Bper Banca SpA

MIL:BPE

Earnings Call Transcript 2019-Q2

[Operator]

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the BPER Group's First Half 2019 Consolidated Results Conference Call. [Operator Instructions].

At this time, I would like to turn the conference over to Mr. Alessandro Vandelli, Chief Executive Officer. Please go ahead, sir.

[Alessandro Vandelli, executive]

Okay. Good evening, ladies and gentlemen. Thank you all for joining this conference call today about our first half 2019 results. This is Alessandro Vandelli, CEO, and I'm here with Roberto Ferrari, CFO; Alessandro Simonazzi, Head of Planning and Control; and Gilberto Borghi, Investor Relations Manager. As introduction to this conference call, I'd like to highlight the key points, trying to keep my comments as short as I can in order to give you enough time for the Q&A session, and to allow the luckiest of you to leave for the holidays.

Please go to the executive summary of the presentation on Page 4, which is already available on our website. Before a quick review of extraordinary deals, [ that ] you all know about, closed in July. At the beginning of this presentation, I'd like to focus on the ordinary activity of the group commenting on the first half consolidated results bringing to your attention few key messages. First, we have been able to show a resilient profitability despite difficult macroeconomic scenario and low/negative interest rate levels. First half closed with a net profit a bit more than EUR 100 million. That is, as you all know, not directly comparable with the first half 2018 results of EUR 307.9 million, which included non-recurring gains realized on debt securities.

We consider this result satisfactory because it comes after having charged recurring and nonrecurring costs related to systemic funds close to EUR 50 million. Indeed, in addition to the ordinary contribution of the EUR 23 million, the Single Resolution Fund, we had non-recurring contribution of EUR 9.6 million and one-off costs of EUR 13.3 million for the intervention on Carige. That this -- I'd like to remember the resiliency of revenues in particular of the commissions as we are going to see later on, the decline of operating cost by 1% year-on-year and a relatively low cost of risk at 33 basis points under control and in line with our expectations.

Second, our capital position is further improving. We have been able to manage capital in a very effective way and our capital position continues to be very solid.

Our CET1 ratio fully phased at the end of Q2 is at 12.33%, up by 9 basis points versus Q1 and 38 basis points versus December 2018.

Third, asset quality. Our strong commitment in improving asset quality continued also in this period. Gross NPE stock are well below EUR 7 billion and the ratio came at 13.7%. The very good news I would like to point out is that thanks to the bad loans disposal to UnipolRec and the acquisition of Unipol Banca deal closed on July 31 we can record a remarkable drop by nearly 2 percentage points of our NPE ratio to 11.8% on a pro forma basis. Let me remind you that this last disposal has been closed without any impact on P&L. We are working on different projects in order to further accelerate the decrease of the stock, and we are confident to be able to deliver successfully as our track record clearly shows.

Default rate is still low at 1.8% annualized in the presence of an encouraging recovery rate of 6.4% and a [ cure ] rate around 8.5%.

Four, on business, even though customer loan stock is slightly down from the peak, however, at the end of last year we had a positive development of commercial activity, especially, in mortgages.

Stock of total funding grew again in the first half close to EUR 95 billion, including the Bancassurance segment which recorded a significant increase in volumes.

Finally, let me say that we did deliver only a [ certain ] deals in the last period but let's go back to it in a minute, but we worked on the implementations of the actions scheduled in the new business plan 2019-2021, in particular, on cost savings and company simplification size. We closed 48 branches out of 230 foreseen in the 3 years business plan horizon, and finalized the incorporation of BPER Services, our IT, a back middle office company into the parent company.

