Good evening. Thank you for attending the conference call to present the results for Banco Popolare full year results. You have a chance to ask questions at the end of the conference call, press star one to ask a question. Please remember that today's conference will be recorded. I now hand it over to Banco's Managing Director, Mr. Pier Francesco Saviotti. You have the floor.
Thank you. Good evening, everybody. Welcome to Banco's conference call. As usual, with respect to the first slides of the presentation, we are going to skip them altogether as we're going to explain them in detail item by item later on. Just a couple of remarks today with respect to our commercial performance. In 2015, we had little less of EUR 9 billion worth of medium to long-term loans, a 50% growth in retail, EUR 1.8 billion, 49% growth rate in small business, EUR 2.2 billion. A little more than EUR 4 billion in mid-corporate, plus 52%. An excellent performance of our consumer credit, Agos dispersed loans for more than EUR 800 million with growth rate in excess of 22%. Indirect funds increased by 8.3%. The payment cards, both credit and debit, increased by 225,000 units. Checking accounts increased by 48,500, of which little more than 3,000 are business accounts.
On page five, talking about the income statement, let me highlight that we closed the year with a net income of EUR 430 million, EUR 427 net of the fair value option. On page seven, we highlighted that the ancillary business units to the size of the core commercial banking activity have made a big contribution to this result. 217 branch network investment banking and wealth management, EUR 144 million. Let me remind you, it's Select and GCL. Consumer credit and bank assurance, namely Agos, Popolare Retail, and Adipop, EUR 138 million. As to Italease, once again, its contribution was a negative one. Rather than Italease, we should talk about the leasing division. Again, it was EUR 127 million negative contribution. This year, again, the income statement reported a number of non-recurring items.
The two most important ones that were in positive impact was the disposal of Istituto Centrale Banche Popolari and the disposal of Arca, which resulted in a positive contribution of EUR 224 million. Let me remind you, again, being a positive impact, Italease's contribution that has been acquired by Banco. This led to a tax benefit of EUR 85 million. These were the positive P&L impacts. Now let's take a look at the negative one, EUR 64 million, roughly, for the voluntary redundancy fund and other non-recurring personal expenses. EUR 77 million is the non-recurring contribution to the National Resolution Fund, EUR 35 million, these are tax claims.
In addition to the usual one that has been reported in the first quarter, EUR 17.7 million, this referred to a dispute where the Court of Cassation went against us. Therefore, we have EUR 22 million that has been set aside. This is a provision in order to deal with tied with preference shares. Then we have the disposal of BP Luxembourg, about EUR 7 million that, in our opinion, should be formalized after receiving ECB's authorization by the end of this month. By the way, EUR 27 million, I skipped this, it's EUR 27 million referring to real estate impairments, of which EUR 39 million gross, EUR 23 million net in the fourth quarter. On page nine, we analyzed net interest income.
2015 closed with a 0.4% decline. The net interest income held out in spite of the strong drop in Euribor in the fourth quarter, minus six basis points, and despite the strong competitive pressure on loan pricing. The average customer spread went from 1.87 in 2014 down to 1.78 in 2015, minus nine basis points, thus standing at 1.7% in Q4. Among the elements that have been supporting net interest income, let us highlight the improved liability spread at branch network level that went from 1.01 in 2014, to 0.85% in 2015. In Q4, it stood at 0.83. On the other part of the slide, we pointed out the evolution of wholesale funding cost, which year-on-year declined by 7.8%. On page 10, we have the fees and commissions, which increased by 3.3%.
Again, considering the excellent performance of our branch network with respect to the sale of asset management products and investment products, in the first six months, it was very aggressive, and then it slightly slowed down in the second part of the year. Then we have other contributions from consumer credit, which increased by 14.7%, contribution from custodian banking services, and other guarantees given. On page 11, we see indirect customer funding up by 8.3%, driven by asset under management, thanks to the funds and SICAV component, went up by 18.7%. In Q4, we also reported an increase of 1.2%, despite the negative market performance. Page 12, the net financial result, which increased by 104%.
