Good evening. This is the Chorus Call conference operator. Welcome. Thank you for joining the Banco BPM Group first quarter 2026 results presentation. As a reminder, all participants are in a listen only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Arne Riscassi, IR Manager of Banco BPM. Please go ahead, sir.
Good afternoon. Thanks for joining the conference call. Q1 results will be presented by our CEO, Giuseppe Castagna, and our Joint General Manager and CFO, Edoardo Ginevra. Let me remind as usual to limit please your yourself to two question maximum. Now, let me hand over to Mr. Castagna.
Thank you. Thank you, Arne. Thank you, everybody. All the people which join our conference call. We are happy to present a very strong set of number for Q1 2026. A solid start, I would say a compelling business model in action, because we are following exactly the path that we presented last year with our updated business plan in February 2025. Profitability grew to EUR 480 million of net income, with ROTE and ROE in line at 20% and 15%, in line with our plan target for 2026. Also, Common Equity Tier 1 is very solid, 13.6%, with an MDA buffer of over EUR 400 million. We will see going forward that Common Equity Tier 1 presents some very good surprise going forward and reaching almost 14%.
The key driver, as envisaged in our business strategic plan, is the benefit coming from the development of the product factories. As you can see, in 2025, we had a contribution, average contribution for quarter of EUR 377 million. Now, in the first quarter is EUR 406 million. The target, the quarterly target for this year was EUR 400 million. So we are already above the target. Let's only have in mind that when we started the plan, the contribution from product factories was slightly above EUR 200 million in 2023. Of course, always as a quarterly average, and EUR 242 million in 2024.
A significant enhancement already in line with the trajectory of 2027, in which we envisage to reach EUR 430 million per quarter. Also since Anima injection, of course, there was a significant improvement of the organic performance. If we go to the pre-tax results of Q1, we have a bettering of almost EUR 90 million, coming half of this from higher non-NII revenues, particularly commission and contribution from product factory, and the remaining 50% coming from lower operating cost, almost EUR 23 million, and lower provision for over EUR 30 million. A significant progress vis-à-vis our target. On page six, a slide, a quick reminder of the most important voices in terms of revenues, cost, and cost of risk.
Revenues grew more than EUR 100 million, always on the average, quarterly average of 2024, bettering also the average of 2025, considering of course that NII Euribor is reduced vis-à-vis both years. 2024, the Euribor average was 3.5%, 2025 was 2.2%. We also confirm the enhanced efficiency in cost management, in which we were able to reduce cost-to-income from 47%- 44%, in two years, and from 46% comparing to last year. We also registered a sharp decline in total provision, going down from EUR 137 million of quarterly average in 2024- EUR 78 million for Q1 2026, and last year was EUR 100 million, the quarterly average for 2025.
The cost of risk has been reduced from 46 basis points to 32 basis points. Talking about effective credit management, we see here the evolution that we had, of course, in particularly starting the first year of our merger. Following this path, we have been able to further reduce the gross NPE ratio to 2.1%, which is in line with the average of Italian banks and also European banks, which is 1.8%. The gross NPE ratio was down almost EUR 600 billion this year, less 21% from last year. If we go to net NPE ratio, we are down from 1.5%- 1.1% in the last 12 months.
If we see the net NPE ratio without excluding the NPA guaranteed from the state, we are down to 0.6%. If we consider only the net bad loan, excluding the state guarantee, we are down to 0.1%. This is the demonstration that we have been changing the quality of our portfolio since the pandemia. We have here showed that since 2021, the average default rate year- by- year was below 1%, with a record 0.68% in the first quarter 2026. We really believe that is a demonstration that our portfolio is a very solid quality. Also, the Stage 2 loans were down in one year from almost 9% - 7.5%.
On page eight, I would just say that we have been able to maintain to 13.6% the common equity Tier 1. Again, we will go more into detail at the end of the presentation on capital. The vis-à-vis the SREP requirement, we have an MDA buffer above 400 basis points. Let me remind that, as I was mentioning before, we will see that, if we consider the figure at the 30 April 2026, considering the recovering of the fair value through other comprehensive income, we are almost at 14% of common equity Tier 1. Some key highlights about the profit and loss. We have a comparison with year-on-year and Q- on- Q.
