Good morning and thank you for standing by. Welcome to the Mediobanca Third Quarter 2024 Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To enter the queue for questions, please press star one one at any time. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Mr. Alberto Nagel, CEO. Please go ahead.
Good morning to everybody, and thank you for joining the call. The results of the last nine months gave us a picture of the group, which is changing quarter-over-quarter and which is coherent with our vision of the 3-year industry plan, the one that we have called One Brand, One Culture. In particular, we have had an increase of 9% in revenue associated with a steep decrease in RWA, down 5%. This is led by an increase of results and trend in wealth management and insurance, which are capital lighter, a different management and attention in RWA in CIB, and very strong performance from consumer finance. This was coupled with a reduced risk within the group and excellent CoR, which is in the region of 50 basis points.
These two elements led to such strong growth with less important capital allocation, led to an important increase in profit, roughly EUR 950 million, and an important EPS accretion of 20%, ROTA of 13%, and very robust capital ratio. These two elements led to a 5% yield by June, basically having our first interim dividend set at EUR 0.51 per share to be paid in May, plus the already completed buybacks of EUR 200 million, with 17 million shares acquired to be deleted by the end of June. If we stick to the industrial trend of the last three months, we can say that they clearly see an increasing and a stronger trend.
In particular, we have reached EUR 900 million, which is one of the highest, if not the highest, level of revenue, associated with a lower CoR led to a steep increase in profit compared to a year ago and to a quarter and to the last quarter. If we look at the single business, we have had a quarter where Mediobanca Premier was very well received by clients and bankers with very important new intake of professional, TFA up EUR 3 billion and, with, important, and, net new money, in different mix with EUR 1 billion of inflow in AUM in the last three months and an increase in asset management offer.
CIB, a rebound in activity and fees with solid performance in domestic advisory, while consumer finance, growing volume, new all-time high quarter in terms of new loans with effective reprice which led to a steep increase in NII, and this is on loan margin, on high loan margins, and very important profitability with stable CoR. We were also, you know, registering quite positive metrics in terms of per share of Mediobanca. So +20% of EPS is coupled with +16% in book value per shares and +15% in tangible book value per shares. Looking at the last quarter, as I said, basically we have had strong AUM, AUA inflow with a rebalancing mix in wealth management, coupled with much stronger recruiting in after the rebranding. So TFA up to EUR 97 billion and basically record net profit EUR 53 million and high revenues more than EUR 230 million.
So basically at the end this quarter was seeing best profitability in wealth management, best profitability in consumer finance, as I said, with strong new loan and very good cost of risk, and a rebound in CIB fee with a positive pipeline ahead. So basically this quarter showed EUR 90 million fee up 7% quarter-on-quarter, but if you see the comparison of the similar period of last year, we have had +72%. So this means that we are bottoming out, the industry is bottoming out in terms of trend of new transaction, and hence basically we see already an improvement in fees, and I think more to come, if this scenario is confirmed as it is recently of much more activity in the sector. So the growth came from TFA first, page 7.
Basically we have put emphasis on AUM, AUA, while we pushed down a bit in terms of new deposits because, as we will see after, we have had a very positive funding activity in bonds. So basically we have pre-funded in bonds. So basically we put our attention on AUM, AUA, and I would say that the very positive message is that we have recorded EUR 2.6 billion of AUM, AUA in this quarter, and out of which EUR 1 billion was coming from AUM, which is an important element of ability to grow much faster than the average of the market if you see that Mediobanca has had 10% of net inflow in the quarter as opposed to 1.5% of average of the network in Italy.
We have had quite positive news in terms of new loans in Compass, which was more than able to offset the other, the opposite trend that we see in the market and we see also for ourselves in corporate loan and mortgage. We have continued to manage RWA in order to have a more efficient bank. This year already in the last 12 months we have had -5% year-on-year, but we have had also another -1% in the last quarter. We like this kind of growth where, as you see on page 8, we are harvesting growth, well diversified from different sources. Wealth Management, Consumer Finance, Insurance, Holding, and waiting for CIB, which is going to come, we have then recorded 9% in revenue.
