Banca IFIS SpA

MIL:IF

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Banca IFIS First Quarter 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Frederik Geertman, Chief Executive Officer of Banca IFIS. Please go ahead, sir.

Thank you, Madam, and good afternoon, everybody. Welcome to our first quarter results call. I am joined today by our CFO, Roberto Ferrari; by our Investor [ Relator, ] Martino Da Rio; and by our newly appointed Deputy Chair, Rosalba Benedetto. And as usual, I will try to go through the presentation in a relatively short time to leave some space for Q&A at the end.

I would, therefore, take you straight to Page 4 for the synthesis of the first quarter results. We're very pleased with the results of our first quarter. We reported net income of EUR 47 million, driven by a strong performance of Commercial Banking and of the NPL business. Reporting revenues at EUR 179 million, that's 7% Q-on-Q despite the decreasing base rates environment. Operating costs at EUR 98 million, that's minus 9% Q-on-Q, reflecting effective cost control and loan loss provisions substantially flat, thanks to the underwriting approach that you know of us.

We have a good contribution from structured finance and equity investments that was EUR 12 million in the quarter versus EUR 2 million in fourth quarter of '24, confirming its recurrent contribution to revenues. It doesn't come in every quarter, but we now have a multiyear track record of good results in the structured finance and equity investment business.

We are focused on reducing cost of funding, as we will discuss more in detail later after the repayment of the TLTRO. Our average cost of funding was down 30 basis points Q-on-Q, and it's now at 3.5%. We have a very solid CET1 ratio. We're in excess of 16.5%, which is widely above the 9% SREP threshold. And we are very well positioned to face both maybe slightly more volatile macro environment and also the potential integration of illimity whilst maintaining an attractive dividend payout. The Board has therefore proposed EUR 111.5 million total dividends in 2024. You will recall that EUR 63.1 million was already paid out on November 20. So what remains is EUR 48.4 million, so this EUR 0.92 per share that will be paid on the 21 of May.

Page 5, revenues. You see we mostly offset the effects of the rates environment relative to last year. Revenues were EUR 179 million, minus 3% year-on-year and plus 7% Q-on-Q, thanks to commercial banking revenues that were EUR 82 million in the fourth quarter of '24, EUR 89 million in the first quarter of '24. And this quarter, we arrived EUR 90 million with good commercial performance and pricing discipline that we've continued, partially offsetting the rates effect and the contribution of structured finance equity investment that I just described.

NPL revenues are a very solid EUR 81 million, they were EUR 81 million in the fourth quarter of '24, they were EUR 74 million last year. A lot of focus on streamlining the recovery activity of the existing stocks. And we also report that we made some positive transactions on new NPL acquisitions also with forward flow mechanisms, therefore, securing continued NPL acquisitions in the coming quarter, and those were executed in the first quarter of 2025. Non-core and G&S revenues at EUR 8 million. They were EUR 5 million Q-on-Q. They were EUR 22 million in the first quarter of '24 that was, you may recall, slightly inflated by some one-offs, specifically the sale of an equity stake that came out of a bad loan. So EUR 8 million this quarter.

Commercial activities, we always give a bit of a picture on how the bank is doing on the commercial side, Page 6. Factoring turnover is roughly in line with the market. It came out at EUR 3 billion. We keep a clear focus on profitability there. It would be quite easy to make higher turnover volumes by going on low value-added types of transactions, which we don't normally pursue. The average spread in factoring in the first quarter was 3.56% on top of the base rate. So that would be an aggregate number that's significantly north of 6% excluding commissions, which further increase the profitability of this segment.

Leasing, you see that the market had quite a growth whereas we are more or less in line with last year. What happened? The quarter was characterized by captive leasing companies of the large European automotive manufacturers offering some very attractive deals to reduce sale backlogs. We obviously don't participate in that type of activity. So we remain focused on premium luxury, on price discipline and especially on underwriting with remarketing agreements in place, meaning we don't have a material exposure to the value of the underlying car.

