This is the Chorus Call conference operator. Welcome, and thank you for joining the FinecoBank S.p.A. First Half 2019 Results Conference Call. 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. Alessandro Foti, CEO of Fineco. Please go ahead, sir.
Good morning, everyone, thanks for joining our second quarter 2019 results conference call. As you know, starting from May the 10th, Fineco is an independent public company. Let me remind you that the exit from UniCredit Group has no implication on Fineco's strategy and business model, will actually allow us to be even more flexible and improve our time to market. Fineco enjoyed limited synergies with UniCredit, we continue to focus on maximizing shareholders' value through healthy, sustainable, long-term growth. Let's underline that Fineco fully independent has no implication for its customers and no material impacts on its capital and liquidity strength. None in its profitability, thanks to the transitional arrangement agreed with UniCredit. The second quarter reflects the main effects coming from the deconsolidation.
In particular, the release of EUR 10 million sub-provisions after the full collateralization of UniCredit exposure, different calculation methodology leading to an increase in the operational risk, and to a decrease in Core Tier 1 ratio to 17.8%, still at very solid levels. Let me underline that the decrease will be partially absorbed as soon as the bank will adopt the standardized model in the coming months. Leverage ratio performed at 4% after the issuance of the EUR 300 million AT1. Let's now move to slide seven and start commenting on our first half results. Adjusted net profit in the first half of 2019 climbed to EUR 137.3 million, plus 9.7% year-on-year, reaching record results despite a more complex environment compared to last year.
Once again, this set of results confirms the soundness of our business model, able to deliver sustainable and industrial growth in every market condition, and shows how some of the actions we have recently taken are already producing results. We generated EUR 323.5 million of adjusted revenues in the semester, up 3.8% year-over-year, supported by investing and banking area, while comparison on brokerage is affected by new regulations and low market volatility. Later on, we will deep dive on the actions we have undertaken on the latter. Operating costs stood at EUR 127.5 million, +2.3% year-over-year, and cost-income ratio decreased at 39%, despite the continuous expansion in assets and clients, thanks to a strong operating leverage and to the scalability of our platform. Please go through the following slides to analyze more in detail all the dynamics of our results. Let's start with net interest income dynamics on slide eight.
net interest income increased by 3% year-on-year, supported by strong volume growth, both high-quality lending and sticky side deposits, even more valuable given the current remuneration on liquidity offered by the system. Volume dynamics more than offset the reduction in gross margins. As you can see at the bottom right of the slide, average gross margins on interest-earning assets lowered from 1.32% in the first half of 2018 to 1.26% in the first half of 2019. cost of funding remains very low at four basis points due to deposits in foreign currencies. Please let me remind you that our cost of funding related to deposits in euro, which represents 97% of our total deposit, is zero. Let me please underline that we confirm our approach towards the build-up of a diversified and low-risk investment portfolio, also in the present rates environment.
As a reminder, while the collateralization of the UniCredit exposure gives us room to increase our Italian govies holdings, as an independent company, we will be able to be even more efficient in our treasury management. In 2019, we confirmed our guidance of a low single-digit increase in net interest income, while for 2020, we see it flat due to the latest evolution in the rates environment. In the following slide, you can find a focus on our bond portfolio. As you can see, our strategy to run off the UniCredit bond portfolio and move into a more diversified investment portfolio through a blend of European government bonds is progressing very well. Our bonds portfolio now includes also France, Spain, Ireland, U.S., Poland, Austria, Germany, Belgium, Supranational Agency, and covered bonds in addition to Italy. Let me also remind our sensitivity to a potential increase in interest rates.
A parallel shift of 100 basis points would generate EUR 119 million of additional net interest income, while a parallel shift of minus 100 basis points would generate minus EUR 108 million of net interest income. Fees and commissions grew by 8.7% year-over-year, with management fees up 12.2%, thanks to a larger contribution of gathered products and services, which moved half from 64% in the first half of 2018 to 69% in the first half of 2019, and to the new asset management company. Let me highlight once again that our investing fees are strongly sustainable as for the most represented by recurring fees. Entry fees only weight around 2% of investing revenues, our business model does not rely on them, and they are aligned with the interest of clients. They are just an anticipation of future profitability for the bank.
