Banca Monte dei Paschi di Siena SpA
MIL:BMPS
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Banca Monte dei Paschi di Siena SpA
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Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the MPS Group First Quarter 2024 Results Presentation. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. [Operator instructions]. At this time, I would like to turn the conference over to Mr. Luigi Lovaglio, CEO of MPS. Please go ahead, sir.
Thanks. Good morning, everybody. Many thanks for joining us from Monte dei Paschi di Siena 2024 First Quarter Results Presentation. The first quarter results give evidence that Monte dei Paschi [Indiscernible] is working at full speed with the new organization and management team successfully driving the continuous growth of the commercial activity in particular, visible in the fee and commission income dynamics. We started 2024 with record operating performance, which show Monte dei Paschi trends compete in the market, thanks to the value of our people and the power of our network. Our capital ratio at 18.2% pro forma confirms the Monte dei Paschi is steadly at the top of the banking system and up to remunerate our shareholder accruing already in the first quarter dividends to distribute next year. Let me now move on to some key highlights. Net profit in the first 3 months of 2024 reached EUR 333 million, with a 41-year-on-year increase, driven by a further improvement in operating performance. That is visible in the gross operating profit crossing EUR 550 million in the quarter, higher by 33% compared to the last year and by 8.5% quarter-on-quarter, supported by both higher revenues and lower cost in each time horizon. Cost/income ratio has further improved to 46% versus 49% in Q4 '23 and 53% in Q1 '23. Revenues above EUR 1 billion in the first quarter and higher by 15% compared with last year, with 2% quarterly dynamics supported by a strong 26% growth in wealth management fees and resilient net interest income. Operating costs were down both year-on-year minus 0.6% and also compared with the previous quarter, minus 4.7%, thanks to non-HR costs, ongoing optimization and processes streamlining, minus 11% year-on-year and 4.1% quarter-on-quarter. The dynamic of cost of non-HR fully offsetting the impact of our contract renewal and inflation. In the first 3 months, we increased the volumes of the commercial savings by additional EUR 3.8 billion, thanks to the continuously growing commercial activity. Also net performing loans volumes are showing a positive dynamic of 0.8% compared to December 2023. As regards to asset quality, the cost of risk gross NP ratio and net NP ratio were kept substantially in line with the end of the year levels, while the NP coverage improved to 49.5%, 40 bps higher than at the end of 2023. Strong liquidity position is maintained in the quarter with counterbalancing capacity close to EUR 30 billion, a reliance on ECB funding reduced to 9%. LCR about 160% and net stable funding ratio at 129%. Final capital core Tier 1 after first quarter at 18.2% pro forma, including current period net profit, net of 50% dividend payout confirming the strength of our balance sheet and positioning the bank among the highest in Europe in terms of capital. Let's go now through more details of our results. As I have just mentioned, after months, we reported a profit of EUR 333 million. The result is by 41% higher compared to the last year and is fully driven by strong operating performance in commercial activity. Quarter-on-quarter comparison is affected by extraordinary release of provision related to legal risk and end of the year positive net tax reported in the fourth quarter results. It should be mentioned that in this quarter, we recognized the full amount of current year charge for systemic fund almost EUR 75 million. So no additional contributions are expected to be charged in the coming quarters. Moving on to the next slide, where we are presenting the net operating profit at the level of EUR 444 million with more than 40% increase year-on-year and almost 20% increase in the quarter. It came thanks to the improvement in all main P&L lines, revenues, costs and provisions. We are confident that we have achieved the capability to generate profitability in a sustainable way, and we would like to preserve and even improve such capability going forward. Let's move on to the gross operating profit that reached EUR 551 million in the quarter, higher by 33% compared to last year and by 8.5% quarter-on-quarter. Drivers of the growth were both revenues crossing the record level of EUR 1 billion, up by 15% year-on-year and 2% quarter-on-quarter and costs, decreasing both year-over-year