You're welcome, and thank you for joining the MPS Group third quarter and nine-month 2025 results presentation. As a reminder, all participants are in 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. Luigi Lovaglio, Chief Executive Officer and General Manager. Please go ahead, sir.
Good morning, everyone. Thank you for joining us today for the presentation of our third quarter and nine-month 2025 financial results. This is a landmark moment for Monte Paschi. At the end of September, we successfully completed the acquisition of Mediobanca, a strategic move we have always believed in. 86.3% of Mediobanca shareholders confirm that belief by tendering their shares. That is a clear endorsement of the industrial strength and the long-term value of this combination from both core shareholders and from Italian and international institutional investors. First, let me thank all of our shareholders for their trust and confidence in our vision and in our ability to execute. I also want to thank our people. Our teams at Monte Paschi have stayed laser-focused through intense months, and they continue to serve clients, deliver strong commercial momentum, and produce another solid quarter.
They show what commitment to performance and integrity looks like. I also want to acknowledge our colleagues at Mediobanca as well. Their results this quarter demonstrate the resilience of their business model and the strength of their client relationship. That is exactly the kind of excellence we want to build with. Finally, thanks to our client. Your continued trust is the foundation of everything we do. Together, shareholders, employees, clients, we made this possible. With Mediobanca, we have created a new competitive force in Italian banking. This combination brings together strong brands with deep client loyalty, exceptional professionals across both organizations, complementary business strength across commercial banking, wealth management, corporate investment banking, consumer finance, and cutting-edge and scalable technology. This is a creative combination financially, strategically, and commercially. It accelerates growth and value creation.
Our combination process with Mediobanca, with more than 20 ongoing work streams, is structured, on track, and is going smoothly with discipline. I am pleased to start working closely with Vittorio Grilli and Alessandro Melfi di Riga, who will be key in ensuring that together we reach new heights and as an integral part of this project. We will present our group business plan in the first quarter of next year. That will be the moment to outline the full strategic and financial roadmap and potential power of the combined group. In the meantime, as you can see from the third quarter results, Monte Paschi continues to perform very well, thanks to the strength of our franchise and disciplined cost management. I am especially pleased to note that our people were not distracted by the Mediobanca transaction.
Across the organization, they were able to stay focused and deliver on their business target to achieve profitable growth. We reached net profit at about EUR 1.4 billion, up by 17.5% excluding taxes. Our balance sheet, as a consequence of the combination with Mediobanca, continues to be stronger and stronger. We maintain a very solid level of CET1 ratio at 16.9%, including the preliminary impact on Mediobanca. This is higher than we expected when we announced the transaction in January. For the 2025 full year, we are setting new guidance on pre-tax profit. We now expect to well exceed EUR 1.6 billion. Let's move on to the nine-month results, which testify our capability to build sustainable value and deliver high returns to our shareholders. We closed the first nine months with a net profit of EUR 1,366 million, up by 17.5% year-on-year, excluding depositing net taxes in both periods.
Sustained by solid growth, thanks to the clear focus on commercial activity. Third quarter net profit was EUR 474 million, up by 16.5% compared to the third quarter last year, confirming the solid progression while the quarterly comparison, quarter on quarter, was affected by the typical third quarter seasonality on revenues, while confirming a high level of profitability. Net operating profit increased by 3.7% year-on-year, reaching about EUR 1.4 billion in nine months, thanks to resilient revenue sustained by fees offsetting rate impact on net interest income almost totally, operating cost under control, and improved cost of risk. Third quarter net operating profit at EUR 453 million, up by 2.4% year-on-year, and decreasing by 7.3% quarter on quarter due to the seasonality. After nine months, gross operating profit reached EUR 1,643 million, almost stable year-on-year, thanks to the resilient revenues.
In a declining interest rate scenario, sustained by fee, income, and cost well under control. Third quarter gross operating profit at EUR 532 million. Nine-month cost-to-income ratio at 46%, stable year-on-year. Strong progression on bank's commercial performance in nine months, driven by the clear focus on Monte Paschi's franchise on key strategic areas. Wealth management with gross flow inflow close to EUR 30 billion, up by 18% year-on-year. We granted mortgages to families worth EUR 48 billion, more than doubling last year's volumes. New consumer loan showed a 17% increase compared to the same period of last year. These are tangible signs of bank deeply connected to its client and to the real economy. Our cost of risk dropped to 42 basis points in nine months, from 53 basis points last year. Gross NP ratio 3.7%, net NP ratio 2%, and NP coverage at 48.7%.
