Bper Banca SpA

MIL:BPE

Earnings Call Transcript 2022-Q3

[Operator]

Good afternoon. This is the conference call -- conference operator. Welcome, and thank you for joining the conference call of the BPER Banca Group's consolidated 9 months results. [Operator Instructions]

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

[Piero Montani, executive]

Thank you. Thank you and good evening, everybody. Thank you for joining. I'm here with my colleagues, in particular with Gian Luca Santi, Deputy General Manager; the CFO, the manager responsible the financial information; Fabio Pelati, for Investor Relations.

We're very happy with the results of this third quarter. The 9 months results are extremely positive, and they confirmed the growth trends observed year-to-date, combined with increasing core business profitability, further improvement in credit quality and a solid capital and liquidity position.

As far as profitability is concerned, the net profit for the 9-month period amounts to EUR 1.466 billion and includes EUR 1.41 billion worth of nonrecurring items, primarily accounted for by the badwill, recognized following the acquisition of Carige. Net of this amount, net profit totals EUR 425 million. Net recurring profit for the third quarter amounts to EUR 108.6 million after payment of EUR 123.3 million in Italian banking system contributions, reflective of robust profitability, which from this quarter also includes the contribution of Banca Carige.

As far as Banca Carige is concerned, I'm pleased to say that the bank has a -- is at breakeven. And as far as this quarter is concerned, in terms of volumes, volumes are on a strong year-to-date uptrend on the back of both Banca Carige's onboarding since the -- since the second quarter and the positive commercial inputs that we have already had an opportunity to observe in the previous quarters. Net of Carige's contribution, direct funding was up 1% and net loans to customers were up 1.7%. Again, in lending support to households and businesses continued with new loans in the first 9 months of 2022 totaling EUR 12.6 billion. In the previous quarter, I remember, we hinted at this figure, which was close to this level.

As far as credit quality is concerned, we have recorded further improvements, with gross NPE ratio down to 4.2%. Last time we communicated 4.3% in the previous quarter. And the net NPE ratio is now at 1.7%. It was 1.8% in the previous quarter. All of this is combined with further improvement in the coverage ratios. So the nonperforming loans are at 61.7% versus 61.3%, and bad loans were at 75.6%, and now they are up. And UTPs were at 46%, and they have improved and [ bonus ], so the performing loans are at 0.68%. The bank's capital strength is confirmed with the pro forma fully phased CET1 ratio that including the full benefit deriving from Carige's DTA sectors at 13.2%.

So this is the overall overview of the quarter, and I will give the floor to Gian Luca Santi and the CFO that will illustrate the details.

[Gian Luca Santi, executive]

I would say that the CEO has already commented the overall situation. We will go into the specific details for just -- just for some qualitative comments.

As you can see on Slide 6, the path has already been developed for the acquisition of Banca Carige in the third quarter of 2022. We completed the mandatory tender offer, and there was a subsequent sellout process with BPER reaching 96.1% stake in Banca Carige. And in the fourth quarter, just last week and there was the approval of the acquisition of Banca Carige and Banca Monte di Lucca into BPER, and IT migration is scheduled for the 28th of November 2022. Just I'm recollecting all of the numbers, and Carige really brought about 800,000 customers to the bank and EUR 10.2 billion in AUM and life bancassurance and EUR 10.3 billion in net loans and EUR 14.3 billion in direct deposits.

Moving on to an analysis of the direct and indirect deposits of the group. Growth was -- by 15.1% year-to-date. And if we look at the entire period, the growth was outstanding. And also in the last quarter, it was importance because it happens through the retail customers. So there's a good positioning and a good growth, which is a very good indicator for banks in this very moment. In direct deposits, a further comment I would like to make is that the market effect, since the beginning of the year, had an impact of 14%.

So the impact of this will reverberate and translate into EUR 20 billion -- does reverberate and translate into EUR 20 billion as at September 2022. But it's important to say that assets under management has been confirmed as a positive contributor for the 3 quarters. And in this quarter, having good assets under management is a good -- so we've got 5:1, I think, as a ratio between direct and indirect. But with the Carige and the former UBI customers, we've been able to contribute to this sector significantly.

