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Operator: Good morning, ladies and gentlemen. Before I hand over to Ms. Magda Palczynska, Head of Investor Relations, a reminder that today's call is being recorded. Madam, you may begin.
Magda Palczynska: Good morning, and welcome to UniCredit's Third Quarter and 9 Month 2025 Results Conference Call. Andrea Orcel, our CEO, will take you through the presentation. This will be followed by a Q&A session with Andrea and Stefano, our CFO. As always, please limit yourself to two questions. With that, I hand over to Andrea.
Andrea Orcel: Good morning, and thank you for joining us. Today, I am proud to present our record third quarter that completes the best 9 months in our history. These outstanding results have been delivered, thanks to our people. Their professionalism, ownership, passion, determination and search for excellence are the foundation of everything you will hear today. Our message is simple. UniCredit is about sustainable, best-in-class performance today while steadily building for tomorrow, all supporting best-in-class sustainable shareholder remuneration. We remain proud of what we have achieved and confident in our future trajectory because our strategy works, and our execution is unparalleled. This is true across every region and business we operate in. These results mark our 19th consecutive quarter of quality profitable growth and a clear beat across net revenue and all its core components, cost, capital, net profit and return on tangible equity. It is a quarter that defines great performance, great prospects and great returns for our shareholders today and over time. We have reinforced our double-digit growth trajectory in EPS, in DPS, in tangible book per share while maintaining a return on tangible equity above 20%. We confirm our dividend and share buyback guidance. We continue to grow in a quality way. Net revenues are up in the quarter and broadly stable over the 9 months. This is remarkable given the challenging macro environment in which we are operating. It shows that UniCredit is capable of growing through the cycle, supported by an increasingly diversified top line that remains highly resilient and will quickly pick up as soon as the impact of a rates decline is absorbed. Costs continue their downward trajectory, supporting a best-in-class cost/income ratio. Capital efficiency remains excellent with a top-tier net revenue to RWAs. Net profit is up 4.7% in the quarter and 12.9% in the 9 months, all at a 22% average return on tangible equity. All our asset quality metrics remain solid and stable. Net NPE, decreasing. Cost of risk contained with no signs of credit deterioration. Overlays intact at EUR 1.7 billion or 40 basis points of yearly cost of risk, a further defense against any future deterioration of our strong asset quality. CET1 ratio remains well above our target range and among the strongest in Europe. Liquidity remains sound with LCR above 140%. Net profit guidance for 2025 remains at EUR 10.5 billion, although we are now considering management actions to be expensed in Q4 to further propel our future result mostly from '27 onwards. These actions are focused on investment for growth rather than investment on efficiencies as they were in the past. The early deployment of EUR 6.5 billion of our excess capital and absorption of related upfront costs will add EUR 1 billion of net revenues and net profit by 2027, growing from there at a fixed capital consumption and largely protected by put options. Residual 2024 share buyback of EUR 1.8 billion will start by the end of October and as early as the end of this week. EUR 9.5 billion in dividends and share buyback for 2025 are confirmed with an interim dividend of EUR 2.2 billion paid on 26th of November. Ordinary distribution policy from '26 onward of 80% of net profit is confirmed. This is practically equivalent to the 90% of previous net profit but did not include the impact from investment. Such ordinary distribution may be complemented by excess capital return evaluated yearly as we did in the past. The Italian Government has released a draft bank levy. It is premature to assess its impact as it is still under discussion. UniCredit will dilute any hit, thanks to our geographic diversification. As always, we will do our best to minimize its impact on UniCredit, our shareholders, our people and our clients. We will release more detail once this is finalized. Our performance this quarter further strengthens our unique equity story, one of the most compelling in European banking. We're delivering beyond what we promised. We have further strengthened our earnings and dividend and capital deployment trajectory as we accelerate the execution of our winning strategy, building even greater confidence in the sustainability of our performance. Our equity story is rooted in our DNA of excellence, something that sets us apart from our competitors. It enables us to deliver consistently in the short term while building long-term sustainable value for our shareholders. This performance gives us a foundation and the confidence to outperform in Phase 2 of our strategy, accelerating growth, driving efficiency further and innovating to meet the challenge of fintechs. Our capital allocation decisions are a core element of our equity story and remain measured, disciplined and entirely aligned with the objective of long-term value creation. This year, we have deployed EUR 6.5 billion of excess capital, well ahead of our plan, in a way that enhances our stand-alone trajectory and grants strategic optionality. The equity consolidation of our stakes in Commerzbank and Alpha following the internalization of Life Insurance in Italy, the combination with Alpha Bank in Romania and the acquisition of Vodeno Aion delivers significant immediate value and improves our geographic and client mix. This capital has been deployed at an approximate 20% return on investment. roughly twice the current return on our share buyback and around 2.5x the implied return of purchasing Commerzbank or Alpha shares at current market prices. We are securing structurally higher net profit through the cycle, propelling sustainable higher dividends and share buybacks with per share and return on tangible trajectory at the top of the peer group. We confirm 2027 guidance for net profit to well above EUR 11 billion. We have combined preparation with opportunity and seized the right moment to maximize shareholder value. Distribution can reach shareholders in two ways: directly through dividends and indirectly through capital deployment that in turn enhances future earnings and dividend per share. Dividends remain sacrosanct, real cash returned directly to our shareholders, generating an attractive dividend yield. Capital deployment, putting aside business growth and M&A, can take two complementary forms, share buybacks and share buyouts. Strategic, both create value, increasing earnings and dividend per share. The difference lies in how they do it. Share buybacks reduce the denominator. Share buyouts enhance the numerator. If we compare the position before and after our EUR 6.5 billion share buyout, we have significantly increased the total value created for shareholders above and beyond what was expected and would have been possible with share buybacks. Above and beyond the significant improvement in the underlying performance, the equity consolidation of our stakes has further strengthened our outlook for '26, '27 and beyond. Based on Commerzbank and Alpha earnings, consensus and net of hedging costs, we expect around EUR 1 billion contribution of fully distributable net profit by '27, thereby significantly improving our net profit, return on tangible equity, EPS, DPS, tangible book value per share vis-a-vis what was previously expected. Our change in distribution policy is a natural evolution in our journey. Previously, we guided on total distributions, including excess capital at equal or above 90%. From '26 onward, with excess capital now aligned to our best, strongest peers, we are guiding to ordinary distribution at 80% of net profit with excess capital return to be evaluated yearly. This change enhances value for shareholder. The 80% ordinary payout applied to a circa 10% higher earnings and organic capital generation. Hence, it is practically equivalent to the 90% before. Any excess capital return or deployment is on top. Shareholders now gain greater clarity and predictability and greater dividend versus share buybacks with future distribution more underpinned by sustainable profitability rather than extraordinary return of excess capital through share buybacks. Our DNA truly sets us apart. It defines who we are, how we perform and the attraction of our differentiated model. It is built on three essential elements that together make UniCredit unique in Europe. We are the pan-European leader, uniting 13 banks plus 1 leading in their markets. Institutions that in most of our markets are not only leaders but often synonymous of banking itself, and more than 20 million clients to whom we offer best-in-class solution and a single getaway to Europe. We have harnessed this unique pan-European model, maximizing local empowerment while leveraging our combined scale in strategic partnership, in talent, in technology, in data, in AI, in product factories, in procurement, thereby making the group much more valuable than the sum of its parts. In doing so, we have achieved our ambition for UniCredit's model to become the benchmark for banking in Europe, redefining what best-in-class across profitable growth, operational and capital efficiency, distribution and strengths look like. And we innovate, striving to anticipate market trends, continuously investing in people, in technology, data and AI, products and distribution channels, aiming to lead in the future while delivering short-term results. These three elements: pan-European leadership, benchmark for banking and innovation form our DNA. They are the foundation on which we deliver today and build for tomorrow. Together, they are what makes our outstanding performance sustainable and what provides us unmatched ability to create value to other banks that wish to join our group. The first trend of our DNA, the one that makes us truly unique is our pan-European nature. Our strength