The combination with Mediobanca will lead to a further enforcement of the balance sheet structure of the new group, with a sound liquidity position with counterbalancing capacity of EUR 53 billion. Quarter one fully loaded at the solid level of 16.9%, including the preliminary impact on Mediobanca transaction, confirming best-in-class capital buffer and providing strategic flexibility. With the successful completion of Mediobanca tender offer, we are opening a new chapter in 553 years' history of Monte Paschi. The 86.3% acceptance gives us clear governance from day one and the strategic flexibility to move quickly in implementing the combined industrial project. The new Mediobanca board appointed on October 28 marks the start of the new phase of development for the combined group. Before we move forward, a warm welcome to our Mediobanca colleagues as we begin this new journey together. We are now one team building the future.
Now, on third quarter and nine-month results, as I mentioned, the profit for the first nine months reached EUR 1,366 million, up by 70% year-on-year, excluding depositing net tax in both periods. We reported as well a solid quarter contribution for EUR 474 million, up by 16.5% year-on-year. Net operating profit after nine months amounted to EUR 1,389 million, showing a positive trend, growing 3.7% year-on-year with resilient revenues sustained by fee income. The net operating profit in the third quarter amounted to EUR 453 million, showing a 2.4% increase versus a year ago. Now, let's move on to gross operating profit. We reached EUR 532 million in this quarter, showing a resilience year-on-year and cost-to-income ratio at 47%, basically stable year-on-year. Gross operating profit after nine months reached EUR 1,643 million, almost stable year-on-year, thanks to resilient revenues, again driven by net fee income.
This confirms our disciplined approach to both costs and revenues generation, ensuring steady performance. For the first nine months of 2025, we maintained the cost-to-income at 46%. I think it's important to underline the strong commercial performance, as you can see after nine months in this slide. Total commercial savings crossed EUR 174 billion and were higher by almost EUR 10 billion since September 24, 2024. Wealth management gross inflows amounted to almost EUR 13 billion in nine months, up by 18% year-on-year. New retail mortgage granted in nine months reached EUR 4.8 billion, 2.2x compared to nine months of 2024. As well, new consumer finance flows amounted to almost EUR 1 billion, with a 70% year-on-year increase. I believe these are a confirmation of capability and effectiveness of our commercial network, and I would like once again to thank you, my colleagues, for the excellent results achieved.
Now, let's move on to the net interest income evolution. In the third quarter, it amounted to EUR 544 million, down by 1.3% quarter on quarter, confirming a certain resilience, both in terms of overall spread. The first month of 2025, net interest income reached EUR 1,638 million, with an early trend in line with the guidance given to the market at the beginning of the year. Net loans dynamic in 2025 has been strong, with a growth in retail and small business component by almost EUR 4 billion, with a positive trend also quarter on quarter despite seasonality. The same performance we are observing in total savings, with total commercial savings in September crossing the level of EUR 174 billion, and they're up by more than EUR 3 billion quarter on quarter, supporting an increase year-on-year exceeding EUR 10 billion, with EUR 7 billion from the beginning of the year.
Now, on portfolio goals, as usual, this is stable, almost stable, with a small decrease of revenue across the year, and with credit spread and sensitivity confirmed at a very low level and slightly longer duration reflecting reinvestment of maturities. Now, let's move on to fees and commission income. If we look at the quarter, we reported an amount of EUR 382 million, with a solid 7.4% increase versus third quarter 2024, with an excellent performance on the wealth management component, up by 10.6% year-on-year, and a positive dynamic also on the commercial banking component, up by 4.5% year-on-year. The quarter evolution is affected, as I was already mentioning, by the typical third quarter seasonality on both wealth management and commercial banking fees.
If we look at the performance after nine months, you can see that thanks to the excellent work of our commercial network, the total fees reached the level of EUR 1,185 million, up by 8.5% year-on-year, with wealth management and advisory fee up by almost 13% year-on-year, and the positive dynamic also in commercial banking fees increased by 4.4%. In the third quarter, operating costs amounted to EUR 468 million and were marginally lower quarter on quarter, driven by non-HR component decrease. Costs were flat year-on-year, with the increase in HR costs related to labor contract renewal and increase in variable remuneration pool completely offset by the effective management of non-HR costs. After nine months, total operating costs amounted to EUR 1,411 million and were higher by 1.4% year-on-year.
