Banca Mediolanum SpA

MIL:BMED

Earnings Call Transcript 2018-Q1

[Operator]

Good day, and welcome to the Banca Mediolanum First Quarter 2018 Results Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Ms. Alessandra Lanzone, Head of Investor Relations. Please go ahead.

[Alessandra Lanzone, executive]

Good afternoon, and welcome back everyone to our conference call and live webcast, which will be held by Massimo Doris, CEO of Banca Mediolanum; our President, Ennio Doris; and Angelo Lietti, CFO; will join the Q&A session.

Before we start off, I would like to call attention to the new layout of our P&L, where we have isolated all of the elements related to the market effects, such as of performance fees and fair value in order to give a truer picture of what we are in fact doing. So a clearer representation, let's say like that, of our operating margin.

With the no further ado, I will give the floor to Massimo Doris. Thank you.

[Massimo Doris, executive]

Good afternoon, everyone, and thank you for joining us today at our Q1 presentation.

Let me start by emphasizing that I'm particularly proud of the quarter, a quarter that was excellent in terms of business and that was only penalized by unfavorable market conditions. In fact, we are undergoing healthy and sustainable growth across the board. And the underlying strength of our ongoing business becomes evident, focusing on our operating margins, amounting to EUR 62 million, up 26% compared to the same period last year.

As you can see, Slide #5, without the lower contribution from performance fees coming from the market effects, our net income would have been higher than in Q1 last year. However, we are happy to share with you that April generated EUR 35 million in performance fees, around 50% higher than the entire Q1.

Management fees had their course, totaling over EUR 250 million, 7% higher year-on-year, and were relatively resilient compared to the previous quarter, given the market's impact on our assets, which dropped EUR 1.2 billion in Q1.

Please note that the basis points on average assets decreased from 195 for the entire year 2017 to 187 basis points in Q1, as shown in Slide #7. The difference of just over 7 basis points is attributable to a number of factors, among which the most important are: first and foremost, the repricing we made on our PIR funds at the start of this year, which accounted for more than 3 basis points, resulting from the reduction of 50 basis points in management fees that were charged on EUR 3.4 billion of assets.

You may recall that the reason for this change was to be more in line with the pricing the market came to establish months down the line. And then, the market effect accounted for 1 basis point, resulting from the decrease in our equity assets.

Furthermore, 3 basis points are related to a change in the asset mix, mostly due to a couple of factors that already produced a decrease in basis points last year. A, the decreasing trend in the use of selected third-party funds; and b, the ongoing success of the Intelligent Investment Strategy service, which temporarily parsed the amount to be invested in equity into money market funds. With management fees of only 50 basis points, this impact will gradually alternate over time as the assets get shifted into equity.

Remaining on gross commission income, net insurance revenues are largely in line with the previous quarter, while the percentage dropped year-on-year, is explained by the market impact on the change in reserves as well as the freeing up of reserves in Q1 last year.

I would like to point out that the effects of Eurocqs are starting to surface here as well, impacting banking service fees with the origination fees for loans as well as other fees, where the upfront fees are accounted for. Keep in mind that the latter are entirely retroceded to the network.

As expected, net interest income registered in line with the previous quarter coming in at EUR 40.5 million, a decrease of 10% versus Q1 last year. However, don't take this number as a sample quarter since we believe we can make headway along the year, thanks to increasing contribution from our credit business.

So we are looking at a decrease of the NII of some 6% to 7% for year-end compared to last year. So in line with that EUR 10 million we already talked about.

Net income on other investments came in at a positive EUR 3.7 million, due to the sale of some bonds prior to their maturities over the course of the year. However, these line items the impact of IFRS 9, in fact, the change in accounting principles penalized us to the tune of EUR 6 million, EUR 3 million of which related to the introduction of a collective provision for any changes in the bond portfolio, and other EUR 2 million to the accounting treatment of performing loans. The line item, other revenues, received the benefit of an insurance reimbursement of a non-provision. Having seen all of this, our contribution margin ended up being a solid EUR 219 million.

Moving on to costs. G&A expenses totaled EUR 131 million, up 5%, half of which comes from our new initiatives, namely our acquisition of Eurocqs, our venture into investment banking as well as the development of our asset management business in Ireland. This is right in line with our expectation of a 6% increase in G&A costs at year-end 2018, specifically, a 3% increase following the development of our ongoing business and 3% for the new businesses.