and quarter-over-quarter. Fees and commissions were the key driver of the quarterly growth of revenues allowing with EUR 30 million contribution to offset the expected net interest income decrease. The structural cost reduction, together with increasing revenues allowed to further reduce the cost/income ratio down to 46% after first quarter, well below the 53% reported in March 2023 and below 46% we reported in December. Now let's have a look to net interest income evolution. In the first quarter, net interest income reached the level of EUR 587 million, increasing by 16% year-on-year, only marginally lower in the previous quarter. The quarterly dynamics, 2.8% negative reflects the deposit volume expansion and the positive evolution on net TCB exposure, allowing to benefit of the 4% deposit rate. Quarterly commercial spreads remain resilient. The net interest income trend is in line with our guidance for the full year. That means for 2024, a level of net interest income slightly below the previous year. Anyway, as we were already mentioned, it will be offset by the growth of fees and commission that will enable to keep the overall total revenues 2024, slightly up compared to last year, confirming therefore, our beginning of the year guidance. Now looking at the volumes, let's start with loans. As you can see, performing loans volumes show a positive development in small and medium enterprise portfolio, allowing to report quarterly growth of 0.8% quarter-on-quarter and also to gain some market share according to preliminary market data. Moving on to savings. As you can see on the slide, commercial customers direct and indirect savings increased since the beginning of the year by EUR 3.8 billion, plus 2.2% quarter-on-quarter by more than EUR 11 billion in the last 12 months, plus 7.8% year-on-year, supported by the continuously growing commercial activity. As I mentioned earlier, and we observe a growth in all categories in assets under custody, in assets under management and in deposits. Our clients confirm their trust to Monte Paschi with higher deposit counting also on a quality asset such as [Banco Diva]. At the same time, I believe that, as I was mentioning at the beginning, the new organization, the new management team are already bringing acceleration of the commercial piece. Now let me give you a quick update on our portfolio of Italian [Govies]. The overall portfolio [Govies] is basically stable with progressive mix towards amortized costs in line with the business plan approach. We want to minimize the potential impact of interest rate and credit spread volatility on bank's capital. It may be also worth mentioning the duration of our value to OCI portfolio is reduced now to 2.6 years following the reinvestment of the maturities. Now moving on to the fees and commission income. Total fees and commission income in the first quarter amounted to EUR 365 million and were higher by 9% quarter-on-quarter by 10% year-on-year. These excellent results were driven by a sharp plus 26% increase in management and advisory fees in the quarter, plus 18% year-on-year, supported by a revamp of placement activity. Commercial banking fees are up by 2.9% year-on-year with a quarterly dynamic reflecting year-end seasonality. Let's be underlying once again that our capability to generate fees from wealth management product is in a historical distinctive on Monte Paschi, and it was well advantaged for Monte Paschi, and it was well highlighted already at the time of launching the business plan '22-'26. The performance of the quarter is reinforcing our belief to be capable to offset with fee income, the interest rate decrease impact in the coming years. Now let's move on to cost. Operating costs in the first quarter amounted to EUR 462 million and were lower by 4.7% quarter-on-quarter and by 0.6% year-on-year, thanks to both lower non-HR costs and HR costs. Non-HR costs lower by EUR 20 million year-on-year, enabled us to offset the increase of HR costs affected by the impact of new labor contracts signed in November last year, bringing the total cost to a level lower than the previous year. We keep being focused on absolute cost target and proactive cost management, delivering excellent results. We are leveraging an efficient cost governance approach and managerial expertise in this respect and without constraining investment. Efficient cost management and fee income generation capability are our main tools to support our operational profitability when interest rates will normalize. Now let's move to asset quality slide. Gross NP stock, gross NP ratio and net NP ratio are most at the same level as in December 2023. And we want to further improve our control on the inflow NP