Earnings call transcript: Banca Mediolanum reports strong Q3 2025 results

Banca Mediolanum SpA reported robust financial results for the third quarter of 2025, with a notable increase in net income and a positive market reaction. The bank’s net income rose 8% year-over-year to €726 million, while its stock price gained 2.29% following the announcement, closing at €17.45. The company’s performance was bolstered by strong net commission income and a strategic focus on product innovation. According to InvestingPro data, Banca Mediolanum is trading at a low P/E ratio relative to its near-term earnings growth, though analysts expect net income to drop this year despite the strong quarterly results.

Key Takeaways

• Net income increased by 8% year-over-year, reaching €726 million.
• Stock price rose by 2.29% following the earnings announcement.
• Net commission income surged by 11%, offsetting a decline in net interest income.
• The company launched a new Intelligent Investment Strategy.
• Strong performance in managed asset net inflows.

Company Performance

Banca Mediolanum demonstrated resilience in the face of challenging market conditions, achieving solid growth in key financial metrics. The company’s net income increased by 8% compared to the same quarter last year, thanks to a significant rise in net commission income. Despite a 5% decline in net interest income, the bank’s strategic initiatives in product innovation and managed asset inflows contributed to its robust performance.

Financial Highlights

• Net income: €726 million (+8% YoY)
• Contribution margin: €1.56 billion (+5% YoY)
• Operating margin: €891 million (+5% YoY)
• Net interest income: €582 million (-5% YoY)
• Net commission income: €967 million (+11% YoY)

Market Reaction

Following the earnings announcement, Banca Mediolanum’s stock price increased by 2.29%, reflecting investor confidence in the company’s performance and future prospects. The stock closed at €17.45, nearing its 52-week high of €18.17. The market’s positive response highlights the bank’s strong financial results and strategic initiatives.

Outlook & Guidance

Looking ahead, Banca Mediolanum expects double-digit growth in net interest income for 2026. The company aims to achieve net inflows into managed assets of €8-8.5 billion and maintain a cost-to-income ratio below 40%. Additionally, a dividend of €0.60 per share is planned, including €0.20 from the sale of a stake in Mediobanca.

Executive Commentary

CEO Massimo Doris expressed satisfaction with the company’s performance, stating, "We are more than satisfied with the progress so far. And confident about what comes next." He emphasized the bank’s commitment to creating value through a consistent model and clear strategy. Doris also highlighted the challenges posed by customer expectations, noting that "Artificial intelligence will never be able to meet the following demand by customers. Customers want to earn a lot of money, but they want no risk."

Risks and Challenges

• Declining net interest income: A 5% decrease in net interest income could pose challenges if not offset by other revenue streams.
• Market volatility: Fluctuations in financial markets may impact asset inflows and investment strategies.
• Regulatory changes: Potential changes in financial regulations could affect operational costs and profitability.
• Economic conditions: Broader economic factors, such as interest rate changes, could influence the bank’s financial performance.
• Competition: Increasing competition in the banking sector may pressure margins and customer retention.

Q&A

During the earnings call, analysts inquired about the potential for performance fees, which the company estimates at €150 million. Management also addressed stable management fee margins between Q2 and Q3 and discussed the expected transition from money market to equity funds. Additionally, the bank’s investment in its Spanish operations was highlighted, with expectations for improved profitability.

Full transcript - Banca Mediolanum SpA (BMED) Q3 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to the Banca Mediolanum 2025 results conference call. At this time, all participants are in listening-only mode. After the speaker presentation, there will be the question-and-answer session. To enter the queue for questions, please press 11 at any time. You will then hear an automatic message advising that your hand is raised. To withdraw a question, please press 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Alessandra Lanzone, Head of Investor Relations. Please go ahead, madam.

Alessandra Lanzone, Head of Investor Relations, Banca Mediolanum: Hello everyone. It’s a pleasure to meet with you again. As you’ve seen, with a strong third quarter behind us, our nine-month picture is in good shape. Today we are going to take a closer look to our results. What’s powering them, and how we see the road ahead. Just a quick note before we start. You’re welcome to ask a question at the end of the presentation in the language of the line you’re calling from. We will answer in Italian, as usual, with a real-time English translation. With that, I’m pleased to turn the floor to our CEO, Massimo Doris, who’s joined by our CFO, Angelo Lietti. Massimo, over to you.

Massimo Doris, CEO, Banca Mediolanum: Thank you, Alessandra, and good afternoon, everyone, and thanks for joining us. Let’s start with the context. Nine months in, inflation in Europe returned to around 2%. Interest rates remained restrictive. Equity markets advanced unevenly. Bond yields were volatile, currencies were choppy, and geopolitics remained a persistent headwind. In this kind of environment, discipline matters, and steady execution is rewarded. That is where we stayed focused. We planned for this noise and kept on doing the fundamentals well, prioritizing our proven trademark levers over one-off moves or tactics. This discipline came through in our nine-month number. From earnings to revenue, the trend is up. Net income up 8%. Operating margin expanding 5%. And an 11% lift in the net commission income. We also reached two record milestones that we are proud of. Over EUR 150 billion in assets and more than 2 million customers. Another strong year is shaping up.

