Banca Generali SpA

MIL:BGN

Earnings Call Analysis

Strong Quarterly Performance with Positive Outlook

In the first quarter of 2024, the company reported strong financial results, with net profit rising to €122 million and total assets reaching €97 million. This growth was driven by a higher net interest margin and strong performance fees. The company achieved an 8% increase in gross recurring fees, with robust contributions from management and advisory fees. Asset under management grew by €11 billion, reaching a record €65.3 billion. The capital ratio increased to 21.2%, and the company remains optimistic about achieving its full-year targets, projecting net interest income of €280 million.

Introduction: Strong Performance in the First Quarter

Banca Generali's first quarter results for 2024 showcased exceptional performance in both financial and commercial areas. The net profit skyrocketed to €122 million, an impressive leap driven by recurring net profit and performance fees. Total assets reached a new high of around €97 million, bolstered by favorable market conditions and robust commercial activity. Moving into April and May, the company observed an acceleration in the quality of its mix, indicating a promising start to the second quarter.

Net Financial Income: Best Quarter Ever

The net financial income for the quarter was extraordinary, partly attributed to a higher net interest margin and lower reductions than anticipated on total assets. Despite stable trading gains, the net interest margin stood out as a key driver, making it potentially the best quarter to date when excluding inflation-linked components.

Fee Growth and Performance

The company experienced an 8% increase in gross recurring fees, closing at €54.4 million. The investment fees, split between management and advisory fees, added positive contributions, with management fees reaching over €207 million. Advisory fees also saw a significant jump to almost €12 million, driven by asset expansion while maintaining constant margins.

Costs and Operational Efficiency

Operating costs increased by 6.3%, but when excluding setup costs for BG Suisse and the phasing of a national banking contract, the rise was limited to 2.4%. Banca Generali managed its cost base effectively despite ongoing investments in innovation. This efficiency is evident in their operating leverage, with operating costs on total assets reaching a new low.

Asset and Profit Growth

Total banking income surged by nearly 33%, well-supported by net financial income and gross fees. The company maintained control over costs, excluding one-off components. The operating profit showed strong growth, while net provisions increased due to conservative and prudent measures. The tax rate also benefited from performance fees, closing below 25%.

Balance Sheet Stability and Capital Ratios

The balance sheet reflected stabilizing client deposits and a slight increase in total assets, promoting confidence in achieving the €280 million target. The capital ratio saw a positive surprise with an increase to 21.2%, influenced by retail net earnings and risk-weighted asset optimization. The dividend payout ratio stood at 87%, with expectations of delivering a strong dividend this year. Banca Generali also boasted a highly liquid portfolio, maintaining liquidity ratios well above regulatory requirements.

Commercial Activity and Asset Growth

Banca Generali experienced solid growth in total assets and inflows. Total assets increased by nearly €11 billion, with €3.5 billion in assets under management. Advanced advisory assets accelerated impressively by €2.3 billion, exceeding €10 billion. The highest-ever level of overall assets under investment was noted, reaching €65.3 billion, €5.5 billion higher than the same period last year.

Recruitment and Expansion

The first quarter saw an acceleration in recruitment, contributing significantly to the company's growth targets. The recruiting efforts are expected to result in around €1.5 billion for the year, potentially exceeding this figure depending on the pace and success of the recruitment initiatives.

Outlook and Future Growth

Looking forward, Banca Generali remains optimistic about achieving its targets under its three-year strategic plan. The company expects to continue its profitable growth trajectory with solid gross recurring fees and controlled costs. Recruitment and the new Swiss branch are anticipated to contribute positively to overall net inflows, with the company confident in surpassing its €6 billion target.

Earnings Call Transcript 2024-Q1

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banca Generali First Quarter 2024 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Gian Maria Mossa, CEO and General Manager of Banca Generali. Please go ahead, sir.