Let's now turn to Page 5 in which we summarized the achievement on extraordinary deals closed in July. In this slide, we summarized 3 strategic transactions announced in February this year and closed in July with the timing that was perfectly in line with our expectations. In the bottom right of the slide, in the interest to provide a complete view of our transactions announced in the first month of the year. We reported also the additional deal related to the project of the public exchange offer on the several shares of Banco di Sardegna announced in March that we hope to finalize by the end of the year. Obviously, I don't want to recap the detail of these deals well known by all of you, but I'd like to highlight that we have been able to deliver on schedule, a complex set of deals with the aim to increase in scale, to create value, to accelerate further the derisking process, and to strengthen our already strong capital base, only a couple of [ messages ] .

The group's profitability will be supported by the benefits expected from the efficiencies related to the increase of the controlling stake in Banco di Sardegna from 51% to close to 100%. The expansion of the scope of the banking group to Unipol Banca and the costs and revenues of synergy that we will be able to extract. The opportunity to pursue together with the other shareholders, the full exploitation of Arca Holding as well as some positive trends that we see in the ordinary business activities. This view is also supported by the consideration that at the time of joining our banking group, Unipol Banca shows excellent half-year results. A consolidated net profit of over EUR 21 million, almost doubled compared to last year, and the net equity, which exceeds EUR 570 million, higher-than-expected, thanks to the increase in service and a good level of profitability achieved.

Furthermore, the group will benefit from significant acceleration of the derisking process, since, in addition to the disposal of bad loans to UnipolRec, it must be considered that Unipol Banca presents the credit equality at the top of the system with a gross NPE ratio of 8.8%. So as a consequence, the gross NPE ratio of the group on a pro forma basis, as I said before, dropped to 11.8%. For your convenience in the annex, we reported the main financial figures of the first half 2019 results of Unipol Banca on a consolidated basis.

Now let's go quickly into the analysis of the first half figures starting from the balance sheet. We can move on to Page 7. Here we can appreciate the goal for total funding at EUR 94.7 billion in June compared to EUR 91.3 billion at the end of 2018, up by 3.7% with an increase in all the aggregates that is funding now at EUR 51 billion and indirect Bancassurance segments reaching EUR 43.6 billion.

Let's turn to Page 8, here we can see more in detail the breakdown of the direct funding, which comes at EUR 51 billion, up by 2.1% since December 2018. Customer funding comes at EUR 46.5 billion showing a growth by 3.3% since December, recording a further strong increase in current account and [ sight ] deposits by 5.2%, mainly due to the conservative approach of customer to financial investment in this current environment and a decrease of retail bonds and CDs. The institutional funding dropped by 9.6% since December, due to a decrease of repos by EUR 1.1 billion partially offset by an increase of bonds due to the issue of a covered bond for EUR 0.6 billion in March '19.

On Page 9, stock of indirect funding and Bancassurance recorded a positive trend up by 5.8%, since the end of the last year, mainly due to the increase in life insurance segment by plus 8.8% and positive market effect on assets under management. Bancassurance sector in June reached the level of EUR 5.4 billion. This is one of the sectors we are focusing on, and we think we may have great opportunity to exploit there. We believe that customers are more and more sensitive to protection products, especially in this uncertain market scenario. It can support also profitability through higher fees.

Moving on to Page 10. We see the trend for customer loans. We rerecorded a decrease both in net and gross loans, minus 1.1% since December '18. Trend in net performing loans is anyway better [ of ] what we had in June '18. Net mortgaging stock is up by 1.9%, showing the ability to be supportive on a commercial business despite the difficult economic conditions. Also the new production of mortgages shows a very positive performance, up by 21.4% compared to first half 2018. Derisking process is still going on as we will see in the next phase. The good quality of the performing loans book is still confirmed.

On Page 11, you can see the nonperforming exposure of gross NPEs at the end of first half 2019 is confirmed below EUR 7 billion with a ratio of 13.7%. NPE and bad loans coverage are still high at 54.8%, and 67%, respectively. But the main figure of this slide is the NPE ratio pro forma including the disposal of about EUR 1 billion of bad loans to UnipolRec and acquisition of 100% of Unipol Banca. It comes at 11.8% with a drop of almost 2 percentage points compared with the stated June '19 figure of 13.7%. It is obvious that this is not the target we have in mind and in fact, we are committed to accelerate further on derisking. We can anticipate that we are working hard with the goal of trying to reach a single digit target by mid-2020. We are confident to be able to deliver successfully as our track record clearly shows.

