Morning. This is the Chorus Call operator. Welcome to Credem's conference call presenting H1 2026 results. To be assisted by an operator during the conference call, press star and zero on your phone keypad. Let me now turn the conference over to Mr. Stefano Morellini, General Manager of Credem. Mr. Morellini, you have the floor.
Good morning to all of you. Thank you for logging in even though we are very close to the summer holidays. Together with me, I have Giuliano Cassinadri and Daniele, our CFO, Aharon Sperduti, and the entire investor relations team. It was a first half that was greatly satisfactory for us, reconfirming our ability to achieve excellent results, thanks to a growth strategy enhancing our business model at best.
A growth, as I already told you, that we could drive in an organic way. Also potentially looking into opportunities, we could also grow through M&A. The way we do banking, these results confirm it, is a benchmark, is a credible reference in the market, both for families and corporations. We constantly support them with the utmost quality product. At the same time, we really support the country. We help savers, and they find, in our group, a safe and reliable guide capable of enhancing their savings through careful advisory and targeted customized advisory. This is the result of the day-to-day commitment of our professionalism and our sense of responsibility and accountability, of all our people, all of our staff. I would like to really warmly thank them, congratulate them, and thank them for their efforts.
Let 's now drill down into the results and highlights. We are on page two. We would like to reconfirm for H1 2026 our highlights, our points of strength. First six months were closed with a net profit of EUR 312.9 million, up 12.5% versus H1 2025. Net of the one-off of the merchant acquiring sales, we confirm our profitability with an adjusted annualized ROTE of 15.9% and an annualized ROE of 14.1%. Our asset quality is at the top of the banking system, not just in Italy, but also at European level, with an NPL ratio of 1.5% and a net value of the ratio equal to 0.7%. In addition to that, our capitalization is quite strong and enables us to confidently face our growth path. A CET1 ratio lands at 16.22% with a buffer of about 768 basis points.
Let's now have a look at the results we achieved in our size growth. We move on to slide three. Also size-wise, we show positive signs also for the first half of 2026. Loans went up year-on-year, went up 2.1%, and direct funding went up 4.5%. Both these results are definitely sizable. Overall funding is equal to EUR 2.7 billion. Most of it is new funding from asset management and insurance. The distinctive feature that characterizes Credem and confirms the ability of the group to be able to really tap the full potential of a diversified business model really supporting revenues and streamlining revenues. Also growing is the number of customers. Our customer base that went up 5% versus H1 2025 and landing at 1.7 million. Let's now look at business diversification, our revenue sources. We are on page four.
You see our revenues are diversified. On a quarterly basis, they have been constantly growing. I'm very happy to highlight that recurring revenues is up and achieves very meaningful levels. Levels of absolute excellence, EUR 495.5 million. This is even higher than the total revenues for the same time periods of 2025. In the second half, in Q2, revenues landed at EUR 545 million, with an excellent balance between NII, 47% of total revenues, and NIM equal to 44% of revenues. During the quarter, a positive impact was derived also from non-recurring items. That is to say, our trading and commissions, performance fees and trading activities. Let's have a look at the different business lines in the next slide.
We still retain a high profitability level, both in commercial banking, closing the first half at EUR 169.3 million, giving 54% contribution to net profit, and also in the private banking and extended banking services. Extended banking services, then consumer credit landed at EUR 45.9 million, accounting for 15% of the total consolidated profit for the first six months of the year. Excellent result achieved, thanks more specifically to the excellent work and excellent quality of our effort, and how we really protected our sales spreads and how we managed to grow wealth and private, including both Credem Euro mobiliare and Private Product Factory. We have an overall result of EUR 106 million, accounting for about 34% of the group total profit. Wealth and private is also driven by the excellent growth of assets under management over the last quarters.
Our ability to have a business lines that can really express excellent levels of profitability is really driven by growth that is made to be sustainable over time. Therefore, we can look into opportunities to grow through M&A, if accretive and valuable to further improve our strategy could be taken into account. Let's have a look at our growth nationwide, our value creation nationwide. We are on page six. We have a widespread franchise throughout the country, and really that bears witness to our commitment to grow throughout the country. Our geographical franchise is well-balanced and very thorough, mirroring the soundness of a national banking group. We want also to be very close to our customers, Banca del Territorio, so to say. We have deep roots in the North, generating high volume, but the way we are fairing shows that we are really a national franchise.