As for regular contributions to banking system, you can see that the Single Resolution Fund, which is always in Q1, came to EUR 5.2 million this quarter. The decrease versus last year is due to the fact that we've been credited with a lower risk coefficient. As far as amortization, depreciation is concerned, we should be at the peak, considering amortization of the significant investments we made in the past 3 to 4 years.

Summing everything up, regardless of the costs associated with the launch of the new businesses, our operating margin comes out very healthy indeed, which aside from any quarterly seasonality is an undisputable sign of the resilience of our business.

Looking at the items on our P&L that are impacted by the market, performance fees registered one of the lowest results in recent memory, EUR 21.5 million in Q1 or EUR 44 million -- EUR 45 million less than Q1 last year. However, as I already mentioned, the market rebound in April, allowed us to generate some EUR 35 million in performance fees.

Now since we are on the subject of performance fees, we would like to let you know that we should be able to present the finalized methodology for the calculation of these fees at the half year presentation. In fact, the Central Bank of Ireland appears to be closed to their decision. The main points have been defined, and we are working together on some technical details.

Once all has been finalized, the new calculation will be incorporated into a fund repricing that will also include an adjustment of recurring fees. Keep in mind, the customer will benefit from a reduction in the TER and our P&L from an increase in the quality of commission income.

And as a repeated reminder, it will take us about 6 months to get the new method in place, and it will be applied fund by fund on a monthly staggered basis. Therefore, at this point, we expect practically, no impact on our P&L in 2018.

Now taking a look at our assets under administration and management, in Slide #10. You see that they suffered from the market drop, totaling EUR 74.9 billion at the end of Q1. We saw a drop of almost EUR 1.8 billion in equity assets and our net inflows compensated for just over half of this.

In fact, as you know, our net inflows in the first quarter reflected our focused attention on installment plans, rather than the lump-sum investments, which, of course, have a dampening effect on the flows we see in mutual funds in any given month. And so it follows that this is also evident in the April numbers that you can see in Slide #39.

But bear in mind that installment plans have a strongly positive impact on the reliability of recovery flows for the upcoming years. Besides being the best response for managing the customer behavior during uncertain and volatile markets, especially, after many years of decent market performance.

And in light of MiFID II installment plans represent a very effective way to put the customers in a long-term investment mode, disassociating their investment from the short-term cost aspect. In fact, potentially unsatisfactory returns caused by the markets, which could cause problems when compared to costs, can actually be kind opportunities in terms of dollar cost averaging considering the nature of the installment plans.

I must say we are very proud of the results of our efforts so far. In prior years, the automatic inflows attributable to installment plans were around EUR 1 billion, and this was the outcome of many years of promoting these plans. This year, our objective is to dramatically increase the number of these plans, in order to generate EUR 2 billion in automatic inflows by 2019.

And today, taking a snapshot of the first 4 months, when almost 53,000 new plans were opened versus nearly 16,000 for the same period last year, we can project EUR 1.3 billion of inflows per year. Therefore, we are perfectly in line with our objective. This strategy obviously has an impact on our inflows for 2018, which we believe will be between EUR 3.5 billion to EUR 4 billion, but of a very high quality in terms of asset mix and stickiness.

Since we are talking about the effort our network is demonstrating to meet a multitude of objectives and requirements, and given the strategy, we are pursuing in terms of revenue diversification, I think it's important to highlight the success we are having in the lending business as well as in non-life.

As you can see, Slide #23. Total loans granted registered over EUR 450 million, a healthy and encouraging increase of 41% compared to Q1 last year, and 26% when you exclude the Eurocqs salary-backed loans. These numbers are particularly significant given the contribution it will make to our NII in the future. And in fact, you can appreciate the average rates are quite high, without having to submit to fixed rate loans. But also, in terms of nonlife insurance business, we are proud to show, in Slide #30, the headway we started to make in P&C as well as in health and disability, which grew overall by 27% year-on-year.

Switching gears in Slide #13, you can see that our common equity Tier 1 ratio stood at 21.7% at the end of the quarter, and excess capital is now at EUR 609 million.

Moving on to the network in Italy, in Slide #31, you can notice that average portfolio of the family bankers was reduced to EUR 16.1 million from EUR 16.3 million at the beginning of the year, entirely attributable to the drop in the markets.

In Slide #32, we see there are now 528 private bankers, whose average portfolio was impacted by the market, going from EUR 38.7 million at year-end to EUR 37.7 million at the end of Q1, with over EUR 28 million in managed assets. And focusing on our wealth advisers, currently there are 34 of them in our ranks, the average portfolio is now EUR 120.1 million, with the managed assets portion at EUR 88.4 million.