Good results in terms of net interest income, even of course, with a slight reduction quarter-over-quarter. The effect is completely offset by the today's less effect of Q1 2026 vis-à-vis Q4 2025, which account for a lower EUR 70 million. Meanwhile, of course, the comparison with Q1 2025 is impacted by Euribor, which was 50 basis points higher vis-à-vis Q1 2026. Good increase, instead + 3% Q-on-Q in net fees and commission, and a solid contribution coming also from income from associates as well as income from insurance. Core revenues were in line with last Q 2025, and a slight bit over year-on-year.
Net financial result was better than last Q 2025, EUR 25 million positive versus EUR 49 negative in Q4 2025, thanks both to the effect of better results from NFR and a reduced impact of cost of certificates. Thanks to that, we have total revenues which increase almost 4% Q- on- Q with a reduction of 2% year-over-year. Operating costs down 3.7% on a quarterly base and 2% on a yearly basis, mainly due to reduction of cost of personnel, but with a good tenures also of administrative cost. Pre-provision income is 10% above Q- on -Q and 2% negative year-over-year.
After total provision, which were down 50% on last Q 2025 and almost 3% on Q1 2025, we have again a profit from pre-tax profit, which is 25% better Q- on- Q. We have the increase of the impact coming from the new taxation, which made the contribution paid for taxes as much higher as EUR 278 million, compared with EUR 185 million of Q4 and EUR 262 million Q1 2025, leading to a net profit above EUR 500 million, 15% higher than December 2025 and 6% lower than Q1 2025.
Let me remind, of course, that Q1 2025 is a pro forma, which includes the contribution of Anima, which instead was not present in Q1 2025 because, as you know, started to be consolidated in Q2 2025. It's adjusted pro forma to compare the same perimeter. Final result or net result, as I mentioned, is EUR 480 million, which is 15% above last quarter. We have also on the right side of the page showed the positive progression that we registered since the acquisition of Anima, comparing the last four quarter. As you can see, both in total revenues, cost-to-income, loan loss provision, and pre-tax profit, we are always registering a bettering of the result with some very positive outcome.
Going very quickly on some of the items. NII again was down 2.1% vis-à-vis Q4 2025, but the EUR 70 million effect would have offsetted completely this reduction. Meanwhile, we have a reduction of EUR 30 million, but with an EURIBOR, which was 50 basis points above the current Euribor. NII at full funding cost were basically at the same level in all the three quarters we are examining. On the right side, you see the evolution of the drivers of net interest income leading to EUR 751 million, mainly to the due to the day effect. Meanwhile, you can see that we had good results from the commercial spread, almost in line with the Q3 and Q4 2025, at almost 2.90% of asset spread.
Basically half of them coming from asset spread and half from liability spread. let me just anticipate that in April, the two spread are going to widening. meanwhile, we are more or less keeping the asset spread. We are increasing the liability spread, thanks to the increase of the Euribor. Let me remember that we have also a sensitivity which stood at EUR 150 million with a replicating portfolio, which is slightly above our guidance of EUR 25 billion, but is due only to the anticipation of some maneuver, which is going to expire during the second part of the year. meanwhile, the index current account remains stable at 37%.
A good news is coming from lending activity, although, as you know, the macroeconomic does not bring to support the decision of investing for our entrepreneurs. We were able to register EUR 1 billion of increase in stock of lending, almost completely coming from non-financial corporate lending, which grew 2%. It's a first signal of recovery. Of course, we cannot say that, with the current geopolitical situation is a clear signal of going up, but good news to see after some quarter of reduction, the first time a positive number has increased in loan.
On the right side, you see how the bettering of our portfolio, how much is allocated in the richest region of Italy, both split in total loans, non-financial corporates, and the part of non-financial corporates related to small business. As you see, the more small the counterpart, the more increase the security packaging that we take for granting loans. If you go to the state guarantee secured loans, we see that we go from a total of 19%, growing to 26% for non-financial corporates, which for the small business, increase up to 41%. If we couple this 41% with the collateralized loans, we go up to 63% of secured loans for small companies. Let's have a look on page 13 on the total net fees and income from insurance.