Clearly, this growth rate is fully due to the recognition of capital gains attached to the disposal of the stakes held in Istituto Centrale Bank Popolari and Arca , amounting to a total gross value of EUR 241.2 million, entirely booked in Q4. Net of the above-mentioned capital gains, we would have reported net financial result lower by 7%, that is EUR 200 million, more or less. The contribution of Banca Aletti, which exceeded EUR 90 million, accounting to 46% of net financial result. On page 13, we see personnel costs up by 0.4%. They include EUR 95 million roughly of non-recurring charges, of which EUR 83 million have been recognized in Q4 against 138 back in 2014. These non-recurring charges are tied to the solidarity fund and to the voluntary redundancy scheme, as well as to the closure of the London branch, which has already been carried out.
They also include the charges tied to the exits planned for 2016 and 2017. Net of these non-recurring charges, personnel expenses went up by 3.8%, which was driven both by the hikes set by the previous national collective agreement and by provisions related to the 2015 incentive scheme that has been partly offset by lower costs coming from the average reduction in headcount, which in 2015 went down by 571 full-time equivalent employees. On page 14, we see the headcount evolution in 2015. From 17,147 FTEs at the end of December 2014, we go to 16,731 at the end of December 2015. Actually, we are ahead compared to the planned target by 251 full-time equivalents.
In the 2016-2017 time frame, we will have 400 FTE exits that have been already expensed in 2015. These 400 exits will be offset by 180 new recruitments. The pro forma FTE headcount will be 16,511. Other administrative or operating expenses. We report a 16.3% increase in this item, which includes EUR 162 million tied to the recurring and non-recurring contribution to the National Resolution Fund and to the Deposit Guarantee Scheme, which have been recognized in 2015 under other administrative expenses, of which EUR 139 million in Q4. EUR 23 million have been reclassified as other administrative expenses in Q4, but they had been recognized in Q1 under the line item provisions for risk and charges.
Other administrative expenses, net of what has already been described, excluding the EUR 7 million worth of reduction in liabilities, they refer to disputes that have been settled with a couple of vendors. Net of these contingencies, administrative expenses went down by 1.2%. Amortization and depreciation went down by 13.2% from an accounting point of view. If we strip out of both years the real estate impairment, EUR 41.4 million in 2015 and EUR 68 million in 2014, the increase reported is 1.1%. It's a slight increase, but still, it has been increasing. Total pro forma non-personnel expenses normalized on the basis of the above-indicated components decreased by 0.8%. On page 17, direct customer funds are down by 3.6% year-on-year, 2.8% excluding repos and core deposits have been reporting the slightest decline.
That is minus 1.4% due to the reduction in time deposits that went from EUR 5.8 billion to EUR 3.9 billion, i.e., minus 32.1%. Including the liquidity generated by the sale of certificates, where the stock in 2015 increased by EUR 1.6 billion, the bond-based funding is stable. On a quarterly basis, direct customer funds decreased by 1.6%, exclusively due to the reduction in repos. As we will see when talking about liquidity, this reduction in repos contributes to the increase in assets eligible for refinancing with the ECB. Net of repos, direct customer funds grew by 3.1% as compared to September. That's showing a satisfactory growth, both with respect to core deposits and bonds. The share of wholesale funding amounts to 17%. This is still in line with the previous year. It's a stable performance. On page 18, we see the group liquidity.
We can certainly define Banco's liquidity as being excellent. Again, 11.9% is the ECB exposure, again represented by TLTRO funds. Unencumbered eligible assets net of haircuts increased to EUR 16 billion because of the reasons I described before, and they are almost only represented by Italian government bonds, and the increase is tied to a number of transactions in terms of repurchase agreements and funding repos. Liquidity ratios are satisfactory. Liquidity coverage ratio is above 180%, whereas the net stable funding ratio comes in at roughly 97%, calculated according to the most updated, the most recent rules of the quantitative impact study. Including certificates, which by all means represent a form of medium-term funding, the adjusted NSFR exceeds 100%. With respect to the maturity profile, both wholesale and retail, in 2016, within the wholesale maturity profile, we see a redemption of EUR 1.6 billion, the residual is EUR 2.1 billion.
To be added to the EUR 3.2 billion redemption in retail. We have potential retail calls for 2016 amounting to EUR 2.2 billion, and we have already carried out call for EUR 800 million between January and February. Of course, we still have to keep the 2017 and 2018 positions under control, EUR 7.8 billion in 2017, EUR 6.9 billion in 2018, sorry, 2017 and 2018 respectively. Now, of course, further bond issues will be evaluated, whose timing and mix will depend on global market conditions. With respect to the retail market, in 2015, we carried out our ordinary distribution activities that is carried out on a daily basis. To date, we really have great peace of mind with respect to these activities. EUR 700 million of own bonds were distributed through third-party branches in Q4. They were warmly accepted by the market. Probably we are going to carry out additional transactions of this type.