Moving on to Page 12. The default rate stays low at 1.8% annualized. We can appreciate a strong improvement of the bad loans recovery rate is 6.4% NOI compared to 5.3% in 2018. This is a very important confirmation that our servicing platform, BPER Credit Management, is a very efficient machine and it is doing an excellent job and playing an important role within our overall NPE strategy.

Page 13. The securities portfolio is broadly stable at EUR 17.2 billion. Also the stock of Italian Government is pretty stable at EUR 5.3 billion since September 2018 as it accounts for 41% of the security portfolio with a duration of 4.1-years, the duration of the total portfolio is 2.8 years.

Now we can move on to profit and loss figures on Page 15. Here the only comment it is worth doing is about the quality of the profit. As you know, first half 2019 figures are not comparable to the first half 2018 ones, which were affected by the nonrecurring realized gains on bonds and the first time adoption of the IFRS 9 accounting principle. First half 2019 closed with a net profit with a bit more than EUR 100 million that we can consider satisfactory because it comes after having charged recurring and nonrecurring costs related to the systemic funds close to EUR 50 million. In particular, we can show a decline of operating cost minus 1% year-on-year and a resilient ordinary NII and commissions, in particular on assets under management and Bancassurance segments up by 1.6% year-on-year. Q2 net profit came at group level of EUR 52.5 million compared to EUR 48 million in Q1, up by 9.5%.

We can go very quickly I promise, through the main trend related to the profit and loss. Starting from the net interest income on the next Page 16. In the comparison, we have first half 2018, NII decreased by 4.8% year-on-year, mainly explained by the IFRS 9 and IFRS 16 effects. In fact, if we exclude these effects, what we call in favor of simplicity, ordinary NII looks resilient, only minus 1.6% year-on-year. Looking at the Q2, we can find substantially the same kind of resiliency with the NII broadly stable over the last 3 quarters.

On Page 17, we can see the net commissions. In the first half, net commissions remained substantially flat year-on-year. In particular, we can appreciate the very positive performance of Bancassurance fees up by 18.9% year-on-year while the decrease of assets under management fees by 3% year-on-year was mainly driven by the reduction of upfront fees year-on-year.

On Page 18, trading income was positive for EUR 27.5 million. Also in this case, not comparable with the first half 2018 for significant nonrecurring realized gains on bonds. Trading contribution in Q2 was lower than in Q1, EUR 5.4 million versus EUR 22.1 million.

Moving forward on Page 19. The first half operating costs are down by 1% year-on-year, an encouraging signal of improvement given the positive expectations we have on cost side when the actions included in the business plan will be fully implemented. Other administrative expenses and D&A impacted by accounting effects of IFRS 16 and not already comparable on year-on-year comparison on a pro forma basis, net of IFRS 16 effects, administrative expenses and D&A down respectively by 1.6% and 15.7% year-on-year.

On Page 20, loan loss provisions came at EUR 74.6 million, [ substantially ] in line with the previous quarter. Cost of credit came at a low 43 -- 63 basis points. Here we can see also the stable level of provision in cost of credit in the last 4 quarters.

About liquidity on Page 22. Our liquidity position is solid thanks to the growth of the total [ eligible ] asset now at EUR 19.3 billion, increased by EUR 0.6 billion versus the end of 2018 along with bucket of unencumbered eligible assets of EUR 7.6 billion and asset liquidity of EUR 1.2 billion made by deposits with the ECB. Both LCR and NSFR ratios stand well above 100%.

On Page 23 where you can see our very solid capital position with a common equity Tier 1 fully phased at 12.33%, up by 9 basis points compared with 12.24% in Q1 and up by 38 basis points versus the end of 2018. I think this is a remarkable result in particular in light of the challenging economic and market environment.