Let me make a quick comment now on the foreign markets. In Spain, although we can talk about an otherwise healthy business, with strong net inflows and management fees growing significantly, the bottom line suffered from, basically, the same factors as the domestic business. Namely, the lack of performance fees due to the markets, and a weak net interest income.

On Slide #34, you can see net income came in at EUR 2.7 million in Q1 compared to EUR 3.8 million last year. Assets totaled EUR 4.7 million and we added on 65 new family bankers to the sales network in Q1 with a total headcount outstanding at 943.

And lastly, as for our plans in Germany. As we had previously mentioned, we are looking for a definitive solution to the issues in Germany. Despite the growth in business, we have never reached the pace we needed to make the business profitable. And so, we've just given a mandate to a consultant to find an appropriate partner to take on a joint role in the business.

Before closing, I am sure you are eager to know what's happening with the audit regarding the question of tax residents of our Irish subsidiary, carried out by the tax police of Milan.

This report is now in the hands of the Italian Tax Revenue Agency, who have the authority to make a decision on the matter. We are certain to be able to clear this up with the agency rapidly. Our goal is to close the issue by the end of the year for sure. In fact, we have already been in contact with them, and a meeting has been set for the end of May.

So they have the proper time to review the documents submitted by the tax police. As we've already stated, we are very positive. On the one hand, back in 2015 the agency had already officially declared Ireland to be the tax residents of our subsidiary.

And on the other hand, our subsidiary is subject to monitoring 2x a year by the Central Bank of Ireland. And there have been no irregularities of this nature in our 21 years of operations there. Therefore, we are certain we won't owe anything, since the issue raised by the tax police has been already examined and rejected by the tax revenue agency.

I would like to reassure our investors that we are giving our full attention to the elimination of this factor of uncertainty on the stock. And so for those of you who have expressed curiosity on how this could impact the dividend, I feel confident in saying that you can rest easy. And while we are on the subject, we would like to emphasize that our dividend policy remains unchanged. We'll aim at giving shareholders increasing value over time, while maintaining a solid capital base.

Remember that in 2016, we made a considerable jump, distributing EUR 0.40, EUR 0.10 more than 2015, thanks to an extraordinary item, the gain on the sale of Banca Esperia. 2017, we were able to confirm EUR 0.40 to the high common equity Tier 1 -- thanks to the high common equity Tier 1 ratio.

In 2018, we see our main business indicators on the rise and a solid operating margin, despite the fact that we are embarking in new businesses requiring capital, such as the new salary bank loans business, where we expect to quickly build a sizable book. Therefore, at this time, we can confer the sustainability of the EUR 0.40. Any increase will be evaluated in the future on the basis of the results we have obtained, and on the capital we need in order to pursue growth. Remember, we are a company with an entrepreneurial point of view.

So thank you very much, and now we are ready to answer your questions.

[Operator]

[Operator Instructions] First question, from Gianluca Ferrari, Mediobanca.

[Gianluca Ferrari, analyst]

I have a question about the 80 basis points decline in margins from 195 to 187. You have explained the reasons underlying this decline. What are -- what's the outlook for the future, 187 basis points will be the future margin? Or do you expect you will regain some ground? This is only question I have.

[Massimo Doris, executive]

Well, regaining ground or regaining basis points, well, that would depend on markets. We believe it should hover over 187 or maybe decline a little more because we are betting on the Intelligent Investment Strategy for equity investments. So all new money, all new inflows are parked in money market funds. And also, new sales because of MiFID II are channeled to funds with lower management fees. Please take into account that this decline is no absolute decline because it is also reflected in a decline in the fees that are rebated to the network, the sale -- the network, of course, receives a certain portion of these fees. So if management fees related to a given product are lower, they will receive a lower percentage. So revenues would decline on one hand, but at the same time, that would be offset by the percentage -- by a lower percentage fee rebated to the network.

[Operator]

Next question Matteo Ghilotti, Equita.

[Matteo Ghilotti, analyst]

First, one thing, with respect to the inflow guidance. You were talking about EUR 3.5 million to EUR 4 billion. Are you -- we're talking only exclusive about Italy or not? Just to make things clear. Second question regards Germany. Do you think you're going to just step out? Or the -- are you going to maintain a minority share? Or you just want to exit? And the third question is performance fees in Ireland. Did you meet an agreement with the regulator so you're going to talk about this once again in 3 months' time? Or are you still trying to come to an agreement and you haven't find a solution yet with the Bank of Ireland?