setting also specific projects aiming and further improve our internal workout capability. While the other main ratio, as I was mentioning, stock are almost at the same level at the end of the year, we reported an improvement of the coverage ratio to 49.5%, plus 0.4% quarter-on-quarter. The cost of risk in the quarter is stable at 54 bps, in line with the guidance of 2024, still no particular signs of portfolio deterioration has been observed. That's why we feel comfortable to confirm our guidance of the cost of risk for 2024 year, not to be higher than in 2023. Let me now comment to bank's funding and liquidity. The soundness of our liquidity position is confirmed also in the quarter And counterbalancing capacity is close to EUR 30 billion. Liquidity coverage ratio stays above 160% and net stable funding ratio stable around 130%. ECB funding has been further reduced, representing now 9% of total abilities, which is already substantially below the business plan target of 13%. Now let's move on capital. Core Tier 1 ratio reached 18.2% pro forma, including this quarter net profit and the pro-rata accrual of dividend for 2024, according to a payout ratio of 50% on pretax profit. Our buffer on Tier 1 requirement is exceeding 760 bps, which translates to the excess of capital of approximately EUR 3.7 billion. Just for illustrative purpose, if we consider an average of co-Tier 1 between 13.5% and 14%, our return on tangible equity would be close to 70%. The remarkable level of our capital ratio is confirmed the capability of the bank to organically generate capital. They reflect the strength of bank's balance sheet and bank's solidity. Let me just remind that we are still using a relatively low share of DTAs from tax losses carryforwards, but this share is expected to increase already from next year, boosting the effect of our organic capital generation. We are right now -- the conclusion but let me shortly comment on the extraordinary litigation as we are-- we are anticipating in the previous presentation, which reached to ordinary mode on management and reporting regarding this kind of topic. Petitum is stable compared to December '23 and the positive trend of civil sentences continues to be coming in favor of the bank. Now let's come back to the presentation, and let me recap key messages on the first quarter results. We had a very good start of the year with EUR 333 million net income, driven by solid operating performance, effectiveness of commercial activities reflected in volumes, in particular in the growth of savings. Cost of risk in line with expectations at 54 bps, strong capital position, which 1 fully loaded ratio, 82.2 pro forma, including first quarter '24, net profit net of the accrual for dividend distribution. Guidance for 2024 pretax profit is confirmed to be above about EUR 1.3 billion but the results reported last year adjusted for the release of provision for legal risk. An update of medium-term strategic target will be given in the context of the second quarter results presentation, considering that we are ahead for our 2022-2026 business plan objective. Let me just conclude presentation by saying that even -- even if Monte Paschi is already growing at full speed, we are committed to push further because our people are highly motivated and we know the competitive scenario very well. We know as well that we have to keep improving our operating performance in order to properly remunerate in a sustainable way our shareholders. So we are very well trained to move forward. Thank you, and we are ready to answer to your questions.
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 Azzurra Guelfi, Citi.
Two questions from me. One is on your net interest income. If you can give us some color on the development of 2024 and 2025? Also in light of the trend that you are showing, which are quite different from the industry, you are seeing deposit growth, but the funding rate that is increasing more than the industry. So I just wanted to see if you can give us some color on this funding development as well, not just on the lending side, which you are actually showing, again, something different from the sector with loan growth. And I guess this is all part of the normalization and coming back because the capital position is now addressed. The second question is related to if you want fast forward weather a little bit and I don't know if you can comment already because you said that you will have a new plan coming. But do you think that there is any area of your balance sheet that needs for the [Indiscernible] or any area that could be subject to additional restructuring in order to improve profitability in the medium term once rates start to normalize?
