Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Banco BPM First Half twenty twenty one Group Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to Conference Questions.
At this time, I would like to turn the conference over to Mr. Roberto Terronagio, IR Manager of Banco BPM. Please go ahead, sir.
Thank you very much. And thank you everybody to be with us today for the presentation of the first half results of the Banco BPM Group. As usual, let me remind that you can find the presentation on our website in Investor Relations page. And after the presentation of Mr. There will be a session of Q and A reserved to financial analysts.
Now I leave the floor to Mr. Castagna. Good evening, everybody. Thank you for being with us. I will be as quick as possible.
I know that it's 5 of August, everybody It's ready to leave. Very good results for our 1st 6 months, especially in this quarter. Operating performance, which allow us to reach a very strong but also consistent EUR361,000,000 of net profit stated, which will be EUR382,000,000 adjusted. Conference. Let me remark that this is higher than the market consensus for full year 2021.
Asset quality is still improving. You already knew that we were concluding in Q2 the Rockets transaction, which allow us to another EUR 1,500,000,000 of NPE, bad loans specifically, which led our gross NPE to 6.2% And 5.2% with the EBITDA definition. Let me remind that when we started the merger, we were as high as 24.1% Very sound also the capital position with a good 12.9 to common equity Tier 1 fully phased an M and A buffer over 400 basis points. Also in this case, I want to stress that we were 13.3% in December, and we are 12.9%. But after Conference having absorbed 95 basis points as regulatory headwinds.
Conference. These results give us good confidence in the future, Also linked to the fact that, as you know, we have resolved in Q2 The 2 agreement in bancassurance, which will come back in the next Couple of years fully in our hands with 100% of the joint venture Conference being part of our group. This will allow us to exploit with more flexibility And with the full potential, the strength of the bancassurance for the next business plan. On Page 6, a set of different target, which show how especially in a very consistent net profit from continuing operation, which I remember is only before systemic charge. Conference.
And basically, in the last 4 quarters, adjusted is almost at a level of more than EUR 200,000,000 apart from Q4 throughout 2020. On Page 7, also the growth in volumes, both in customer loans, which are plus 6% in the quarter and 9.6% if we consider basically Conference. Beginning of 2020, which we included in order to give you the road map Conference since I would say the starting of the COVID situation. Of course, there is an enormous Growth also in deposit, 18.7% since beginning of 2020, which is Still growing also in the last quarter 2.4%. As we will see in details, this is a growth driven especially by corporate because luckily enough for private individuals, we have been able to transform Almost all the increase in deposit into asset under management.
As you see, Asset under management grew 8% and 2.6% still growing in last Q. More important, the net inflow year to date, which is EUR 1,700,000,000 compared with minus EUR 400,000,000 in Q4 2019. Gross NPE ratio down to 6 per 2. Already we say that common equity Tier 1, 12.9 after 95 basis and the same M and A buffer to 402 basis points. On Page 8, this was possible during a period with The COVID impact very strong, thanks to the intensive bettering of our digital banking experience, Conference which has been expanded almost to all our products and allow us now to add more than 85 percent of the transaction remote more than doubling 145 percent more Based up based transaction, which were $4,000,000 in the first half twenty nineteen And are now 10 more than EUR 10,000,000 in the first half twenty twenty.
Also the app, which the newly Successful rollout of the new group app mobile app grew to 24 the total app based transaction versus 9% in 2019. There is also a big increase in customer using both digital and app. The Digital customer grew from 42% to 53%. Active mobile user On digital, active users grew to 67% from 42%, and we have reached 1,500,000 program that we started at the beginning of our merger that now allow us to have which allow us to increase our customers positive customer score An omni channel and advisory, which allow us to increase 15% assistance request and of course deploying an advanced customer analytics, Conference, which allow to address more than 30% of total sales, thanks to Conference Advanced Analytics Program. Also the digital identity, which will allow the bank to Be completely paperless, started with the rollout during this quarter Conference and will reach half of the app customer by this year and then in 2022 hopefully completing Conference.
Also in ESG on Page 9, we have developed Our engagement, we as you know, we have issued our first EUR 500,000,000 social bond, senior preferred, Conference. Under EUR 25,000,000,000 MTN program, the social bond will be utilized to finance or refinance Italian SME loans guaranteed by the state in response to COVID-nineteen. The bond has been bought by banks for 43%, funds 40% and other institution for the remaining 17%. We have also improved during this quarter our ratings, both standard ethics, which were upgraded us from double E minus to double E. We have top ranked in ISS, ESG, Conference.