In 2015, on international markets, we issued a EUR 1 billion covered bond issue, EUR 1.5 billion senior bond issues. We are keeping markets under close-- We're keeping them monitored because we are waiting for these irrational times to come to an end and to be back to a more normal and manageable situation. Treasury securities portfolio, EUR 300 million less compared to September, EUR 17.8 billion is the total amount, and the average residual life is four years, the time to maturity. The share of government bonds has been classified. Held for trading, 10%, AFS, the held to maturity has increased, which went up to 42%.
Go to page 22, you see loans, and you can see that in 2015, customer loans went down by 2.7% year-over-year and 1.4% quarter-over-quarter. But if you exclude from loans non-core elements such as the run-off of the leasing division and the repo, you see that the yearly decline would have been wiped out, and the quarter-over-quarter decline would have been limited to 1%. Let me quickly remind you of something I mentioned at the beginning. That's to say, in 2015, we actually lent less than EUR 9 billion, and that is 57% more than total loans granted in 2014. It's a steady trend, EUR 4.1 billion in 2013, EUR 5.7 billion in 2014, EUR 8.9 billion in 2015. It's a steady trend, like I was saying. Loans are subdivided in rating 1 buckets that show a steady improvement in quality. We have increased and almost doubled the amount of rating 1 loans.
We have increased to 10.5% rating 2 loans. The top four loan ratings account for 53% of our loans, and the following two categories account for 27%, and 10% is unrated. I would really say that the shift, that the change in the mix of loans is already paying off and will continue paying off looking forward, because qualitatively, the portfolio has remarkably improved since 2012. Cost of risk, 94 basis points. It's in the upper tier of the guidance we provided between 80 and 100 basis points, still remaining within the band. 94 basis points compared to 106 in 2014. EUR 804 million is still a big amount, but we managed to achieve that level because new NPLs flows declined significantly.
Maybe it's a little too early to say that, but it's a decline that has already taken root in January as well, apparently, seemingly, the decline can be confirmed for the current month as well. In the following page, you see a stock of gross NPLs that go down by 4.7% on a year-on-year comparison, and 4% is the decline in the last quarter, in the fourth quarter. This shrinkage, this decline, is due to the fact that unsecured NPL, bad loans, unsecured bad loans, were sold. EUR 210 million were sold in the second quarter, and EUR 730 million were instead sold in the fourth quarter. I would really say that this is a significant sign in any way. Even without this disposal, bad loans would nonetheless have accounted for an amount which is better than the Italian banking industry.
Excluding disposals, bad loans would have gone up by 8.4% compared to what the Bank of Italy yesterday reported for the whole industry of 9.4%. Plus the stock of gross bad loans would have gone down, NPLs would have gone down, even though we had not sold these loans. Nonetheless, the decline would have accounted for about EUR 80 million. Let me say that the risk profile as well has improved, as shown by the decline reported in the unlikely-to-pay and past-due loans buckets. Recovery just for NPLs is 43.7%, and the decline compared to September 2015 is attributable to a disposal of unsecured bad loans we made in October. Being unsecured, the coverage was extremely high. Excluding this phenomenon, the coverage of NPLs would have increased both compared to the end of 2014 as well as the end of September 2015.
The coverage of bad loans is equal to 56.3%. If you add collaterals or if you factor in collaterals, the total coverage is 102.6%. Coverage for unlikely-to-pay is 25.4%, but if you factor in collaterals, the coverage goes up to 85.8%. Past-due loans have a coverage equal to 20.7%. In the following page, you just see an additional explanation of what we have already said. That's to say, bad loans are secured by collaterals by 79.8%. Unlikely-to-pay are collateralized 80.1%, at the level of 80%. The coverage is 56.3% for bad loans. If we exclude collaterals, we have a coverage of 45.8%. If we add collaterals, we have a coverage of 114%. Bad loans unsecured by collaterals are equal to 78.5%, but 98% of all collaterals are represented by real estate property, 41% of which are residential properties, 70% of which are located in northern Italy.
