Good evening. This is the Chorus Call conference operator. Welcome and thank you for joining the conference call on the BPER Group's first quarter 2023 consolidated results. 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. Piero Luigi Montani, CEO of the BPER Banca Group. Please go ahead, sir.
Thank you. Thank you. Good evening. Welcome to this conference call. We are the last ones to present our results after the other banks presented theirs. The quarter closed with a net profit that is very satisfactory. I hope you saw the results already. The results are very good.
The recurring profitability is increasing. There's a good increase in credit quality, our liquidity and capital position is very solid. The quarter closed with a not net profit of EUR 290 million after payment of EUR 69.5 million in contributions to the Single Resolution Fund. Another part of this will be paid in the third quarter. Last quarter was closed with EUR 112.7 million. Operating income totaled EUR 1.318 billion, up 18.5% quarter-on-quarter and 49.2% year-on-year on a standalone basis. If we had to consider, as we did in the following slides, you will see that, the Carige's contribution, then the increase would be by 32.9% on a combined basis.
Net interest income increased significantly and settled at EUR 726 million, with an increase by 28.4% quarter-on-quarter, 92.9% year-on-year on a standalone basis. Here again, if we had to consider the contribution by Carige, then the increase would be by 74.3% on a combined basis. Thanks to the good contribution from the commercial component, net commission income was similarly very resilient and closed the quarter at EUR 506 million, down 3.4% quarter-on-quarter. I would remind you all that the prior quarter was December, which is always substantial in its changes, and 12.3% increase on a standalone basis, and it would be almost flat with a decrease of 0.3% on a combined basis.
In terms of volumes, total funding amounts to EUR 281 billion, up 1.1% quarter-over-quarter and 7.8% year-over-year. Direct funding totaled EUR 113.5 billion. It was down 1.2% quarter-over-quarter, but up 14.2% year-over-year. Indirect funding, which totaled EUR 167.5 billion, was up both quarter-over-quarter and year-over-year, respectively by 2.6% and 3.8%. Of which I would remind you that EUR 85.9 billion of the funding is traceable to AuM and Life Bancassurance. Net loans to customers amounted to EUR 89.4 billion and were up 13.6% year-over-year.
There was a slight decrease quarter-on-quarter due to the large corporate. We will see that later on. Credit quality is strongly improving. Additional de-risking made it possible to continue to downsize our stock of non-performing loans. The gross pro forma NPE ratio was down to 2.9%. At the end of 2022, it was 3.2%. The net NPE ratio is now down to 1.2% from 1.4% at end 2022. Coverage levels have risen further, settling at 60.9%. The level was 57.1% at end 2022. Bad loans are at 80.4%, 77% at end 2022. UTPs are at a 53.3% coverage, and they were 49% at end 2022.
Performing loans are at 0.75% versus 0.77% at end 2022. The bank's capital strength is confirmed with a fully phased CET1 ratio of 13.34% versus a minimum SREP requirement of 8.47%. Our liquidity position is likewise excellent with LCR at 206.3% and NSFR at 126%, broadly in excess of the regulatory thresholds. Total funding amounts to EUR 281 billion, up 7.8% year-on-year and 1.1% quarter-on-quarter. Direct deposits from customers is EUR 113.5 billion, up 14.2% year-to-date. Direct retail funding continues to be resilient and accounts for approximately 75% of total funding, while corporate funding accounts for almost 25% of the total.
Sight deposits account for approximately 85.6% of direct funding, and the loan-to-deposit ratio is 78.8% to be precise, almost 80%. With regard to indirect funding, the stock amounts to EUR 167.5 billion, a 2.6% increase from end 2022, with EUR 85.9 billion referring to AuM and the life insurance premiums portfolio, with an increase of 1.2% from end 2022. Net funding in the quarter amounted to a positive EUR 191 million. Assets under custody amounted to EUR 81.6 billion, up 4.2% from end 2022.
With regard to the stock of loans to customers, loans total EUR 89.4 billion, plus 13.6% year-on-year, with a 1.9% contraction in the first quarter, almost 2%, almost entirely due to the segment of businesses and the large corporate. From a sectoral perspective, the loan mix sees a good balance between the main economic sectors, across the manufacturing and trade sectors, accounting respectively for about 15% and 8.3% of the total. The breakdown by customer segment reveals that the retail accounts for almost 60%, while the corporate segment accounts for 40.8%. Let's now move on to credit quality. The quality of the loan book continued to be a focal point in the first quarter of 2023.
