Franchise to having concluded the acquisition in April. The ROE and the ROI are stand at 16.7% and 22.1% with full consolidation of Anima Holding. Let's say that we are ahead of the planned trajectory. Non-interest revenues' pro forma, including Anima Holding, already represent 49% of total revenues versus our target of 50% by 2027, so almost there. The same, I would say, that if we include the pro forma of Anima Holding Q1, the net income of the group would stand 2% above the average quarter of 2027, so with a big anticipation over the plan. Profit from continuing operation pretax are higher than again the average quarter 2027, which is 788. This quarter, including Anima Holding, we are at EUR 827 million. These results have been driven by very strong commercial results across the board despite Euribor decline.
Let me remind that year- on- year, the Euribor declined 136 basis points, but notwithstanding that, total revenues went up to EUR 1,476 million [Foreign language] EUR 1,434 million in Q1 2024. Customer loans went up 2.5% quarter- on- quarter. Investment products year- on- year are up 15%. We also managed to reduce general cost and provision with the cost income, which went down from 47% - 44%, and the cost of risk down from 32 basis points to 30 basis points. All these results allow us to anticipate that we are already changing our guidance for 2025, which will be increased by EUR 1.7 billion to EUR 1,950 million, which, by the way, is the result we expected for 2026. On page seven, the fast execution of the plan has been the driver for such overperformance and the possibility to reach targets in 2027. Net income again up 38% year- on- year.
Including Anima, we are 2% higher than the quarterly target of 2027. Strong volume growth, EUR 2.4 billion in Q1 [Foreign language] the forecast of 1.7%, which we had for the entire 2025. The increase is 2.5% [Foreign language] 1.7%, but 2.5% is related only to the first quarter. The same is for investment products, 15% year- on- year, up to EUR 6.7 billion [Foreign language] EUR 5.8 billion of 2024, which was already a record number. Let's consider that the average target for 2027 would be EUR 5.3 billion per quarter. Good improvement in asset quality, down from EUR 3.6 billion to EUR 2.8 billion. Cost of risk reduced to 30 basis points with a target of 40 basis points. Also happy to confirm that Anima acquisition has been anticipated of one quarter having been effected by April 2025.
The contribution from non-interest revenues, which was one of the main input of our business plan, is already starting to give very good results together with a good control on cost. Total revenues again were up 2.9%, notwithstanding a lower NII for around EUR 50 million year on year. The total contribution of Q1 in terms of total revenues is already higher than the average of 2027 forecast. The same is for the contribution of non-interest income on total revenues. The target with Anima was 50%. We are, including Anima pro forma, 49%. The same 1% is without considering Anima in this quarter, neither in average quarter in 2027. Almost there also for that. Operating costs very good, down 3.5% with, let's say, cost of staff yet to take full advantage from the early retirement scheme, which will impact mostly in the second part of the year.
The cost income record at 44% [Foreign language] 45% of the target plan. Total provision went down 30% with cost of risk two basis points lower than last year, or the Q1 of last year, and with an advantage of 10 basis points [Foreign language] the target of 2027. The volume growth is confirming our capability to generate shareholder value through continuing support to the Italian economy. Basically, all the increase in customer loans is related to non-financial corporates, almost EUR 2 billion in this regard, preserving also the high quality of the stock, which still is secured for more than 50%, half and half, basically state guaranteed and collateralized. This figure became 64% of secured if we consider SME companies. Moreover, it was very good, the trend in new lending.
We passed from EUR 5 billion in the first quarter 2024 to EUR 6.2 billion in the last quarter 2024 to EUR 8.2 billion in the first quarter 2025. I can anticipate that we overcome EUR 10 billion by April this year. The difference quarter on quarter is more than 30%. With good results also in terms of ESG-related medium-term financing, which stood at EUR 2.4 billion in Q1 versus a target for the year of EUR 6 billion. Very well ahead. Total customer financial asset year on year up 3.4%. Basically the same figure that we registered in December 2024, despite EUR 1 billion of negative market effect, which we experienced during Q1 2025. This growth was supported by a good net flow both of asset under custody and asset under management for a total consideration of EUR 2 billion. Some words about Anima.
I already said we will consolidate Anima Holding by Q2 2025. Basically, we reached total customer financial asset together with the bank and Anima Holding to the level of EUR 377 billion. The key figure of Anima Holding standalone will be asset under management of EUR 200 billion, net income of EUR 72 million in Q1 2025, EUR 30 million which will be compensated in the integration, the consolidation with our figures. Let me remember that Anima Holding has, apart from the relationship with us, which is the most important, something like 100 other distributors, 1 million on client, and more than 300 investment professionals.
The contribution to the group coming from Anima is an APS accretion of more than 10%, a return on investment of 13%, the possibility to reach 50%, as I mentioned before, in terms of non-interest income of total revenues and the contribution coming from net income from wealth management, asset management, and protection in the region of 35% of the total net profit. One of the most ambitious targets of the plan with the wider gap to fill when we presented the plan was the revenues coming from key product factory. In Q1 2024, we had EUR 222 million coming from this activity, but with the completion of Anima, we reached already in Q1 EUR 390 million versus a target of the plan of EUR 430 million, which is a 5% growth in terms of CAGR.