Let me say that, we managed to reclassify for all the quarter we showed in this page and all the number that you will see, in our enclosed slides, that the cost related to synthetic securitization are now reclassified to other operating item, and are not anymore into the net fees and commission. This is of course pro forma for all the quarter we examination. Talking of that, you can see how the strong contribution from net fees and insurance, make the quarter contribution passing from EUR 630 million- EUR 750 million, with also a, an increase from EUR 687 million- EUR 710 million, talking only of contribution from fees.
The vast majority of this contribution is coming from investment product fees, which grew 8% Q- on- Q, split above contribution coming from Anima, from upfront fees, and from running fees. As usual, the Q1 bring a strong contribution also from upfront fees, but is a sort of seasonality effect. The investment product placement was as much stronger as the Q1 2025. Let me remember that Q1 2025 was the strongest quarter in terms of contribution from investment product fees, due to the special effort that our network was doing during the first months of the starting of the hostile offer from UniCredit.
We managed to confirm that the capability of the network, also without any kind of menace, is very trained to perform very good results. Apart from the EUR 6.7 billion of investment product place, and we managed also to sell to our clients EUR 1 billion in March of BTP issue. In terms of other fees contribution, we have a reduction of 2% Q-on-Q, mainly driven by two items. The first one is the termination of the Ecobonus scheme, the fiscal credit discount that banks managed to perform both in 2024 and 2025, and now is not anymore there, even though the effect of the fiscal effect is still giving advantage to the bank, but not in terms of more commission.
The real reduction was coming, although from the lending activity, in particular from the specialized lending activity, the structure finance activity, which in the first quarter 2025 was at a record level, and now is at a more consistent level of EUR 75 million. I would say that this is contributing to the specialized activities for EUR 75 million. I would say that this would be more or less the contribution we expect also in the rest of the year, although we have experienced this growth in volume that we showed in the page before, demonstrating that there could be, depending on the geopolitical situation, also strong recovery, if the situation is going to normalize.
In terms of total customer financial asset, on page 14, we registered a reduction both in terms of volumes of Banco BPM itself and in terms of Anima contribution due especially to the market effect, of course, coming from the reduction of the value in Q1 2026. As far as for Anima is concerned, there is also a reduction coming from the termination of an agreement with Etica, which was known since January 2025 and is producing some effect in reduction of financial asset managed by Anima. Notwithstanding that, the contribution from Anima is bettering.
As you can see on the bottom, right side of the slide, Anima contributed to the Banco BPM Group's P&L for EUR 143 million of total revenues level, + 4.7% vis-à-vis Q1 2025 pro forma, of course, and EUR 56 million in terms of net income level, 23% higher than Q1 pro forma 2025. On page 15, we have the good results coming from the tenure of and the rigorous cost discipline applied by the bank. We have a reduction of 3.7% in total operating cost, which is 4.7% from staff cost, due especially to the savings coming from the solidarity fund exit, which were quite massive in Q4 2025, and also reduction of 1.8% Q- on- Q, related to ASA and D&A.
Finally, on page 16, cost of risk is down to 32 basis points. As I mentioned, we managed to reduce the stock gross from EUR 2.75 billion to EUR 2,180 million, 21% year- on- year, with the ratio which has been reduced to 2.13% as a gross ratio and 1.13% as a net ratio. Remember that net bad loan ratio is down to 0.34%. I don't repeat the effect if we exclude the loans guaranteed by the state, but as you remember, we are down as far as net bad loans to 0.1%. On the right side, some good number about cost of risk down from 40 basis points to 32. Default rate down to 0.68%.
A very positive cure rate in Q1, up to 9.78%. Especially the coverage of total NPEs increasing to 160 basis points as total coverage and 240 basis points if we exclude NPE with state guarantee. Let me remind that bad loans, excluding NPEs with state guarantee are covered up to 80%, so really without any further potential risk coming from this asset. I leave the word to Edoardo Ginevra for page 17.
Thank you, Giuseppe. A quick look at the financial components of this quarter. The first part that is illustrated in this slide is related to the evolution of our negative reserves on debt securities, which on a net basis has been worsened by EUR 30 million until from December to March due to the volatility that happened during third months of the quarter, now this amount is again almost aligned with the level as of year-end. End of April, it was EUR 300 million, EUR 306 million, so very similar to EUR 299 that we experienced three months ago.