We envisage we will go down with the de-risking and NPE coverage grows further and stands at 60.9%. Bad loan coverage has risen to 80.4%, among the best in class in the industry. The UTP coverage ratio is 53.3%. Performing loan coverage has risen and is almost stable from the end of 2022. The composition of the performing loan portfolio is stable, with Stage two exposures accounting for 11% of the total. Moving on to financial assets and securities portfolio proved stable during the quarter at EUR 30 billion, and its risk profile continues to be very conservative. Bonds come to a total of approximately EUR 29 billion, of which EUR 10 billion in Italian government bonds.
Italian bonds account for approximately 45% of total bond sales in the portfolio and 8.5% of total assets. The growth trend of the quarterly average yield on the portfolio continues and was 2.0% for the quarter. Duration of the portfolio is stable. It's stable at 1.9 years, and the duration of the Italian government bond portfolio is likewise stable at 2.1 years. Moving on to the income statement. As noted above, the quarter closed with a net profit of EUR 290.7 million. For the sake of completeness of information, we wanted to show the quarterly and annual changes in the income statement by factoring in the contribution from Carige.
Top line revenues totaled EUR 1.2 billion with the net interest income rising by 74.3% year-on-year, 92.9% on a standalone basis as a result for sure of the uptrend in market rates, but also because of the resilient net commission income, which was down slightly by 0.3% year-on-year. Let me remind you that it was up 12.3% year-on-year on a standalone basis. Stated operating costs totaled EUR 675.8 million, down 12.3% quarter-on-quarter. Loan loss provisions amounted to EUR 140.5 million, with an annualized cost of credit of 63 basis points and an annualized default rate of 1%.
Net interest income for the period totaled EUR 726 million, up 28.4 million % quarter-on-quarter, driven primarily by a higher network contribution, which was good in the last part of the year, in the first quarter of the year, and also in this period, we're seeing it proceeding very well in a satisfactory pace. Customer spread is 3.27% up quarter-on-quarter as it benefited from higher interest rates, of course. Net commissions are concerned, the item settled at EUR 506.1 million, slightly down from December 2022 by 3.4%, primarily as a consequence of the seasonal effect, which was positive in the last quarter, and lower commissions from Nexi, due to the transfer of the merchant acquiring business to Nexi.
The year-on-year growth is observed across all types of fees and commissions, particularly in bancassurance, life and non-life or P&C, up 18.3%. The uptrend continues with traditional banking fees rising by 15.6% year-on-year and indirect funding fees growing by 4.9%. As far as the operating costs are concerned, during this quarter, operating costs settled at approximately EUR 675.8 million, down 12.3% compared to the level observed in the fourth quarter, which however included substantial non-recurring components.
The combined effect of growth in the top line and cost discipline, which has been pursued lately, has led to a substantial reduction in the cost/income ratio, which by the end of the first quarter settled at 51.3% from 68.2% down significantly from December. Now the decrease is by over 16 percentage points. Staff costs were stable, even though, in fact, down strongly, because in December the item was strongly impacted by the cost of provisioning to the redundancy fund, which was EUR 166 million, due to 540 employees being admitted to the Solidarity Fund. The agreement was reached with the trade unions on start of the evening.
I remember I received a message at 6:00 A.M. on Sunday morning, I guess on Saturday morning. The balance is 270 headcount, but as I was saying, we were saying in the press release, 90% of these headcount reduction will happen in December, so the impact, the positive impact will be in 2024. The number of total employees was also down to 20,557 at year-end. The total headcount was 21,059. We were down by 509 units due to the staff exits in February and March. The total number of branches has decreased as well, to 1,759 from 1,913.
154 branches have been either sold or closed because 48 branches were sold to Banco Desio and 106 branches were instead closed. In our plan, we also envisaged that the number of branches would be reduced. We're now reflecting on the changes in the balance on the market, because some of the markets. Some of the branches that we were considered to be less profitable are instead producing different, you know, evidence. We're trying to understand whether the balance should be different, and we should, we're considering that. Let's now move on to the cost of risk. The group's loan loss provisions for the quarter amounted to EUR 140.5 million.
Thanks to the excellent results achieved in revenues, the group can even more strongly pursue its prudential targets in the management of non-performing loans, an approach that has distinguished us for some time now. Increased coverage that was strongly pursued and desired. We really pursued that with a willingness on all classes of non-performing assets, puts us in a better position to manage any future shocks or impacts that a deterioration of the economic environment might cause. At the same time, the high level of coverage of non-performing exposures allows us to create a, let's say, potential positive reserve should the worst scenarios, hopefully, not materialize. As a consequence of these operating choices, the annualized cost of risk settles at 63 basis points with the annualized default rate being at 1%.
