Good evening, everybody. Thank you for attending, considering that it's already late in the day. I'll be rather quick on the first slides, because 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 EUR 2.03 billion, down by a high percentage compared to last year. This decline was mainly driven by middle and large corporates. 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-over-year and quarter-over-quarter, which of course is already an answer to the many questions we received from you after the various issues and events involving Banca Popolare di Vicenza and Veneto Banca. Assets under management increased, although slightly. Checking accounts are not really fully satisfactory. A few thousand, but again, stable at about 2.3 million. As to the consolidated income statement, the bottom line is a net loss of EUR 313 million, net of fair value options, minus EUR 323 million, because of course, FVO has this type of impact. 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 Popolare di Milano.
By now you know very well that the ECB asked us to further strengthen our capital and asked for NPL coverage ratios to be in line to the top, to the leading Italian banks. 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 non-performing loans stock down to EUR 10 billion 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. 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. The April income statement has been charged with quite hefty loan loss provisions, which are above average. The board of directors, since we are well aware of these provisioning policies, decided to actually state or to recognize them already by the end of March, considering that part of the provisions referred to a bad loan portfolio that had 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. This is the so-called LGD floor. It asked for the individual valuation or the line by line valuation to be carried out as soon as possible.
On page six, we prepared this table in order to give you an idea of the EUR 45 million charge referring to the contributions to the Single Resolution Fund. This is a non-recurring charge. By now we have to consider it as being an ordinary, regular contribution, because for 10 years or more, we will have to pay that contribution year after year. We highlighted this because the EUR 44.4 million are higher than the EUR 38 million of last year that in any case had been recognized under a different line item. Net interest income on page seven. On 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-on-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, the -11 basis points. 10 basis points, I'm sorry. Of course, there was a EUR 4 million 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-on-year basis was muted and came in at 0.6%, whereas on a quarter-on-quarter basis, it came in at 1.8%. 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 of 2015 really bears little significance because in that quarter, in the 2015 quarter, you might remember that fees and commissions had been rather hefty, EUR 422 million, 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 banks with the four banks under resolution in central Italy, of course this influenced our customers' propensity in terms of investment, and they practically shifted their investment focus onto plain vanilla and bancassurance products.
As of the month of March, things went back to normal, EUR 317 million for the quarter that have been reported and that by no means are below the EUR 350 million being our guidance, were made up of EUR 100 million developed in January, EUR 97 million generated in February, and EUR 119 million generated in March. So March you see is back to normal. As to April is reporting the same level as in March, and based on the beginning of 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-over-year basis and by 0.6% quarter-over-quarter. The net financial results, net of non-recurring capital gains that had been recognized in the fourth quarter and that regard the disposal of the stake held in Istituto Centrale and in Arca, we were talking about EUR 241 million, let me remind you. Well, the net financial results show a quarter-over-quarter increase by 117%, from EUR 26.6 million to EUR 57.9 million. It is worth highlighting with respect to this chart what Banca Aletti 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 Aletti closed with a negative result of EUR 2 million.
That was due to the market underperformance, which, as we already said, affected customers' investment propensity, so that they shifted from structured products to plain vanilla and bancassurance products, as we already said. This was also affected by the fact that trading did not give the results we were used to. In any case, Banca Aletti closed the first three months of the year with net income of EUR 16 million. That of course is much lower than the results they had in the same period last year. 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, the net of capital gains we talked about before.
On page 11, we see operating costs, in particular personnel expenses, which went down by 4.4%, mainly driven by the headcount reduction, namely 475 full-time equivalents net. On page 12, you see a snapshot of the evolution in terms of headcount. At the end of December 2015, we had 16,731 full-time equivalents. At the end of 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 447 full-time equivalents. 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 harbinger was that with respect to revenues, probably things would not have fared as brilliantly as in the past.
By the end of the year, we are going to have probably a reduction by 9%-10%. Practically, personnel expenses should go down by 9%-10% by year-end. Combined with the performance of ordinary lending, we were able to build up an income statement structure that is well-positioned to face similar decline in 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-over-year and grew by 0.6% over the quarter or quarter-over-quarter. It has reported a decline with respect to the bond and other debt component. By other debt, we practically mean the custodian bank funding.
In order to contain the cost of funding, 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 direct funding does not include the liquidity generated by the sale of certificates. The certificate stock increased to EUR 5.4 billion, 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 its 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 EUR 3.9 billion to EUR 3.4 billion. On page 16, we talk about liquidity.