The profitability on asset under management, calculated as management fees, net of taxes on asset under management, is equal to 47 basis points in the first half 2019, with customer looking for more conservative solutions. We remind that we are further developing our investing offer through the launch of new Fineco Asset Management solutions and the enlargement of insurance products. As for 2019, we confirm our guidance of after-tax margins flat, but revenues growing low double digit on the back of volume effects on Fineco Asset Management contribution. Trading income net of non-recurring items is down by 18.3% year-on-year due to the lower market volatility and to the new ESMA regulation in place since the second half 2018. As you can see in the chart on the right bottom, the first half of 2019 has confirmed these patterns of low market volatility.
Nevertheless, the new option platform we have announced during our first quarter results is now fully up and running, they are already producing tangible results on the brokerage side that should be further strengthened over the next quarters. At this regards, for brokerage, we expect a low double-digit growth in the second half of 2019, versus both the first half of 2019 and the second half of 2018. For 2020, we see this growing trend to continue. Moving to slide 11, we have a detailed review on cost evolution. As you can see, the first half of 2019 once again confirms our efficiency is part of our DNA and core in our bank, representing a clear and unique competitive advantage.
Staff expenses were at EUR 44.1 million in the first half, plus 6.3% on a yearly basis, mainly due to the increase in the workforce related to the business development and cost related to the Fineco Asset Management. Not fully in place in the first half of 2019, and the internalization of some services after the exit from UniCredit Group, like for example, the audit department. Non-HR costs at EUR 83.4 million, flat year-on-year, despite the enlargement of assets and clients. In terms of future evolution, we confirm our guidance on a continuously declining cost income in the long run, thanks to the scalability of our platform and to the strong operating gearing we have. We expect cost up low single digit both in 2019 and 2020. Let's now move on to slide 12. Commercial loans grew 28.2% year-on-year with the usual strict control on credit quality.
Let's remind that our lending is offered exclusively to our loyal customer base of clients, and our deep internal IT culture allows us to fully leverage on big data analytics. This translates into commercial cost of risk very well under control at 14 basis points as of June 2019, due to the improvement in the quality of the credit. For 2019, we expect a stabilization of our cost of risk at around between 19-21 basis points, much lower compared to the system. Let's move now in analyzing our lending offer more in depth at slide 13. Mortgages grew by more than 35% year-on-year, reaching EUR 979 million at the end of the first half. Average loan-to-value on total outstanding at 53% and average maturity at 19 years. Personal loans grew 12% year-on-year with very attractive margins.
Lombard loans exceeded EUR 1.1 billion in June 2019, increasing by more than 35% in one year, driven by Credit Lombard. We are adjusting our 2020 guidance on volumes, and we don't want to undermine the quality of our lending book. On mortgages, a new production in a range of EUR 300 million-EUR 350 million, as we prefer not to compete against the system in red zones characterized by aggressive prices, high loan-to-value, and longer maturities. On personal loans, new production in the range of EUR 250 million per year. On Credit Lombard, we expect around EUR 500 million annual growth. As for the expected yields, please remind that in the case the market environment changes, we would have to move accordingly. Moving to slide 14, Fineco confirms a rock-solid capital position on the wave of a safe balance sheet.
Let me remind you once again that the full collateralization of the exposure with UniCredit fully neutralized any potential credit-risk-weighted assets and concentration limit deriving from the exit from UniCredit Group. The only negative impact on our Common Equity Tier 1 ratio is related to the increase in the operational risk-weighted assets from EUR 682 million to EUR 1.2 billion. That is exclusively due to the change of model for calculating operational risk, which is no longer the UniCredit Group advanced model. Again, let me stress that this impact is only driven by applied methodologies, while the risk profile of Fineco has not changed at all. As a result of this, our Common Equity Tier 1 ratio stood at 17.84%.
