Bper Banca SpA

MIL:BPE

Earnings Call Transcript 2021-Q3

[Operator]

Good evening. This is the Chorus Call conference operator. Welcome, and thank you for joining the conference call on the 9 months 2021 consolidated results of the BPER Group. [Operator Instructions]

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

[Piero Montani, executive]

Good evening, everyone, and thank you for joining. I apologize for the late time, which is not the best. But I will try to be as brief as possible, trying to give you the most important information and give you time for the questions and answers. I'm here with the CFO, Mr. Roberto Ferrari; the Planning and Control Officer, Mr. Alessandro Simonazzi; the person in charge of the reporting, Bonfatti; and Fabio Pelati from Investor Relations.

The first 9 months this year closed with a very positive results, which I do not want to say that were even in excess of our expectations. But they will not be taken for granted because of the operation that we carried out that show our commitment. That was quite of a network in terms of the number branches and people and customers that we acquired, of course, the integration process could have had some problems, but we could bring everything to successful completion and the result is very positive. We're very much happy with both the profitability, which continues to grow, and net profit for the period and also the volumes, asset quality. Asset quality was even not only confirmed, but even improved.

As far as profitability is concerned, net profit for the period amounted to EUR 586 million. And excluding one-offs profits before tax amounted to EUR 417 million, which was driven by growing revenues from an increase in net fee and commission and the placement of asset management and bancassurance products, which went very well, and the ongoing recovery of a traditional banking, which we were expecting, but it was not to be taken for granted.

The third quarter confirm the positive trend and closed with a net profit of EUR 84 million, which is very good after paying EUR 80 million worth of contributions to the Italian banking system, which exceeded last year because, of course, the mass of deposits was larger. Then the annualized cost of credit for the 9-month build was 70 basis points, excluding, however, the additional loan loss provisions that we took in the first half of the year that was about EUR 310 million, if I remember correctly.

And moving on to volumes, I would like to underline following. The excellent retention of banking relations with customers from the newly acquired branches, which bears witness to the successful completion of the integration, indirect funding and the net profit of the branches that we have acquired is good. The expectations we had in the original plan was that the churn rate would have been heavier, and instead, it's in line with that of the group for the branches we have acquired.

There was a very good uptrend in indirect funding. And net funding from AUM in the quarter exceeded EUR 900 million. It was EUR 941 million, which is a very important figure for us because it's almost doubled the level of the previous quarter, which was EUR 313 million (sic) [ EUR 513 million ].

The loan payment moratoria declined to EUR 3 billion in the third quarter. And state-guaranteed loans were up 6% quarter-on-quarter to almost EUR 7 billion. If you -- we focus on credit quality, we can observe that the trend is on a continuous uptrend. The gross NPE ratio is going very well because it declined further to 5.5%. The latest data was 5.7%. But the net NPE ratio was even better because it declined to 2.6% from 2.8%.

The stock of nonperforming loans in the future will benefit also from the derisking strategy that we have talked about also in the previous -- on the previous occasions. And we had given guidance of sales for EUR 1 billion during the year. EUR 700 million have already been disposed of. We're short of the target by EUR 300 million. And we are convinced and [ starting ] that we will complete this disposal plan by the end of the year.

The stock of -- sorry, the NPE coverage ratio was further strengthened to 55.3% versus 51.8% in the previous quarter, so 300 basis points as an improvement. And also, UTP's coverage ratio was also significantly up. And so the total coverage is going well.

With regard to capital strength, the CET1 ratio is confirmed at 13.7% with a large buffer versus the current threat requirement of 8.1% -- 8.125%, combined with a sound liquidity position which is comfortably in excess of the minimum requirements.

So I would go over to the various items on the following slides, which I summarized in this very first slide. But we'll go into details now. Direct funding reached EUR 97.9 billion, almost EUR 98 billion of which EUR 89 billion in current accounts and deposits at a very marginal cost. The deposits were down slightly by 0.6% quarter-on-quarter due commercial actions aimed at reducing excess liquidity and promoting also households' adoption of a medium-, long-term investment approach. Institutional funding amounted to EUR 4 billion and was broadly stable on the previous quarter.