Our nine-month performance reflects preparation and a simple aim: to provide our customers with the same dependable, hassle-free service we never failed to deliver. Two points stand out. First, we deliver strong overall net inflows, underpinned by a 21% year-on-year surge in managed asset inflows. This supports healthier recurring fees and also strengthens customer relationships. Our family bankers continue to convert customer engagement into advised investment solutions, enhancing quality as much as quantity, increasing share of wallet, and improving retention. Second, our revenue mix proved well-balanced. As the interest rate tailwind softened as anticipated, recurring fee income increased markedly, thanks to higher average managed assets more than compensating for lower NAI, while protection policies and credit volumes picked up year on year. Below the line, we stayed disciplined on costs while investing in growth levers that matter, namely technology, network quality, and the customer experience. Capital and liquidity remain robust.

Above regulatory thresholds, giving us the flexibility to keep investing in our business in all market environments while delivering attractive and rising shareholder returns. Our business in Spain is progressing in line with plan, adding breadth without distracting from our core Italian focus. As we enter the final quarter, our priorities are clear: keep leading inflows with a managed asset bias, protect profitability through revenue mix and discipline, sustain high-quality customer acquisition as well as network growth, and execute with the same level of rigor that has driven quarter-by-quarter improvement in operating margin this year. Let’s walk through the nine-month details. First up, economic and financial highlights on slide number four. Let me start with the headline number. Net income came in at EUR 726 million, 8% ahead of last year, mainly thanks, as we said, to a material recurring fee growth driven by strong inflows into managed assets.

Our core business set a higher bar. Contribution margin surpassed EUR 1.56 billion and operating margin EUR 891 million, both advancing by 5% year on year. We solidly outperformed the interest rates headwind. Net interest income fell 5% to EUR 582 million. Yet our results came in stronger. Q3 added significant value year on year. We anticipated that net interest income would narrow the gap versus last year, and it is now moving toward our full-year guidance for 2025, which we have further revised to end up closer to the results of 2024. Our working view is that three-month year-over average is 2.17% in 2025, notably lower than the 3.64% average in 2024. The impact, however, is partially offset by a more favorable volume mix, supported by increasing liquidity from customer deposits. Looking ahead, 2026 points to a higher net interest income.

Importantly, while our commercial initiatives put near-term pressure on NAI, they fueled growth in net commission income, which at the nine-month point climbed 11% to some EUR 967 million. Every component of gross commission income posted strong gains. As expected, recurring fees contributed the largest share. In fact, combined management and investment management fees rose to over EUR 1.24 billion, marking a solid 10% rise over the same period last year. This expansion was underpinned by a record net inflows into managed assets, which lifted average asset by EUR 13 billion year on year. This came despite market volatility and a weaker US dollar weighing on Q2. However, Q3 saw a supportive market backdrop. In fact, as you can see in slide number nine, there was a solid uplift in Q3, 7% higher than Q2, benefiting from constructive markets as well as strong flows. Volumes boosted the recurring fee income.

At the same time, a somewhat different mix favoring fixed income funds, together with increasing equity-oriented inflows via Intelligent Investment Strategy, which begins in lower fee money market funds, compressed the average recurring fee from 212 to 202 basis points year on year, in line with our expectations. Let’s now focus on the key ratios across the first nine months. The cost-income ratio came in at 37.2%. Edging lower versus H1, as could be expected given the cost seasonality. There is also a cost-efficiency component that should support year-end, and we can now confirm we’ll finish out 2025 below 40% as per our cost-income guidance. Acquisition costs measured against gross commission income held steady quarter after quarter, ending the nine-month period at 34.3%.

Finally, the cost of risk, annualized on a 12-month rolling basis, stood at 15 basis points, and we expected it to normalize toward around 20 basis points by year-end, consistent with our guidance. Slide eight provides more detail on the other income statement lines, and let me flag a few. Banking service fees climbed 29% to nearly EUR 182 million on the back of strong certificate sales, especially in Q2, with some follow-through in Q3. As you know, certificate fees are booked upfront in the P&L. Net income on other investments was EUR 23.5 million, up 29% year on year, reflecting a larger Q2 Mediobanca dividend and higher valuations on our treasury portfolio after Italy’s rating upgrade. The 50% increase in provisions for risk and charges reflects the same dynamics we saw in H1.