[Massimo Doris, executive]

Net inflows 3.5 to 4. We're talking about Italy. To this amount, we should add what Spain has been generating. As to Germany, we would not want to totally exit the German market, but of course, we are open to any kind of solution and to talk about any kind of outcome if there is an interesting offer that is tied to our full exit, then we will take that into consideration. It might be interesting, however, if our German subsidiary would be invested in by a larger company in Germany. What we might do is holding a stake in the parent company in the larger company, instead of fully exiting the company. We will take all the various expressions of interest and proposals, and we are going to vet them and see what to do. We just issued our mandate, but we believe that by summer time, we should have to receive a number of offers that we can analyze and decide what to do. I think by June already. As to performance fees, the negotiations, the talks have not been closed yet. So we have no figure that we can share with you. But as I said, during the presentation, we expect to be able to come to a conclusion rather early and that depending on the outcome, we are rather flexible with respect to any possible adjustments that can be carried out with respect to recurring fees. We want to have a total expense ratio going down for clients and the better mix for the bank. And by mix, I mean, variable fees and stable fees. So as to have a positive effect, both on the side of our clients and for the bank itself, on both fronts. And no impact on the sales network that would keep on earning as before. So I believe this would be a win-win situation, and this is the outcome we are working towards all of us involved.

[Operator]

[Operator Instructions] Next question from Alberto Villa, Intermonte.

[Alberto Villa, analyst]

I have a couple of questions too. You talked about a target net inflows of EUR 3.5 billion to EUR 4 billion, and you have revised these figures because you bet a lot on installment plans. So maybe some of the inflows will be transferred to 2019 or maybe it's just this contingent situation where things are going slowly, and so inflows to us lower. Also, net interest income, Q1 compared to Q4 last year, maybe you have already given a guidance, but I missed the beginning of the conference, so please could you give us some guidance in terms of how NII could be bolstered also by the newly acquired company in charge of salary-backed loans. And also, tax rate in the first quarter, net of seasonal effect. Could you tell us what kind of tax rate are you expecting for the future? The new calculation method for performance fees after an agreement has been reached with the Bank of Ireland, do you think this may have a significant impact?

[Massimo Doris, executive]

Okay. So net inflows, the decline is partly attributable to the fact that as you corrected -- pointed out, we are working on installment plans a lot. And so part of those inflows will actually be streaming in, in 2019. Plus markets have performed differently in this first quarter compared to last year. So also, there is no much time for recovery and MiFID II kind of contributed to slowing down things. I think we could say -- we could say that the decline was divided, was due 50% to installment plans and 50% to market performance. As far as NII is concerned, our guidance is, once again, minus EUR 10 million, because if you compare the first quarter of this year, and also, the second quarter of this year, there will be, anyway, a decline, and there was a decline in the last 2 quarters of 2017, plus now we are working on lending in a given way. So we are reconfirming that 10% -- EUR 10 million decline in NII equal to 6% to 7%. Performance fees. Well, they should not be heavily -- there should be no heavy impact on the tax rate because let me remind you that the other recurring fees that would be increased precisely to offset the decline in performance fees are fees that would remain in Ireland and would not be rebated to Italy. So inevitably, there will be a certain impact because based on our forecast, there will be a decline of about 15 basis points in the ultimate total expense ratio. So it means we will have fewer revenues in Ireland, and here, instead, there will be just a small impact and the tax rate at the end of the year would be affected by the split of income between Italy and Ireland. But we do not expect any major change.

[Alberto Villa, analyst]

One final question. The bullish dollar, the strong dollar has already contributed positively to your assets under management. Is this visible in April or shall we wait until May?

[Massimo Doris, executive]

Well, performance -- well the result in April were equal to EUR 35 million. So it's already significant improvement.

[Operator]

Elena Perini, Banca IMI.

[Elena Perini, analyst]

I'd simply like to ask your stance with respect to the decision of the constitutional court on life insurance policies. Are you worried this might have an impact on your product offering? Or as Ania seems to be, the Italian Insurance Association, seems to be quite confident that the insurance nature of these products is not going to be endangered so to speak or impacted, I'm talking about life insurance and Class III insurance policies.

