Bper Banca SpA

MIL:BPE

Earnings Call Transcript 2023-Q1

[Operator]

Good evening. This is the Chorus Call conference operator. Welcome, and thank you for joining the conference call on the BPER Group's first quarter 2023 consolidated results.

[Operator Instructions]

At this time, I would like to turn the conference over to Mr. Piero Luigi Montani, CEO of the BPER Banca Group. Please go ahead, sir.

[Piero Montani, executive]

Thank you. Thank you. Good evening. Welcome to this conference call. So we are the last ones to present our results after the other banks presented their. The quarter closed with a net profit that is very satisfactory. I hope you saw the results already and the results are very good. The recurring profitability is increasing. There's good increase in credit quality and our liquidity and capital position is very solid. The [indiscernible] quarter closed with a net profit of EUR 290 million after payment of EUR 69.5 million in contributions to the single resolution fund. Another part of this will be paid in the third quarter.

And last quarter was closed with EUR 112.7 million. Operating income total EUR 1.380 billion, up 18.5% quarter-on-quarter and 49.2% year-on-year on a stand-alone basis. If we had to consider as we did in the following slides, and you will see that the courageous contribution, then the increase would be by 32.9% on a combined basis.

Net interest income increased significantly and settled at EUR 726 million with an increase by 28.4% quarter-on-quarter, 92.9% year-on-year on a stand-alone basis. And here again, if we had to consider the contribution by Carige, then the increase would be by 74.3% on a combined basis. Thanks to the good contribution from the commercial component, net commission income were, well, similarly very resilient and closed the quarter at EUR 506 million, down 3.4% quarter-on-quarter but, I would remind you all that the prior quarter was December, which is always the substantial in its changes and 12.3% increase on a stand-alone basis and would be almost flat with a decrease of 0.3% on a combined basis.

In terms of volumes, total funding amounts to EUR 281 billion, up 1.1% quarter-on-quarter and 7.8% year-on-year. Direct funding totaled EUR 113.5 billion. It was down 1.2% quarter-on-quarter, but up 14.2% year-on-year. And in direct funding, which totaled EUR 167.5 billion was up both quarter-on-quarter and year-on-year, respectively, by 2.6% and 3.8%, of which I would remind you that EUR 85.9 billion of [indiscernible] funding is traceable to AUM and life bancassurance.

Net loans to customers amounted to EUR 89.4 billion, and were up 13.6% year-on-year. There was a slight decrease quarter-on-quarter due to large corporate. We will see that later on. Credit quality is strongly improving, additional derisking may be possible to continue to downsize our stock of nonperforming loans.

The gross pro forma NPE ratio was down to 2.9% at the end of 2022. It was 3.2% and the net NPE ratio is now down to 1.2% from 1.4% at end 2022. Coverage levels have risen further, setting at 60.9%. The level was 57.1% at end 2022, but loans are at 80.4%, 77% at end 2022, UTPs are at a 53.3% coverage, and they were 49% end 2022. Performing loans are at 0.75% versus 0.77% at end of 2022.

For capital and liquidity. The bank's capital strength is confirmed with a fully phased CET1 ratio of 13.34% versus a minimum SREP requirement of 8.47%. Our liquidity position is likewise excellent with LCR at 206.3% and NSFR at 126% broadly in excess of the regulatory thresholds.

Total funding amounts to EUR 281 million, up 7.8% year-on-year and 1.1% quarter-on-quarter. Direct deposits from customers is EUR 113.5 billion, up 14.2% year-to-date. Direct retail funding continues to be resilient and accounts for approximately 75% of total funding, while corporate funding accounts for almost 25% of the total. Site deposits account for approximately 85.6% of direct funding and the loan-to-deposit ratio is 78.8% to be precise, almost 80%.

With regard to indirect funding, the stock amounts to EUR 167.5 billion, a 2.6% increase from end 2022 with EUR 85.9 billion referring to AUM and the life insurance premiums portfolio with an increase of 1.2% from end 2022. Net funding in the quarter amounted to a positive EUR 191 million. Assets under custody amounted to EUR 81.6 million, up 4.2% from end 2022.

