Good evening, everybody. Thank you for attending considering that it's already late in the day. I'll be rather quick on the first slide because then we're going to actually describe them in greater detail afterwards. Let me just on page four talk about commercial performance. Over the quarter, this was not one of the best performances ever, especially as far as lending is concerned.
We lent 2,000,000,000 down by more by a higher percentage compared to last year and this decline was mainly driven by mid and large corporates and this of course was mainly due to the very strong competitive pressure that is still raging upon the market. Consumer credit performed well. Direct funding growth both year on year and quarter on quarter, which of course is already an answer to the many questions we received from you after the various issues and events involving management increased although slightly and checking accounts are not really fully satisfactory, a few thousands, but again stable at about 2,300,000.0. As to the consolidated income statement, the bottom line is a net loss of $313,000,000 net of the fair value option minus $323,000,000 because of course SVO has this type of impact. And this is really impacted by loan loss provisions that really mark a very strong discontinuity compared to its normal trend because already in the first quarter, we started to bring the NPL coverage ratios in line with the targets set by the ECB under the merger plan with Popular de Minano.
By now you know very well that the ECB asked us to further strengthen our capital and ask for NPL coverage ratios to be in line to the top to the leading Italian banks. And with respect to NPL coverage, they want a 49% coverage ratio. As to bad loans, coverage ratio has to go up to 62%. The aim is to actually reduce the nonperforming loan stock down to up €10,000,000,000 maximum by 2019. This being the requirement, immediately after signing the memorandum of understanding, we started to take all the necessary actions to identify the loan portfolios that might be disposed in the coming future.
Of course, this is not a thing that can be done overnight. We are still progressing with these activities and the board has not made any decision yet. In any case, our credit department has practically expedited the review process of a high number of bad loans and the April income statement has been charged with quite hefty low loss provisions which are above average. And Board of Directors since we are well aware of these provisioning policy, decided to actually state or to recognize them already by the March, Considering that part of the provisions referred to a bad loan portfolio that has been valued individually because in excess of EUR €300,000 In the meantime, the Board authorized the temporary use of a collective valuation taking into consideration or taking the historical loss given default as a basis, LGD that was developed by internal models. So this is the so called LGD floor and asked for the individual valuation or the line by line valuation to be carried out as soon as possible.
On page six, we prepare this table in order to give you an idea of the 45,000,000 charge referring to the contributions to the single resolution fund. This is a no non recurring charge. By now we have to consider it as being an ordinary, regular contribution because for ten years or more we will have to pay this contribution year after year. But we highlighted this because the $44,400,000 are in excess of the 38,000,000 are higher than the $38,000,000 of last year that in any case had been recognized under a different line item. Now net interest income on Page seven, Q1 net interest income for the year went down by 9.2% affected both by the worsening Euribor, but in particular also by the very strong competitive pressure on customer loan pricing.
We have the asset spread at branch network level that on a year to year basis went down by 23 basis points. On a quarterly basis, the drop is 4.7%, which again was affected by the worsening driver, minus 11 basis points 10 basis points, I'm sorry. But then, of course, there was a $4,000,000 worth effect due to the lower number of days in the quarter and by the lower contribution from the government bond portfolio. These two items actually were the main drivers of the decline we reported in the quarter. The liability spread has improved on a year on year basis by six basis points and remained stable quarter on quarter.
The decline in the cost of wholesale funding on a year to year basis was muted and came in at 0.6% whereas on a quarter on quarter basis it came in at 1.8%. Net fees and commissions went down by 24.7% year on year and by 6.9% quarter on quarter. Please remember that the comparison with the first quarter twenty fifteen really bears little significance because in that quarter, in the 2015 quarter, you might remember that fees and commissions have been rather hefty, $422,000,000 including also performance fees. In any case, the decline in fees and commissions was mainly driven by the underperformance of stock markets in the first couple of months and of course affected also the credit market. This coupled with the resolution of the four banks or of the events with the four banks under revolution in the center of Italy, of course this influenced our customers' propensity in terms of investment and they practically shifted their investment focus onto plain vanilla and bank assurance products.
As of the month of March, I think it went back to normal, $317,000,000 for the quarter that have been reported and that by no means are below the $350,000,000 being our guidance were made up of 100,000,000 developed in January, 97,000,000 generated in February and a 119,000,000 generated in March. So March you see it back to normal. As to April, April is reporting the same level as in March. And based on the May, we expect that again in May, we will go back to normal with respect to fees and commission performance. Indirect customer funds reported a decline, but this was really due to the market effect because net of the market effect actually indirect fund volumes would actually have increased by 1.3% quarter on quarter and by 2.2% year on year.