Equipment and technology leasing, minus 1%, so roughly in line with last year. A little bit of delay in CapEx decisions we're seeing on the corporate side, where we don't have any specific tax effects boosting the leasing volume as we had in Q4. So that went away. Companies, in our opinion, are buying a bit of time. The market was slightly better because there was quite a contribution from large tickets linked to the PNRR. And that's a type of leasing that we don't do. You will recall, we do mostly SMEs, therefore, small tickets. The spreads, very solid at 3.75% on top of the base rates. That could be either the IRS, if it's fixed rates or Euribor 3 months.

Page 7, the NPL business. The NPL business has performed very nicely. We have a solid EUR 101 million cash collection. You see that we are almost always stable above EUR 100 million real cash coming in per quarter. Starting early 2024, we concentrated on the Revalea purchase and integration, and we gave a lot of time and attention in the last 2 quarters on streamlining the recovery activity on the existing stocks, right, with focus on extra judicial activity. I note that starting from 2025, the cash collection and revenues figures that we give will include Revalea by default. So we will stop reporting the 2 separate numbers. It doesn't make sense anymore. The company is integrated. And therefore, we give the combined number.

You'll see it's not on the slide, but it's elsewhere in the results that gross book values decreased a bit because we sold some portfolio tails. Gross book values were down EUR 1.4 billion. But as you see, net book values were not. They were substantially stable, meaning that the collection was offset by new portfolio acquisitions. So you should see this as good housekeeping. We are selling tails of very low book value loans. These are typically either expired or they pertain to deceased debtors. As I said, the net book value of these loans is marginal. We sell them for very small book profits to specialists who like this type of residual value.

And therefore, in no way, shape or form, you should give any attention to the gross book values if they decrease a bit, we will continue to sell tails. We have done it already last year in a significant amount, and we will continue to do it because we think it gives a much cleaner and fairer picture of the size of the business. And it's also probably in the long run, more efficient not to have improductive stocks on your book that will not generate significant collections given our business model.

Page 8, rate sensitivity is always an item of interest for the analyst community. So we put in the page again. Here, we simulate the effect of a shock 50 basis points decrease in reference rates. So that's theoretical, obviously. What would be the annual net interest income effect of a step change of minus 50 basis points at the start of the year. And you see that, that's been reduced by quite a lot. It was EUR 11 million to EUR 13 million in March, it's now down to EUR 6 million to EUR 8 million. And that's based both on increasing the duration of the bond portfolio. We're now at 4.2 years. The overall proprietary portfolio increased a bit also in size in the last few quarters. And the second thing is, obviously, it's common sense, increase the mix towards fixed rates where we can. And that's especially possible in leasing, where we're now at 82% of fixed rate contracts.

On Page 9, we give you a little bit more detail on the dynamics of the interest rate effects. We show you the commercial banking interest income. So keep in mind, this does not include the NPL business. It does not include the non-core, and it does not include treasury, okay? And we open interest -- gross interest income and gross interest expenses and the base rates. So what happens in the quarter in the blue box. You can see that the base rate at the bottom goes from 3% to 2.6%. So we lost 40 basis points in the base rate.

The aggregate interest income, consequently, given that in commercial banking, most of it is rate sensitive, decreased by 40 basis points. That's obviously a combined effect. It includes the base rate effect. It includes pricing. It includes mix effect. But in any case, the combined was minus 40 basis points. But in the meantime, our actions to reduce the aggregate cost of funding of the bank generated a saving of 30 basis points, right? So the net effect is now below 10 basis points this quarter on the back of a 40 basis points rate reduction.

So on this basis, we give a bit of a flavor, right, for how we're positioned now. So keep in mind that throughout 2024, we had, on average, EUR 0.75 billion of excess funding that we maintained for prudential reasons, given that we had this EUR 2 billion of TLTRO to repay. In the first quarter of 2025, you can see the combined effect of the decreasing rate sensitivity and the cost of funding reduction measures. And these are now starting to catch up with the base rate reduction. So the dynamic is going in the direction in which we want to go to control, right, the interest rates effects.