Moving on to liquidity, there's not much to say. The bank's liquidity ratios remain high with an LCR of 206.3%, and the NSFR closing the quarter at 126.5%, both broadly in excess of the supervisory requirements. With regards to TLTRO III operations, at the end of the quarter, the amount to be repaid at subsequent maturity dates totals EUR 15.1 billion, of which EUR 9.7 billion to be repaid in June, whereas I would remind you that EUR 6 billion was repaid earlier, last December. With regard to capital, as I said in the introduction, the pro forma fully phased CET1 ratio with the bank is 13.34%, broadly in excess of this threat requirement of 8.47%.
To conclude, our first quarter 2023 results show a growing net operating income supported by top line revenues, not only net interest income, net fee and commission income, I would add, because they were very much resilient. We expected that very well. I was pleased to notice that and confirm that. Along with further improved credit quality, not only because of the improvement in the NPE ratio, also in the coverage ratios and the sound capital and liquidity position. Ahead of the business plan schedule in terms of both projects delivery and economic financial targets. I can say that BPER is ready to face the challenging macro scenario from a position of strength. Thank you for your attention, we will now take your questions. Thank you very much.
This is the Chorus Call operator. We are now starting the question and answers 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. Anyone who has a question may press star and one at this time. The first question is from Giovanni Razzoli, Deutsche Bank. Please. Go ahead, sir.
Thank you very much. Thank you for your presentation. My first question is about your liquidity profile, which as you reported, is very solid and sound. I would like to understand whether in the mid-term, do you intend to issue some repos or I'm sorry, to dip some other instruments because the bank has not done that for some time, but because of the bail in issues, et cetera.
Could it be an opportunity or a possibility for the future, repos or bonds or time deposits, if so, what would be the impact and what would be the cost of funding? LCR post TLTRO. I would like to know if you can give us your view on your exposure of tax credits to EUR 2 billion. I think you reported. Have you made any considerations? Do you think there will be any risks in the portfolio that you're considering? My last question is a little bit of a provocation. You have reported very strong numbers in terms of net interest income, net fee and commission income that are resilient.
There are some of your peers that produced lower numbers, but they have reviewed their guidance in terms of net profit for 2023 and remuneration and dividend distribution for their shareholders. I would like to understand whether you may take a step forward and give us a different guidance about the net profit for 2023.
Mr. Razzoli, thank you very much for your question. We haven't seen each other for some time now, but we will have an opportunity for that. well, in terms of the issuances, my answer is for sure, yes, we are considering those issuances. Not now, we're speaking about the second half of the year, but for sure we're considering that, but not immediately. About the indicators.
After the first repayment, so after from the end of this year, 160, 170. When everything is repaid, we think the guidance can be 130, 150, with some room, of course, in between. In terms of the valuations and the category of risk you were referring to, we do not have any. We have no reason for expecting that. We've got some prudential provisions at 1%. As far as guidance is concerned, it's clear that with these numbers, we will have to review the guidance a little bit, but I'm, you know, a little bit conservative. I would like to give you some, you know, background. Market scenarios rapidly change. They have rapidly changed.
In December last year, we were looking at some sort of a catastrophic situation. Things changed completely. From a catastrophe, we actually moved on to some sort of a euphoria. We have no reasons for concern now. We know that the evolution is very much associated to the market trends, interest rates, also to the trends in credit, so in lending. We do not have any negative indicators on either side. We do, we have no visibility of what will happen in the next half. We would like to be and continue to be prudent and conservative as we have always been.
Of course, as far as net interest income is concerned, we think we will get to EUR 2.5 billion and for fees and commissions, EUR 2 billion, for operating costs, EUR 2.7 billion. As far as the bottom line in the financial statements or accounts, we think we can confirm the results of the business plan, by 2025 this year. This under the assumption that the market circumstances will continue to go the way we predict. If that's the case, then the business plan objectives will be maintained and actually even be delivered by the end of this year. We will see how this develops then. You were asking something about the cost of credit, 63 basis points. We've always been prudential, and 63 basis points are conservative, or is conservative.
Once again, we will have to see what the future developments will be, but it may be 40 basis points then if the market development is even more positive, that's even going to be better. We have a lot of reserves, so we feel confident that we can face the market. But of course, we cannot predict things because of course, the hikes in interest rates will produce some disadvantage with some companies not being able to, you know, or having some difficulties. I cannot tell if this will happen in this year or if it will happen next year. This is a little bit of a snapshot of the overall situation.