The residual 2% is just represented by pledges on securities. The same thing applies to unlikely-to-pay loans with a coverage excluding collaterals of 22.7%. Factoring in collaterals, it would be 98%. Unlikely-to-pay loans that are not secured by collaterals have a stated coverage of 36.5%. If you go to page 27, we have a snapshot of the leasing division. Once again, you see we are steadily downsizing. We are down to EUR 5.8 billion, EUR 3.1 billion former Italease, EUR 2.7 billion being released. Released portfolio, 20% of it is in the hands of BPER, BPM, and Popolare di Sondrio shareholders. Here, NPLs declined once again from EUR 3.9 billion to EUR 3.8 billion, and the coverage went from 33% to 35%, so it went up. If you consider coverage including collaterals, we get to a level of 100.3%. In spite, the average haircut on collaterals, which compared to true market value, is about 20%.
On page 29, you see the last slide, where you see the snapshot of the group's capital ratios. Let me tell you, these capital ratios are extremely sound. Phased in is equal to 13.2%, fully loaded, 12.4%, of course, after all distributions, after dividends. The elements that were reported as pro forma in the past were correctly reported because we actually disposed of some of these items, and in Q4, we updated the time series concerning the PD and LGD risk parameters from 2010 to 2015. Q4 results include also some data quality measures on our portfolio, which was measured based on the standardized approach. I am done with my presentation, and I can now open it up to your questions. Thank you.
Thank you. Ladies and gentlemen, if you wish to ask a question, press star one and wait to be introduced. Again, dial star one. Again, ladies and gentlemen, if you wish to pose a question, dial star one. First question, Willis Palermo.
Thank you, Mr. Saviotti, for your presentation. I have two questions. The first is on asset quality. The NPL stock has gone down. You sold a number of unsecured bad loans, but you said that in any case, even without this sale, the NPL stock would have gone down anyway. I would like to know the percentage. Then with respect to the disposed bad loans, what is the discount you had to give? Second question, I would like to know something about the Italian government scheme to help banks dispose of their non-performing loans.
How much time would it take to set up an SPV and to come to an agreement with counterparties to sell other non-performing loans and bad loans? Then, in general, what are your growth projections for next year with respect to loans that have been going down this year?
Let me try and answer all your questions. They were quite quick, so if I forget something, just tell me. The loans that we disposed were bad loans for a nominal value of EUR 1.2 billion, stated EUR 949 million. Part of the disposal has been carried out in Q1, whereas the last tranche was sold on October the 2nd, and therefore this pertains to the fourth quarter. If we deduct the share of loans referring to the disposal and EUR 149 million from the total NPL stock, you see that in any case, NPL would have been going down anyway. The percentage, which would have been smaller, but in any case, we would have reported a decline in NPLs that would have been from EUR 80 million-EUR 100 million. Maybe that's not much, but it's a first sign after years that NPLs have been growing.
This time, even without disposing of those bad loans, we would have in any case reported a slight decline in NPL. This was a benefit. As far as I could understand, and do correct me if I did not understand well, you asked in how much time and what is the amount we expected to sell. For 2016, we have planned an additional sale of non-performing of the bad loans, both secured and unsecured, which on average is around EUR 600 million-EUR 650 million. We intend formalizing this disposal probably within the first half of the year, of course, we have all the workout activities implemented by our department for bad loans, and we are active in recovering bad loans.
In addition to the recoveries carried out in 2015 with respect to bad loans, thanks to which we could recover EUR 400 million, we have also the possibility of disposing of part of these bad loans.
As to the cost of credit, the guidance for this year still lies within the 80-100 range. This time, we believe that it could go towards the lower part of the range and not as last year, towards the higher part that is 94. Since it's January, it's a bit too early to come to final conclusions. Given the decline in non-performing loans in January after the downward trend in 2015, which accounted for more than 60%, we hope that this first sign in the first month of the year will repeat in future years, not only will we enjoy a smaller cost of credit, but also a decline in non-performing loans in general. Securitization of bad loans.
Talking about the securitization of bad loans and the plan that is being put together by the government, I would like to know whether Banco is interested in participating. Are you talking about bad bank? Yes. Well, if you are referring to the bad bank, to date, no other clarifications have been put forward other than the press release that has been issued by the Ministry of Economy and Finance a couple of weeks ago. Well, I don't know whether it will be possible for us to increase even further the decline in NPLs by resorting to that device, let's say. In any case, the disposal of bad loans is guided by price.