As I mentioned again, the growth was driven by the HR component due to the labor contract renewal and the variable part remuneration, and part of this increase was offset by effective cost management of non-HR costs. Now, let's move to asset quality. The stock non-performing decreased to EUR 3.1 billion, reflecting a reduction of EUR 400 million in the quarter, mainly due to the sale of NP portfolio completed in August. The gross NP ratio is 3.7%, and the net NP ratio at 2%, in line with the business plan targets. Cost of risk for nine months was 42 basis points, down versus 53 basis points of full year 2024, confirming the good status of our asset quality. The breakdown on NP stock shows a low incidence of bad loans on total NP at about 30%, and that's why this portion, this proportion should be considered in analyzing the coverage.
Anyway, it's a very good level of 48.7%. You can see from the slide the solid liquidity position of Monte Paschi, leading to a more diversified funding structure and a lower ECB funding weight on total liabilities. Moving on capital, I believe that this is a very interesting set of figures. The strong capital position of the bank is confirmed also in this quarter. We had common equity tier one ratio fully loaded at 16.9%, already reflecting the preliminary impact of the Mediobanca transaction. This ratio incorporates the net profit of the period and is calculated net of dividend, assuming 100% payout ratio on net profit. As you can see, the Mediobanca transaction is impacting around 2%, 2 percentage points, in line with our preliminary estimates. It is worth mentioning that we are not fully incorporating the purchase price allocation.
As for example, we have not yet factored the valuation of financial asset and liability fair value. The capital ratio is therefore very strong, with a large capital buffer compared to regulatory requirements and also our management target that we were indicating at the level of 13%, and that gives us strategic flexibility going forward. Now, I would like to spend just a few words on the results that were already published of Mediobanca. I think it's important to underline the positive trend and the potential that is deriving from the combination. The commercial momentum remains solid, with EUR 2.5 billion of net new money, robust merger acquisition activity in corporate investment bank division, and EUR 2.3 billion of new consumer finance volumes, very remarkable results. The diversification of the business has supported resilient revenues, even in a challenging macroeconomic environment.
Now, let's again go through some key important messages regarding our combination. We have really transformed into a new leader in Italian banking with the scale and credibility to compete at the European level. This transaction was driven by a clear conviction that Italy deserves a stronger, more innovative, more diversified financial institution, one capable of supporting families, small and large corporates across the country. On this slide, you see some of the key financial metrics of the combined group: EUR 8 billion in performance revenues and around EUR 3 billion in adjusted net profit. I would like again to underline the strong industrial rationale for our project. From the get-go, the industrial rationale has been clear and consistent. Monte Paschi and Mediobanca are different and therefore complementary. Together, we combine leading capabilities in retail and commercial banking, consumer finance, asset gathering and wealth management, private banking, corporate investment banking.
The result is a more resilient, diversified, and innovative group, with a balanced source of profitability and multiple engines to invest, to grow, and to better serve clients. On this slide, you can see an overview of our combined operating model and the strong industrial merits of the transaction in each business line. In retail and consumer finance, we bring together Monte Paschi's nationwide network and Compass best-in-class product and risk expertise. In wealth and private banking, we now operate with greater scale and higher advisory capability, spanning Monte Paschi Premium, Banca Mediobanca Premiere, Mediobanca Private Banking, Compagnie Monégasque de Banque, Monte Paschi Family Office. This will allow the group to deliver more sophisticated solutions and attract high-value clients. In corporate investment banking, our clients benefit from a stronger balance sheet, a deep advisory expertise in Italy and abroad through Messier & Associés and Alma Partners.
Insurance and asset management and stability, add stability and optionality, diversifying our revenue base and supporting long-term value creation. The combination creates a more resilient, diversified, and innovative group. On the slide, the figures that you see represent a preliminary illustration of the proforma business line on the basis of historical numbers and not including synergies. From a revenues mix composition, asset gathering and wealth management represent almost 30% of the total revenues. Retail and commercial banking stands around 31%, consumer finance 17%, and corporate investment banking, including the lending business for Mediobanca and Monte Paschi large corporations, represent almost 15%, while the Generali insurance contribution represents 7%. This is a first snapshot of what the combined entity will look like once we have completed our project, and we are working with our colleagues at Mediobanca to further optimize the target business model.
