Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banco BPM Q1 2019 results presentation. 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, everybody, to be with us for the presentation of the first quarter result 2019 of Banco BPM group. As usual, before leaving the field, Giuseppe Castagna, our CEO, for the presentation, let me remind that the Q&A section is reserved only to our financial analysts, and you can find the presentation on our website on the investor relation page. Now I leave the room to Mr. Castagna. Thank you.
Good evening, everybody. This is Giuseppe Castagna speaking. Thanks for being with us for the Q1 results. Let me say that basically we can say that with this balance sheet, we have basically reached most of the target that we had in mind when we started this merger. I would say that we have completed a dramatic reduction of NPE, reaching a very satisfying ratio below 10%. We have built up a solid capital position, growing quarter-on-quarter. We are building a balance sheet which is growing in volume, both in asset and in liabilities, especially in loans and current accounts. We were able to reach a good profitability in this first quarter, in line, I would say, with the expectation and consensus, notwithstanding a slow start in commercial activities, but thanks to good cost control and lower provision.
Starting from the risking on page seven, here we have only the last year reduction. In terms of NPE ratios, we went down from 20% to 9.9%, including the L-ACE transition that we have concluded during the first quarter. On the bad loan ratio is even better. We started from 13%, we are now to 3.1%, only 1.4% net. UTP, without any specific disposal but only with workout, we were able to reduce from 7.5% to 6.7% gross and 4.6% net. The tax ratio went down to 71%. The capital position is increasing. This quarter, we are experiencing a growth of 30 basis points in our pro forma fully loaded. As you know, we are still waiting for some accounting related to the Agos transaction and the platform.
The comparison with the 11.5 of last quarter is 11.8 this quarter, notwithstanding 12 basis point reduction due to IFRS 16 accounting principle. Also, the phasing ratio was up from 13.5 to 13.7. On page nine, you can see some highlights of the performance of the balance sheet, in which we can see how the risk profile of the group has bettered during these two years, not only in terms of reduction of NPE, but also, again, in loan growth, in current account and deposit growth, almost 6% in reduction of the Italian loans portfolio, 3 billion in one year, and in a very strong liquidity position, which account now to total eligible securities for more than 53 billion.
As I said before, notwithstanding a lower start in terms of commercial activity, as you know, our bank has experienced some problem during the first quarter due to the many things happening in our bank. Notwithstanding that, we were able, through cost reduction and finally reaching a very satisfactory cost of risk, we were able to target the EUR 150 million, which were our potential target for the first quarter, in line with our budget and consensus. The EUR 150 million, of course, has to compare with the first quarter EUR 223 million, but I have to remind that in the first quarter, there was almost EUR 180 million related to the bank assurance transaction. Inside the EUR 150 million, there is a contribution of almost EUR 6 million from the Nexi transaction, but also a negative contribution to Single Resolution Fund for EUR 41 million. Let's go a bit more through the different items.
Net interest income down. We were expecting, of course, the reduction due especially to the PPA IFRS 9. As you can see in the bottom right side of the slide 12, our guidance that we gave you of a reduction EUR 160 million, once we got the final perimeter of the last ACE disposal, we can recalculate the difference for increasing from EUR 160 million to EUR 185 million. Only in the first quarter, there is a difference of more than EUR 80 million like-for-like, which reduce the difference between the first quarter of 2018 and this quarter to 1.9%. In terms of Q on Q, we have a reduction of 5%. If you exclude the calendar effect, we go down to 2.8% of difference.
In terms of spread, on page 13, finally we can see a rebound in the spread, thanks to keeping the asset spread to 1.9%, and with a small reduction, one basis point of the cost of funding. The real, for us, unsatisfactory results is the net fees and commission, again, related also to peculiar situation of the bank that the bank experienced during the first quarter, and also, of course, to market condition. I have to say that especially the first two months were particularly difficult for our commercial network. Starting from March, we are experiencing again results in line with our budget expectation. In April, we had more than EUR 1.1 billion of sales, which is in line with our expectation, and also May is again on track for reaching what we feel could be the right result for us.
Going through the different number, the reduction from the first quarter 2018 is basically almost all in upfront fees for replacement of investment products. Compared to last quarter, the main difference, rather than in management and advisory, is in credit. This is notwithstanding credit raised the issue of new loans to EUR 5 billion compared to EUR 3.8 billion the first quarter 2018, we experienced a quite normal seasonable reduction of the structured finance and syndicated loans issuing, which were down from EUR 1.7 billion over the last quarter. Quite normal such increase in the final part of the year compared to EUR 900 million in the first quarter of 2019.