We don't want to sell our loans at like a fire sale, and they have to be in line with our carrying amount, there is little I can say other than talking about our budget. We may sell EUR 600 million-EUR 650 million. They have already been planned and included in the budgeted income statement and included especially the cost of credit. If any more opportunities will emerge from the bad bank, and if this is going to prove useful, we're going to take advantage of it. Loan increase this year. This year, we have been planning an increase in the number of loans granted compared to last year. We expect that EUR 10 billion worth of loans to be granted. Compared to 2015, it's EUR 1.1 billion more.
We expect to be heading towards a more positive economic cycle compared to the past, we hope that loans will increase despite the decline in the runoff of Italease, because of course, Italease is reducing. In any case, we hope that in 2016, there will be a positive sign in front of the related figure.
Riccardo Rovere. A couple of questions. Good evening. I apologize, I connected a few minutes later, so I did not hear you talk about NII. I'd like to know what actually led the quarter-on-quarter decline in NII. Mr. Saviotti, you talked about the disposed bad loans. You said EUR 1.2 billion is the gross amount, and normalized, that would be, or stated would be EUR 940 million for the entire year, while the disposal of the last quarter is EUR 730 million gross. Is that correct?
No, not at all. Let me go over it again in a different way so that maybe I can be clearer. As you know, with bad loans, we have
Losses and carry forward, also the fund itself. Bad loans do not take into account these losses that have already been reported. Nominal value would be EUR 210. When we sold the EUR 210 million in the first half, the rest in the second half. This is the nominal value. What is the stated value? Is the nominal value minus the losses that have already been incurred. That would be equal to EUR 940 million. EUR 940 million we had already provided for amply, so we could close the disposal with no damages to our P&L. Was I clear? Yes. The quarter-on-quarter decline is EUR 950 million at nominal value sold on October 22nd, and net is EUR 732 million. Okay, clear. What about NII?
Well, the reduction in net interest income in the last quarter is essentially attributable to the six basis point decline in the Euribor, plus the usual problem which is represented by cut-throat pricing. If you want to withhold certain positions in the market, you have to apply a certain spread, which is really not profitable for us. The cut-throat competition in the market, combined with the Euribor decline, resulted in a reduction from the EUR 387 million in Q3 to EUR 369 million in Q4. Next question, Alberto Cordara.
I'd like to link back to the last issue raised by my colleague that is sold NPLs. EUR 1.2 was the gross amount, which is EUR 1,250 million and EUR 940 is provisions?
No, that's not how it is. If this is your question, I will reply directly. If you have other questions.
No, I just wanted to understand. What is the markdown at which these loans have been sold?
Let me clarify this. You know that in Banco and in many other banks, we make use of the so-called perdita anticipata, or write-offs. A defaulting loan is assessed by the loan manager, and if it's a EUR 100 million loan, they decide to make a EUR 50 million write-off. Nominal is EUR 100, but the accounted or the stated amount is EUR 50 million, and they are immediately charged to income. Out of EUR 150 are immediately charged to income, and the loan is stated at EUR 50 million. Then, of course, provisions are based on the EUR 50 million. The residual EUR 940 million have been provided for. The provisions that were set aside were so high that there was no P&L effect. It was a line item with a given amount of provisions.
You don't want to talk about the price? You don't want to disclose on price?
No, we don't want to make any disclosure on price because we still have other bad loans to be sold. It's not useful to talk about price.
Fine. You showed a slide where you showed that the wholesale funding is not greatly positive. We should also consider the trend on the Italian banking sector as a whole. On the slide, you show that the net of repos, you have a positive dynamic of funds quarter-on-quarter, especially with respect to a positive evolution of deposits compared to bonds. Other banks say that people, instead of investing in bonds because yields are so low, they just keep them on their checking accounts. Could a positive effect be obtained by a good funding mix for next year? You might have less term deposits and more demand deposits, and something that can really support net interest income despite a low Euribor scenario. What might be the right solution for a good leverage of the funding mix?