In this respect, we are working on the migration to the Standardised Approach in the coming month, which is expected to absorb lower capital versus basic approach in the region of 100, 150 basis points as of December 2019. The current Operational Risk-Weighted asset figure should be taken as a worst-case scenario. leverage ratio equaled to 4.03% pro forma, including EUR 300 million Additional Tier 1 issued in July 2019, which enables Fineco to proactively maintain the leverage ratio comfortably above 3% well ahead of 2021, when this ratio will come into force, and to better exploit our growth potential, while at the same time working on our initiative to improve the asset mix of our clients. total capital ratio pro forma, including EUR 300 million Additional Tier 1s, stood at 33.94% as of June 2019.
On slide 15, you can find more details on the EUR 300 million Additional Tier 1 placed on July 2019. Let me remind you that this issuance allows us to proactively maintain our leverage ratio comfortably above 3% well ahead of the 2021 regulatory entry into force of the 3% requirement. On July 11th, 2019, the bank successfully completed the placement of its first market issue of Additional Tier 1 instruments for a total amount of EUR 300 million with a fixed coupon of 5.875% for the first five years, compared to initial price guidance of 6.5%. This tightening compared to the initial price guidance is one of the most significant seen for this type of instrument as a result of an overall demand equal to nine times the offer.
The issuance recorded an order volume of 2.7 billion EUR, demonstrating recognition of our bank also in the fixed income segment, and allowing to us to take advantage of favorable market conditions. On slide 16, we show an overview on the total financial assets growing trend supported by the healthy expansion in new inflows. We gathered 30 billion EUR net sales since 2013, leading total financial assets to almost 76 billion EUR in the first half of 2019. Gathered products increased their penetration rate to 69% on total assets under management from 67% on December 2018. Let's now move on slide 19. Jumping into the slide 19, out of 3.3 billion EUR of net sales in the first half of 2019, 90% was organically generated through the existing financial planners or directly by the bank, and 10% came from recruitments made over the last 24 months.
For 2019, we expect a robust net inflows driven by structural trends and by the high quality of our proposition. The recent launch of some brand-new products and services, such as Plus and CORE Target, is helping us in offsetting the higher propensity of clients to remain in a wait-and-see mood in this very complex market environment. I will skip directly to slide 22. Sustainability is at the heart of our business model and translates in transparency and fairness towards customers as the cornerstone of our commercial strategy. As you know, we believe that making our clients satisfied is the only way to generate a long-lasting relationship and produce sustainable results in the long run. As a consequence, Fineco ranks number one among banks in terms of reputation, a key indicator as it allows to affirm us as a premium brand and generates a positive dividend on business results.
This explains why we have decided to share with customers the benefits of the operational efficiency we are generating through Fineco Asset Management by progressively lowering their total expense ratio in an environment characterized by pressure on margins, and why we have developed a sustainable fee structure based on the total absence of performance fees and upfront fees almost at zero. Let me remind that we engage customers leveraging on the quality of our services, not relying on short-term aggressive commercial offer, thus explaining our cost of funding close to zero. In the same way, organic growth is the main engine of our net sales as we focus on putting our advisors in the best position to answer to the financial needs of the Italian families. Let's now move to slide 23.
Delivering the highest possible shareholder value via a healthy, sustainable, and organic growth is the main goal of our business model. Thanks to this approach, over time, we have continuously delivered high-quality, recurrent, and predictable profitability over the cycle, producing a diversified and sustainable revenue growth in all market conditions. Our commitment is key to be a long-term winner and to refrain from taking shortcuts in order to produce short-term results, especially in a challenging macro environment characterized by pressure on margins, low expected returns, and demanding regulation. We have already underlined our focus towards a quality offer and the attention we pay on building a fair and long-lasting relation with customers.