Let's consider that without Anima, because it's not consolidated in Q1, we already had a growth in the other product factories Q1 2025 to Q1 2024 of more than 20% year- on- year. Let me remind also that the insurance and payment business will go at full speed only from 2026. Further improvement also in asset quality, apart from the reduction I already mentioned of EUR 800 million in terms of gross MPEs, which comes from a very good and solid default rate below 1%, a reduced cost of risk to 30 basis points. The capability of the bank to process already out of EUR 1 billion of disposal, which were in the forecast of the business plan, we already reached EUR 800 million of disposal. The remaining EUR 200 million will be completed by this year.
Let me say on the right part of slide 12 that if we exclude the state guarantee loans, MPEs of course, we are net MPE below 1%, 0.8%. Just some quick word about capital. We confirm that we can stay above 13% in terms of target after Anima, also without the no Danish compromise. Mr. Ginevra will go through the details of this figure with MDA Buffer, including already, of course, the Basel III impact, which allowed us to close the Q1 at 15.3%. With an anticipation of the no Danish Anima impact of 53 basis points coming from the capital increase we provided to BPM Vita in order to complete the acquisition of Anima. The MDA Buffer stood at 459 basis points. Also in this respect, we can confirm that throughout the plan will be above 350 basis points.
Very comfortable also LCR and NSFR and MREL. Let's go to some of the numbers in detail. Q1 net income again, EUR 511 million coming from a good tenure in terms of net interest income, - 5.5%. If we consider full funding cost, including certificates, the gap is reduced to 2.9% year- on- year. Fees and commission up 6%. Very good results also from insurance, which grew from EUR 5 million Q1 2024 to EUR 26 million in this quarter, together with the very good net financial results, which was boosted not only from the lower cost of certificates, but good performance in the trading. Total revenues again, 3% higher than last year, notwithstanding EUR 50 million less in NII. Operating cost down 3.5%, provision down 30%, which led to a pre-tax profit of 15% higher than last year. A net profit again of 38% higher than last year.
I have been told by my colleague that we should be around EUR 70 million above the consensus for this quarter. In terms of consistency of our growth pace, on the right side, you will see in the last two years some of the most important figures characterizing the results. Net fees and commission went up 12%, revenues up 18%, cost income down 7 full points, a reduction of 45% in LLPs. Again, net profit from continuing operation up 58%. Let's go through some of these figures. NII already mentioned that 5.5% lower year- on- year will be 2.9% full funding cost.
This also considering that we were able during Q1 to reduce further the NII sensitivity, which started in 2024 at EUR 300 million per 400 basis points, then went down to EUR 250 million in Q4, now is down to EUR 200 million and EUR 150 million if we consider also the contribution of certificates. On the right side, you see the asset spread and liability spread, which the asset spread basically was quite consistent if we consider the good growth that we registered in loan growth. Liability spread was much better than the reduction of Euribor. As you can see, year on year, the Euribor was down 136 basis points. We went down in liability spread only 100 basis points. The same proportion is more or less for Q4 2024 versus Q1 2025.
How we were able to maintain a good net interest income because to the figure of Q1 2024, if we would have applied the full predicted sensitivity, we had gone down EUR 93 million. Through managerial action and some other volume effect and other, we were able to register basically half of the predicted reduction. The managerial action itself will count for mostly half of this figure, around EUR 20 million. Let me remind that it is the same experience that we had basically in each quarter of last year. Throughout the business plan, we have forecast a total of EUR 100 million of positive effect of managerial action throughout the completion of the business plan. In the next 11 quarters, we have another EUR 80 million to optimize. We are on the good road also in this situation. What are the managerial actions? You know very well.
The replicating portfolio is up from EUR 22 billion - EUR 25 billion with an average yield of 2.1%. Very solid and the duration of 2.8 years. We further slightly increased the share of indexed current account from 34% - 36%. We are also experiencing a continuous reduction of spread in the newly issued wholesale bonds, which allow us to take advantage up to now of each new issue [Foreign langauge] the previous issuance. Net fees and commission up 12% on last quarter 2024, 6% year- on- year, but is almost 10% if we consider that we do not have basically any more contribution from fiscal credits and instant payments, which amount for the first quarter 2024 at around EUR 15 million. Of course, notwithstanding that, the commercial banking fees, the commercial other fees apart from investment product fix fees are still slightly higher than Q1 2024.
They would have been much higher if we would have considered the fiscal credit commission. Let's spend some word about investment product fees. As I mentioned before, we had a big increase in placement of investment product, plus 15% year- on- year. We were able to manage the best products in terms of commission with an upfront which grew 29% year- on- year to EUR 106 million versus EUR 82 million in 2024, and a slight increase of 5% also on running fees. Let me also stress that another quality of fees that we emphasized during the business plan presentation, which are the fees coming from specialized activities, corporate investment bank, structured finance, traders for finance, and so on, went up from EUR 61 million for Q1 2024 to almost EUR 80 million for Q1 2025.
Cost income, very good results with the cost income down to 44%, a reduction in cost of more than 3%. Again, we are not yet experiencing the reduction of the staff, which we mostly made during Q1. Let's only consider that we had almost 750 people out in Q1 through the early retirement scheme and the early retirement with new hiring for a bit up 300 people. This, of course, will make a very strong effect in the region of EUR 30 million-EUR 40 million in the remaining part of the year. We will experience further reduction also in cost of personnel. DNA and other administrative expenses, also in this field, we were able to manage very carefully all our expenses. For sure, I don't think we can stay at this level for the next quarter, but [Foreign language] the business plan figure, we are much below the target.