Looking at loans, net customer loans, the growth year-to-date is 14.8%, 1.7% change on a like-for-like basis out of the -- so out of the EUR 90 billion net customer loans, we've got EUR 8.3 billion that are state guaranteed. What is important is that new loans have reached EUR 12.6 billion.

And once again, this bears witness to the fact that the customer base we have achieved makes it possible for us to develop a strong commercial effort. And the expectations for 2023 are that the situation may be reversed so that the short term will go up because inflation and the price increase will, especially for businesses, lead to an increasing need for liquidity and so the trend may be reversed in the future.

As far as asset quality is concerned, strong asset quality is confirmed in Q3 '22, with declining NPE ratios and coverage further strengthened. So we are now at 4.2% in the NPE ratio. NPE coverage has been further strengthened. Bad loans at 77.9% and UTPs at 47.3%. There's the consolidation of Carige that has brought in about EUR 150 million in net loans, which means that if we had to analyze one, we only had to announce -- analyze deeper, we would be at 64% in terms of NPE coverage. 0.68% of performing loans coverage is very important, with 4.3% for Stage 2 loans. We are among the best-in-class. And I would say that with the disposals by the end of the year, we should be able to be positioning among the best in the Italian banking system.

As far as the financial assets portfolio is concerned, we can say -- as you can see on the slide that our portfolio is made up of 36% is Italian government bonds out of the total. We had braced for and we were ready in the past to actually also acquire Carige's government bonds. And so from EUR 8.6 billion, we are now at EUR 10.6 billion, but with BPER that had gone down to EUR 8.3 billion, precisely to prepare for this input from Carige. And as you can see, the duration is 2.1 years in Italian government -- in total bonds and 2.2 years, so a little bit higher for Italian government bonds.

We have tried to give you an overview of the quarters of both BPER and Carige by, obviously, also calculating pro forma and taking away all of the one-off or nonrecurring items. And I would say that by comparing solo BPER on a stand-alone basis and -- you may remember that last time we had not yet consolidated the profit and loss, but now the variation is only in terms of personnel costs because of a twofold effect, seasonality effect and holidays basically on the one hand, but also we're starting to perceive also the reduction in the headcount. So 533 people have gone away. Now in the 9-month period, we are at 600 exits. And so we will start to benefit from these reductions in the headcount over the next quarters, too.

Then as compared to the second quarter, there's a difference then also in contributions to the Italian banking system funds, EUR 123 million just for BPER, EUR 102 million that I would say is one of the most important differences compared with second quarter that you can see in Slide 13. Then as far as cost of credit is concerned, we will see the details thereof, but annualized cost of credit is 48 basis points.

As far as net interest income is concerned, once again, the dynamics here for the quarter between the third quarter and the second quarter, there is a difference. So in the first part, we only have BPER, 33.8% growth in commercial, and it's to be split between market effects and volume effects. So the institutional funding, we have issued subordinated loans and so debt, and so the cost of funding is a little bit higher. And EUR 22 million (sic) [ EUR 20 million ] reduction in the TLTRO. So from EUR 39 million in the second quarter, we are now at EUR 19 million. So there's a benefit from the TLTRO still. And you can see Carige as a whole because some information, some detailed information are being structured over these weeks and so from next quarter, we will give you more details. But the commercial spread, as you can see, goes from [ 1.93% ] to [ 2.05% ] quarter-on-quarter.

As far as net commission income, Slide 15, is concerned, of course, there's been a drop in what comes from assets under management and in direct deposits, but there has been a growth in the traditional banking activities, and we have seen that particularly in transactional banking, POS and cards, and also there has been an increase. And there's been an increase also in Corporate Investment Banking (sic) [ Corporate & Investment Banking ] and the loan dynamics also drags along some -- an important fees and commissions component. So we're very much satisfied with the traditional banking activity in terms of net fees and commissions.

As far as Finance is concerned and trading income, the only difference between the 2 causes lies with Carige because there was some capital gains there on the disposals of some securities and Carige also benefited from some short positions on interest rates.