Looking forward, you can expect that in the coming quarter, credit spread repricing initiatives will enter. These pertain to the stock. So it's not just new flows that most of the factoring stock will be repriced upwards. That's a spread effect. And you will have an aggregate cost of funding that will continue to go down, right? So that's the way we are managing the interest rate scenario. And maybe in the Q&A, we can come back on it if you have further questions on this.

Page 10, costs. Starting with the blue. Other operating costs are down EUR 6 million. EUR 4 million lower consultancy and other suppliers costs, EUR 2 million, the project costs that has been completed, so they don't reappear, EUR 1 million travel and living expenses. And you can see, therefore, that the first part of the extraordinary costs linked to the potential M&A are actually more than offset by the savings. Then we have the cost directly linked to NPL recovery, which have always a bit of seasonality. So that's EUR 4 million Q-on-Q. And there's finally EUR 1 million of personnel costs, mainly timing effects, so I wouldn't read too much into it. So on aggregate, we reduced the costs, EUR 4 million year-on-year and EUR 9 million Q-on-Q. It's a very good result, and I commend all the personnel of the bank for the discipline and the care that they've put in, in keeping our cost base sustainable.

Page 11, loan loss provisions stable at historical low levels, EUR 8 million versus EUR 9 million in the previous quarter. You can see that the coverage levels remain very high also compared to most other banks. So we have a total of 48% coverage of bad loans, 48% coverage of the overall, 70% on bad loans, 44% on UTPs and 12% on past dues. NPE ratios, you can see that it goes slightly up. We want to explain that a bit. We've had multiple quarters in which it was gradually going down. We see 2 effects. One is the denominator, right? So the performing loan stock has seasonality given the factoring business.

And secondly, a little bit of an increase in the nonperforming loan stock in the NPE stock. That's up EUR 19 million Q-on-Q net, and that's due to a few very specific client situations. I wouldn't read too much into it in the wider picture. The presence of guarantees has limited the loan loss provision impacts, which, as I mentioned, are only EUR 8 million. We did not use overlays to keep the loan loss provisions low in this quarter, right? So it's the effect of guarantees. We expect gross and net exposures to be managed down in 2025, so to get them below the starting level of the fourth quarter of 2024 in the absence of any external shocks. So we're working on offloading a bit of that stuff.

You know that the gray box pertains to past dues and UTPs and UTPs of the Italian public health system. That's a runoff portfolio. It's gradually going down as we collect you can project that going down towards 0 in the next quarters and years as we collect these loans. The number probably to watch with more attention is the number that excludes it, so the 5.7% gross and the 2.9% net.

Page 12. We always get questions about macro, given that we serve a good part of the Italian SMEs. So are we seeing any issues? Are we seeing any particular risks in the economy? The answer is no. We have no signs of widespread macro risk materializing yet. There's, of course, a lot of uncertainty in the world, right, tariffs, supply chain disruption, exchange rate effects. So we'll keep monitoring this very carefully. But as for now, payment days in factoring are down relative to the previous quarter. Stage 1 and Stage 2 loans, the mix is favorable. You can see that Stage 2 is actually down to 7%. Probability of default is down to 2.8% of the aggregate performing portfolio, some slightly riskier position exited. So once again, at a historical low level. No strange signals either in the rating migration. So on aggregate, we can say that today, we don't see any issues materializing. Now of course, looking forward, we can discuss later. But as for now, all seems to be very, very solid and calm.