This 9% broken down in different businesses, you see on the right side of the slide, we have had a trend of revenue in the last few quarters is clearly higher than the average of the last year. So in consumer the average revenue trend was closer to EUR 200 million, now we are closer to EUR 230 million or between EUR 230 million and EUR 240 million, with there is always some seasonality. Then in consumer finance we had EUR 280 million and we are now running at EUR 300 million.
In CIB we are back to a level of EUR 200 million, and in insurance we constantly have quarters that are closer or higher than EUR 120 million as opposed to EUR 100 million of previous year. This is driven if we see the sources by, of course, three main or four main sources of revenue. The most important is still NII.
NII is enjoying a very positive spread between loan yield and funding spread. So basically this spread is stable growing, and so the ability to reprice of Compass was so strong that we could counter the weakness of other sources that I think particularly in the next year can come back while Compass will continue to have this kind of trend. And this was able to maintain a very high level of NII, notwithstanding the fact that, as we said, in funding, given the very positive capital market trend, we prefer to pre-fund with the DCM part of our funding and hence incorporating a higher cost of funding in absolute but lower than what we have budgeted and forecasted.
In fact, you see on Slide 10 that this quarter we have privileged taking the opportunity of a very positive credit spread DCM activity, pre-funding most of our budgeting funding, also in terms of capital issuance plan. So 80% of the capital issuance of our plan are already completed with the pre-funding maturities done at tighter than budgeted spread. You see the breakdown here on page 10. Fees, we had a positive very positive quarter. I would say why? Because basically net of some seasonality, you see, in particular in wealth management, if you see the corresponding quarter of last year it was EUR 111 million, this year is EUR 123 million.
In the middle there are some seasonality effects like, in December you have always banking fees and performance fees, and net of this it's a very healthy trend where all the components are working in the right direction. CIB is going back to levels of EUR 85 million-EUR 100 million, supported also by Arma, and as well as the Consumer Finance enjoying buy now pay later fee contribution is getting closer to EUR 14 million per quarter. Costs are a function of our development. So we have broken down the increasing costs in three main drivers. Business-related growth, so basically EUR 55 million of additional costs are related to platform growth. Our headcount went up by 200, so we are hiring people in most of our businesses, but all three businesses are growing in terms of headcounts, and some also add-ons from acquisition net of disposal.
Other part is more related to technology and projects, in particular digital, and then we have had, what was partly forecasted, it's the inflation and labor cost related to the new contract. In our budget we have anticipated a part of this. Another part, of course, had to be put to the P&L, but it's also true that this is coming in a context of a very positive trend in revenue, so it's well deserved. Cost-income in the region of 43% and in all division is broadly stable with an improvement in wealth management that the more growth and the more the operative leverage will work and will make that we're going to go closer to 60% rather than to 70%. Positive news also on CoR.
Basically, CoR in this quarter was 48% for the group, was 48%, and basically, this in the nine months is reverting to 50 basis points of cost of risk, where in consumer finance we are being seeing this increase in cost of risk being stabilized. So compared to our initial budget we had something like 15, 16 basis points on top of the increase we have had in mind, but this is much more than offset by higher, higher, I would say, loans and in particular more, more healthy loans in terms of personal loans which have much better margin. So net, net, net it's, it's something that we will see after is making Compass more profitable compared to the previous year. CIB, very good. CIB and wealth management, very good cost of risk, hence I would say now we are running better than anticipated in, in, in group CoR.
This is coming, another positive, with much lower usage of overlays. So, the more we go on, the more we see room, you know, to use less of this overlay, thanks to much better trend compared to our budget. Staging and NPLs are, you know, NPLs ratio are broadly unchanged, and this is also part of effect of the de-risking, overall the de-risking that we have already started some quarter ago. In terms of capital optimization, our reallocation is underway. It is important to note, in the last 12 months, the improvement that are massive that we made. So basically, a year ago, 40% of our RWA were in CIB, now we are at 33%. In consumer we went from 26% to 30%. Wealth Management, and insurance are broadly unchanged.