[Gian Mossa, executive]

Good afternoon, and thank you for attending our first quarter results conference call. First quarter results were very strong, both in terms of financial results as well as in terms of commercial results. Overall, net profit closed at €122 million, while total assets achieved new highs at around €97 million, thanks to favorable market conditions, but also a very consistent commercial activity. The result of April is in line with the first quarter, but with an acceleration of the quality of the mix and also May started very, very well. So let's start commenting on net profit, so page 4. We already said a jump of almost €50 million driven by 2 major components: the recurring net profit, supported by both net financial margin and gross recurring fees plus performance fees. And as you can see, the contribution of the variable net profit amounted to €40 million. Page 5, let's start with net financial income. The trading gains were in line with the previous quarter. And you know that here, there is room to adjust the overall trading gain in line with the overall result of the net financial income. And concerning the net interest margin, there is a positive surprise. The result is probably the best quarter ever once you carve out the component of the inflation link. And this result is the consequence of a higher net interest margin and a lower reduction compared to our expectation on overall total assets. If we move to total growth fees, you see at page 6, a very strong result, higher almost by 8% and the gross recurring fees and the variable fees closed at €54.4 million. On both components, positive news. May is going pretty well in terms of overall gross fees. And moreover, variable fees, we have more than €10 million, very close or at the high watermark, and we already posted other €5 million, €6 million performance fee in these first days. For the gross recurring fees, you know there are 2 major components: the investment fees and other fees. Investment fees increased by 5%. And if you break down the 2 major components, you can see positive contribution from both management fees and advisory fees. If we focus on management fees, page 8, you see that we exceeded €207 million. This is all about asset expansion, while the margins are pretty stable and above our guidance for the 3-year strategic plan, and there is a positive momentum in all the in-house [ funds ]. Page 9, you see the advisory fees. Here, the increase was more significant -- the overall contribution jumped to almost €12 million. And again, also in this case, the result is driven by asset expansion with, say, constant margins. The overall margins on advisory fees is confirmed at [ €0.49 ]. Page 10, today, we will focus a little bit more on the other fees, just to explain a little bit the exceptional result. Starting from other banking fees. Other banking fees are in line with the same period of the last year. So no news, good news. Brokerage commission jumped to almost €15 million. Most of this increase is structural and is driven by asset expansion and also better quality of the mix with a major focus on increasing focus on also Forex and of course, also equity due to the favorable market conditions.If we focus on entry fees, also in this case, they say that there are some structural factors and some, a one-off. The one-off -- the first one-off is the placement of the BTP Valora. It accounted for €2 million in terms of fees. And we say that the rest is, for the greatest part, coming from structured [ product ] certificate and a minor contribution from fee and asset management products. So let's say that the volume on certificate continue to be pretty strong also in April and May. If we move to page 11, we start now considering the part of the cost, starting with the payout ratio. Here everything is in line with expectation. You can see only a small increase in the payout to financial advisers for the ordinary component. This is due to some specific factors, temporary factor. The first one is the mix of the inflows of the first quarter, where you know structured products, brokerage, [indiscernible] as an added payout. And the second is a specific initiative on the insurance, where we slightly reduced the commission for clients and maintain almost unchanged payout to financial advisers. So the result is a slight increase in the ordinary payout. Let's say, these are all temporary initiatives, and I'm confident to confirm the target of 36%. As you can see, the payout to third party is pretty stable. And also here in the medium term, I do expect to grow at around 6% or lower. Page 12, operating cost, these numbers, to me, are probably the best news because overall, you see an increase of 6.3% of the core operating costs. But once you carve out the setup of BG Suisse and the phasing of the national banking contract, the increase is only by 2.4%. So let's say that we are managing very well the cost base despite the ongoing investments for innovation. And page 13, you can see the excellence of our operating leverage with the operating cost on total assets at a new floor at [ 0.28 ] and the cost income also once [ carved ] out the most variable components. You see volatile components; you see that the ratio stood at 33%. So to sum up, page 14, total banking income very strong, up almost 33%, well supported by net financial income plus gross fees. Costs under control, once we exclude the, let's say, the one-off component, operating profit very strong. Below operating lines, you see 2 increases. The first one is the contribution to banking funds from 6 to 10 million and the net provisions. The reason of the increase in the net provision, the reasons are mainly 2. The first one is the different impact of the rate on the