Governance Quality Score, where we are considered the best with level 1 and also the sustainability ratings of On Page 10, we want to show how our results we are going to present today are fully aligned with the business Conference we presented last year before the outspread of COVID and allow us to be very confident Conference in potentially present the new business plan by the presentation of Q3 results. We have shown some macro target, which was presented in our 20 2023 business plan, Which of course will be updated. But as you see, the current status of first half result show how Also in terms of revenues, which were maybe not fully credible when we presented the plan, are instead fully in line with the results we had for 2023. As you can see, total revenues The first half is EUR 2,300,000,000 and in the full year, EUR 2023, there was a Coforogas EUR 4,400,000,000 costs are already down operating cost envisaged in 2023. Cost income is 55% versus 59%.
Cost of risk core cost of risk is in line, and be very prudent in the Stage 2 increase, which brought our full cost of risk to 86 basis points. Also in terms of return on equity and the net income, the annualized, the first 6 months results bring us mostly to the level of 2023 business plan. This is without considering fast further Revenue booster like, as I mentioned before, the Bancassurance growth engine, Any opportunity that which we will deploy completely in the new business plan. Likewise, the additional opportunities We still haven't yet utilized the savings coming from the retirement which finance in 2020 and will take will start in the 3rd Q4 2021 Because the first 990 exit happened at the end of June 2021. Essentially, the impact will be partially in 2021, then almost full in 2022 and the remaining EUR 30,000,000 in 20 23.
And this is not yet incorporated in the first half results. Conference. First, NPE ratio is already at the level of our 2023 target, which was 5.9 under the air by definition Conference. And is now 5.2. Let's go to some figure on page I would say on page 20, there is the stated Conference.
Results, let me only stress that this amount to EUR361 Net profit for the first half EUR 261,000,000 for the second quarter After €79,000,000 of extraordinary revenues coming from fiscal realignment on real estate, Which we almost completely fully utilized to increase depreciation on on other real estate and increase low loss provision. On Page 13, there is adjusted Conference. Highlights, let me underline quarter on quarter, 5.1% higher On net interest income, 1.5% of net fee commission, you can remember that there was Q1 record result for us in commission, we have been able to beat Q1 and of course being 16% higher than first half twenty twenty. Also, NFR was able to repeat very good results, EUR 100,000,000 Q1, EUR 117,000,000 Q2. In this case, thanks to trading activity, but also to the revaluation of Nexi and Cia stakeholders in our balance sheet.
Also the result of other revenues is very good coming Conference from the strong results and strong profitability of our product factory. All in all, total revenues is almost EUR 1,200,000,000 in Q2 and EUR 2,300,000,000 half year. Operating costs are almost at the same level of Q1, Q2 and also vis a vis 2020, Conference, which lead to pre provision income of EUR 450,000,000 for Q2 confronted with EUR 48 6 of Q1. Loan loss provision still very consistent, EUR 235,000,000 adjusted Conference and in the half year EUR 379,000,000, which again state amount increased to EUR 4.70 EUR 3,000,000. Net profit from continuing operation is EUR 246,000,000.
As I mentioned at the beginning of the presentation, almost 8% more of EUR 227,000,000 of Q1. And H1 is at EUR 4 EUR 73,000,000 confronted with EUR 176,000,000 of first half twenty twenty. Conference. After the systemic charge, we have EUR 230,000,000 of net profit versus EUR 150,000,000 of Q1 Conference and EUR 382,000,000 for the semester vis a vis EUR 128,000,000 of last year. Conference.
Let's go to some details about the different items starting from NII on Page 14. The trend is consistent 6.9 percent driven by the TLTRO Increased drawing by EUR 10,000,000 at the end of March 2021, We have EUR 24,000,000 coming from the last EUR 10,000,000,000, but also the commercial banking activity And the non commercial banking activity, which include the negative impact from reinvestment of TLTRO The commercial asset commercial spreads are doing well. The asset spread Conference. It's still at the same level basically of Q2 2020 was 178 basis then EUR 180,000,000 now again EUR 178,000,000 but the customer spread is at EUR 116,000,000 Conference due to the reduction of liability spread, which of course is driven by the Urebor that was 25 basis points lower than Q2 2020. The new lending is still very consistent.
We were at EUR 6,300,000,000 in Q2, 5.2 percent from Enterprises and Corporates and 1.1 percent in terms of household. If we compare H1 'twenty one to H1 'twenty 20, the results is even EUR 12,100,000,000. But we are an increased percentage of share of COVID-nineteen measure, Conference which is as high as 39% of the total loan granted versus 15% In 2020. Of course, in the second half of the year, we think that this percentage will be opposite to the one we are presenting. Also in July, the lending was very sound.