This, of course, is also leading to an overall, important increase in return on risk-weighted assets that went from 3.2% to 3.6% in wealth management and, as a group, went from 2.3% to 2.6%, so ahead of our plan. Capital generation has been strong. Basically we are broadly at the level of December, so 15.2%. This was basically as a result of earning generation, payout, business growth, and other 20 basis points including Generali, which in part will be reversed as you know after the payment of the dividend. So we have a temporary absorption of RWA and capital, but then this is going to be reversed in the coming quarter.
So we have made progress in our ESG plan and target both on governance with the outcome of the general meeting we have already commented. In our social target where we are at the second year of our program, in today's diversity inclusion initiative, and we have renewed our commitment in some partnership which are important, and I would say delicate program to support female refugees with the United Nations. We have been more precise in environmental setting our second interim emission reduction target. In particular we have identified aviation and cement sector, and we have had also some acknowledgment of our effort where in particular CDP has increased the scoring of our group. Going to divisional results, I would start from our priority wealth management.
This is a very important quarter I have to say because this is a quarter where acknowledgment, I shouldn't say final acknowledgment, but full acknowledgment of our potential is clearly there. And I have to summarize this with three main events. One is the rebranding. We were already very confident about the outcome of this rebranding. The reality it's better than what we have imagined. Why? Because that it was so welcome that we think that in terms of recruitment, not merely in terms of number but quality of people that can join Mediobanca in the next few months is going to be much better. So you see here numbers of 42 new professionals. The reality goes beyond the number in terms of quality, no? So this is the first element. The second element is what we have done in private markets.
Private markets, you know, you know now collecting capital for private equity initiative overall is very difficult, no? Because of what happened in the world, higher interest rates, low allocation from institution. So Mediobanca was able to raise EUR 1.2 billion and having 650 investors, out of which 30 are new customers, into TEC 2 program which is a club, a club deal type of investment into minority of very interesting and growing mid-cap in Italy, no? This gives you the sense that Mediobanca when is there to promote products that are tailor-made in asset management, also within its wealth management network, it's marking the difference. It's something that you see, you feel it, you feel it into the market, no?
So this is something that, together with the net new money, gives the sense of the potential we have still embedded in our franchise, which is a great, I shouldn't say confirmation that the strategic path it's the right one and more growth is coming in the next foreseeable future, no? Then if we stick to numbers, TFA up EUR 8 billion since June to EUR 97 billion and basically EUR 7 billion of AUM, AUA in the next nine months, this turned into EUR 12 billion, 12% increase in revenue and net profit up 18% to more than EUR 150 billion, no? This is coming, this is coming, I have to say, notwithstanding growth because the more you grow, you know, you the more it costs you, no? So, we have recorded these numbers notwithstanding two elements, basically. Cost of growth in terms of legal cost.
So, as we have recruited better and more people, we are paying more cost. Second, the renewal of our labor contract. So, net of this extraordinary cost, the recurrent profitability is even higher than the one we have, we have recorded. So, another element of seeing Mediobanca performance, Mediobanca group performance, is on Slide 24. Again, here, we are growing at least two times the system speed, where Mediobanca has had an increase of 4% of net new money in percentage of AUM, AUA stock, while the market has had 1.7%. But if we focus more on AUM purely, this is even more important because it's 2.4% as opposed to 0.4%.
As I said, we have privilege in this quarter, funding in bonds rather than deposits, and we are moving more the campaign for deposits in this quarter, so in this quarter we'll see more inflow in deposits as well. Key initiative been already mentioned. So basically I would, a very positive quarter which I said is giving even more confidence about what we have to do in this segment. In CIB, you go on page 28, again it's coherent with what we have planned to do. So we want to have a CIB operator which is more skewed on fees, so M&A, capital market, and less in I would say balance sheet-driven activity. So the first nine months saw any steep increase in announcement in transaction plus 57%.