Now in conclusion, we have arrived at the end of the presentation and let me highlight briefly the key final messages on Page 25. First on capital, one of the points of strength of BPER Group is the capability to manage in a very effective way for the capital and the liquidity positions. This is confirmed also in the first half 2019, in which the common equity Tier 1 fully phased reached the level of 12.33%, improving both versus March '19 and December '18. In addition, our group presents a very good liquidity situation and a very low leverage. Second, on asset quality. You know that only 3 years ago, our gross NPE ratio was at 23.5%. Our current gross NPE ratio pro forma of 11.8% along with a solid capital position represents for us a very important achievement, but we are aware that our job on derisking is not completed yet, and we are fully committed to accelerating in spite of what we embedded in the business plan. Our track record demonstrates that we will be able to do this. Third, on profitability, all these achievements come along with a good profitability trend. Net profit revenues are resilient, operating costs are showing signals of improvement. The cost of risk is relatively low and under control. Starting from this situation and considering the expected benefits from the extraordinary deals and from the business plan actions, BPER Group has the real opportunity of reaching a good and sustainable level of profitability. So overall satisfactory situation and a good starting point for the rest of the year. Thank you all for your time and attention. Now we are ready to start the Q&A session and to take your questions. Thank you.

[Operator]

[Operator Instructions] The first question is from Jean Neuez of Goldman Sachs.

[Jean-Francois Neuez, analyst]

I just wanted to ask 2 really quick questions in light of recent developments from the regulation and ECB perspective, the first one is, you've historically benefited from a great funding position with [ value and new ] reliance on the wholesale market, which has been a long-term advantage in terms of stability yet the new regulation forces banks to issue a fair bit of senior and non-preferred bonds. I don't see any so far in your liability structure, I might be wrong here, apart from the subordinated ones. I just wanted to understand where you saw your strategy at this point in terms of tapping markets and whether you had early [ conversation ] as to your issuing plan going forward and how you plan in particular with the retail component. And my second question was on net interest income, obviously, there has been the change in monetary policy from the ECB recently and I just wanted to understand whether you would be willing to share an updated sensitivity for your net interest income?

[Alessandro Vandelli, executive]

Okay, okay. Thank you. Thank you very much. So I give the floor to Roberto Ferrari, for the question about our funding plan and in particular on some potential issue on MREL and so on.

[Roberto Ferrari, executive]

Okay, so the first question, good afternoon to you, is on MREL. It's important to say that we have a positive buffer on MREL, and that we have planned EUR 1 billion of issuances in senior preferred or senior nonpreferred. It depends also on the subordination requirement that we didn't get yet. And we will issue them in 2020 and 2021. It's very important also to say that we still have EUR 2.8 billion together with Unipol Banca -- EUR 2.8 billion of senior bond issued on the retail network. So the structural cost of our liability so far, our bonds will actually get lower, not higher through the retention of the retail bonds and the issuances of the MREL wholesale bonds. On the second point on net interest income sensitivity. We have 7.5% of our net interest income for 100 basis point increase and plus 7.5% yearly and minus 0.6% for a 10 basis point decrease, minus 0.6%.

[Operator]

The next question is from Andrea Vercellone of Exane.

[Andrea Vercellone, analyst]

Got 8 questions -- 4 questions, actually. The first one is if you can provide the risk-weighted assets of Unipol Banca as of June? The second also on capital, if you can recap the negative headwinds and the positive tailwinds vis-à-vis regulatory capital in H2 '19? The third one is on the new definition of default. If you can remind us if you're planning to apply that already this year or later on and if you can guide us on the increase on NPE that this will trigger? And the final question is on the usage of the bad will, which is higher than you had guided for because the equity is higher, the equity of Unipol Banca is higher? So is it still confirmed that more or less you're planning to use all of it to cover the restructuring charges, personnel-related and higher NPE coverage and asset write down? Or is there something different to say?