Going to start with interest income evolution. As we were mentioning, we wanted to increase our deposit base for a simple reason because normally, you achieved the result of the year if you get good results after 6 months. So the increase of deposit was a sort of goal we wanted to put in place and to achieve because thanks to deposits, then we can switch to asset management products and in some way, additional viewing, the generation of fee income. Clearly, as I was mentioning at the beginning, we are collecting part of this deposit from [Indiscernible], part from small business. They are mainly deposits at site and thanks to that, we are also increasing commission connected with the transactional activity of the company and as we have excess of liquidity, a positive position is a net position in ECB, we have a sort of advantage by just placing to ECB gaining the difference between the 2 rate, what we are paying to customer and what we're being getting from ECB. So from an economical point of view, yes, we are observing an increase of cost, but net-net is more than giving more than a positive impact on P&L.Ă‚Â In the first quarter, for example, the dynamic of net profit was a sort of combination of slight decrease of the commercial at interest income, higher cost of bonds partially both this negative impact, partially compensated by higher contribution of ECB net position. So I think it's important to underline that the trend of net interest income is really going according to what -- where our plans for this year. And we are sure that in the second part of the year, we will better fix the need in terms of volumes connected with switching to product asset management product, and we can also optimize additionally the cost of funding. So first part of the year a bit more aggressive, but anyway, always in positive area. Second part of the year is reaching to mutual funds or asset management products, bancassurance product, slightly decrease of the stock of deposit and by consequence, decrease of the overall cost. This is the strategy connected with 2024. 2025, we are going to have a scenario where clearly we are going to face the impact of decrease of interest income in terms of loans, but at the same time, the commercial interest expenses should have as well a decrease. The overall commercial at interest income will be slightly down, but we believe that a significant portion of this decrease will be recovered by fees and commission. So combination of action in terms of revenues and further efficacy, we believe in terms of cost will really bring a level of revenues that will be probably slightly below 2024, but will be significantly important in order to support the overall profitability of the bank.Ă‚Â Now we were mentioning that we want to update some projection, -- midterm projection of the plan because practically, the plan is already we achieved on most on the targets. And I have to say that what we will be focused more is in stressing some development on a specific area of revenues that we already started to benefit in 2024, but we believe we need to make additional acceleration on that. We are speaking by typical product of lending for families and small business, additional activity of development in product of asset management, reinforcing the number of people dealing with customers and also utilizing much more digital support for the commercial activity, including probably a more effective use of our call center. So practically, we are not identifying a specific area of optimization of the cost, this is a livening process. We are aware that if we want to keep profitability in a sustainable way, we should keep saving more and more with a continuous approach. And as I was mentioning, without constraining in terms of investment because we plan to invest also a significant amount for transforming part of our business in a digital way.
The next question is from [Giovanni at Sole], Deutsche Bank.
Good morning to everybody. Two questions on my side. The first one is a rather question on the fee income generation in the quarter, which was very strong. So if you can please update us on the -- what you have mentioned in the previous quarter, that is the update on the investment that you are taking on your advisory platform, which is, in my view a differentiating element for Monte Paschi related to the other banks. It seems like you are one of the few banks which are focusing on investing at the moment. So if you can share with us was the state of the art there. And if you can also share with us what is the details of the product sales in the Q1 '24, mainly assets under management? You mentioned that there were EUR 3.8 billion of higher direct and indirect deposit flows in Q1 vis-a-vis the Q4, but I would like to know what is the contribution of AUM products in Q1 vis-a-vis the previous quarter. And connected with this, what was the contribution of upfront fees in this quarter? So that concludes my first question on the fee income generation. And the second question, during the presentation, you mentioned that your return on tangible equity would be much higher, normalizing your capital position and you have mentioned is that the level of CET1. Was it 13.5% or 15%, was that the range you are referring to? And the last question on the business plan revision in August, is it fair to assume that in connection with that, you may also restate some of the off-balance sheet DTA as a part of the probability test that could be attached to this revision of the plan?
The next question is from Ignacio [Ulargui] with BNP Paribas.
I have 2 questions. One coming a bit on fee income generation and in to Giovanni's question before, how do you see the fee income performing in coming quarters and whether the 1Q '24 was the right level to think for the year? The second question is on [Indiscernible].
Sorry, just one second that we first answer to Giovanni and then we will take the next question, sorry for that.