Thank you very much.
Next question is from Adele Palama, UBS. Please, madam, go ahead.
Good evening. I have some questions on NII. EUR 2.5 billion is your guidance. I would like to understand what the assumptions are behind this guidance in terms of beta, deposit beta and growth. Long growth and also average Euribor what you expect for this year. I would also like to have guidance for the NII trend in 2024, if you expect it will go up or it will be flat compared to 2023. Looking at your guidance for EUR 2.5 billion, with the results you delivered this quarter, I can understand that. Is this going to be the quarter when we can expect that this is the peak for the NII?
For the other two quarters, if I use your guidance, then you have less than EUR 100 million, I guess. I would like to understand better how it's going to develop. My last or my next question, if I can, is about the Single Resolution Fund, not just for this year, but for next year. Do you expect there will be a removal?
As for the assumptions for our net interest income, we saw the Euribor at 6%. As far as net interest income once again is concerned, expectations are difficult to, you know, to be made. We do not expect problems in the next quarter, but there may be some in the future. Who knows? I cannot answer for 2024 because it's too remote.
To us, it's important to understand how 2023 is going to be developed so that we can make projections for 2024 when we have more visibility then. As far as your projections for the Resolution Fund are concerned, I cannot answer, to be honest. I have no evidence to provide an answer, a negative or positive answer to that yet. As for the deposit beta for deposits as an assumption for NII guidance for 2023. What the beta, it's 3%. It's about... So let's give an easy answer. It's 30% on average, but it's 28.69 to be precise, but let's say 30%.
If I may add a follow-up question on NII, what is the contribution that we can expect from the next TLTROs in the next quarters since the contribution was positive this quarter? It's EUR 50 million in the second quarter. Per quarter?
In the second quarter.
Next question is from Domenico Santoro, HSBC.
Good evening. I wanted to understand, first of all, going back to the question that my colleague made, if the additional contribution of the TLTRO, is it on top on the net interest income? Will it be repeated? Is it going to be recurring or?
No, it's only to be in the second quarter, a one-off contribution.
Thank you very much.
I would need clarification on deposits just to understand your terminology a little bit better, because I was looking at page 24 in the presentation, looking at site deposits and current accounts. There's outflows of EUR 5 billion in the quarter, which is quite substantial, and there are also other lines going upwards, but you're also including institutional direct funding there in the total deposits. Could you tell us more about how it should be interpreted? Is it continuing or are there any other elements in the lines that should be added so that we have more color? My next question is about direct and indirect dynamics, and all of the other movements or moving parts of capital. Can you tell us more about positive and negative moving parts on capital for 2023?
Are there going to be any further one-off elements contributing in addition to the headcount maneuver that you have communicated?
As far as the drop in current accounts, I thought I mentioned that it's very much associated to businesses and the corporate segment. There was a drop in the large corporate, which is not alarming, though, considering that we're also, you know, comparing ourselves with a prior quarter that was completely different from the others. As far as the other moving parts of capital are concerned, that you were referring to, for sure there were some movements, but those movements did not raise any concerns. They've always occurred in the recurring dynamics, but there will be some more in the future.
It's evident that as far as deposits are concerned, they may be looking for, customers may be looking for higher yielding, deposits, and so we'll try to attract them basically. There's been also a transfer from indirect to AuM, and we were able to be resilient. As far as capital is concerned, there's just one of probably that it's going to be the platform. We have announced that transaction, and we will complete that by the end of the year. Yes, the credit platform. We talked about that, but they were advising me that I should be more precise, and it's the credit platform that I was hinting at.
If I can take this liberty, in the institutional funding that you have included in total funding, it's institutional though, so it's not deposits. It's securities, to be honest. It's just for me to understand better the terminology, but it includes repos, though.
Okay, thank you.
Next question is from Andrea Lisi, Equita.
Yes, good evening. My first question is more of a clarification on the beta, deposit beta. Is it... So of 30%, is it correct to assume that it is the average for 2023? I would like to understand what the evolution is going to be. What is the deposit beta at the end to be assumed for... In terms of guidance? If I...
Probably you answered this in your prior answer, but are there going to be one-offs impacting the income statement of 2023? My third question is about capital. Is the remuneration policy going to be the same or will it change considering the results you've had and the capital at 13.3% that you have, the CET1 ratio?