It's more international thanks to Arma and our friends in, outside Italy, so 53% of transactions are non-Italian, 30% are involved in mid-corporates, and 50% have as a counterparty a private provider of private capital, so basically a private equity, no? So we think that advisory is going to go better in the first few quarters because it takes time to build the pipeline and then to sign deals and, you know, close, do the closing of deals, no? So we have done some announcements so we think that in the next few quarters we can enjoy this, this trend. And we will continue to work in three main initiatives. One is, having a stronger tech digital presence with Arma. Arma is already growing very nicely, has already done some nice hires, more to come. As well, this we can say in energy transition which started very, very, strongly.
As well as private capital coverage. Private capital, and private equity is making 40% of the fee pool in the industry, so having put the attention and the special coverage on this is proving to be a right choice. On top, we have started other country mid-corporate activity. So basically, mid-market activity is already very robust in Italy, but in the future we'll enjoy of at least a couple of more countries to support this trend. Lastly, the new initiative in market, we are on track as a BTP specialist. We should start to harvest revenue in the next financial year. So basically, we are creating different pool of revenue to support the rebound of CIB in the next few quarters.
The revenue trend you see it on page 30. It's a revenue trend that is going in the direction we like. So basically in the 200-ish level. So then this quarter like previous quarter as I said we had some positive which are basically advisory. I would say also DCM. I would also markets activity in particularly certificates and activity with clients was very robust. Still missing part on which the industry has to have a rebound are ECM IPO where the market is reopening but is more selective and acquisition finance. Going to consumer, consumer is having a very, very positive trend. I would say that this environment you can see from competitors numbers it's not the ideal for consumer finance. Why? Because consumer finance normally has like Compass, fixed rate, asset side, and more variable rate, and faster repricing in terms of liability.
So basically in a moment where interest rates are going up normally you see consumer finance company, you know, incorporating lower results. This is coupled with an overall higher, slightly higher cost of risk would have brought to lower, lower, or much lower, results for a consumer finance company. In Compass we are seeing the opposite. Why? Because the ability of Compass to invest in its leadership in distribution, in its leadership in digital, in its leadership in new product like buy now pay later led to the fact that the repricing, the amount of new loan were so good that they can more than balance the increase in cost of funding, cost of risk, and in cost of development, no? So basically what I have to say is that we were touched by the high level of productivity of new loan.
If you see page in particular, 37, we have had recorded the new all-time high quarter in terms of new loan. EUR 2.2 billion with EUR 1 billion in particular in personal loan. Most of them are done through our network. So this is giving much more marginality to the group. So this and the ability to guide the price was such that you see on the right part of the slide we keep on growing in terms of basically NII on average loan. So third quarter was 7.2%. And we have still some improvement to be done because it takes time to reprice. So now you see in the slide part of this has been repriced and part is still to come because it depends on maturity, no? On top having invested in digital in a new product is leading to new avenue of growth.
The new important avenue of growth is the way Compass is doing buy now pay later which is not the typical of the market because we don't operate as a fintech. We operate buy now pay later as a proper consumer finance product. So basically the activity done in physical and online with a very important level of merchants which are part of our partnerships with us led to a steep increase in new loans. So basically you see the last quarter loan book went up to EUR 230 and basically new loans are EUR 150. So the more we roll out our agreement and the new digital outfit with merchants the more we will grow. And this is bringing both fee income and NII if I can summarize 50/50.
And what we can say is that the profitability net of risk, now it's more than three years we are operating in this segment, is very good and is comparable to finalized loans. So basically the purpose loan that we have been doing for many years, no? Here the beauty is the number of customer we are acquiring every single day and the redemption in terms of repeat business. Both are above expectation and are clearly laying out the path, an avenue of growth that only few years ago was not there and was not deemed to be so big. Cost of risk has been stabilizing on the level we have told in the last few quarters. So basically, this higher cost of risk but contained compared to the start of the year is driven by two elements. I would say the vast majority is the mix.