We have closed July with 2.4 Additional new lending, of which EUR 600,000,000 from state guarantee transaction. The total of state guaranteed transaction as of 30th June was EUR 15,000,000,000 EUR 1,600,000,000, 100 percent guaranteed EUR 13,300,000,000 from EUR 70,000,000 to EUR 90,000,000,000 Conference. Driving the average level of guarantees to 86% on the EUR 15,000,000,000 drawn. We still have EUR 2,000,000,000 in pipeline. As of June, of course, EUR 600,000,000 were utilized in July.
So we have still EUR 1,400,000,000 to be utilized during this quarter. In terms of spread, the out is still lower than the inflows. So possibly, we will not lose Further as a spread because this should continue also in the Q3 Apart from early repayment, which we, of course, are not able to envisage right now. Conference. Let me stress the robust performance of new lending to household, which was plus 62% Conference.
Also in terms of targets of TLTRO after reaching with an excess of EUR 7,000,000,000 the first Observation B period, which ended in Q1, we are for the period ending end of 2021, We have almost EUR 3,000,000,000 in excess. On Page 16, we can see Some interesting view of the moratoria COVID measures. We have remaining with EUR €4,800,000,000 of outstanding Conference. June 2021 was EUR 6,000,000,000 and the default rate was 1 25%. Of the remaining moratoria, EUR 10,200,000,000 EUR 5,400,000,000 will not postponed by client.
So as you know, by June, we had the answer or the request from our client to postpone or not the current moratoria, the majority decided not to postpone. Conference. And so we have been left with EUR 4,800,000,000 of requested moratoria ending by the end of this year. Out of the EUR 5,400,000,000, we already have been checking the first EUR 3,000,000,000 Expiring of installment, of course, expiring in July and EUR 3,000,000,000 basically Reduce added to the EUR 6,000,000,000 already expired, reduce the Conference. The full rate of the expired monetary from 1.25% to 1.10%.
Of this EUR 4,800,000,000 of remaining moratorium outstanding moratorium, 74% from time to time from EUR 3,900,000,000 which were the mid di risk and derisk When we started with EUR 60,000,000,000 of monetoria, then they were reduced in December to EUR 2,400,000,000 in these two category of midairisk and derisk, and now they are reduced to EUR 1,300,000,000. This means that also clients that are classified from ourselves in these two categories are repaying normally the installments when they renounced the remoratoria. We have also conducted we're still conducting A continuous strict control on all this EUR 4,800,000,000. We have now reached 79% of client, we are postponing the moratoria. And out of these 79%, less Then 1% declared to possibly have some problem to restart payment in January 2022.
I think a very confident outlook respect to the dramatic view that we had at the beginning of the pandemia. On Page 17, we have The results of net fees and commission, Q2 outperforming the already strong Q1 And of course, being EUR 140,000,000 more than last year, We basically had the same result of Q1 in terms of commercial banking fees, EUR 251,000,000 And we beat the for $6,000,000 for $8,000,000 the management and advisory fee coming mostly from the investment product placement, but also from advisory fee and corporate Conference and the M and A in advisory. The trend is still increasing. As you see, June was much higher both of April May. And in terms of sales, The results was so good, notwithstanding the Investment Products placement was in Q2 a bit lower Then the EUR 5.4 record results of Q1 2021 will reach EUR 4,900,000,000 including EUR 300,000,000,000 of BTP Futura.
The average of EUR 1,500,000,000 per month Conference has been maintained also in July. Very good also operating cost. We are Keeping operating costs under strict control, we decided to give you also the number of first half twenty nineteen because as you know, Not really the first half twenty twenty, but when we will go ahead for the full year 2020, this is incomparable with full year 21. So we prefer to make also comparison with 2019. In 2020, Opportunity to exploit the COVID measure, which made the savings for more than EUR 140,000,000.
Conference. Right now, we are 2.1% higher in respect to first half twenty twenty. And the Q2 2021 is even lower than the Q1, thanks to EUR 14,000,000 of COVID related savings, which we think hopefully will be the last one, which we will incorporate for 2021. As I mentioned at the beginning, we still are not considering the savings which will come from our Retirement scheme, although it's better only EUR 3,000,000 are already considering the 1st semester. The remaining EUR 41,000,000 for 2021 will be in the second half, Another EUR 120,000,000 in 2022, and we will go to EUR 140,000,000 Conference in 2023.
