Bper Banca SpA

MIL:BPE

Earnings Call Transcript 2022-Q2

[Operator]

Good morning. Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the presentation of the BPER Group's results for the first half of 2022. [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, everybody, and thank you for joining. Before starting with the presentation of the results, I would like to remind you that as a consequence of the decree of the 25th of July 2022, whereby the Court of Genoa ordered the suspension of the execution, among other things, of the resolution of the shareholders' meeting of Carige of 15th June, whereby the Board of Directors of Carige have been appointed, Carige could not, in fact, present its half year results as of 30th June, as originally foreseen. And therefore, at its meeting today, the Board of Directors of BPER Banca approved the consolidated financial report as at 30th June for the BPER Group, of which Carige is part, in which the balance sheet data of Carige were incorporated as developed by Carige at managerial level according to the indications by the principles -- and according to the principles applicable. And this data was, in fact, reported by Carige.

I would like to present data in the accounts today. The first 6 months results are extremely positive with increasing core business profitability, combined with the further improvement in credit quality and a solid capital and liquidity position. Results include the effect of the acquisition of Carige with the upside already visible in volumes and credit quality. Net profit for the 6-month period amounts to EUR 1,385 million and includes EUR 1,068 million worth of nonrecurring items, primarily accounted for by bad will recognized following the acquisition of Carige. Net of this amount, net profit totaled EUR 317 million.

The net recurring profit for the second quarter amounts to EUR 204 million, underpinned by operating income totaling EUR 916 million, up 3.7% quarter-on-quarter, primarily driven by net interest income growing and net fee and commission income also increasing, respectively, by 8.7% and 2.9% quarter-on-quarter. The operating costs for the quarter, net of EUR 33 million worth of nonrecurring items, totaled EUR 557 million, in line with the previous quarter.

In terms of volumes, they have increased significantly since the beginning of the year, benefiting from Carige's acquisition but also from a forceful commercial performance. As a matter of fact, considering the scope on a like-for-like basis, direct funding was up 0.8% quarter-on-quarter. And also, net loans were up 2.5% quarter-on-quarter. In lending, new loan origination in the second quarter amounted to EUR 4.3 billion, up 34% quarter-on-quarter. And the trend started in the previous quarter, as communicated previously.

As for credit quality, the NPE ratio is 4.3% gross. If I do not remember wrongly, it was 4.9% last time and 1.8% net, down further from the first quarter of 2022, benefiting from both the onboarding of Banca Carige and from a still very low default rate of 0.8%. The annualized cost of risk is 47 basis points, down from 57 basis points in the first quarter of 2022.

As for capital and liquidity, the bank's capital strength is confirmed with a pro forma fully phased CET1 ratio that, including the full benefit deriving from Carige's DTAs, settles at 13.4%, broadly in excess of the SREP requirement of 8.29%. And the liquidity position is likewise excellent with indexes well above the regulatory thresholds.

The acquisition of Carige was finalized on the 3rd of June this year to an extent of 79.418% of its share capital successfully concluding, a path we started in December last year. The transaction, which we strongly advocated, as we said on numerous occasions, has great industrial and strategic significance as it will allow us to further strengthen our competitive position on a national scale, particularly in geographies where our footprint was limited, including Liguria, and to increase our customer base by 20% to around 5 million customers.

As already highlighted in the business plan presentation, as we said before, the acquisition rests upon a strong industrial rationale. We had declared that its impact would be -- on capital would be negligible, and so it is. The credit quality upside is already visible. And the acquisition will additionally contribute to increasing the future profitability of the BPER Group thanks to synergies. These synergies were quantified at EUR 155 million gross, 50% of which we expect will be achieved as early as in 2023 with 100% being achieved in 2024. And the synergies are accounted for by cost savings for an amount of EUR 85 million, lower cost of funding for an amount of EUR 40 million and higher revenues for an amount of EUR 30 million.

Let me remind you that as part of the deal, in order to prevent antitrust issues, an agreement was entered into with Banco Desio for the disposal of 48 branches, of which 40 held by Carige and 8 by the BPER Group, specifically by Banco di Sardegna, with closing which we expect will be finalized by February 2023.

As for volumes, as I said, volumes are on a significant increase, driven both by Carige's acquisition and the forceful commercial momentum since the beginning of the year. In particular, direct deposits from customers totaled EUR 114.5 billion, up 12.9% year-to-date, of which EUR 101 billion mainly accounted for by sight deposits and current accounts of retail and corporate customers, up 10% year-to-date. On a like-for-like basis, that is to say excluding the EUR 14.6 billion contribution from Carige and including the volumes of the branches in scope for disposal which are classified as other assets in the balance sheet, BPER's direct deposits were up 0.8% quarter-on-quarter.