On risk provisions, last year’s favorable legal resolutions led to one-off partial releases that were not present this year. For network indemnities, the increase remains volume-driven. Higher commissions naturally require higher provisions. Fair value showed a significant improvement to EUR 23.4 million from EUR 10.3 million last year. The stake in exit was fully disposed of in Q2, leading to a substantial uplift from the negative mark recorded in the same period last year. We also saw a positive contribution from treasury trading activity. Let’s turn to slide five for a brief look at the business results in the first nine months. Commercial activity was strong, lifting total net inflows by 14% to EUR 8.16 billion, supported in large part by the success of our time deposit campaigns. Notably, inflows came from both new and existing customers, underscoring the effectiveness of our marketing and acquisitions engines.

The clear standout, however, was managed assets, which flows. Of EUR 6.58 billion, up 21% year on year. With October now in, the year-to-date figure stands at EUR 7.3 billion. We are firmly on track to reach our EUR 8-EUR 8.5 billion guidance in managed asset inflows, topping the EUR 7.6 billion record from 2024. As shown on slide 34, for the first nine months of 2025, we again topped a sorority in managed asset net inflows, extending a four-year leadership streak. Even with the updated classification, which also includes the lower margin segment of administered assets with fee-over or fee-only pricing models, we came in second place, only a touch behind Fideuram. Let’s now refer back to slide number five. As we said at the beginning, we crossed the EUR 150 billion milestone in total assets, ending September at EUR 150.4 billion, 9% above year-end.

The credit book also posted growth, reaching EUR 18.44 billion, with asset quality remaining solid, as shown by an MPL ratio of 0.78%. This was thanks to loans granted, which increased 37% year on year, totaling EUR 2.79 billion. Gains were also solid in general insurance gross premiums, up 23% to EUR 114 million, driven by standalone policies, but even more so by a renewed uptake in loan protection policies in line with mortgage expansion. Turning to slide six, we crossed the 2 million customer milestone, adding 147,700 new customers and lifting the base up 4% at the end of September. Our family banking network at the group level expanded in step, also up 4% to EUR 6,682. As we noted earlier, Intelligent Investment Strategy gained clear momentum. About EUR 4.4 billion is currently parked in money market funds, set to transition into equities over an average of 3.5 years.

Since the beginning of the year, EUR 1.5 billion has been added, rising a material 43%. Another EUR 2.9 billion is slated to move into mutual funds over the next 12 months, as shown on the last two lines of slide six, including some EUR 800 million from double-chance deposits and over EUR 2 billion from installment plan flows, which continue to build steadily. Our trademark model keeps proving its value. It pairs customer convenience with long-term consistency for the bank, supporting recurring fees and strengthening the durability of our revenue base. Let’s move on to another key pillar of our model: balance sheet ratios, shown on slide seven. Nothing dramatic here and by design. Capital strength is one of our defining advantages and a cornerstone of your long-term confidence in Banca Mediolanum.

For the first nine months, the full set of capital ratios reinforced an already robust balance sheet, comfortably exceeding regulatory thresholds and sector averages. Our CT1 ratio moved up to 23.2%. The exit from the stake in Mediobanca is now fully incorporated, contributing slightly above one percentage point. In light of this, the board of directors has resolved to pay a more generous interim dividend this year, namely EUR 0.60 per share, which indeed factors in this one-off benefit from the Mediobanca sale we executed in July. The interim dividend will be paid November 26th and corresponds to a total of EUR 443.5 million. Let’s take a moment to focus on our family banking network in Italy. Which crossed the 5,000 mark, reaching 5,046 financial advisors in the first nine months. Since January, 245 new colleagues have joined us.

Many with prior experience as branch managers or customer relationship managers in other sectors. We also welcome a strong pool of young talent through the project NEXT, our key growth lever to shape the network of the future, ensuring generational continuity as well as enhancing the productivity and profitability of our senior bankers. Our banking consultants are top graduates who begin with a six-month executive master’s at our corporate university, finishing with the FA certification, then go straight to hands-on work alongside a senior private banker or wealth advisor, with their remuneration covered by the senior. The numbers in slide 37 reflect the success of the project. As of today, 556 banking consultants are already active in the network, with an additional 207 currently in training. We expect to overcome 800 by the end of 2026. This strategic project is already paying off.

For the almost 700 senior bankers supported by a banking consultant for at least 12 months, productivity has stepped up materially. These were already ahead of their peer group, and now the gap has widened sharply. The advantage in managed asset inflows has increased six times, from +7% to +43%. About one and a half times in loans, from +28% to +42%. And almost doubling in protection policies, from +29% to +54%. And again, almost doubling in terms of customer acquisition, from +41% to +80%. We are more than satisfied with the progress so far. And confident about what comes next. Our network is set to keep growing faster, and we see clear upside in productivity.

With that in mind, let’s turn to slide number 30, which tracks the last five years of productivity in terms of average assets per banker for the 1,000 private bankers and wealth advisors who make up the top tier of our network. As you can see, at EUR 64.2 million average asset per banker, we are already almost double the industry average, which is EUR 34 million. This gap has expanded in recent years, underscoring our strong commitment to the network quality, as well as higher recurring revenues per banker. A productivity edge that, thanks to our dedicated efforts, we expect will keep trending higher. Now, let’s turn our attention to Spain by commenting on slide number 32. Given Spain’s impressive step-up in volumes, we chose to double down on acceleration to achieve a real step change in scale.