As far as operating costs are concerned, I would say that for operating costs, you can see the -- that over the 9 months, we're calculating about EUR 47 million in one-off costs that are broken down equally between cost adjustments to the solidarity fund of 2021 and EUR 24 million instead -- our one-off costs deriving from the acquisition of Carige. So we're benefiting also in terms of personnel cost from a reduction of about 590 people with 530 people from the first of July.

As far as the cost of credit is concerned, we can confirm at BPER's level that there are the same loan loss provisions as we had in the second quarter. The annualized cost of credit is 48 basis points, but we should consider that we also increased the coverage ratio for nonperforming loans. So this effect is very important and probably represents also and accounts for 50% of the loan loss provisions that in terms of basis points we are, in fact, taking.

As far as capital is concerned, the slide is self-evident. You can see that the deductions are OCI fair value reserves, and then there are deductions on DTAs because after assessing capital threshold, they are taken back, and we will reabsorb them by the beginning of -- by the early months of 2023, then so you can see they are the risk-weighted assets. And then by pro forma -- if we pro forma calculate the DTAs of Carige, we will get to 13.2% in terms of pro forma phasing CET1 that is broadly in line with our expectations.

So once again, I would reassert the final conclusions that our operating profitability is underpinned by the top line growth and traditional banking revenues with, again, a net fee and commission income that exceeds net interest income in the [ scores ] and then the resilient asset quality should be highlighted with higher coverage and the solid capital that gives us a good position of solidity and financial strength.

My presentation is over, and I would open the questions-and-answer session.

[Operator]

[Operator Instructions] The first question is from the Italian conference by Peruch, from Mediobanca.

[Noemi Peruch, analyst]

So I've got 3 questions. First, could you share with us the dividend per share that you have included in your common equity for the 9 months of the year for this 9-month period? And how much should we expect the next quarter? And you had indicated EUR 450 million in net interest income. And now can you update your guidance for the quarter? And my last question is about fees and commissions, your strategy in terms of asset management and insurance was profitable so far. And Q3 exceeded the limits of your guidance. But looking at the next year, do you expect commissions will continue to increase?

[Unknown Executive]

Well, very quickly, as far as the dividend is concerned, for the 9-month period, EUR 0.075 was set aside. And as far as the expectation for the end of the year is concerned, we are -- we will try to keep with what we had promised. And so we will see how things are developed towards the end of the year. But as far as net interest income is concerned and the guidance for the next quarter, for sure, we did very well.

And probably -- I'm saying something in advance, but I think that in terms of -- we will go around EUR 1 billion divided between net interest income and net commission income on a 50-50 basis. But you know that 2023, so next year is going to be a very special year. No one has understood yet what we can expect. But we have carried out our analysis, and so we -- what I'm giving us the guidance is what we are thinking now, and then we would be more accurate in our guidance over the next weeks and months.

[Noemi Peruch, analyst]

And can you give us guidance also about the net interest income for 2024, probably?

[Unknown Executive]

Well -- so the analysis is being carried out. We can confirm the data, but we may expect a little bit better results.

[Operator]

Next question is from Domenico Santoro from HSBC.

[Domenico Santoro, analyst]

Yes, I've got 4 questions. First of all, the contribution of the TLTRO. Probably, there was some inaccuracy. I understood it was EUR 39 million gross in the second quarter and now it's EUR 19 million. I think I had higher numbers. And so I would like to understand better what's the contribution is going to be for the fourth quarter, both in gross and net -- gross and net terms.

And then net interest income, I can understand that the Q4 is going to be better than Q3, and we can infer that it's going to be much higher. But can you give us guidance for next year 2023? And -- because we are -- so EUR 1.950 billion probably will be achieved next year. So I would like to have better guidance and then systemic costs also, we need guidance about that. And I would like to know more about any possible decisions about nonperforming loans being sold or if the model is going to be revised? And if so, to what extent?

[Unknown Executive]

Well, let me see if I remember all of your questions. But the systemic costs for next year is about EUR 150 million, the guidance I gave before was an overall guidance of EUR 1 billion on a 50-50 basis. And the contribution of the fourth quarter, as I was saying before, is in line with this quarter. We expect something better, but we will clearer in the short term.