We can say that we have an excellent liquidity position. ECB exposure is EUR 11.9 billion, stable compared to December, and it's completely made up of TLTRO I. Already at the June auction, the coming June auction, we intend converting the entire ECB exposure from TLTRO I to TLTRO II, thus reaping a benefit in terms of cost of funding. Later on, we will decide whether to increase the overall exposure up to the maximum drawing allowance, roughly EUR 15 billion. Additional unencumbered eligible assets, net of haircuts, stand at EUR 15.6 billion. In May, they had already went up to more than EUR 16 billion 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 Capital protected certificates is slightly above 100%.
On page 17, we see wholesale and retail maturity profile. In the first quarter of the year, we redeemed EUR 2.8 billion, of which EUR 300 million were long-term repos and EUR 2.5 billion referred to bonds. In January, the group issued EUR 1 billion 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 TLTRO operations launched by the ECB. Retail market. In Q1, EUR 2.1 billion retail bonds expired, of which EUR 1.1 billion for exercised calls. We programmed EUR 2.2 billion worth of calls, and we already exercised EUR 1.1 billion 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, mostly Italian government bonds, and it comes in at EUR 18.8 billion, 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 3.9 years. At the end of March, the gross available-for-sale reserve on government bonds was EUR 152 million, down compared to the EUR 223 million at the end of December 2015. While the gross unrealized gain on held-to-maturity securities added up to EUR 350 million, above the EUR 282 million at the end of 2015. Talking now about loans. Customer loans gross are EUR 85.5 billion, down 3.5% year-on-year, and showing a slight increase quarter-on-quarter.
If we exclude from the loan trend the main non-core elements such as the runoff of the leasing division, repo dynamics, 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, as I said earlier when I opened the presentation, did not reach a volume that was entirely satisfactory, EUR 2.3 billion. The month of April generated loans slightly below EUR 700 million as an overall volume. We expect, though, to increase the pace of lending in the current month as well as in June. 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. If you want to lend money today, you have to make certain rather tough decisions.
Terms and conditions aren't that fantastic. Also you have to assess carefully credit worthiness. Based on our past experience, we want to be particularly focused on a correct assessment of customers' credit worthiness. 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 a 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. We would rather forego a certain more significant interest income because we're not happy with the underlying credit worthiness. The cost of credit was 320 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, EUR 495 million are non-recurring. In total, we have EUR 684 million worth of loan loss provisions. Net of this element of discontinuity, the cost of credit would be 89 or around 89 basis points, 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 EUR 386 million, 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. Past-due loans declined by 37.7% year-on-year and 11.1% quarter-on-quarter. Net bad loans go down 0.8% over the year and increase in the quarter by 1.9%.
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%. 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. Thanks to the provisions we made during the quarter, the increase in coverage focused specifically on bad 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, 74% for bad loans and 75% for unlikely-to-pay loans.
Thanks to this, the coverage of bad loans, including these guarantees, goes up to 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 we compare differently to Italy's main players. On page 24, we see a snapshot of this. Bad loans. You see the gross exposures, that's to say, nominal value minus expected loss. Gross exposure, we have 7.39%, which is 74% of the total, with a stated coverage of 45.8% and a collateralized coverage limited to residual loans equal to 117% and 160% if you consider collaterals at fair value. Unsecured loans, EUR 2.7 billion, and they have a coverage of 81.9%.
Adding up bad loans, collateralized bad loans, and the coverage for unsecured loans, we have a total of 59.7%. I know I keep reiterating this, but there is a difference between secured and unsecured loans because 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 collaterals, you end up being penalized compared to other peers that may have fewer collateralized secured non-performing loans or bad loans and more unsecured loans. The total of EUR 6 billion is covered by EUR 6.6 billion by guarantees, 98% being real estate and 2% being pledges. Let me stress once again that real guarantees at fair value are equal to EUR 10.6 billion. Obviously, a EUR 500 million collateral that is used to cover EUR 500 million, you can apply only EUR 200 million.
In the meantime, a property loses or sheds the value because it devalues by 20% or 30%, you 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 going to go over the same table again because it's the same identical thing. Here too, you see that 75% are fully secured and collateralized. 25% instead is unsecured. Net is EUR 7.3 billion, covered by EUR 5.9 billion with collaterals at fair value are worth EUR 10.1 billion. On page 26, you see a snapshot of our leasing division and business. Here, things are progressing steadily but safely, and things are getting better. Outstanding is EUR 5.7 billion, EUR 2.7 billion being released, EUR 3 billion the former Italease business.