Page 13, very nice piece of news. MSCI upgraded our ESG rating to AAA. That's the highest level, obviously. It happened on the 29th of March, so in the quarter. It came back -- it came on the back of an upgrade last year that got us to AA. So we took 2 notches in 2 years. I think there are only 3 banks in the country that have a AAA rating. So we're very pleased with that. We gave you some details on the rating in terms of how they break it down. So financing environmental impact, the industry average is 4. We score 6.8. Human capital development, the industry average is 3.7. We score 8.4. Corporate governance, 6.5, we score 6.9 and corporate behavior, 5.9, we score 6.4.

So we are very proud that the integrated approach to sustainability of our controlling shareholder that drives these initiatives and sets these ambitions is clearly bearing fruit in the conduct of the bank, also in the way the core business is executed. And that's both on the commercial banking side, obviously, with all the environmental things that are going on there in the credit side and socially in the NPL side.

Page 14, going towards the end, capital ratios, 16.55%. I want to underline that, that number, 16.55% excludes the net income and dividends that you could estimate for the first quarter of 2025. Had we computed that, we would have had another 20 basis points. [Technical Difficulty] First of all, RWA effects. So on aggregate, the total RWAs of the bank decreased by EUR 253 million. We have, on the credit risk side, a neutral effect. We have some decreases by lower volumes that are offset by higher repo activity and by some off-balance sheet exposure under Basel IV.

The net of these numbers you see there is more or less neutral. But then we have an increase in market risk and CVA and a significant decrease in operational risk due to the new calculation methodology that Basel IV prescribes for Banca IFIS. So there, we gain or lose, depending on how you want to see it, we have a reduction of EUR 337 million of RWAs, and that gave us a 43 basis points boost on aggregate.

Other effects are not very material, lower intangible assets and slightly higher calendar provisioning. So all in all, 16.55%, excluding the net income that we report this quarter, creating a very, very solid base for both facing a bit of volatility maybe in the remaining of the year on the macro side and for a successful potential integration of illimity if the illimity shareholders decide to accept the offer.

I would not go into Page 15, which contains a little bit more detail on the quarterly results and instead hand over to the moderator for Q&A. Thanks for your attention this far.

[Operator Instructions] The first question is from Irene Rossetto, Banca Akros.

First of all a couple of questions from my side. What do you expect in terms of net interest income evolution in the coming quarter? And then do you see any sign of macroeconomic slowdown? In particular, do you see some asset quality deterioration following the introduction of the tariff by the Trump administration?

Thank you. Yes. So in terms of net interest income, well, you saw some details in the presentation, right? So I won't repeat the details that we try to share so that you could maybe model a bit on your own. Let me say that the dynamic -- the real synthesis is that we are catching up with the rates environment, right? So what happens when Euribor goes down is that on the asset side, your pricing suffers immediately. On the liability side, reducing the cost is a slower process because you need to wait for your funding to expire and to renew it with cheaper funding. Some things are fixed rate, especially on the retail side, et cetera.

So what we're now seeing is that after roughly a year, right, a fairly significant steep reduction in base rates, we are catching up on the cost of funding side. So what you may expect in terms of evolution, we're happy to share an estimate. Annual net interest income on aggregate for 2025, we expect it to be down between 6% and 8% roughly with respect to 2024, right? So that's how you should expect it to pan out for the full year on the basis of the dynamics that we showed.

On macro, yes, it was also in the slides. There's a lot of stuff going on, right? So not only do we have uncertainty on what the tariffs at the end of the day will be, but there's always -- and there's a lot of discussion going about how it will eventually land, but you also have the effect of the uncertainty itself that leads to probably corporates being a bit prudent and being a bit careful in capital allocations and in new investments. So we expect volatility in terms of tariffs. We might have some fiscal policy of stimulus in Europe also around the defense funds. There's some uncertainty on rates because it's not clear what the inflationary picture is, so how the central banks will react.