Clearly, we will provide additional information and those details in the new business plan. We began the combination process immediately with structured work streams and joined teams across both organizations, coordinated through regular cross-functional governance. The plan covers OT business and support functions, with clear accountability, senior leadership oversight, and the focus on maintaining business continuity and exceptional client service throughout. As a part of our integration strategy, a dedicated HR work stream has been established, focused on retaining key managerial talent. This initiative reflects our deep commitment to preserving and enhancing brand value during this transformative phase. We want to ensure continuity, safeguard institutional knowledge, and support long-term leadership stability. Our objective is to build a solid, efficient operating model, step by step, with disciplined project management and transparent communication.
A detailed analysis for examples already completed on IT architectures, operating models, and development priority, aiming at enhancing the best solution for each area and plan IT investment for digitalization to ensure resilience and efficiency. This is just an example of how the work is progressing at full steam. The EUR 700 million industrial synergies target we communicated is now in this preliminary assessment, reconfirmed on the basis of this work we are performing. Mediobanca remains a distinctive and highly valuable franchise within the group, with this brand, client relationship, and professional capability preserved and strengthened. The ambition is to unlock new opportunities for our growth across both organizations. The group will increase productivity, expand its product and service offering, invest in technology and digitalization, and continue to attract and retain top talent. Mediobanca is an accretive combination from all perspectives. Return on tangible is expected around 14%.
We expected to confirm our payout ratio of 100%, and the capital position remains best in class in Europe, providing strategic flexibility. Now, short update about the process and indicative timeline. I have to say that our approach is quite methodical, step by step, and transparent. All milestones have been met, demonstrating discipline, execution, and strong project management. In the first quarter of next year, we will present a combined business plan that reflects the full potential of our group. We will hold a capital market day to present it to the market. Now, going back to Monte Paschi standalone, again, we reported another solid quarter with almost EUR 1.4 billion after nine months, strong commercial performance, strong capital position with quarter one at 16.9%. We are further improving our 2025 full year guidance with the pre tax profit expected to be well above EUR 1.6 billion.
The capital position is expected to be above 16% at the end of the year, a very sound level which provides confidence in ensuring a 100% payout for the coming years. Monte Paschi plus Mediobanca creates a third competitive force in the Italian banking industry with potential to increase its European scale. We have organized teams with people from Monte Paschi and Mediobanca working together with a common strategic vision and spirit of collaboration, each bringing their skills, know-how, and sense of responsibility to bear. The values are aligned around integrity, respect, customer focus, and accountability. Now it is clear that together we are capable of making things happen. Our goal is clear and within reach to play a leading role in Italian and European banking with vision and the desire to create sustainable value for all our stakeholders.
Thank you very much, and we are ready to answer your question.
Thank you, sir. Excuse me, this is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. The first question comes from Antonio Reale of Bank of America.
Good morning, all. It's Antonio from Bank of America. Just a couple of questions from my side, please. The first one on distribution. Your capital ratio at 16.9%, as you said, incorporates the new dividend policy of up to 100% on net profit, which is a big change, I think, for you. As you were not previously paying the tax reassessments out.
Now, does this mean that you're now looking to pay out on a reported net profit basis, so including potential DTA write-ups and similar? Just trying to get a sense and better understand what this means for your dividend per share going forward. I remember during the tender offer, I think you mentioned that you wanted to try not to deviate too much from the DPS of last year. Related to that, if I may, pretty much, if I look at all your peers, they pay dividends on an interim basis. I think it was the case also for Mediobanca. Do you think it's something you would look to consider for 2026 fiscal year? That's my first question.
Then my second one is really trying to get a sense of how you're thinking about the reorganization of the new businesses that you plan to sort of reorganize following the deal with Mediobanca, both from a divisional and a legal entity standpoint, if I may. Your slides 27 and 28, I think, show very clearly how, in one go, you bought back all the product factories that Monte Paschi had lost over the years and more. The question is, how do you plan to integrate all these businesses and, at the same time, monetize Mediobanca's strong brand and achieve the synergies that you targeted? Thank you.
Okay, I will try to be very clear.