[Unknown Executive]

We are really -- we have no worries with respect to what happened. On the Il Sole 24 ORE, the Italian financial paper, there was an article that precisely described what had happened. The decision was made on a specific case. And it was not that unit-linked must have a capital guarantee, otherwise it's not -- cannot be considered a life insurance. That specific case was really focusing on the customer risk profile. The risk profile of the client was prudent and through this investment, it lost 40% -- he lost 40% or something similar. So that was the point. A number of decisions were made in Italy against this type of development, but the regulations also at European level are still legitimizing or recognizing unit-linked products as being insurance product because for sure, they do have a strong financial component, but still they have an insurance component as well. If we analyze our most important unit-linked product, which is my life, we have a whole life where we pay net asset value, plus a small percentage and in this whole life policy, the customer may elect, in case of death, of course, when the premium is paid out, may elect the percentage that is going to be reimbursed above net asset value, in case of death. In a mutual fund, this is impossible to be negotiated or to be decided, whereas, here at the end, you can come up to 105%. Then it is possible to actually turn the premium into annuities instead, and this is not possible with a mutual fund. And these are specific and -- specific characteristics of an insurance policy. So we are really laid-back and we have no worries. These policies, by the way, are well-recognized also at European level. So should anything change, this not going to change only for Banca Mediolanum, but it's going to change across the board. And the unit-linked products are those have been generating more over these years, but it was really a factor that the decision by the court was misunderstood. If I may, add, Ania's -- Ania published a clarification that really described very well what had happened. So the market is now -- has no worries. But I'm an entrepreneur, and so every time, there is a change, we try and understand what we can do to turn the change into an opportunity. So let me explain with a context. Inheritance fees today, once you deduct the exempt component, lead to a 4% tax, if you will, on the asset that the heir is entitled to. If you have a EUR 100,000 insurance policy, and this should undergo succession, the heir would have to pay EUR 4,000 with a EUR 1 million policy, you would have to pay EUR 40,000. So take what Massimo explained, in these products, we have a possibility of repaying not 100%, but 101% up to 105%. This means that out of -- out of these 5%, 4% allows the heir to pay the taxes should they be levied in the future. So had there been a natural change in rules -- had the rules been changed, actually, we could have sold tens of thousands of insurance policies in order to cover the 4% inheritance tax on these financial products. Unfortunately, there was no change. So this gives you an idea of the issue, and you may understand how we behave, by really turning problems or changes into opportunities. In this case, leveraging insurance policies with a financial component. So not only were we not worried about this issue about this piece of news, but we are ready to change it into an opportunity. Having said so, actually, nothing has changed.

Thank you, Elena. Are there any other questions?

[Operator]

[Operator Instructions] There are no further questions, sir, from the Italian call. We can now switch to the English call.

Our first question comes from Hubert Lam from Bank of America.

[Hubert Lam, analyst]

I got 3 questions. Firstly, I may have missed this, but in terms for your recurring -- high recurring fees you want to implement to offset the lower performance fees, will this be booked in Italy or Ireland? Obviously, this may have an impact, as you say, on the tax rate. So that's the first question. The second question is on NII. Can you confirm that you think that the 2018 NII will be the trough, and we should expect 2019 to have a higher NII than 2018? And the last question is on the investigation by the tax police. Can you give us some background as to why this is happening? Why you've been targeted by the tax police? And just maybe just give some background on why this situation's just come up?

[Massimo Doris, executive]

As to the increase in recurring fees. As I said earlier, these fees will remain in Ireland. These are fees that are already being generated by funds today. But these fees are not repatriated or not rebated to Italy. This is no management fees, but other recurring fees. So we will bolster, we will increase this type of fees, which will remain in Ireland. Because this fee has got nothing to do with management fees, even though it's recurring in nature. So the tax impact is going to be minimal because -- there will be a slight impact, of course, because we will have a fewer performance fees, more recurring fees. So the TER will be slightly lower, thus the customer would pay less, and thus, we would have lower overall revenues in Ireland. But once again, the impact will be really minimal. But the bank will enjoy a better mix because we will have more recurring fees and fewer volatile fees. As to NII. I have to confirm that 2018 is actually the trough, is really the minimum, the floor for this item and in 2019, we expect NII to grow again, regardless of tax interest rate. Well, not really regardless, because should interest rates decline even more, even though it's highly unlikely, then this would change our forecast, but if interest rates remain stable, we expect interest income to improve. As to the tax police issue, why is this happening considering that this issue had already been tackled, resolved and closed back in 2015. Well, in Italy, we have tax police that carries out audits and so-called inspections, and then, they draw their own conclusions. During this first phase, the bank cannot intervene, cannot defend itself, cannot enter a dialogue with the police, and provide evidence to defend themselves. Tax police asks for certain documentation, we have to provide the documents, and that's it. They analyze the documents and draw their conclusion. The conclusion is then handed over to the tax authority and it is only and only then that the company can start talking and defending itself, explaining point by point, item by item, what had actually happened, and thus -- what had actually happened and thus, reject some of the criticism or the comments made. Why did they come back, if they had already carried out this inspection in the past? I don't know, I don't have an answer. And this is something that is happening not only in the finance industry, rather, other industries, fashion, IT were really received these kind of audits. Unfortunately, the country has a significant budget deficit, and they are trying to reign in as much money as possible from just about everywhere, and they, sometimes, surprisingly enough, they go for rather weird solutions or attempts, and this is a clear example of inexplicable situation because this case had already been tackled, settled and closed. We are very confident we can demonstrate our case, we have about 100 people working for MIF in Ireland, for Mediolanum International Funds. So saying that all operations are carried out in Italy is going, really, a bit overboard. We have plenty of people working there in our Irish operations. So we will defend ourselves, and we are sure we can approve that the tax residence for MIF is actually Ireland.