In terms of headcount, we are now down to 20,500 Company. Considering 990 voluntary exit by June, we still have So far, the 6.20 people included in this scheme, Which will leave the bank by 2022. Also, the network was right sized, as you know. Conference. Farder 300 branch were reduced between May June of this year, leading for a total of 1,000 branch if we consider the starting point of 2,400 branch in 2017.
Just a few words on the strong liquidity and funding position. Of course, this is something that doesn't give problem to the banking system. Conference. Right now, we have LHEF over 200%, very, very sound MSFR, TLCRO fully exploited, very few global amount of bond outstanding. Conference.
Notwithstanding this year, we have been in the last 18 months, we have been issuing both 81, PS2, Senior preferred and senior non preferred. Very good results coming for from our securities portfolio. We had a total consideration of almost below EUR 40,000,000,000 between It's held to maturity and sales, amortized cost and trading, which had in June €90,000,000 of reserves on HTTS, Conference, which now grew to more than EUR 200,000,000. So notwithstanding what we have realized in the first Q, which lead to the very sound and fair results, we still have more than EUR 200,000,000 Securities at amortized cost. I won't go through Page 20, just give you the glance of the Italian govis vis a vis the non Italian govis and the relative duration, which basically didn't change a lot Conference since last quarter.
Just a few words about Page Conference 2021 where you will find NPE evolution. We are down to EUR 7,100,000,000. Frankly Speaking, nowadays, we are below €7,000,000,000 and net NPE is €3,700,000,000 We just wanted to remember that we started from more than €30,000,000,000 of gross NPE and more than €60,000,000,000 of net NPE. Conference. This, of course, has an impact on the coverage, where we go down from 62% to 55.4 percent embedded loans and 50.7% to 47.4% in total NPE.
Conference. Of course, if we consider the rockets, including in the Q1, the amount of the second quarter Conference. See an increase both in terms of bad loans from 54.9 to 55.4 Conference and also in terms of total NPE from 45.9 percent to 47.4 percent. Almost at the same level, we have also the OTP, which 44.6 percent, up from 43.1%. Also in terms of bad loans, thanks To Rockets, we increased, which of course had a lot of unsecured bad loans sold.
Conference. We have now increased our secured bad loans from 62% to 69%. As you can see, the full trade is very comfortable to 1.1%. It would be a bit lower than 1% excluding DoD, 8% of the annual rate. Q rate, of course, is being reduced during this COVID period due to the strict timing and the increase in time that we now have to respect to bring back to performing our OTP.
In any case, the workout rate You will find out on Page 43, it's still very sound. It is around 14% last year and this year and allows us to compensate the inflow of new nonperforming laws. Conference. On Page 22, we have on the top part of the slide, the quarter reduction of Gross NPE and net NPE. In the lower part, you will see our very, very prudent approach That we are still having to our cost of risk evolution.
We have an increase on Q2 vis a vis Q1, which bring the amount of the first half in line with the first half Conference 2020, if we talk about ordinary cost of risk, we will be down to 52 basis points Conference after having included some round provision on single names And the non core impact, which will still driven by the Project Rockets impact And the tightening of Stage 2 criteria to which we added also our leverage finds portfolio in this quarter Conference has been accounting for 34 basis points. Last page of numbers, we have Very sound capital position. We started we ended March in 12.7% Fully loaded, 13.7% phased in. We are now up to 12.9% fully loaded and 14.1% phased in. The increase is due to 37% of Q2 performance, 17% already accounted for the payment of 81 coupon and the dividend stake, 10% out regulatory headwinds coming this time from look through approach on alternative funds and opposite ten Our MDA buffer to a very solid 402 basis points.
Just Conference. The last part of the slide is dedicated to the ABBA stress test, but I think you already know Exactly what was going on, and it's very good also for us. So final remarks So on Page 24, very good year, very good quarter and very consistent with our forecast And with the business model we have in mind to develop solid growth in core revenues Conference with led to a very sound net stated that adjusted net profit still reduction Commission of MP ratio and further disposal of bad loans and a robust Capital Position Leveraging on Digital Banking and on the changing profitability coming from the outlook of our business model. On Page 25, we give you some outlook about full year 2021. Of course, the total revenues will be slightly impacted by the very strong result of Q1 in NFR.
So we think we can bring we will reach EUR 4,400,000,000 total cost EUR 2,500,000,000 leading to pre provision profit of EUR 1,900,000,000. Cost of risk in order to have To give you a forecast on EPS, we consider the same cost of risk of H1, but again, it's a very prudent approach. Conference. And this will bring to an EPS of €0.35 and a dividend payout partly already accounted in common equity Tier 1 of 40%. This already having 13% as a target for common equity and the MDA buffer again in the region of 400, but in any case higher than 3 Conference.