As I was saying before, the beta for was 27 for the retail and 69 for corporate as per the model that we have. We, on average, consider 30% for the retail, but there are no one-offs.
As for the remuneration is concerned, in the quarterly results, we've got a EUR 0.05 mentioned, we will see what happens by the end of the year, and we will see also what the market trend is going to be, and if there's a possibility we will do more, but we're not yet considering that. We will consider that in the future.
Thank you.
Next question is from Marco Nicolai from Jefferies.
Good evening. I would need a couple of clarifying specifications. What's the deposit beta today at May? About the default rate. You've gone up a little bit, if I'm not wrong, in the first quarter compared to last year. I would like to understand if you can give us more color about that.
I have seen that in this quarter you had 70 basis points of regulatory impact, negative regulatory impacts, so this was a little bit higher than you had expected. Can I understand what it refers to?
As far as your first question is concerned, the deposit beta today is at 12%-13%. As far as the default ratio is concerned, it was up just slightly from 0.8% - 1%. I would say that it's almost entirely associated to the merger with Carige. Within the merger, as part of the merger, we have standardized the model, and there was a little bit of impact from Carige. The rest of the bank was stable.
As for your last question, I would say that the regulatory impact is more associated to the inspection on the models, and it's 40, 50 basis points.
My next question is from Andrea Vercellone from Exane.
I have some questions. My first question is about personnel expenses. I would just like to understand whether in your first quarter you have already included an accrual for the renewal of the contract, or will you recognize everything at the end? My second question is about the issuances for medium to long-term funding. How much are you planning to issue in the second part of the year in 2024? My third question is, how do you intend managing the deposits, basically?
We have seen in the first quarter, there was an outflow. There was a little bit of a flight of deposits. Not that that was an issue, because you've got a loan-to-deposit ratio that is probably among the lowest in the banking industry, so you've got even an excess of liquidity. From a management perspective, deposit management perspective, are you going to pay these deposits a little bit more? Or for a certain amount, are you even ready to accept a decline in deposits or a transfer to assets under management, basically? Fourth question is about SIFÀ. Has it already been deconsolidated? If not, can you give us a risk-weighted assets that will be going out, basically, after deconsolidation?
Let's start from the easiest question you made. That it was the first question. The answer is no, we have not recognized anything yet. The contract renewal will not be easy to manage, so to say. We'll have to wait and see how it's going to develop. As for the issuances, it's EUR 500 million in 2023 and the same for 2024. Your third question was about management of deposits. The answer is quite to be taken for granted. I mean, of course, we'll have to deal with the deposits and retain them as much as we can. When you said that there was an outflow of deposits, well, I would like to say that, to be honest, it was quite, you know, natural, because we are comparing this quarter with the previous quarter.
The third quarter is instead going to be a little bit, probably, I mean, what went out was broadly expected. In the future, we will carry out multiple actions. Everybody is questioning on how to retain deposits. For corporate deposits, we will have to do something different because corporate and businesses are more structured, they are more attentive, probably they want us to negotiate more. Whereas with the retail deposits, I mean, deposits are more fragmented and it needs to be dealt with in a different way. There are going to be multiple actions to be implemented. The objective is that of retaining deposits. Part of the deposits will end up being concentrated in either indirect deposits or assets under management.
Indirect deposits are good anyway, not only assets under management. It's evident that in the first part of the year, it was too early for us to understand how the market was developing, whereas now, depositants are trying to have higher yields, and we need and want to have them be happy. We will try to retain the deposits. The actions that were put in place are numerous. They belong to our day-to-day activities. I'm not mentioning them now, but it's part of what we do with the market every day. As far as SIFÀ, I mean, the RWAs are not important, not material. So EUR 400 million. As I was saying, we're talking about an amount that is not material.
Just a follow-up question on the guidance you provided, EUR 2.7 billion costs for the year. Are they net of the contract renewal? Should we add the cost of the contract renewal, or is it incorporated, embedded in it?
I'm sorry. You wanted to understand if it was included or not? Yes, it was, but it's not been defined yet because of course, we are waiting for the definition. EUR 2.7 includes an assumption or hypothesis, yes. Of course, it includes the assumption or hypothesis that we have made, but you may understand that negotiations have not yet started. We had to estimate what the number may be in the end, but it's more of our assumption.
We'll have to in fact negotiate it with the unions that the negotiations have not yet started with. We have estimated it because we knew the contract would be renewed, but we'll have to in fact define it with the unions, and the definition is not yet there.
Good. Thank you.
Next question is from Noemi Peruch from Mediobanca.