Certainly, volatility on exchange rates, dollar has been depreciating, as you know, a bit of intangibles such as consumer and corporate sentiment. So as we showed, if you ask us today, if in the credit book, even with forward-looking indicators, we have any sign, right, of things turning worse, we don't. If you expect me -- if you expect us to make a forward-looking statement, I would probably take another look around probably July and more likely September as we see what the effect on corporate turnover and corporate profitability and consumer sentiment is, especially in the U.S. in the light of the tariffs.

It will take a few quarters from these things to translate into the real economy and then to translate into credit book. But it's very soon to say. I would say, for now, all is very good. We had a few of these cases in the past. I remember, I got the same questions when the Ukraine war started, when we had this huge inflation spike, when energy costs seem to be crippling European production. And in the end, right, the effect has been -- of these things has been manageable. So not making any predictions now, but let's take a look this summer when we see how these things actually then pan out. I hope I answered Irene.

The next question is from Manuela Meroni, Intesa Sanpaolo.

I have 2 questions. The first one is on Slide 9. The commercial spread has declined by 10 basis points in this quarter, so much less compared what -- compared with the decline reported in the previous quarter. So you also talked about the credit spread initiatives. So I'm wondering if you can share with us when you expect the stabilization of your commercial spread?

And the second question regards to the outlook. This was a pretty strong quarter. There were significant trading profit, but also some one-off costs. So I'm wondering if you confirm your full year net income guidance.

Thank you, Manuela. Sorry, I was replying to you with the microphone turned off. So I'll start again. So you asked about evolution of the spreads, a little bit tricky because it depends on a lot of things. I would say probably that -- and I'm looking at the -- to the CFO now as I talk, I would expect the overall spread, right, that you see on Page 9 to be at its bottom around Q3. And I think from then onwards, we may see a recovery because funding costs will continue to go down and Euribor, we hope, might stabilize. So the lowest point, I think, will be Q3, and we don't expect a drastic reduction from here onwards because -- and that's what we wanted to show on Page 9 because we think that we've got it under control.

And we mentioned, I think, an expectation for aggregate cost of funding for the full year, right, which we expect to be at around 3.3%, right? So I think these are the numbers that you need to figure it out for -- to figure out the outlook for yourself. In terms of guidance, yes, we gave a guidance that said broadly in line with last year. We are reconfirming it. Of course, the Q1 was pretty nice. But if we look ahead, first of all, the uncertainty that we just mentioned on the macro side, but also we reduced the interest rate sensitivity. We didn't completely eliminate it, right? So right, we -- I don't think we can take for granted that there will be 4 quarters of the same -- with the same profits as we saw in Q1.

So at this point, and you know our style in that respect, but we confirm the guidance. And if there's something to change either up or down, we'll come back to it later in the year. But one thing I want to just react to, you defined the contribution that we had as trading profit. I would like to underline that we are looking at the contribution of a very high quality, fragmented selective equity investment strategy with minority stakes where we co-invest with private equity players that over time, has given a lot of confidence in our ability to select these investments.

So it's true that you don't have it every quarter, but I would consider it core, and I would consider it fairly recurring, right? Although obviously, Q1 for seasonality reasons is -- can be a bit richer because you do the valuations on the basis of the full year '24 numbers of the targets, right? So I wouldn't fully qualify it as trading results. I would associate it with core business in the commercial banking and our structured finance expertise.

The next question is from Fabrizio Bernardi, Intermonte.

It's Fabrizio with Intermonte. I have a few questions, as you can imagine, is on the illimity play. In your press release, I think you mentioned that the regulator requested Banca IFIS shall carry on due diligence for the termination of the badwill resulting from the transaction to be certified by an external auditor and sent to the Bank of Italy. So I'm wondering why the [ ECB ] made this request, first question.

Second question is, did you expect the write-off of illimity that was announced a few weeks ago? And if this has been included in your numbers, so in the offer. So again, what do you think about the results of illimity, if you can share your color or flavor. What is your common equity Tier 1 expectation after the completion of the offer?