This resulted in higher level of costs, mainly linked to a scaling up of our platform, increased activity all over the country, and incremental marketing spending. Therefore, the effect on the P&L reflects a conscious investment choice and aim at supporting growth and building long-term value. It’s also worth noting that net interest income dropped by 24% compared to the same period last year. Given the significantly smaller scale of our operation in Spain, the increase in net commission income there was not sufficient to offset the gap. Operating margin reached EUR 44.5 million, reflecting a 32% decrease compared to nine months last year, mainly due to the factors we just mentioned. Net income stood at EUR 38.9 million, 28% lower year on year. Total assets grew by 14% since the start of the year, reaching EUR 14.8 billion, with managed assets rising 15% to nearly EUR 11.2 billion over the same period.

Net inflows stood out once again, totaling EUR 1.54 billion, 68% higher than last year. Managed asset inflows contributed EUR 1.37 billion and impressed. 45% increase. On the lending side, the credit book expanded further, reaching EUR 1.67 billion and an 11% increase versus year-end. Meanwhile, the number of family bankers is up by 1% to a total of 1,629. What matters here is the material increase in productivity in the past five years. Just like the domestic market, average assets in their portfolio went from EUR 5.5 million in 2020 to over EUR 9 million today. Finally, our customer base in Spain has grown to 270,750, marking a strong 6% increase since the beginning of the year. In closing, let me first recap our guidance for 2025. Net inflows into managed assets at around EUR 8.5 billion. For 2026, volumes are expected to remain similarly strong, assuming normal market conditions.

Net interest income down some 1% compared to 2024. Based on current yield curves, we project an increase in 2026. Cost-to-income ratio below 40% and cost of risk around 20 basis points. Dividend per share to increase compared to the previous year, of course subject to shareholders’ meeting approval. This dividend, talking about the 2025, of course. Looking ahead, analysts broadly point to a strong net inflows into managed assets, resilient recurring fees, and solid operating and commercial momentum into Q4. I could not agree more. As we wrap up, I would like to confirm that our recurring business engine is tracking last year’s peak run rate, which reinforces our positive outlook for the year ahead.

Our priorities continue to be growing the network and enhancing the productivity of our family bankers, delivering sustained net inflows into managed assets, expanding the customer base, building durability in any context through consistent execution, sharing the value we create with our shareholders through dependable dividends. Forty-three years on, we continue to create value in the same way: a consistent model, a clear strategy, and real delivery built on a long-term vision, our ownership-oriented people, and daily customer trust. Thank you for your attention, and Alessandra, it is over to you. Thank you, Massimo. We can now open the question and answer session. Please try to limit a couple of questions each at the beginning, and then if we have time, we can continue. That is for sure. Thank you very much. We are ready to open the Q&A session.

If you want to ask a question, please press star 11 on your keypad and wait for your name to be called. If you want to cancel your question, please press star 11 again. Wait for your name to be called before asking the question. Question from Luigi de Bellis, EquitySIM. Please go ahead. Good afternoon. I have two questions. The first one is net inflows. It is really impressive, between EUR 8 billion and EUR 8.5 billion, and you expect a solid trend in 2026 as well. What are the main reasons why you think inflows will be robust in the year to come as well? Do you see any special opportunities due to the inflows mix in terms of transition from administered assets into managed assets and so on and so forth? Network, you have increased the total sales network by over 100 professionals. What’s the expected trend?

Can you provide some updates, some colors as far as the wealth managers and private bankers’ network is concerned, also in terms of the assets they manage? Thank you. Net inflows into managed assets. Why do we expect EUR 8.5 billion inflows next year as well? Provided the markets are normal, this is what we expect. Should a bear market materialize, should market collapse by 20% or 30%, it will not be possible to report EUR 8.5 billion net inflows into managed assets, because when the market crashes, it is more difficult to grow. It is also true that in that type of market, we make the difference, because of course we report fewer inflows, but the others do report much, much lower inflows, so we nonetheless can broaden our market share. If markets, say, behave, we believe we can once again generate EUR 8 billion to EUR 8.5 billion.

€5 billion. In terms of net inflows into managed assets. Plus, the network is growing, so I think that inflows should be growing as well, because points of sale, quote unquote, are increasing. The demand for advice is increasing, so I really think that we have laid all the necessary groundwork to keep growing. Also, we are in November, and we are providing a range of €8-€8.5 billion in terms of inflows into managed assets. You have to consider that these net inflows include certificates. These certificates do have an auto-callable option. Certificates normally track S&P or FTSE MIB indices. If a year later the two indices are above the initial strike price, the certificate would pay out a significant coupon and repay principal.