With regard to the stock of loans to customers, loans totaled EUR 89.4 billion, plus 13.6% year-on-year, with a 1.9% contraction in the first quarter, almost 2%, almost entirely due to the segment of businesses and the large corporate.

From a sectoral perspective, the loan mix is a good balance between the main economic sectors, across the manufacturing and trade sectors, accounting, respectively, for about 15% and 8.3% of the total. The breakdown by customer segment reveals that the retail accounts for almost 60%, while the corporate segment accounts for 40.8%.

Let's now move on to credit quality. The quality of the loan book continues to be focal point in the first quarter of 2023. And we envisage we will go down with the derisking and NPE coverage grows further in expensive 60.9%. Bad loan coverage has risen to 80.4% among the best-in-class in the industry. The UTP coverage ratio is 53.3% performing loan coverage has risen and is almost stable. From the end of 2022, the composition of the performing loan portfolio is stable with Stage 2 exposures accounting for 11% of the total.

Moving on to financial assets and securities portfolio proved stable during the quarter at EUR 30 billion, and its risk profile continues to be very conservative. Bonds come to a total of approximately EUR 29 billion, of which EUR 10 billion in Italian government bonds. Italian bonds account for approximately 45% of total bond sales in the portfolio and 8.5% of total assets. The growth trend of the quarterly average yield on the portfolio continues and was 2.0% for the quarter.

Duration of the portfolio is stable. It's stable at 1.9 years and the duration of the Italian government bond portfolio is likewise stable at 2.1 years.

Moving on to the income statement, as noted above, the quarter closed with a net profit of EUR 290.7 million. And for the sake of completeness of information, we wanted to show the quarterly and annual changes in the income statement by factoring in the contribution from Carige. Top line revenues totaled EUR 1.2 billion with net interest income rising by 74.3% year-on-year. But 92.9% on a stand-alone basis. As a result, for sure, of the uptrending market rates, but also because of a faster -- but because of the resilient net commission income, which was down slightly by 0.3% year-on-year. But let me remind you that it was up a 12.3% year-on-year on a stand-alone basis, stated operating costs totaled EUR 675.8 million, down 12.3% quarter-on-quarter.

Loan loss provisions amounted to EUR 140.5 million with an annualized cost of credit of 63 basis points in the annualized default rate of 1%. Net interest income for the period totaled EUR 726 million, up EUR 28.4 million quarter-on-quarter, driven primarily by higher network contribution, which was good in the last part of the year, in the first quarter of the year. And also in this period, we're seeing it is proceeding very well in a satisfactory pace.

Customer spread is 3.27% up quarter-on-quarter as it benefited from higher interest rates, of course. As far as net commissions are concerned, the [ ISM ] settled at EUR 506.1 million, slightly down from December 2022 by 3.4%, primarily as a consequence of the seasonal effect, which was positive in the last quarter and lower commissions from Nexi due to the transfer of the merchant acquiring business to Nexi. The year-on-year growth is observed across all types of fees and commissions, particularly in bancassurance, life and non-life for P&C, up 18.3%. The uptrend continues with traditional banking fees rising by 15.6% year-on-year and indirect funding fees growing by 4.9%.

As far as the operating costs are concerned, during this quarter, operating costs settled at approximately EUR 675.8 million, down 12.3% compared to the level observed in the fourth quarter, which however, included substantial nonrecurring components. The combined effect of closing the top line and cost discipline, which has been pursued lately has led to a substantial reduction in the cost income ratio, which, by the end of the first quarter, settled at 51.3% from 68.2%, down significantly from December. So -- now the decrease is by over 16 percentage points.

Cash costs were stable, even though, in fact, down strongly because in December, the item was strongly impacted by the cost of provisioning to the redundancy fund, which was EUR 166 million due to 540 employees being admitted to the solidarity fund. The agreement was reached with the trade unions on start to the evening. I remember, I received the message at 06:00 in the morning, Sunday morning -- I guess on Saturday morning. And so the balance is 270 headcount. But as I was saying, we were saying in the press release, 90% of these headcount reduction will happen in December. So the impact -- positive impact will be in 2024.