But as far as the disposals are concerned, by the end of this year, we had talked about disposals for about EUR 1.5 billion in NPLs. And in the business plan, we had also included disposals of UTPs with the objective being the disposal of bad loans by the end of this year. And what we expect is that we will go towards a disposal of EUR 1 billion, EUR 1.1 billion and if possible a little bit higher, but we do not expect significant -- any significant impact.

And as far as the TLTRO is concerned, I would leave the floor to -- give the floor to Gian Luca Santi, Deputy General Manager.

[Gian Luca Santi, executive]

In the annexes, you have a slide on net interest income that shows how net interest income evolved over the quarter, EUR 30 million in the first, EUR 27 million in the second and EUR 6 million in the third quarter, of course, by including [ Genoa ], it would be EUR 30 million for the quarter, but you have the development, all of the breakdown in a slide.

[Domenico Santoro, analyst]

If I can ask for clarification that is important for next year, the -- can you give us guidance about the revenues because you said EUR 1 billion, I think.

[Unknown Executive]

Yes. I must be cautious and conservative because we're speaking about a very special year. So EUR 1 billion in terms of operating profit with the subdivision into net interest income and fee and commission income of 50% each roughly with differences of -- there might be -- that there may be differences. But this is what we are thinking of at the moment. But I want to be conservative and prudent because we're -- I mean the [ fear ] is in progress and next year is fraught with uncertainty. So we need to be cautious.

[Operator]

Next question comes from Marco Nicolai from Jefferies.

[Marco Nicolai, analyst]

Yes, and thank you for the presentation, and I congratulate you on your results. I've got a couple of questions. If you can give us an update on the litigation with Malacalza any possible reverberations if there any? And in terms of one-off costs connected with the acquisition, should we expect any further costs? I would think so for the fourth quarter. And can you give us color on that? And can you give us some update on synergies if you have an update on the synergies that you expect from Carige?

[Unknown Executive]

Well, we do not expect any further impacts on costs as compared to what we gave you as a guidance. The integration costs are about EUR 70 million as a whole, that we have already taken. Actually, EUR 30 million has already been taken. And we hope that by the end of the year, considering that the situation has been a little bit better than we expected or are in line with what we expected, we hope we will be able to improve the situation even further and not worsen it. But if there are any -- if your question was whether we see any negative surprises, the answer is we do not see any surprises.

Well, litigation with Malacalza, we have already spoken about this. We are quite confident about the results of litigation. I have no further update to give you as compared to what the market already knows. And so I wouldn't add anything.

[Marco Nicolai, analyst]

So -- so in terms of costs associated to the M&A, is it only [ EUR 30 million or EUR 35 million ]?

[Unknown Executive]

No, this is what we have already taken, what we have already incurred. But the overall cost is [ EUR 70 million ], and we hope we can do better. At the same time, I feel quite confident that it will be better because the operation -- this transaction that was, for sure, very complex as far as we're concerned and also for entire organization because Carige was -- had some problems that were dragging along the last summer.

We had to work intensively, but everything eventually worked out well. And so we're quite confident about the next future and the -- and the future in general because in the meantime, we have seen that the operating income was positive and also the bottom line there is at breakeven, which makes us confident about the future. The synergies we gave you can be confirmed, and then we will be more detailed during the next quarter.

[Operator]

Next question is from Andrea Lisi from Equita.

[Andrea Lisi, analyst]

I'm sorry, I was on mute. My first question is about the balance sheet. I have seen that there has been an increase -- a strong increase in cash and cash equivalents. And I would like to understand how this interacts with the TLTRO? If there is any correlation? And then in terms of guidance for the net interest income for the next year, indicatively, you spoke about EUR 500 million per quarter. So I would like to understand what rates assumption is it based on -- is your estimate based on? And so for the considering today's interest rates, what sensitivity do you have for -- in terms of your [indiscernible] increases?

[Unknown Executive]

What we're based on today's situation, we cannot base ourselves on any further situations. So this is what we're based on. And I can confirm the trend that you gave. And if the CFO is taking the question about sensitivity.

[Unknown Executive]

Yes, the sensitivity for a further increase by 100 basis points in the interest rate is 5% of net interest income.