We are very competitive also in Central and Southern Italy. Direct funding and loans, it's a very balanced ratio between them, and a common piece of information that is common to all areas, indirect funding, that really proves that our advisory model is really performing throughout Italy. This match between being independent, being at the same time very close to our customers, and being very sound at European level. These are all factors that enable us to create a sustainable growth model, generating value over the long term for all of our stakeholders. In the next slide, let's have a look at the main items in our income statement, our P&L.
We're on page seven of the presentation. Our NII performed really well. It's up more than 5% versus the previous quarter, whilst the NIM, core NIM, net of non-recurring items, such as trading and performance fees, went up sizably, thanks to the excellent net production, net delivery of services. Net revenues went up 8.5% versus the first quarter of 2026. Almost 12% versus the first half of 2025, also thanks to the results we achieved in trading and to the contribution of performance fees. Over this quarter, we really proved that we can really manage cost items, retaining at the same time a constant commitment to really come up with new projects and IT systems to really support the size growth of our group. Payroll is declining 3.5% versus the previous quarter because we had an advance of the seasonality effect and the holidays effect.
Of course, we have ICT costs that are controlled. Our operating profit is up 20% point versus the same time frame last year. The cost of risk is very limited. It's very low. It's 9 basis points versus the previous year. The net profit for the first half is EUR 312.9 million, up 24.3% versus quarter-on-quarter, and up 12.5% year-on-year. If we look at the adjusted net result, it's EUR 278 million for the first half of 2025, net of the benefit we derived from the disposal of merchant acquiring activities. Let's now have a look on page eight of the different items. The NII grew nicely over the two quarters after EUR 244 million recorded in the first half. The second quarter is up EUR 257 million.
The performance was mainly driven by the favorable positioning and placement on interest rate risk and the constant growth of commercial volumes. Maybe anticipating some of your questions, we look at this year's NII with a much more positive eye versus the previous years, with an NII that we expect growing vis-à-vis or versus 2025. Let's have a look at the customer spreads. We are on page nine of the presentation. We do confirm an excellent ability to really support our profitability. Our customer spread is up for the third quarter in a row. It's higher than 3%, an excellent level, especially considering the level of our asset quality and therefore a profitability adjusted by the cost of risk. The resilience in our customer spread stems from the excellent result of our returns on loans and an accurate management of direct funding, thanks to our teams.
Let's now move on to our securities portfolio. We are page 10 of the presentation. If we compare it to March, our securities portfolio is quite stable, with a slight shrinking of overall volumes to EUR 12.2 billion. Also, as a consequence of some sales of some disposals that we made over the second quarter of 2026. The portfolio still retains a high level of quality. It's highly diversified. The overall duration is 4.2 years. The impact of Italian govies is 39%, with a component of HTC that is 81%. We are constantly monitoring the market to seize opportunities for better positioning and to really enhance the contribution to our NII. Let's have a look at the commission performance. We are on page 11. Non-interest margin, h ere we are very, very happy and satisfied to look at the results achieved.
Commissions, fees and commissions, whatever kind result, that reconfirms what we had already told you in advance. That is to say that this item will be the main driver for revenues over the next quarters, especially thanks to the strong synergies we managed to unfold between our networks and product factories that are really well supported in our business model. Recurring fees, splitting of income from financial activities and performance fees went up vis-à-vis the same time period in 2025. It's really a sizable increase, equal to 18%. More specifically, management fees landed at more than EUR 153 million, net of performance fees that were EUR 23.4 million. The result was also driven by a number of placements that over the quarter were worth more than EUR 11 million.
If we look at wealth management, which is also growing, the insurance result land at EUR 30 million in the first half, in excess of EUR 150 million in banking fees, and EUR 27 million instead is the contribution provided by the financial activities stemming from some profit-taking activities over the first six months. Page 12. In addition to really sustaining and supporting revenues and keeping our business sustainable and keeping costs in line with the previous quarter, we retain a level of cost that is in line with the previous quarter without giving up our commitment to really support our size growth by hiring 213 new colleagues since the beginning of the year, and with a very strong activity or focus on IT and a number of projects. Compared to the first quarter of 2026, payroll went down 3.5%, mainly due to holiday taking and the seasonal effect.