Yes, we confirmed that we expect to distribute for this year a dividend per share broadly in line with the one of previous year, ensuring to our shareholder a yield among the highest in Europe. Afterwards, we are committed to deliver a growing DPS while preserving our strong capital position, from which we want to leverage for industrial projects and additional remuneration for our shareholders. As far as interim dividend, it is clear that it is one of the options we will consider, and we will be very precise once that we are going to present the business plan in the first quarter next year. As I was mentioning regarding the integration, yes, in our project, we were quite clear saying that we would like Mediobanca to be focused on corporate investment banking and high-level private banking, let's simplify.
As we believe there is a strong competence there, excellent capability in dealing with customers, and a huge potential on which we can leverage in order to enrich our total level of profitability. I have to say that from these few days where we are already working together, I feel even more comfortable that this is the right direction because we can create and build up a real and unique potential, additional, powerful institution that will support the Italian economy with the competencies in terms of advisory capability, to which we are going to add the balance sheet of Monte Paschi. On private banking, Mediobanca is a top player, strong and excellent professional team is over there. I strongly believe we have room for significantly increasing our total asset and our penetration in the overall Italian landscape.
Now, it's clear that the approach we want to use in order to be very effective is already from day one, a sort of divisional approach. We already are setting our overall way in managing this opportunity in this way. We are going to consider, again, once we have a clear view about the business plan, how we can optimize in terms of also legal structure this exercise. Clearly, Mediobanca will be a legal entity with this brand because it's too important to preserve the value and the peculiarities that Mediobanca has that are in some way different necessarily from commercial banking. We want to leverage on this diversity in order to increase the value and to be a player that is unique in the Italian landscape for the balanced approach we can have on the market compared to other big players.
Thank you, very clear.
Just maybe on the interim dividend, if I may, just follow up on that as part of the question. I do not know if you have any early thoughts on that. Thank you.
Assuming Antonio, Andrea speaking, can you say again the follow-up question because we missed it?
It was just if you had any early thoughts on your interim dividend and considerations.
Sorry, Mr. Reale, we cannot hear you. Can you please speak closer to the phone?
I think I mentioned, right, that it is an optionality we are going to consider with the business plan. When we are going to present, we will be clear on that. Clearly, we have a positive attitude towards the opportunity to have interim dividend.
Okay, the next question is from Marco Nicolai of Jefferies.
Good morning. First question, again, on the DPS.
I got your comments about this year DPS broadly in line with last year and growing DPS from this level. I'm just trying to understand the moving parts for the 2026 DPS because clearly this year with the big positive one-off you will have at the end of the year in terms of DTA write-up, you can pay pretty much if I look at the amount of net income that will bring, you will be able to pay pretty much the DPS you want. For 2026, I'm just trying to understand the moving parts there because the DPS you had in 2024 seems relatively high. I was just trying to understand in terms of synergies, what do you expect already coming through in 2026, if any, and also how you plan to split the restructuring costs between this year and next year.
In general, all the moving parts that can bring us to a DPS in 2026, broadly above the one of 2024. This is the first question. The second question is if you can update us on your asset management partnerships. My interpretation of Banco BPM management comments yesterday is that they are relatively open to a merger and/or anyway to do something with you. Obviously, these comments were kind of at the crossroad with Anima as well as with the stake that they have into BMPS. I was just trying to understand what's your view on this topic and if you can help us understand what are the future plans in terms of M&A. These are my two questions. Thank you.
Okay, thank you.
We will provide clearly quite detailed information once that we are going to present the business plan. Now, we would not like to go too much too deep in providing early drivers in order to get this growing dividend, right? We are confident that our level of synergies are even conservative starting from the first outcome from these work streams that we are practically developing together with the Mediobanca team. At least the level we already plan are in our understanding ensured, and we will be, as I said, more precise once that we are going to finalize the business plan. As well as on the integration cost on which we are now analyzing how to split them. Anyway, we believe that what has been planned from the very beginning when we launch the deal is confirmed.
Even, as I said, we are even more confident that we can get our goal. Those are the times we were speaking about growing DPS per share. Now, Anima is for us an important partner. We are keeping growing in offering this product, and I believe this is also reinforcing our relationship with Banco for this common pattern that we work with. It is clear for us as an important value and also strategically is important to keep reinforcing this cooperation. Anyway, we are completely focused in delivering this combination, industrial combination. I am not using the word integration because this is not an integration. It is a combination of two excellent institutions. We believe that the more we are focused on this implementation, the sooner we will get the results that we committed by launching the tender offer.
Full speed on making all what we plan implemented and effective.
Thank you.
The next question comes from Ignacio Urlaguy of BNP Paribas Exane.