Number of total employees was also down to 20,557 at year-end. The total head count was 21,059. So we were down by 509 units due to the staff exits in February and March. The total number of branches has decreased as well to 1,759 from 1,913. So 154 branches have been either sold or closed because 48 branches were sold to Banco Desio, and 106 branches were instead closed.

In our plan, we also envisage that the number of branches would be reduced. We're now reflecting on the changes in the balance on the market because some of the markets that would -- some of the branches we -- were considered to be less profitable are instead producing different evidence. So we're trying to understand whether the balance should be different, we're considering that.

Let's now move on to the cost of risk. The group's loan loss provisions for the quarter amounted to EUR 140.5 million. And thanks to the excellent results achieved in revenues, the group can even more strongly pursue its prudential targets in the management of nonperforming loans and approach that have distinguished us for some time now. Increased coverage that was strongly pursued and desired. We really pursued that with willingness on all classes of nonperforming assets, but in a better position to manage any future shocks or impact that a deterioration of the economic environment might cause.

At the same time, the high level of coverage of nonperforming exposures allows us to create a -- that's a potential positive reserve showed the worst scenarios, hopefully not materialize. As a consequence of these operating choices, the annualized cost of risk settles at 63 basis points with the annualized default rate being at 1%.

Moving on to liquidity. There's not much to say. The bank's liquidity ratios remain high with an LCR of 2.6 -- I'm sorry, 206.3% and the NSFR closed in the quarter 126.5%, both broadly in excess of the supervisory requirements with regard to [ TLTRO ] operations at the end of the quarter, the amount to be repaid at subsequent maturity date totals EUR 15.1 billion, of which EUR 9.7 billion to be repaid in June, whereas I would remind you that EUR 6 billion was repaid earlier last December, With regard to capital, as I said in the introduction, pro forma fully phased CET1 ratio of the bank is 13.34%, broadly in excess of the SREP requirement of 8.47%.

To conclude our first quarter '23 results show a growing net operating income supported by top line revenues, not only net interest income, but net fee and commission income, I would add because they were very -- that was very much resilient. We expected that many. I was pleased to notice that and confirm that, along with further improved credit quality, not only because of the improvement in the NPE ratio, but also in the coverage ratios and the sound capital and liquidity position ahead of the business plan schedule in terms of both projects delivery and economic financial targets.

So I can say that BPER is ready to face the challenging macro scenario from a position of strength. Thank you for your attention, and we will now take your questions. Thank you very much.

[Operator]

[Operator Instructions] The first question is from Giovanni Razzoli, Deutsche Bank.

[Giovanni Razzoli, analyst]

My first question is about your liquidity profile, which as you reported is very solid and sound. I would like to understand whether in the midterm. Do you intend to issue some repos or -- I'm sorry, to -- some other instruments because the banks have not done that for some time, but because of the Berlin issues, et cetera, but could it be an opportunity or a possibility for the future? And so repos or bonds or time deposits? And if so, what would be the impact? And what would be the cost of funding. Then LCR post-TLTRO, I would like to know if you can give us your view on your exposure of tax credit, EUR 2 billion, I think you reported. Have you made any considerations? Do you think there will be any risks in the portfolio that you're considering?

And then my last question is a little bit of a provocation. So you have reported very strong numbers in terms of net interest income, net fee and commission income, that are resilient. There are some of your peers that produced lower numbers, but they have reviewed our guidance in terms of net profit for 2023 and remuneration and dividend distribution for the shareholders. So I would like to understand whether you may take a step forward and give us a different guidance about the net profit for 2023.

[Piero Montani, executive]

Mr. Razzoli, thank you very much for your question. We haven't seen each other for some time now, but we will have an opportunity for that.

Well, in terms of the issuance answer is for sure, yes. We are considering those issuances not now. We're speaking about the second half of the year. But for sure, we are considering that, but not immediately then about the indicators. After the first repayment, so after from the end of this year, EUR 160 million, EUR 170 million. And then when everything is repaid, we think the guidance can be EUR 130 million, EUR 150 with some room of course, in between.