BPV went down, the level of our absolute exposure to interest rate risk went down in the fair value of comprehensive income portfolio from EUR 2.4- EUR 2.06 million. This is only to a very limited extent represented by Italian government bonds, less than EUR 700,000. Why is that? With an overall level of the portfolio almost unchanged at EUR 47 billion, now we have reduced the percentage represented by fair value other comprehensive income to 29%, with amortized cost accounting for 71%. Italian Govies within the overall banking book represent only 38% of the total, with a constant share in the last quarters.
On the right part of this slide, net financial result improved significantly versus Q1 2025, from EUR 15 million- EUR 25 million. This is due to the structural improvement of cost of certificates from EUR 50 million in the first quarter last year to EUR 27 million, mostly driven by the declining Euribor scenario. Other NFR components went down from 66%- 52%, 66% of last year was influenced by some one-off elements, whilst this year it's very important to note the contribution of global market activities and the dynamic management of some our market positions. All of these elements translated into capital with the dynamic that is shown on page 18. After accounting for the headwinds related to Basel III, the starting point is 13.49%.
After accounting for these 9 basis points of headwinds, 88 positive basis points came from the performance in the P&L of this quarter. 75 basis points is the absorption of capital from dividends and 81 coupons. Only 19 basis points, despite the strong volatility in the market, have been absorbed by the reduction in reserves fair value of the comprehensive income, which as we said, have been then reversed in April. DTAs contributed positively for 18 basis points, and the rest, the various other elements are negative for at most 3 basis points.
13.59%, which is the level of common equity to CET1 ratio, is at the end of March, would become almost 14%, 13.98%, if you want to note the number, the exact number, if you consider fair value other comprehensive income reserves on debt and equity holdings at the record date of April 2026. As a pro forma, at a pro forma level. MDA buffer is above 100 basis points, and MREL buffers are at 469 basis points or 4.69 percentage point if you use as reference the total requirement. 437 is with reference to the subordination requirement.
The final point to mention in this, for this slide is that we still continue to have an amount of capital that is of potential capital that is to be created during the plan horizon, thanks to the contribution of reserves on fair value through other comprehensive income and DTAs. According to our forecast, this translation of potential into actual capital would account during the plan horizon for 120 basis points, whilst overall, taking into account also the rest of capital to be created even out of the plan horizon beyond the 2027, this amount is higher than 200 basis points. For the final remarks, let me leave the floor to Giuseppe Castagna.
On page 20, some check about the guidance and the outlook for 2026. As you know, we have out the previous plan that we confirmed in 2026 last year, just one year ago in February 2025, which was above EUR 101.9 billion for 2026. Let me say that Q1 results are already in line, thanks to revenues already in line by line, and the overperformance in net fees and commission. As far as costs are concerned, we are instead well ahead our plan trajectory, both in operating cost and in cost of risk
So although there is a higher impact from the tax headwind, we can say that we have almost recovered all the gap generated by the taxation. As you may remember, we confirmed the guidance for 2026 before tax. Now we think we are in line to say that we are very confident to be able to reach.
The target for 2026 already this year. Let me say that for sure we confirm that the deliver of EUR 1 of dividend per share is confirmed for 2026, which at today level correspond to 8% of dividend yield. Talking, looking ahead to 2027, as you know, we have a plan which terminates in 2027. We have a target of EUR 2.15 billion. Also, in this case, we feel that we have not already reached like in 2026, but in a positive trajectory, which give us a lot of confidence in terms of reaching the target for 2027. We just mentioned some of the key number here. The increase of non-NII revenues above 50%, which was the target, now is 53%.
Still, we are not in full power with all our product factory. The net NPE ratio, which is down 0.5% vis-à-vis the target 2027, and the availability of a buffer of common equity Tier 1 , which is going to improve, thanks to managerial action and RWA, coupled with 120 points, business point, what Edoardo Ginevra was mentioning, coming from DTA reduction. We are confident to overcome the EUR 7.7 billion of cumulative net profit for the four- years of the plan, reaching the promising trajectory leading to EUR 2.150 million for 2027, and leaving us the room to going above the EUR 6 billion of cumulative distribution target, which we presented last year in February 2025.
All the indicators are very good, both in terms of P&L and of capital strength, which of course can also enable us to overcome the distribution through new issue, new measure to decide at the end of this year. Thank you very much for your attention. I leave the floor for your Q&A session.