lies in our ability to bring together more than 20 million high-quality loyal clients through our 13 plus 1 leading commercial bank with commanding market share in the most profitable and value-accretive segments in each market. We do this through a common vision and strategy, supported by shared product factories, increasingly shared technology and data platform, shared procurement and the strength of a combined balance sheet. We have created a scale advantage for all our banks, enabling them to leverage the group. At the same time, they use our pan-European network to offer unique products and services from trade finance to cross-border flows on a level that few can match. This combination of scale, connectivity and client quality makes UniCredit the partner of choice across Europe, a competitive edge that is difficult to replicate. And that advantage translates directly into irreplicable and resilient revenues, quality NII and fees and a strong foundation for future growth. Because of our success in truly leveraging our European network, the second interconnected strand of our DNA is that we are and strive to continue to be a benchmark for banking. Over the past few years, we have identified and executed a transformation blueprint that many thought impossible and now many are trying to replicate. We have shown that a large multi-country complex institution can be simplified, can be empowered, can be brought together and made more efficient and more profitable than others. In the first phase of our transformation, we unified the group under one purpose, one vision and one set of values. We empowered our banks and our people, simplified our structure and strengthened our ownership. And we rebuild the trust and passion critical to making the impossible possible. We increasingly leveraged our scale by integrating partnership, digital and data capabilities, procurement and product factories under one common model. We invested in our people, in our technology, data and AI, product factories and distribution channels, building the capabilities and infrastructure needed for long-term success. This transformation worked and is still ongoing. We delivered sector-leading efficiency, both in how we operate and reward capital while securing top-tier net revenue growth and moving our return on tangible equity from the bottom of the pack to the top. Our shareholder returns have been among the best in Europe. Such was the success of Phase 1 that we were now able to seamlessly move to Phase 2, continuing to execute our multiyear transformation blueprint. Phase 2 further emphasizes the focus on the front line, on the top line, accelerating our profitable commercial growth in a targeted fashion while continuing to improve our operating model. We're moving forward with a clear set of initiatives, all designed to drive quality, scale and long-term value. Our focus is sharper. Our execution is faster, and our ambition is higher. We're directing capital and resources towards the most attractive opportunities, the right geographies, the right client segment and the right product areas, ensuring every euro we invest delivers the highest possible return. We are expanding our product factories, deepening integration between them and our commercial banks and capturing more of the value chain. We are accelerating in SMEs and private and affluent, where our franchise is strongest and our potential greatest. At the same time, we are transforming how we serve clients, moving decisively towards an omnichannel model that seamlessly combine physical and digital, giving every client the best experience UniCredit can offer. And as always, our people remain at the heart of everything we do. We continue to increase the level of empowerment of our talent, the building of new skills and the creation of an environment where innovation, ownership and collaboration drives results. Phase 2 is about turning a proven blueprint into a compounding engine of growth, maintaining the efficiency discipline and strength that defines UniCredit today. The third strength of our DNA, the one that defines our future is innovation. We're not only building the future of UniCredit, we're helping to shape the future of banking in Europe through our 13 markets. Innovation for us is not an add-on. It is a mindset, part of how we work every day, seeking to extract value from it. We have invested in a proprietary cloud-native core banking platform through our acquisition of Vodeno, bringing together best-in-class technology and AI with scale to create a modern, agile foundation for the bank of tomorrow. We have brought in more than 200 outstanding engineers acting as an internal sandbox to support the modernization of our entire group. We are investing in data and AI at scale, using them to transform how we serve clients, how we manage risk and how we operate, with over 140 use cases currently alive and many more in development. We continue to innovate in the way we serve clients, letting them choose among our omnichannel. As an example, Buddy, our digital branch in Italy, onboarded 300,000 new clients in the 9 months, reaching almost 800,000 clients. We're also carefully but actively shaping the future of digital assets in Europe, combining prudence and responsibility with innovation as we explore new frontiers in tokenization, payments and secure digital value. And our innovation is not limited to technology. In an environment of accelerated change, we are innovating in how we develop and reposition our people, our talent, in how we work and lead, empowering our people, promoting collaboration across border and creating an environment where ideas thrive, and execution accelerates. Innovation is how we build the future for our clients, for our people and for our bank. And crucially, this innovation is self-financed, made possible by the efficiencies and the profitability we have already achieved. The success of our strategy and our unique DNA are clearly reflected in today's results. We marked the 19th consecutive quarter of profitable growth, underpinning the best 9 months in our history. It is proof that UniCredit has fundamentally transformed into a stronger, more resilient bank. We have outperformed across all key metrics, demonstrating consistent execution and the power of our model. Net revenues remain resilient, driven by better-than-expected NII net of loan loss provision. We look at it that way as NII cannot be separated from loan loss provisions. Robust fees, now including the internalization of Life Insurance in Italy, stronger contribution from investments that become a further core engine of our future net revenue growth. Trading, but while temporarily affected by negative one-offs, still shows good underlying client-driven dynamic. These results underline the quality and increasing diversification of our top line. Operational excellence remains one of UniCredit's key differentiators. Costs fell again in the quarter and were broadly flat over the 9 months, a remarkable achievement given the integration of new perimeters and continued investment in technology, people and growth. Our cost-to-income ratio remains among the very best in Europe. Capital strength is confirmed not only as an absolute number, but also given our superior organic capital generation now in line with net profit. Net revenues on RWAs remained strong. As a result, UniCredit's profitable growth remains best-in-class. Our top line remains resilient with each one of its driver performing better than expected. For the first 9 months, net revenue stood at EUR 18.5 billion, broadly stable despite headwind from lower rates. In the third quarter alone, net revenue reached EUR 6.1 billion, up 1.2%. NII net of LLPs declined 4% in the 9 months and 4.2% in the quarter, with cost of risk remaining benign at 10 basis points and NII -- gross NII performing better than anticipated at the beginning of the year. Margins were stable and loans grew circa 2% versus Q3 2024 end of period, partly offsetting the rates decline. Net NPE and default rate both improved to 1.4% and 1.1%, respectively, confirming sound asset quality and coverage. We kept overlays unchanged at around EUR 1.7 billion. NII RoAC at 19.2% remains best-in-class. Fees and insurance income, which benefited from the internalization of Life Insurance and strong investment product performance, continues to grow, reaching EUR 6.6 billion for the 9 months, up 4.9% and EUR 2.1 billion in the quarter, up 7.6%. Investment contributed EUR 693 million for the 9 months, up 84% and EUR 248 million in the quarter, up 64%, mainly from the equity consolidation of Commerzbank. While '25, the contribution of investment is offset by negative trading costs hitting the trading line. From 2026 onwards, they will significantly propel our top line. Together, all this reinforces the sustainability of our earnings mix with fees and insurance income representing a top-tier share of revenues. Trading performance of EUR 1.3 billion for the 9 months, down 10% was negatively affected by one-offs from the mentioned equity consolidation. Trading was up 4% in the quarter. Underlying trading remains solid and client-driven. This diversified revenue base across products, geographies and client segments ensure that UniCredit remains well positioned to deliver quality growth even in a challenging environment. Our operational efficiency continues to set the benchmark. Costs were broadly flat over the 9 months and in the quarter, fully absorbing the integration of Vodeno Aion, Life Insurance in Italy and Alpha, Romania as well as inflationary headwinds. Our cost-to-income ratio remains among the lowest in Europe at 36.8% in the 9 months and 37.1% in the quarter. This reflects our ability to simplify, streamline and automate while supporting rather than hindering our top line growth. Our continued efficiency also allow us to invest wisely in people, in technology, in products and channel to make us ready for the future. This is a tested blueprint, streamlining where it matters, investing where it counts and delivering operational excellence while laying the foundation for long-term growth without hindering present results. Our capital and capital efficiency remain best-in-class. Net revenue to RWA was broadly flat at 8.6% in the 9 months and 8.4% in the quarter, notwithstanding