Asset quality, I already mentioned the reduction of cost of risk and MPEs. Let me just mention the default rate below the figure of last year, 10 basis points. The Q rate 1.5% better than the figure of 2024. Also a very strong support in terms of coverage, where at 57% in terms of bad loans, 33% in terms of OTP. If we do not consider the state guarantee, which of course are not covered at the same level of the other MPEs, for the other MPEs, we have a coverage of 74% for bad loans, 42% for OTP. Very solid and consistent. Let me give the floor to Eduardo for the finance part of the presentation.
Thank you very much, Giuseppe. Very quickly on page 20, to highlight that we have increased the level of the size of the banking book while preserving EUR 46.7 billion, while preserving the split between the two components, amortized cost and fair value of the comprehensive income, with the amortized cost remaining at a stable 69% of the total of the banking book. Similarly, also the share of Italian bonds on the total of the banking book, or the total GOBIs and supranational bonds, is in the area between 35-40%, historically maintained, and to be precise at 38.2%. The non-government bonds are stable at slightly above EUR 8 billion. Page 21 shows the impact of the financial part on capital and on P&L. Capital reserves have been slightly improved in the first quarter from EUR 509 million - EUR 498 million.
As a matter of fact, they have more significantly improved in the first month of the second quarter. Now the position is EUR 455 million. The increase in the basis point value of the fair value of the comprehensive income portfolio is consistent with the increase in size, and it is also related to the move from EUR 1 million - EUR 2 million. It is also related to the intention to preserve a net interest margin in a scenario of declining rates. Turning to the trading contribution, these went up from EUR 9 million one year ago to EUR 46 million. The increase is clearly to be split into two components. The component related to cost of certificates is continuing to benefit from the trending reduction in interest rate, mitigating the overall sensitivity of our P&L that has been shown in a slide on NII.
From EUR 75 million - EUR 50 million, this is again over around one third. The rest of the trading result is based on other NFR component, especially in terms of the global market activities, so structuring of derivatives products or certificate products that is then sold through our network. On top, positive results in general from trading. This part of the P&L is not currently taking the advantage of dividends to be paid by Monte Paschi. The participation in Monte Paschi will further provide food for this component of the P&L in the second quarter for a total that is quite close to EUR 100 million. Next page on liquidity and funding. Very quickly, the highlights have been already presented by Giuseppe. The liquidity position is EUR 49 billion. Direct funding is stable at around EUR 132 billion.
Positive news from rating agencies with DBRS position in the bank in triple B high and starting to improve in the outlook to positive. Market conducive to sustained insurance activity also in this quarter. As already mentioned, an activity that allowed the bank to reduce the overall spread on the issued bonds. On LCR and NSFR, nothing relevant to comment. Maybe interesting to mention that MDA Buffer has absorbed very easily the impact of Basel III, Basel III Plus, remaining at an amount well above 9 percentage points. Talking about Basel III or III Plus, the next page, page 23, provides the details on the evolution of capital during the quarter. Let's go step by step. We started the quarter at 15.5.
We have received a contribution from performance, so the net profit from P&L, which is 92 basis points, and a distribution including 81 coupons of 77 basis points, meaning that P&L created, despite a strong level of payout of 80%, created still 15 basis points of organic capital generation in one quarter. On top, organic capital generation coming from sources different from P&L is given by the DTA, 16 basis points, and fair value of the comprehensive income reserves. Here we have future potential capital that amounts to more than 300-325 basis points, of which worth noting that 175 basis points is to be transformed into real capital by the end of 2027, so during our planned horizon, providing further comfort to our capital position overall.
As anticipated to the market in the previous quarter, we have produced an important effort to optimize capital position in the participation area and in other managerial actions. Participations leading to 17 basis points of additional capital and the managerial actions, including synthetic equalization for 46 basis points. Capital reduction coming from regulatory headwinds, including Basel III Plus and RWA increase, so volume increase has been contained in 76 basis points, leading to a total pre-Anima transaction of 15.30. The value of the fully phased position in March is 14.76, with 53 basis points that is the impact of the capital increase in Banco BPM Vita to fund the Anima transaction, which is an anticipation of the overall impact of the acquisition of Anima in the scenario where the Danish compromise is not granted.
What I mean by that is that of the overall impact of 268 basis points of Anima, 53 basis points that we anticipate to the market three months ago, 53 basis points has been already anticipated with this capital increase. On top, before coming to the final potential impact, we need to consider also that the participation in Anima is 90% instead of the 100%, which was used to calculate the 268 basis points, leading to a saving of the order of magnitude of around 30 basis points, as anticipated in previous presentations to the market. With this in mind, I think it's clear that we are very close to maintain the 13%, which will be transformed into a delivery of the target, taking into account the contribution from current capital generation in the next quarter.
MDA Buffer is 559 basis points, RWA at EUR 65 billion after Basel III Plus impact. Now, again, if I can leave the word to Giuseppe for the final conclusion, please.
Yes. I think on page 25 would be, I think, very useful for you because I was mixing during the presentation with Anima and without Anima. Let me make a quick reminder of the figure of the actual figure of Q1 2025 without Anima. The pro forma full consolidation of Anima of the same figure of Q1 compared on the right side of the slide with the average quarter of 2027, the final year of the plan, of course, including Anima contribution. You can see that total revenues in terms of pro forma, including Anima, are already higher than the average of 2027.