[Alessandro Vandelli, executive]

Okay, thank you very much, Andrea for your questions. About the first point is on RWA of Unipol. Unipol has RWA around EUR 5 billion at the end of June '19, EUR 5 billion. I will take also the question about the new definition of default.

Now new definition involved, we are waiting to understand if it is possible to have the go-live in the third or fourth Q 2019. So we are trying to [ add ] these elements. About the impact, we have an impact on the stock of NPL and an immediate impact of around EUR 200 million, and at the same time, a reduction on RWA around EUR 170 million.

About bad will, first of all, let me say that is a very positive news to have more active bad will than expected. So now if we compare the price paid for Unipol Banca of EUR 220 million and the net equity around EUR 575 million. So we have probably something around EUR 40 million or more bad will -- potential bad will for -- in this transaction. Let's say that looking at the situation of Unipol Banca, we can say that this is a bank that has already completed strong cleanup actions and so the credit portfolio is [ already after ] a strong disposal of bad loans. At the same time, this bank has no significant real estate property. So let's say, I think that we are going to have a very variable gross purchase price allocation, but at the same time I think that this -- the bad will of around EUR 350 million is an important element. So we are trying to understand how to use it. I think that one point is positive for BPER to offset the impact of the redundancy plan, so you know that we are working on this, and we are not sure if the impact will be on the fourth Q, but anyway, this is one of the potential advantages to have the bad will in this year, and at the same time, it's possible to use it partially also for some extraordinary provision on nonperforming. We are working for an acceleration in derisking, as we said during this conference call, and we have a good level of cover in significant portion of bad loans that we think that is possible to work for a new disposal, and I think that part of this bad will can be used for an [ advantageous reason ]

It is too early to say, we are only some days after the completion of the deal, but anyway this is probably the first picture about the potential usage of the bad will. I don't remember if there was another question, if you can repeat please, I will try to give you an answer or I don't know if...

[Andrea Vercellone, analyst]

Yes. The tailwinds and the headwinds on capital. You had given the full amount in the business plan up to 2021. My question is, if any of it, positive or negative, is coming this year?

[Alessandro Vandelli, executive]

No, we have no expectation for this year coming from this. You know that the area where we try to understand is the TRIM that we have already completed, but we are still waiting for the outcome of this action, but you can remember that during the TRIM, there was also the presentation of the new model for the large corporate. So there is a very positive combination of the effect of the TRIM on one side and the positive effect coming from the pretty large corporate. So we have no worry about this. Potentially we can have also some benefit coming from the -- at the end from the TRIM. So this is our expectation.

[Operator]

The next question is from Riccardo Rovere of Mediobanca.

[Riccardo Rovere, analyst]

Just a couple of questions from my side. I noticed that tax collection is positive in the quarter. This kind of let's say very low taxation has been common, has been pretty common over the past few quarters. It probably has written up some may be off-balance-sheet DTAs. This is what I would imagine. This is something that is going to go on every single quarter from now on? And if I remember correctly, but please correct me if I'm wrong, in past conference calls you mentioned a tax rate in the region of 10%. Now is the -- for 2019, could this be the case also for the years to come, if I remember correctly, the guidance on the tax side, of course?

[Alessandro Vandelli, executive]

Okay, Riccardo, thank you very much for your questions. What I can say is that for 2019, our expectation is to have at the end of the year a tax rate around 10%. So I confirm the level of this 10%. For the next year 2020, our estimation here is to have a tax rate between 15% and 20% for the 2020 and the progressive alignment to 30% in the next year 2021. This is the trend. So 10%, 15%, 20% next year and then a progressive alignment to the 30%.

[Riccardo Rovere, analyst]

And this is due to the recognition of the DTAs that are currently not recognized, is that correct to say?

[Alessandro Vandelli, executive]

Exactly, correct, correct.