As far as indirect funding is concerned, it's on an uptrend. It rose to EUR 166 billion, driven by the positive commercial input. And we, of course, have to thank the entire organization for the effort. The increase was concentrated in assets under management and bancassurance, which, as I said before, net funding inflows rose to EUR 941 million and almost doubled the level of the previous quarter. And this must be underlined because last quarter also included August, which is normally not the best month for this type of placements. And so the results we have achieved is very important, and it gives us, of course, feedback in terms of the future and the near future.

What I can confirm is that even though the results have not come for the month of October, I can tell you that the trend continues positively in October. And it's my conviction and also the conviction of my colleagues around the table that the trend will be confirmed in the following months as well.

As far as net loans to customers are concerned, they settled at EUR 76.5 billion on a slight increase since last quarter. And this is also a very important piece of information because in the past, we generally had a slight decrease. And instead, here, we have a reversal of trends. And this gained momentum in the latest part of the year with a good increase. And we think that this performance will go on in the last quarter of the year. But we also think that it will accelerate next year, probably driven by investments that are under the national resilience plan and the cofinancing that will be connected to it and that some analysts are expecting will be for a large amount.

As part -- as for loan payment moratoria, the declined to EUR 3 billion versus EUR 3.2 billion in the previous quarter and 76% of active moratoria. And this is important as classified in the low-risk range of internal credit ratings. It's important to underline that the default rate of expired moratoria continues to be very low at around 1.3%. As for state-guaranteed loans, we have seen an increased by 6.3% quarter-on-quarter, and they settle at EUR 6.9 billion.

Moving on to credit quality. We have already hinted at the gross and net NPE ratio. I would remind you that they are 5.5% and 2.6%, respectively. And they are going down significantly, and we expect they will go down further by the end of the year. We confirm the EUR 1 billion target for disposals that we had communicated. The coverage of nonperforming exposures, I would like to underline that coverage of bad loans went from 60.9% in the second quarter to 63% with an increase by 2.1%. UTP loans are at 48.4% coverage versus 43.1% in the second quarter with a 5% increase. Total coverage of NPEs rose to 55.3% from 51.8% in the previous quarter, a 3.5% increase. And the volumes that you can see here are very good. So the performing loan coverage is in line with the previous quarter, 0.6%.

Again, with a reference to credit quality, we see that stage 2 net loan stock at the end of September amounted EUR 9.6 billion and continue to account for 12.9% of the group's performing loans. And their coverage is, like, quite stable at 3%. We said that before, we have been very stringent and strict in classification. And we have included in our classification in this class, the medium high rated exposures to sectors which were most affected by the health emergency with -- even though we didn't see any signs of deterioration, we wanted to have a closer focus on them. And so these categories were restaurants, hotels, travel agencies, transport and leisure, most of this is included in the cluster. And we monitor the situations very accurately.

As far as the default rate is concerned, it continues to be 0.8% lower than last year. So I don't think -- there's no need for comments there. As for bad loans average recovery rate, it continues to be robust and is 6.4% versus 6.9% in 2020.

The securities portfolio shows a moderate growth during the quarter. The stock of securities amounts to EUR 27.4 billion, 96% of which is invested in bonds with a duration of 2.4 years. Italian bonds account for 40.7% of the total bond portfolio, which bears witness to our strategy that has always been based on diversification in addition to caution. And Italian government bonds amount to EUR 8.4 billion and have a duration of 3 years.