So doing more personal loan we have higher gross yield and higher CoR. Net-net as we see we have seen from the numbers it's highly positive. And the second is back to normality, back to pre-COVID kind of level of CoR. Insurance generally trend continue to be very positive and above also our internal guidance which is the guidance, the consensus of the market. So basically we are enjoying a higher component of insurance that now as you know is treated in such an efficient capital way that makes this investment and this business quite interesting. Holding function improved results thanks to the fact that as we have central ALM management part of the benefit of NII is going to the holding function. So as a closing remark we are very happy with the industrial trend.
I mean, results, quarters are important but what, what is more important is the trajectory of the group. The trajectory of the group, group tells us that we are now planning a future of the bank more on wealth management and this is having every day positive feedback and confirmation from our initiative. That capital lighter activity in CIB is possible and it's going to be what we are fishing for in the next few quarters. And that we continue to have improving results in two business that are having excellent metrics like consumer finance and insurance. Of course this three level, three element is then pushing to have a very interesting capital distribution or capital return which is more based on in our case dividends, cash dividends.
So at 70% and but we always put a piece of buyback and this is basically giving an overall very interesting remuneration, no? So in terms of number if we see our revenue should be in the region of EUR 3.5 billion. Material growth both in NII and fees. The dividend we have already, you know, mentioned and this will likely bring double-digit growth in EPS and DPS compared to last year. We see this trend also going well in next year. Qualitatively we can say that we see increase in NII and in fee also in 2025 and 2026. And hence I think we have a good industrial trend in the next few quarters. Thank you very much for your attention and it's now time for your questions.
Thank you. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question please press star one one again. Please stand by while we compile the Q&A roster. We will now take our first question. Please stand by. The first question comes from the line of Britta Schmidt from Autonomous Research. Please go ahead, your line is now open.
Yeah, hi there. Good morning. Thank you for taking my questions. The first one will be on the outlook for the year. It looks like a really good quarter. The revenue trends are very solid. Cost of risk is also looking a little bit better. But the full year has been largely reiterated. Maybe you can comment a little bit on the outlook for next quarter for costs for example and also for the cost of risk. And whether we should expect visibly higher costs based on the better revenue performance so far. And then secondly on the capital ratio, which came in a little bit lower than expected. Do you still guide to a capital ratio by year-end to around 15.5% please? Thank you.
Thank you Britta. So in cost, we can say that, I mean, this trend is going to be confirmed. You know that the last Q is normally bonus season. So normally we have the last Q of the year a bit higher compared to Q3. As revenue are going well I don't see a different trend this year compared to previous year. While in cost of risk we have to say we are seeing better trend. So, we gave a range of 50%-55%. Today clearly we are on the lower part of this range. Let's see but I mean as far as we see cost of risk looks better.
Capital ratio, to explain, this the trend of the quarter, what you saw it's relative to an initiative in asset management with some seed capital for new interesting initiative. What we can say that capital ratio will look very nicely at the end of the year.
Thank you. We will now take our next question. Please stand by. The next question comes from the line of Luigi De Bellis from Equita SIM. Please go ahead, your line is now open.
Yes, good morning. I have some question. The first one is on the NII. So we have seen a resilient trend in Q3. So can you elaborate also on the trend for the next year? So what are the tailwinds that can offset a lower interest rate curve? Elaborating also on the loan yield and funding cost expected going forward in particular in consumer considering the lag effect of repricing. When do we expect the peak of loan yield considering the current interest rate curve? The second question is on the wealth management. So deposits have been softer sequentially. So can you give us more color on this also on the trend expected in the coming months? And the recruitment, you mentioned stronger quality recruitment after the rebranding. So how do you expect this trend to evolve? And can you elaborate also on competition to acquire new bankers?
In terms of inflows if you can give us an update on the net inflows trend also in April and the first days of May? Thank you.
Thank you, Luigi, for your question. So, NII trend, let's break it down in different components, no? Start from funding cost. Funding cost, we see after June a progressive decrease in funding cost. Why? Because we have put our effort on, as I said, pre-funding in the capital market. So, more bonds than deposits. Bonds are more expensive than deposits. And starting from June, we should see a decrease in interest rate. So, this element should bring a more competitive, should, we always say should because basically we know that interest rates forecast are always difficult. But our main scenario leads to an overall 2.7 average Euribor in 2024, 2025. So, we see more interesting cost of funding on one end. And on the other, we have two elements that are having different trend.