The asset management segment, in any case, increased by 1.2% on a year to year basis and by 0.6% quarter on quarter. The net financial results, net of non recurring capital gains that has been recognized in the fourth quarter and that regarded the disposal of the stake held in Isiduto Centrale and in ARCA, we were talking about $241,000,000, let me remind you. Well, net financial results show that quarter on quarter increased by 11717% from $26,600,000 to $57.9 It is worth highlighting with respect to this chart what Bancoletti was able to generate with respect to the net financial results. In fact, for the first time in the last four to five years, this time, Banca Lecchi closed with a negative result of 2,000,000 that was due to the market underperformance, which as we already said affected the customers' investment propensity so that they shifted from structured products to plain vanilla and bank assurance products as you already said. And this was also affected by the fact that trading did not give the results we were used to.
In any case, I'm collecting close the first three months of the year with net income of $16,000,000 that of course is much lower than the results they had in the same period last year, but it shows that still the bank has the capacity to generate profit also under distress and distressful market situations. In Q1, the net financial results grew by 15.8% compared to the quarterly average in 2015, again, net of capital gains we talked about before. On Page 11, we see operating costs, particular personnel expenses, which went down by 4.4%, mainly driven by the headcount reduction, namely four seventy five full time equivalents net. On Page 12, you see a snapshot of the evolution in terms of headcount. At the December 2015, we had 16,731 full time equivalents.
And at the 2016, we should go down to 16,434 employees or FTEs, which means that we are well ahead already compared to the business plan by four forty seven full time equivalent. This is the outcome of a policy of an approach that we started in the last one year and a half, Aiming at containing costs in view of the future outlook, the was that with respect to revenues, probably things would not have fared as brilliantly as in the past. So by the end of the year, we are going to have probably a reduction by 9% to 10%. So practically, personnel expenses should go down by nine to 10% by year end. And combined with performance of ordinary lending, we were able to build up an income statement structure that is well positioned to face similar declining revenues we had to suffer in the first quarter.
Even though we hope that revenues will actually be beefed up in the coming future. On page 15, direct customer funds which went down by 1.9% year on year and grew by 0.6% over the quarter or quarter on quarter. It has reported a decline with respect to the bond and other debt component and by other debt we practically mean the custodian bank funding. In order to contain the cost of funding, we really focused on core deposits, which grew by 2% year on year and also on a quarterly basis, it reported an increase. As usual, we have to remind you that the direct funding does not include the liquidity generated by the sale of certificates.
The certificate stock increased to $5,400,000,000 with a 33% increase year on year and slightly less than 2% increase quarter on quarter. The share of captive funding came in at 85% and its core deposit component, as I already highlighted, confirms once again it's a significant contribution at 58%. We were also able to decrease term deposits, which are more expensive in terms of funding source and over the quarter, we were able to further decline the term deposit funds from $3,900,000,000 to $3,400,000,000 On Page 16, we talk about liquidity. Again, we can say that we have an excellent liquidity position. ECB exposure is $11,900,000,000 stable compared to December and it's completely made up of TLTRO one.
But again, already at the June auction, the coming June auction, we intend converting the entire ECB exposure from TLTRO one to TLTRO two, thus we think a benefit in terms of cost of funding. And then later on, we will decide whether to increase the overall exposure up to the maximum drawing allowance, roughly 15,000,000,000. Additional unencumbered eligible assets, net of haircuts, stand at 15,600,000,000.0. In May, they had already went up to more than 16,000,000,000 and were mainly represented by Italian government bonds. Liquidity ratios are positive.
The liquidity coverage ratio is in excess of 160%. And the net stable funding ratio where we include also capital protected certificates is slightly above that 100%. On Page 17, we see wholesale and retail maturity profile. In the first quarter of the year, we redeemed the €2,800,000,000 of which €300,000,000 were long term redbows and €2,500,000,000 referred to bonds. In January, the group issued EUR 1,000,000,000 bonds on third party networks.
And this issue was very well received, which allowed us to expand our funding sources. We are not particularly active on the wholesale market. Still, our position is influenced by the large liquidity we enjoy and by the additional opportunities offered by the new TRO operations launched by the ECB retail market. In Q1, 2,100,000,000.0 retail bonds expired, of which EUR 1,100,000,000.0 for exercise step calls. We programmed 2,200,000,000.0 worth of calls and we already exercised 1,100,000,000.0 of them, so half of them.