In lending, net loans to customers amounted to EUR 91 billion, up 15% year-to-date, with approximately EUR 10.5 billion contributed to by Carige. As part of the aggregate, state guaranteed loans totaled EUR 8.4 billion. I would remind you that in the previous quarter, we had communicated EUR 7.5 billion for Carige. Now it's got EUR 5 billion, and EUR 2 billion is for Carige. On a like-for-like basis, net loans to customers were up 2.5% quarter-on-quarter, underpinned by a pickup in loan demand. And as we said, new loan origination in the second quarter amounted to EUR 4.3 billion, up 34.2% quarter-on-quarter.

As for indirect funding, it amounted to EUR 163.5 billion, of which EUR 15 billion from Carige. The stock has decreased by 1.7% since the beginning of the year due to the financial market's negative performance but also due to the lower volumes at the branches that are being sold, which should be 1.1. It is, however, noteworthy that net funding over the first 6 months of the year totaled EUR 600 million and remained positive in the second quarter as well in spite of financial market turmoil.

As for credit quality, as we said at the beginning, it shows an additionally improving trend. The NPE ratio was, in fact, down to 4.3% gross and 1.8% net quarter-on-quarter, benefiting also from the acquisition of Carige, whose gross NPE stock amounting to EUR 148 million has been acquired net of the loan losses already taken as part of the PPA and which we expect we will sell by the end of the year.

On this connection, with regard to asset derisking, the amount of gross nonperforming loans is expected to significantly decrease further over the next quarters in the wake of the disposal of additional nonperforming loans for a total amount of EUR 2.5 billion, which includes the bad loan servicing platform for which considerable interest was shown by specialized industry-leading players. And in fact, the exclusive negotiations have been entered into with Gardant for this.

So the transaction has started. And the NPE coverage remains high at 60.3%. And in particular, the coverage of bad loans is 75.6%. If I remember correctly, it was 76.2%. And coverage of UTPs is 46.6%. Performing loans coverage is 0.66%, of which 4.2% for Stage 2 loans.

Again, for credit quality, looking at the default rate, the annualized default rate is still very low and settles at 0.8%, slightly down from the default rate in 2021. And the annualized bad debt recovery rate remains high at 9.9%, up from last year's 6.7%. And the key contributors in this quarter were particularly the disposals of 2 exposures.

And with regard to the securities portfolio, it totals approximately EUR 31 billion, with EUR 3.2 billion contributed to by Carige. And its risk profile continues to be very conservative. 90% is accounted for by bonds with an average duration of 2.1 years. Italian government bonds amount to EUR 10.9 billion, up quarter-on-quarter due to Carige's onboarding in the group with EUR 2.6 billion. And the Italian government bond portfolio duration is 2.2 years.

Moving on to the income statement. I would remind you that the 6-month period closed with a net profit of EUR 1.4 billion and includes EUR 1,068 million in nonrecurring items, primarily accounted for by the bad will generated by Carige's acquisition, amounting to approximately EUR 1.2 billion. Excluding one-offs, net profit came in at EUR 326 million, of which EUR 203 million posted in Q2, up 81% on the previous quarter. In particular, in the second quarter, core revenues totaled EUR 872.4 million, up 5.5% quarter-on-quarter, thanks to both a pickup in net interest income, which increased by 8.7% quarter-on-quarter, and net fee and commission income, which was up 2.9% quarter-on-quarter.

Operating costs net of nonrecurring expenses, referring to the acquisition of Carige and adjustments to the cost of the workforce optimization efforts, totaled EUR 557 million. Net impairment losses in the second quarter amount to approximately EUR 104 million, down 8.2% quarter-on-quarter with the cost of credit for the 6-month period, therefore, settling at 47 basis points versus 67 basis points in 2021 and 57 basis points in the first quarter.

As you can see in the slide on bad will, the details of the PPA are there. And the PPA led to the recognition of bad will for approximately EUR 1.2 billion, inclusive of impairment losses for an amount of EUR 306 million, including EUR 105 million on loans; EUR 69.2 million on property, plant and equipment, particularly buildings; EUR 60 million on disposal of branches; EUR 56.6 million, almost EUR 57 million, on contingent liabilities; and EUR 25.2 million due to positive tax effects. So factoring in the nonrecurring impairment losses and provisions booked to Carige 6-month accounts for an amount of EUR 212.5 million, impairment losses totaled EUR 518 million.