Thank you. This is the Chorus Call conference operator conference operator will be now begin the question-and-answer session. Anyone who wishes to asked a question may press star and one under touchtone telephone. To remove yourself from the question queue please press star and two. We kindly asked to use handset for asking question. Anyone who has a question may press star and one at this time. The The first question is from Giovanni Razzoli, Deutsche Bank.
Good afternoon to everybody. Two questions on my side. The first one is on your CET1 ratio of 13.6%, which actually reached 14% in April, you mentioned. It's a very good level above my expectations. I was wondering whether, with this level of capital, if this is confirmed going forward, you can consider resuming to your share buyback plan that you have put on hold last year. Connected to this, I've seen that, you know, the lending growth was a little bit low, 1% year-on-year on household and corporate.
Can you give us a guidance for the full- year so that we can have also a better understanding on how the CET1 ratio can evolve in terms of also risk-weighted assets expansion? The second question relates to the slide number 13, especially in terms of fees. In my view, the fees were pretty good, especially in terms of investment fees. There was a restatement as far as I understand, so you have changed the representation of the fees, removing the cost of the securitization from the fee income line. If you can share with us what was the impact in this quarter. It seems to me that this is a trend, a representation that is in line with other peers. If you can also confirm this.
Regarding the investment fees, I was wondering if you can provide us also an indication on how is April evolving, because the trend of the Q1 was very good in my view. Thank you.
Thank you, Giovanni. Of course, we are very happy to have in April 14%. Of course, this comes from the volatility of the market, but it's going back to the number we had the end of the year. We are quite confident that this could be the roadmap toward the end of the year. We are very happy because this was one of the question that many broker were asking about our common equity tier one strength. I think that coming back to 14%, as you may remember, after overcome the denying of the Danish Compromise, bring us to the same level also having had the burden of the non-Danish Compromise apport. Very happy about that.
Let, of course, terminate the years, as we were saying, also last year, in order to consider what we can do about the excess of capital. On fees, of course, as you were mentioning, this restatement is in line with our main competitor. Frankly speaking, it's not something related to the capability of selling products to our client. We decided it is better represented into the other cost rather than into fees and commission. I confirm that average on the last five, six quarters has been consistent in line with the EUR 20 million.
Thank you.
The next question is from Manuela Meroni, Intesa Sanpaolo.
Good evening. First question on the NII. You say to expect an NII in line with the 2025 exit level. That means little bit lower than EUR 3.1 billion. I'm wondering if you can share with us the main moving parts in terms of volume, margins, and the contribution of the replicating portfolio. The second question is on consolidation. One of your competitors this morning said that Italy is a fragmented market and needs consolidation. I'm wondering if you want to share with us what are your thoughts on the consolidation in Italy and the role that Banco BPM can play in it. Thank you.
On NII, yes, we guided towards an overall level of NII, which is similar to what we had in last quarter of the year, bearing in mind the potential evolution of the underlying drivers. In particular, concerning volume, we expect to continue to have moderate growth in loans and to come back to an average level of deposits, which is again with an increase versus the level we had in December. Moderate positive contribution of volumes and potential tailwinds coming from level of rates and in particular from the expectation of central bank hiking rates during the current quarter, during the current part of this year.
Replicating portfolio, I was about to fall down. We have a level of replicating portfolio which is at EUR 28 billion, EUR 3 billion above our target level. This is because we took the opportunities of the shape of the yield curve during the first quarter to anticipate some maturities of the replicating portfolio, keeping anyway the target level at the same EUR 25 billion that we used to have since we approved the previous plan. This means that over the rest of the year, we have maturities in this portfolio that we will not renew. Coming back to the level of EUR 25 billion, other things equal.
We may, of course, reconsider this policy, this strategy, depending on the evolution, not only of the absolute level of rates, but also of the yield curve. Okay, about consolidation. Of course, yes, we feel we are in the best place to catch the potential opportunity coming from an eventual consolidation, further consolidation of the market. We had a lot of consolidation last year, some of them also related to our bank with the acquisition of Anima, and the other acquisition of Monte Paschi, Mediobanca and BPER Banca. Of course, there could be room for something more. It's not only from one bank to decide exactly what to do. We think we are in a good position to understand where the market would generate opportunity for us.