Moving on to the income statement. As noted above, the first 9 months of the year closed with a profit for the period of EUR 586 million with profit before tax amounting to approximately EUR 417 million. The profit for the quarter was approximately EUR 84 million, which is very good result taking into consideration, I mean, the impact that the contributions to the Italian banking system funds, and it was EUR 80 million. And if you consider the contribution to the Italian banking system funds, and this would be more or less the same in the future, too. But one-offs include integration-related costs totaling EUR 94 million, of which EUR 18 million in personnel expenses and EUR 76 million in other administrative expenses. Additional LLPs were taken for an amount of EUR 310 million, as I said before, in the first quarter -- first half of the year. Goodwill impairment amounted to EUR 230.4 million. And as for badwill, the badwill that was originated by the acquisition of the 620 branches amounted to roughly EUR 1.128 billion, inclusive of EUR 310 million in cash recovery.

We will now focus on the net operating income. Net operating income rose to approximately EUR 2.5 billion, supported by the growth in core revenues, which -- by which we mean net interest income and net commission income. Noteworthy was the excellent results achieved in Q3, closing at EUR 892 million, thanks to the growth in core income, which was almost 5% up from the previous quarter. And in particular, there was a positive trend in net commissions, with share of core income rose to 53% in the third quarter from 45% in the same period last year.

So what I mean is that the incidence of net commissions was 53% in the third quarter, which is a very import piece of information for us that we think we will maintain in the future. So considering that last year, we were at 45%, it's been a very good qualitative leap forward. And it is important to highlight that the guidance of EUR 800 million as a whole in net interest income and net commission income was reached and even exceeded. So we had given this as a guidance in the past, and we can confirm it for this quarter.

And let's focus on net interest income. The first 9 months posted EUR 1.119 billion in net interest income, of which EUR 981 million from commercial activity. Net interest income in the third quarter totaled EUR 391 million, plus 1.6% quarter-on-quarter. And TLTRO-III contribution, including the impact of excess liquidity held at the ECB's deposit facility in the quarter totaled EUR 24 million. And we expect a pickup in the next quarters as a result of commercial actions that we have put in place. On the one hand, we have initiatives to contain excess liquidity, particularly with institutional customers. And on the other hand, we have a very effective commercial strategy in place to promote loans that, as we told you, we have seen an increase in, in the latest months. And we will expect -- we expect further developments in the coming months.

And as far as commission income is concerned, so in the 9-month period, the net commission income grew to EUR 1.172 billion, driven by growth indirect deposits and bancassurance. Net commissions were a major uptrend to EUR 438 million, plus 8% quarter-on-quarter, mainly benefiting from increasing AUM and also from bancassurance. But also traditional banking fees continued their uptrend by 5.5% quarter-on-quarter, driven also by the ongoing rebound in the Italian economy.

As far as trading income and dividends are concerned, what we call finance trading income, settled at EUR 173 million in the 9-month period, of which roughly EUR 43 million in the last quarter as it benefited from positive market performance and also some capital gains on securities disposals in this part of the year.

Operating costs totaled EUR 1.6 billion, impacted by EUR 102 million in one-off charges mainly associated with the going concern integration process. The third quarter operating cost amounted to EUR 517 million, down 8% quarter-on-quarter following the reduction in staff expenses because we did not neutralize it. And so we always have an advantage in the summer. But in this quarter, they went down by 11.6% quarter-on-quarter. I would remind you that we -- there's a transaction going on that we have already announced to the market and it's -- what I mean is the workforce optimization process that was launched in the first part of the year, which is due for completion by 2024. And it envisages the exit -- I'm sorry, so the negotiations with the unions are underway, and it envisages the exit of approximately 1,700 employees and a hiring plan.

Looking now at the cost of credit and provisions and other items. LLPs as a whole amounted to EUR 715 million and included EUR 310 million in additional provisions. Out of the EUR 700 million loan loss provisions, I would say that most of them did not confirm a migration from 1CET -- from risk class to another. On the contrary, that migration was very limited, which bears witnessed to the fact that the bank is always paying a lot of attention and caution to the provisioning approach -- to its provisioning approach. So excluding the additional LLPs, the annualized cost of credit is 70 basis points as we had announced and which we're confident will decrease in the future. But I wouldn't say it will in the next quarter because the fourth quarter may be, in fact, affected by some other policies that we are considering to accelerate derisking in the future. So this applies to the future by looking at the future for next year, but it may not apply to this last part of the year.