The core revenues are at the same level, EUR 1 billion, 561 million is the same level of the forecast for 2027. Still, the EUR 40 million missing, you remember, from the fraud factory, but we are going at the speed and the pace that will allow in the next 11 quarters to easily reach and overcome the target to 2027. In doing so, in completing the 50% of non-interest income coming from product factory and non-interest income on total revenues. Operating costs are already at the level of the 2027 quarter, EUR 703 million [Foreign language] EUR 697 million, as is shown by the cost income ratio, which is 44% at the same level of 2027, and the cost of risk, which is still lower than the target, 30 basis points [Foreign language] 40 basis points.
Net income, all in all, as I mentioned before, is 2% higher than the average quarter of the target in 2027. Also, in terms of business mix, I think we have done a lot of road during this first quarter, and especially if we consider the pro forma consolidation of Anima, you can see that in terms of breakdown of net income by business mix, we have been reduced to 60% of the commercial banking activity. We are at 10% in terms of specialty banking solution, but we grew already to 30% coming from wealth and asset management plus protection. We have still this 5% of increase [Foreign language] the planned target, which will come by the development of the many product factors we started in 2024 and the contribution coming from integration of Anima.
This is very important for us because it's not only the evidence of the results that we can easily reach in 2027, but also gives the idea of the transformational pattern that we have done during this year in transforming a bank which was two-thirds led by commercial activity to a bank which will be led 50% by commission coming from product factory. This means that with the results will be much more replicable, the bank will be more capital-light with a lower risk profile. All in all, we feel that also the multiple at which our stock will be considered should increase thanks to this better positioning. On page 26, why are we so confident to reach our results of the target?
First of all, because we are confident in increasing our guidance, but the fast execution and the proven track record of delivery give us full confidence and full commitment from our management to reach the targets. We made the last two plans that we, an example with the last two plans we presented on the left side of the slide in 2021 and in 2023. In both cases, we delivered in advance, one year in advance and two years in advance for the last plan. As you can see, we had a target of EUR 740 million in 2023 and EUR 1 billion 50 million in 2024. Basically, after one year, we were already higher than the target in 2023 with the actual 2022. In 2023, we overcame the 2024 target. This came with a fast start, but not as fast as the one we have done this year.
The second example is for the plan that we have recently reviewed in February this year. This was the plan presented in December 2023. As you may remember, in one year, we were already EUR 300 million ahead of the forecast. The guidance was EUR 1 billion, 360 million. The target 2026 was EUR 1.5 billion. After one year in 2024, we were already adjusted at EUR 1.7 billion. In this case, we had a fast start, EUR 370 million in Q1 2024, which was higher than the guidance for 2024 and slightly below the guidance of the last year of the plan. Let's go to the current plan on the right side. The current start confirms the capability to execute very fastly our projection. As you may remember, the target for 2026 of the current plan is EUR 1 billion, 950 million, and for 2027 is EUR 2 billion, 150 million.
We have had the first quarter, including Anima consolidation, which stands at EUR 550 million, which is 13% higher than the forecast in 2026 and 2% higher than the forecast of the average quarter of 2027. If you exclude Anima on the last, on the bottom line, you see that the advantage that we kept is almost at the same level, even a bit higher [Foreign language] the results done in Q1 and average of 2027. Again, fast start, proven track record, commitment to delivery allow us to present this very good set of results, confirming not only the capability to reach the plan, but also the strength of our capital tenure. This has encouraged us to present the new guidance on net income from EUR 1.7 billion - EUR 1 billion, 950 million.
This will come notwithstanding we are considering Euribor 30-40 basis points lower than we considered in February at the presentation of the guidance. NII at full funding cost will be mid-single- digit lower than 2024. Net fees and commission, of course, will experience strong growth thanks also to the Anima contribution, double-digit growth, and a good single-digit reduction also in cost income and in provision, which lead, of course, to this EUR 1 billion 950 million. Q1 results, we feel, are already in line with expectation that we have for the planned target in 2027. We feel really that the reference point, this would be the reference point for any standalone valuation of the bank. I give you the floor for any Q&A, which I will be happy to answer with Eduardo.
Thank you. This is the conference call operator.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. To remove yourself from the question queue, please press star and two. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and one at this time. The first question is from Antonio Reale of Bank of America. Please go ahead.
Hi, good afternoon. It's Antonio from Bank of America. I have two questions, please. My first one is on loan growth. You're clearly in the wealthiest part of the country, and that might explain part of the strong activity levels when it comes to volumes, but you've been gaining market share, growing, performing loans this quarter.
Can you talk a little bit more about what you're seeing both from your clients on the network and from your competitors, and to what extent the market share gains can come without compromising price discipline? That's my first question. My second question is on organic capital generation, please. If I may, before I jump onto that, a quick clarification on your capital ratio pro forma after including Anima at 90%, because if I'm not mistaken, you would be at around 12.9% CET1 this quarter. I wonder if that's correct. With organic capital generation, you'll be above 13% from the next quarter. That's a quick clarification, hopefully. I come to my second question, which is I'd like to dig a little bit deeper into the drivers of organic capital generation. You just posted a very strong net profit.
I think it's your record high quarter with strong core revenues and very low default rates. If I look at your slide 23, after dividends paid, your organic generation, deriving purely from earnings, stands at around 15 basis points, while the majority of the capital growth also going forward, I think, is expected to come from DTAs and fair value reserves. I see there's also strong managerial effort, which I'm sure requires a lot of work. Can you just give us a little bit more color on the quality of this organic capital generation going forward and how much more of this can be sustained? Thank you.
Antonio, long road.