If either one is below the threshold, no coupon is distributed, and the following year you go in, check again, and see whether you are above or below the expected level. If it is above, you pay the coupon for that year and you recover the previous year coupon as well. The certificate is closed, so to speak, and you return the principal to clients. We have about EUR 400 million certificates, which we sold between November and December last year, which actually are part of net managed assets, and they have reached maturity. Both indices are above the initial strike price, so potentially they may return principal to customers. The money may be transferred from the certificate, which is managed assets, into deposits, which is administered inflows. Being November and December, the network simply does not have time to transition the money from administered to managed assets.

By the way, the transition is justified by a beautiful reason. That is to say the certificate performed very well, but that being year-end would cause a gap of about EUR 400 million between administered and managed, better said, in managed assets. For that reason, because there is no time essentially to fill that gap. As far as the network is concerned, the sales network recruitment policy will continue, recruiting new bankers. 20% of them have a significant portfolio already, a significant amount of assets under their management. Another 20% of them are more junior professionals, so they are not bringing a lot of assets with them. Then we have people whose background is in insurance and others that come from different areas. Then we have banking consultants. I really have to say that clients do appreciate, and they continue to express their appreciation for advisory in general.

There is a recent market research by Prometeia, according to which a sales network used to manage just 9% of Italy’s assets, and they are up now to 20%. Traditional banks used to manage over 70% of Italians’ wealth, and they went down to 60%. You see the advisory model is really meeting a specific need on the part of clients. As far as both private bankers and wealth advisors are concerned, we have about 1,000 putting them together. There is a significant trend that is steadily going up. I believe that the average advisor’s portfolio will keep increasing. The number of people probably will slow down in terms of growth, not because we will hire less, but because every couple of years we will kind of raise the bar.

It will be increasingly difficult to pass to the upper tiers and become either a private banker or a wealth advisor. As you can see, in 2019, 2020, we saw a decline in the number of private bankers and wealth advisors simply because the bar was set to a higher level at that point. Those people who could not comply with the new requirement fell off that category. They came back in in 2021, where you can see that significant jump forward. Private bankers have an average of EUR 51 million assets in their portfolio. In five years, we will have fewer private bankers, but with a bigger average portfolio. The total will be higher in terms of assets, but lower in terms of number of professionals. We are staking it all on quality. We want them to be qualified, highly professional bankers managing increasingly larger portfolios.

Thank you. Thank you, Luigi. Next question, please. Next question. Enrico Bolzoni, JP Morgan. Please, sir. Good afternoon. Thank you for taking my questions. First question, I would like clarification on management fee margins. Clearly, this year markets have moved a lot. Can you confirm that taking into consideration the daily average assets, the margins have started to increase in the third quarter compared to the second quarter? At the beginning of the year, they were higher, clearly. Do you think that should markets remain stable, we might continue to see an increase in management fee margins in the coming quarters? Second question. Can you give us an update on performance fees that have not crystallized yet, but which might do so by the end of the year as compared to the high watermark? Let me start with the second question first. EUR 150 million, roughly.

Are the performance fees we may potentially collect right now? Talking about management fee margins, recurring management fees and investment management fee margins. Between the second and the third quarter, they were unchanged. What is actually affecting this fully expected decline in margins? Mainly one thing. That is the behavior of the sales network. I already hinted at this at the call when we published the first half results, and the reason remains the same. In the last two years, and this year is no exception, 100% of net inflows into managed assets that flowed into funds flowed into bond funds. So 100% in bond funds. Equity funds raised slightly, grew slightly, but the worst was for flexible and balanced fund. Let’s say that 100% of flows went into bond funds. Bond funds have a lower management fee compared to equity funds.

Therefore, of course, you see this decline. In addition, there was a EUR 1.5 billion increase in money market funds linked to the Intelligent Investment Strategy, where the management fee is 20 basis points. So EUR 1 billion more means that average fees are strongly impacted. Should we worry? Of course not. Equity markets are tight. At a certain point, they will correct. If we take a look at the past during zero net interest rates, 100% of our flows were into equity funds, and our clients had increased this portion a lot. Bond funds are back to being interesting thanks to the increase in interest rates. Finally, they can be a good solution for midterm needs for our clients. This is also an asset class that may certainly level off risk since equity markets are so tight.

In the last two years, net inflows into managed assets were really skewed towards bond funds. Which means that now clients have a better balanced mix. When markets will correct, our clients will be much more at ease, and they will then be able to flow once again and to invest once again in equity markets where prices will be much more interesting. These 202 basis points could certainly decline, especially if our intelligent investment strategy is going to grow further. When markets are going to move down. We already experienced this back in 2023. Just as back then, there is going to be an acceleration in the transfer of flows from money market to equity funds. We go from 20 basis points to 250 basis points in terms of recurring management fees, with an increase in average fees.