And some color about the acceptance rate of the offer. It is below 60%, 70% of the share capital. What do you do if you end up with 2 listed entities? And then finally, given that illimity has some important shareholders, if you have spoken to them in order to understand if they like or not to accept your terms?

Yes. Thank you. Very clear, quite a list. I'll go through it one by one. I wrote them down, but if I miss something, you will remind me, I hope. So why did the ECB ask for a due diligence? I can't talk for them. Obviously, I can tell you what my perception was. So first of all, we did an unsolicited offer. So there was no possibility to do a due diligence from the outside, right? And obviously, that is known to the regulator. So they asked us once the transaction is complete, if the shareholders decide to tender the shares, right, that we go through the balance sheet and verify the exact amount of the target's equity to then have a reliable number for the badwill.

We see it as a normal request. And I want to underline that given that it's an outside-in transaction, right, an outside-in valuation. And I want to underline that we would have carried it out in any case, even if not requested by the ECB for the certification of the PPA, right, of the purchase price allocation. And that type of certification is done with an external independent auditor typically. So it doesn't really impact what we would have done anyway. I also want to remind everybody that the illimity is a regulated entity by Bank of Italy. It's listed on the STAR segment, and it has requirements on governance and reporting on controls and equal to the ones that are applicable to Banca IFIS. We operate in the same segment. So we find this a reasonable request, and we're not overly concerned with having to do that. We would have done it anyway.

On the write-offs, were we expecting them? No, we had no prior knowledge. What I would say is that, of course, we took note. And we think on the basis of what came out that the offer that we made is definitely and even more so a great value creation exercise, both for illimity shareholders and for Banca IFIS' shareholders, right? You asked me for some comment on the results. I would rather not comment on other banks' results, not even if we are engaged in a possible transaction. So I would rather not comment further on it beyond saying that what we read this far confirms our motivation to do the transaction and in our opinion, confirms the fairness of the price that we put out on January 8, which was before, obviously, this news came out.

CET1 expectations also in the light of what you mentioned. So we had -- even at the start of the previous business plan, always a target of remaining above or around 14%, right? Then, of course, it went better, meaning that the 3 year plan, I mean, meaning that we ended up with more profitability, more dividends and more capital, but that was roughly our target. The indications we get from our controlling shareholder is to keep managing the bank in a safe way, meaning that we want to have this level of comfortable capital also after the completion of the merger. And we, therefore, don't see any reason to significantly change this outlook or this approach on the CET1 even after the merger.

The acceptance rate of the offer, it works like this. I just want to reiterate it. If more than 66.6% of the shareholders tender the shares, then the offer is valid. If anywhere between 45% and 66.6% of the shareholders -- the shares are tendered, then we have -- we can discretionary waive the threshold and still accept it. In any case, the 2 entities will remain separate and listed for some time. Our ultimate objective is and remains in both scenarios to get control of the shareholder -- extraordinary shareholder meeting and merge the entities.

What we will do in the case of an acceptance rate between 45% and 66.6% if we decide to waive the condition is to partially execute the synergies because not all of them require the entities to be merged, progressively work towards the merger and in the meantime, do the due diligence that was mentioned before, right? So that's how we reason about the acceptance rate. So it's valid beyond 66% and between 45% and 66% we have the possibility to waive the condition and to still go on. And if we do that, we will still pursue a good part of the synergies.

Last question, have we spoken with the illimity shareholders? So we were -- we got, as you may have seen, [ concept ] authorization just very, very recently in the last hours. So we now have an acceptance period from May 19 till June 22. That is the time in which limited shareholders will take a position. First, before that, the limited Board needs to take a position on the offer. So we're waiting for that, too. I can only comment on 2 shareholders that have made public statements, that were, I think, constructive about the offer.

So there is no firm commitment from anybody, but there are a few large shareholders that have made public comments on their constructive approach towards the offer. That's where we stand today. And we will discover the remainder in the -- during the offer period that we approach with confidence. We think we have a great story and value creation opportunity also for the illimity shareholders based on Banca IFIS' proven approach and track record in terms of creating recurring industrial profits that we may even augment with the synergies that we think are quantified in a very reasonable way and that can be done in a socially responsible way.