And finally, we should point out that the bank has a fully phased CET1 ratio of 13.7%. I would just like to underline a few items that are, in fact, a summary of the developments over these last months. Just 3 or 4 bullet points will summarize all of the contents that I have expressed so far. So increase in operating profitability was underpinned by net commissions growth and positive commercial performance. So it was actually underpinned by commercial performance in particular. And I'm saying this with pride because it involves all of the organization.

There has been a very good reduction in NPE ratio. And considering also this integration, so we expect it to decline further on the back of ongoing derisking. The strong capital position gives room to increase shareholder payout and be more generous on that front. And then I would like to say that the strong results we have achieved in profitability, asset quality, capital position combined with an enhanced competitive edge that we have reached with the acquisition of the branches recently pave the way for the group's new 2022-2024 business plan, which we'll communicate shortly.

And I think I have been brief enough. I think I have told you everything that needed to be said. And thank you for your attention. We will now take your questions.

[Operator]

[Operator Instructions] The first question is from the Italian conference call by Christian Carrese from Intermonte.

[Christian Carrese, analyst]

I have a few questions. One is on net interest income. I can see there's some pressure in terms of spread. You were saying that you are considering some policies to try and contain the pressure. But I would like to understand in terms of evolution of the loan book, what do you see is going be an acceleration? I have seen it has increased quarter-on-quarter on the performing side, performing loan side. But I was wondering if you can tell us more about 2022 and the last part of 2021.

In terms of asset quality, the big question that we all make is what about the evolution for 2022. Some banks have hypothesized there will be a provisioning increasing with the cost of risk going down in 2022. If I have made my calculations well, your gross NPE ratio is going to be down to 5.2%, 5.3% by the end of the year with the EUR 300 million worth of disposals that you will complete. So what is going to be the level that you want to reach because if I have understood correctly, your coverage has gone up during the quarter. There would be -- there will be some initial provisions, probably also for you to do the disposals by 2022 or further derisking. Would you give us more color about the cost of credit? I expect a drop in 2022 compared to 2021 considering the additional provisions you took. But what about the underlying factors? So do you expect a deterioration? Or do you expect stability in the next year?

And finally, as far as capital is concerned, I would like to understand are there going to be one-offs in the fourth quarter? And in terms of additional provisions, what do you expect for core equity Tier 1? And what maneuvers will you leverage to have a -- to have some more room in terms of capital?

[Piero Montani, executive]

Well, as far as lending is concerned, we expect loans will increase quantitatively in the last part of the year by about EUR 1.5 billion. As for future development, we think that growth may be by 2%, but we want to be cautious and conservative. It may even be higher because the demand for loans is growing and very much will depend on the evolution of the national resilience fund and the cofinancing that some analysts expect will be in the range of EUR 250 billion. So I would give you 2% on average.

Then as far as provisions, EUR 715 million is very conservative, very prudent, and it exceeds the extent of risk that we consider internally. But we want to be conservative. And in the last part of the year, we will try and focus on whether there's going to be more room for some derisking transactions, and we will consider that very attentively.

In terms of the cost of credit for the future, looking at the trend, we do not have any concerns internally. We may settle -- we may estimate it at 70 basis points.

I would give the last question to Mr. Ferrari for the answer.

[Christian Carrese, analyst]

This 70 basis points that you gave us, are you considering just the management of future inflows? Or are you considering also the stock because you want to have a stronger derisking?

[Piero Montani, executive]

It's both, both, Christian.

[Roberto Ferrari, executive]

This is Mr. Ferrari, the CFO. In terms of the CET1, we will have some effects in the last part of the year. But want to be -- we are targeting more than 13%, considering also the impacts of one-offs. In terms of headwinds and tailwinds, we expect we will have the benefits from the rollout of internal models in -- by 2023 on UB, Unipol and other legal entities, and we expect that will yield 50 basis points of upside.