In 2022, there was a strong decline, and then there was a very sharp acceleration. You see this. The light blue bars above 2022 are the step-ins where the installment would be doubled or tripled and would flow into equity funds. The average fee at that point would really report a sharp increase because, as I said, a couple of billion, if I remember well, were transferred from money market funds with a 20 basis points fee to equity funds featuring a 250 basis points fee. We have to just get used to this sort of volatility of the average fee and the average fee margin. Having said this, I have repeated this quite often. I believe that margins will dip slightly, really a matter of a few percentage points because of our clients’ mix. Since we are acquiring.

Wealthier and wealthier clients, of course, not only wealth clients, also. Young clients that are not so rich, but also wealthy clients would not invest 70% in equity markets. Forty-year-old and seventy-year-old clients, the risk being the same, would in any case show different investment mixes, especially if the seventy-year-old has millions of euros in assets and the forty-year-old has EUR 100,000 in assets. If the high or ultra-high net worth individuals have a more higher bond investment share, this will mean that the average fee margin is going to be slightly lower. I believe that it is not going to go much below 200 basis points. I do not foresee our average fee margin to go below the 195 basis points. Right now, they are at 202, but they could go up to 207-208 basis points.

Because if the markets go down, there will be an increase in equity investments with all the consequences I’ve already described. Thank you, Enrico. Next question, please. The next question is from Elena Perini in Intesa Sanpaolo. Good afternoon, everyone. I too have two questions. The first one is on NII and the new, more optimistic guidance you provided. I’m not sure whether you have already covered this topic because I had to disconnect briefly, but I’d like to know what are the main drivers underpinning your new guidance. Then I have a more technical question in nature concerning taxation because you were the one that promoted an action at the European Supreme Court that resulted in the judgment on the regional production tax that has an impact on dividends. Could you share some numbers with us in the light of the.

Budget law and how much you could be reimbursed, refunded, or in negative terms, what kind of impact would a 2 percentage point increase in regional production tax would have on your results? Okay, so NII. At the start of the year, our guidance was minus 5%, and now we are saying minus 1%. What happened in between? The main reason is that actual data point to about EUR 1 billion more on current accounts that pay zero fees. So it generates no income. And of course, EUR 1 billion more that you collected no cost made us go from minus 5% to minus 1%. In 2026, the outlook for NII is an increase. I mean, we expect NII to go up, but always assuming the yield curve is the same as today. Should the curve change, our outlook will change too.

Considering today’s forward curve, this is what we expect because there are certain fixed-rate securities that are about to mature, say BTPs, bonds that would yield 0.2%, 0.3%, 0.4% that are reaching maturity and be replaced by other BTPs that have a much better payout. Also, you have to consider the increase in our flows. Like I said, we managed to gather deposits at very low cost. We have increased our activities in terms of lending as well. The improvement is essentially due to those BTPs that were paying off a very little amount of interest, very little interest, and instead, they will be replaced by higher-paying BTPs. As to your second question, I hand it over to our CFO. I have to say that a draft budget law was circulated, but the government is still working on it.

A minor change would change the overall picture completely. We want to wait for the final law to be passed to express ourselves. I may quote some of the figures mentioned by our competitors, but considering the draft budget law as is today, it is manageable by us or by other banks. It will have an impact on the regional production tax. It will help us free up reserves on the non-deductibility of payable interests and so on and so forth. You mentioned the European Court of Justice judgment, which is final. Italy has not actually fully incorporated this judgment into its national laws, but apparently, the government set up some kind of reserve, earmarked some money to return the money to the banks that were unduly taxed because of the dividends they received from foreign-based subsidiaries. As far as the draft budget law is concerned, we think.

It’s manageable. There are obviously positive and negative impacts on us and other banks as well. Before we continue on with the Italian line, I would rather hand it over to the English line for a minute, and then we will get back to Italian. Let me hand it over to the operator on the English channel for the Q&A session. Thank you. Now we are going to take the question from the English line. It comes from the line of Hubert Lamb from Bank of America. Your line is open. Please ask your question. Hi, good afternoon. I have got a few questions. Firstly, you mentioned for NII, now you expect 2026 to be higher than 2025. At this stage, how much higher do you expect it to be? The second question is just a clarification on performance fees.

You mentioned that if the year ended today, you would have accrued EUR 150 million. Just double-check, does that EUR 150 million refer to the full year or just to come up. That is EUR 150 million that could happen in Q4 alone? Lastly, I just want to check also on the dividend of EUR 0.60. You mentioned that it also includes the Mediobanca proceeds within that EUR 0.60. How much of Mediobanca is within. The Mediobanca proceeds is within that EUR 0.60? Thank you. Talking about the NII increase, this could be a double-digit increase when compared to the 2025 level. However, it is a bit too soon to really talk about this considering the present yield curve. The EUR 150 million performance fees have to be added to the ones that have been accounted for in the first nine months. So it is plus EUR 150 million. As to the EUR 0.60 dividend.