discount of [ debt ] reserve for our financial advisers. So last year, same period was a positive contribution, plus [ 3.8 ]. This quarter, negative, minus 0.7%. So the overall effect is minus 4.5%. And then we have some conservative and prudent provision for, say, the financial advisory finalization and the pension – [indiscernible] for the pension and some reserves, also some provisions also for the clients. So you know that when numbers are pretty good, we prefer a more conservative attitude on the provision side. And the tax rate closed at below 25% at 24.2% . Also in this case, here, you see some one-off components. Of course, the impact of performance fee reduced the tax rate. Here, we continue to expect a guidance in the range of 26%, 27%, probably closer to 26%. As a result, net profit jumped at €122 million and the recurring net profit closed at €82 million. Now moving on to the balance sheet, the overall assets closed at [ 15.2 ] with the interest-bearing assets accounted for €13.8 billion. In this case, you can see that the yield increased by 0.14%, with the contribution of all the major voices. Financial assets decreased by €100 million. Loans to clients decreased by [ €700 million ]. Focusing on the liability side, here, you see more or less a stabilization of the clients of our deposits and a slight increase in the cost of funding for the retail clients from 0.72 to 0.84. So again, also from the balance sheet perspective, stabilization of client deposits and a slight increase on the total assets, make me confident on overachieving or achieving the target we mentioned last time of €280 million. Page 18, capital ratio, we have a positive surprise. Overall, capital ratio increased thanks to the retail net earnings, but also thanks to a risk-weighted asset optimization. This optimization accounted for 1.5% in terms of total capital ratio. So we closed at 21.2%. Consider that we have the payout ratio, the dividend payout ratio implied in the own funds is at around 87% it means 80% of the recurring net profit and 100% of the variable net profit. So we are also confident to deliver good dividend also for this year. Leverage ratio well above our target, and we continue to stay with a very liquid portfolio with all the liquidity ratios well above the regulatory requirement. Now let's move on the commercial activity and total assets. The recruiting part will be part of the focus on the business update. So now we have 4 pages, 2 are about total assets and 2 about total inflows and the scheme is almost the same. Let's start with total assets, so page 20. At the top, you see an increase of almost €11 billion on total assets, of which €3.5 billion in assets under management. Bottom left, you see an impressive acceleration of assets under advanced advisory plus €2.3 billion, and now we exceeded €10 billion. And the top right, you can see the overall assets under investment, €65.3 billion is the highest level. It means €5.5 billion higher than the same period of the last year. The overall weight of asset under investments on total assets is at €67.5 billion and we consider this level from which we do expect a normalization. So I'm pretty confident to close the year at this level or higher. It means that the mix of the inflows will be positive. If you look at page 21, you have total assets, the details of the assets under management, plenty of good news. The first one is stabilization of the traditional life policies. Second, the increase in the managed solutions. If you focus on the bottom left, you see that both wrappers and in-house fund account more on the total assets under management, in particular the sum of wrappers and in-funds now account for 55% from 52.3%. It means that we have accelerate the overall exposure, the [indiscernible] in-house products by 2.7% in one year and more will come. Very confident, optimistic on numbers for the financial wrappers and also for the in-house funds. In-house funds are gaining momentum, but you will see again some slides on this topic in the business update. So now let's see the same pages for the net interest for the first quarter and then the detail for April in the business update. The overall net interest for the first quarter closed higher year-on-year and with better quality. You see the red bar is positive, €400 million compared to last year, negative. And while we confirm positive net interest in advanced advisory, on the right, you see the overall impact of the inflows on assets under investment [ quality ] matter, €600 million of assets under investment with growing contribution, as I mentioned, of financial wrappers and in-house funds. Page 23, there is the detail of the inflows of the assets under management. And again, you see the normalization of the traditional life policies with positive inflows. On the right, you see increasing contribution of financial wrappers, pretty stable in in-house funds but an acceleration in April and negative contribution of third-party funds. So the focus is on in-house solutions. Page 25 is -- we would like to focus a little bit on the targets for this year in terms of net inflows and in terms of the quality of these net inflows. And we have an update of numbers, including also April. The first graph at the top is about the traditional representation. You see that in the first 4 months, we had inflows for more than €2.3 billion compared to the €2 billion of last year. So it means almost 50% higher of better quality. The better quality, let's say, is pretty clear with the result of April. On the right, you see the result of April last year and the result of April this year. This year, we have positive inflows in house funds, positive inflows in financial wrappers, positive inflows in insurance and also positive