Compass, which is going to print and is printing, even in April we have had another very positive month. So as long as Compass continue to print this level of, I would say, new loan and price the way they're able, we have two strong supporting factors. So lower cost of funding and higher loan stock in Compass price at the right level. Where is the weak part of the story as we know? Is the volume on corporate and mortgage. Why? Because corporates on one end they tend to basically refinance on capital market and they are not willing to pay spreads on top of higher interest rates. And this is a bit similar in mortgage. So we expect that the two main positive will be bigger than the two main negative. Hence this will bring an increase in NII also in 2024, 2025.
Of course it's going to be lower. We are talking about low single digit but the trend is that we haven't seen a peak in NII today. Deposits in wealth management and recruitment. So for the reason I told just a few seconds ago, a few minutes ago, we are sticking more to deposits in the coming quarters because we have pre-funded our bond issuance. So we're going to put a bit more emphasis on deposits. Now, deposits it's a matter of also pricing. We have to find and we will find the right balance between, you know, promo price and amount of deposits we need, no? Normally even if we don't have a huge increase in loans it's better to do more deposits because then you convert into AUM, AUA rather than bonds because commercially are much less effective in wealth management, no? Recruitment. Recruitment is going very well.
We have to look more at quality and quantity. We can do a bigger number with lower amount of intake because of average size of portfolio, no? We see that, I mean, professional that have in their customer base entrepreneur they are more and more taken by our proposition because of course we can serve them with a number of product and, you know, expertise that in some cases they don't have where they are, no? So this pitch is working. It's not only positive, no? Because I said that this recruitment is not coming, you know, without cost, no? There are some legal costs. There are higher labor contracts. But, you know, I think overall it's something that is, you know, bringing more AUM, generate a bigger leverage, operative leverage on wealth management.
So what we'll see is basically a trend of continuing growth in revenue in wealth management associated with lower cost income. Competition is there like always. Many banks are putting focus on wealth management. So we knew this and this is happening. But, you know, I think we have some features and some skill set that are not easy to be replicated.
Thank you.
Thank you.
We will now take our next question. Please stand by. The next question comes from the line of Azzurra Guelfi from Citi. Please go ahead, your line is now open.
Hi, good morning. Two questions for me. Listening to the presentation, you have said many times the word growth and progress. But all of those seem just to relate to your initiative. So, not rate related. If anything, your business is more countercyclical versus rates. So, with rate coming down, this growth will not slow. When I think of the major initiative that you mentioned, it's Arma. It's the financial advisor growth. Do you think that those are going better than what you were initially expecting? And, if anything, are they positively surprising? Like, the ability to attract FA it's higher than what you thought. Arma is integrating better and easier with your CIB. So, if you can give us some color on what do you think could be a conservative or original assumption on this growth initiative. And the second question is a quick one on the CIB.
The environment seems to be more supportive than in previous quarter. Can you give us a little bit of expectation of the pipeline going forward? Thank you.
Thank you Azzurra. So I would say that Arma is going according to expectation and basically is having opportunity to grow in terms of new partners. And it's already happening. Now, from the hire of new partners to see, you know, impact in numbers it takes some quarters. But, you know, we are going according to our plan that was a plan where Arma within Mediobanca can grow because we can provide capital to grow in terms of new partner and also some selected acquisition. So we are now in execution phase. Of course, as I said, execution to be seen in terms of number normally requires some quarters. So I think what we are doing now we'll see more the benefit in 2025. Financial advisor, you know, we knew the trend.
We knew when we did interview in the past people said we want to go and come and work for Mediobanca brand. We want to be close to Mediobanca. We want to be close to the expertise of Mediobanca, to the soft skill in CIB, no? So this is why we have rebranded CheBanca! into Mediobanca Premier and why we have put the new Mediobanca Premier closer to the ecosystem of Mediobanca. Because this is a strong selling point I would say. A bit abused unique selling point. Now, we are seeing this now happening, no?