The next question is from Simonetta Chiriotti, Mediobanca.

It's about the NPL segment. So I would like to know if you could just give us an indication of the strategy going forward in this segment. So where should we expect the GBV to end after this process of sale of the tails, so just a broad indication. And the second point, you mentioned some forward flow agreements. So wondering if you could give us a bit more color on this. And finally, on the partnerships that you have mentioned as the instrument to increase growth in the coming years, if there is any update on this aspect?

Yes, Simonetta, thank you. Very clear. So as I mentioned, you saw the gross values going down because we did some housekeeping. And you saw the net values remaining stable on the basis of both our collections and the new acquisitions, right? So the strategy in the NPL business is the following. And the NPL business is core. It's a good profit contribution engine. And we think it is a resilient type of business for the reasons I will explain in a second, also in a context in which the Italian nonperforming loan stocks on the balance sheet of the banks has decreased a bit.

So we will continue to sell tails of portfolios in order to have a meaningful balance sheet without having on it huge amounts also in terms of numbers, so just numbers of loans, right? Huge amount of loans with gross book value -- significant gross book values, but very marginal net book values. So expect us to do some further sales of these tails, right? And this will never go away. We buy, we do the workout. And when we get to the tail end, we leave it to other specialists. So over the next quarters, expect some more disposals roughly of the size that you've seen. I won't make any firm predictions. I mean we don't specifically have to do it, but we think it is just good housekeeping to do it.

With respect to the forward flow agreements, those you -- some originators are happy to enter in these. We think that there are clear advantages. Long-term cooperations work better in this area. You have less hassle with the auctions. You have a more fluid portfolio handover. You get to know each other, you get to more -- also given over time, you get to a more refined understanding on both sides of the values of the portfolio. So you should imagine that we have a few consumer finance specialists that have made these types of transactions with us, sometimes also in competitive processes, right? And that will give us certainty of flows over the next quarters.

Strategy looking forward. First of all, we should keep in mind that it is true that there are less nonperforming loans on the bank's balance sheets in Italy at present. But if you look at what's produced, the part of small tickets unsecured, so families, right, is gradually increasing. And that's because consumer credit tends to generate as part of its business system, nonperforming loans at the tail end. It happens every quarter, irrespective of upturns, downturns, the economy, consumer credit generates a certain flow of nonperforming loans.

And consumer credit in the country is growing significantly and has grown for years. So we are in a place with the NPLs that's looking a lot more resilient to us than, for instance, corporates, right, which had the huge wave of 2011, 2015, which today is obviously very different. So we are in a place where small tickets unsecured NPL management and purchasing, we think can be for specialists that have scale like we do, can remain an attractive business over the next years.

In this, we're going to approach it with some co-investors. That means sharing a bit of revenues and a bit of remuneration with third-parties and having in return the benefit of not being exposed to calendar provisioning. We're quite far ahead on this project. We have numerous conversations ongoing. I think that before the end of the year, we will give the market a very detailed description of this type of asset management strategy, which will continue to generate value for us over the next years.

I'm being told that I may have said the 22nd of June at the end of the offer period. I meant the 27th. So I correct myself. The offer period is from May 19 to June 27. Sorry for that. I misspoke.

The next question is from Davide Giuliano, Equita.

I have just one left regarding NPL. NPL performance was a bit weak in the past 2 quarters, and this quarter was, by contrast, very, very good as you are now back on the market. Also, operating costs were also down in the division year-on-year despite revenues that was -- revenues that were up. Can you elaborate for a moment on the reason why for this decline in costs? And most importantly, looking at the broader cost base for the bank, what can we expect for the coming quarters?