The remainder is mostly positioned in the second half of the year. Treasury securities portfolio, these are government bonds, Italian government bonds, and it comes in at 18,800,000,000.0, up by 8% year on year and by 5.9% quarter on quarter. Most Italian government bonds are classified as available for sale, 45%, held to maturity 43% whereas the held for trading component remains relatively small, slightly above 10%. The average time to maturity goes from four to three point nine years. At the March, the gross available for sale reserve on government bonds was €152,000,000 down compared to the €223,000,000 at the December 2015.
While the gross unrealized gain on held to maturity securities added up to €350,000,000 above the €282,000,000 at the February '15.
Talking now about loans. Loans growth are €85,500,000,000 down 3.5% year on year and showing a slight increase quarter on quarter. But if we exclude from the long term trend, the main non core elements such as the runoff of the leasing division, RepoDynamics and as far as the yearly change is concerned, the sale of unsecured loans, the annual decline goes down to 1.1%, while the quarterly increase goes up to 0.7%. Loans, I said earlier when I opened the presentation, did not reach a volume that was entirely satisfactory, 2,300,000,000.0, but the month of April generated loans slightly below 700,000,000 as an overall volume. We expect though to increase the pace of lending in the current month as well as in June.
But honestly, I have to say that we are not receiving that many applications for new loans as we may have thought a few months ago. So if you wanna lend money today, you have to make certain rather tough decisions. The terms and conditions are in that, you know, fantastic. And also, you have to assess carefully credit worthiness. So based on our past experience, we wanna be particularly focused on a correct assessment of customers' credit worthiness.
So we can kind of be more lenient as far as lending terms and conditions are concerned, especially when high rated and highly reputed customers apply for loan. But we do focus a lot on credit worthiness. We do not want to have to pay in the future for a mistake made today if we just give in and grant bullet loans, or if we grant loans with particularly significant balloon payments. So we would rather forgo a certain more significant interest income because we're not happy with the underlying credit worthiness. The cost of credit was three twenty basis points in the quarter.
That is once again due to the discontinuity I hinted at the very beginning of my presentation. Total loan loss provisions, euros $495,000,000 are non recurring. So in total, have $684,000,000 worth of loan loss provisions. Net to this element of discontinuity, the cost of credit would be 89 or around 89 basis points, so slightly lower than 2015 financial year and in line with our expectations. NPLs declined by 4% year on year and they are unchanged over the quarter.
New NPLs seem to be limited to $386,000,000, which is a confirmation of the normalization trend for new NPL inflows, which started back in 2013. Unlikely to pay loans go down 6% year on year and 1.8% quarter on quarter. Cost due loans declined by 37.7% year on year and 11.1% quarter on quarter. Net debt loans go down 0.8% over the year and increase in the quarter by 1.9%. But net impaired loans, considering also the coverage level we have reported in the quarter, are actually declining both over the full year and over the quarter.
Let me once again stress for what it may be worth that once again our growth result, I. E. 0.8%, compares positively to the general banking system, which is equal to 4.7%. But as you may understand, data are not fully homogeneous because the data of the banking system provided by the Bank of Italy's statistical bulletin ends in February. Coverage of NPLs from 43.7% in December to 45.7% now.
And thanks to the provisions that we made during the quarter, the increasing coverage focused specifically on debt loans, we achieved 59.7%, 1% increase year on year and 4.3% increase quarter on quarter. High percentage of collateralized loans were a positive thing, 4% for bad loans and 75% for unlikely to pay loans. So thanks to this, the coverage of bad loans, these guarantees, goes up to 103%, 103.6%, while the coverage of unlikely to pay loans goes up to 85.7%. I keep underscoring that the group's coverage levels have to be interpreted alongside with a significant percentage of collaterals and thus we have a different percentage and a different compare we compare differently to Italy's main players. On Page 24, you see a snapshot of this BEV loans.
Then you see the gross exposures, that's to say nominal value minus expected loss. So gross exposure, we have 7.39%, which is 74% of the total with the stated coverage of 45.8 and a collateralized coverage limited to residual loan is equal to a 117% and a 160% if you consider collaterals at the fair value. Unsecured loans, 2,700,000,000.0, and they have a coverage of 25 coverage of 81.9%. Adding up bad loans, collateralized bad loans, and unsecured and the coverage for unsecured loans, have total of 59.7%. I know I keep reiterating this, but there is a difference between secured and unsecured loans.