Yes, very good experience this quarter because also we come from, as all the market, from a couple of years of reduction of growth because of the interest rate waiting, the interest rate going down because of the uncertainty that we experience in the geopolitical situation, because of the tariffs situation. Notwithstanding that, the reduction of interest rate that we experienced in Q1 was a boost, I feel, for our client to start to make more demand for credit. Part of this, of course, is also switch from old loan to new loan. As I mentioned, we reached EUR 8 billion of new loan in Q1. This is part of the growth of EUR 2.5 billion, which is not something that we think we can experience all over the year. This is already more than we expected for 2025.
Now we can stay very attentive to not concede any potential advantage in terms of interest rate. The discipline has been very solid. If we are slightly reducing one or two basis points, that spread is because we take care of the quality of the client and of the guarantee scheme that we have made now a habit to have for SMEs. Very happy of these results. Not yet full request for new loans from all the market, but of course, I think our geography helped a lot in terms of growing. Together, let me say also with the willingness of our people and our client to support and to show some interest in the offer of the bank.
Yes, for the second question, organic capital generation, of course, if you anticipate to Q1, the Anima effect, of course, would be 12.9, but because Anima will come in the second quarter, we will be able to generate more capital. Let me give the floor to Eduardo for giving some color on this.
No, what I would say on Anima is, first of all, your math is correct, Antonio. If I simply kind of stop the clock at April 30, then I have also 14 basis points, additional basis points of reserve from fair value other comprehensive income, which is not accounted for at the date of March 30. It is, of course, a dynamic that is generated, I would say, day by day, taking into account organic capital generation that you mentioned.
Yes, the impact of Anima without Danish compromise is to be taken into account, but also the other parts of the capital generation are part of the equation. We continue to be fully confident in maintaining these 13% that was mentioned since the presentation of the plan. On the organic capital generation, yes, 15 basis points is what we achieved this year. Of course, it is not 92 basis points because we think it is worth paying a significant part of the capital we generate or the net profit we generate to our shareholders. That is the explanation of the 80% payout ratio. Fifteen basis points is, of course, despite the 80% payout ratio, which we continue to be committed to pay to our shareholders. On the rest of capital generation, you are right, it is based on DTAs and fair value other comprehensive income.
I already said that this is out of a total remaining total at the date of end March of 325 basis points, 175 basis points by year-end 2027. If you ask for more color, I would say that 50 basis points or 50 something, 50+ basis points of these 175 are to be transformed into capital at the same sequel by end of 2025, with the remaining part split of 140 basis points split more or less similarly between 2026 with 70 basis points and 2027 with 50 basis points. Sorry, the remaining part of 120 basis points. I said 140.
We are really comfortable because now that the bank is producing strong organic capital generation and P&L in this period, not only in this scenario, this not only drives direct increase in capital, but also generates DTA recoveries, which has been for long remained trapped into the previous asset situation of the bank.
That's great. Very clear. Thank you.
The next question is from Noemi Peruch of Mediobanca. Please go ahead.
Good evening. I have one clarification and two questions, if I may. The clarification is on net profit guidance. Did the EUR 1.7 billion include the EUR 160 million capital gain from Anima, or is it only now included in the EUR 1.95 billion? And then my first question on common equity. Could you please update us on the additional benefit from reallocating some of the Anima intangibles between banking and insurance business post-consolidation?
Did you consider the transitional Basel IV risk weight for the insurance business as of now? If so, could you please comment on the impact on common equity with 250%? My second question is on M&A. On the process, I think you mentioned that BAMI would remain part of the consolidation process in Italy, even if UniCredit walks away. Are you potentially open to assess all scenarios, including takeovers, agreed deals, or stake building? Perhaps. Thank you very much.
I start with your first question, which are three questions, if I understood correctly. Guidance includes the capital gain of Anima currently. Of course, when we issued the previous guidance, we had a high-level estimate of the same parameter, which was included as well.
Let me say that overall, this guidance has some margin of conservatism that we now are no longer adopting, given the positive start of the year. Of course, given also the opportunity provided by the fact that Anima itself will contribute to our P&L for three quarters instead of two, which was the original assumption. Anima intangibles, good point. I forgot to mention it in replying to the previous question. Currently, we did not use any smoothening assumption on the non-Danish scenario from reallocation of Anima intangibles from Anima to Banco BPM Vita. It is an option that we are studying. It is a possibility that we have and that, of course, may contribute to further improve the capital position of the bank.
On insurance, we are applying 100% risk weight, and we are expected to continue to apply this risk weight based on article, if I'm not mistaken, 499.2 of CRR, which allows this treatment based on the existing position at the date of, I think, mid-2024, if I'm not mistaken. At the end of the day, we are confident to continue in this fashion. Not 150% for us. On M&A, I believe this is a question for Giuseppe.
Yes, even though I would avoid the first part of your question because, of course, we are under a public offer. I would not talk about retiring anybody. We will see what happens. Until then, of course, we are on this standalone pattern, which is very satisfactory for us. In the future, we will see.
I already mentioned in the past that, of course, we consider ourselves an important part of the potential consolidation in Italy. I think the completion of the product factory makes us as a unique kind of bank with 50% coming from commission and product factory. For sure, there will be room to explore other potential opportunities. Let us be very much concentrated on our standalone situation right now, on looking at what will happen on the offer. You know what we think about the offer is not yet an offer. Basically, it is still a discount. We are expecting something from UniCredit. We will make our decision, which will, of course, be as a leader of the Italian banking system.
Thank you. Just one follow-up on the 250%.