The guidelines from the EBA and the new definition of default will instead produce about 20 basis points negatively impact, and so the net impact will have -- will be 30 basis points. But I will -- in Basel III, we have calculated that as well. But we will have to wait because probably the Basel III norms and rules will change. We do not have impact in terms of operational risk. But we expect 70 to 80 basis points of impact on credit risk. But we will have to see when this happens.

[Operator]

The next question is by Domenico Santoro from HSBC.

[Domenico Santoro, analyst]

Yes. I've got 4 questions, but very short. You hinted at the actions to offset the effects of interest rates on net interest income. So what about your core deposits and what the strategy is going to be? What is the percentage that you're applying?

My second question is on the fees and commissions, so when the -- when will the migration of UBI assets over to Arca products take place? Can you quantify the effect on fees and commissions and give us color on that? Then costs are under the run rate of EUR 320 million, EUR 325 million that you gave as a guidance, and it's quite complicated considering volatility. So could you give us a number in absolute figures.

Excuse me, I have some problems Mr. Montani said about the third question. Yes, I was looking at the total cost for the third quarter, they were down -- they were below the EUR 525 million in terms of run rate. Could you give us guidance in absolute terms for next year and also for the future so that we can understand how the total costs will evolve also in terms of -- or as a result of the reduction of the headcount that will start next year, I presume. And then could you tell us about how much the dividend is impacted in terms of basis points?

[Piero Montani, executive]

Well, let's try from the action. Let's try to start from the actions. If you are considering the commissions that we -- and fees that we applied, they were very limited. We tried to discourage large amounts of nonoperational customers. We did not apply very heavy fees and commissions to limit the excess liquidity we have with ECB between EUR 22 billion and EUR 24 billion. We worked a lot to try and increase loans because, to be honest, this is my personal opinion, liquidity is considered as a problem. But I always have on my mind that there are 3 problems that banks may have problems with. One is credit when it's not conservative or finance when it's not conservative and the lack of liquidity.

So liquidity is not a problem, it's an opportunity particularly if in the future lending will resume being strong. And so we'll have to be focusing on this. And so as far as a precise, exact number of operating costs for the future that you were asking about, I'm a little bit reluctant to give numbers, but I do not want to be because you made the question. But on average, I would say that we would have EUR 535 million quarterly on average. It's more or less a commitment that we can maintain. Then you asked something about Arca. And the migration is, in fact, in progress. And yes, you were asking about provisions. We set aside EUR 0.02 per quarter, so EUR 0.06 as at today, which, if we consider EUR 600 million, it's more or less a 30% payout.

[Domenico Santoro, analyst]

EUR 535 million cost, is it before the maneuver?

[Piero Montani, executive]

No, it takes account of the maneuver on staff, but not from day one because, of course, this will be a gradual process. I would like to be more specific. I do not want to give you information before I know it. But we are now going on with the trade unions. But trade union negotiations are negotiations between the parties. We do not know how they will be completed. We will complete it successfully, I'm sure. But the maneuver on staff would be gradual maneuvering. So the 1,700 employees will be phased out over time. Also, because if it were to happen in one shot next year, then we would have a problem.

[Alessandro Simonazzi, executive]

And as far as rates is concerned, in the latest quarter, as far as customers are concerned, new loans to customers have got rates that are a little bit higher than last quarter, and it's a positive signal that I wanted to convey. Another important thing that I would like to underline is that the analysis about the dynamics of the net interest income is correct that you make. But what is predominant now is fees and commissions on net interest income.

And so our bet for the future is going to be on fees and commissions. And I think you should take -- you should acknowledge that the work we made in the last part of the year gave us a boost in terms of fees and commissions. Then we've got EUR 27 billion funding from customers, which is in excess. But it went down by EUR 3 billion in the last quarter, and it was offset by retail funding, which is some sort of a starting point that will enable us to process it in the future, and it would be stabilized in the future, if it's processed well.