inflows in banking assets. And if we focus on the second graph, bottom of the page, you see that we say now the contribution of the investment solutions account for 39%. But again, we are very positive to achieve the target 40 to 60%, thanks to several initiatives and the normalization of the market condition. On the right of the page, you can read some optimism on the overall net inflows because we see two potential upside, recruitment and Switzerland. While the optimism on the quality of the net inflows come from some consideration on our asset under custody and optimization of our offering in [ Luxembourg ]. So let's go through this potential upside. So page 26, the focus is on recruitment. Recruitment started very well. You see an acceleration of senior recruitments from 29 to 39%, an acceleration of the new junior recruitment and from 12 to 25% and also an acceleration of the assets managed by the team. So the combination of senior and junior, it's about an increase of 20% -- so market conditions are memorizing. We have plenty of people and professional willing to understand our business model and the growing demand comes from traditional banking system, but also from direct competitors. So I'm very confident on achieving the targets in terms of recruitment. And then very Switzerland, we celebrated the opening of our Swiss branch on Monday. There is a significant interest for our project, and we are close to receive the final authorization to offer the banking solution of our Swiss bank into Italian clients. And you will remember that we have two different models of business. The first one is more on medium, long term to develop the onshore business in Switzerland and the second of short-term, medium-term to start managing the money of the Italian resident in Switzerland. Thanks to Italian investment services, Italian professionals and deposits in Switzerland. In the first, let's say, 4 months, the contribution of the total inflows of Switzerland accounted for €100 million. Most of that is booked in Italy. So if on one hand, we are positive on the overall net inflows, so let's say that the €6 billion target could be probably low compared to what we can realize, we can achieve. Also in terms of mix and quality, we start to be more confident of the final result. Let's start from page 28, where there is a focus on the total assets under custody. Total under custody account for almost €27 million. And for us, in terms of percentage for our clients is a peak. If we break down these numbers, first of all, you start seeing that more than €5 billion of bonds will expire within 1 year, €5 billion. Two-third of the bonds have a positive performance. So it's much easier to sell a bond with positive performance than a negative one. Also in terms of liquidity of this portfolio, only the high percent of total asset under custody is invested in structured products. So on one end, we can continue to provide good performance in terms of structural products and on the other one, let's say that the portfolio is pretty liquid. And last but not least, even in the -- for the part -- remaining part of assets under custody, you see that the penetration of advanced advisory services is still 22%. So there is room also to implement advanced advisory services further on asset under custody. So I'm sure that we will see a normalization of asset under custody, and I'm sure that we will continue to deliver higher profitability [indiscernible] structure products and asset under advisers. Next page, page 29, you see other positive news, and it's about our Luxembourg platform. We achieved the previous record high, €21.4 billion, of which €10.7 billion of retail funds. And you have already seen in the previous conference call that the interest for the retail distribution is more and more focused on in-house funds compared to third-party funds. And the second graph shows you the percentage of this distribution. So we had the floor at 43.8%, and of, let's say, in-house funds compared to third-party funds. Now at the end of the first quarter, we were 46%, above 46%. April was very positive for in-house funds because we launched a new offer. And in the second half of the month, we collected more than €100 million with negative inflows in third-party funds. And we said optimization was about the, say, new products in existing asset classes but also the coverage of two new asset classes, the bond one and the alternatives on that now with the existing scenario with the actual scenario of interest yield, we think that we can also gain more traction on more traditional bond funds. And we do believe that alternative funds can work better with higher yield scenario.So for all these reasons, we do expect that the rebalancing between third-party funds, in-house funds continue for the profitable future. Page 30, that is the last one. Just recoup our major targets of the 3-year [indiscernible] plan, consistent growth. Higher than €6 billion, very optimistic, very confident to meet this target, the quality, 40%, 60% in asset under investment. There is a normalization of the market, and there is a positive feedback from the network and the clients for the new offering. So we are positive also on the mix. Profitable growth, let's say that we confirm the targets over the previous conference call with very [indiscernible] conservative assumption on net interest income. And we see a very solid gross recurring fees, cost under control. And moreover, you see that with plenty of capital, we are more than confident to achieve and deliver the [indiscernible] growth. And I remind all of us that the 20th of May is going to be €1.55 per share. So it's the first tranche of the dividend for the last year. And now I will handover for the Q&A session.