Let's say that this EUR 190 million has to be read also in the light of issuing of EUR 500 million of certificates, which of course, are not computed under net fees and commission, but goes to net financial results, and this would have brought the commission result to something more than EUR 200 million in the first quarter. On page 15, net financial results, as I said before, with the positive contribution of Nexi, which is the main aspect related to this item. Let's go to cost on page 16. Operating cost. Very good. We are still keeping a good pace, which we started since the beginning. Like for like is around 5% reduction. The quarter-on-quarter comparison, of course, has to bear in mind that in the last quarter 2018, we have some extraordinary savings. Personnel expenses are going down almost 4% year-on-year.
Again, on the Q4 2018, we had some reversal of the incentive scheme registered for the entire 2018, the pace is still very good. Notwithstanding, we are terminating the incentive scheme for retirement December 2018, we are still experiencing a reduction in personnel. The headcount are going down since the beginning of the year, almost 70 people, bringing the total headcount to 22,175. I remember that when we started, we were almost 25,000 people. In administrative expenses, there is a consequent reduction both year-on-year and quarter-on-quarter. Of course, it's better to read the reduction in the gray bubble, 8.9% year-on-year and 6.3% quarter-on-quarter, because the 21% take into account also the new effect of the adoption of IFRS 16, which as you know, accounts in a different way, the leasing held by the bank.
This difference is going into amortization and depreciation and is around EUR 25 million. The net effect is zero, we have EUR 25 million less of administrative expenses, EUR 25 million more of amortization. Let's go to cost of credit. Finally, we are reaching the normality, I would say. We have seen a very consistent reduction, not comparable, of course, with last years when we had all the forced disposal in order to get to the current NPL ratio. Finally, we reached 57 basis points, which is, as you can see on page 20, is supported by the three key drivers that determine the reduction of cost of risk. First of all, of course, the big reduction in the stock, going down 52% from EUR 25 billion to EUR 11 billion after the Project ACE.
The good decrease in default rate, the net inflows, the default rate is going down 1.2%, 36% year-on-year, and the flow from UTP to bad loans, the danger rate, lower 34% versus last year. Let's talk about the balance sheet. As I mentioned before, very big increase in current account and sight deposit, 8% year-on-year and 3.3% quarter-on-quarter. I have to say that we are still registering during April and beginning of May, further increase in current account, which shows how the bank now has clients that want to be liquid and driving for protection and secure investment. This, of course, gives us some problem in terms, again, of building up commission, but I am sure that we can be able, and already from April, we started to convert part of these volumes of current account into asset management.
On page 23, we don't have any more retail bond in the next three years. Meanwhile, only EUR 2 billion for year, starting from 2020, of institutional bond maturities, which is more or less equivalent to the issue we forecast to do in 2020 and 2021. As I mentioned before, a very strong liquidity position. We are growing quarter-on-quarter. We have reached now EUR 54 billion of eligible securities, of which unencumbered liquid securities, we were almost EUR 22 billion in March. Again, in April, we have reached almost EUR 27 billion of liquid security unencumbered. Of course, this bring to the TLTRO. We will be waiting, as other banks, in order to understand which will be terms and condition for the next TLTRO before deciding the new strategy on funding. Securities portfolio is not changing too much.
Basically, the small increase that you see under Italian Gov is all related to trading activities, very short terms. The spread sensitivity is still EUR 1.6 million, down again from EUR 3.5 million last year. The duration is 2.6 year versus 2.7 end of last year. The non-Italian Govies grew to EUR 9.3 billion, and HTCS reserve bettering EUR 130 million, having now a negative contribution of EUR 60 million. On page 26 is the effect I was talking before, still not big growth in asset under management, only EUR 2.4, mainly due to market. We again have started already also with the reorganization of our marketing and commercial activity, a new strategy on all the range of different products, bank assurance, asset under management, funds of funds, and we are sure again that we can take profit of the growing of volumes in current account. On page 28, talking about loans.