When you have a breakup where you see that the collateralized secured loans have a certain level and you don't consider the value of collateral, you end up being penalized compared to other peers. They may have a fewer collateralized secured non performing loans or bad loans and more unsecured loans. The total of 6,000,000,000 is covered by 6,600,000,000.0 by guarantees, 98% being real estate and 2% being pledges. But let me stress once again that real guarantees at fair value are equal to EUR 10,600,000,000.0. Obviously, a 500,000,000 collateral that is used to cover 500,000,000, you can apply only 200,000,000.
But if the meantime a property loses or sheds the value because it devalues by 20 or 30%, still have a lot of leeway, you still have a lot of margin to make sure that the loan is still fully covered. The same applies to unlikely to pay. I'm not gonna go over the same table again because it's the same identical thing. Here, two, you see the 75% are fully secured and collateralized. The 25% instead is unsecured.
Net is 7,300,000,000 covered by €5,900,000,000 with collaterals at its fair value are worth €10,100,000,000 On Page 26, you see a snapshot of our leasing division and business. Here, are progressing steadily but safely, and things are getting better. Outstanding is $8,400,000,000 being released, dollars 3,000,000,000 the former Italy business. And as far as gross NPLs are concerned, there is once again a slight reduction. Stated coverage excluding collaterals that goes from 35% to 36%, so one percentage point up compared to twenty fifteen and thirteen points more than 2,009.
And the total coverage including collaterals comes in well above 100% to 105% to be precise compared to 103% in December even though we have an average haircut of 20% compared to market values of the collaterals. On Page 28, see the group's capital ratios as of March 31, phase the in and and fully loaded. The first quarter trend, minus 67 basis points for the phase in model and for the fully phased that we have the 1222%, I'm sorry. As far as the reduction of common equity tier one, we see there is evolution for 40 to 50%. And once again, I'm referring to the phase in.
The first quarter results there, a 44 charge in terms of basis points in the phasing model and 70 basis points for the fully loaded, and that is essentially due to non recurring loan loss provisions that were made in the first quarter. The shortfall reduction, which is due to an increase in provisions, plus 25 basis points under the phased in model and plus 62 basis under the fully loaded model. And once again, if we concentrate on this fully loaded, we can increase the deduction for investments and DTAs minus 21 basis points. This is really a negligible impact for the phased in model. Fully loaded, a reduction in AFS reserves by 14 basis points, passing from EUR $232,000,000 in December to EUR 150,000,000 in the first quarter.
So we shared 14 basis points here. Then there is an item which objectively calls for clarification, an increase in DTAs from previous tax losses that can be recovered, minus 20 basis points phased in and minus 31 fully loaded model. I am no tax expert, but the head of financial reporting said that IRS tax losses can be carried forward with no time limit, which means that if you have recorded past the tax losses, you're gonna record and acknowledge DTAs right now or in the future, which have been considered conservatively among tax revenues that are generated by future revenues and does have to be entirely deducted from CET1 for 100% of their amount. But this negative charge is just temporary because in the future financial periods, the taxable amount that will be generated by the group will allow us to offset these losses and thus will have a positive impact on common equity Tier one. So this is the situation that brought the phased in to 13.2% to 12.5% with a total capital of 15.6% and fully phased from 12.4% to 11.7% with a total capital ratio of 15.1%.
But in April, we have already formalized a payout of dividends for Argos and Popular Vita subsidiaries, which would generate 18 basis points under the phase 10 system and 25 basis points in the fully loaded model. So this is not to be accrued. This is something that we have already realized. It's just a pro form a because it's March 31, and then there is a capital increase that will have to be done, and that will be worth two twenty seven basis points phased in and two forty basis points in the fully loaded model. So the pro form a phased in results are equal to 14.9 common equity tier one and eighteen point three as total capital in fully loaded.
We have 14.4 for common equity Tier one and seventeen point nine for total capital. I think that this concludes my presentation. I'll be happy now to take any questions you may have. Thank
question, Giovanni Razzoli. Good evening. I have three questions. First of all, the capital increase that you just mentioned, when the capital increase was announced, it seemed that the capital increase would have been offered partly preemptively and partly not. Whereas now, it seems that you are actually going towards a capital increase that will be completely offered preemptively to your existing shareholders.
So we wanted to know whether a part of the capital increase will not be offered preemptively. And then the time frame, do you think that the capital increase may be launched by, say, the June? Second question, DTAs. Cost of the new tax on DTAs since we saw what you had in the first quarter, I would like to understand what the charge is for this new tax. The third question is more generic, so to speak.