Admin expenses, as a trend, is still tied in with the commitment the group has taken to support growth. Generally speaking, the cost base is strictly correlated with the growth of our group, the size growth, and also tied in with the excellent growth of revenues that we think is sustainable also for the next quarter. Let's now move on to loans to customers. We are on page 13 of the presentation. We keep growing our loans to customer, 2.1% is the growth year-on-year, confirming both the excellent work we did as a group and also the effectiveness of our business model. More specifically, short-term loans went up 4.6% year-on-year. Residential mortgages and leasing went up 2.1% and 2% respectively versus 2025. Consumer credit, driven by our company, Avvera, is recording a 12.6% increase year-on-year and lands at EUR 4.4 billion.
Despite a market scenario that is really challenging and the strong competition, we are confident we can keep on improving our market share. Thanks to the strong synergies we can unfold through our business model and the one-of-a-kind work, the extraordinary, outstanding work of our sales network. Let's now talk about inflows. It's page 14, one more in the presentation. In the first half of 2026, we landed with an excellent result, almost EUR 2.7 billion overall net inflows. Very positive are the flows coming from assets under management and insurance landing at EUR 1.3 billion. It's volumes that are giving a very strong contribution to our commission items, and that will still support our revenues in the coming quarters.
Our organic growth strategy is based on increasing inflows and the ability to acquire new clients and to further consolidating our role as being a point of reference for our clients to manage their savings. The results achieved in this second quarter prove that we are going along the right lines. Net direct funding is basically flat, EUR 69 million. It's a natural development and consistent with our advisory activity that led to the changing, the channeling of liquidity into assets under management and wealth management. A very positive performance, EUR 1.5 billion worth of assets under custody, thanks to the placements of govies. We are now on page 15 of our presentation. The excellent performance in our net production led to an increase in direct funding from customers, where our direct deposits go up 4.5% year-on-year.
We have inflows from insurance, assets under management and insurance, landing at EUR 51 billion with a 13.3% growth versus the first half of 2025. Let's now have a look at the asset quality and the metrics. Our asset quality metrics are reconfirmed at levels of absolute excellence at the very top of the European banking universe. Cost of risk is very limited and lands at 9 basis points, confirming the effectiveness of our credit assessment policies during origination and the lack of signs of deterioration to be detected. NPL ratio, 1.5%, is lower than the system average, both in Italy and in Europe. Also, we are not seeing any signs or meaningful signs of deterioration, and therefore, our rate is 0.47%. That's our default rate.
We focus on the economic scenarios, and at the same time, as an objective, we want to have a cost of risk in line with the previous years and below 20 basis points. Let's now move on to the NPL coverage. We are on page 17 of the presentation. Also looking into the NPL coverage, our group is at the top of the industry, both in Italy and abroad, with a coverage ratio of 56.4%. That includes additional coverage coming from shortfall and coverage of Pillar 1. It stands at 59.9%. These levels really give us a competitive advantage should there be any changes in scenarios as have it happened in the past, and make us confident in our pathway towards really rolling out our growth strategy. Let's now look at the bond issuance, even maturities. We are on page 18 of the presentation.
If we look at institutional wholesale funding, we were back in the market in May with the issuance of a EUR 500 million green bond. Let me remind you that there are no bond maturities in 2026. The margin on the MREL requirement is 9.2 percentage point. Let's now have a look at liquidity ratios, page 19. As to liquidity ratios, we have very high levels of net stable funding ratio and liquidity coverage ratios, landing respectively at 140% for NSFR and 171% for LCR. Let's have a look at capital, consolidated capital ratios, page 20. If we drill down to a greater level of detail, we see our capital position confirming the excellent soundness of the group.
Capital ratio, both at bank level and holding level, are at very high levels, respectively 17.45% and 16.22% for CREDEMHOLDING , with a buffer versus the minimum requirement of roughly 768 basis points. That really enables us to fully support our growth strategy, both organically and gives us the necessary flexibility to look into opportunity to grow through M&As. Really enables us to take up any impact that may derive from the volatility of markets or any other external scenario. Page 21, the last table for this presentation, the last slide. Before we move on to your questions, I'd like to wrap up the presentation with a summary that really tells you in a very effective way about our DNA. Everything starts from our very foundations.
We've been in the market for a long time, with the capital soundness at the top of the industry, excellent portfolio quality. Thanks to this very sound financial funding, the market is rewarding us when it comes to institutional funding, wholesale funding, as we have well diversified our wholesale funding. We can therefore leverage it to really finance the growth, fund the growth of our loans. We can improve the relationship with clients. We can have advanced advisory, and assets under management are also in the forefront, and we help our savers, we help our clients to turn their deposit into value-added investments. We look at the value chain, and we fully control it. We have our own internal product, internally developed product, and therefore we can really leverage the margins. We have a fee-based business model.