This is the global loans, performing and non-performing. Of course, we have the massive reduction on non-performing I was mentioning before. If we consider only performing loans, we are growing 5.3% year-on-year and 2.7% quarter-on-quarter. On page 29, you can have a better understanding of this growth related to the core customer loans, which also not considering the leasing in runoff, the GACS, and the repos, is growing 4.6% year-on-year and almost 2% quarter-on-quarter. As I was mentioning before, in the first quarter 2019, we registered a record new loan granting for EUR 5.2 billion. Going back to non-performing exposure on page 30. You can see on the upside of the slide, the reduction of the gross NPE. We were already talking about that, almost EUR 13.5 billion of reduction in the last one year, from March 2018 to March 2019.
In terms of net NPE, we went down EUR 5 billion from EUR 11.3 billion to EUR 6.4 billion. On page 31, you have an interesting breakdown of our NPE portfolio, which is completely different from the other Italian banking system, being nowadays composed of bad loans. Gross bad loans are only 31% of the total NPE. Net bad loans are only 23% of the net total NPE. A very comfortable situation vis-à-vis an Italian average, which is more or less 54%. In terms of secured, unsecured, also in this respect, we have 64% of gross NPE exposure secured and 72% of net NPE exposure secured, much higher than the Italian average. This is important also in light of understanding the coverage levels. If you go through the single items, bad loans UTP, we are still growing in coverage year-over-year.
We are decreasing in the total coverage of NPE because of this completely different composition, which now see the three-quarter basically of the NPE composed by UTP. I would go directly to the capital on page 35. Here you can find the capital composition. We start at 10%, as stated, Common Equity Tier 1 fully loaded in December, which was 11.5% pro forma. Through the increase, we went through to 10.9%, without the IFRS 16 became 10.8%, to which we are still to add the two pro forma that we will perform during the second quarter, which are related to the joint venture of the NPL platform, accounting for 24 basis points, and the agreement with Crédit Agricole on Agos accounting to 80 basis points. All in all, we have 11.8% of pro forma fully loaded compared to 11.5% of last quarter.
The same apply also to the phase-in, which is growing to 13.7% compared to 13.5%. Once we have devoted two years of our activity to restructuring and bettering our balance sheet, now we feel, as we mentioned many times, that it's time to become more profitable. We are moderately satisfied of the results we reached, but very committed on bettering the results through bettering core revenues and still keeping under strict control operating cost and cost of credit. This is all for me. I think we have half an hour for the Q&A section.
Excuse me, Mr. Castagna. We will now begin the question and answer session, which is reserved to analysts only. Anyone who wishes to ask a question may press star one on their touch-tone telephone. To remove yourself from the question queue, please press star two. Please pick up the receiver when asking questions. The first question is from Jean-Francois Lopez of Goldman Sachs. Please go ahead.
Hi, good evening. Jean-Francois Lopez from Goldman Sachs. The first question I would like to ask is about NII. I was looking in the mix of your loan book. There has been very strong growth in mortgages, but then there has been relatively marked declines in all other categories of loans. I guess part of that is responsible for the margin erosion year-over-year. The question I wanted to ask is, do you believe that this mix has further to shift, and do you think that the other portion of the loan book continues to shrink when the rest continues to grow? Do you see continuing erosion of margin on a product-by-product basis? For example, your competitor, Ubi today, was showing good margin evolutions, but then they have shrunk their loan book. You've got obviously margin erosion, but strong growth.
That is what I'm trying to compare and contrast. The second thing I wanted to ask is, could you please remind us of your capital headwinds to come in terms of EBA guideline and other TRIM or anything that might have to come in the next two to three years, and where you believe your steady state Common Equity Tier 1 ratio has to be. Where you want to run the bank. Thank you.
Okay. For NII, I think we were quite steady in terms of asset spread. Of course, I saw the announcement of other banks. Basically, at the beginning of year was a bit easier before the TLTRO announcement to increase interest rate. Now we are having some more resistance. Having, of course, the commercial network very much devoted to loan growth, of course, maybe we are paying something more. Again, it's the first time we don't have any reduction in the asset spread, so we are keeping very well. As you can imagine, the spread that were maturing most of time comes from higher spread. I would say that I am quite convinced that we can have also NII increasing during the year because we are building up on comfortable spread.
Of course, there is also retail mortgage portion, in which there is quite a competition in the market. We have raised from 25 to 30 basis points the interest margin. We are having some good results. Of course, the global spread of mortgage is lower than for corporate.
You think the mix effect is still going to be penalizing going forward or not?