[Operator]

Thank you. This is the Chorus Call conference operator. We will now begin the question-and-answer session. [Operator Instructions] The first question is from Elena Perini, Intesa Sanpaolo.

[Elena Perini, analyst]

I have 4 questions, actually. The first one is on the trend of performance fees in April when the market conditions seemed to be more challenging. Then if you can provide an outlook for entry fees because, yes, you've talked about some one-offs, but I think that the base is stronger than in the past. Then on your guidance, as regards the NII and costs, which were overall -- while the NII was better than expected by -- in the first quarter. And then the costs were up more or less in line with the guidance part with the setup costs of BG Suisse. So I don't know if you have any updates on them. And then a final question on the tax credits related to the super bonus if you have any exposure? And if you could have any impact then from the new ruling that is under the discussion at the moment?

[Gian Mossa, executive]

So starting from performance fee, April closed at €4 million performance fee. But with the recovery of the markets in May, now as I mentioned, we have an important part of the total assets very close or at high watermark. So from the level reached this day, achievement these days, there could be an upside also in the performance fee. Entry fees, you are right. There is some seasonality in the numbers. The first one is the BTP. But again, this week, there is another placement. I do expect slightly lower numbers. So if I have to give an estimate of the BTP for us for this quarter, should be in the range of €250 million, €300 million. In the first quarter was about €400 million. So it's not about €2 million, but could be €115 million. Entry fees for the asset management products mostly depend by market. but we said that the contribution is pretty marginal. For the structured products, you have some seasonality. So the busy period is the first quarter and the last quarter of the year, the fourth quarter. So you will see normalization in the second and the third, but the demand is pretty robust. In terms of guidance for the net interest income, let's say that we maintain our target to stay at or above €280 million. There are basically 3 major assumptions. The first one is that we project a IBOR at 3.1%, so definitely lower the level as of today. We continue to project to estimate a reduction of overall client deposits in the range of €500 million to €1 billion. And honestly speaking, as I said today, the trend in last few weeks is the opposite. And the overall weight of current accounts for power clients is at 8.5%, that is a very low level. But let's say, we prefer to continue to project €0.51 billion also because the yields have surprised us at the beginning of this year. So let's wait for a reduction, then we will update eventually the projection. And third, we continue to assume a slightly increase of the cost of funding for our retail deposits. So with these assumption, we are confident to achieve €280 million or more. In terms of cost let's say that the operating leverage is pretty impressive. But we have to consider that we want to continue to invest for [ Switzerland ], but also for other projects. So our target for the 3-year plan is in the range of 5, 6. We could stay a little bit above 6, but we are talking about a zero point, not percentage point because as I mentioned, we have continued to optimize the operating machine. So we have some savings. In terms of tax credit, super bonus nothing, is negligible for us. No impact.