The Mediobanca portion accounts for some $0.20. It is one-third. Thank you, Hubert. We will go back to the Italian line if there are no other questions on the English line. Yes, I hand it over for the next question from Gianluca Ferrari, Mediobanca. Please, sir. Actually, I was going to ask the same question as Hubert. We are talking about an incremental line in terms of dividends for 2026-2028. You said that Mediobanca’s stake sale accounted for $0.20. Let’s say that a clean-up starting point would be $0.80 if we multiply the amount of the dividend amount you are paying out now, we multiply it by two for the next few years. Will you be following this trajectory or are you going to pay out even more? Talking about the dividend trajectory right now is a bit premature.

At year-end, our ideas will be clear. The fact that the sale of Mediobanca’s stake accounted for EUR 0.20 out of a total of EUR 0.60, but that had no impact on our account because the extra capital generated by the sale of Mediobanca was equal to EUR 150 million. So we may say that EUR 150 million are worth EUR 0.20 in terms of a portion of dividend paid out. As far as the trajectory of future payouts are concerned, future distributions, those depend on a number of things that will be more visible at year-end. Let me add two comments. Our business is rock solid. In the medium term, I don’t expect a collapse in profitability. Assets are growing in 2008, in 2011, or in 2022. Assets declined, obviously, because markets were declining. Though we reported in those years too, we reported.

Positive net inflows, and this has an impact on recurring fees. Casting our glance forward, I think that net of performance fees that may or may not be generated, I think that our income statement will be growing. Our P&L will be growing, and as a consequence, dividends will be growing. Also, the CEO is a major shareholder in the bank, and he and his family do love dividends. We’ve always been a generous bank when it came to distributions, will continue to be generous, but at the same time, we always keep an eye on the long term. We have robust capital ratios. This kind of guarantees us the possibility, the opportunity of paying attractive, growing dividends even in years where the net income maybe is not that high. Since our capital ratios are so robust, we could pay.

Out more and have maybe capital ratios decline a bit because they’re so high. I don’t know whether we can think that the basic dividend is €0.80 or €0.85, whether it will go up by €0.05 or €0.08 a year. At this point in time, I don’t know. I myself, as the CEO and as the shareholders, I am extremely interested in making shareholders happy, myself included, and that is why we want to continue to be generous with dividends. Thank you. Thank you, Gianluca. Next question. Alberto Villa, Intermonte SIM. Please, sir, go ahead. Thank you. Good afternoon. I need just a couple of clarifications. Again, NII guidance. Does the 2026 guidance include commercial activities and initiatives, or the expected growth is actually tied to assumptions that do not take into consideration commercial campaigns that have short-term impact on NII?

Second question regards Spain. Robust growth and keeps on growing. Strongly. However, the contribution to net income was not growing. It was actually declining. What is your view on future profitability, whether after this growth and investment, do you believe that the profitability in Spain will start to be comparable to the one you have in Italy? Structural profitability. The operating margin declined even though all the business activity numbers were growing. Can we expect to see a growth that is in line with the operational performance and the growing number of clients and inflows? I’ll start with the second question. This year, we decided to really start investing a lot in terms of the platform. We had to revise the app and the website. They were sort of getting old, and also marketing costs.

We wanted to have a higher visibility on the territory and also commercial costs. With aggressive rate initiatives so as to acquire and win over clients. By the way, these same clients are seeing a good transition to managed assets. This is as far as this year is concerned. Next year, of course, we’re not going to repeat exactly the same things. Spain’s profitability is going to improve, no doubt. This was only a one-time step that we introduced to really get up to a new level and start growing again, to create the stepping stone so that we could grow again. As to the 2026 NII guidance, it includes the commercial initiatives as we did in prior years. These costs were based on the present yield curve. Looking forward, should things change and they would be higher, then it will be reflected.

On the same guidance and vice versa. There is no major impact from commercial initiatives to next year’s guidance, but they have been included in the guidance. Going back to Spain, we should highlight the fact that Spain’s balance sheet is different compared to Italy’s structure. It was more affected by the rate movement. Compared to the Italian market, it is much more competitive. In Spain, mortgages are less expensive than in Italy. Between 2005 and 2008, I was the CEO there, and I can say that things are rather different compared to Italy. Thank you, Alberto. Any other questions? Giovanni Razzoli, Deutsche Bank, has the next question. Good afternoon. I have two quick questions and a more philosophical one. The first question is about capital. Mediolanum has a business model that is generating income.

Grows, I mean, the company grows, but you are also growing your own capital. Currently, you have a leverage ratio that continues growing. Do we have to interpret this capital ratio, which is twice as much as your competitors, as a guarantee that dividends will continue growing, considering that year after year you will have a number of one-off components, etc.? I mean, did I get you right when I say that you are not going to make any extraordinary action, any managerial action or anything, but you will keep growing year after year and dividends will grow at the same pace? You talked about the guidance for 2026 NII, which should be growing in terms of the level of a double digit. I’d like to understand what kind of amount, total amount we’re talking about. The final, more philosophical question is about AI.