Thanks very much for the presentation and for taking my questions. I have two questions. One is coming back a bit to Antonio's question on the integration and your comments about Mediobanca being a legal company. I want to just understand a bit better how do you think the listing is going to go, whether you would plan to further integrate by taking over the minorities and integrating that, and what would be the impact if you do not do that in synergies? Because I think it would be a bit more difficult to go ahead with all the planned cost savings. The second question is on the commercial activity of Monte Paschi in the quarter. Has been super strong in lending and deposits.
Just wanted to get a bit of a sense of where you're gaining market share in lending. In terms of deposits, you mentioned in two key results that you were focusing on transactional deposits. I think that just wanted to get a bit of color on how do you think about your NII implications after the good quarter into coming quarters. Thank you.
Let's start by saying that the success of the tender offer at the level of 86% acceptance rate is ensuring us effective governance from the very beginning. In the presentation, in some way, we already provided a first glance how we see this combination. We are working, as I said, with our Mediobanca colleagues and the deep dive on the target business model we provided, as I said, in the context of capital market day in first quarter next year.
What is important to underline is that we will maintain and leverage the two strong brands of Monte Paschi and Mediobanca with the respective entities focused on what we say the core business. On the current listing of Mediobanca, let me say that with the 14% free float, we see reduced volumes and liquidity on the stock. However, it's too early to take any decision of a potential delisting. That is part of the assessment in the context of the new business plan, as I was mentioning. As far as net interest income dynamic, I think that we're expecting the fourth quarter to keep almost level of the third quarter and then to have again a level of 2026 almost in line with the one of this year.
We can have some positive upside if we will be capable, as we are now aiming at, to increase the level of our lending thanks to the combination with Mediobanca capability and advisory at the balance sheet of us. Clearly, the expectations are as well to keep under control the cost of deposits that are growing. As we were mentioning, we are really intensifying our commercial efforts, leveraging on the very positive attitude that we are now observing in the network that are very well motivated. We reinforce our capability in managing. We are getting continuous feedback, very positive in new meetings with customers. This will enable us also to keep growing in deposit without compromising the spread. That is why we are very positive that we can continue.
Clearly, we have to think that part of these deposits are collected with the scope then to convert in asset management product, so we can have some fluctuation just depending on the capability to make this kind of conversion, at the same time to replace what we are converting in asset management product or bank assurance product with regular deposit. Anyway, we are really at this point enjoying a very positive moment of all our network, our franchise. It is not only deposit that we see a good pace without compromising the spread, but also, as you saw in the presentation, inflow of asset management product, bank assurance product. Overall, it is a very positive momentum for Monte Paschi.
Thank you very much.
The next question is from Giovanni Razzoli of Deutsche Bank.
Good morning to everybody. I have just one question.
Sorry for asking you this detail, but in the broader context of your capital position and dividend policy is important in my view. You have reported a 17.9% CET1 ratio, which includes a part of the PPA. I was wondering whether you can share with us what was the impact on the PPA. You have mentioned that there could be more in the coming quarter due to the fair value of assets and liability of Mediobanca. If you can help us understanding what was the impact of the PPA in this quarter and what could be the impact in the next quarter. I am wondering, for example, whether the PPA this quarter includes or not the revaluation of Mediobanca real estate assets. Thank you very much.
Ciao, Giovanni. Andrea speaking. Good morning to everybody. As mentioned, the PPA as of 30 September 2025 was partial and preliminary.
Not including, for example, as mentioned by the CEO before, the valuation fair value of financial assets and liabilities. It includes mainly the revaluation of Generali that is anyway not impacting the capital position and a few hundred million regarding what you mentioned, the real estate, which is in line with the projections that have consistently been delivered throughout the public offer.
T hank you.
The next question is from Hugo Cruz of KBW.
Hi. Thank you for the time. I have a few questions if I may. First, can you be a bit more clear on the CET1 ratio impact? The impact coming in Q4, do you expect that to be positive or negative? That is my first question. Second, related to this, the DTAs, I thought all the DTAs would be fully brought on balance sheet on day one.
You still have EUR 1.1 billion off balance sheet. Why is there still off balance sheet? When do you expect that to come on balance sheet? Will it be Q4 or not? A third question, clarification on your comments about the dividend for 2026. Out of 2026 earnings, you still have a lot of DTAs, very strong capital ratio. Is there any possibility that you can manage the DPS to show that growth versus 2025 DPS, or will it be just mechanical DPS out of 100% of payout? A final question on the bank tax. Some of your peers, Banco BPM and Banca Mediolanum, have given a bit of an indication of the potential impact. Can you comment what could be the impact for you? Thank you.