Yes. So yes, the NPL division, what happened there was that as we integrated Revalea, which was fairly sizable for us, we didn't purchase other portfolios. So Revalea came in altogether, and we lacked a bit of new material, right, that had -- that would have been bought in a normal situation, right? And new portfolios coming in give us in the initial quarters, always give us a bit of extra contribution just because of the way the collections work. So we suffered a bit in Q3 and Q4 because of the lack of these purchases, given that we were focused on Revalea, as I mentioned.

And so what you see happening in Q1, it's not so much that the new purchases are immediately generating value because there's some delay there. But what happened there is that for at least 6 months now, the bank has started a very, very thorough and technical approach to managing and revisiting the existing stocks. And this is something that you can expect to continue. It's just further sophistication coming into the recovery machine. Great job on behalf of all our NPL colleagues in that respect.

And so we're very pleased to see it because that's just progressively the value of the existing stocks that's expressing itself. And in the meantime, we're also purchasing again. So we're happy with the NPL division. And I don't have anything else to say. I mean, it's difficult to make very precise predictions on every single division for the next quarters, but we're happy with the way this is evolving, and we're happy with the way Q3 and Q4 were corrected, if you will.

Cost, there was a lot of discipline this quarter. Don't expect it to be exactly the same in the next quarters also because, frankly, some extraordinary costs will come in connected to the extraordinary transaction regardless of its result. Obviously, these are external fees. They are all market-based, but they're sizable given the size of the transaction, right? So we have a bit of that coming in. There's a bit of seasonality probably. I wouldn't count on the cost to be continuously going down at the rate at which they went. So a good quarter, but then next quarter, some externally costs will come in, and you should keep it into account when you think about future profitability. I guess that was it, Davide, yes.

[Operator Instructions] The next question is from Giuseppe Grimaldi, BNP Paribas Exane.

I have actually 2 questions. The first one is around the cash collection trend that we're seeing right now. If you just can give us a bit of an update on what you're seeing. The second one is a bit of a modeling one. So this quarter, you saw tax rate that went down into the quarter compared to last year. How should we think at the tax rate for the full year?

Yes. Thanks. I'll pass the tax rate question on to the CFO. I'll answer on the cash collection of the NPL. So I touched on it in various moments. I won't repeat myself too much, but what you see is a healthy EUR 100 million roughly cash collection per quarter, expected to remain like that, roughly, right? We've been reliable in this respect, and most of it comes from the existing portfolio. So the model -- and if you look at the appendix of our presentation, you always find real cash collection and model cash collections, right? And you can see that over the years now, the model has been prudent.

And so we're comfortable with expecting the same in the future. Why did it happen? Well, a mix of things. A little bit of refocus on shortening the times, right? We also do some client transactions where we shorten the time frame of collection and leave on the table a little bit of value for the client. That's one thing. So transactions basically, voluntary transactions. Part of it is the whole focus on the processes and the approaches in keeping the payment plans alive, for instance, that we did in the servicing business. I just mentioned it.

So it's just an industrial approach that tries to innovate, tries to improve, tries to streamline the processes, try to remain efficient. And on that basis, we think our stock and also what we're buying can continue to keep us at roughly EUR 100 million cash collection per quarter, roughly. And maybe we'll have a quarter of EUR 90 million and then maybe we'll have a quarter of EUR 105 million, I don't know, right? But that's roughly what you should expect.

I'll give to Roberto the floor for the tax.

Thank you, Fred, and thank you, Giuseppe, for asking. Actually, we are applying the patent box [indiscernible] thanks to our IT investment that we made in the past. So we do expect tax rate for this year to stay around 30%.

[Operator Instructions] Gentlemen, there are no more questions registered at this time. I turn the conference back to Mr. Geertman for any closing remarks.

Thank you very much. We have nothing to add. As always, the Investor Relations team is at your disposal for any further questions you may have, and we will certainly be in touch in the next month on the basis of the authorizations that we have received. I thank you all for your time and attention.

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