Am I understanding correctly that given your structure, you will never apply 250% on a fully, fully loaded basis of Basel? Thank you.
Yes. Sorry, I had a problem with the mic. Yes, this is our stance given the CRR rule contained in article 4.9.2. Thank you. For 95.2, sorry. For 95.2.
Thank you. The next question is from Giovanni Razzoli of Deutsche Bank. Please go ahead.
Good afternoon to everybody. Follow-up questions on the CET1. You said that you expect after the consolidation of Anima to be above 13%, but the comments that you made bring me to think that you will be well above 13%. You do have the cash flow generation for the next quarter, including Anima. You mentioned the improvement in the other comprehensive income reserve. There is the DTA.
If I'm not mistaken, you mentioned in the past also some significant risk transfer actions, the possibility to move the goodwill to BPM Vita. You are already at 13%, let's say 12.9%. My understanding is that this is an extremely conservative guidance. Where I can be wrong, there could be acceleration or risk-weighted asset, or what could be the other, let's say, offsetting elements to these, in my view, strong achievement, potential strong achievement. The second question is on the commercial performance in terms of placement of investment products, which has been very, very strong, which is EUR 7 billion. I would say that probably this performance was also impacted by some noise around the UniCredit offer, which could have an impact on your network.
So I was wondering whether you can give us some color also from the month of April if this positive trend is also confirmed given the turbulence we had in April. Thank you.
Thank you, Giovanni. Let me take the occasion to answer to your question on common equity. I think you have made some very good observation and comments. Unfortunately, we are stuck to this 13% because the market was influenced by some rumors that going below 12%. We want just to show that since Q1, we are almost there. We are higher than there. Even with the contribution of Anima, impact of Anima will be there. Of course, we have generated, again, track record.
If you look at our eight years of story, I think we have generated 2,000 basis points of common equity year-one all in all in order to risk EUR 30 billion of assets, in order to make all the capital management action we have done to build up our network, our product factory, and so on. Now, unfortunately, I do not know why the market is stuck on this 13%. Maybe we were so, let's say, naive to still stay on this 13%. Let me say that the only justification, we also added 350 basis points of MDA buffer, which is the higher amongst the most important player in the Italian market. Although somebody would have expected some reduction in capital, we are still there and we will be stronger even after. Placement, good question. Also this is one of the UniCredit impact. What can I say?
Of course, we would prefer to work without distraction and without distraction for our network. It's not that easy, especially at the beginning when something happened like that. But as you were mentioning, then you can be able to transform problems in opportunities. Maybe this was the case also for our network. We have experienced a lot of commitment from everybody, from the 1,300 branch, from the 15,000 people in the network, from all the people working from the bank. We are so committed and so certain of our strength standalone. And maybe the results of this quarter testify the capability of the bank. Sometime you need a kick to perform better. And this was a good occasion. April, let me say that was still very good considering the many, unfortunately, bridge that we had during the month, Easter 25 of April, 1st of May, and so on.
You know that in terms of commission, this costs a lot because you cannot perform the day-by-day transaction. I think we were around EUR 1.7 billion in terms of investment product, much higher than April last year. The same, this, I think I mentioned, was in terms of loan production. We are above EUR 10 billion by the end of April. We will continue very steadily to perform well.
Thank you.
The next question is from Manuela Meroni of Intesa Sanpaolo. Please go ahead.
Yes, thank you for taking my questions. The first one is on your net income guidance for 2025. It has improved. You already mentioned some changes in the capital gain on Anima. I'm wondering if you can share with us what you expect to be better compared with what you were expecting in February when you released the first guidance.
We are talking about better volumes, revenues, lower cost, or provision, or anything that you can share with us. The second question is, again, on the common equity tier one. You already generated 46 basis points from managerial action. I'm wondering if you still have further room for other managerial action that you want to put in place in the next quarters. If these managerial actions are going to have any impact on your revenues. Thank you.
Thank you, Manuela. I think on page 27, we gave you some, let's say, indication about the bettering, the many bettering, I would say, of the forecast of the guidance for 2025. Basically, we are confirming that NII is kept at a very solid level of one mid-single- digit reduction [Foreign language] 2024.
On the opposite, we have a strong increase in commission, very good performance in cost income and in cost generally, and a lot of room in terms of guidance in provision. All of these together with the Anima anticipation of one quarter should give us the results that we presented today. For managerial action, I do not know if Eduardo wants to.
Yes, can you repeat the question? I did not understand if you talk about capital or NII, sorry.
I was talking about capital, 46 basis points already in this quarter.
Yeah. What we have done is we originated this capital mostly from synthetic securitizations. We performed two transactions in March. From, how to say it, from the credit portfolio by reducing the capital absorption with maneuvers that you can imagine on our lending, on our credit risk and capital absorbed on credit risk. We can continue.
We do not currently expect to perform synthetic sectorization in the second quarter. We are considering currently additional transaction potentially, if needed, either in the third or in the fourth quarter. Of course, we will continue to optimize the credit portfolio.
The next question is from Delphine Lee of JP Morgan. Please go ahead.
Yes, good evening. Thank you for taking my questions. Just wanted to ask you on NII and the interest rate sensitivity, which is reduced to EUR 200 million. If you could just, if you do not mind elaborating a little bit on this. It seems to me that part of the difference in terms of consensus and revenues that you target is also not just core revenues, but trading and associates and insurance. Just wanted to see on trading, if you could give us a little bit of indication.