Then in terms of devaluations and the category of risk you were referring to, we do not have any. We have no reason for expecting that but we've got some prudential provisions at 1%. Then as far as guidance is concerned, it's clear that with these numbers, we will have to review the guidance a little bit, but I'm a little bit conservative. I would like to give you some background. Market scenarios rapidly changed. They have rapidly changed.

In December last year, we were looking at some sort of catastrophic situation. But then things changed completely and from a catastrophe actually moved on to some sort of a euphoria. We have reason for concern now, but we know that the evolution is very much associated to the market trend, interest rates but also to the trend in credit.

So in lending, we do not have any negative indicators on either side, but we do -- we have no visibility of what will happen in the next half. So we would like to be and continue to be prudent and conservative as we have always been. But of course, as far as net interest income is concerned, we think we will get to EUR 2.5 billion and for fees and commissions EUR 2 billion, for operating costs EUR 2.7 billion. Then as far as the bottom line in the financial statements or accounts, we think we can confirm the results of the business plan by 2025 this year.

This under the assumption that the market circumstances will continue to go the way we predict. If that's the case, then the business plan objectives will be maintained and actually even be delivered by the end of this year. We will see how this develops. Then you were asking something about the cost of credit, 63 basis points. We've always been prudential and 63 basis points are conservative -- or is conservative.

But once again, we will have to see what the future developments will be, but it may be 40 basis points, then is market development is even more positive that even going to be better that we have a lot of reserves. So we feel confident that we can face the market. But of course, we cannot predict things because, of course, the hikes in interest rates will produce some disadventure with some companies not being able to or having some difficulties tell if this will happen in this year or if it will happen next year. But this is a little bit of a snapshot of the overall situation.

[Operator]

Next question is from Adele Palama, UBS.

[Adele Palama, analyst]

I have some questions on NII. So EUR 2.5 billion is your guidance. I would like to understand what the assumptions are behind this guidance in terms of beta, deposit beta and growth so long growth and also average Euribor if you would. And what you expect for this year. But I would also like to have guidance for the NII trend in 2024, if you expect it will go up or it would be flat compared to 2023.

And then looking at your guidance for EUR 2.5 billion. With the results you delivered this quarter, I can understand that -- this -- is this going to be the quarter when we can expect that this is the peak for the NII because for the other 2 quarters, if I use your guidance, then you have less than EUR 100 million. So I would like to understand better how it's going to develop.

And then my last -- my next question, if I can, is about the single resolution not just this year, but for next year, do you expect there will be a removal.

[Piero Montani, executive]

As for the assumptions for our net interest income, we saw the Euribor at 6%. As far as net interest income, once again, is concerned, expectations are difficult to be made. We do not expect problems in the next quarter. There may be some in the future, who knows. So I cannot answer for 2024 because it's too remote.

To us, it's important to understand how 2023 is going to be developed so that we can make projections for 2024 when we have more visibility than as far as your projections for the resolution fund are concerned, I cannot answer. To be honest, I have no evidence to provide an answer, a negative or positive answer to that yet.

[Adele Palama, analyst]

As for the beta for deposits as an assumption for NII guidance for 2023, what the basics 3%.

[Piero Montani, executive]

It's about -- so let's give an easy answer. It's 30% on average, but it's 28.69 to be precise, but let's say, 30%.

[Adele Palama, analyst]

And if I may and a follow-up question on NII. What is the contribution that we can expect from the net CLOs in the next quarters since the contribution was positive this quarter.

[Piero Montani, executive]

It's about EUR 50 million in the second quarter.

[Adele Palama, analyst]

Per quarter?

[Piero Montani, executive]

In the second quarter.

[Operator]

Next question is from Domenico Santoro HSBC.

[Domenico Santoro, analyst]

I would like to understand, first of all, going back to the question that my colleague made. If the -- the additional contribution of the TLTRO is it on top on the net interest income? Will it be repeated? Will it -- is it going to be recurring?

[Giovanni Razzoli, analyst]

No, it's only to be in the second quarter, a one-off contribution.