I don't think so, because again, if we can keep the spread, the asset spread, and the rebound we had encourage me to say that we can still have some good result in this respect. With also increase in volume, we should have some increasing in NII.
Okay.
For TRIM, you are talking about two, three years. It's quite difficult to give you a precise answer because there are many things that are coming. Basically, I can give you a guidance for this year. I have always said that we will be in the region between 11.5% and 12%. We are already 11.8%, we hope that with profitability we can generate to the end of the year, we can easily offset the TRIM effect that could come.
EBA, can you remind us?
EBA, basically there is only the AMA effect. Sorry, just a minute. Yes, 25 basis. Again, inside what we expect to generate as profitability this year.
The total EBA that you expect based off the regulation over time is how much?
Total in this year or the next three years? I don't understand.
The total impact, the cumulative total impact of EBA guideline.
No, I don't have any other guidance rather than the one we know that is 25, 30 basis points.
Okay. Thank you.
Thank you.
The next question is from Andrea Vercellone of Exane. Please go ahead, sir.
Good evening. Four questions. First one is on commission income, where I share your view that it is quite disappointing. Can you quantify the amount of upfront fees that you have in this quarter, those that were in Q4 and those that were in Q1 last year? Second one is on funding. Can you share with us the average yield on the maturing medium and long-term bonds for 2020 and 2021? Third is on cost of risk. Actually, quite good level in the quarter. Given that you are not selling anything anymore or you're not planning to sell anything anymore, not that you have anything anymore to sell, if inflows remain at the current level, how optimistic would be to just annualize Q1 in terms of provisioning level? Finally, just a detail, the PPA turned negative in the quarter.
Is that what we should expect going forward, i.e., a negative contribution to the P&L rather than a positive? Thank you.
Let me start from the last one. For the PPA, the impact is still slightly positive, as you can see on page 12. Of course, there is a big reduction in-
Excuse me. I mean at net income level.
Huh?
Not at NII level.
At net income level should be negative for EUR 3 million. That's all. Cost of risk 57 basis points. I would say that is below what we expected because you know that we had a guidance of 65-75 basis points. I just mentioned to you the three drivers that we think are determining the cost of risk. Currently all the three of them are very encouraging. Let's say that we have some founded hope that we can be better than the guidance. The funding average yield is two and a half, 2.5%. With the recent funding that we had, we can be inside this average cost. The commission is exactly the difference that you have, the EUR 50 million difference. Basically, we had EUR 50 million this quarter, EUR 50 million last quarter, EUR 100 million the first quarter 2018.
Out of this, as I was mentioning before, around EUR 10 million comes from the certificates that we have under NFR.
Thank you.
Thank you.
The next question is from Alberto Cordara of Bank of America. Please go ahead, sir.
I have three questions. The first one is related to the fees. When I look at the past, there is always a positive seasonality, particularly for Banco, even more than for the old BPM, in Q1 where the network is placing a lot of products, and you do a lot of placing fees. You'll be missing this quarter, which reflect probably also some of the external market condition that you cannot control. My question is, will we see this year a seasonality similar to what we've seen in previous years, a strong Q1 and then weaker Q2, Q3 and, well, Q4 is always a bit of a question mark. This product placing will take place over the next few quarters? Another question is related, I do apologize for the question, but I think this is also something people talk about.
In relation to this diamond mis-selling, you took a strong provision in Q4 last year. The question is if you feel comfortable that that is the end of it, or if there is a risk that more may be needed in the course of the year. Finally, the last question is, if you can remind us the sensitivity of your capital to an increase of 100 basis points in sovereign spreads. Thank you.
Okay, Mr. Cordara, for the fees. Luckily enough, I already told this on the Q4 presentation that this year we would expect a completely different curve, starting very low in the first quarter and gaining quarter by quarter. As you know, we have completely changed our strategy in advisory with our clients. Nowadays, we are going more on recurring fees rather than upfront. As you were mentioning before, that was peculiar in one of the two banks to have a very strong upfront in the first quarter. We completely changed this attitude also to be MiFID compliant. I would rather expect, as I can already anticipate, that compared to the first three months, already April and the beginning of May are 30% better than what we registered in the first quarter. Basically, we are growing.