We generate stable and recurring fees and commissions, and they're not impacted by interest rate volatility, therefore maximizing the overall profitability of our group. That really organically generates capital and retains an excellent capital soundness. It's therefore a resilient business model, a profitable one, and a sustainable one over time. I would like to thank you very much for listening to us. Now let's move on to the Q&A.
This is the Chorus Call operator. Let's now start the Q&A session. If you want to ask a question, please press star and one on your phone. To be removed from the Q&A queue, press star and two on your phone. Use your phone handset to ask the question, please. First question comes from the line of Elena Perini with Intesa Sanpaolo. Please go ahead, Madam.
Good morning to all of you. Thank you very much for your presentation. I have three questions. The first one is on your NII. You gave us a guidance of growth versus 2025, mainly driven by rates and volumes, even though volumes are faring well too. Could you elaborate on your sensitivity in that respect, your sensitivity to rates? The second question is about your profits. It's [inaudible]. If we multiply by two your half-year data, you practically would land in line with what you achieved last year, even with the contribution of the capital gain coming from the disposal of the merchant acquiring. A comment on NII and on other items I mentioned before. How can they move? What do you expect to happen? What is the level you're going to reach as far as net profit is concerned?
One last question, are there any novelties about your capital when it comes to the adoption of CRD IV by member states that could free up 120 basis points of capital? Would that be helpful for further M&A transactions, or could there be room for more generous, somehow remuneration policy vis-à-vis your shareholders? Thank you.
Thank you for your questions. Let me tackle the first one about the guidance on our NII. Compared to our expectations for 2026, the expectations we had in 2025, we expect to close 2026 with a growth of at least 5% year-on-year. First of all, thanks to a growth in volumes. Here, we are more optimistic, and that reaffirms our commercial strength. Secondly, the way interest rates are faring are going, which is really supporting our NII.
As far as other guidance items to get to the net profit, maybe let me dwell on assets under management and insurance items. Here, the inflows in 2026, consistent with 2025, which was already very good, is ensuring strong revenues from recurring fees, net of performance fees. We expect it to grow double-digit, of course, subject to how markets will perform. That does not include performance fees. In the first half, we've already accounted for a big contribution of these performance fees, which was not discounted because of the geopolitical backdrop. They gave a strong contribution to the increase in our NIM in the first half.
We'll see what the market will be like for the second half of this year, but it's clear that if we were to have a similar situation in the market, results will be even more positive than the ones of the first half. As far as our sensitivity to rates, maybe then I'll give the floor to our CFO. I would like to wrap up answering your questions about the consolidation scope of our holding, while there are no major updates there. The CRD IV directive was recently adopted within Law 285, so we'll soon be able to start a dialogue with regulators. Of course, we will ask to be excluded from the regulatory or supervisory scope for CRD IV. That will not come automatically because every decision has to come from the ECB, and the ECB will give its saying on the matter.
As far as dividends are concerned, as you all know, dividend is something the Board of Directors will decide upon. Last year, we confirmed dividend despite the level of profit in recurring items was lower than what we had in the previous years. That was a major signal we sent out then, and that really proved that we really focus on the market, and we want to provide a stable remuneration for our shareholders, and therefore, a steady growth of our dividend payout.
Even at moments or hard times, we've always paid out a dividend, with the exception of 2020 because of ECB's recommendation. Let me reiterate that this is something the Board of Directors will have to decide upon. What you said will be looked into towards year-end, when we will be able to rely on more details about the results we will have achieved throughout 2026. Daniele, I give you the floor for sensitivity to interest rates.
Hello, Elena. Good morning. As far as sensitivity to interest rates is concerned, currently, we have a sensitivity over 12 months in EUR +97 million , 100 basis points curve, and EUR -62 million in case of parallel reduction decline in the range of 100 basis points. The average beta in the first six months of the year on deposit was about 30%.
Thank you very much.
The next question comes from the line of Luigi Tramontana with Kepler Cheuvreux.
Good morning. Congratulations on the excellent results you achieved. I have three questions. One is on commissions. I would like to better understand how the placements you made were just placements of retail BTPs, or if you also placed other types of products, such as certificates, and what your take is on those products ensuring major entry fees. Another question about capital, but you've already answered that question.