the significant impact on NII from rates. Organic capital generation continues to be a key strength. We generated EUR 7.9 billion, 283 basis points, allowing us to accrue 100% of distributable net profit as dividend and share buyback, most importantly, without denting our overall capital position. Our CET1 ratio stands at 14.8%, down 120 basis points due to the equity consolidation of Commerzbank. The regulatory impact of 14 basis points was almost entirely offset by other drivers. On a pro forma basis, our CET1 is down to 14.6% due to the equity consolidation of the 26% of Alpha stake, partly offset by the Danish Compromise impact related to the Life Insurance internalization in Italy. We continue to deliver quality profitable growth, underpinned by strong operating performance, complemented by one-offs with net revenue, cost and capital all better than our expectations. We are not just growing, we are growing with discipline. Our model continues to prove its strength, delivering growth, profitability, efficiency and capital strength and outsized distributions all at once. Italy continues to be our quality earnings powerhouse, accounting for 44% of group net profit. Net revenues are down 1.7%, to EUR 8.1 billion. NII, net of LLPs declined 5.1%, primarily reflecting rate normalization, only partially mitigated by disciplined pass-through management and benign cost of risk at 22 basis points. Asset quality remains robust with stable coverage and decreasing default rate. Gross and net NPE ratios were broadly stable at 2.7% and 1.5%, respectively. Adjusting for state guarantees and considering Italian overlays, the net NPE ratio of Italy drops to 0%. NII RoAC remained strong at 23.2%, thanks to our focus on margin over volume and targeted origination. Fees and insurance income grew 4.7%, reaching a top-tier 42% of revenues, driven by investment products up 7%, the contribution of Life Insurance internalization and benefiting from one-off incentive scheme effect on payments. Costs were down 1.7%, to EUR 2.9 billion in Italy, bringing our cost/income ratio to 34.1%, the best in the country. Net revenue on RWAs remained broadly flat at 10.4%, also the best in Italy. Profit before tax, excluding one-off, rose 2.4%, to EUR 5.1 billion with RoAC stable at above 32%, reinforcing our market leadership. Italy exemplifies our strategy in action, focusing on quality, efficiency and disciplined growth. Its performance underlines the strength of our model and its ability to deliver across cycles. Germany continues to be a resilient anchor, accounting for 22% of group net profit. Net revenues are up 2.4%, to EUR 4 billion. NII net of LLPs grew 1% thanks to disciplined pass-through, the anticipated effect of trading normalization and a decline in cost of risk at 14 basis points. Asset quality remains solid with overlays broadly intact. Net NPE ratio is down to 1.4% with stable coverage and default rate decreased. We keep strong attention to single file given the corporate nature of our bank. NII RoAC remained strong at 21%, reflecting our focus on margin over volume and selective origination. Fees and insurance income grew 0.9%, reaching 31% of revenue, driven by investment products up 11%, partly offset by weaker financing activity. Costs were down 2.8%, bringing our cost/income ratio to 37.6%, the best in Germany. Net revenue on RWAs at 8% confirm strong capital efficiency. Profit before tax at EUR 2.4 billion, is up 7.2% with RoAC at 23.4%, reinforcing our market leadership. Germany is a clear example of our ability to consistently deliver through disciplined execution. Its performance highlights the strength of our diversified model with resilience, efficiency and capital discipline driving record profitability and reinforcing our quality leadership in the market. Austria continues to be a resilient anchor, accounting for 12% of group net profit. Net revenues are down 1.4%, to EUR 2 billion. NII net of LLPs declined 5.7%, only partially mitigated by loan growth at 1.3% at stable margin. Asset quality remains solid, with overlays intact. Net NPE ratio is down to 2%, with stable coverage and default rate further decreased. NII ROC at 14% confirms disciplined origination. Fees and insurance income grew 5.2%, 8.2%, excluding Card Complete disposal, reaching 31% of revenue, supported by advisory and financing and strong investment products up 10%. Costs were broadly flat, bringing our cost/income ratio to 38.9%. Net revenue on RWAs at 6.7% confirms strong capital efficiency. Profit before tax at EUR 1.2 billion, down 3.8%, broadly flat, excluding the new bank levy. With RoAC at 22.8%, reinforcing our profitability leadership in Austria. Austria showcases the power of our focused strategy. Combining profitability, efficiency and prudent risk management, its performance confirms our ability to lead in corporate lending while maintaining exceptional asset quality and strong return. Central and Eastern Europe continues to be our growth engine, accounting for 22% of group net profit. Its role as a key profitable growth driver will fully emerge once its cost of risk fully normalizes. Net revenues are up 1.7%, to EUR 3.5 billion. NII net of LLPs declined 4%. The strong loan growth of 13.5%, including the contribution from Alpha, Romania, 8.5% without, was able to only partially mitigate the expected rates decline. And Central and Eastern Europe cost of risk increase at 5 basis points from minus 25 basis points as it gradually normalizes. Asset quality remains solid with net NPE ratio stable at 0.9%, growing coverage ratio at above 64% and default rates stable. NII RoAC remained strong at 24%, confirming disciplined margin management. Fees and insurance income grew 13.3%, reaching around 29% of revenues, supported by broad-based contribution across countries with particularly strong performance in advisory and investment products, up 24%. Cost increased 12.4%, 2.7% on a constant perimeter, so excluding Alpha, Romania, bringing our cost/income ratio to 33.8%. Net revenue on RWAs at 8.5% confirms strong capital efficiency. Profit before tax at EUR 2.1 billion, down 1.8% with RoAC at almost 30%. CEE continues to demonstrate the success of our growth strategy with broad-based momentum across countries and products. Its performance underlines our ability to scale profitably, diversify earnings and deliver sustainable value across the region. Our Russian bank is now a highly focused franchise. Local loans and deposit account both less than 0.5% of groups. Cross-border payments focused on now euro and U.S. dollar account for less than 2% of group. No cross-border lending exposure remains, and a positive liquidity contribution from Russia to the rest of the group still exists. We have achieved this significant reduction at minimal cost, both in the interest of our shareholders and in adherence to the spirit and law of sanctions. Our Russian bank is ring-fenced and operates strictly within all legal and regulatory requirements. This franchise is managed in a controlled and disciplined way, ensuring stability and compliance while minimizing risk. The exposure on CET1 from extreme loss scenario has declined from circa 130 basis points to circa 80 basis points, mainly connected to retained earnings. Client solution remains a cornerstone of leveraging group scale. Product factories that support our banks and our partners in delivering capital-light fee-driven growth while also accelerating their NII from specialty areas. Net revenues reached EUR 9 billion, up 7% and fees EUR 6 billion, up 4%, confirming the strength and diversification of our product portfolio. Investment products delivered record performance with fees up 9%, to EUR 1.9 billion and AUM and AUA up 14%, to EUR 186 billion. Our Onemarkets Funds reached EUR 28 billion, up 68% year-over-year, supporting the internalization of almost 80% of our value chain still going. Insurance has become a major growth pillar, with fees and insurance result up 12% to EUR 700 million. Following the internalization of Life Insurance, we are now the fourth largest player in Italy, with EUR 46 billion in reserves. Payment fees were up 2%, also benefiting from timing of yearly incentive paid in Q3. In a segment affected by headwind such as new regulation on instant payment, this is a great result. We are top 3 in 4 European markets in issuing and acquiring, and we're awarded Best Cash Management Bank in 7 countries by Euromoney. Advisory and financing maintains a top 3 position in bonds and loans by fees in Italy and in Germany. Client risk management was up 13% and reached a return on allocated capital of 43%, driven by high-quality client-centric activities. Trade and correspondent banking remains a leader with top 3 position in every country in which we operate and a cross-border market share 5x higher than any domestic one. These factories are client-centric and scalable, a key driver of our Unlocking Acceleration strategy, enabling us to retain more of the value chain. In conclusion, we have delivered another record quarter, completing the best 9 months in UniCredit history. This marks our 19th consecutive quarter of quality profitable growth and a clear beat across all our KPIs. Our strategy is working. We're leveraging our unique DNA as a pan-European leader, serving a high-quality client base through 13 leading banks and partner, demonstrating the validity and the strength of our unique model as we also stand as a benchmark for banking. We're sustainably accelerating growth, well ahead to what we expected at the beginning of the year, relentlessly executing while continuing to invest and innovate for the future. We have reinforced our double-digit growth trajectory in EPS, in DPS, in tangible book per share, maintaining a return on tangible equity greater than 20%. This places us in a leading position now and in the future. We have reinforced our expected distribution with higher dividend and ordinary share buybacks, placing us again at the top of the peer group for the 2025, 2027 period and beyond. UniCredit continues to create superior value for all stakeholders, delivering this quarter a great performance with great prospects and great present and future shareholders' returns and is today stronger, more resilient and better positioned than ever. Thank you, and we will now open to questions.