Net interest income is the following slide. And net interest income for the 6-month period totaled EUR 785 million, up 8.7% quarter-on-quarter driven by higher interest rates, coupled with increasing lending volumes. And they're still growing after the closure of the reporting period. The quarter-on-quarter reduction in the TLTRO-III contribution, due to an increase in excess liquidity owing to the onboarding of Carige as well, was more than offset by the enhanced securities portfolio contribution, which benefits from higher yields due to the interest rate hike. Customer spread is now 1.4%, up quarter-on-quarter, including as a result of repricing actions, but that's not the only contributor. We had other actions contributing to that.

Slide 17. Net fee and commission income totaled EUR 914 million, of which EUR 463 million recognized in the second quarter and was up 2.9% quarter-on-quarter driven by the traditional banking services segment for an amount of EUR 263.7 million, up 4.3% quarter-on-quarter. And this is also the result of the growth-oriented policy, particularly in the corporate segment that yielded positively, driven by the effects on the market. Commissions on indirect deposits and bancassurance totaled EUR 173.2 million, improved the resilience despite the strong volatility of financial markets. Particularly noteworthy is the strong increase in fees on nonlife bancassurance, which totaled EUR 26.5 million. Not that much, but still, we must emphasize that the increase was 92.2% on the previous quarter. So it's a segment that is growing rapidly, and we appreciate that.

Then trading income totaled EUR 84.4 million and showed strong resilience despite financial market headwinds.

Operating costs in the first half of 2022 totaled EUR 1,148 million, impacted by EUR 33 million of nonrecurring costs recognized in Q2, namely EUR 24 million in adjustments to the cost for the workforce optimization efforts making use of the Solidarity Fund announced in December last year. This is due particularly to the fact that the catchment area has expanded and so -- in terms of the number of users. So we had to adjust the amount, but it will yield positively in the future. And then there's EUR 9 million in one-off charges in relation to the process of Banca Carige's acquisition, in particular, in relation to advisory and consultancy.

Excluding these costs, operating costs amounted to EUR 1.1 billion, of which EUR 556 million recognized in the second quarter, broadly unchanged as compared to the previous quarter. In particular, staff costs totaled EUR 335 million, down 4.7% quarter-on-quarter. As we said before, other administrative expenses amounted to EUR 173 million, up 7.6%, reflecting the costs incurred for the start-up of the new business plan projects which we had planned. And so it's perfectly in line with our projections.

Moving on to the cost of credit. As I hinted at before, I would repeat that net impairment losses totaled EUR 216 million. Those that we took in the second quarter amounted to EUR 104 million. But I would like to emphasize that a little bit more than 50% of these provisions were needed only to -- were useful only to increase the coverage of loans. And provisions, however, have gone down by 7.4% quarter-on-quarter, which is reflective of the good trend we are observing in credit quality and which we can expect and declare today after the 6-month period was closed. The annualized cost of credit was 47 basis points, down from the normalized cost of 67 basis points in 2021.

With regards to capital, the bank's capital strength remains high with a pro forma CET1 ratio -- fully phased CET1 ratio of 13.43%.

And so to conclude, we are very happy with the way this 6-month period went. We had worked a lot on it, and we have observed a growing operating profitability driven by the good performance in both net interest income and net fee and commission income. There's an ongoing improvement in credit quality, which will additionally benefit from the planned disposal of NPLs for an amount of EUR 2.5 billion. And another thing that we can observe is the sound capital and liquidity position, which will enable us to rise up to the challenge of a very uncertain external environment with confidence. All of this is to us a solid base to support the stronger future profitability deriving from the enhanced competitive position. So we think we have a good, solid base to -- goal to build upon. And we are now involved in the integration of Carige, which we expect will be completed by the end of the year.

I tried to be as fast as possible so that you have more time for questions, and we're willing to take your questions now.

[Operator]

[Operator Instructions] The first question is from the Italian conference by the Domenico Santoro from HSBC.

[Domenico Santoro, analyst]

Yes. I would like to know if you can give us color about the net interest income and net fee and commission income and costs for the second part of the year, including, of course, the contribution from Carige, particularly with regard to net interest income because there are, of course, some other elements that will be included, the TLTRO and the impact of interest rates.