We are building up, again, volumes in order to convert into asset under management. We needed some help also from the market because in our strategy of advisory by portfolio, there are more opportunities for our network to sell when the market goes a bit better because we have more opportunities to propose swap of investment to our clients. Meanwhile, when the market goes down, it's more difficult to make this kind of transaction. Now we are experiencing very good conditions. Hopefully, as you were saying, there are also external conditions that can help or not this approach. Of course, we are also issuing new products which are more compliant with the need of security, aversion to risk, and willingness to be liquid that our clients are showing the last months.
You were also mentioning the diamond, I have to say that, as you know, in the first quarter, there was also some news related to that, which impacted on our top management, in many commercial managers. Of course, this also may have contributed to have a slowdown in the commercial activity, which again, as I was mentioning before, already since April is performing much better. The third, the sensitivity to the spread, 100 basis points of increase of spread in BTP has an effect in our Common Equity Tier 1 of about 23 basis points.
Thank you very much.
The next question is from Giovanni Razzoli of Equita. Please go ahead, sir.
Good afternoon to everybody. I have two questions. If I may, one is a clarification on the slide number 12, that is the NII trend. If I look the headline number, EUR 555 million in the Q4 and EUR 505 million in the Q1, the decrease seems significant, if my understanding is that there are a couple of components that impacted this trend. The EUR 23 million decrease in other components reflects the lower contribution from the PPA as a result of the sale of NPL. Is this understanding correct? On the remaining decrease, there is a EUR 12 million related to the calendar effect. That's my understanding of the trend in NII. If I look at the spread, the spread is flat quarter-on-quarter. The volumes are there.
The spread also incorporated a mixed effect, there is nothing really particular in such a big headline decrease that one may see from, again, the headline number. That's my first question. The second one, you've mentioned that the government bond portfolio has increased also because of the activities of Akros. I was wondering whether this reflect the market making activity on government bonds, shall we consider these increases temporary going forward? Thank you.
I agree. On NII trend, you were right. We have EUR 29 million coming down from the PPA effect, EUR 12 million for the calendar, and the rest is almost EUR 14 million. We had, as we mentioned in 4Q, some contabilisation of single asset interest originally due for the full year, which was released in the Q4 for around EUR eight million. I would say that all like for like is almost the same performance. As far as the Akros portfolio, Akros is only engaged in trading activity. They have not banking book in the traditional way. Basically, quarter-on-quarter, you will see some different exposure in the trading of Akros, it's only temporary.
Thank you.
The next question is from Riccardo Rovere of Mediobanca. Please go ahead, sir.
Good evening to everybody. Just one question for me. May you please break down the impact of the various elements that drove the increase in Common Equity Tier 1 ratio from 10 to 10.8%, which looks fairly remarkable. Thanks.
Thank you. Just a minute. I'm getting all the figures. Starting from fully loaded, we have 20 basis point from dividend payout from Agos, 26 basis point from the ACE and the GACS, 25 basis point from the HTCS bettering our reserve for EUR 130 million, 11 basis point for Nexi, and of course, reducing 12 basis point for the IFRS 16 effect. Are you clear?
Very, very clear. Thanks.
Thank you.
The next question comes from Hugo Cruz of KBW. Please go ahead, sir.
Hi. Yeah, thanks. You said you'll have a new business plan. Could you just give a bit of an indication what will be the focus of the new business plan, what levers you think you can flex in the next two to three years? Basically, that was it. Thank you.
Of course, we have a split. Again, as I was mentioning before, there is the portion of residential mortgages which are in the range of 150 basis points. Meanwhile, of course.
Sorry, I'm not sure. Perhaps you can't hear me well. I was asking about the new business plan, the strategic plan that you expect to approve by the end of the year. I was just wondering what will be the focus of that plan in order to improve profitability, and what key levers you think you can still flex to improve the ROE of the bank. Thank you.
Of course, for the new business plan, you have to wait until the presentation of the third quarter results. It's not because we don't want to give you information. It's just because, as I was mentioning before, we are really experiencing for this first year, I would say, a normal year, without extraordinary transaction, without devoting energies to the risking, to rebuilding balance sheet, and so on. Basically, we are trying to devote all our interest to the growth of the commercial activity. We have to understand also for us, of course, which kind of market and opportunity we can have during the year. Then we will give you, of course, all the detail with the presentation on the business plan.
For sure, we have just mentioned something that it comes quite easily to my mind, is that we have to rebuild a proportion in direct funding and indirect funding, in which we have at least EUR 10 billion to be utilized in order to foster the growth of asset under management already in our balance sheet. Of course, we have the two specialized bank, Agos and Aletti, which basically started this new year in their new activity. We will have some more clue about their opportunity going forward.