Operator: [Operator Instructions] The first question is from Ignacio Ulargui, BNP Paribas Exane.
Ignacio Ulargui: I have two questions. I mean the first one is focusing on loan growth and the kind of expectation of acceleration of growth that you see. I wanted to get a bit of a sense of how that trend is going in Germany and Italy, particularly. Second question is on the potential measures that you might take for improving the P&L in '26 and '27. If you could give us a bit of a sense of the magnitude of it and the focus because if I understood correctly, Andrea, you said during the call that it may not be that focused on cost, more on investments. So I just wanted to get a bit of color about that. And if I can -- may, a final clarification on the distribution and share buyback. If I just look to consensus, consensus has around EUR 13 billion of share buyback currently. And if I just look to your numbers, you get EUR 11.5 billion. I mean, could that be bridged through extraordinary distributions?
Andrea Orcel: Okay. Let me start on loan growth. So as we said probably conservatively from the very beginning, to see significant loan growth at stable or improving margins, you need to see economic development, investment and actual people wanting loans. If you push loan growth against the wall, you're going to reduce your margins. And as we said many times, margins trump volume 3:1. So it may look quite good on the top line. But honestly, over time, you're denting profitability and it's difficult to recover. So with that caveat and applying that discipline to how we grow, we're seeing significant progress in loan growth in Italy, and we believe that such progress is going to accelerate markedly in 2026 and beyond. Why that? For mainly two reasons. The main reason is that like the rest of the group, we have almost completed all the actions to bring our loan portfolio to the profitability it has today with a very marginal amount of loans still below EVA. Why is that important? Because in order to do that, we delivered what we delivered in the past, but we had a drag as we purged off positions that were not meeting our benchmark. We don't -- we no longer have to do that. So look at what that means now. Secondly, post the withdrawal of our offer of BPM, we have gone back to the drawing board, and we resumed the plan we were about to launch last year within the acceleration phase that we put on hold because of the acquisition -- or possible acquisition. That plan has been boosted. And we actually believe and -- watch this space that we will be profitably gaining market share next year in the country, and that will drive a significant portion of Italy's results. So on Germany, I would just say the usual same thing but different. Again, we have a bank that is focused. Obviously, there was no M&A situation there, and that is now well set after all the changes we've done in the business, in the operating machine and in other places to grow profitably. We still see some headwinds from some competitors, if I may, dumping on -- to achieve volume. We will not be drawn in that, but we believe that we can grow even without that, and we will demonstrate that, that is possible. So I am positive on that as well -- and I am positive that in the target segment of Mittelstand, affluent and private, we will be gaining growth or market share. In terms of potential measures to improve. First of all, why do we have these potential measures? We have potential measures because once we announced our Phase 2 of UniCredit Unlocked Acceleration, we -- there were a few things that were different. Number one, our view on macro was more negative than it is now, having -- not on macro itself, but how we navigate the macro. Number two, we did not have the extra boost that we believe we're going to have primarily in Italy, but also in the rest of the group. And number three, and most important of all, we had not witnessed what this franchise can do. And if you go back to my comments, we were ahead of expectation in our acceleration in Q1. I repeated the same in Q2. I'm repeating the same in Q3. That gives me a lot of confidence that our acceleration can go further. As we go further in our acceleration, like in any acceleration, our businesses in the process of preparing the new multiyear plan, which is not approved yet, so I'm not anticipating anything, are requesting further investment in order to underpin that acceleration. There are only so much you can do with gains in efficiency, which, by the way, we will continue to make. But to harness the acceleration we want, we need positive investment. How does it change? It changed that if you look at the past, most of our investment were targeted to efficiency. And we let the network, the client franchise run, and they did an excellent job. The action we are now considering for the rolling of a new MYP are much more targeted than before on top line acceleration. It means you're going to look at hiring. Italy will hire in spades. Training, Italy will train in spades, so will Germany and the other countries. Digitalization of our omnichannel to make sure clients feel a seamless experience if they go to the branch, to mobile-first, Internet, Buddy Bank, and I can continue, rather than pigeonholing them into a segment, we think that, that is the future. But that requires continued investment. As you know, we've invested about EUR 1 billion group-wide in modernizing our physical presence. We've invested another bunch in mobile-first, in technology, et cetera, for our network. We will accelerate that. And there are also some other levers that we can pull to further insulate group results from either adverse effect or accelerate them, and that, we are considering now. So with the MYP of at that point, '26, '28, we will be reviewing and hopefully upgrading our ambition. And in order to support that greater ambition, we will take on a year that honestly has some one-off in it, some of that sunshine to further propel our future. And we don't have an amount yet. We are taking from -- bottom-up from every business and area what they would wish and the commitment that they're making. It's still premature to discuss it, but it was correct to raise that possibility because now it is a possibility. On distributions, I would like to make the following comments because maybe I look at them in a different way than everybody looks at them. There is only one distribution that ends up in the pocket of our shareholders. That is called dividend. It's a cash payment that hits your account. When I do share buybacks, by reducing the share count on the same earnings, we are obviously accelerating the EPS and accelerating the DPS, again, dividend, and accelerating my tangible book per share. But it's an indirect effect on what gets in the pocket of my shareholder. When we have decided to take the moment and invest EUR 6.5 billion today in the stake consolidation, we have done a few things that I think were not considered enough. Number one, our shareholders had a lot of uncertainty as to the timing of deploying of our excess capital, between now and the end of '27. Well, it could mean tomorrow, and it could mean December 31, 2027. Now EUR 6.5 billion are deployed, and that's it. They are going to start pumping from '26 onwards. Second topic, when you do share buybacks, as you know very well, you cannot anticipate at which price you're doing the share buybacks. So as of today, it's 11% return on investment. Over time, nobody has any idea. It depends on where the share price is when we will execute it. However, by deploying EUR 6.5 billion of our excess capital at a 20% return on investment, we give exact clarity on what the impact will be, and there is no going around it. Incidentally, that 20% is almost double what we would have gotten by doing the same amount of share buyback on our own shares, and it's 2.5x higher than what anyone who wanted to replicate what we have just done would extract from consolidating the same amount of shares in Commerzbank and Alpha. So we view the second leg called capital deployment as deployment, and I can deploy it in share buybacks, I can deploy it organically in the business. I can deploy it in M&A, or I can deploy it -- obviously, this is not recurrent, and we had an opportunity that we grabbed into strategic stakes that also give me strategic optionality that no other bank in Europe has. When I put it all together, what are the facts? The facts are that versus consensus of what we would have paid in dividend to our shareholders before we deployed in the '25, '28 -- [ FY '27 ] period, we are going to pay EUR 1 billion more. And our dividend per share has increased its growth dramatically versus before. So from a dividend standpoint, our shareholders are massively better. If I look at share buybacks, you are correct. They are going to be lower than what they were before, or at least consensus is saying that. And they're saying that because EUR 11.5 billion that consensus is giving plus EUR 6.5 billion is almost EUR 19 billion, not EUR 13 billion. So in effect, what we're saying is that we've generated so much capital that we could distribute or employ 6.5% at great returns and still give you close to the same amount of share buybacks you were going to have before. If you add the dividend amount and the share buyback amount, the before and after is very similar. But now we have EUR 1 billion more revenues and EUR 1 billion more net profit because of our investment. To finalize my answer to your question, could there be extraordinary distribution? Absolutely. We had a 16% plus CET1 before. We were on another galaxy to all the other banks. Incidentally, many believed that all that excess capital could not be returned this fast, hence, the consensus. Now we are -- let's take it to the end of the year, somewhere between 14.5% area or slightly lower depending on a number of actions. We are still very high, but at the level of best-in-class competitors. So we're no longer an outlier. But we are at these levels. Our target CET1 is not 14% plus. It is 12.5% to 13%. So depending on how the business performed, how we see the deployment of further opportunity into our organic growth, which in turn will drive dividend and earnings. In terms of all of that, we will continue to trend down to 12.5%, 13%, and you can do your calculation on what excess capital is that. And if we don't find ways to deploy it profitably in our organic growth, it will come back to you. It's just that we will tell you how much it is at the end of every year when we take align on how well we have done and what our future prospects are. Last thing I would say is that if you look at the practice we had when we launched UniCredit Unlocked, it's identical. We said vis-a-vis dividend, they are sacrosanct, and we will tell you how much of the excess capital we give you back at the end of every year. We changed. Sometimes you need to go back to where you were because it was better, and I think it is better.