It's difficult to understand exactly what is the sustainable profitability of your group considering the many nonrecurring items you had in a different environment where interest rates are no more zero bound but slightly higher. What might be the group's profitability in the coming three years, let's say? What would you say as a guidance, hundred, four hundred, two fifty? Can you give us some guidance? Let me start with the last question.
Normal profitability, hence we had to recognize these loan loss provisions would have been 37,000,038 million dollars in spite of the 44,400,000.0 contribution paid to the resolution fund. Of course, these contributions are not going to be a one off because we are going to have to pay contributions every year, not on every quarter, of course. So it has a very strong impact on the quarter. DCA cost is about 30,000,000 As to the capital increase, let me confirm that the entire capital increase will be offered preemptively to shareholders. They will be fully under subscription rights.
We really thought about this. Somebody said that it might be difficult to actually close the capital increase because of what the all the problems we saw with local community chains at Veneto Banca. We decided that to close as rapidly as possible. Had we split the capital increase into subscription rights and a component offered to investors, general investors, that we would have to split it into two, part now and part in September. So we decided to do it in one go immediately.
And if we can satisfy all concepts, requirements since they have been asking for a load of documentation in order to launch increase. The capital increase should be launched by the May or the very June. Then with respect to the future profitability, of course, we prepared our budget and it's almost a statistical exercise because I'm quite confident that we are going to merge with Banco de Porras de Milano and therefore the results spawning from this merger will certainly be difficult and by the way the business plan is going to be presented next week. But in the second choice, statistic assumption that Banco remains a standalone, I already told you in the previous presentation that we have already got organized to achieve satisfactory profitability despite the current circumstances. We focused primarily on costs.
As far as revenues. We are certainly going to have to suffer some problems with respect to NII. But as far as fees and commissions, I'm sure that already in March and April, the results we showed in March and April are already pointing at the fact that things are going back to normal. That is $350,000,000 worth of fees and commissions stream by quarter. The profitability would have been good for sure.
Let me say that our budget expected to see number two in front of the figure we then reported. And it could have been achieved even under the current market situation. Now of course our ambitions have changed. We are going to have, I hope, this marriage with a party who is performing very well. Reported its results today.
They may be compared to a racing horse, whereas we are sort of a workhorse rather than a work than a racing horse. We might get there at a slower pace, but we always get there. We can work hard and plow our way to results. And I am sure that we will be able to achieve important profits and income streams. And when presenting our business plan and all the values that data next week, I'm sure that we can shed more light on the entire aspect.
Carlo De Grande has got the next question. I'd like to go back to the issue of provisions. You presented the plan, you mentioned that you hinted at presented to the ECB, you hinted at this. So you are thinking of EUR 500,000,000 provisions that will be accounted for in the next few quarters because this is going to offset the capital increase or it's a speculation or will it be higher or lower? Well, provisions that well, yes, you are thinking around along the right lines that we'll have to make further provisions, in fact, in the coming quarters to respect and comply with the agreements we made with the ECB.
So we are formalizing a number of initiatives right now that will have be submitted to the Board of Directors so that we can formalize as professionally as possible the level of the coming provisions. So it could be
higher, the level or lower? Correct.
It could be higher or it could be lower. Okay. Thank you.
Christian Cabreza. Good evening, everybody. When talking about the merger, you were saying we hope everything is going to end up well. This means that there still might be the case that the merger is not going to be approved. Then with respect to provisions, I would expect gross provisions of EUR 1,500,000,000.0 in order to meet ECB's requirement, which would be net EUR 1,000,000,000, which is exactly the amount of the capital increase you are going to launch?
And then another question with respect to government securities and the ASF treatment, if there are any indications with respect to the merger. Will you be required to recognize the capital gain? And is this going to have a negative impact on net interest income? As to AFS, we have some government securities. If we're going to have to deal with the situation you mentioned, this will certainly have to do with Banco Popular de Milano.
It will be there to turn to. Then, well, you know, as to the merger, until things are not closed and completed, who knows what might happen. I'm not saying I hope that everything is going to end up well because I am I have any concerns or because I have doubts. So everything is progressing well. Due diligence has been has been completed.
Next week, we are going to present the business plan. It's really following the regular process and we as well are progressing well. We are going to launch a capital increase, which we hope is going to be closed favorably. One of the conditions that's set by the ECB in Frankfurt is that the capital increase has to be completed and provisions have to be set aside. I'm sure this is all going to happen.