[Operator]

The next question is from Domenico Santoro, HSBC.

[Domenico Santoro, analyst]

Thanks for the guidance on the NII. And I wonder if given the expectation of rates, you can also look beyond 2024 and give us an indication of NII for 2025 -- regarding your management fees, if -- I was just comparing the performance of your management fees with all the competitors that so far, they have disclosed numbers. So now we can basically make a sort of a comparison. And you sort of underperformed in terms of growth on gross management fees over the last quarter, but also over the last quarter that I mean, management fees have floated around €200 million. Is it also true that you are intercepting revenues under different lines? So we should probably look at your business in a different way, including also advisory. But just looking at Q1, other competitors also reported a slight uptick in terms of margins, while your margins are stable and probably also because your sales have been a little bit weak. So is it this an inflection point? So from now on, you expect management fees to accelerate and margins to improve from here given also heavily was very strong? Or I mean, we should look at your business overall and you aren't accepting revenues also by a different kind of business like the advisory, and that's the reason for this sort of underperformance. So is it going to be reverted in a way? Or it's going to continue this way? I know that you mentioned the in-house funds and probably this is the answer.

[Gian Mossa, executive]

Starting from net interest income, considering the projection of €280 million, I do not see a significant impact -- negative impact for the next year. Say, we are €10 million, €15 million lower, but with a significant reduction of the interest rates. So you should see the sensitivity. In terms of management fees, you are right that some competitors provided higher margins. Here, you have to consider 3 effects with different signs. The first one is about insurance, the traditional life insurance. We decided to temporarily reduce the management commission to clients. This accounted for 1.5 basis points. And then there is a normalization with the commission after a couple of years. So you have a detractor, the, say, some reduction in the insurance business but is temporary. And this offset positive contribution of in-house funds and, of course, positive market effect. So overall, I do not expect an increase in margins. It's more about stabilization. I do expect an increase in volumes. And the increase in volumes is for financial wrappers as well as in-house funds. Then you are right, we do see also a repositioning of the industry and of the market on advanced advisory services. So being a market leader in advanced advisory services and financial wrappers positioned the bank, in my opinion, with a competitive advantage in more challenging times. So I'm pretty satisfied of what's going on from a commercial perspective. Just to mention the first 2 weeks of May, it's just 2 weeks, but the percentage of the assets under investment is above the upper band of our range. So we are close to 70%, 80%. So they said it -- I'm positive. As I said, the markets stay at this level, I'm positive on the quality of the mix. And so as a consequence also on the management fee.

[Domenico Santoro, analyst]

Sorry, just to clarify a bit of follow-up on the margins. The measures commission that you mentioned in insurance, is it a temporary effect in 2024? Or is it going to weigh the margins for longer?

[Gian Mossa, executive]

Our initiative's on a 2-year time horizon. So it's not just for this year, but it's also for next year, 24 months.

[Operator]

The next question is from Alberto Villa, Intermonte.

[Alberto Villa, analyst]

The first one is, again, on the traditional life flows. Are you still seeing any kind of -- or are you expecting for the future, any kind of outflows or the commercial activity are actually working well? And in the future, how do you see in general the contribution from these kind of products to the business? The second one is on recruitment. It started well this year. Maybe you can give us an idea of what is your expectation of the contribution of recruitment for the inflows in 2024? And effectively, this is the last year of the business plan. So maybe there would be the time to update us for the future I guess, in the coming quarters. And finally, on BG Suisse, you mentioned possibility also for M&A there and international expansion. I don't know if it's possible to elaborate a little bit more on what are your ambitions? We know the targets for Switzerland, but also in terms of eventually looking at opportunities outside of Italy and Switzerland.