Well, what we did is that what we call core deposits or core direct funds, EUR 39.9 billion is the amount shown on the slide. Holds on and keeps on being as stable as possible. EUR 39.9 is not what really is important to us, because within the EUR 39.9, we also have corporate deposits. Of course, we are interested in core deposits. We want them, but they are the more volatile because it takes just 10 basis points or 15 basis points difference, they immediately transfer the checking account somewhere else. Whereas what we are interested in is the net retail core deposits, which is stable. It's the loyal component. It's those millions of checking accounts that by their own nature are stable. Why do we want to grow in terms of number of ordinary checking accounts? You open a checking account, you deposit EUR 5,000, EUR 3,000, EUR 1,000.
Well, they will stay there forever if you serve them well. This is the real backbone, the strength of banks. Not only of Popolari banks, but all banks who are interested in having a stable customer pool on which to build their business. Our core deposit level is good, but a bank such as ours needs to improve it even further. We intend enjoying an increase in the number of retail checking accounts in addition to corporate checking accounts, because they are one of the most important instruments to support a more stable funding and less volatile. Of course based on what is printed on the press or what media are saying, people might change banks because they want a different product. Of course, we have a certain turnover or a certain churn.
When people have on their checking accounts, mortgage loans, their credit cards, they have bills and being paid on the checking account, they generally are loyal and stable. We want to increase these type of checking accounts. Since we started actively to view and to follow these checking accounts, we were able to bring home a couple of billions more. We have no liquidity problems. Not at all. If you take a look at this slide on liquidity, we have EUR 11.9 billion worth of TLTROs. That is the ECB exposure, then EUR 16 million which are unencumbered and eligible, net of haircuts, and that are by large represented by government bonds and then can be used with the ECB for refinancing any time. Thank you.
Mr. Giovanni Razzoli has the next question. Good evening. I have three questions. The first one is about the interest income, which in the fourth quarter was rather low compared to the previous quarters. Looking forward in 2016, can we project out the fourth quarter results, EUR 370 million, the total for 2016 should be below EUR 1.5 billion. You mentioned the low Euribor rate and a fierce competition as the drivers for this decline. I was wondering whether we can take this fourth quarter result and extend it out for the rest of the year to calculate NII. Page 29, the LGD calculation was updated, and it accounted for 86 basis points. I'd like to know whether this was a regulatory capital or some kind of filter was applied because the risk-weighted assets remained unchanged compared to September.
Final question, as far as the market consolidation is concerned, you are a very active player. You've been extremely explicit in describing the options you are considering. I ask the same questions to other banks. I'd like to know whether, compared to the past when Popolari banks emerged, the 10% of the cost basis was the standard level. Do you belong to the camp of those who think that 10% is no longer realistic? Considering the current consolidation option and considering it's going to be a major deal, is there more room for cost cutting in excess of 10%? Finally, should you actually team up with another bank? The idea of having operating companies could be a way to expedite the restructuring and reorganizing the new bank. What do you think? Let me take the first question about NII first.
The Q4 drop, as I said earlier is due, and probably you don't want to hear me repeat it once again, it's ascribable to the low Euribor rate and the cutthroat competition that is driving prices down. What we can say is that our interest income in 2016 is going to be subdued, if you wish. We are only slightly concerned because we know we are going to offset it via costs, via loan loss provisions, et cetera. We are reasonably comfortable with this NII. I do not know whether over the short term, I will think differently about it.
Next time when we get together for the next results presentation, maybe the market has calmed down in the meantime, and maybe in the meantime, the rates have picked up and we can lend the money with more peace of mind. As far as the group's capital ratio, as you can see on page 29, I talked to you, I mentioned the data quality interventions we made because I just want to describe you one case for you to understand how simple these things are and how important it is to regularly perform these changes and make sure the data quality is accurate. We managed to recover a little less than EUR 600 million this way. There was a group of French banks that were rated as if they were Italian banks. Their rating was wrong. The country rating of Italy had been assigned to French banks.
As far as pass-through items, there were a number of these items with weighting assigned to them that was equal to 100, but those items were actually related to the Bank of Italy, so the weighting associated with these pass-through items should have been zero. We managed to simply save in terms of risk-weighted assets, about EUR 1.4 billion, and we improved the profile of our risk-weighted assets. Also, charges to RWA, to risk-weighted assets, were made because we had, like I said, to update our time series for the risk parameters for the PD and LGD parameters. We updated the time series from 2010 to 2015, all this boiled down to the Q4 result, generating a benefit in terms of our common equity. You asked a question about consolidation.