Operator: The next question is from Antonio Reale, Bank of America.
Antonio Reale: Antonio Reale from Bank of America. Two questions for me, please. The first one is on NII in Italy. We've seen a lag down this quarter, given the outlook on rates. My question is, do you think -- we've seen the trough in your Italian NII this quarter. I've seen a good uptick in deposits, and you've talked about growth. So do you think that NII in Italy can be the sort of swing factor for the group given the performance we're seeing elsewhere? That's my first question. My second question is a follow-up on your profit ambition for '27. You're targeting well above EUR 11 billion. If I look at your Slide 2, you're looking to add EUR 1 billion by 2027 from strategic investments, which at least on my numbers, seems somewhat conservative. If I add that up to your underlying profits this year plus some of the growth you talked about, you're really going to be closer to EUR 12 billion, more than EUR 11 billion. Is it -- I mean, what am I missing? Is it -- you're building buffers and buffers? Or the third and last clarification, if I may. I think you've talked about new multiyear plan. Did I understand correctly that you're looking to present a new strategy update sometime next year? If so, could we have any visibility as to when you would expect that to be?
Andrea Orcel: Okay. So let me start with NII. Let me be broader. I don't think NII in Italy has troughed yet. I think it has a little bit more to go. But I would say that if I take a group-wide view in our Executive Committee, the word troughing on NII is more and more used. So I think that like with the plan, the right time to discuss about trough or no trough and what are the expectation is probably with the year-end results as we will be sitting on the year-end result, see what would have happened around January and the prospects, and we will be able to guide you without speculating. But I would say that we are troughing in the group. We just need confirmation that this is sustainable. With respect to net profit ambition, I think I would like, Antonio, not to make the same mistake as we -- probably I made on distributions before. We will return EUR 30 billion -- or more than EUR 30 billion. We spent EUR 6.5 billion, and it becomes EUR 36.5 billion. Now it just became EUR 33.5 billion, but not EUR 36.5 billion, and everybody is disappointed. So I would say the following: Because of the further acceleration that we see in our underlying business, which is really the exciting story in our results of this year. Unfortunately, because of all the noise, the consolidation of stake, the [ visa and the VAT ], it is kind of hidden. But because of the acceleration of our commercial results that we see this year and that we confirm 3 quarters in a row. And I hope, and it's critical, we will be confirming in the fourth quarter, we are more optimistic than what we were when we designed our Phase 2 of accelerate of UniCredit Unlocked '25, '27. So as every year, we update that by losing the -- looking back and adding a year. I think at the moment, if the trends are confirmed, we will be looking to upgrade our expectation for profitability. At the moment, you only have '27. You will look at '27. We will add '28, and we will clarify '26. For that reason, we are making the investment. In terms of your reconstruction, I would say this, we were going to make circa, and you know that circa can be up or can be down, EUR 10 billion in 2027 before we made these investments -- or before we consolidated this investment. So if you mechanically take EUR 10 billion, and you add EUR 1 billion net from this investment, and -- you're right, the EUR 1 billion is dependent on two factors: the consensus on Commerzbank and Alpha being right, and that I'm not going to get into. And secondly, our hedging cost, which I'm deducting from the total numbers being the ones that you're estimating to be, but we are going to give you an update with the year-end numbers. So if you mechanically add circa EUR 10 billion to circa EUR 11 billion, you don't get to well above EUR 11 billion. You get to circa EUR 11 billion, okay? Why are we telling you well above EUR 11 billion? Because the underlying franchise is doing better than we anticipated at the beginning of the year. How much well above EUR 11 billion, I'm not going to comment because we're finalizing our plan. We're getting the feedback from everybody. We want to be realistic on what we say. And most importantly, our Board needs to approve it. But let's put it this way, I'm optimistic about 2027, which is the only number out there. For us internally, we are also positive on what we can do on '26 because of all these factors. Because it's not only 1 year that gets pulled up, '26 and '28 will be affected as well. But with one caveat or one caution. The caution is that the new investment that we're doing on accelerating are going to impact '26, but not fully. They need to be rolled in. The years where our investment -- new investment are going to impact the most, and I'm answering your question again, is in '27 and '28. In '26, although we have started this investment, they will impact for only a fragment of the year. So '26 is going to remain just what -- which is not little, what our acceleration can deliver without a lot of impact from those investments because they will arrive a little bit later in the time and affect more the second half of the year than the first half of the year. I hope that, that's clear. With respect to the strategy update, et cetera. Unless somebody demonstrates otherwise, I personally do not like Investor Days, okay? I like updating everybody, all of our stakeholders every quarter. I don't think many banks maybe bore you or interest you with an update on their strategy and where they are going as integral part of their result presentation 4 quarters a year. And then once a year, once we roll our plan, we review our guidance with a lot more granular detail. I think that is more continuous and better. So should you expect that with the full year 2025 results, we will give you significant detail on the next 3-year plans as we roll? You should. Is that an Investor Day? No, it's not. And so the date is very clear, is when, Magda will tell you, we will have the year-end results sometimes in February.
Operator: The next question is from Delphine Lee, JPMorgan. Ms. Lee, we cannot hear you. Maybe your line is mute.
Delphine Lee: Yes, apologies. My first one is on Commerzbank. Just to understand a little bit where we are now on the derivatives that are still in place on the hedging costs. Just to understand a little bit how to read a little bit the effect you've taken this year, but also kind of what we should expect in coming years. And my second question is on the Italian bank tax. I mean, I thought you said it was a bit early, but I don't know if you could just share any color about just what you think is a likely scenario?