I have completed my presentation. I leave
Conference. Excuse me. This is the Cusco conference Operator, we will now begin the question and answer session. Conference. The first question is from Christian Perisse with Intermonte.
Please go ahead.
Good evening. Thank you for taking my question. First of all, congratulations for the results, very The first question is on revenues, in particular, on net interest income. I would like to understand the moving parts Conference going forward. Looking at TLK contribution, Conference on Commercial Banking and basically these 2.
So TLTRO, if I look at the slide, seems to have a positive contribution in the quarter equal to €24,000,000 Addition or contribution compared to the Q1. So this would mean around 1% yield on debt CFO. Is it correct? Conference. If you can elaborate a little bit.
And in terms of launch and customer spread, what do you expect Conference for the 2nd part of the year. And finally, on the financial portfolio, I saw that the reduced Part of the Italian Globes in the quarter, the annualized capital gains went down a little bit, maybe they were also booked in the trade income. So what do you expect from the financial portfolio contribution going forward? So basically this quarter level of net interest income, do you feel that is sustainable in the coming quarters? The Second question is on the fees.
It seems that now the network is going at full speed, Very good set of results. Do you expect still some conversion in terms of deposit Under management. If you can give us a guide, I would expect some slowdown in the Q3 compared to the Q2, but if you can give us an idea. The first question is on Strategic option, let's say. We see that you have the option to buy back the Banca This could add some earnings in the future, let's say, 20 Conference.
I did some homework and I feel that take into account the possibility to get the damage Compromise, maybe the impact on the capital would be not so big, negligible, I would say. So if you can give us Any idea of what could be the contribution from the Bancassurance if you decided to keep in house That kind of activity. Then I missed one question, but maybe I will ask later. Thank you.
Thank you. I will try to give you the detail you have requested. All in all, of course, we think the second part of the year will be slightly better, thanks to TLTRO. Even though you know that we cannot contribute 100% basis points because unfortunately, there is so much liquidity that a part of it will be Conference, unfortunately, invested at negative rates. So I would say that Only half of the contribution is incorporated in our forecast for 2021.
Conference. Commercial would be mostly online with what we see in In 1st part of the year, the goal of the portfolio, securities portfolio, we think that considering On one side, the maturity that we are having during the year at a higher yield. And on the other side, the savings on the interest that we are campaign on the wholesaling issuing. We think that we have more or less EUR 15,000,000 less also by yourself will be in the region EUR 2,000,000,000 to EUR 2,000,000,000. 2nd question, fees.
The conversion is very high, as I was mentioning before. Basically, we never had positive net asset Under management from deposit, we have in June, we had EUR 1,700,000,000, which for us is very, very consistent. We are still growing and we will continue to grow. The problem is to reduce EBITDA deposit from corporates and enterprise, which we are doing, charging corporate and enterprise of fees As much as we see an increase in deposit. This unfortunately will take place from conference.
Has been taking place from July, but I think we will see more in the Q4 rather than in Q3. Total fees, as you were mentioning, normally in the second part of the year are a bit lower than the first part of the year. But I am confident because even in Q2, we had, as I mentioned before, a reduction of upfront fees, but a very sound compensation from running fees And from fees coming from ordinary activity, M and A and so on. So let's say that EUR 450,000,000 for quarter for the next quarter would be the bottom that we consider. Bank Assurance, as I mentioned, will be basically at the base of our new business plan.
We are doing all the forecast about the potential charge that will be impairments capital. Conference. We don't have a definite, I mean, precise idea, but we are considering That if the Danish Compromise will be applied, it will be very negligible, the cost of capital on common equity Tier 1. On the opposite, we will have a very consistent increase in terms of revenues and net profit More than compensating, of course, whatever charge we can have in terms of capital.
Just on capital, if I may follow-up. In the business plan you presented Last year, you were referring to a threshold of 12.5% common equity carry on fully loaded, if I'm not mistaken. So you are now targeting 13%. So do you see that the 12.5% still Is a reasonable threshold or after COVID-nineteen pandemic, You would prefer to have a higher capital buffer. And still on dividend payout, you increased You said 40% payout after the stress test outcome.
So should we assume you don't expect any Conference. And additional guidance after the results of the stress test, I mean, negligible add on. Thank you. Conference.
Basically, as far as common equity is concerned, 12.5%, I think, was the 2023 baseline. The 13% is The outlook for 2021, so we have not yet giving outlook for years to come. The real situation that we were expecting more impact from the headwinds, which we have instead absorbing very well. So we are still keeping a very sound common equity Tier 1. As you know, the principal headwind were forecasted in this first two years of the plan because in the next year will be very, very low.