[Operator]

The next question is from Hugo Cruz of KBW.

[Hugo Cruz, analyst]

If I may, just to make our life easier, I was just wondering if you could give guidance for the second half for the key items, if possible? Can you give us a contribution of Unipol so I was thinking NII fees, CET1 ratio as well and particularly in NII, I mean there is all some -- there might be some good effects from being -- Unipol being inside a different group, like moving into BPER, I was just wondering if we should take those numbers that you're showing in your presentation at face value, if there will be some readjustments after July?

[Alessandro Vandelli, executive]

Well, it's not simple to express clearly the second half of the year for the combination of different layers because it will be not only Unipol Banca consolidation, but also the Arca Holding -- Arca Group consolidation. Then at the end, there will be another [ second ] from the minority stake that we bought in Banco di Sardegna. So there is varied and different elements. What I can say starting from the standalone basis, starting from the top of profit and loss is that our expectation is to have a stable NII to compare with the first half of this year and some positive effect on commission and fees. If you look at also the 2 quarter 2019, there was a significant increase between the first one and the second and probably is important to underline that there is, let's say, a stable NII compared also 2018 and 2019. There are some very important [ action ] on different area and we are positive on the commission and fee levels. Let's say that in this situation, yes, we have -- we expect to have a positive support also by Unipol Banca, and we can say that it is possible to have some benefits working on the cost of funding that we are already analyzing some potential benefit from a good managing of the liquidity position, and so let's say the second half, in our view, would be a positive for BPER Group. There is another point, let's say, our expectation is to see an ordinary cost of risk lower than in the first half. This is thanks to the action completed during the first half 2019, so we are positive for the second half of the year from this ordinary level of cost of risk. And let's say, the last point looking at the capital position and this -- all these elements, what my expectation is at the end of the year that BPER Group will be in 12% area in terms of common equity Tier 1. This is what I can say about this very important second half, where as I said before, there would be many effects coming from Arca Holding, Unipol Banca and Banco di Sardegna.

[Hugo Cruz, analyst]

All right, thank you. So if I may, just a follow up, I mean, on Arca. You still -- is your intention to just fully integrate kind of the business or is your intention, I think, you are potentially looking at options to find other partners? To expand the distribution? What are you thinking about that?

[Alessandro Vandelli, executive]

Well, let's say first of all that we are very satisfied for this deal because Arca is a historical partner for BPER, for many other banks in Italy, and let's say the performance of Arca, the performance also of the funds managed by Arca are extremely positive in the last year. Said this -- as I said on many other occasions, I would say that it's not a priority for BPER Group to have the control of Arca. What is important to maintain the independent asset manager and working with the other shareholders starting from Banca Popolare di Sondrio. We want to understand what is the best solution, the best opportunity for Arca and after the summertime, I think it's possible to complete the analysis started last month and to take some decision on Arca. What I can say is that first of all, we are satisfied on Arca on one side and on the other one is not a priority for BPER to have the control. Said this, I repeat, we try to understand what is the best for Arca, for a full evaluation of this important asset manager. But it's too early to give you a clear path for Arca, and we want to complete the analysis, and this will be probably after the summertime.

[Operator]

The next question is from Ignacio Cerezo of UBS.

[Ignacio Cerezo Olmos, analyst]

A couple of quick questions for me. The first one is on the dividend policy, if you can give us expectation for the year-end? And how much have you been accruing in the first half? And the second one is in terms of the asset quality, clean up, derisking and, whichever you want to call it, and any NPL disposal? Do you think it is going to be concentrated on [indiscernible] loans or UTP? And what are the NII considerations of deciding one or the other?