Andrea Orcel: Okay. So Commerzbank, where we are now on hedging cost? So I would say that it's fair to say that we're now completely aligned on the upside with Commerzbank as we have, I would say, significant cost this year. That's why you see the impact I was talking about, practically eliminated all call options that we had sold on the stock when we colored it -- or on part of the stock when we colored it. So if you look at it from a long standpoint, on the upside, we're 1:1. However, as for everything else we do, and it's not personal or anything, we remain always caution as we have overlays on our asset quality, while we are very strong on it and we are very optimistic on it, we have something called put option on the stake just in case. So if the performance is positive and ahead of expectation, we are 1:1 aligned, if the performance is not just negative, but significantly negative, we make money, okay? So that's where we are. Now those hedges cost money, and they are netted from the profitability of the stake. They cost money in two ways. One, the cost of stakes, which is several hundred million. We will update on exactly where we are because we're doing -- we continue to do action to reduce it, with the end of year results. And the second thing is funding. Because we are funding the participation, obviously. That is -- the two of them are significant. But as we have taken cost upfront already, we continue to look at ways to reduce that combined cost to give you more and more -- a clean impact on the net income we bring in from these stakes because we think it's cleaner and clearer for all of you. We will do that. But as we are conservative, we will maintain our put option to protect on the downside. And for one rating agencies approve of that. Italian bank tax and what do you think is a likely scenario? I think I never know what the likely scenario is with anything that is politically related, and I don't try to speculate. So I don't know. I would just say that it is premature to assess the full impact. I would say that depending on the rumor, the full impact is more or less high. I would say that for UniCredit specifically, the combination of the fact that we are in inverted commas only 40% in Italy and 40% profitability in Italy and so on and so forth, the impact is obviously diluted on the 100%. And secondly, that by having all of the cautionary, call them, buffers that we have across, we are going to try to neutralize as much of the impact, whatever the impact is, as we can. At the moment, we expect an impact, obviously, but it's premature to tell you how much. We will see in the next few days or weeks where we're going to land.
Operator: The next question is from Giovanni Razzoli, Deutsche Bank.
Giovanni Razzoli: Two questions at my end. One is on Russia. You confirmed that you are going to exit the country by first half 2026. Shall we assume that the contribution to the bottom line will also be basically go to zero? Or do you have ways to move some of the revenue or businesses elsewhere to keep the contribution of -- that contribution to some extent at some point? And the second question is on your stake in Assicurazioni Generali. In the last conference call, you anticipated that you would have reduced your stake below 2%. Based on the last report on [ cons ], you are still above the 5%. I was wondering how shall we treat it in terms of contribution to your P&L or whether you have changed your views on this stake?
Andrea Orcel: So on Russia, we never said we would exit by first half of '26. So let me be clear. What we expect to close -- and if you want to call it, is exit, and maybe that's where the misunderstanding lies, is that we will close our retail operation, which has already declined very significantly by the first half of '26. And we stand by that at the moment. The state of the franchise going forward is, as I said, we have about EUR 700 million in local lending, [ was ] EUR 700 million, we haven't granted any new loan since the war started. But the rate of decline of those loans is dependent on which loan they are. So if I have a mortgage, it's a long tail. That's why banks are different than our industry. If they are multiyear, they are multiyear. But we believe that we will gradually trend line to about EUR 500 million over time. But there is very little we can do to go above and beyond that because if we have a loan outstanding and we are not giving you one, you trend line as the loans decay, and that is what varies. On -- as we said, on deposit, the local deposits are just below EUR 1 billion. We are a very cash-rich bank. We are viewed to be a safe haven to a certain extent, one because we are international and two, because of our strong capitalization. And obviously, by not having done any new loan, we are not exposed to any worsening of a credit cycle of anything else. We're just, I don't know, call it a safe deposit box, maybe it's not the right word. So those are there. Under Russian law, we cannot turn away deposits. So they are what they are. We don't see any particular trend up or down at the moment, but they are what they are, and they are probably going to stay around that level. On payments, we used to be multicurrency, if I remember correctly, on 16 different currencies. We are now focused on 2. Some we have discontinued, some we have effectively rendered marginal or close to 0. Those 2 are U.S. dollar and euro. As you have heard very broadly in Italy and it said, we are providing a service to international Western company that are still in the country and to the Western world that requires to execute payments directly and not through other economic blocks for energy and commodities that are continued to be purchased by all of our countries from Russia. And therefore, that's what they are there for, and they stay there. They are less than 2% of the total payment that we do, about EUR 6 billion, EUR 7 billion. We don't see very material change from that, but they could evaluate. So then you asked your question about the contribution. I think because of how Russia and Russia rates are and because we are super covered in Russia, super covered in Russia, every time a loan is repaid, we get significant write-backs. So as an example, this quarter, one large multinational in -- or one large company in Russia repaid a cross-border loan, the last cross-border loan of substance that we had. And as they repaid, they were covered at 40%. We released a significant amount of provision. From the beginning of the war, we've had that trend again and again and again and again. I can't stop that. If they repay, and they pay in full, I'm booking the release of provisions. And so I do think that the Russia trend line will continue as is, will continue. The Russia contribution to our profitability will significantly decline in '26. And in '27, as we said, that the contribution was going to trend down to, let's call it, marginal. And when you look at our numbers -- and I have made this point before, but maybe it's missed. Try to look at our numbers, and after '27, eliminate the fact that we are absorbing a EUR 600 million to EUR 700 million compression of bottom line and much greater on NII from the compression of Russia because at that point, my delta -- I will have troughed, and my delta goes up. What we are telling you is that the performance, the commercial performance of the rest of our franchise is running a lot faster than you think it's running because it's also absorbing that. Stake in Generali reducing, et cetera, et cetera. So our net exposure to Generali has been reduced -- or our net stake in Generali has been reduced significantly -- dramatically. I would say, below 5%. I wouldn't say it is below 5%. And furthermore, what remains is hedged on the downside. Why has it been done in a way? We have done it because we didn't want to weigh on the company, and that's what we have done. Is it strategic? No, it's not. Have we changed stance? For the time being, we have not changed stance. We are where we are. We have reduced the exposure. It is not something that is considered tactically important at the moment. We have reduced our net exposure and potentially, we will reduce more. But at the moment, you should think that between the net number and the hedge that we are, it's well below 2%. The net exposure, I want to be very clear.
Operator: The next question is from Britta Schmidt, Autonomous Research.
Britta Schmidt: A follow-up on Commerzbank. The pro forma CET1 guidance of 14.6% does not mention the increase in the stake to 29%, but the net profit indications for 2027 still do. Is this just a matter of timing? And what would be the impact of an additional 3%? And then with regards to NII, you said that it will pick up once we've fully priced, and you sound more optimistic on loan growth in Italy. Can you confirm the 2027 NII indication that you previously provided to be slightly above 2024?
Andrea Orcel: So the -- yes, we are talking about 2027, and it is expected that by that time, in my opinion, much earlier than that, the remaining physical portion of the stake between 26% and circa 29% will be, let's say, consolidated. At the moment, we don't need it. It has an impact on capital. We don't need the contribution. And for the time being, it is better to do that because it squares with a long position with some of a short position, and it reduces the volatility of our P&L, which at the end of the day is what all of you want. So I would say if you fast forward to '27, but probably much earlier, we will be at circa 29% plus/minus. But the timing to do that is linked to minimizing the impact on capital and ensuring that the volatility and the impact on our P&L quarter after quarter is -- still gets reduced over time, so you don't need to go and estimate that, et cetera, et cetera. So that is the point. With respect to the NII indication, I think for the time being, we are just confirming. As we review our rolling 3-year plan, we will update you on that. And depending on how much more growth we see vis-a-vis the time where we had that, we may be updating it on the upside.
Operator: The next question is from Sofie Peterzens, Goldman Sachs.