Let me please highlight the other main aspect of this strategy, namely, a safe and diversified low-risk asset coupling with valuable and sticky deposits, solid capital position, a deep internal IT culture allowing us to leverage on cutting-edge technology, difficult to replicate and leaving our operating leverage unmatched in the banking arena. This allows us to have a highly scalable, low-risk business and to exploit growth opportunity with a best-in-class time to market. Let's now move on slide 25. Let me please spend a few words on the main changes in our total assets following the consolidation from UniCredit Group. As you may see from the graph, our balance sheet enjoyed a massive de-risking after the full collateralization of our UniCredit bond exposure, while total assets decreased after we extinguished term deposits with UniCredit and transferred EUR 1.2 billion liquidity at Bank of Italy.
In the pie on the right-hand side of the slide, you have the breakdown of our non-UniCredit bonds. As you can see, the diversification of our investment portfolio is continuing with an increased exposure towards a blend of European government bonds and covered bonds. Moving to slide 31. Fineco Asset Management is key to further improve operational efficiency in several aspects and to improve our ability to create a modern and innovative multi-manager solution to satisfy the needs of our customers, enhancing our time to market, in developing our offer to meet evolving customer needs, and deal with market challenges by anticipating the trends of the industry. Just a few words on the latest investment solution recently launched by Fineco Asset Management.
New decumulation products allowing for a gradual investment in financial markets, a key solution in an environment seeing customers with a low risk propensity. Multi-thematic fund specialized in capturing the most relevant secular trends reshaping the world. New building blocks, both vertical and based on risk profile, have been launched, and more sub-advised funds are in the pipeline. On a final note on our Irish subsidiary, let me please underline that among the several benefits Fineco has managed delivering, a key factor to focus on is the higher proficiency in risk management, thanks to the look-through on daily basis on the sub-advisory funds' underlying assets. Let's now move on slide 34. On this slide, a quick update on FinecoBank U.K. and Patent Box. In U.K., we acquired 4,500 clients with a share of non-Italian continuously increasing and now up to 64%, of which 48% is native British.
Considering the steady level of revenues constantly generated, we now started the second phase of this initiative with more boost on marketing and commercial activities. I remind you that U.K. offer leverage as 100% on the Italian platform, meaning that we have no additional fixed cost. Let me please give you an update on the offer side. On one end, ISA and multi-brand funds are under implementation and expected in the coming month. On the other, we continue to expand our multi-currency service and the banking offer. For example, with the launch in the coming month of the instant payments. A quick update on Patent Box. The closing of the process is still in the hands of the revenue agency. Let me remind you that we applied both for intellectual properties as our platforms are internally developed, and also for the trademark.
The fiscal benefits will recover five years from 2015 to 2019. Intellectual properties are renewable according to the international guidelines. We are confident to close the agreement with the Italian fiscal authority by year-end as the deadline for the five years validity of the norm expires in 2019. Alternatively, we cannot exclude or consider the option to self-determine the Patent Box benefit as set by the decree, Decreto Crescita, definitely approved in the Law Number 58 of 28th of June 2019. As you know, in the second half of the year, we will start on preparing the launch of two brand-new platforms that will be available starting from 2020, and that will further strengthen the productivity of the bank. This will be the third evolutionary step in the history of our bank and will allow us to combine our cyber advisor approach with big data analytics.
This will help us to better deal with pressure on margins by further improving the productivity of our network and the asset mix of our customers. Slide 18. Before we open the call to questions, going back to slide 18, let me please give you some color about the July results, confirming once again the attractiveness of our one-stop solution, with customer massively using our best-in-class platform for brokerage and our open architecture platform. Net sales were solid at EUR 420 million and with a mix influenced by two temporary effects. The first one coming from clients selling their assets under custody component, minus EUR 350 million, for profit-taking mainly on Italian govies following the reduction in interest rates. July has been a very profitable month for brokerage, the best of year so far, confirming once again Fineco as a leader in Europe for number of executed orders.