To the point that why we were starting a financial advisory chain six, seven years ago, 10 years ago and the possibility to hire was more limited to some cluster in some cluster of financial advisor. Now we are more. It's more Mediobanca that is in the position to choose who is going to come, who is better not to come, no? So again, Arma said it's going according to plan. I would say financial advisor intake quality in particular is better than forecasted, no? Now, of course it's a long trajectory, no? It's not something that we should see only this quarter. But it's going in the right direction. CIB. In CIB as I said we are seeing a greater number of transaction announced. These transaction are coming from I would say private capital.
So, a lot of private equity business related activity and also some I would say M&A between, you know, corporates, no? The second positive is DCM. A second element, a third element which has been very robust and will stay is certificates. Again, here we see a very positive situation with Mediobanca. Because Mediobanca is harvesting I would say to benefit in certificates. We are manufacturing certificates. So in CIB we retain margins and we sell certificates to our wealth management customer base. So again, having CIB and wealth management combined is ripping the benefit of the two. There are also some weakness in CIB market still. As I said, ECM is for the time being not as robust as we have anticipated. Acquisition finance hence loans to corporate done at decent spread within M&A are still behind what should be in the normal market.
Thank you. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced. We will now take our next question. Please stand by. The next question comes from the line of Marco Nicolai from Jefferies. Please go ahead, your line is now open.
Hi, thanks for taking my question. In the consumer unit, if I look on a year-on-year basis, loan growth is improving. I mean, it was always well into positive territory also in the past quarters. However, I can see a little bit of an acceleration. Can you tell us a little bit more on this trend and how do you expect it to develop going forward? Also, still in the consumer unit, this quarter, including the release of overlays, you booked less than the last quarter in terms of total provisions, let's say. Are you still expecting a normalization of the cost of risk or is that it? I mean, since you already had an improvement compared to the previous quarter, how shall we still expect kind of, you know, a normalization or I guess the normalization is it over?
Last question, can you tell us a little bit more on the, you know, move from CheBanca! to Mediobanca? Obviously you rebranded. However, can you tell us a little bit more about what you did beyond the rebranding? You said that you moved the structure of CheBanca! the former structure of CheBanca! closer to Mediobanca. But can you be a little bit more specific and tell us a little bit more around this? Thank you.
Thank you, Marco. Very nice question. So consumer. Yes, we saw an acceleration. And this is very much confirmed also in April. Why? I would say that the general mood is positive. And this is in particular also related to CoR. So you have seen that we have an all-time high employment data. So there is quite good consumer confidence. So we are working in a positive environment. But I would say this is 30% of the answer. 70% is the ability of Compass. Because Compass has worked a lot on its distribution platform, no? Massive work in the last 7-9 years where basically we have invested in many kind of distribution fixed variable cost the sort of the linkers door to door to the buy now pay later. So this is creating two elements.
More activity done through our network which is then, you know, giving much better margins. Because we don't pay fee to third-party distributor, no? So this coupled with the buy now pay later which is becoming a trend of paying stuff in the world. And given the position of clear leadership of Compass which is doing this as I said and we repeat because the business will be regulated by an EU directive in 2025, 2026. So if you operate already like a proper consumer finance product you have done all what or most of what the new law will require. And this is also important for our partners. Because we are there to stay as a stable institutional partner rather than a fintech, no? This is the reason why we see this acceleration. This acceleration is for the time being there to stay.
It's a great supporting factor to our NII. A bit related to this is the CoR. Now, part of this improvement is also and will be related to the fact that our ECL model is based on better I would say scenario, no? Where interest rates are a bit lower and unemployment rate is lower as well. So basically in the ECL you project a better scenario to the point that basically as this increase of bps related to the mix is there to stay but is not growing we see for the time being Marco little use of overlays even for the quarters to come. The next quarter. So what we have done in Mediobanca Premier we said basically we made a similar approach. We had a similar approach towards Mediobanca Private Banking. I give you by analysis not exactly the same because the segments are different.