And I would like to know if there are some nonrecurring items missing in the second part of the year, particularly with regard to the costs for restructuring, if you can give us further details about that and disposals as well.

And what should we expect in terms of core Tier 1 by the end of the year? If you can give us details and the pluses and minuses, so to say. But I do not know if it's too early, but I will make the same question that I may have made during the business plan presentation. Considering the good results we made, can we expect an increase in the payout?

[Piero Montani, executive]

You made one question after the other, and they are all very important. So as far as core Tier 1 is concerned, we reassert that the acquisitions impact is expected to be negligible, and it is. And so we do not expect any variations, any substantial variations on that. Of course, the second part of the year is challenging and will see us involved in a number of transactions. But I was saying that the performance is good. The trend is good. I cannot say it's going beyond the expectations because we had worked on that a lot during the first part of the year. But we think the trend will continue as expected then -- unless the market or the context deteriorates.

But I can confirm what we stated in the business plan for payout. So we had given guidance for the end of the business plan, so not for the end of the year. So not for this part of the year, we cannot confirm the second part of the year yet. So it will be more generous than in the past, but it will also have to take into account some transactions that are complex and that we will include. And -- but I can confirm what we said in the business plan.

As for net interest income, considering also Carige's contribution, we expect 4.4 -- EUR 450 million, EUR 440 million, EUR 450 million. So to be generous, it could be EUR 490 million, EUR 500 million. But this is what -- this is the range we expect. I hope I covered all of the questions.

You said something about nonrecurring items. As planned in the business plan, we have just started. So there's a number of costs that we will incur, and they are the ones that we had assumed. So we will be more precise in the second part of the year, but we do not expect any surprises on top of what we stated. So I'm confirming what I stated during the business plan presentation.

[Operator]

The next question is from Marco Nicolai.

[Marco Nicolai, analyst]

I would like you to confirm that in the P&L, you're not including any effects from Carige going beyond the bad will.

[Piero Montani, executive]

Yes. Yes, I can confirm that. Yes.

[Marco Nicolai, analyst]

And then again on the bad will, can you confirm at this point that you have covered all of the bad will, including 100% of it, and not only the bad will that concerns that part of shares that you are already holding? And can you also say that in terms of M&A costs, everything was taken in the P&L, and we should not expect any additional cost?

And then with regard to the decree of the 25th of July that you hinted out at the beginning of your presentation, this decision by the Court of Genoa, does it have -- is it likely to delay the effect of the synergies? What should we expect out of this decision? What are the next steps that you will take to resolve this issue? And that's it. So these are my questions.

[Piero Montani, executive]

I have -- my microphone was off. I'm sorry. Yes, for the next -- for the first questions you made, my answer is yes to the 3 of them.

Then as far as the write-downs and integration costs in the P&L are concerned, yes, for sure, there will be some cost in the second part of the year because we've just started. But they are the ones that we have envisaged and included in the business plan. So there are no additional costs on top of what we had already mentioned.

And the last part of your question is more of a novelty to us as well because the decision by the court was a surprise to us, caught us by surprise. And so there will be a hearing on the 9th of August at 11 in the morning. So I do not know whether we will have an answer during the same day or if we will have the answer and reply in the following days. But of course, we're hoping that the decision would be favorable to us. Even if it was not, however, we would then, of course, call another shareholders' meeting so that we can establish a new Board of Directors. And then, of course, this has delayed the process a little bit. But in our plans and according to our plans, we will still be able to close the transaction by the end of the year. This is our objective.

So we have a number of alternative plans in place that will enable us to close the transaction by the end of the year anyway. You know that a sellout period has been opened. Now we are at more than 40% of the stake now. So we're confident that we will reach 95%. This, of course, will make things much easier because after -- once 95% of the stake is reached, then you can go for the squeeze out, and this will help. But I cannot tell you that this issue was not a surprise. It was, but it cannot revolutionize the entire plan.

[Operator]

Next question is from the English channel. Mr. [ Cruz ]...

[Unknown Analyst]

Really, I have 2 questions. One is for the EUR 2.5 billion of NPL disposal you want to execute, do you still need to book further provisions to get this disposal done or not, anything material?

And second, your NII was very strong, mainly on the commercial NII Q-on-Q. What -- I didn't see the similar effect with your peers. So what's going on here? Was this -- does this include anything like hedges that you put in commercial NII? Are you doing something different from your peers to grow the -- basically the loan side so much? That's it.