For sure, we are in a strong position in terms of capability, having already realized a very good transaction years ago. We are now at the plenty of our capability in terms of reaching the profitability we promised last year. We, of course, have also a lot of small consolidation potentially to do related to capability distribution, which would emphasize our product factory. There is a lot to go. We are looking to everything, big, small, opportunities, in terms of banks, in terms of other product factory to join to our product factory, in terms of distributors of our product factory. It's difficult to say which one will materialize, which one will give the best opportunity for our shareholder.
For sure, we are considering and studying all the situation in order to take advantage from potential availability from other counterparties.
The next question is from Delphine Lee, JPMorgan.
Yes. Good evening. Thank you so much for taking my questions. My first one is just to go back on fees and commissions. It looks like, I mean, the trends in Q4, in Q1 were definitely better Q- on- Q. The year-on-year comparison seemed to be somewhat a little bit weaker than what we have seen with peers. If you could give us a bit of color what you expect in the next few quarters in terms of trend on a pro forma basis, clearly, after the reclassification. My second question is just to go back on M&A. Previously you were talking about the M&A options with Cariparma, with Montepaschi. Is this still kind of priority for you? Is it something that you're actively looking?
If so, sort of, you know, what shape and form, you know, would you like to see, and what would be your sort of, you know, kind of ideal scenario, in terms of value creation? Thank you.
Thank you, Delphine. As far as the first question about fees, let me remember that last year Q1 was a record level and was driven of course also the peculiar situation we were experiencing. The fact that we were able almost to replicate last year, the only difference is coming from fees on lending, as I was explaining before, which as a matter of fact is now recovering. Let's be positive about the possibility to made better results as we expect in terms of fees and commission. Let me also say is that Q2, Q3, and Q4 last year were not that strong like Q1.
I have only April of this year as comparison to last year, and I can anticipate that April, in terms of investment product, in 2026 has been better almost 20% vis-à-vis last year, with a contribution, if I'm not wrong, of EUR 5 million-EUR 6 million better than April 2025. A very strong contribution from the network. I think these are now numbers, once we have a common strategy also with Anima, with our bank insurance activity that was not the case last year. Very important for us, the contribution coming from that, and the possibility to exploit at the most the full power of this product factory. M&A, we frankly speaking, we don't have priority. Priority comes from the market opportunity. We are examining all the possibility.
Basically, I think we speak more about Agricole and Montepaschi just because Agricole is the first shareholder with 23% of shares. For sure, everybody could imagine some opportunity with them as well as we are a small shareholder, but nevertheless quite relevant shareholder for Montepaschi with 3.7%. I think this is the reason why everybody expect possibly these two transaction. To be a shareholder does not mean that the opportunity for doing an M&A are ideal. Let's wait and see. Let's understand what the other counterparty are willing to do.
I think, that we are in a good position to take advantage from every opportunity as well as I mentioned before, opportunity arising from smaller M&A, which can, enhance the capability of our product factory.
Thank you very much.
The next question is from Ignacio Ulargui, BNP Paribas Exane.
Thanks very much for the presentation and for taking my question. I have just one question on costs. I mean, how should we expect costs going forward in the context of a very solid performance in 1Q? Could you consider at a given point in time using that excess capital and that potential, better capital progression to take any managerial action to improve cost further? Thank you.
Thank you, Ignacio. The trajectory of costs is, as you correctly observed, positively oriented. We managed in this quarter to deliver savings versus end of last year in general versus the overall last year trend because this has been the impact, the result of the cost management actions we undertook since the announcement of the plan with the redundancy program in the replacement of existing older cohorts with new ones to a less for a lower rate. For a rate of replacement is lower than one. In general, the trend for cost that we expect to experience can benefit from additional marginal efficiencies.
Let me only observe that you are not only below the trajectory of the plan, but we expect to continue to stay below this trajectory. You know, the only additional qualitative point I may add on that is that we within this overall trend, we expect to replace part of the running costs with change costs, so investments and expenses that we are implemented in order to modernize the infrastructure of the bank.
Thank you very much.
The next question is from Luís Pratas , Autonomous.