Okay. I start answering to some question, right. So the main driver of fees and commission growth, as I was mentioning, is collected with wealth management product. I think we had a very good performance and probably all the market is having good performance in the first quarter. Practically, the gross flow increased by 50% quarter-on-quarter, and we have a net flow positive. So the overall upfront fee increased by almost -- by EUR 30 million. So we move from EUR 35 million in Q4 to EUR 64 million. To say that this trend is expected in some way to continue and this combination of the new team, organizational team, as you remember, we changed to retail, we appointed a new Deputy General Manager in charge exclusively to the commercial activity. We had a very positive road show meeting -- the 14 head of the territory on the areas that we have throughout Italy, so practically, we met almost 4,000 people. And I think the reaction was -- and the feedback was extremely positive. So I think we have a very well motivated network, and this is visible in the day-by-day pace that we are achieving in terms of results.Ă‚Â Now we invested a lot of money in Athena. Athena is really a sort of modular approach and development, we want not only to utilize Athena terms of defining better the profile of customer, but we want also to try to better understand the development of portfolio, trying to have a sort of repositioning of customers that are not using our products for a certain period of time or customers that normally belong to the last quartile in terms of revenue generation and probably in the last 8 to 9 months were never even contacted by our people, right? So through a further integration, implementation of Athena, we can be much more effective and much more focused in terms also getting an iteration much higher compared to what we have now. It's clear that Athena is supporting -- that will be much more supporting also some improvement that we want to have in our outbound activity, as I mentioned, in terms of call center that currently is only and mainly working inbound activity.Ă‚Â Now regarding DTAs, I think it was mentioned in the beginning, practically, we didn't yet update the figures with the current one and probably we will take advantage also updating midterm target of the plan to fuel the probability test. And thanks to that, we believe that we are going to have some additional benefits in terms of tax benefit. The last question was -- the last question regarding the ideal target, I believe that our bank can run the business with 15.5%. But as we used to be conservative, we are just saying that even if you take a 14% that is by far, presenting a significant buffer, our profitability will be very close to 70%. So it means that we are positioning ourselves at the highest part of our peers.
The next question is from Ingacio Ulargui with BNP Paribas.
[Indiscernible]Ă‚Â you just have one more question linked to organic capital generation and how do you see that organic capital generation over the coming quarters? You mentioned in the presentation that you expect a bit of a step-up in that generation in 2025, what kind of capital level generation do you think? And then one small clarification, if there was any kind of one-off in cease in the quarter or we could think this level is the right level to take for 2024?
I will ask Andre to answer our capital. I will just confirm that we don't have one-off in the first quarter. I think the results, as I was mentioning, is presumably connected with a very positive performance in Wealth Management products. Clearly, we start with a very good pace. The second quarter, okay, we have April that the intense working days was not a perfect one in terms for improving our results but clearly, we count to keep the pace and to replicate the performance.
Yes. On -- good morning to everybody. On the first question, I mean, first of all, we will give, let's say, more precise view when we present our updated medium-term targets. Having said that, as Luigi was mentioning before, and as you were pointing to, the key let's say, one of the key drivers on top of net income for the next years will be the consummation of DTAs on tax loss carryforward. To give you an idea, this quarter, we basically used around EUR 20 million net as a net usage of DTAs on tax loss carryforward. So a very low amount. This amount is expected to increase next year and in the steady state until we use all the DTAs of tax loss carryforward, this amount should be somehow equal to the taxes -- [Indiscernible] taxes to be paid. So quite sizable capital generation that will go on for some years. So I hope that this can give you a preliminary guidance but then as mentioned, we will be more precise when we present our updated targets.
The next question is from Noemi Peruch, Mediobanca.
The first one is on NII. When it comes to 2024 guidance, could you please update us on your NII, indeed outlook for 2024? And do you expect a bit of trade-off between fees and NII already visible in 2024? And then on your strategic target update. Would you -- are you expecting to update 2026 business on target? Or would you look further out? And then my last 2 questions are on asset quality and [Indiscernible] risk. On this equality, I see NP going up Q-on-Q or could you give us more color on this? And lastly, on legal risk, when do you expect to have visibility on the final petition on the NP criminal procedures -- proceedings. Thank you very much.