I mean, Q1 was clearly very strong, but in terms of the run rate that you would expect and the trends on that. Thank you very much.
Okay. On NII sensitivity, basically, this is the result. Reduction of NII sensitivity, this is the result of the progressive implementation of all the actions that we are producing to decrease the sensitivity of our balance sheet in a scenario of declining rates. If I may summarize the concept, the real name of the game is the usual deposit beta. One year ago, the contribution to sensitivity of total deposit of improvement in cost of deposits, taking into account the replicating portfolio, one year ago for 100 basis points was EUR 360 million. Now is EUR 480 million.
This means that, especially taking into account the increase in the replicating portfolio, I do not have it on top of my mind, the amount one year ago, but it was probably below EUR 20 billion. Now we are at above EUR 25 billion. Plus the restructuring of the deposit portfolio itself, which is now indexed at a share of 36%, leads to this improvement because we have a natural share of deposit repricing in a scenario of declining interest rate or repricing through the swaps in a scenario of declining interest rates that contributes to this reduction in sensitivity. Of course, there are some moving parts in the rest of the balance sheet, but overall, they tend to compensate each other throughout the period that we are considering.
On NFR, what we have and that contributed to the improvement in the guidance is, of course, consolidation of the results of this month. On top, the fact that given that we have two quarters of Anima, part of the contribution of Anima is in NFR for the improvement, sorry, for the contribution of the dividend from Monte Paschi, which is in the order of magnitude of additional EUR 40 million. This explains the fact that we are confident to close with NFR, which will be in the area of, let's say, slightly below EUR 100 million. Part of this contribution comes as well from, again, the reduction in rates because with the current level of rates, we clearly have an advantage in certificates that is shown on page 21. Last quarter, last year, we paid EUR 64 million on certificates.
Now, in a quarter, we paid EUR 50 million. One year ago, we paid EUR 75 million. This is a contribution to the overall target that I mentioned.
Thank you very much.
The next question is from Marco Nicolai of Jefferies. Please go ahead.
Hello. Thanks for the presentation. On commercial performance and on commission, fees were very strong this quarter. If I compare how much the commission income grew compared to the stock, let's say AUM were up 3% year on year, but running fees are up 5%. Also, placements are up 15%, but upfront fees are up 30%. There has been also, let's say, margin effect on top of the volume effect. Can you give us some indications what is driving it and if you think it can be sustainable for the future?
Also on asset quality, still pretty solid and overlays increased compared to the previous quarter. Let's say, if you are in a scenario where GDP growth is lower than expected, can you provide us with some sensitivities on your cost of risk? Just a clarification, is the cost of risk guidance embedding the 2025 net income guidance 30 basis points? Thank you.
Thank you for the question. Very interesting. Let me talk about this, it is very important, the fee increase in terms of yield of each investment product sold. This is the difference of having a product factory on yourself and just distributing product from another product factory. When you have the full range of product factory, you can choose time by time, in the best interest of the client, the most convenient product in your range of the many factories.
Let me make an example. Last year, first quarter was very good. We did not have any life insurance product because Generali and Veravita were not providing us any new product. We were obliged to sell other products that mostly had maybe a lower yield for us. Now, including also Anima, of course, we have a wide range of products which come from the most simple current account to the most sophisticated provided by SICAV or funds from Anima. We can, depending on the capability of the client to be risk-averse or risk premium, give them the best product. We always have a solution for them. This allows us to have a much higher yield in terms of each product that we can sell.
I think that, frankly speaking, maybe the volume is not so sure that we can continue to grow to EUR 6.5 billion-EUR 7 billion per quarter. For sure, the yield of these sales will be even higher than the one we presented because now we have all the ammunition to give the most important, the best product for the client and for the bank. I think it is sustainable. The first quarter results show very clearly this assumption. Asset quality sensitivity, we, of course, have done sensitivity also for 2025, considering a default rate much higher, depending also on a potential decrease in GDP. I think we have 10-15 basis points of increase from the current situation.
For a zero GDP growth in GDP, 10 basis points.
Yeah, 10% for a zero GDP.
Sensitivity on cost of risk is the one that you asked. It's the same question, I think. Asset quality.
30 basis points is not the guidance for 2025. The guidance is higher. As I mentioned before, we have a default rate, which is higher, prudentially, of course.
The next question is from Ignacio Ulargui of BNP Paribas Exane. Please go ahead.
Thank you for taking my questions. I just have two, one on costs and the other one on commercial spreads. Starting with costs, I mean, the performance has been very strong, much stronger than what we expected, at least. That has been largely driven by admin expenses, which are down 16% in the quarter, although they are flat year on year, sorry, quarter- on- quarter. How should we think about admin expenses going forward? What kind of investments are you planning to have into 2025?
The second one is on the commercial spread. I mean, how should we think about the performance of the commercial spreads? It's kind of largely done provided that you're able to stay at a current level, so we should expect some further decline in the coming quarter. Thank you.
Thank you. Thanks for congratulating on the evolution of the bank, finally. On staff costs, or in general, on operational costs, I would say we are very, I mean, optimistic on the evolution of this component of the P&L. As correctly observed, staff costs, sorry, other administrative expenses have improved significantly versus Q1 2024, are more or less aligned, broadly aligned with the level of last quarter of last year. We preferred to be more prudent in the overall evolution fully of this part by inserting some additional expenses.