The second temporary effect came from the self-direct clients selling H2O funds. As a reminder, Fineco is one of the most important open architecture platforms in Europe and also used by clients to buy funds on their own initiative. These two components led to a strong inflows in deposits, which in the coming months are expected to be transformed again into assets under custody and assets under management. Also, thanks to the new initiative the bank is undertaking. Net of this temporary effect, net sales and deposits are in line with our expectations. Finally, net sales in gathered products and services stood at EUR 191 million, with a penetration on assets under management at 69%, confirming the attractiveness of our advanced advisory solutions for our customers. Thank you for your time, and now we can open the call to questions.
Excuse me, this is the Chorus Call 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 touchtone 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 Gianluca Ferrari with Mediobanca. Please go ahead.
Yes. Good afternoon, everyone. Three questions from my side. The first one is on NII. You made a very clear guidance for this year and next year. I was more curious around the fact that you lowered a bit the yearly new production for mortgages and personal loans. I understood you said, "We don't want to compete with banks," and so on and so forth. In reality, you are basically offering those kind of products to your existing customers. By the way, the cost of risk at the moment has been a great achievement. Why not sustaining a bit the NII with at least the same production you were guiding for in Q1, or even accelerating it? The second question is on leverage. If I got it right, I think EUR 1 billion of new deposits is consuming more or less 15 basis points of leverage.
Maybe Lorena can help with this math. In a couple of years' time, if you keep growing the bank like you are doing at the moment, we could see the four times leverage going back again in the three times region. I was wondering if, given the growth you are having and the great results you are achieving with this respect, if it is not the case to revisit a bit the 70% dividend payout and to retain a bit more earnings to absorb the tremendous growth you are achieving. The last question is on the Voluntary Scheme in the second quarter, the EUR 4.3 million, if you can help us in trying to model that for full year 2019. Thank you.
Let me start from the net interest income. The net interest income, clearly the guidance we are giving on mortgages and personal loans is not necessarily a reduction in the guidance. We just gave a range because clearly it's extremely difficult to give exactly and very precise numbers because it can be affected by many reasons. We are giving a guidance in terms of range. Clearly, this doesn't mean necessarily that we are going to go for the lower end of the range. At the same time, clearly, we don't think that the right answer for sustaining the net interest income is to take on board more risk. We are going to, because this clearly it's a shortcut.
We are going to continue on moving that direction because we think that keeping a quite very well under control cost of risk remains absolutely key and current with the philosophy of the bank. Coming to your point on the leverage ratio. First of all, let me remind that our strategy focuses on transforming as much as we can possible deposits into asset under management. We are setting up several initiatives, such as the launch of the new platform in order to further boost the productivity in the network. In any case, in order to be more precise regarding the numbers. In order to keep a leverage ratio at 3.5%, that is the guidance we are giving to the market throughout 2021.
We can have a growth in terms of deposits in the range between EUR 2.5 billion and EUR 2.7 billion per year. That is absolutely perfectly current with our business strategy. This without cutting dividends and something else. I want to remind that Fineco is characterized by an extremely capital-light business model, and so clearly also maintaining a very generous dividend policy. We can generate organic capital. Again, based on these numbers, we expect that a range between EUR 2.5 billion and EUR 2.7 billion of deposits on year is going to keep the bank personally in line with the 3.5% target level we have on the leverage ratio. On the Voluntary Scheme.
For the year, we don't expect anymore.
On the Voluntary Scheme, based on the most recent information, we don't expect any other request by the Voluntary Scheme.
Thank you. Thank you very much.
The next question is from Alberto Villa with Intermonte. Please go ahead.