Good afternoon. Thank you very much for taking my questions. My first one is on the 2026 guidance. For multiple results, we have seen the disclosure that there is some room for overperformance, especially in fees, costs and cost of risk. I would like to ask you what is holding you to provide a more positive guidance, whether it is just a more conservative view, whether it is the weaker macro given the geopolitical uncertainty, or maybe could you also think about recycling any of this better performance into investments for the future? My second question is also on the CT1 guidance of the 14% that you mentioned. Could you please break down the main OCI movement that you observed in April?
In particular, it would be very helpful if you could provide some sensitivity to changes in sovereign spreads, as well as any movements to the Monte Paschi share price. Thank you.
Thank you. This is Giuseppe speaking. For the guidance, I think we have been quite clear. On page 20, you have all the different items compared to the business plan on 2026. Of course, before tax, we are much ahead, I would say, of what not the guidance, but what we expected before knowing the impact or the new fiscal impact. Of course, we have still some prudent approach related to the recovery of almost EUR 100 million we have to perform in order to match the 2026 business plan. After one quarter, even though we have recovered almost all the gap, maybe it's more prudent for us to wait another quarter.
Also, due to the macroeconomics, which, as you know, are not that stable in terms of geopolitical, in terms of inflation, interest rate, and so on. Of course it would be easy for me to say that I better my guidance and say that it would be equal or better, but does not change much. I would therefore ask you to consider that is already a bettering because in February, we were not saying that we would have matched the plan after tax, but only before tax. Now we are much more confident to be able to reach also the results, absorbing almost EUR 100 million of tax effect. For common equity, I leave the answer to Edoardo. Yes.
If you go back to the track record of Monte Paschi share price, I believe it was around 7.4, if I'm not mistaken, end of March. Now it's and end of April was around 9. This leads to 1.6x 110 million, which is more or less our number of shares. To long story short, slightly more than 30 basis points is the improvement in April we have in the pro forma from Monte Paschi. Slightly less than 10 basis points is the improvement we had in February, the comprehensive income reserve. Debt, February comprehensive income, debt, government bonds reserves.
Great. Thank you very much. Maybe can I just do a quick follow-up on the tax rate as well, since, you know, it's a very important guidance point. This quarter came in at 36%, and it was a bit worse than the 33% guidance last quarter. Could you please clarify what's the tax rate guidance for the rest of the year? Thank you.
Yeah. I think this is slightly higher than what we expect to have overall during the year. Of course, the tax rate in Italy has been impacted by as Giuseppe was saying, the budget law approved end of 2025. We expect to stay in the region of 35%, 34%-35% overall for the whole of the year.
Thank you very much.
It's slightly higher because there are items that are less impactful in terms of taxes, such as, for example, Monte Paschi dividend maturing in second quarter, which is part of revenues, but is taxed before the distribution, so it doesn't impact on tax on taxation.
The next question is from Elena Perini, Intesa Sanpaolo.
Yes. Thank you for taking my questions, and good evening, everyone. My question is about your stake in Anima, because you are at 89.95%. You have several times mentioned the opportunity to reopen Anima's capital to other partners to, you know, also strengthen the distribution relationship. Is still your view at the moment, and how this can potentially help other bigger M&A options for you?
No, of course, as you were mentioning, is a possibility to open and to either the possibility of accommodate both other banks or distributors interest in Anima or also potential M&A. To have the company listed, that would help, of course, the value determination of the company, the possibility to have some step in a way which would be a bit easier than if we delist the company. Of course, we will not keep it forever listed, for sure. Let's wait this situation in which everybody's talking about opportunity, I think in a couple of quarter we will make a decision about it.
As you know, we can also decide to make a merger to consolidate Anima, without any other action on the market. Thank you.
The next question is from Noemi Peruch, Morgan Stanley.
Good evening, and thank you for taking my questions. I have just a few. In Q1, what drove the deposit decline, especially on the side deposits? In terms of common equity, I appreciate the guidance and the mark to market as of April, but I was wondering if you could give us visibility also in perhaps other moving parts that could impact common equity that will impact by year-end. Then, a follow-up on the cost side. If I'm not mistaken, you have plenty of room to implement a further early retirement scheme on top of what you have agreed with the unions with Q4. I was wondering where this initiative sits in your priority list, and also in the context of meeting the net profit targets. Thank you.