Okay. Thank you for your questions.
On the first question, capital ratio, common equity ratio end of the year, this will depend on the final impact of the PPA that it is under assessment. What we can, let's say, confer now is that we expect that it will be higher than 60% anyway. That is the answer. About the DPS in 2026, it is what was mentioned by the CEO. It is too early to give a guidance on net profit. What we can already confirm is that we expect to achieve a good chunk of synergies already in 2026. On the tax law, the impact is definitely manageable. In 2026-2028, we expect based on the current draft of the law, an impact on the combined perimeter. Let me reiterate, on the combined perimeter of around EUR 100 million per year.
On top of this, this year, there might be the impact of the taxation of the so-called extra profit reserve that we expect will be accounted anyway directly into equity. The fourth question I missed. It was on the DTA. Sorry, the DTA. The DTA. No, actually, we have still EUR 1.1 billion of DTA off balance sheet when we update the new business plan. So end of the year, we expect that this amount will be basically written up. We are expecting full. And sorry if I may, clarification, the EUR 100 million impact on the tax, that will be through P&L? The yearly one. In 2026, in 2027, in 2028, yes. It is additional tax. Yes.
Okay. Thank you very much.
The next question is from Luis Manuel Grillo Pratas of Autonomous.
Hi there. Thank you for taking my questions.
My first one, I have essentially a bunch of clarifications. The first one is on the, so you essentially mentioned that you did not include any fair value adjustments on the Mediobanca balance sheet. If I am not mistaken, the 2025 annual report of Mediobanca included a large positive effect there. I wanted to hear any comments if whether we should expect a positive in Q4 coming from this. You just mentioned to Hugo that maybe in Q4 we should not expect any meaningful DTA capitalizations. Can you confirm that? Essentially, the large one, the EUR 1.1 billion, will only happen when the business plan is released next year. I also wanted to ask you about your comments on the combined entity. It seems that you are not going to the approach of doing a merger by incorporation, if I read that correctly.
I wanted to confirm if this has any impact on your synergies execution. I'm thinking, for instance, on the funding side, if there could be any MRLD synergies for maintaining both entities separate. Yeah, thank you.
Okay. I think I'm just confirming that we were very, very much conservative in this preliminary assessment of PPA. As Andrea was mentioning, overall, at the current stage, being very much conservative and wanting to go deeper in making the analysis, we are hopefully expected to complete this process. For the main item within the end of the year, at the current stage, we are also confident that we can have a positive impact. Let's complete the work before giving much more detail on that, right? Regarding the reorganization and the combination, I want just to underline that we will implement actions in order to get all the synergies.
It was mentioning even at the level that we expect now to be even higher than what we planned. The fact that we are speaking about legal entity does not mean that we cannot exploit all the potential that we can have from the combination. As I said, it is a working in progress and hopefully will be soon completed. As I said, in the first quarter, we will be very precise about the option that we are going, the target model we are going to implement. What should be clear is that in our preliminary estimation, we see only positive upside in whatever we are going to implement in terms of synergies.
There was a clarification requested on the DTA write-up since I mentioned the approval of the new business plan. Anyway, we expect to be able to write up the DTA already in Q4.
That was your question, potentially also based on preliminary projections. The expectation is that the write-up, to the best of our current knowledge, happens in Q4. As regards MRL, we do not expect these synergies. We are expecting synergies because the new entity will be a single point of entry.
Thank you.
The next question is from Lorenzo Giacometti of Intermonte.
Yes, good morning, and thank you for taking my question. The first one is on your excess capital, which is seen growing year by year due to DTA's compensation and potentially even more with the merger or with the Danish compromise treatment. Do you intend to distribute it to your shareholders? If yes, do you see distribution via dividends or buybacks as more likely? The second one is a more strategic one.
Are you planning to expand abroad with some of your businesses? I was mainly thinking about consumer finance, but also wealth management and investment banking. Thank you.
Okay. Let's start from what is for me even more exciting, that is the expansion of the business. We strongly believe that Compass, with this manager, has the full potential to expand the business outside Italy. They have expertise. They have very good technology. They have a proven track record in terms of scoring. I believe that this is an option that we're going to explore very quickly. My personal view is also that for some part of the business, as well as private banking, investment bank already is there.