So I think we Can envisage and I have common equity one, but I don't think that we will need to stay at 13%. If you ask right now, Conference. Unfortunately, I see that the majority of the bank have higher common equity Tier 1. So we are Already in the lower part of common equity Tier 1, we feel very comfortable being around 13%. Let's see the evolution of the pandemia and possibly we can also go down at more normal approach of around 12 point Can you hear me?
Sorry, sorry, I didn't get
I was wondering the stress test again that you passed Comfortably, the stress test, so you don't expect any
Actually speaking, we feel very comfortable because, as you know, we have Because as you know, we have a very good performance better than the average of the other bank in the base case scenario, which I think it's the most probable. If I don't think there will be a severe consideration of the stressed case because as you know, it was already applied to a very stressed situation.
So
I don't expect, frankly speaking, any material change in terms of
Conference. The next question is from Giovanni Razzoli with Deutsche Bank. Please go ahead.
Good afternoon to everybody. Two questions. A clarification on the fee income. Can you share with us what was the contribution of the upfront fees in the second quarter? And the second question is Slide number 10.
So Very explicit showing us that despite the cost of risk that is 86 basis points In the first half that is quite above, so more prudent than the average of your peers, you are delivering €360,000,000 of Bottom line. So I was wondering what could deviate your targets from Something like an earnings power in the region of €700,000,000 for the next business plan because it seems to me that we are Fairly prudent in terms of cost of risk in relative terms, while your profitability seems more resilient Than expected. So shall we take this as an evidence power as a base for the next business plan? What are your thoughts there? Or You think that there are some elements in the revenues which can move up or down at this level of profits?
Thank you.
Thank you, Mr. Vergioli. Fees, starting from fee income, We have upfront in Q2 for €79,000,000 visavis €87,000,000 in Q1. Conference. Running fees on the opposite, going up to EUR 123,000,000 In Q2 visavis 114.5 in Q1, and then we have an increase of EUR 6,000,000 In management and advisory fees.
In terms of cost of risk, basically, We wanted to give you, first of all, it's not, of course, in anticipation of what we will give you For the new business brand is just an outlook for this year, which is not even an outlook for this year. The outlook was Conference, driven by the net results and the dividend policy. And in order to give you something consistent, we had, of course, To start from an hypothetical cost of risk that we prefer to imagine the same of the first half. Then, of course, All this can be better, but we wanted to give you some solid number about Earnings per share and dividend policy. On Page 10, Sorry.
No, on Page 10, we instead were just representing some comparison between this first half result and the old business plan. Again, we are not saying that we are going to do the Same business plan because there will be many things different, but we're only stressing that we feel confident in approaching Conference. A new business plan target, thanks to the result we have already reached in the first half of twenty twenty one. So I wouldn't consider neither 86 or 51 guidance for the new business plan. Conference.
Thanks.
The next question is from Jean Ouel with Goldman Sachs. Please
Hi and good evening. Thanks for the guidance. I just wanted to ask, because the cost program is fairly large and then you're showing this very strong reduction this particular quarter. So you have an outlook for the full year. I just wanted to understand the moving parts into 2022, whether you have already a rough idea of what your cost would be then.
I'm just trying to size up the difference in staff cost versus and branch cost, but also maybe versus some other inflation or some other initiatives that you might have, You referred a lot to digital in your presentation. 2nd question I have is, it is true that your cost of risk looks more prudent than some of the other peers. At the same time, You've got about EUR 2,000,000,000 more inflow per quarter year to date of Stage 2 loans. And I wonder Conference. Whether you think you're there or whether you think there is some more reclass to take place?
I think we Conference. I already asked this question on the last quarterly conference call, but maybe there are changes in parameters. And lastly, with regards to what's happening around you yourself in Northern Italy in the banking landscape, There was a lot of focus today on your stand alone profitability, I feel more than usual. Any change in the way that You think about Banco BPM's place in the Italian landscape now organically or inorganically? Thank you.
Thank you, Mr. Noyed. First, we start from the last question. No, there is basically, we want to just we were Conference. Requested to give some forecast update on our business plan.
We think that now would be a good moment to start talking about that. And of course, we cannot do other than giving you our stand alone projection. Conference. Why now? And why we're thinking basically by this autumn, we can be able to do that.
Conference. First of all, because we are experiencing eventually the results we were expecting when we announced the first business plan, Especially in terms of revenues, so we are much more consistent and much more credible. And Secondly, because hopefully, we can imagine that the pandemia will be will have lower and lower effect on the business. Of course, if this happen, we think we can go ahead with some new figure, very sound, very interesting In order to give the possibility to make some forecast also in terms of our stock. Conference?