Sofie Caroline Peterzens: This is Sofie Caroline from Goldman Sachs. So my first question would be, you have the 29% stake in Commerzbank and 26% in Alpha. In 5 years' time, how should we think about the probability of UniCredit owning 100%, potentially having unchanged ownership or not owning anything in these two banks. So if you could comment on how we should think about the ownership? And then my second question would be around the costs. I know you will have the strategic update with the fourth quarter results next year. But kind of how should we think about kind of cost growth in '26? Should we expect any restructuring costs? And then kind of very long term, do you think that there is potential for UniCredit and European banks to become much more efficient than what we are today? You have one of the best cost/income ratios in the sector at 37% in the first 9 months. But could that potentially go down to 30% or even lower in the very long term?
Andrea Orcel: Okay. So I think for the time being, we are quite committed to remaining at a level of participation that is below the level of a full offer for very different reasons in Alpha and in Commerzbank. With respect to Alpha, one of the reasons why -- or the main reason why we have increased our stakes, 9.9%, then we went to 20%, then we went to 26%, is very simple. We have an outstanding relationship with the bank, number one, and the bank asked us and considered it a positive development for them. That is a good reason when you have a partner. The second good reason, because you always need to have the financial meeting, is Alpha has effectively allowed us to demonstrate to ourselves first and then to the market that the setup that UniCredit now has with centralized product factories, with centralized procurement, with increasingly aligned technology, data platform with let's call it, put at the center all the scalable services that a group like ours can give to 13 disparate banks, allowing those disparate banks to be not only the best they can be in the market, but surpass their competitors by leveraging what UniCredit putting at scale at the center can offer them. We discussed it many times. There were country in the Central and Eastern Europe who could not distribute investment products because the large asset managers would not go there and support that growth. They were not relevant enough. Through us, they can. If they did that one by one, they couldn't. So we have demonstrated not only that, but we have demonstrated with Alpha that in a bank that is absolutely not part of the group, the level of value we can generate for them and for us by leveraging those common platform products, et cetera, at scale is much greater than it was. If you wish, it demonstrates that even without banking union for a group like us, we can demonstrate significantly above EUR 0 value creation across border just because we are set up, how we are set up. We also work with them. They provide ideas, and we are providing ideas. And we believe that we have a blueprint in the way we run our network in retail, a blueprint on our contact centers, a blueprint in our digital first and vice versa, where we can extract a lot of efficiencies even if we're separate. So if you believe that, you want to increase your participation to not only benefit from that through your part of the equation but to gain more exposure through their part of the equation. And that's why we are where we are. We will not do things in Alpha that are not in the interest of everybody, and we are very, very committed to the partnership. And we believe that Greece and Alpha are great additions, although on a partnership basis to what the group is. Commerzbank is different, and I'm not going to comment on all the differences. But again, we are committed to stay below the full bid percentage for the moment. We have through the put options, protection on the downside, we are now aligned 1:1 if there are positive development. The two of them together give not only EUR 1 billion of net profit, but also -- EUR 1 billion of revenues, but also EUR 1 billion of net profit, which is fully distributable to our shareholders. Today, if I were to take that off and replace it by share buyback, I would have significant dilution. So it is an engine, a further engine to propel my net revenue. It is a further engine to support distribution and net profit growth. And for the time being, we're very happy to stay where we are, and I would think about now keeping that for the foreseeable future. But obviously, we observe the situation, and we will judge what to do if and when the situation changes. For the time being, it's not changing. How should we think about cost growth in '26 and restructuring costs, et cetera, et cetera? Okay. So I think this is a good question because it allows us to touch on a point. From 2021, we have been pounding the table that cost growth -- absolute cost growth above and beyond cost/income ratio is critical to the success of the bank. And a lot of people were saying, but why do you focus so much on cost growth with rates and this and this and that? What do you care? It's EUR 100 million here and there. I would say to those people go now tell me the same thing with rates going down. Why is cost growth such a critical point for our group? Our competition is no longer just legacy bank. Our competition is fintechs. You just need to see how much new clients some of our competitors, the names that come to your mind are aggregating in every country. The only way we're going to be successful in pushing them off is twofold. One, improving our client experience. Hence, all the investment we're doing in the network, in the omnichannel, et cetera, et cetera. And two, having a breakeven point that is substantially below them because it allows us to have flexibility and to be able to release some of that ability on the margin if we want to push back if the situation becomes necessary. The second reason is, as I touched on, if you are very efficient and you constantly find new ways to reduce your cost, you will be able to finance investment. Whatever anybody tells us, if you go to the market with results every quarter, if your costs are a problem, you're not investing because it would become a compounded problem. And therefore, as you don't have control on cost to contain that appearance of no control of cost, you're investing less. In our case, we can invest more because we have control on cost. So I don't have a number to give you for full year '26, '27 or '28. But we did we did commit, we did we did commit to keep our cost broadly flat from '24 to '27 before, and there is no way I'm going to back down from that commitment. This year, the costs are broadly flat -- are going to go close to being broadly flat, not only as they appear, but absorbing all the new perimeter of consolidation that, if I don't remember wrongly, was adding about EUR 100 million of cost to ours. So when we tell you we're broadly flat, it means we absorbed EUR 100 million investing. I don't think any bank is able to do that today. And we are determined to continue to go because we find inefficiency every day. Restructuring cost. I have already said that on the EUR 10.5 billion of this year, which may or may not be greater, we will potentially, probably, possibly, it's a decision for my Board, deduct some upfronting of cost in investment or some below-the-line things to further accelerate not so much '26, but '27 and '28, okay? In our plan this year, when we started 2025, we did not have any such cost because we took them before. And indeed, the impact of these things are not having an impact on '26. They're having an impact on '27 and '28. Why then have we changed our position? We have changed our position for two reasons. One, we can afford it. It's the famous quote from a famous American President, "You build your roof while the sun is shining." We have the roof. I think at the moment, we're just making improvement to the entire house. The second thing is because due to witnessing true acceleration of top line from all of our businesses and all of our countries, we feel more confident that we can spend on certain things and accelerate that growth further. So those costs or investment or restructuring, call it, whatever you want to call it, are directed at showing you that we are upgrading certain numbers because they're going to track, and they're going to give more impact. So as of now, I can't tell you what we will do in 2026. But what I can tell you is we don't need to do anything in '26, and we don't need to do anything in '27. So if we will do something in '26 in addition to '25 or in '27, it will be because the sun is shining, we're doing much better than we anticipated, and we see better opportunities to further accelerate going forward. Otherwise, we're very happy and we're set for probably up to '28. So you have a baseline. If we can beat that baseline investing more, then we can talk about it again. But once we give you the baseline in -- at the beginning of '26, we will halt, and we will only talk about doing anything else if we beat it. Is there a potential for UniCredit and EU banks to become more efficient than today? My personal view, absolutely, absolutely. Every time we go to the end of the year, we say, "Don't look at incremental, put everything back on a blank piece of paper and ask yourself, if you were building the business from the ground up today, would you build it like that?" And the answer is always no. "We would never do this. We would never do that. We would never do that." So in many cases, you can't change everything at the same time because we're flying while we're doing this. But every time that we do an inch forward, we find a lot of more opportunity to do another inch and then another inch. I think for too long, our sector have said, "Oh, we cannot be more efficient than that," et cetera, et cetera. I will ask everybody how many of all of us would have thought that European banks could be not only at now much below 40%, but even significantly below 50% cost/income ratio 5 years ago. You can say it's rates. I can respond really because rates have just gone down 150 basis points, and we're still holding. It's exactly the same on return on tangible equity. "Oh, it's rates." Well, really, we're still holding at 20%, and we are committed to hold or improve both on cost -- on cost/income ratio and on return on tangible while growing. And we will demonstrate that in the next few years.
Operator: The next question is from Andrea Filtri, Mediobanca.