We have a strong opportunity because once Mediobanca will be completely focused on corporate investment bank and private banking, there will be additional opportunity to expand business not only in Italy but also abroad. That is why it is a nice project because we are opening a new market, a new potential revenue generation for the benefit of all the stakeholders. Yes, we have a nice excess of capital. As you were mentioning, starting from this year, we will have also the EUR 500 million of DTAs that we are going to contribute to the increase of capital to the overall capital level. As I was already mentioning, for us to have an important buffer of capital is an opportunity.
We would like to use it in the best way, getting opportunity to expand additionally our business, or we can say eventually further reward our shareholder with even a high level of remuneration. If it is a true buyback or it is through extraordinary dividend, whatever, it is something that we evaluate time to time. What is important is that this is a strong opportunity. I believe today, by showing the revenue stream with almost one-third of revenues coming for asset gathering and wealth management, it is clear that this part of business deserves a significant rerating as well as the other components. This is an additional evidence that our evaluation deserves to be much more in line with our fundamentals and the potential of value that we can generate.
This kind of approach in exploring all the opportunity for better extract value from the combination will materialize. I believe even earlier than what we plan, I think we have strong expectation and, again, confirmation that we are really representing an attractive case of investment.
Okay. Thank you.
The next question is from Andrea Lisi of Equita.
Hi. Thank you for taking my question. The first one is on if you can provide us with more updates on the integration charges.
If from your preliminary analysis, clearly pending the business plan presentation, you are still confident with what you have initially indicated, and if you can provide us some preliminary indication, at least, of how many into how many years these integration charges will be split, if it is reasonable to see already a big portion in the last quarter of this year and then the rest through 2026 and maybe some portion also in 2027. The other question is on capital, if you can confirm that your preliminary indication of kind of 50 basis points additional contribution in case of obtainment, in case of regulatory treatment of the insurance component like in Mediobanca. Last question is regarding if you can provide us a further update on the management of the stake in Generali. Thank you.
Okay.
Integration charge is something that we are assessing clearly, looking at what now we are considering. We are going to invest money clearly in retention package. It depends how we complete the assessment, particularly on IT. That is one of the main areas where practically we are going to have some cost. Overall, we are confident. First, that we can, that the estimation we fixed when we launched the transaction is absolutely actual. The second is that given the work of the teams that are now analyzing the combined business, we believe that we are going to have even room for having even a positive outcome from the overall cost we plan. The impact on quarter one regarding the potential Danish compromise is 50+ . In Generali we are focused on Mediobanca.
As I was mentioning, Generali is for us a nice correlated bulk of revenues. For the time being, we are, as I said, completely involved and committed to deliver what we were mentioning earlier regarding the combination of the two entities.
Thank you.
For any further questions, please press star and one on your telephone. Mr. Lovaglio, at this time, there are no questions registered. Excuse me, we do have a follow-up question from Luis Manuel Grillo Pratas, the Autonomous.
Hi there. Sorry. It's just a quick clarification on the Generali treatment. When do you expect to receive those more than 50 basis points impact? Thank you.
As I was saying, we like to be very conservative. All the figures we were mentioning are without this benefit. We are working in order to have this kind of benefit. Honestly, it's difficult to predict when this can be completed.
I believe we deserve it. We will do our best in order to get as quick as possible, but it depends not exclusively on us. For the time being, we manage everything without considering this benefit that should be obvious and should come to us.
Thank you.
Gentlemen, there is a final question from Ignacio Urlaguy of BNP Paribas Exane.
Hi. Thanks for the opportunity to take another question. I just was wondering whether you could consider doing a total return swap as Vita has done on their own sales given the confidence that you have about the integration and the strength of the franchise and the combined franchise. Could that be a possibility or something that you do not explore at this stage? Thank you.
Sorry, Ignacio. I have not understood what do you suggest we can consider?
Whether you could consider doing an equity derivative covering buying your own shares like Viper did on the 9.9% of their capital, if that could happen.
We are focused on what we know better, that is doing banking, honestly. For the time being, we are not considering any kind of transaction like that. We want to be really focused in getting the best from the two entities.
Thank you very much.
Gentlemen, at this time, there are no questions registered. Back to you .
No other question, right? Thank you very much. See you next presentation.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.