As far as gross NPLs are concerned, there is once again a slight reduction. Stated coverage, excluding collaterals, goes from 35%-36%, so one percentage point up compared to 2015, and 13 points more than 2009. The total coverage, including collaterals, comes in well above 100%, 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, you see the group's capital ratios as at March 31st, both the phased in and fully loaded. The first quarter trend, -67 basis points for the phased-in model, and for the fully phased, we have 12.
22%.
22%, I'm sorry. As far as the reduction of Common Equity Tier 1, we see there is evolution for 40%-60%. I'm referring to the phased in. The first quarter results are there. We have a 44 charge in terms of basis points in the phased-in 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, +25 basis points under the phased-in model, and +62 under the fully loaded model. If we concentrate on the fully loaded, we can increase on the deduction for investment in DTAs, -21 basis points. This is really a measurable impact for the phased-in model.
Fully loaded, a reduction in AFS reserves by 14 basis points, passing from EUR 232 million in December to EUR 150 million in the first quarter. We shed 14 basis points here. There is an item which objectively calls for clarification. An increase in DTAs from previous tax losses that can be recovered, -20 basis points phased in and -31 fully loaded model. I am no tax expert, but the head of financial reporting said that IRES tax losses can be carried forward with no time limit, which means that if you have recorded past tax losses, you're going to 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 those are to be entirely deducted from CET1 for 100% of their amount.
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 1. This is the situation that brought the phased in to 13.2%-12.5% with a total capital of 15.6%, and fully phased from 12.4%-11.7% with a total capital ratio of 15.1%. In April, we have already formalized a payout of dividends for Agos and Banco BPM Vita subsidiaries, which would generate 18 basis points under the phased-in system and 25 basis points in the fully loaded model. This is not to be accrued. This is something that we have already realized. It's just a pro forma because it's March 31st.
There is the capital increase that will have to be done, and that will be worth 227 basis points phased in, and 240 basis points in the fully loaded model.
The pro forma phased-in results are equal to 14.9% Common Equity Tier 1 and 18.3% as total capital. In fully loaded, we have 14.4% for Common Equity Tier 1 and 17.9% for total capital. I think that this concludes my presentation. I will be happy now to take any questions you may have. Thank you.
Ladies and gentlemen, if you wish to ask the question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, it is star 1 if you wish to ask the question. First question, Giovanni Grosoli.
Good evening. I have three questions. The capital increase that you just mentioned. When the capital increase was announced, it seemed that the capital increase would have been offered partly pre-emptively and partly not. Now, it seems that you are actually going towards a capital increase that will be completely offered pre-emptively to your existing shareholders. I wanted to know whether a part of the capital increase will not be offered pre-emptively. Then the timeframe. Do you think that the capital increase may be launched by, say, the beginning of 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 is difficult to understand exactly what is the sustainable profitability of your group, considering the many non-recurring 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, EUR 300, EUR 400, EUR 250? Can you give us a guidance?
Let me start with the last question. Normal profitability, hadn't we had to recognize these loan loss provisions, would have been EUR 37 million-EUR 38 million, in spite of the EUR 44.4 million contribution paid to the Single 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 in every quarter, of course. It has a very strong impact on the quarter. DTA cost is about EUR 30 million.
As to the capital increase, let me confirm that the entire capital increase will be offered pre-emptively to shareholders. That will be fully under subscription rights. We've really thought about this. Somebody said that it might be difficult to actually close the capital increase because of the old problems we saw with Banca Popolare di Vicenza at Veneto Banca. We decided to close as rapidly as possible. Had we split the capital increase into subscription rights and a component offered to general investors, we would have to split it into 2, a part now and part in September. We decided to do it in 1 go immediately, and if we can satisfy all concepts, requirements, since they have been asking for a load of documentation in order to launch the capital increase, the capital increase should be launched by the end of May or the very first days of June.
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 Banca Popolare di Milano, and therefore, the results spawning from this merger will certainly be difficult. By the way, the business plan is going to be presented next week. In the second choice, so to speak, assumption that Banco remains a standalone, I already told you in the previous presentation that we have already got organized to achieve a satisfactory profitability despite the current circumstances. We focused primarily on cost. As far as revenues, we have to suffer some problems with respect to NII.