And then there's another question you made about the percentage of conversion of funds from what we call Pramerica to Arca, Arca is a company that we attach a lot of importance to and that we will invest on -- in. And the conversion was 70% year-to-date. And you may know that -- I mean, of course, this brings an upside, but you can understand that we've got a business plan underway and so would be more clear once the business plan is presented.

[Operator]

Next question is by Azzurra Guelfi from Citi.

[Azzurra Guelfi, analyst]

I've got 2 questions on revenues. Net interest income, commercial part, you showed a good progression quarter-on-quarter. But if I look at the spread, it's still being compressed in lending. So now that you've got a different perimeter, can you give us color on the trend of the spread and the front and back book because I would like to understand better for the fourth quarter.

And then in terms of fees and commissions, can you give us details in terms -- on upfront fees? And then banking fees and commissions, we saw a rebound quarter-on-quarter, which was even better than volumes. So when volumes are going up, as you expect in the next quarter, the -- will the trend in banking fees probably be even stronger?

[Piero Montani, executive]

So let's start on the easier questions. You asked about the upfront. And I would say that the bank has historically never worked on having immediate results, but always worked on building and creating a foundation and a base for the future. This has been in the past and will be the same for the future. As far as upfront fees are concerned, they are lower than 8% in assets under management. On total placements, still, they are very -- they are even lower than that. So in the 9-month period, I think they were EUR 35 million, EUR 34.9 million in fees and commissions. And as far as the trend, if I have understood correctly, you said you had a good performance in transactional banking fees and commissions. And I confirm that. We did. And for the future, we expect this trend will be maintained. But I do not understand actually what the question was about.

[Azzurra Guelfi, analyst]

It was just for me to understand better the volumes growth quarter-on-quarter was not very much, not very high, but the transactional banking was good. So probably you can expect a larger, better performance in the future?

[Piero Montani, executive]

Well, you should consider that transactional banking is not always associated to volumes. So there are a lot of items of that contribute, so for instance, cards, transactional banking. So all of these aspects are being focused upon by our organization for retail customers in general. From UBI, we did not only incorporate the 620 branches, but also 1,000,600 customers were acquired. And so in this very close proximity to customers in banks like ours because they develop volumes and transactions depending -- accordingly.

[Alessandro Simonazzi, executive]

Azzurra, you were asking about the bank book -- the back book. So volumes were very much on an uptrend. The front book compared to last quarter. And what I mean is the new loans went from EUR 1.20 billion to EUR 1.30 billion as against back book of EUR 1.7 billion. For personal loans, which is another product that we are pushing a lot, we are at EUR 5.7 billion. And as for corporate loans, so large businesses, we are at EUR 1.1 billion, EUR 1.2 billion against a back book of EUR 1.7 billion, EUR 1.8 billion. And then we've got more or less the same also for the other businesses. But if you need more information about the upfront fees for us, it's marginal on volumes totaling approximately EUR 4 billion since the beginning of the year even though we incorporated the UBI business units.

[Operator]

Next question is by Giovanni Razzoli from Deutsche Bank.

[Giovanni Razzoli, analyst]

Very short, brief question, Roberto. Can you tell me about the results on top of tiering and on top of the -- so that we can understand better about the development of commercial activity in the next quarter.

[Roberto Ferrari, executive]

Giovanni, in the previous quarter, results were EUR 17 billion. Now we have reduced them to EUR 16 billion. So we expect there will be a phase down by the end of the year, both because of the maneuvers that we are promoting to discourage direct funding and initiatives to encourage assets under management and also because of the increase in lending that the CEO was hinting at before. So we should go down from EUR 17 billion in the third quarter to below EUR 16 billion in the fourth quarter.