[Operator]

Next question is from Christian Carrese from Intermonte.

[Christian Carrese, analyst]

Yes. I would like to understand for the fourth quarter what the one-off items are, if there are any? So you were recalling the cost of personnel, for instance, and so I would like to understand the Nexi situation, then the -- some one-offs that you may give us color for the fourth quarter. And then the strategy, as far as strategy is concerned, in the newspapers, we had reports of -- we read about this third banking pole. And if you -- are you interested in increasing your footprint, for instance, with the Banca Monte dei Paschi has been capitalized now. And so could it fit within your plans?

[Unknown Executive]

Well, as far as the one-off items are concerned, apart from what we have already communicated, we cannot see any and we hope there's none. So I have no further elements to add to what I have already talked about, and we may expect some positive elements for the next quarter. Then Gian Luca talked about the exit of about 600 people. I think it was 580 people. So 600 people left in the first half of the year, and there's going to be 400 people leaving in the second part of the year. So for next year, we will start to have a benefit from the headcount reduction, but we will have the upside next year.

And then as far as the HR is concerned, we are defining a second maneuver that we in fact set out in the business plan for about 200 people. So there's another, let's say, HR maneuver that is being -- that is going on. And when we talked about the sale of branches to Desio, the sale of these branches to Desio will also involve 270 people leaving, which means that there is a quite substantial headcount maneuver going on that we hope will be completed soon. That -- many actions have been implemented. There are 2 or 3 that are -- will be completed by the end of the year, including Nexi that you were hinting at, and we are confident that this will be completed. But with Nexi, we hope it will be the -- completed, so the numbers have already been communicated. In the fourth quarter, the deal should be closed, but we will give you communication of everything once when we can confirm what we have seen -- said.

As far as third banking pole strategy is concerned, I'm repeating myself over these days and I do not know what -- what to add and it's not something personal against you or with you. But over the last 15 months, the bank has doubled its position. Actually, it has troubled its complexity because by putting together, the UBI deal with 620 branches and 5,600 people, Carige that is bringing onboard 3,300 people. So we have -- we are integrating. We have partly integrated, and we are still integrating 8,400 people. And it was still yesterday's bank so we cannot look too far ahead at what is happening, but we really have to have a good focus on what we have and our priority today is that of completing everything we have started and consolidating the bank that we have formed.

Now the bank has got 5 million customers. We need to arrange everything in the best way, also in terms of bad branch network because we're adding the branch network of Carige now that is bringing along a number of customers that, as you know, have experience. I wouldn't say an abandonment because I would be offensive against Carige and of course, they did what we called. They have -- the customers' relationships have been retained. But of course, there were problems with the loss in volumes, and we need to fix that. We need to integrate the people that are part of the head office. 800 people are going to be integrated in the head office.

We have already talked with everybody. We basically have the plans for redeploy the people, and we are confident that good work will be made in the next quarter, and most of the things will be settled and -- but still work is intense, and we wouldn't consider another transaction now. Once we're done with what we're doing, we will...

[Christian Carrese, analyst]

What about the IT migration?

[Unknown Executive]

I couldn't understand question very well, Mr. Montani says.

[Christian Carrese, analyst]

I was saying what about the partnerships?

[Unknown Executive]

Well, among the -- the things that we need to arrange in the best way with Carige, we also have the partnerships that they had. And so we hope -- we are confident that there will be completed by end of the year. And as far as the IT migration is concerned, progress -- I mean, the migration is well ahead and you may know that since last year with the acquisition of UBI, we also have acquired a lot of people from UBI, including the manager of IT, Mr. Sonnino, and we have acquired basically 140 people to strengthen the IT in the meantime and including also the partnerships. On top of that, there are also the partnerships with the IT sector that is being repositioned, is being in-sourced. And this is bring about the inclusion of 103, 104 people that we need to strengthen the IT department.

We have not identified any problems so far. We are perfectly convinced that the entire integration of the IT will be completed by the end of this month successfully. And the tests we have carried out so far proved and yielded very well. And this bears witness to the fact that also in terms of IT, we have made very good steps forward. Obviously, we have not yet completed the process, so we will work intensely to complete the integration by the 27th and 28th of November over the conversion weekend, and I'm sure you will be able to verify the positive results of this integration with Carige.