Frankly speaking, this is an area where we believe we can continue to achieve significant savings and deliver important performance. On wasted, as far as the depreciation and amortization, here you see it is more or less a constant trend, and we have room to sustain additional investment activities. While we talk about costs, let me also clarify that the cost of personnel is still in progress of improving during the rest of this year because starting from the second quarter, we will have the positive impact of the redundancy schemes that have been agreed in December and started only to a limited extent to produce the benefits during the first quarter. This is another area where we believe we can continue to deliver an improvement in performance for the rest of the year.
Coming to the commercial spread, let me talk, I did not understand if you want to talk about deposit or asset spread. Let me talk about commercial spread in general. If you see our page 16, you will see that our commercial spread has increased much higher than the reduction of the Euribor over the quarter. For instance, Q1 2024, we had an advantage in the commercial spread [Foreign language] the Euribor average of the quarter of 37 basis points. Thanks to the maneuver that we are doing on the liability spread and the capability to keep a very good asset spread also in a growing environment, we have increased the commercial spread in the last quarter of 2024 to 58 basis points from 37. In Q1 2025 to 69 basis points.
That means that our capability and view to reduce the possibility to increase NII in an environment in which Euribor was growing and starting to produce a sort of defense line in order to offset the potential reduction of Euribor is working very well. Now the liability spread is reducing much at a lower speed [Foreign language] the reduction of Euribor and having the capability to keep the asset spread at the same level, we have a potential increase in commercial spread meanwhile the Euribor goes down.
Thank you.
Thank you.
The next question is from Hugo Cruz of KBW. Please go ahead.
Hi, thank you for the time. Just two quick questions. One is I've noticed you did not show any loan growth in household loans.
I wonder if there's anything to do with the pricing conditions in that part of the market, if you could please discuss those. The second question on the replicating portfolio, do you still see any room to grow the size of the portfolio further? The duration, 2.8 years, seems a bit low. Why are you not pursuing a longer duration? That's it. Thank you.
No, on replicating portfolio, we are fine with the level that we reached, which was announced back in the previous strategic plan and confirmed in this one. We believe that taking into account the share of index deposits, which do not need a replicating portfolio to improve price sensitivity, overall, we are at around now 60% of total deposits that are hedged either through replicating portfolio or through the contract itself of indexation.
Strategically, we are fine with that, bearing in mind that still the yield curve remains negatively sloped or only slightly positively sloped for the relevant levels. On the 2.1% rate, I believe this is, we are satisfied with that. Of course, we can improve once the yield curve will normalize by simply replacing the backbook with new transactions, more or less leaving unchanged the current volumes. We observe in the market that other institutions have a lower level of yield and a higher duration, meaning that it might be slower for other players, the improvement of the overall profile of the same replicating portfolio. On the loan growth pricing condition, maybe I did not get very clearly the question. Is how we have managed the loan growth keeping good pricing?
Sorry, you were just on household loans. You did not show any growth in household loans.
I was wondering if that's because of pricing in that market.
Basically, the vast majority of the growth was with corporates and SMEs. We are, of course, growing in terms of residential mortgages, but with a very slow start in January, improving in February, very good in March. Let's keep an eye on the next quarter to understand if March will be the average for the next quarter. For sure, there is an improvement. Meanwhile, the interest rate goes down, but still not at that speed that we could have expected with such interest rate. Let's see this quarter what happens.
Thank you.
The next question is from Andrea Lisi of Equita. Please go ahead.
Thank you for taking my question. Good evening. The first one is just a follow-up on the G&A expenses.
You said that, yeah, it can be seen that are close to the one of the previous quarters. If I understood well during the call, you have said that it is unlikely that on a standalone perimeter, they will remain at these levels. What could be imagined as a reasonable average quarterly level for these expenses? Regarding the evolution, the second question is on the NII, in particular, if you can provide us the indication on the lending, the front book versus the back book, and if there is still a positive substitution effect on this side. The very last one, obviously, it is quite difficult to quantify, but clearly in a lower interest rate environment, there is room for higher capital gains.
If it is reasonable or in some way, yeah, can be a reasonable hypothesis to assume an average trading level that is close to the one that we observed this quarter. Thank you.
Okay, thanks a lot for allowing me to clarify, especially taking into consideration the position of Equita in this current overall environment. It's interesting. It's helpful to be able to clarify. On the general expenses, I wanted to mean that we are very satisfied with the current level of the general expenses, which is consistent with the last quarter. In our guidance for P&L, we preferred to stay a little bit more on the safe side so that if needed, we will have room. Again, this is an area where we can compress the overall level of expenses as well as generating additional buffer and additional delivery to improve our overall performance.
Overall, we are kind of guiding for a slight increase, but we have room to compress this item if needed. On NII effect from substitution, of course, it depends on the various products and on the various segments. At a constant mix, I believe that we can say that the backbook is replaced by an equivalent level of spreads from the front book. If the mix changes, it depends on products. For example, mortgages, of course, would have a lower spread compared to SME and small business lending. On the rates, I believe that the current level of rates gives probably more opportunities to further push and improve in commissions because in investment portfolios of our clients, capital gains tend to materialize, helping for additional commercial activity from the network.
Trading, we do not have expectations to translate capital gains in the portfolio into trading because, of course, these capital gains are in the parts of the portfolio that generate higher levels of NII, and we are fine with the long-term contribution of such parts of the portfolio.
Very clear. Thank you.
Mr. Riscassi, gentlemen, there are no more questions registered at this time.
Okay, thank you very much to all of you, and I hope to see you in the next days for some other clarification. Thank you very much.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.