Of course, we still believe that consolidation could be useful. But as I mentioned also in Q1, It's not the case right now because right now we don't see any potential consolidation at our door. So of course, we will still continue to look. We'll still continue to understand if there is the possibility to make Commission. But of course, we feel that is also very interesting to understand that we have a good story, a very good Sorry, also on a stand alone basis.
Second question, no, I can assure that the cost The risk come out for a very prudent approach. Stage 2 new increase is only, Let's say we take advantage from the moratorium, the pandemic to level the difference, the gap That we had vis a vis our competitor. In our opinion, this is much more due to our geographic presence rather than a non prudent approach Conference before of this decision. But having the possibility to increase to be more prudent, Conference. Thanks to the moratoria, we decided to change model and to make more Titan model for the inflow into Stage 2.
And this happened in the first In the Q1, with the moratoria client, which were either in the high mid high risk and high risk and in the industrial sector more eaten by the pandemia. In the second Q, this was referred instead to our Leveraged Finance portfolio, and we decided to have a more strict model also for this asset class. And this, of course, had an inflow in Stage 2 quite consistent, Which led to the 34 basis point of increase of cost of risk. But because of the running of the moratorium, which are very, very Good up to now, as I mentioned in my presentation, we are confident that this Stage 2 can go back to Stage 1 and reduce also The impact on cost of risk. First question?
Was on the cost for 2022, whether you expect That you're going to get the benefit of the staff reduction still 600 and the 1000 plus the branches or whether there is other inflations?
We believe in 2022, we can have a further reduction of EUR 60,000,000 all in all. Of Of course, considering also the new investment in digital. So the trade off between savings in personnel, Hiring of people because, of course, we have also some consistent hiring of Young specialized people to perform by the business plan and increase in some cost, we think we can still have Some consistent savings in the region of around €60,000,000 for 2022.
Conference. Thank you.
Thank you.
The next question is from Gonzalo Lopez with Redburn. Please go ahead.
Conference. Hi, good morning everyone. Just two questions please. The first one is on the transformation from deposits to AUM funds. You mentioned that you are planning to charge some fees to corporates.
I was wondering if you can conference. Provide some color on the initiative that you are planning to take on the retail side, please. And the second one is on the P and L. Could you please provide some visibility
Thank you, Mr. Lopez. So on fee on corporate on charging corporates for deposit, we have already started A campaign vis a vis large corporates and midsized corporates. We have communicated to the client which kind of increase in fees will be applied, but we had to give them the Possibility to negotiate these fees, which will be applied in any case if we don't come to some terms by Q4. And instead, if we decide, together with the client, the amount of increase will be in place directly from Q3.
We don't have a clear idea. We think it could be between EUR 5,000,000 and EUR 10,000,000 the total Not really to increase these fees, but to reduce the deposit. So In doing that, we hope that they will move deposit, possibly utilizing for investments or rather to change The deposit for in other banks. So this is more or less what we feel about the positive. Conference.
Tax rate will be in the region 25% to 30%. Let's have in mind There are also a lot of maneuver driven by the P and error from the state, which allow, for instance, eco bonus, super bonus, which will impact Conference rate in doing this kind of a transaction. So I don't have a more precise question what would be in this region.
Fantastic. Thank you.
The next question is from Andrea Vercellone with Exane BNP Paribas. Please go ahead.
Good evening. Two questions on my side. The first one is on margin and The second one is on derisking. On margins, can you give us an idea for how many quarters do you still expect The yield on new production to be above the exits. And on derisking, you have done a lot.
You've done the other the Rocket transaction, which you had already announced. I'm just noticing from pretty much all of your competitors that there seems to be a bit of a race to the bottom Into selling, selling, selling NPLs. Clearly, there are different logics to it. However, Whenever you sell something, there are charges attached to doing so. So I was just curious whether you're going to join this race to the Conference?
Or you're pretty much done and we shouldn't expect anything major to be announced in the context of the new business plan?
Conference. Of course. Thank you, Mr. Versaillona. Marginil, I think you referred to asset spread.
Conference. As we mentioned on Page 15, we have experienced an outflow, which is at The lower interest rate vis a vis the new inflow. As I mentioned, I imagine starting from Q3 and Q4, an increase of ordinary loans. So we'll be mitigated the effect of the lower spread on asset guaranteed by the state. So hopefully, we will be able to maintain a consistent margin.