Well, tell you the truth, I don't know whether the percentage you mentioned can be actually the final percentage. One way or another, we can say that we are hovering around that number. As far as operating companies are concerned, they are a significant asset for this group. They were extremely valuable. We leveraged on the important role of operating companies in the negotiation, in the dealings with the well-known counterparty we have been talking to. These are assets that will account for a significant contribution should actually the agreement be reached. Thank you.
If you wish to ask a question, please press star one. Next question, Andrea Vercellone.
Good evening. Four questions. The first question refers to Agos. Can you give us a guidance with respect to the 2016 income? Whether the good result this year is sustainable or improvable. Second question is the non-recurring real estate impairments both this year and last year. I'd like to know whether you can give us a bit of color as to what this property is all about. Is it the same real estate, or are these different buildings or real estate? If I'm not wrong, these are former Italease's buildings or real estate. Can you say something about the expected loss after the disposal of bad loans, talking about the capital shortfall.
Should you reach an agreement, would you convene the shareholders meeting just once to approve both the demutualization and the merger, or do you think that there are going to be two meetings?
Agos performed very well, the result they achieved is absolutely repeatable. Agos is performing well. There are no non-recurring items that are bolstering their results. I'm very pleased to say this because after all the distress, after all the troubles we went through, we found a smart way to cooperate with the new CEO. We really work well together. We are really in sync. 2015 closed with a very good result. 2016 will close with a similar result because the result is repeatable. I cannot tell you whether we will exactly replicate that result, but it's within our reach. As far as the value of the real estate properties are concerned, I hope you know that we are mandated to update appraisals or appraise the values for our properties.
These rules were issued by the ECB, every time a building is reappraised, if the value indicated by the appraiser is different from the previously appraised value, you have to write it up or down, depending on the difference reported by the appraiser. This is what we have reported. Every time a building value is reappraised, we keep hoping that the real estate market picks up again, and thus the property values will pick up as well. Every time a property is reappraised, we really hope that the values will not be penalized. You're talking about properties that are always the same real estate portfolio? Yes, exactly. It's the same properties whose value is simply being adjusted along with the market prices. They are being marked to market.
If the real estate market shed 5%, when you reappraise the value of the building, you find out that the building is worth EUR 1, EUR 2, or EUR 5 billion less than it was previously ascertained. We have to bring the values of the buildings in line. We have updated appraised values dating back to 2013, 2014, and 2012. Every time buildings are reappraised, we have to adjust their values. We do not reappraise the entire pool of buildings. Maybe a bunch of buildings are reappraised in 2012, another bunch in 2012, and another bunch in 2013. Three years later, you will have to reappraise the various buckets of buildings. Next year, we will have to reappraise the value of those buildings that were appraised in 2013.
Looking forward, it is reasonable to expect that these values will increase, because even though the real estate market does not surge, I don't expect it to drop further. As far as the shortfall is concerned, to fully loaded, EUR 275 million, phase-in EUR 210 million. As to the consolidation, I do not know whether we are going to make one or two general meetings. We haven't talked about these aspects yet. What I can tell you is that we made major steps forward, so it becomes even more reasonable to expect a positive conclusion, but we haven't yet talked about these aspects. We'll make that decision when time comes. From the regulatory point of view, would it be regular to just call a single shareholders meeting to approve both the demutualization and the consolidation? You are asking me a lawyer's question. I really don't have an answer.
I don't know whether there are legal constraints preventing us from doing that. I really don't know. What I'm interested in is the business. The regulatory details will be taken care of by presidents, lawyers, et cetera. I am more business-oriented. These are things I have to know, but it's not really my major interest. Next question. Alberto Cordara.
Sorry, I have a follow-up question. The PD and LGD basis points I see for phase-in and fully loaded, this would lead to an additional shortfall with respect to expected losses.
It's already included in the EUR 275 million fully loaded.
Thank you.
Bella. Azzurra Guelfi.
Two very quick questions. With respect to the appraisal of the bad loan collaterals, what is the percentage for the past year? Second question, deposit trend for retail and corporate in the first months of the year.
Mrs. Guelfi, I am sorry. I'm aging. You need to speak up and maybe speak at a slower pace. Okay, let me try and speak closer to the microphone.