Thank you, Hubert. Are there other questions?

[Operator]

[Operator Instructions] Our next question comes from Andrew Crean, from Autonomous.

[Andrew Crean, analyst]

Two points clarification and one question, actually. Points of clarification, the EUR 3.5 billion to EUR 4 billion net inflow forecast. Is there just Italian mutual fund and unit linked? Or does it also include other administered assets? And then, second point of clarification. When you say that the TER for the customer will fall by 15 basis points, is that on the assumption that performance fees average 75 basis points, as they have over the last 10 years? Or is it against the 47 basis points, which was on the Irish funds in 2017? And then, the point -- the question is about how the family bankers are dealing with the new disclosure regime. How are they enjoying it?

[Massimo Doris, executive]

As far as the EUR 3.5 billion, EUR 4 billion net inflows, we are talking about Italy, once again, and it's Italy alone.

[Andrew Crean, analyst]

So that includes cash assets? Administered assets?

[Massimo Doris, executive]

No, it's mutual funds and unit-linked, not administered funds. Then, you were asking about the 15 basis points decline in total expense ratios, we -- the initial point was 75 basis points of performance fees. We believe this is going to be halved down. So we're going to shed 36, 37. We're going to increase the other recurring fees by some 20 basis points and the difference is, 16, 15 basis points depending on decline in the total expense ratio. But the starting point is 75 basis points that refer to performance fees. As far as MiFID II is concerned, you are asking how family bankers reacted. Well, let me say that, as I already said during the previous conference, during the year-end results conference, they are really choosing products that have a slightly lower management fees. In most Irish funds, we have 2 categories. One with entry fees and management fees that are lower. And then, a second category, where there are no entry fees, but the management fee is higher. Our family bankers are really selling more of the first category products, and with entry fees, that can be discounted off to the client is not going to pay this entry fee, with a slightly lower management fee. So we've seen that MiFID II did somewhat affect the behavior of our family bankers because they've shown they are slightly more careful when advising and when telling their clients, which product to choose and when having to choose between products, they go for products that have slightly lower management fees. Again, since part of a management fee is rebated to them, if they offer products with lower fees, they themselves are going to receive, in absolute terms, a lower amount. Percentage-wise, it's the same, but in absolute terms, the amount they are going to receive will be slightly lower -- slightly less. In any case, inflows, yes, have been lower compared to last year. However, we should not forget that we decided to clearly detail all the costs to our customers very clearly and very transparently. This is not the same choice made by all our competitors. Not all of them went for this type of choice. And this is important because we're not talking only about management fees or performance fees. There is much more to that. There are correspondent bank fees, negotiation or trading fees, rather, fixed fees and commissions, and so on, and so forth. And then you see, if you add them all up at the end, costs are really -- may be, rather significant. And at that point, showing all this, this would -- could have, really, halted the entire sale of asset management products or -- and we could have seen an outflow, which did not happen because we've always been very close to our clients. And then, there is also the installment plan products, but this is another story. But in any case we've seen that the disclosure requirements really had very little effect in general.

Thank you, Andrew. Are there any other questions?

[Operator]

There are no further questions from the English line. I'll now turn it back to the Italian line. [Foreign Language]

Ladies and gentlemen, there are no further questions. We hand it over to Ms. Alessandra Lanzone for her conclusions.

[Alessandra Lanzone, executive]

Well, thank you for your attention, and we'll talk, again, on July 31 for the first half earnings report. Thank you, and good afternoon, everybody.

[Operator]

The conference call is over. Thank you, everybody, for your participation. You may disconnect now.