Okay. Let's start with the evolution of net interest income. As I was mentioning, we expect to have a net interest slightly below compared to 2023, but it's a combination of slightly up cost of funding, sort of resilience of net interest income. Clearly, then we have to have the cost of bonds that are impacting because we have additional bonds that we were just issuing. The combination of all these kind of things will bring to this lower level that is absolutely manageable in terms of fees and commission additionally that we can generate and bringing the total revenues, as I was mentioning, slightly up compared to 2023. The key drivers of the fees and commission, as I was mentioning, will be the wealth management activity as we don't expect significant improvement in terms of banking fees for several reasons. Now regarding the NP, I think these are used to underline this aspect. Now NP ratio is a very nice ratio but by definition is a ratio between the performing loans and the nonperforming loans. So if you don't grow significantly in performing loans, you are penalized. And I think what's important for us is to see many times the level of reserves is covered by the gross operating profit, and we have a positive trend on that. But having said that, we want as well to reduce the stock. So in addition to what I mentioned before, the sort of internal reinforcement of the workout activity, not because we are not effective, we are very well effective in curing -- particularly, they're likely to pay portfolio. We want to try to set up a specific tax force, especially to speed up some recovery connected with the loans that are fully with a guarantee of [Mediocredit] or so, what we call [Indiscernible] that clearly requires a specific process for enforcing the guarantee, but at current stage are among the loans that we are considering nonperforming despite we have the guarantee. So by quickly enforcing the guarantee and getting as quick as possible, the money back from [Mediocredit] we will further improve and reduce our stock. In addition to that, we already set in the plan of the year. We are also considering to prepare for the second part of 2024, a potential sale of part of the portfolio. We already have adjusted completely the value of the potential sales of the portfolio in our P&L. So according to some indication we are getting from the market in an informal way, we believe that this is another option, and the sort of trade-off if we sell or we try to further improve our capability recovery. But clearly, we want to deal in an effective way by decreasing the stock of NP. Then regarding the target of the plan, it's clear that the idea is to extend the period for which we are providing a target to the market, but still something that is still to be well defined. But clearly, we expect to go beyond 2026.
Thank you. And on the legal risk?
I forgot about legal risk because now for me, it's completely a topic that is fixed -- is completely settled and so I canceled from my mind. But anyway, practically, as I was mentioning, this is a process that unfortunately is lasting but practically, we don't have changes in Petitum compared to the position in December. We are waiting for some development connected with the NP civil litigation that we were already presenting, and we have a slide in the attachment of our presentation just to support the information I was giving hourly. And practically, the NP proceeding will have some development next year but anyway, we already know that almost trends parties were excluded a very small Petitum just to give you the idea that is a process because the Petitum that has been excluded are EUR 13 million. But it is a process that will keep going forward, but as we were mentioning, we already identified -- classified this risk very limited one. So we are confident that it's just a matter of time, and anyway, we are also well equipped in terms of balance sheet for dealing with this kind of issue, even if it will last a bit longer than we hope.
The next question is from Fabrizio Bernardi, Intermonte.
My first question is on strategy. It looks like you have longer capital. Probably one of the common equity Tier 1 ratio higher. I mean, probably the highest, I think, in Europe, at least in Italy. You were not supposed to pay a dividend on 2023 and you pay and now you pay also on 2024. So what I'm wondering, I know that there is pending a new business plan, so maybe this question is let's say, not, let's say, welcome. But would you consider the possibility to buy banking assets given your position in terms of capital or this capital position is, let's say, what you think is good for a group that is coming out of a turnaround, and in any case, maybe you can drive our attention to the dividend policy, considering the capital position? Thank you.
So let's start from what for me is quite clear. I don't think we have to consume our capital to buy capital banking assets, right? Anyway, it's clear, as I was mentioned at this time, that we are aware that the position of capital is quite strong. Maybe with the plan, we can also consider a different approach in terms of dividend distribution policy, is something that we can consider. At the same time, as I was mentioning last time, we will try to capture the opportunity connected with the current partnership that we have in place and clearly depends also on the counterpart, but we are aware that we have to be active and we have to optimize this excess of capital.