[Operator]

Next question is from Adele Palama from UBS.

[Adele Palama, analyst]

I've got 2 requests for clarification on the guidance and some questions. As far as the costs are concerned, I think, I remember that there were some costs -- some one-off costs deriving from the personnel maneuver of about EUR 140 million, EUR 150 million. Has this already been taken? Or will it be taken in the fourth quarter?

[Unknown Executive]

Well, you remember perfectly because the HR maneuver was for 600 people with an estimated cost of EUR 150 million, but this cost will have to be taken, and I'm confident that by the end of the year, we will complete the HR maneuver. There are many things to do, but this was included among our objectives. And so by the end of the year, we were completed. And if it's not by the end of the year, it will be by the -- by early next year, but we're working on it.

[Adele Palama, analyst]

Yes. Yes, good. And I would also like to know if you are thinking of repaying the tranche of the TLTRO in advance?

[Unknown Executive]

Let us consider that in due time. What I can say is that we are in a condition to repay that because there's -- that would be possible. But we have not yet thought about this. I mean there's no difficulty in repaying it. We will consider the opportunity and convenience of doing that in due time.

[Adele Palama, analyst]

And I would like to have guidance on what you expect for the cost of risk in 2023 and some clarification about the NII 5%, or is it annualized third quarter? And then the moving parts of capital that you expect, if you expect, any moving parts for the 2023 and 2024?

[Unknown Executive]

Just a minute because you made a lot of questions. We had microphone -- the mic was off, I'm sorry. As far as this year is concerned, we have communicated that the cost of risk was 48, is 48 basis points. And we expect it will be maintained between 48 and 50. We may get to 60 or 70 in case of an adverse scenario, but we will see what happens. Then I would like -- I always stress one point that unlike other banks, we were always conservative. We've always been conservative. We've always been judged as having a higher cost of risk than others.

And I would underline this, once again, our cost of credit, that the cost of [indiscernible], we always gave, if we had looked at the models, we would have been able to declare a lower cost of risk, but we wanted to be conservative and prudent because our objective was that of reducing the gross and net NPE ratio, and we would have obtained that through a substantial sale of the portfolio.

So -- we always took robust provisions in order not to make sales by the end of the year with a strong impact on the profit and loss. So we are in a position now to say that we should be able to close a -- had a big deal in NPE by the end of the year for EUR 1 billion, and the marginal impact is being considered. But the same type of approach will be continued -- will continue in the past. So we were prudent in the past, I'm sorry, and we'll keep being prudent in the future. Then for a number of reasons, now we are -- we expect 20%. For next year, we would also -- it could also be 25%.

[Adele Palama, analyst]

[Audio Gap].

[Unknown Executive]

5% probably, that -- there was a part missing. 5% is the tax rate based on 2022, about EUR 100 million in terms of numbers.

[Adele Palama, analyst]

And what about the moving parts of capital in the fourth quarter and in 2023? And the -- another question is about overlays.

[Unknown Executive]

There are no impacts. And for overlays, you were asking, so it's about EUR 90 million. I hope I gave you all of the answers.

[Operator]

Next question from Andrea Vercellone.

[Andrea Vercellone, analyst]

Just a -- I'm asking for clarification about core revenues for next year, you said EUR 1 billion quarterly. And my question is based on what perimeter? Today's perimeter? Or is this perimeter net of the merchant acquiring, leasing and...

[Unknown Executive]

I'm sorry, the -- well on this perimeter, of course. But I may have understood wrongly. So of course, the perimeter, excluding the acquiring -- merchant acquiring, yes. So today's perimeter, net of fees from the acquiring business.

[Unknown Executive]

Yes, because the merchant business is going to be closed by at the end of the year. And so it will have to be excluded from the perimeter. We cannot include it in the perimeters, otherwise there would be something wrong in the calculation, of course.

[Andrea Vercellone, analyst]

And what about the other deconsolidations that you are planning, you have not yet excluded them from the guidance? Or have you? This is my question.