Hi, good afternoon, and thanks for taking my questions. The first one is back on the NII. Just to make clear for the guidance for 2020, if we assume an increase in deposits in the region of EUR 2.5 billion-EUR 2.7 billion, what's your assumption in terms of investment yield? If we can expect a significant change in the investment mix compared to the slide 25 pie chart you show us of the non-EUCG bonds. Because I'm still struggling in finding Given the current market yields, it seems a bit challenging to achieve these targets. The second question is on the CET1 ratio. Can we expect by the end of the year, the possibility you get a boost from a partial internal model, if you can update us on that. The third one is on the Patent Box.
You said that you may go for the self-calculation methodology if there is no agreement with the agency. I was wondering if you can give us an indication of what is the self-calculation in terms of size of benefit for the company. Thank you.
Okay. Just for coming back to the point on the net interest income. Again, we are confirming this guidance for 2020 for a flat net interest income. You have to consider that clearly this probably is the first dividend we are able to get thanks to the exit from the group, not because clearly we are not going to change the structure of our investment. I want to be very clear on the point. Our idea is not to increase the risk we are taking on board, because again, we don't think that this is the right answer on the question on margins on net interest income. In terms of investment strategies, the approach is going to remain pretty much the same. The dividend from exiting from the group is just a result that I try to give you the physical flavor of what I mean.
When being part of the group, for example, was nearly impossible to enter in any kind of repos agreement. Fineco now has a very large treasury department because we are sit on more than EUR 23 billion of investments and something like that. Clearly, there are a lot of actions that you can take for making efficiency without taking on board more risk. For example, if you want to enter in a repo agreement for extracting additional revenues from the portfolio, in the past, the process was incredibly cumbersome because we had to go through an investment committee at the group level and assessing if the counterparty, for example, you have entering in a repo agreement with an global SIFI, in any case, it was requested to submit this to the investment committee of the group.
In the case the group has reached the maximum level of exposure or respect this global SIFI, was not possible for us to go throughout this transaction. Practically, Fineco in the being part of this group has not exploited fully all the potential that there is in efficient management of the treasury department. Same story when you had to invest, for example, if I have investment plans in which I have to invest a certain part of my liquidity in Portuguese bonds or something like that, same story. You had to go through these incredibly cumbersome processes for getting authorization at the group level, with the risk at the end of the process to discover that the overall maximum amount at the group level has been exceeded, and so the delaying investments by, I don't know, six months, clearly is going to create.
Putting everything together, clearly we are working quite intensively in order to transform the Fineco treasury department in a real efficient department. The results that clearly is that without changing the risk profile of what we are doing, our investment strategies, we are going to be able to offset the headwind represented by the most recent decline in interest rates. On CET1, yes, we are quite confident that by year-end, we are going to be able to move in direction of the Standardised Approach, respect the basic approach. As we explained during the presentation, we expect a possible increase respect the 17.83% CET1 ratio to head in a range of additional 100-150 basis points of CET1 ratio. On the Patent Box, clearly we cannot give you any precise numbers.
What we can, in any case, we can confirm that is going to be a sizable amount in the region of several tens of millions of EUR. That's all. Clearly, it is an evolving story because the fact that in the case we go for self-integration, this doesn't mean that we are not going to be extremely cautious and conservative in what we are doing. In any case, we confirm that the Patent Box, when it is going to be finalized, is going to be a sizable effect. I want to remind also that looking forward, Fineco continues developing brand new platforms. All these brand new platforms are clearly becoming eligible for getting an additional tax break. Because the trademark is a one-off thing.
Everything is related to the intellectual properties is recurrent, and Fineco is in a great position considering the peculiar business model we have. A business model that differently from the most part of the other banks, we are directly developing our platforms. This is making this quite attractive considering the future evolution of Patent Box.
Thank you. Very helpful.
The next question is from Elena Perini with Banca IFIS. Please go ahead.
Yes. Good afternoon. I've got essentially two questions on your AUM net inflows and your net commissions. How do you see the net inflow mix going forward during this year? Do you see an improvement in AUM net inflows, or even the current environment, do you still see a cautious attitude from investors? Linked to this, you gave us a guidance on net interest income for 2020. As regards net fees, after the low double-digit growth you expect for the current year, what is your perception for 2020? Thank you.