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 EUR 350 million worth of fees and commission stream by quarter. The profitability would have been good, for sure. Let me say that our budget expected to see a number 2 in front of the figure we then reported, and it could have been achieved even under the current market situation. Of course, our ambitions have changed. We are going to have, I hope, this marriage with a party who is performing very well. Banca Popolare di Milano reported its results today. They may be compared to a racing horse, whereas we are sort of a workhorse rather 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. I am sure that we will be able to achieve important profits and income streams. When presenting our business plan and all the various data next week, I'm sure that we can shed more light on the entire aspect.
As a reminder, ladies and gentlemen, if you wish to ask a question, press star and one on your telephone and wait for your name to be announced.
Carlo Digrandi has got the next question.
Good evening. I'd like to go back to the issue of provisions. When you presented the plan, presented to the ECB, you hinted at this. You are thinking of EUR 500 million 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?
Provisions, you are thinking along the right lines. 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. We are formalizing a number of initiatives right now that will have to be submitted to the board of directors so that we can formalize as professionally as possible the level of the coming provisions. It could be higher, or lower? Correct. It could be higher, or it could be lower.
Okay. Thank you.
Christian Carrese. 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. With respect to provisions, I would expect gross provisions of EUR 1.5 billion in order to meet the ECB's requirements, which would be net EUR 1 billion, which is exactly the amount of the capital increase you are going to launch. Another question with respect to government securities and the AFS treatment. Is there 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 reserves on government securities, if we're going to have to deal with the situation you mentioned, this will certainly have to do with Banca Popolare di Milano. It will be theirs to turn to. 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 have any concerns or because I have doubts. Everything is progressing well. Due diligence has been completed. Next week, we are going to present the business plan. It's really following the regular process. 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 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. We always say if and if and if, but it's just natural for people to express things along these terms. 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 10 years. 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 covered this topic. With respect to asset management, both you and Banca Popolare di Milano have their own asset management company.
Do you think that Aletti 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, we are going to decide this later on when times are right. Marta Bastoni has the next 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.
As far as the first question is concerned, in four years, so by the end of 2019, we 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?
Badwill. The badwill. Have you already made a decision? Will you use it? Will you use it matter of the fixed restructuring costs?
I'm very sorry, but the line is broken, and then she breaks up constantly, so it's really difficult to understand what she's saying. Anyway, the question was about the badwill.
We'll use it. We'll use that amount depending on the needs we'll have then. Maybe it will be used to offset against impaired loans. Also because we will have to apply PPAs for both assets and liabilities of BPM. It all depends on the result after the use of PPA. As far as impaired loans are concerned, we'll see. It will be maybe a matter of working on the equity itself. We will see what is also the amount in terms of BPM's assets and liabilities that will be available then, and at that point, we'll make a decision.
The next question comes from the line of J.F. Neuez. Please ask your question.
Hello there. I just wanted to ask again about the coverage and 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 forma Core Tier 1 ratio as of today, including that of BPM, I come up with a capital of about 13.5%, which means that there is about 120 basis points difference compared to the post money and post coverage pro forma Core Tier 1 ratio that you showed last time. It seems to me as though essentially compared to the coverage ratio, this ratio is essentially ahead of target already. I just wanted to know whether that's right or whether I got something wrong here.
Sounds reasonable. This is a first answer, again, this is something that we are still trying to estimate in the best way, we will probably disclose definitely within the business plan presentation that is expected to come next week.
I didn't hear the first part of your answer, 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 new DTA fee of 1.5%, do you have an estimate for the impact on P&L? Sorry.
Could you kindly repeat your question? Could you please repeat slowly?
Yeah. The latest government decree introduced a 1.5% fee on DTAs. Do you have a guidance for what could be the P&L impact of that already?
Sir, did you get the answer?
No, I didn't hear any answer, sorry.
Now it's clear enough? The answer is that the expected number is in the region of EUR 30 million.
EUR 30 million a year. Okay.
Exactly.
Thank you very much. Okay, thank you.
Sorry, but he was speaking English on the Italian line. That is why. Sorry.
Okay, no worries. Thank you.
Okay, there are no further questions at this time. Please go ahead.
Well, considering there are no further questions, let me reiterate one concept. The quarterly report is not really brilliant, but it is really offset by the costs, personnel expenses, and G&A that are actually going down on a yearly basis by nine, 10%. This is, I believe, going to take us to a result net of extraordinary provisions, like we are saying, a result that will be more than good. We knew that revenues were going to be more contained, specifically regarding net interest income. We believe that this approach is going to generate benefits, 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 stronger capital basis.
The Common Equity Tier 1 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 Popolare di 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.