Sorry, if I can make a top-up, you have, let's say, relatively high cost of risk in terms of loan loss provision. There are banks that reported today, I think, 10 basis points, you have a 54. Is there a possibility that you are very conservative in this?
I think -- I don't know if we are conservative, we are very responsible for that, right? Because I believe a bank in this environment to the cost of risk should be a medium bank, right, around 30, 40. As I -- we didn't mention, but anyway, we have some overlay on that. We like to be very conservative and I believe the cost of risk that we have is also giving us comfort for the coming months and for the next year, even if the overall economic situation will deteriorate. If I want to use one of your expression, maybe probably we are conservative, but I think we are conservative everything we are doing and it's much better to surprise the market also on the side of the risk grade.
The next question is from Andrea Lisi, Equita.
Just 2 very quick questions. The first one is if you can provide us a bit more -- if you can explain a bit better the difference between the CET1 fully loaded of 17.9% and the pro forma of 18.2% where it comes from the difference? And the second is, if you can provide us an update on the amount of fiscal credits related to super bonus do you have? And which was the contribution to NII in the first quarter? Thank you.
So I start with the first question. The difference between the common equity Tier 1 ratio pro forma and, let's say, the status one. No, the difference is simply that the pro forma includes the net profit and the dividend accrual for the period. As you know, as you know, if you do not ask for a explicit approval to the ECB for including the interim profit then from a formal viewpoint, this is not part of the capital, but then this will be included, of course, when we approve the first half results. While on the super bonus exposure, the book value of tax credits connected to super bonus amounted to EUR 1.6 billion and the NII contribution in first quarter '24 amounts to EUR 23 million.
The next question is from Hugo Cruz, KBW.
I just wanted to ask you to clarify a bit the OpEx guidance. I think from Q4, you had guided for OpEx to go up a bit, but this quarter actually went down. And I think you mentioned previously today that you expect OpEx to continue to go down. So if you could clarify what you expect for this year? And perhaps the moving parts, staff and non-staff? Thank you.
Okay. I was mentioning, we have a different trend that is connected clearly with HR that is impacted by the labor contract that was signed in November, so additional increase of cost on that, practically, on the HR as already we -- in the first quarter, we have the value of the cost that includes this increase of salary, we plan to be almost flat throughout the year. And the first quarter of non-HR cost was quite important, the savings we reported is very challenging to keep this level, but we want to be very close to this level also in the coming quarters. So overall, the trend on non-HR costs should be slightly lower compared to the 2023. And HR costs slightly up connected with this increase of salary. So -- the challenge is really to keep as much as possible the overall cost in 2024 marginally up trying to offset part of the increase that is connected with the personnel expenses.Ă‚Â And in order to do it, it's clear that we are leveraging on our cost management organization. We are factoring some action we put in place with the exit of 4,000 people in November '22 And it's clear when you have 20% people leaving the bank, you have some benefit in terms of space management, some benefit in terms also of stationary position that you will not get immediately, but you will get a bit later. And we hope that this cost reduction, For space management activity reduction, for costs related to synergies connected from the merger of the company that we integrated because we integrated in April last year to companies, and this will also allow us to start the process of renegotiation contracts. And in some cases, also to reinsource some outsourced activities that are very expensive, and we want to utilize some people from inside in order to optimize productivity. Clearly, also the evolution of all the legal risk are implying some benefit in containment or legal and consultancy costs. So all these actions that we already have in our pipeline will gradually give you their results. We hope to anticipate some actions we planned for 2025 in order, as I said, to partly offset the increase of HR cost connected with the labor cost.
[Operator instructions]. Luigi Lovaglio, there are no more questions registered at this time, I turn the conference back to you for the closing remarks.
So thank you very much. I see your next presentation in August.
Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.