When we bought CheBanca! seven years ago and we rebranded into Mediobanca Premier, we said, "okay, Mediobanca Private has to be something close to us. Very close to us. Operating with the same approach. Having the same quality of people. Using our product. Making Mediobanca asset management Mediobanca investment banking product for them. Mediobanca TEC so TEC 1 , TEC 2 . All the other project on private market." So the same is going to happen in Mediobanca Premier. Of course it's a different segment. So not all the initiative we do for private are good for Premier. For instance, our research, our M&A, our certificates all our products are there embedded now in Mediobanca Premier. The cooperation with advisory is coming because basically the quality of the bankers and advisor are such that they need and they get response and feedback from the center.
So it's not a rebranding. A repositioning in the higher level and in proximity in our ecosystem. Product, philosophy, initiative we do a lot of initiative on the territory using our institutional research. This is a very important you know that Marco we issue apart from our Mediobanca research we have also a lot of sector research. A lot of industry research which are very interesting when you present. So we do a lot of events now branded Mediobanca branded Mediobanca with Mediobanca Premier to the customer of Mediobanca Premier. This is something that is creating a different compared to others that they don't have. So this is a set of elements I wanted to give you to give the sense of this activity.
Thanks a lot. Sorry, quick follow-up on the consumer. Here NPL ratio moved up a little bit Q o Q. How shall we read this? And thanks a lot for your answers before.
Yes, the NPL ratio is going up slightly. Why? Because basically we have had a decrease in stock loan because we grew where we see margin in consumer. And we don't want to grow in mortgage in corporates because it's a negative EVA, no? But the trend in NPLs is very, very healthy. And in the last Q we will sell some so we have already sold. You know that Compass does two kind of disposal or one big every year in order to have a warehouse of non-performing which is basically nothing, no? Because we sell all the consumer. So it's a matter also of timing of this. This is going to happen this quarter. And in the meantime we see also the loan stock where it ends up. But this is going to be either 2.4%-2.5%. So we don't see any major changes in this.
Thank you.
Thank you. As a reminder, to ask a question you will need to press star one one on your telephone and wait for your name to be announced. Please stand by. Please stand by while we compile the Q&A roster. We will now take our next question. Please stand by. The next question comes from the line of Adele Palama from Mediobanca. Please go ahead, your line is now open.
Hi. I have a question on the management fee margin which seems to have declined year-on-year. So I was wondering if it's a question of our asset mix. And then if you can give a guidance on the evolution of the management fee margin for the next quarters. And then the same question for the fees expenses. So as a percentage of management fees has slightly increased in the last fourth quarter. So if you can tell us a guidance there as well. Thanks.
So as you may have seen in many other situation there's been a slight decrease in the ROA of the division. Why? Because basically we have had nine months now it's improving where the component of AUA was bigger than AUM. And hence there's been a bit of dilution in terms of marginality. The more we are able to revert this and the last quarter we have had EUR 1 billion of AUM. And we think this trend can be somehow confirmed in the current quarter. We should catch up a bit of this marginality. But it's function of basically higher interest rates and fixed income product, no? We see an improvement in the quarters to come. Sorry, because the line was a bit not so clear maybe you asked other question that I didn't really be able to.
Yes, sorry. I asked a question for the fees expenses. As well, fees expenses seems to have grown over net management fees a little bit. So I was wondering if you can give a guidance on that trend as well for the next quarters. And then if I can add another question, sorry. What's the percentage of AUM that are coming from the financial advisor that were hired as a percentage of total AUM flows? Thanks.
Sorry, there's also been, I would say, a seasonal temporary impact. In the sense that the AUM of this quarter were concentrated in the last part of the quarter. So the marginality was affected by the fact that maybe it was in the last month or the last 20 days. And hence on average during the quarter it went down. We should see a reverse in the quarter in the current quarter.
Thank you. As there are no further questions, I would now like to hand back to Mr. Nagel for closing remarks.
Thank you very much for your attendance. I hope you have a nice continuation on the day. You can join us in the last quarter and the full year results in July. Thank you very much. Bye-bye.
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