I would say, I wouldn't say that this is a decline in deposit. Frankly speaking, we are EUR 400 million in March below December, which of course has also seasonality. Let's have in mind that in March, we placed EUR 1 billion of BTP coming, of course, from current account. If I may say, in April, we are already above the figure of December 25. As you know, this has been the growth in deposit, has been a signal in our bank growing year- by- year. Of course, we cannot expect to have a EUR 5 billion of increase in deposit every year like last year. We have in our plan a slightly growth of EUR 1.5 billion -EUR 2 billion per year.
Having in mind that of course with the growth of last year, we are already where we thought to be able to be in 2027. We are not, you know, spending interest rate in order to keep more volumes of deposit, but because of our footprint, we increase deposit in any case. Maybe cost and common equity, I think Edoardo already answered, but I leave the room.
Common equity, if I understood correctly, the question was about additional guidance for the rest of the year. I think that the level that we have in April may represent the pro forma level that we have in April may represent a good hint towards the direction we expect to have until the end of the year. In the region of 14%. Bearing in mind that with the current market volatility, this is a level that is subject to a number of statistical factors. With some room for defining an interval, a confidence interval .
Cost, t alking on costs, as I said earlier, we have implemented already all the actions that were planned into our strategic plan last year. Last year we said that basically the benefits on cost were locked in once we signed the contract with the unions. We are delivering some additional improvements, working on a number of levers. For example, we signed recently an additional agreement for 100 headcount of reduction that are expected to be implemented during the remaining part of this year, mostly in between the first and second quarter. The rest, as I said, is to confirm the current trajectory and to remix in favor of more investments, more change, more modernization of the bank.
Thank you.
The next question is from Hugo Cruz, KBW.
Hi. Thank you for the time. I have three questions. First, on loan growth. You know, it seems a bit weaker than some of what than the peers that have reported already. I was wondering if you could talk about your market share of new originations for the main segments, you know, raising mortgages, corporates, et cetera. A second question on NII. You know, I understand you wanna be cautious with the, you know, with the guidance overall given the macro uncertainties. What I heard from you about the NII, it sounded like all the trends would imply an increase to the guidance, 'cause I think guidance implies kinda flattish rest of the year. You're talking about volumes going up, margin expansion, et cetera. Why are you not raising your guidance for NII for this year?
The third question is around, if you could tell us the pace of the impact of DTA assertion on the CET1 ratio during the rest of the year. You've done 18 basis points in Q1. I was wondering, what should we assume in other quarters? Thank you.
Thank you, Hugo. Loan growth, we were much more prudent, I remember, when we presented our plan vis-à-vis our competitor. We are happy about EUR 1 billion of loan growth. We have a target of EUR 2 billion for this year. Again, we don't want to sacrifice margin for loan growth. As you have seen in our presentation, we are growing in all the segment, taking advantage also from the state guarantee and the collateral, keeping safe our stock of portfolio. We are quite happy about our growth. Again, I don't think you can push our loan growth in this situation in which there is some resistance from our entrepreneur to increase the investment. I think it's good that we are so close to take advantage from any potential movement.
We are still waiting for some good market environment, bettering of the market environment in order to push on the loan growth. Having said that, again, for instance, for mortgage, we are applying some new product in order to offset the reduction we have experienced in last quarter, but we are still growing year-on-year. On NII, Edo, respond.
Yeah, NII, we definitely are seeing positive signals, and expect to have results delivering a positive trend versus the first quarter of this year. Bear in mind that we have mitigated on purpose our NII sensitivity to avoid excessive dependency on NII, so to avoid riding too much the waves when they go up, but also going too much be too much exposure to the downside risk. Net-net, if some of these conditions prove to be even more favorable, then we could revise our guidance. For the time being, we prefer to stick to the indication, to stay consistent with the exit level of December. The other question was on DTA.
Yeah, more or less, we have an expectation for the rest of the year of capital creation coming from DTAs that is similar to the pace we experienced during this quarter. Consistent also with what I said of the 200 basic of the 120 basis points of capital creation expected from DTA and prepare the comprehensive income during the remaining part of the plan rise.
Many thanks.
Gentlemen, Mr. Riscassi, that was the last question. There are no more questions registered at this time. I turn the conference back to you for any closing remarks.
Okay. For being with us, and I'm sure we'll see around during our road show during the next days. Thank you again.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.