[Piero Montani, executive]

As for the EUR 2.5 billion disposal, net -- nonperforming loan disposal, there's no impact created by this issue. And so we have already entered the exclusive negotiations today regardless of the result -- regardless of what happened and regardless of the outcome that this will imply.

Then as far as what we are doing compared to our peers, everybody is doing as much as they can, of course. And our position is probably a little bit different, though, because within 1 year, we have really changed our DNA, so to say, because we have scaled up a lot, almost doubled our size in terms of volumes, customers, employees, suffices to think that we have included about 8,400 employees from UBI, for instance, and Intesa so -- with the previous transaction.

So we have really changed. 2.5 million new customers have been onboarded. So comparing ourselves with our peers, it's difficult for us today. We are now including geographies that were new up to some time ago with a difference, though, because with UBI's onboarding, you may have seen it from the churn rate, that has remained stable. There was no attrition. And so we can say now after some time has passed that the acquisition has been settled down, so to say. And the same will apply to Carige, because Carige went through a very difficult, complex history. And so the problem is not that of getting new customers, but winning back those volumes that the bank had lost.

And so we're working a lot and we will still work a lot on commercial activity. You may have seen it from the EUR 4.300 billion new originations that we made, which is 32% more than usual. I can confirm that this trend is going on this year. And so we are trying to acquire substantial volume. So I may say that our peers, our peers we can compare -- we cannot compare ourselves to Intesa or to UniCredito because of the size and type of banks.

But if we compare ourselves to Banca Popolare, which is more similar to us, I would say that we are a little bit more aggressive because we want to grow a lot. And we have activated a number of services that we didn't have before like Corporate & Investment Banking, which was there but was more of a residual type of segment, which is now instead counting -- numbering 120 employees. And we aim at having 160 employees in that segment. And we are acquiring specialty skills, and we're working to grow. And this is confirmed by the transactional banking, which is, of course, the result of a market that has favored us. But also, it is the result of the commercial momentum.

And another thing that we're doing, as we announced in the business plan, we have just started, but we would also like to focus a lot on private banking and asset management in general. And in fact, we will give Banca Cesare Ponti that we are onboarding from Genoa. We were going to vest that bank with a mandate, so to say, that is working on this segment. And then the other segment we're working on is insurance. That, of course, is being pursued with a distribution agreement we have with Unipol, that is our shareholder with a stake of 19.9%. So I'm sure they are happy as well.

So these are the segments that we're working on, and I can ensure that we're working intensively on all of these fronts. And the first quarter results had already borne witness to that, and now the results are confirming this, probably the latest quarter, the last quarter, bear further evidence. And so I would say that a lot of these results are the consequence of the onboarding -- I'm sorry, are the consequence of the activity that BPER has made.

Carige to us was and is a very important investment because we think there are opportunities for growth there, significant opportunities for growth there. And I'm saying this because I know the bank. The bank went through 6 years that were extremely difficult. And it has been able to retain 800,000 customers that were there when I was there, and they are there now. So what I may say -- what I must say is that volumes have -- there have been, so to say, outflows of deposits. And it's quite comprehensible because people who had deposited their money there, when the bank started having problems, they started to take their deposits somewhere else. And instead, the companies and businesses that needed financing turned to banks that could be more appealing.

And so the customers left their accounts there but transferred their deposits. And so the task we will have to carry out together my colleagues -- with the colleagues we have there, and I know them, and I know that they are very much willing to win back the volumes, is that of going on winning back those volumes that have been lost during these years. And so this is more or less what makes us different from other banks. Let's put it this way, unlike other banks, this bank is being built. We are building it. And so we've got a more intense period of work and activity but probably more opportunities for growth than others.

[Operator]

[Operator Instructions] Mr. Montani , ladies and gentlemen, there are no more questions registered at this time. Actually, there's a follow-up from Domenico Santoro from HSBC.

[Domenico Santoro, analyst]

I'm sorry. Just for me to have all of the details, going back to the restructuring cost, is it correct to say that you only have to make the accrual for those EUR 70 million that belong to Carige -- that pertain to Carige for the second part of the year that and EUR 220 million were not included, EUR 220 million, I'm sorry, of the penalties from -- on the commercial agreements, on the distribution agreements?

[Piero Montani, executive]

Okay. I understand. Yes, it's correct. What you say is absolutely correct. So the cost of penalties have partly been set aside, not all of that, though, because as you know, on some counterparties -- with some counterparties, there's a negotiation or discussion in place. And so of course, we're trying to resolve and terminate these contracts. But we would like to terminate them at a more favorable cost. And so part of the costs have been included. Some others have not, and we will complete this process by the end of the year. So this is my reply to your questions.