Bad loan collaterals. What is the percentage of assets that has undergone an appraisal, and what is the updated value of the collateral? Second is deposits. Can you give us any indication as to retail and corporate deposit trends in the first weeks of January?
As to the last question, no problems with respect to deposits. Even during the major events that occurred in December, we had no problems. When we analyzed the situation after the panic had spread over the market, we instead had reported an increase. Mr. Faroni was right telling me that just because we had no problems, we decided to call EUR 2.2 billion worth of bonds. Had we had any problems on retail or corporate deposits, we would have never have done such a thing. No problems at that level. With respect to collaterals for securing our non-performing loans, I don't know how many appraisals are back assets with respect to 2014.
What I can tell you is that appraisals are updated on an ongoing basis, and we also resort to external databases telling us the trend of prices for a given region, for a given type of buildings, and what are the changes that have been reported, which is not the full appraisal I was talking about before and that has to be carried out in compliance with Bank of Italy and ECB rules every three years for the Bank of Italy. For the ECB, when we are talking about a given amount, it should be carried out every year.
What I'm talking about now is the updates that we have, that we receive, and that are uploaded within the loan file, and that is made available by Nomisma. Every six months, we receive this set of update. This has nothing to do with appraisals. As I said, appraisals are carried out every three years for certain real estate, and every year for other type of properties that are from EUR 10 billion upwards. For these type of buildings, the appraisal will be carried out every year. Core deposits as of 31st of December increased by roughly EUR 1 billion. Next question. Hugo Cruz.
Hi. Thanks for taking my call. First, on fees, how much of the fees in Q4 were related to upfront asset management fees? If you could give me the EUR million number, it would be great. Second question on risks and charges. I would like to understand, apologies if you explained this already, but I would like to understand how you booked a positive number in Q4 despite the one-off costs. Three, I didn't understand your NII guidance. Can you repeat what you said on what could be the NII in 2016? Thank you.
Let me take your last question first. Our guidance for net interest income in 2016. We expect a reduction of NII in 2016. We have not quantified the reduction, but it will vary as a function of the degree of competition in the market. If competition in the market is equally aggressive, as aggressive as it is today, we will most likely shed a few percentage points in our interest income margin. Hopefully, competition will be milder. The year is over. In the month of December, banks engaged in a lot of window dressing activities which continued in January as well. Most likely we'll go back to working more in the business as usual mode and will be better able to continue working with the customers that are more profitable for us.
As far as fees in Q4 are concerned, they are providing me with data right now because I don't remember upfront fees amount. It's 16% of all fees in Q4. 16% of Q4 fees were upfront fees. Could you kindly repeat the other question you asked about risk and charges, please? Because we could not hear your question properly. Speak slowly, please.
Yes. I just wanted to understand, you booked a positive number of EUR 15 million despite having some costs of EUR 4 million plus EUR 22 million for tax disputes. I would like to understand what explained the positive risks and charges.
It is just a reclassification. We have restated things. There was another item, i.e., administrative expenses, were added to this item, administrative expenses. If you deduct EUR 23 million, you are left with EUR 14 million. Go to page eight of the presentation, please. There you can see exactly what I'm telling you. Out of the EUR 38 million paid into the National Resolution Fund, EUR 23 had already been recognized in Q1 under the line item provision for risks and charges, and have been reclassified in Q4 under other administrative expenses.
All right. Perfect. Thank you.
In other words, it's our forced contribution to the Resolution Fund. It was EUR 38 million. We reported an initial charge of EUR 23 million because we thought that a portion of our contribution could have been covered by a commitment. When the rules were actually passed and enforced, the amount was specified, and they told us which was the item under which we had to state this contribution. We removed it from the risk and charges and included it in the other administrative expenses item.
Perfect. Thank you.
Saviotti, no other questions, I hand it back to you.
Well, there's little I can add other than saying that I am satisfied with these results. It's the first time we talk to the market with a satisfactory result. Unfortunately, they are now being disclosed against a backdrop, against a market which has been washed by great panic and hysteria. I hope that despite this, our results will be satisfactory for the market. In any case, I am satisfied because I believe that they represent a very solid foundation for starting 2016 with a better peace of mind, because 2016 is not going to be an easy year, we are well prepared. Thank you.
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