[Giovanni Razzoli, analyst]

So if I'm not wrong, Roberto, with each EUR 1 billion less?

[Roberto Ferrari, executive]

Yes, we got EUR 5 billion more.

[Operator]

Next question from Andrea Vercellone.

[Andrea Vercellone, analyst]

We would like to give -- to have more clarification about costs. When you gave us the guidance of EUR 535 million on a quarterly basis on average, you also said that for the year, this already includes a certain amount for the redundancy scheme that you are talking about with the unions. But we would -- I mean, it would be more useful for us to have the gross amount. So what is the guidance without this maneuver? And once the negotiations are signed, we will calculate what the upside has been because otherwise, we mix the different values, and we may risk duplicating the upside.

[Piero Montani, executive]

There may be a misunderstanding. Probably I was not clear when I explained it. The number I gave you takes account of the staff maneuver that will spread out over time, part of which will also be impacting next year. What I wanted to say is that not everything will impact next year. Then as far as the impact of the maneuver is concerned, once the business plan is presented, we'll have a clearer overview of the negotiations once they're closed and so we will be able to be more accurate.

[Operator]

Next question is by Andrea Lisi from Equita.

[Andrea Lisi, analyst]

I have a question on the -- probably the contributions to the banking system and also revenues, EUR 850 million. You made EUR 892 million. But I would like to understand with the evolution of the market, can you confirm the level? Or should it be increased?

[Piero Montani, executive]

The quality of the sound was not very good. I'm sorry. Yes. Banking system charges with this quarter, we should be over. I mean they should be over. There may be some also entry next quarter, but almost nonsignificant. So we expect we have -- we're done with the charges with the [ scooter ]. Then you made a question about revenues, if we confirm EUR 850 million. I'm always a little bit reluctant to give it, but we may even say EUR 860 million.

[Operator]

Next question is by Anna Benassi from Kepler.

[Anna Maria Benassi, analyst]

Yes. You posted very good results. I've got a question on fees and commissions. Because this was the best surprise we had. And so I would like to understand what was the contribution by Arca to the net fees and commissions of the group. And if you think that -- or actually, what products do you expect will be well performing in the next quarter, net of the summer break? What are the products that you're focusing on?

And then there's an M&A context that we are experiencing in these weeks in Italy. And so I've heard from your comments that we're very much focusing on the integration of the businesses that you have acquired. And also, you're working a lot on cross-selling, on the integration of your group and commercial activity. There's a reorganization in place, considering that there are also negotiations in price with the union. So I'm wondering if you -- in your point of view, in your opinion, will there be mergers in the future that will involve you?

[Piero Montani, executive]

I hope I can answer everything because the quality was not very good. So I start from the last part. As I said in the past, we're always very much concentrated on the integration and consolidation internally. And we think that a large part -- most of the activity has been completed. But you know that integrations are processes that take time, and it will take time also because we've got [ 1,100 ] extra staff now. There's adjustments to the contracts and the redundancy schemes. All of these aspects, of course, are time consuming, and we want to focus on these aspects well. We are very happy with how things are going on. The results did not exceed expectations. They were within our expectations. But of course, it will not to be taken for granted.

On the table, we do not have anything that concerns the M&A. So it's not something that we're looking at now. Of course, we're not living on the moon. So we know that the aggregation process is in progress and we will look at it. And if there are some opportunities coming up that are interesting, we will examine them, but it's not amongst our priorities. I do not remember what the other questions were.

[Anna Maria Benassi, analyst]

So the -- about commission.

[Piero Montani, executive]

Well, we have taken your questions now. So as far as the Arca contribution is concerned, the contribution was EUR 110 million in the 9-month period with a concentration on assets under management and bancassurance protection, as we call it. I would like to underline that the share of the insurance products in this last quarter was very high, 37%. Last quarter, it was lower than 30%. So insurance products are performing well. And EUR 57 million is going to be the profit of Arca.

[Operator]

Next question from the English conference is by Cruz from KBW.