Yes. I would need some clarification about the guidance for the cost of risk. You have mentioned 40 to 50 basis points, and I would like to understand whether this is the level for the year, for this year, for the next quarters in 2023.
I have a question about risks and charges, and I would like to understand whether what you have mentioned is only about the main elements, and if you can give us color about tax credits. I have a question about capital. 25 basis points or 35 basis points in RWA increase. What is it associated with? 79 basis points of headwinds, is it Basel IV-related, or can you give us guidance about the Basel IV impact?
As far as the guidance is concerned, it's for the year then for risks and charges. I would say that almost the entirety of risks and charges is due to the settlement of the distribution agreements with Carige. There's not much else. It's actually almost nothing on top of that.
My last question, I would say yes, about capital.
Can you give us an update on the impact of Basel IV?
I think we had already mentioned the impact from Basel IV in our previous meetings. It's 40 basis points.
Next question is from Hugo Cruz from KBW in English.
Hi, thank you for the time. Apologies if this has been asked, you know, I'm listening to the English one, so sometimes it's hard to understand. My first question is around the customer direct deposits, slide 24. It was down 2.9% Q on Q, if I just ignore the institutional. I was wondering if this decline is more concentrated on the Carige side of the business. If you could split the decline between Carige and rest of the group. Second question around NII, it was very strong in Q1. I was wondering if there was any positive benefits, one-off benefits in Q1, perhaps anything related to hedging. I think you also mentioned there will be a positive in 2Q from, I think, closing the TLTRO position.
I understood that could be a positive of EUR 50 million, if you could confirm. I don't understand how you go from a very strong run rate in Q1 to then a EUR 2.5 billion guide a year. It implies a big decline in NII in the coming quarters. It's a trend that's a bit different from what the other banks are guiding. If you could explain that a bit, please. Finally, clarification on capital, the CET1 ratio. Again, there's been a lot of volatility ratio, a lot of moving parts. Is there anything in the coming quarters, either positive or negative, that we should be aware of? Any model updates, any DTI gains, anything like that, if you could clarify? Thank you.
As far as Carige is concerned, the impact on direct deposits was absolutely marginal in terms of deposits, meaning that we have already given the metrics, the bank was not such to actually influence the volumes of the BPER Group, not even in terms of trends. The trends were different, I don't know, as far as the net interest income is concerned, there's nothing I would add to what I said before, even though for the CET1, I'm not expecting negative impacts for the next quarter. On the contrary, there may be an increase, not by much, an increase anyway.
Okay, thank you.
I would remind you that, if you wish to register for a question, please press star one on your telephone. Next question from Benassi, Anna Maria from Kepler.
Yes. Good evening, everybody. Thank you for your presentation. My question is about the guidance that you have provided, because you basically confirmed what you were saying in February in terms of net fee and commission, costs, net interest income. You basically gave us or replicated basically the view you had on net interest income, even though the net interest income was up. I cannot put together the expectation of a net interest income, which is based on rates at 3%, because that's what they are at now, with the assumption of the net interest income.
EUR 800 million sounds to be too little of an amount, considering that there are not going to be any one-offs. I cannot understand how. Well, I cannot understand the profit generators, basically. And then sensitivity with to the interest income, if you can provide us color about that.
Well, we're always prudent and conservative, so it's true that we have replicated what we said in the past, which means that we didn't, we were not lying, basically. We're not denying what was said before. I understand what you were asking. As I said before, we are aiming at a target by the end of 2025 that is quite substantial as a target, but everything depends on the evolution of the market.
If the market continues to go this way, then it's, you know, one thing, but there are going to be repercussions on the market, then we need to be conservative. It's quite early for us to make, you know, considerations or projections for the future. It's easy to make, you know, calculations. If you take what we have delivered and you multiply it before the period, then it may seem that EUR 800 million is quite conservative. It may be, but in fact it very much depends on the trend in the market. As far as the NII sensitivity, we confirm what we said in the past. We always gave a sensitivity of 5%, and that's what we can confirm today.
Next question is a follow-up question from Adele Palama, UBS.
I would just like to understand what your guidance is for on the trading income, considering what you did in the quarter. Can you consider EUR 25 million-EUR 30 million by quarter for this year?
Yeah, it's going to be EUR 100 million for the year.
Mr. Montani, there are no further questions.
Thank you very much. Thank you. I would thank you all. For any further questions you may have, my team is willing to give answers to you. You can call us at any time. Thank you for your attention. Have a good evening. Bye.