Andrea Filtri: I think you just inspired my first question, which is when do you think you can scale Vodeno's platform up to roll it out to the rest of the group? And where do you see cost income trending to once the new tech is rolled out? The second question is what would banks need from the European Commission to move ahead with real mergers in Europe? And third, just a clarification, how much longer can you keep your overlays unchanged?
Andrea Orcel: Okay. So I'm going to start from number 3 because it's an important question. My overlays -- this is a debate I have with many people. My overlays will remain where they are until I am absolutely convinced that I mean, summer and the sun is shining for the next 2 or 3 years. Until then, I am not going to let go. There is no point in shaving my cost of risk to look good in the short term. And then we get some issues with macro development, some issue with credit development, some issues with something and say, "Oh, and now my cost of risk needs to quadruple," okay? And by the way, I didn't say it quadrupled. I'm just giving an example. So the overlays are what they are. I think one country where I spent a lot of time in the past, called Spain, used to call them anti-cyclical provision. For me, it's an anti-cyclical provision. When the sun shine, you create overlays and extra provision. When it rains, you release overlays and extra provision to buffer the peaks and trough of our sector. I think that is the conservative way of looking at it. So we haven't released them yet because if you ask anybody, has there anybody who will tell you we're fine. The cycle of risk is fine, and there are no issue. And for the next 3 to 5 years, it's all fine. Nobody is saying that. So why should I release? Because, accounting-wise, we release when some of the overlays are driven by drivers. The drivers are linked to areas of risk. So sometimes the areas of risk that we identify finish. And therefore, the overlays are released. But we always, unfortunately or fortunately, find new areas of worry that drives the replenishing of the overlays at exactly the same level they were before. And we will do that until when they release, we look out and we say, "Wow, there is really nothing else. There is no point in maintaining them." And hopefully, we will do that without having had to use them to contain our cost of risk, but we don't know. Nobody knows, okay? So that's the point. So for us, overlays are an insurance policy, but one that will pay up and propel our net income if it doesn't need to be used because we are all wrong, and the cycle of risk is benign and will remain benign for the foreseeable future, which everybody doubts. The second -- the first question, Vodeno and the growth and et cetera. So we did a step that no other bank had done, which is instead of experimenting with external providers on modernizing our core banking system, modernizing our data platform using AI by lack opportunity, relationships, we found what we believe after diligence to be one of the best, if not the best, core banking system platform of external providers out there. Why do I think it's one of the best? Number one, the breakeven point of that platform is 2/3 to 70% below ours today. And by the way, it's not because ours is not good, but because ours is legacy, and theirs is not. It's all cloud native. Second reason, it is flexible. A lot of this platform, you can do transaction and payments. You cannot do multiple products. With Vodeno platform, you can. So because of that, we bought it. And I think we bought it at an attractive price. And I think that it allows us to bring in 200 engineers that we can use on the side of a group as a sandbox to experiment on things. A lot more exciting job than our continued rationalization of what we have. But they're there. So as we are there, we have -- we are doing a number of initiatives with them. One is the new entry into Poland. And people look at it as the new entry into Poland. I don't look at it as the new entry into Poland. I look at it as Vodeno with this breakeven point at that level with a digital-first bank, which also relies on branches because we will have 40 branches in Poland. Can it got in from the ground up and make money? I'm not going to tell you how many clients we're going to get on the platform, and I'm not even going to tell you how many products I'm selling. I am going to tell you, can we make money at 20% return on equity. If we can, that's the proof of the pudding and therefore, it's replicable in other places, initiative number one. Initiative number two, Vodeno went -- comes with an already functioning and I believe, unparalleled embedded finance platform. We're going to leverage it to the entire group, and it's an area of growth for our lending. Initiative number three, Vodeno allows us -- when our internal technology and Vodeno look at our legacy system to look at the possibility of migrating on the Vodeno platform. Incidentally, Vodeno is the only platform that has done it. We call it Vodeno Aion, but what is Aion? Aion is the ex Monte dei Paschi di Siena Belgium. It had a legacy platform like all of us [ first ]. It was migrated in full to Vodeno in under a year. So not the scale of UniCredit, not the scale of our unique banks, but it worked. So it's premature to tell you when, how is it possible. But certainly, in the trajectory of looking at what we can do to continue to modernize and migrate that is considered as it is considered every time we have a new initiative that is completely new to the group, moving to the cloud, do this, do that. They are -- help contribution to our own team to be able to accelerate that because we have capacity -- engineering capacity to accelerate it. So for me, Vodeno is an outstanding sandbox and an acceleration levers for us that we're experimenting with, and I'm very, very happy to have. If you look at what will take for the EC -- to the European Community to allow banks to move with real mergers in Europe? I think you can look at it in two ways. Way number one, we need a banking union to do cross-border merger. Then how long is a piece of strength? You need to ask them. Because everybody says we need it, nobody wants to do it, okay? You can look at it in another way, regardless of a banking union, can we do cross-border merger and extract value? UniCredit can. I don't think anybody else can. But that may be arrogant from our standpoint, but I think we can because of the setup that we have with 13 plus 1 banks, common factories, common -- increasingly common technology platform, data platform, procurement, strategy, vision, purpose, talent, university, et cetera. It's just a container that accelerates and extract more value than they could individually from every bank that chooses to partner with us. In addition to that, we believe that our blueprint from running transformation and banking can extract value from a number of banks even if we're not doing an in-market merger. And in addition to that, and most importantly, we are in 13 markets. We are not hostage of any one market, and we can always look. Having said that, if you ask me what the time of everybody at UniCredit has been dedicated to across the board and even more so in the last 6 months or 3 months or 4 months? It is providing you with an underlying performance that accelerates and the new plan that you will see from '26 onwards. It is not thinking that M&A is the only solution for us to buffer growth which is what people who cannot grow anymore have to think. So we will look at M&A if it accelerates, and we are very happy not to look at it. If it doesn't, in the same way, we were very fast to take the opportunity on the stakes. And we will not do anyone because we're moving in a direction without needing anything more. But if there are opportunities, we move fast. If they are not, the core is UniCredit at its foundation.
Operator: We will now take the last question from Manuela Meroni, Intesa Sanpaolo.
Manuela Meroni: The first one is on the revision of the taxation of the dividend paid on the EU subsidiaries. I'm wondering if you expect any refund following such a revision? And the second question is on your strategy in Italy. It's clear that now you are focusing on the organic growth, but I'm wondering if you could be still open to inorganic growth? And in that case, what would be the area in the business in which you may potentially be interested in?
Andrea Orcel: Okay. So answer to your question. Without wanting to speculate as things are constantly moving in our countries and in the rest of Europe, I would be positive on the answer to question number one, do we expect any refund following the revision of the taxation of dividends paid by EU subsidiary. Because it's supported by a clear deliberal decision. Strategy in Italy would be -- would you be open to inorganic growth? And if so, in what areas? We're always open. We're always open. But if you ask me, it's almost like I said to someone, what is the possibility that you go on Mars? It's possible. It's not probable in the short term. And it's not probable because of all the reasons you know very well. And -- but most importantly, because yet again, it was -- I got confirmation that when you do M&A, you slow down your own franchise significantly. I think that the revived momentum that Italy is experiencing now and the commitment they are making to themselves to gain market share, creates a ton more value than being in a situation where because of now the lens of regulatory and political approval, we are all in a swamp for a year before being able to move anywhere. And where a lot of consideration that are not value creation or certainly not value creation for the shareholder of UniCredit cloud judgment. So for us, we look. If there are good opportunities, we are there. If people are interested in creating value, we will run. But we think that we can achieve a lot organically, and we will demonstrate it through 2026 to '28. And that's where the focus is, I would say, mostly, if not exclusively. If something comes up, as we have demonstrated, we're always very quickly to get to move, but we do not expect that something will come up.
Operator: Okay. Gentleman, that was the last question. Thank you.
Andrea Orcel: Thank you very much.
Operator: Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.