[Domenico Santoro, analyst]

Thank you very much. Then I wouldn't need clarification on deposits, just to understand your terminology a little bit better. Because I was looking at Page 24 in the presentation, looking at sight deposits and current accounts there's outflows of EUR 5 billion in the quarter, which is quite substantial, and there are also other lines going upwards, but you're also including institutional direct funding there in the total deposits. And so could you tell us more about how it should be interpreted. Is it continuing? Or are there any other elements in the lines that should be added so that we have more color.

Then my next question is about direct and indirect dynamics. And then all of the other movements or moving parts of capital. Can you tell us more about positive and negative moving parts on capital for 2023? And are there going to be any further one-off elements contributing in addition to the headcount maneuver that you have communicated?

[Piero Montani, executive]

Well, as far as the drop in current accounts, I thought I mentioned that it's very much associated to businesses and the corporate segment, there was a drop in the large corporate, which is not alarming though considering that we're also not comparing ourselves with a prior quarter that was completely different from the others.

As far as the other moving parts of capital or concern that you were referring to, for sure, there were some movements, but those movements did not raise any concerns. They've always occurred in the recurring dynamics, but there will be some more in the future, but it's evident that as far as deposits are concerned, they may be looking for or customers may be looking for higher-yielding deposits. And so we try to attract them basically, but there's been also a transfer from indirect AUM, and we were able to be resilient.

As far as capital is concerned, there's just 1 one-off probably that is going to be the platform. We have announced that transaction, and we will be -- we will complete that by the end of the year, but the -- yes, the credit platform. So we talked about that, but they were -- yes, they were advising me that I should be more precise. And it's a credit platform that I was hinting at.

If I can take this liberty. The institutional funding that you have included in total funding, it's institutional though, so it's not deposits. its securities to be honest. So it's just for me to understand better the terminology, but it includes repos, though.

[Operator]

Next question is from Andrea Lisi, Equita.

[Andrea Lisi, analyst]

My first question is more of a clarification on the beta, deposit beta. Is it 30%? Is it correct to assume that it is the average for 2023. And I would like to understand what the evolution is going to be. So what is the deposit beta at the end to be assumed for -- in terms of guidance?

And then if I -- probably you answered this in your prior answer. But are there going to be one-offs impacting the income statement of 2023?

And then my third question is about capital. So is -- I mean is there the remuneration policy going to be the same? Or will it change considering the results you've had and the capital at 13.3% that you have with the CET1 ratio.

[Piero Montani, executive]

So as I was saying before, the beta for -- was 27 for the retail and 69 for corporate. As per the model that we have, we -- on average, we can figure 30% for the retail. But the -- there are no one-offs. As for the remuneration is concerned in the quarterly results with 0.5 -- so EUR 0.05 mentioned, but then we will see what happens by the end of the year, and we will see also what the market trend is going to be. And if there's a possibility, we will give more, but we're not yet considering that. We will consider that in the future.

[Operator]

Next question is from Marco Nicolai from Jefferies.

[Marco Nicolai, analyst]

I would need a couple of clarifying specifications. What's the deposit base today at May. And then about the default rate, you've gone up a little bit, if I'm not wrong in the first quarter compared to last year. And I would like to understand if you can give us more color about that.

Then I have seen that in this quarter, you had 70 basis points regulatory impacts, negative regulatory impacts. So this was a little bit higher than you had expected? And can I understand what it refers to?

[Piero Montani, executive]

As far as your first question is concerned, the deposit beta today is at 12%, 13%. As far as the default ratio was concerned, it was up just slightly from 0.8% to 1%. And I would say that it's almost entirely associated to the merger with Carige. So within the merger, basically as part of the merger, we have standardized the model, and there was a little bit of impact from Carige, then the rest of the bank was stable.

As for your last question, I would say that the regulatory impact is more associated to the inspection on the models and it's 40, 60 basis points.

[Operator]

Next question is from Andrea Vercellone from Exane.

[Andrea Vercellone, analyst]

I have some questions. My first question is about personnel expenses. I would just like to understand whether in your first quarter, you have already included an accrual for the renewal of the contract? Or will you recognize everything at the end?