[Hugo Cruz, analyst]

It's Hugo here. Just a few questions. So before in the past, you gave guidance on the run rate of NII of EUR 400 million a quarter, do you think we could see that already in Q4 or first quarter next year? I'm nothing to ask about fees because I imagine it's more a focus of the business plan and working some more volatile with NII, it would be helpful to kind of see the run rate?

And the second question around the systemic charges. I thought you were a bit higher than expected this quarter. I understand it was due to the deposit consolidation of UB branch [ by now ] Was there any one-offs in there? And is there any room to have -- to book lower charges next year? And then I, finally think in the presentation, you made a comment around increasing the shareholder payout. The guidance you gave on dividend for this year is a 30% payout. Do you have a different number in mind for next year for the business plan? That's it.

[Piero Montani, executive]

I may not have been very clear in explaining the system charges. The system charges for this quarter were EUR 80 million. I'm recollecting that for the 9-month period, it should be EUR 126 million. And that's done for this year. So there will be a fine-tuning by the next year, but it would be marginal, and it will not change the amount for the period. So for next year, we will make some more precise estimates, but I think we can expect the same, EUR 125 million, EUR 130 million. We will be more precise and accurate with the business plan. As far as the payout is concerned, as I told you, we have [ satisfy ] EUR 0.02 per quarter, so EUR 0.06 year-to-date, which means a payout of about 30%. As for next year, we may expect that this be rounded up, but it will be -- we will look at it as part of the business plan, and we will communicate it once we present it.

[Hugo Cruz, analyst]

And the run rate of net interest income?

[Piero Montani, executive]

As far as net interest income that's concerned, we can give you guidance that applies to the next quarter on average, it's going to be around EUR 400 million.

[Operator]

[Operator Instructions] Next question is from the conference in Italian by Adele Palama from UBS.

[Adele Palama, analyst]

I have a question on something that has been already hinted at, but I would like to have a clarification. Your guidance about the cost of risk for 2022 is 70 basis points. But does this includes the core cost of risk and possible potential future disposals?

[Piero Montani, executive]

Yes, we have 60 though, 60 basis points. But yes, it includes everything.

[Operator]

[Operator Instructions] Next question from the English conference is a follow-up by Hugo Cruz from KBW.

[Hugo Cruz, analyst]

Sorry, just to clarify the cost of risk guidance that you're giving for next year? Is it 60, 6-0 or 70, 7-0?

[Piero Montani, executive]

Yes, I can confirm it's 60, 6-0 for the next year. But I said that in the next quarter, the cost of risk may be different, and so it will be higher. For next year, 6. -- 6-0, 60.

[Operator]

Next question from Jefferies, Mr. Marco Nicolai.

[Marco Nicolai, analyst]

Could you remind me of the sensitivity to Euribor? And then on revenues, you gave a guidance of NII plus commissions of over EUR 800 million. And now you said that the NII would be about 40 -- sorry, EUR 400 million. So with the fees and commissions, despite the seasonality, you made EUR 420 million, EUR 430 million in net fees and commissions. So I think you are over EUR 800 million, almost close to EUR 850 million. So what about the future is still going to be over EUR 800 million for the future?

[Piero Montani, executive]

Yes. Yes. Because we included trading also inside. So as a whole, we are at EUR 820 million. As for the sensitivity, the impact is EUR 50 million.

[Operator]

There are no further questions at the moment. Mr. Montani, we give you the floor for any further comments to close the conference.

[Piero Montani, executive]

I would like to thank everybody. I apologize for the timing. It's quite late time, and you may have had some other conference calls during the day that -- and so it's late in the evening. But we are -- do not hesitate to contact us. If you have any further questions, you can contact us and my colleagues, and we'll give you answers to all of your questions. We'd like to thank you, and have a good weekend. Good bye. Bye-bye. Have a good weekend.

[Operator]

This is the conference call operator. The conference is over. Thank you for joining. You may disconnect your telephones.

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