EXCLUSIVE INTERVIEW with Orcel | From Unicredit, which beats expectations, to the Generali game

As we said, we launched this offer to unlock a situation of lack of dialogue and total lack of engagement from the other side. We didn't succeed because after only two meetings of about an hour each, they decided to stick to their positions.

This is the 21st consecutive quarter of record results. The numbers beat across all lines from revenues to what we call our core revenues — meaning net interest margin, fees, and insurance results. From the contribution of investments in other companies, particularly Commerzbank and Alpha, from costs that were better than expected. Our cost-to-income ratio has dropped to 33.4%. Our returns on equity are now close to 26%. And I believe this demonstrates that the continuation of a transformation that started in 2021 and now continues with 'Unlimited' gives us sustainability, consistency, and results that tend to outperform the sector.

For the moment, we see that everything happening from a geopolitical and macroeconomic perspective, we're able to absorb it. Why can we absorb it? Because the transformation allows us to go beyond, to compensate for a whole series of factors. We also have very strong lines of defense. We still have 1.7 billion in overlays to cover potential credit problems. Our credit coverage has improved. Our costs will continue to decline because we took on integration costs last year, so we have various levers to compensate. Based on what we see today, we believe we can reach 11 billion or more in net profit this year, and we have reaffirmed our conviction regarding our 2028 and 2030 results. Obviously, the environment is what it is, and if it continues to worsen, we would need to revise things, but for the moment we don't believe we need to do so and we believe we can compensate.

I believe that, more modestly, if we look at what happened in 2022 with the invasion of Ukraine, there was slower growth, inflation, and rising rates — it wasn't negative for banks. In our case, we believe that if rates rise and growth is more moderate — the growth we're seeing now will be lower — but margins will be wider, and this should have a neutral effect on our net interest margin, a neutral-to-slightly-negative effect on our fees. We have a whole series of other levers, including costs still declining, that should help us in an inflationary scenario. So when we put it all together, we believe we should be moving a bit faster, but that we can absorb these factors and deliver what our shareholders expect.

As we said, we launched this offer to unlock a situation of lack of dialogue and total lack of engagement from the other side. We didn't succeed because after only two meetings of about an hour each, they decided to stick to their positions. At this moment, there is an offer that, in our view, incorporates a premium, given that Commerzbank's stock rose 20% when we made our investment. It's up to Commerzbank shareholders to decide what they want to do. From our point of view, we win either way. If we remain below control, which is the most probable scenario, we'll continue to have a return from a significant investment in Commerzbank of over 20%, which, as you can see, this quarter helps support our results. If Commerzbank does better because it revises its plan, we'll benefit more. If Commerzbank does worse because it fails to execute, we have a put option coverage that allows us not to be worried. If instead we reach control, we've presented our point of view, and I want to be clear — we presented it because Commerzbank didn't want to engage and present a common point of view, a common plan, so we were forced to put forward our own. It's clear to everyone that it would create much more value than their plan. It's clear that it's incremental to their plan, so if they revise their momentum upward, our trajectories would be higher. It's not a dismantling at all, but rather a refocusing on Germany and Poland. We believe Commerzbank is drifting abroad, going into new business areas with higher risk overseas, and we believe it should refocus more on Germany and Poland, delivering the results we're already delivering from HVB.

I believe the German government is more in a position of observing what happens between Commerzbank and us. Some parts of the government have shown themselves to be more open to dialogue and more open to evaluating what we propose, so I believe the situation is what it is.

In Generali, we have an economic exposure significantly below 2%, so from an economic point of view our exposure is contained. When we started reducing our economic exposure, we did it through derivatives, neutralizing 100% of what were our shares and therefore maintaining the physical shares in our possession and thus voting rights, but not the economic aspect. Why did we do it? Because at the time it was the best way to reduce our risk without moving the insurance company's stock price, and because we have, as Philipp Donat also highlighted, very promising dialogues from an industrial perspective on insurance, asset management, and a series of areas where by cooperating we could reduce costs and become more efficient together without this having an impact on Generali. So from our point of view, being a present shareholder who can help with the stability of this partnership is a valid cause, but for us it's a financial investment.

There is no plan to go above it at this moment. For us it's a financial investment. When you say 'need' — there's a lot of volatility in Italy, and for us it's an important partner. Being in a position to defend this partnership, which would generate a lot of value for us, is important. So if we have an exposure of under 2% with the ability to help other shareholders maintain the stability of the company, for us that's a positive.

You should ask Delfin that. For us, they are one, a very important client, and two, a shareholder who has been with us for years — since the privatization of Credito Italiano, actually — so we owe them a great deal and we stand by them, but those are decisions for them.

We believe — we said that our target is to aim for 11 billion or more. For the moment, it's premature to talk about the 'more,' but 11 billion we will reach.