[Alessandro Vandelli, executive]

So thank you, Ignacio, for your questions. I would take the first 2 questions and the third one about NII I try to give [ some ] . First on the dividend policy, well, first of all, our policy and our approach for the dividend is not to have up and down year after year, but that [ to establish ] a trend. So let me say that our view for 2019 is to confirm the level of last year and it is possible to do something better than in 2018. Said this, we have already completed last part of the level of dividend of 2019. So we have already accrued EUR 0.11 this year, and so we're already very close to our target and this is the first point. Second answer on asset quality. First of all, let me express the satisfaction for what we were able to do in the last year and also this year we have a significant growth in NPE ratio and now we are at 11.8%. We are working on different projects and this time probably there would be something also on the UTP, not only bad loans. Obviously, the last part of [ protracted spells ] of that we want to try to complete in the first half 2020 using GACS will be on bad loans, but at the same time, we are already working on unlikely to pay that -- unlikely to pay portfolio, working in particular on some single names and small portfolio, and let's say that this [ first ] experience on unlikely to pay is from my point of view a positive. So what is important to say is that there is a significant interest and we are trying to complete before the -- in BPER of unlikely to pay. So FX rate NPE gross ratio will be combination of significant disposal through GACS on one side, unlikely to pay portfolio and also single small portfolio of bad loans. In the end, obviously, the recovery activity of our BPER Credit Management. So this combination, I think, it's possible to grow single-digit next year is our strong objective and is an important step in our strategy in derisking. There was another question about NII, Roberto?

[Roberto Ferrari, executive]

The question was much of the NII in the first half was due to NPEs? I mean bad loans and UTP, it was around EUR 30 million in the first half of 2019.

[Operator]

[Operator Instructions] The next question is from Christian Carrese of Intermonte.

[Christian Carrese, analyst]

Just a quick question on net interest income. I see that the customer spread went down in the quarter, may be you just answered, but just a clarification, what do you expect in the coming quarters? I see that the [ requisites ] are going up year-to-date, also do you see room to [ reach ] some deposits [ into ] assets under management to boost fees? And then on financial portfolio. There are some results -- positive results from the portfolio. There is room to freeze any capital gain around the portfolio to the end of 20 -- so there is room to increase capital on the security portfolio -- through the security portfolio?

[Alessandro Vandelli, executive]

Okay, thank you. Thank you very much, Christian, for your questions. Well, speaking on NII. First of all, let's say that from our point of view it's extremely important to present a stable NII in the last 3 quarters. So you can see that it is around EUR 272 million, EUR 273 million, so now there is, let's say, a level that we are aiming to confirm. Obviously, every day we are working to deal with NII to work to -- to try to have all the option to increase and also to have a positive effect on our revenues. And you said before, the migration from direct to indirect deposit and so on. And this is the typical action. Let's say, you can also see the positive trend in the insurance, product life and also on the asset under management. Said this about the securities portfolio, I think there are some positive elements both in the BPER portfolio, but also in the Unipol portfolio. Roberto, if you want to explain this point?

[Roberto Ferrari, executive]

Yes, Christian. In the financial portfolio at the end of July, we had around EUR 270 million of positive reserve. Most of it is in amortized cost. So they are not invested in our common equity Tier 1 ratio, but will have a positive impact also on fair value as a comprehensive income around EUR 40 million and I'd say that on our common equity on the overall bond portfolio, we have sensitivity that is around around 40 basis point of capital for 100 basis point decrease in the rate.

[Christian Carrese, analyst]

Okay. And then there is room to freeze those capital gain or...

[Alessandro Vandelli, executive]

Yes, there is a possibility to actually -- to sell some bonds and to have positive impact on the profit and loss, but clearly -- we already have the impact on the common equity also through fair value as a comprehensive income.

[Operator]

The next question is a follow-up from Riccardo Rovere of Mediobanca. Sorry, Mr. Rovere withdrew his question.

[Operator Instructions] Mr. Vandelli, there are no more questions registered at this time.

[Alessandro Vandelli, executive]

Okay. So thank you, thank you very much. No closing remarks. Just thank you very much for your attention and very good evening, and see you soon, and thank you, again. Bye-bye.

[Operator]

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