Also, I'd like you to elaborate a bit more on capital. Meaning, having excess capital, such a sizable excess capital as you generate. You generate capital, again, in a sizable way and in a very efficient way, b ut it's capital that's not really "working". What's your strategy? Could you elaborate? For instance, for M&As type of assets that you are looking at with somehow more attention, and if you have any specific assessment or valuation metrics that you are applying. For instance, return on investments, value creation, et cetera. Thank you.
Thank you. As far as commissions are concerned, we had EUR 10.8 million in 2026, EUR 11.5 million in the second quarter of 2026. If you want us to give you more details, out of the EUR 22.3 million, EUR 6.1 million is BTPs and AUC, practically. The vast majority, more than EUR 16 million worth of commissions are from OTRs, in-house OTRs. I think that should answer your question. As to capital, I can stress the fact that as we've closed the market more than once, we want to have a capital position enabling us to have a balance between rewarding our shareholders and, at the same time, have a capital endowment that is quite sound and robust. Even through uncertain economic cycles, we want to be able to still grow organically.
As you could see, these are very sizable and meaningful, and they have been, especially on the loan side, but also on the funding side. This is still our strategic priority in the long term, but also they give us the necessary flexibility to be able to carefully look into potential opportunities of growth through M&As, and this is something we are doing. I think I gave you a way to understand why we want to have such a strong capital level. For greater technicalities, I hand it over to our CFO, Daniele.
Good morning. From a target perspective, what we are mainly focusing on is entering areas where our network is not yet so developed as we have done with CR Cento. We want to create value, meaning we want to unfold synergies, but also we want to rely on the leverage on the full ecosystem around us. That's why we look into opportunities for maybe individual product factories that could be accretive or could serve the group's growth strategy.
The models, whether you analyze it from a dividend or from a DCF model, or i f we were to have a transaction in cash and we look at ROI, it's one thing, and if we were to have a transaction paid with shares, it would be the dividend area to be impacted. The main thing for us is that these transactions have to be accretive EPS-wise, earning per share-wise. A s far as the ROE is concerned, it very much depends on the opportunities for returning investments we may have.
Thank you very much for those clarifications. I have just a small follow-up on a one-off item of EUR 9 million that you accounted for in the first quarter. Could you elaborate on what it is connected with?
It's simply positive returns on some litigations we had, and when we closed the litigations, we had money released or freed up.
Mr. Andrea Lisi with EQUITA. Next.
Thank you very much for taking my questions. The first one is, you are indeed consolidating your results, but also , well, the consolidation in the market, could it provide growth opportunities for you? Are you already looking at some initiatives of that kind? As far as the NII growth, indeed, it's a matter of rates and volumes. Could you elaborate on what you expect as far as loans and deposits and funding are concerned from now to year-end?
Also, going back to growth and commissions that you mentioned before, do you think the commission levels that you currently have in the asset management sector segment, do you think they are sustainable for the coming quarters? Thank you very much.
Let me answer the first question. Yes. Our growth strategy with, well, internal organic growth, also leverages consolidation. As you could see from the result achieved in the first half, we increased our customer base by about 5% net. We are also, over these last few weeks and months before the summer holidays, we went through these opportunities. Consolidation enabled us to, for instance, go to the province in the Valtellina area where we didn't have a franchise in the past, and now we do. We opened two or three branches there, so that's an extra opportunity for growth.
As far as the questions you asked about loans and funding, or the deposits or funding, as far as our guidance is concerned, loan growth, we would like to retain the sustainable growth pace we've already provided or proven in 2025, around 3%. The target, the goal, as you saw in the first half, is to focus more on the profitability of such assets.
As far as deposits and funding are concerned, the target is EUR 4.5 billion worth of total direct and indirect funding at the end of December 2026, and EUR 2.8 billion should be assets under management and insurance, AUM and insurance. We are confident, and I'd already said it, above and beyond how markets will perform and how performance fees will fare. This will support us in the second half of the year as well, and it's one of the reasons why, as I said before, we expect a double-digit increase year-on-year.
Thank you very much.
Mr. Morellini, for the time being, there are no more questions in the queue.
I'd like to thank you very much for logging in. Thanks for patiently following us, and we wish you the best summer holiday.
This is the Chorus Call operator. The conference call has come to an end. You may disconnect your phones. Thank you very much