[Domenico Santoro, analyst]

And can you give us guidance on the costs?

[Piero Montani, executive]

EUR 70 million for Carige and EUR 220 million for the penalties, yes.

[Domenico Santoro, analyst]

No. Costs, operating costs, that's what I was referring to.

[Piero Montani, executive]

So you would like to know more of the guidance -- to have a guidance for the operating costs for the second part of the year? We expect 640 -- I'm sorry, EUR 640 million. I was thinking of operating income and said operating costs. EUR 640 million, EUR 650 million is our expectation.

[Operator]

Next question is by Azzurra Guelfi from...

[Azzurra Guelfi, analyst]

Net interest income is my first question. So my question is about the spread. When I look at the comparison between the quarters and the trend of the spread, it's more on the asset side and not on the liability side. And so I would like you to give us color on the drivers for the improvement.

And the other part is about volumes. So we have seen that the curve is steepening. And so how is this reflecting on financing and loans to the SMEs and the demand for loans in the next quarters?

[Piero Montani, executive]

Well, as for volumes, we have observed this demand increase. And so we keep following this. The demand is there. The demand is going on. As for the spread, it has gone up to 1.42%, in line with what we were expecting. We may even improve it, but it will depend on the trend on the market. If this is the trend of the market, then there may be an improvement. But in this phase, we only captured that improvement partly. But it would not have been possible to do more.

So as far as customers are concerned, as I said before, we're growing a lot with new acquisitions. And the new acquisitions, however, pay some sort of an entry fee because we are starting. And -- but it's in line with what we expected, considering the market trend. And so we expect this will go on. We have seen that the trend is going on well. We saw that in July. So we do not expect it will change abruptly, and then we will see what happens after the summer because it's going to be based on the market trend.

[Azzurra Guelfi, analyst]

If I can make a follow-up question on this. The -- my question was more of -- on, is there a level of rates on which it may become more -- become difficult for you to operate, so to say?

[Piero Montani, executive]

So the -- I was trying to reformulate what you are asking. Clearly, the rate increase is not a disturbing factor at all in this phase. But the -- what is -- it's more the deterioration of the market or the recrudescence of or exacerbation of some negative things, then that would have an impact. But...

[Operator]

Next question is a follow-up from Marco Nicolai.

[Marco Nicolai, analyst]

Yes. I will seize the opportunity to make an additional question about risk-weighted assets. You are now at EUR 58 billion, and you will get to EUR 61 billion by 2025. But there are going to be reductions made, between EUR 4 billion and EUR 5 billion, so coming from the disposals, partly from Carige's transition to the AIRB models, the advanced interest rate-based model. So I was thinking that this level that you have in your plan for risk-weighted assets is quite high. It's true that there may be some impact from the EBA guidance or Basel IV. But could you help me understand how we got to EUR 61 billion? Have I lost something probably?

And then my question is, is there anything nonrecurring in the line other operating income in this quarter? Because I have seen EUR 10 million of costs in there. And so if you can expand on that a little bit.

[Roberto Ferrari, executive]

Yes. I'm Roberto Ferrari speaking, CFO. So the EUR 61 billion estimate considers both an increase in loans, which is already visible, as the CEO was saying, and will continue to increase in segments. Like the large corporate has a higher RWA density. And it also takes into account an estimate from the impact of Basel IV because we have incorporated between EUR 4.5 billion and EUR 5 billion of RWA increases due to the EBA guidance and Basel IV and FRTB. So there's a margin of conservatism in there that is due to the impact of the full inclusion of the impacts of Basel IV.

And as far as the nonrecurring items in the other income line are concerned, there's a negative impact of about EUR 20 million due to the -- a pickup in CIB that had an impact on other income.

[Marco Nicolai, analyst]

Could you give us an update also on NII sensitivity, including Carige? Are there any new elements that you can provide compared to the last sensitivity data that you provided?

[Piero Montani, executive]

No. There is nothing new. So it's what we communicated. I think we already communicated and announced 15%, which we confirm today.

[Operator]

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

[Piero Montani, executive]

I would like to thank you. It's very hot today. So I would thank you twice for you having been patient and listening to the conference call and being -- for being patiently listening to us on this hot day with questions. And we are willing to take any further questions. My colleagues around the table are here. You can call us at any time. Thank you, and good evening, everybody.

[Operator]

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

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