Of course, we cannot consider the potential effect of prepayment because, of course, what we consider are the maturity, which are going out. And on that, we know that the outflow is lower than the inflow. But of course, we don't know about prepayment. And being such liquidity on the market, of course, it's difficult to have a clear measure. Up to now, we were able Give a good forecast on the
1st two quarter. Excuse me. Just a clarification, if a corporate prepays, Is there a fee attached to doing so? Or they can just do what they want?
Depends, of course. Normally, if you have syndicated loans, So there is some attached to prepayment. Normally, also in Bilateral loans, it's possible that there is a fees attached. But as you can imagine, then competition is the king because sometime in order to replace the loans with a new transaction, It brings you also the possibility to cover the interest rate with the derivatives and so on. Not always we are paid a substantial commission.
Of course, it happens in many cases, but of course, does not compensate Conference. Going to de risking, I have to say that I was obliged to be up front runner into selling, selling, selling. But we didn't do that in one shot. As you well know, We were very able during this 4.5 year to have a very sound transaction normally at a higher price vis a vis the competition, always putting strong competition in place in terms of bidder. Conference.
And as you were saying, we are almost done. We are now at 6.2, which is 5.2 in The guidelines, I don't think that we will imagine strong derisking coming from disposal in the new business plan will be more a normal workout activity for which, of course, We have also some single asset disposal, but not the round and sound transaction we were used to do Conference and we have done during these years. Thank you.
Mr. Castagna, there are no more questions
Please go ahead.
Conference. Okay. The next question is from Madhurra Guelsey with Citi. Please go ahead.
Hi, good evening. I have a
question on the ESG. When I look at your portfolio, you are clearly exposed to the SMEs more than the average European banks. And the if you want the greening up of the loan book, it's a process that will take time. How are you thinking about your client response to more inquiry about the cleaning of their activities and how would these impact your future lending as well as margin. And when you look at the European banks, it's quite difficult to do a comparison.
Do you think that at some point, the European regulator will look at Capital charges or capital benefit linked to climate related position? Thank you.
Conference. I think the 2 questions thank you for the question. I think they are very much linked because, of course, as you know, we are already under Scrutiny by ECB. We are Sending all the material that they were asking in the first round of question about ESG. Now we have better classifying also our portfolio, which will be sent to ECB by the next stage of their inquiry.
This will help also us, of course. So we will be in a way obliged to perform in detail all the exposure in order to understand If they are under the green approach or not, this is something that we are already discussing with our client Being in a very sound part of the Italy, we think that most of our client Conference. I have these very well in mind. They are approached by all the main bank, national, international. And as far as I know, up to now, in our investigation and query with our client, we are not having any problem Conference in getting this transparent disclosure about their current situation.
Of course, I am not yet In the position to give you numbers because we are still under scrutiny also ourselves. But I think in the next quarter, this will come out As much as we will give these numbers also to the regulator. And depending from that, of course, the regulator can If we are compliant, I don't think there will be any kind of tight policy about capital. Otherwise, of course, as we are used to do the good business I'm doing, but we never were informed about that. It's just my opinion.
Conference. Thank you. The next question is from Noemi Peruk with Mediobanca. Please go ahead.
Good evening and thank you for taking my question. I have just one on cost of risk. So you indicated that the annual cost of risk will be in line with H1. So with this, I assume 86 bps. So I was wondering how will you be allocating the additional 35 bps on top of the 52 underlying?
Conference. Will it be Stage 2 and the moratoria if you do not envisage further shun derisking going forward? Conference. Do you see some additional small derisking? Thank you very much.
Thank you, Ms. Peruk. Again, I have to say that we wanted to give you some Precise figure about the net profit and the EPS. And in order, Keith, to give you a sound figure, we either had the to give you a figure in between EUR 52,000,000 EUR 86,000,000 or to give you The same figure that we had in the first half. It's not yet we have not yet, of course, decided if we will reach effectively the cost of risk We don't envisage right now any problem in having a core cost or risk also in the 2nd part of the year.
Conference. And then we will decide if we will be able to make more profit or we will prefer Depending from the situation, I don't think we will have any problem in Stage 2. And also in Moratoria, I gave you, I think, a lot of information to make you To make up your mind in order to understand how could behavior or not the further Ending of the moratoria. So we have not a forecast of EUR 86,000,000. We just gave you For August of 86, in order to give you the APS that we have as outlook for our bank.
Conference. There are no more questions at this time.
Okay. So thank you very much everybody. I hope you will have some days or weeks on vacation. And of course, I know that our IR Already is available to take also some call to give you some more explanation about our figures. Conference.
Have a good period of holiday and see you when we have when we will be back. Thank you very much.