Regarding the asset under management net inflows, we don't expect any significant change in terms of approach and habits by clients. At the same time, the continuous improvement of our product offer is making us confident that we are going to be able to get absolutely decent returns, also assuming that clients are remaining cautious. Because as we underlined, Fineco Asset Management is working quite actively in developing new solutions that are exactly in that kind of direction. We were mentioning the new generation of the accumulation products, also a new generation of insurance products. I'm jumping directly to your questions on what we can expect in terms of net commissions development. For the year, we gave a guidance of everything that's related to investing, growing in the region of low double digit, and we confirm the same guidance also for 2020.
Let me spend also a few words, because when we are talking about fees and commissions, there is also brokerage. Maybe brokerage has suffered quite a lot, particularly in the first quarter, because we had the combination of very low volatility, at the same time, still the impact of the new ESMA regulation. As we explained, the bank has put in place a quite huge amount of effort in direction of developing a new generation of products and services, mainly in direction of the option business. That as we are not discovering the hot water, but this is the most profitable activity, for example, for the U.S. brokers now, the most part of the profitability is coming from the option business. The results are starting and building up.
For this reason, we think, first of all, we can confirm that the results generated by brokerage in the first quarter can represent the bottom of our results. Also assuming the volatility remaining pretty low, we expect that brokerage is going to keep on growing in the region of a high single digit going forward, exactly for these reasons, because what has been taking place is paying off. It's clearly not a coincidence that July has been the best month of the year for brokerage. July has been characterized by a little bit touch higher volatility, but the most part is explained clearly by the completely changed structure of products and offer. Again, we have not discovered anything. We are not going to get the Nobel Prize for innovation, but just we implemented what has been proven to be very successful in U.S.
for dealing with retail clients.
Okay. Thank you very much.
The next question is from Anna Adamo with Autonomous Research. Please go ahead.
Good afternoon. I have two questions on capital, please. Firstly, slide 14 of the presentation shows that credit risk RWAs have gone up by 10% versus Q1. What is driving this significant RWA inflation in the quarter? Is there any one-off non-recurring items? The second question, I understand that Fineco Pillar 2 requirement is zero at the moment. Do you expect an increase in the Pillar 2 R following the exit from the UniCredit Group? If so, what's the timing on this? Thank you.
Regarding the increase of the risk-weighted assets, it's just related, the largest part by far is explained by the change in the way we are calculating the operational risk. That is not an increased risk profile of the bank. I want to be extremely clear on this point.
There is an increase in credit risk RWAs.
Lorena.
Okay. The increase in credit and counterparty risk quarter-on-quarter is partially due to increasing lending that is absolutely in line with the previous quarter. We have made some new investment in covered bond, which has a slight capital consumption, and there are some non-recurring items that are related to the purchase of securities not settled by the end of June, which generates a commitment for unsettled financial assets. This effect will be completely recovered at the beginning of July.
It's just a temporary effect because.
Okay.
had a situation in which exactly at the end of the month, we had the settlement of some activities that not completely finalized at the close of the two months, and this has generated this temporary effect. On the Pillar 2, we are still waiting, because first of all, to know exactly who going to be our regulatory body.
Yes.
Fineco is still under the control of the ECB. Considering that we are below the EUR 30 billion threshold of balance sheet, probably we are expected to return under the control of Bank of Italy in terms of surveillance. Clearly after that, we're going to receive the final request on the Pillar 2. We cannot rule out.
Some request.
some more requests, but clearly, it's going to have a negligible effect in what we are doing because Fineco is in such a strong position that also assuming that we receive an additional request by them, it's not an issue.
Okay. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone. Gentlemen, there are no more questions registered at this time.
Thank you very much. As usual, if you have some more requests of data, information, details, we are as usual always available for answering to your any additional questions in the coming days. Thank you very much.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.