And then my second question is about the issuances for medium to long term funding. So how much are you planning to issue in the second part of the year in 2024?

My third question is how do you intend managing the deposits basically? Because we have seen in the first quarter, there was an outflow -- there was a little bit of a flight of deposits. Not that, that was an issue because you've got a loan-to-deposit ratio that is probably among the lowest in the banking industry.

So you've got even an excess of liquidity.

But from a management perspective, deposit management perspective, are you going to pay these deposits a little bit more? Or for a certain amount, are you even ready to accept a decline in deposits or a transfer to assets under management basically.

Fourth question is about [ CIFA ]. Has it already been consolidated? And if not, can you give us the risk-weighted assets that will be going out basically after the consolidation?

[Piero Montani, executive]

Well, let's start from the easiest question. You might -- it was the first question. And the answer is no. We have not recognized anything yet. And the contract renewal will not be easy to manage, so to say, but we'll have to wait and see how it's going to develop. But as the insurances, it's EUR 500 million in 2023 and the same for 2024.

Your third question was about management of deposits. The answer is quite to be taken for granted. I mean, of course, we will have to deal with the deposits and retain them as much as we can. But when you said that there was an outflow of deposits, well, I would like to say that, to be honest, it was quite natural because we are comparing this quarter with the previous quarter, the third quarter instead going to be a little bit probably -- I mean, what went out was broadly expected.

But in the future, what will carry out multiple actions. Everybody is questioning on how to retain deposits. And for corporate deposits, we will have to do something different because corporate and businesses are more structured, they are more attentive probably they want us to negotiate more whereas with the retail deposits, I mean, deposits fragmented, and it needs to be dealt with in a different way. There are going to be multiple actions to be implemented.

The objective is that of retaining deposits part of the deposits will end up being concentrated in either indirect deposits or assets under management in direct deposits. Good anyway, not only assets under management. Because it's evident that in the first part of the year, it was too early for us to understand how the market was developing, whereas now depositors are trying to have higher yields and we need and want to have them be happy. And so we will try to retain the deposits, the actions that were put in place are numerous. They belong to our day-to-day activities and not mentioning them now, but it's part of what we do with the market every day.

As far as [indiscernible]. I mean the RWAs are not important -- not material. So EUR 400 million. As I was saying, we're talking about an amount that is not material.

[Andrea Vercellone, analyst]

Just a follow-up question on the guidance you provided, EUR 2.7 billion cost for the year or the net of the contract renewal, should we add the cost of the contract renewal? Or is it incorporated embedded in it.

[Piero Montani, executive]

Now it will have to be -- I'm sorry. So you wanted to understand if it was included or not.

[Andrea Vercellone, analyst]

Yes.

[Piero Montani, executive]

It was, but it's not been defined yet because, of course, we are waiting for the definition, but EUR 2.7 billion includes an assumption of hypothesis. Yes, of course, it includes the assumption of hypothesis that we have made, but you may understand that negotiations have not yet started. So we had to estimate what the number may be in the end, but it's more of -- our assumption we have to, in fact, negotiate it with the unions that the negotiations have not yet started with. And so we have estimated it because we knew the contract would be renewed, but we will have to, in fact, define it with the unions and the definition is not yet there.

[Operator]

Next question is from Noemi Peruch from Mediobanca.

[Noemi Peruch, analyst]

Yes. I would need some clarification about guidance for the cost of risk. You have mentioned 40 to 50 basis points. And I would like to understand whether this is the level for the year for this year or for the next quarters in 2023.

And then I have a question about risks and charges. And I would like to understand whether what you have mentioned is only about remain elements? And if you can give us color about tax credits.

And then I have a question about capital 25 basis points or 35 basis points in RWA increase, what is it associated with?

And then -- having 79 basis points of headwinds. Is it Basel IV related? Or can you give us guidance about the Basel IV impact?

[Piero Montani, executive]

As far as the guidance is concerned, it's for the year then for risks and charges. I would say that almost the entirety of risks and charges is due to the settlement of the distribution agreements with Carige. There's not much else. It's actually almost nothing on top of that. And then my last question -- to your last question, I would say yes. So about capital.