[Gian Mossa, executive]

On the traditional flows. I have a slight different view from a short term versus medium long term. In the medium, long term, to me, this is a great competitive advantage. Of course, in this phase of positive markets, and you focus on -- your clients focus on the yield. And when we resumed [indiscernible] volatility in the place to be. So the normalization of the yield to me, will be the contribution -- positive contribution for this asset class. We continue to see some outflows, but let me say that the inflows, the gross inflows is pretty strong. So the overall result is positive zero or positive. So again, we have the line in our brand. I think that in normal condition is a great advantage compared to competitors, and now there is a gradual normalization also of the outflows. In terms of recruitment, let's say, so far, it's working very well. And as I say, there is increasing interest. We do expect €1.5 billion for this year. So around 25% of the target that we announced. It could be a little bit higher; it could be. It depends on, let's say, when we successfully accelerating the recruitment because it takes time to transfer money. So the potential positive impact would be at the end -- in the last part of this year or in the first quarter next. But let's say that this is a positive contributor. For BG M&A, of course, since we announced the launch of our BG Suisse Bank, several external asset managers approach us because they consider us a potential [indiscernible] because no legacy, no risk and a very efficient machine, operating machine. So we are considering some potential acquisition of external asset managers, where the costs are very, let's say, very small and -- and you can consider person by person. So no big deals. It's just an acquisition of assets, basically, also with assets, and we are just dialoguing with a couple of players, but it's something similar to visual [indiscernible], something that we can finance with our [APD ] and it wouldn't change numbers of the bank overall. For the international expansion, let's say, that now we are very focused on Switzerland. So at least for this year and probably also next year, we will – our mainly focus will be [indiscernible]. There is appetite in the insurance business to consider also [ Auto Bank ] clients. So we are start considering this project in Italy. I do not exclude that in the future, medium term, we can consider how to [ bank ] clients, also growth.

[Operator]

[Operator Instructions] The next question is from Luigi De Bellis Equita Sim.

[Luigi De Bellis, analyst]

2 questions for me. The first one is on the Managed Solutions. So you mentioned strong momentum for in-house funds vis-a-vis third-party funds. So do you expect this trend to continue? And if so, are there a significant difference in terms of profitability for you? And the second question, more general. So we are seeing lower numbers for the last BTP Valora. So where we are in your view in terms of normalization of market condition for flows? So how do you see the appetites of your clients for BTP compared to some months ago? So you mentioned it also a good trend in May. Can you elaborate also on this trend? Y

[Gian Mossa, executive]

Let's say that if you ask me where the inflows will go in the next 6, 12 months, I'm more positive on financial wrappers and advanced advisory services, probably first choice financial wrappers. Then in the retail distribution of funds, I do see an advantage now versus towards third parties. And I don't see a reason to change this trend. But let's say that if I have to choose one kind of product, it's all about financial wrappers and it's good for us also because the underlying part is invested in our Luxembourg platform. So first of all, advanced investment services; second, retail funds. In the retail funds, I see positive inflows for our in-house.For the BTP Valore, just to give you my feeling, the current one should be 20%, 30% lower compared to the previous one. This is just internal projection. And I do see room for another 1 or 2 placement for the retail distribution, also because the penetration of [ govie ] bonds, Italian [ govie ] bonds is now start to be a little bit less [indiscernible] from the peak of the previous years. So I do expect another couple of initiatives but less successful than the previous one. In terms of appetite, as I mentioned, the volumes are a little bit lower than the previous one, and we start seeing more interest on asset management solutions also in the bond space. So again, the normalization is almost there. And from this moment, I think that our industry will take an advantage..

[Operator]

[Operator Instructions] Mr. Mossa, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

[Gian Mossa, executive]

Thank you, and waiting for meeting you in person.

[Operator]

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.