[Unknown Executive]

Well, the -- well, I was thinking loud, while you were making the question, but the deconsolidation we're speaking about, the only one left would be the leasing well and the branches to Desio, they have already been considered. So yes, those things have already been considered because as far as the branches being sold to Desio, if the deal is closed next year, then, of course, they will be considered as out of the scope.

So what has been announced, yes, for sure, everything that has been announced is out because if it was not the case, then we would have [ cheated ]. And so of course, everything that has been announced is not in the guidance because we know that they will not generate any more benefits of revenues. But it's important for us to know what you have excluded.

[Unknown Executive]

Yes, you're right. You're right. You made a good question, but it's -- I'm not speaking for myself, but the history of this bank has always been very prudent. And so it's part of its style, not to declare something it has not considered.

[Andrea Vercellone, analyst]

And so the second clarification is about NPEs. I remember EUR 2.5 billion.

[Unknown Executive]

Yes, you're right. We always spoke about EUR 2.5 billion because we were considering bad loans and UTPs and the sale of the platform. I probably was too quick when I said this, but we are dividing the platform and the UTPs that will go next year. And then for this year, we're just talking about bad loans. And so bad loans will be sold by an amount of up to EUR 1.5 billion, probably will not be able for us to get to EUR 1.5 billion by the end of the year, but we will do, we will sell EUR 1.1 billion, EUR 1.2 billion by the end of this year. So it's split into 2 moments because we would have not been able to do everything by the end of this year. If you look at the extent of the deals we're proposing, they are very substantial, and there is a problem of timing.

[Operator]

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

[Hugo Moniz Marques Da Cruz, analyst]

I Just -- I think last quarter, you gave some guidance for the run rate on operating costs. From memory, I think it was guided for EUR 640 million to EUR 650 million a quarter. So I was wondering if you can update that guidance as well?

[Unknown Executive]

Yes. We can give you the guidance by quarter, so it's EUR 650 million -- I'm sorry, 100 -- EUR 650 million this quarter. EUR 2.6 billion -- EUR 2.6 billion overall, EUR 650 million each quarter.

[Operator]

Next question from the Italian conference from Mediobanca, Noemi Peruch.

[Noemi Peruch, analyst]

I've got 2 follow-up questions and one question. So our first follow-up question is about the NII guidance. We would like to know how many [indiscernible] issuance you have foreseen and what -- do you consider as an adverse scenario for the cost -- risk -- cost of risk of 60 to 70 in terms also of [ employment ] environment and everything? And then thirdly, leasing and [indiscernible] disposals?

[Unknown Executive]

For the role part, Roberto, the CFO will answer. Then in terms of adverse scenarios, we have not focused on something extraordinary in one sense or the other. What I wanted to say is that, if the scenario remains flat and stable, based on what we're seeing today, then evidently, we can be confident that the cost of credit will be much more limited or in line with what we have.

If there's a recrudescence of something that we cannot expect now, but because there are no specific forecast, but you can include in that recrudescence or emergency, whatever you want, like the cost of energy, inflation or employment problems, then if we were to consider a worsening scenario, more negative scenario than what we've seen today, then we would consider a cost of risk of 60 to 70 bps -- basis points, but we have no visibility now, I think that nobody has a clear idea of what will happen next year.

But just personally speaking, I would say that yes, personally speaking, and I do not know if I'm right or wrong, I'm probably more tightened and concerned about 2024 than 2023, but I'm confining myself to saying this. We will have to see what happens.

[Roberto Ferrari, executive]

Noemi, the CFO speaking. As far as the [indiscernible] is considered -- is concerned, we've got an issuance of EUR 400 million, and we have considered EUR 500 million to EUR 600 million in senior debt to be issued next year. And I think that this will be -- will complete our [indiscernible] issuances for 2023.

[Operator]

Mr. Montani, there are no further questions registered at the moment.

[Piero Montani, executive]

Good. So thank you for joining the conference call and for any further questions or request for clarification that you may require, my colleagues are here. We are here for further clarifications, answers to questions that you may not have been able to make or that you want to make in the future. So thank you for your attention. Have a good evening.

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