Okay, thank you.
The next question is from Ignacio Cerezo of UBS. Please go ahead, sir.
Yeah. Good afternoon. Quick couple of questions from me. First one is on asset quality. I think I understood 1.2% default rate in the quarter. If you can clarify whether that number is in gross, and you can give us Q1 last year and Q4 last year. The second one is asking whether the 4% year-on-year decline of the cost base you have booked this quarter is sustainable into the rest of the year. Thank you.
Starting from the cost, I think we have shown during these last two years that we are keeping to a strict control of cost. Of course, with 2018, the majority of maneuver we had to implement for the business plan were done, but still, we have to get some improvement from operative cost and personal cost. I think that our target is definitely to stay on this pace of cost cutting. In terms of default rate, as I mentioned before, the current ratio is 1.2% and down from 1.9%.
Thank you.
The next question comes from Domenico Santoro of HSBC. Please go ahead, sir.
Yes. Hi, good afternoon. Thanks for the call. A couple of follow-ups from my side. First of all, on the 26 basis points that you accrued in the quarter as a result of the deconsolidation of risk-weighted assets related to transaction. This is regardless of the use of the GACS, so just wondering what could be the plan B differently. You already hinted at something in the last call. Then on the LGD waiver, any update on this, given that all the final details now are out in the banking package? I remember in the last call you gave some indication about the recurrent profit for this year in terms of gross operating profit. I just wonder whether you can give us an update on this qualitatively or numerically, just to understand where we could land in 2019. Thank you.
If I understood well, Mr. Santoro, for the completion of the total GACS, what is remaining now is only 24 basis points coming from the disposal of the platform, having already factorized the guarantee of the GACS on the FWA. Was that the question?
You already basically included the risk of the assets, right? For the consolidation.
Yes, of course. This is already done. What we still have to put into the Common Equity one is the disposal of the platform.
All right. Okay, clear.
The second one, a bit difficult to give guidance, but again, we think we are going through what we announced the last year. In terms of NII, I can confirm that we feel that with this increase in volumes, we can reach the target we told in the last quarter, which was more or less in line with last year, of course, reducing the extraordinary effect deriving from the risking. For commission, we think we can be able to recover the slight decrease we have registered in the first quarter. I would say that the consensus I think is in line with our expectation.
The next question is from Christian Carrese of Intermonte. Please go ahead.
Yes, good afternoon. Just a clarification on the outlook you gave at the end of the presentation. You are expecting an increase in profitability in the coming quarters. The EUR 150 million net profit had two different one-off, one positive, one negative, the one Nexi on the positive side and the Single Resolution Fund on the negative side. I was wondering, you are expecting something similar for the coming quarters in terms of net profit? If you can remind us what is the impact of the DGS in the coming quarter. The second question is on the distribution agreement, the new distribution agreement with Cattolica and Anima. It was an old one. Can you give us an update on how is going the process of the new agreement in terms of new production and so on?
The contribution is EUR 41 million net negative for the Single Resolution Funds, Positive EUR 54 million from Nexi. Of course, as you know, Single Resolution Funds apply basically only in the first and the third quarter.
DGS?
You are asking last year how much it was?
Yes. This year, what are your expectation for DGS in the third quarter, maybe?
Last year was EUR 32 million. I don't know really how much could be this year yet, but more or less the same. This year we have some saving in this first contribution. You were asking about the different activity with the asset management or bank assurance?
Both.
Okay. Now, basically, again, also if I mention, we have a slow start in both the activities, not in the bank assurance, non-life in which we are growing very well, but in the life production, of course. We have obtained some new product from our joint venture. During this last week, we are placing very well new production, also . We are recovering, having what our clients ask, which is protection, safe product, and possibility to have opportunity to invest in asset which are not very leveraged. Again, the start was not as we expected, but we are already recovering since April.
On the overall profitability, you would expect something similar to the first quarter, maybe at the bottom line?
As a guidance, you mean?
Yes.
Basically, we see what we read on the consensus. We think we can have this EUR 550 million per quarter, which is something sustainable for us.
Okay. Thank you.
Gentlemen, there are no more questions registered at this time.
Okay. Thank you very much for your question. Of course, our people is at your disposal for any further clarification. Thank you very much. Good evening.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.