The whole industry is talking about artificial intelligence, how to engage customers via AI, ensuring at a convention you showed us your new app, etc. But you’re still betting on the human touch on your financial advisors. Don’t you think that AI is generating kind of a hype or is a hype? Okay, let me take your first question first. Having robust capital ratios allows us to pay out attractive dividends even when net income, for whatever reason, isn’t as good as expected. You may also pay out 100% of net income because capital ratios are so solid that we can have them soften a little bit and still keep going perfectly well. The other thing is regulatory changes. In the past, rules were passed that forced us to, I mean, that absorbed a lot more capital.

If your capital layer is thinner, you have to recapitalize the bank, and thus you have to pay out lower dividends. If you are strongly capitalized as a bank, you can, of course, pay out dividends that are higher with total peace of mind. Guidance for 2026 NII, yeah, 10% plus 11% plus 9%, I do not know. It is what we expect, but once again, we expect these numbers based on today’s forward yield curve. AI, just like back in 2000 with the onset, with the advent rather, of the internet, I think that this technology has been a little bit overrated. I am not saying it is not good. It will be absolutely fully pervasive. It will be used everywhere. Just same as the internet, it has been used everywhere. There are no companies that do not use the internet, and the same will apply to artificial intelligence.

Just like back in the early 2000s, they were saying that trading online will mark the death of financial advisors, and this did not happen. I think that the same goes for artificial intelligence. If you are a do-it-yourself investor, probably you will have at that point an even more highly performing platform, more efficient, comparing to the most developed and the most avant-garde trading online platforms of today. Artificial intelligence will never be able to meet the following demand by customers. Customers want to earn a lot of money, but they want no risk. Combining the two things is impossible. When the client is going to ask AI to put together an investment portfolio generating 5% returns in real time, sorry, in real terms, at zero risk, I am really curious to see what kind of answer the system is going to give to clients.

I mean. No matter how intelligent that system is, I do not think that the two things can go together. Like I said, investors will be able to count on a faster, more efficient, more accurate, easier-to-use platform. The market will expand. It is also true that that technology, in the hands of a financial advisor, will be a tool that will help the advisor work better, more efficiently, and faster. When the customer is going to ask for a generated portfolio that would return 5% in real terms but assuming zero risk, the financial advisor will take a seat, or sit the client rather, and start explaining to the client that that is not doable, but there are a number of options to try and meet their needs as best as possible. Also.

I don’t think that the advice given by artificial intelligence when customers, say, are panicking because markets are crashing, well, I don’t think artificial intelligence can provide the same degree of peace of mind, the ability to calm down clients when things are going down the drain. AI cannot pat you on the shoulder and tell you to relax. AI will be a tool that will make the business more efficient, more, I mean, faster, and it will be also an additional very efficient tool for financial advisors. Those companies that decide not to invest in AI right now, in 10 years’ time, will be in, I think, deep distress. It’s as if in the early 2000s, you had not invested in the internet. By 2010, you would not have had a website. You would not have been able to contact customers online.

This technology, AI, I mean, is here to stay. It’s a fantastic technology, but I don’t think it can turn our business model upside down. In this business, the person, the financial advisor, the human being, will continue to be a success factor and will be absolutely in demand. I am 100% persuaded of this. And this does not apply to Banca Mediolanum only. It will apply to all sales networks, and it will apply to traditional banks as well because more and more clients want to talk to somebody. Of course, they’re going to cut down on the number of branches, but physical branches will never disappear entirely because the need for a human relationship is important. Let me go back to the NII guidance because I see that it’s a matter of interest. Today, we are just giving a guidance. It’s a forecast.

As with any other guidance, I confirm that based on what we know today and the information we have today, as the CEO was saying, the current curves and the possible forecast we are providing with possible commercial campaigns, I confirm once again that we will brush the double digit. I would like to really think about this with all of you because, say it would not come out to be 10% but 5%. Considering that we are dealing with Banca Mediolanum’s figures, the net income impact would be 2%-3%. Fourteen to fifteen-month guidance, having volatility of 2%-3% on the net income figure is not really material. We are now discussing whether it is going to be 7%, 8%, and 10%. Banca Mediolanum is really very, very careful when providing guidance.

Based on what we know today, this is the guidance we can provide. If along the year things will change and rates curve will change, the guidance will change accordingly. Once again, considering the amount of net income Mediolanum generates, this is really trivial. It’s negligible. Thank you, Giovanni. Are there any other questions? Non abbiamo altre domande. Lascio la parola a lei. We have no further questions, so I hand it over to you, Mrs. Lanzone, to conclude the call. We end the conference call here. We are going to meet again at the beginning of February for the financial year 2025 results. Thank you. This is the end of the conference call. Thank you for participating, and you can now disconnect. Thank you.

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