And, you know, we always say if and if and if, but it's it's just natural for people to to express things along these terms. But I am really confident this is going to be one of the most important deals to be closed in the Italian banking system in the last ten years, so nobody would be against it. Just maybe some color on the business plan. I don't want you to say something in advance, but maybe you've covered this topic. With respect to asset management, both you and Banco Popular de Milano have their own asset management company.
Do you think that Select is going to be merged into Anima? Is there going to be a merger or what? We let you sort of think about this and make all your possible dispositions on this, but then we are going to decide this later on when times are right.
Martha Bastoni has a question. Two questions, actually. First of all, NPLs. I'd like to know whether you have your own target that you have set for yourselves. Maybe you have set a sort of an intermediate target compared to the one set by the ECB and intermediate to the target you want to achieve in November.
The other question, The capital increase, will it be used to increase the coverage? Could you please repeat the second question? We kind of did not hear you. Anyway, as far as the first question is concerned, four years, so by the 2019, must have a ratio of impaired to total loans which does not exceed 19%. Based on our internal analysis, we don't expect any difficulties in getting there.
Could you please be so kind as to repeat your second question, please? Bedwill. The bedwill. Have you already made a decision? Will you use it?
Will you use it in matter of the fixed restructuring costs? Or or I'm very sorry, but the line is broken and and the and then she breaks up constantly, so it's really difficult to understand what she's saying. Anyway, the question was about the bed will. We'll use it. We'll use that amount depending on the needs that we'll have then.
Maybe it will be used to be to upset against impaired loans. Also because we will have to apply PPAs for both assets and liabilities of BPM. So it all depends on the results after the use of PPA. And as far as impaired loans are concerned, we'll see. It would be maybe a matter of working on the equity itself.
Then we will see what is the amount in terms of BPM's assets and liabilities that will be available then and at that point we'll make a decision.
And the next question comes from the line of JF Nerds. Please ask your question.
Hello there. I just wanted to ask again about the coverage in the NPL provisions which is left to book to arrive at the target that you've set for yourselves as when the business plan was announced. The reason why I'm asking this is if I calculate your pro form a core Tier one ratio as of today, including that of BPM, I come up with a capital of about 13.5 percent, which means that there is about 120 bps difference compared to the post money and post coverage pro form a core Tier one ratio that you showed last time. And it seems to me as though essentially compared to the coverage ratio, this would be this ratio is essentially ahead of target already. And I just wanted to know whether that's right or whether I got something wrong here.
Sounds reasonable, this is a first answer. But again, this is something that we are still trying to estimate in the best way, and we will probably disclose definitely within the business plan presentation that we expect it to come next week.
Didn't hear the first part of your answer, but I'll read the transcript. Thank you very much.
Thank you. Your next question comes from the line of Hugo Cruz. Please ask your question.
Hi, thank you. I'm not sure if you already answered, but the DTA, the new DTA the new DTA fee of 1.5%, do you have an estimate for the impact Sorry. On P and
Could you kindly repeat your question? You please repeat slowly?
So the latest latest government decree introduced a 1.5% fee on DTAs. Do you have a guidance or what could be the P and L impact of that already?
Sir, did you get the answer?
No, couldn't hear any. No, didn't hear any answer. Sorry. Now it's clear enough?
So the answer is that the expected number is in the region of
The 30 expected million number is about 30,000,030
million euros a year. Okay.
Exactly.
Thank you very much. Okay. Thank you.
Sorry, but he was speak
There are no further questions at this time. So please go ahead.
Well, considering there are no further questions, let me reiterate one concept. Quarterly report is not The quarterly report is not really brilliant, but it's really offset by the costs, personnel expenses and G and A that are actually going down on a yearly basis by 9%, 10%. And this is, I believe, to take us to a result net of extraordinary provisions. Like we're saying, a result that would be more than good. So we knew that revenues were going to be more contained specifically with regard specifically regarding net interest income.
So we believe that this approach is going to generate that benefit and is going to generate a benefit in terms of offsetting the net interest income that we have already lost and will lose in the second half of the year. Nonetheless, our capital is solid. We have a capital basis. The common equity Tier one levels and the total capital level are quite sound. I believe that once we have perfected the capital increase, we can add the final touch to this structure which is really getting ready to merge with Banca Popular de Milano in the next four or five months.
Thank you. This is the end of the conference. Thank you for your attendance. You can now disconnect. Have a nice evening.