[Noemi Peruch, analyst]

And so can you give us an update on the impact of Basel IV?

[Piero Montani, executive]

I think we had already mentioned the impact from Basel IV in our previous meetings, it's 40 basis points.

[Operator]

Next question is from Hugo Cruz from KBW.

[Hugo Moniz Marques Da Cruz, analyst]

Apologies if this has been asked, but I listen to the English until sometimes it's hard to understand. So my first question is around the customer direct deposits, Slide 24. It was down 3.9% Q-on-Q. If I just ignore the institutional. I was wondering if this decline is more concentrated on the Carige side of the business. So if you could split the decline between Carige and rest of the group?

Second question around NII. It is very strong in Q1. I was wondering if there was any positive benefits, one-off benefits in Q1, perhaps anything to hedging. I think you also mentioned that there will be a positive in 2Q from, I think, closing the TLTRO position. I understood that could be a positive of EUR 50 million, if you could confirm. And so I don't offer a very strong run rate in Q1 to the EUR 2.5 billion guidance. So it implies a big decline in NII in the coming quarters. It's a trend that's a bit different from what the other bank is timing. So if you could explain that a bit, please?

And then finally, another clarification on capital. The CET1 ratio. Again, there's been a lot of volatility, I'm sure a lot of moving parts. Is there anything in the coming quarter? Is that a positive or that we should be aware of any model updates and EBITDA guidance, something like that, if you could clarify.

[Piero Montani, executive]

As far as Carige is concerned, the impact on TLTRO deposits was absolutely marginal in terms of deposits, meaning that we have already given the metrics, but bank was not such to actually influence the volumes of the group, not even in terms of trends, the trends were different. I don't know. But the -- as far as the net interest income is concerned, there's nothing I would add to what I said before. Even though for the CET1, I'm not expecting negative impact for the next quarter for -- on the contrary. There may be an increase, not by much, but an increase anyway.

[Operator]

[Operator Instructions] Next question from Benassi Anna Maria from Kepler.

[Anna Maria Benassi, analyst]

My question is about the guidance that you have provided. Could you basically confirmed what you were saying in February in terms of net fee and commission costs, net interest income. And you basically gave us or replicated basically the view you had on net interest income, even though the net interest income was up.

So I cannot put together the expectation of net interest income, which is based on rates at 3% because that's what they are at now with the assumption of the net interest income, EUR 800 million sounds to build -- so a little of an amount considering that there are not going to be any one-offs. I cannot understand how -- I cannot understand the profit generators basically. And then sensitivity with -- to the interest income. If you can provide us color about that.

[Piero Montani, executive]

Well, we're always prudent and conservative. So it's true that we have replicated what we've said in the past, which means that we didn't -- we were not lying basically. We're not denying what we said before. I understand what you were asking. So as I said before, we are aiming a target by the end of 2025 that is quite substantial as a target, but everything depends on the evolution of the market so if the market continues to go this way, then it's 1 thing, but if there's going -- there are going to be repercussions on the market, then we need to be conservative.

It's quite early for us to make considerations or projections for the future, it's easy to make to calculations. If you take what we have delivered and you multiply it before period than it may seem that EUR 800 million is quite conservative. It may be, but in fact, it very much depends on the trend in the market.

And then as far as the NII sensitivity, we confirm what we said in the past. We always gave a sensitivity of 5%, and that's what we can confirm today.

[Operator]

Next question is a follow-up question from Adele Palama, UBS.

[Adele Palama, analyst]

I would just like to understand what your guidance is for the -- on the trading income considering what you did in the quarter, can you consider the EUR 25 million to EUR 30 million in the quarter -- by quarter for this year?

[Piero Montani, executive]

It's -- yes, it's going to be EUR 100 million for the year.

[Operator]

Mr. Montani, there are no further questions.

[Piero Montani, executive]

Thank you very much. Thank you. I would thank you all. And for any further questions you may have, my team is willing to answers to you. You can call us at anytime. Thank you for your attention. Have a good evening. Bye.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]