Good morning, ladies and gentlemen. Today's conference call will be hosted by UniCredit CEO, Mr. Jean-Pierre Mustier; and the Co-CFO, Mr. Mirko Bianchi. [Operator Instructions] Today's conference call is being recorded. At this time, I would like to hand the call over to Mr. Jean-Pierre Mustier. Sir, you may begin. Jean-Pierre Mustier: Thank you very much, and good morning to the team and welcome to the analyst call for our second quarter results. While we continue to face the challenges of the ongoing COVID-19 pandemic during the period, we finished the quarter in a strong position. We are ready to seize the opportunity that lies ahead, thanks to our effective business continuity measures, our accelerated digitalization and our stable cost base. As shutdowns began to ease across most of our core markets, we are seeing the first signs of commercial recovery. This can be seen more clearly in our monthly performance with good sales for June, now slightly higher than the level of a year earlier, demonstrating the resilience of our commercial franchise. We are ready and open for business and in a strong position to capture commercial opportunities. We have maintained our disciplined risk management, the hallmark of Transform 2019, and we confirm our financial year '20 and '21 cost of risk guidance. The FY '21 guidance is also confirmed. With our very strong balance sheet, we can continue to finance the economy and support all our stakeholders. We have committed to reinstating our Team 23 distribution policy in 2021, including returning any excess capital to shareholders. Let's turn to Slide 5. I would like to remind you of what UniCredit stands for. Our performance this quarter reflects the conservative way we run the bank and our diversified business model. It also reflects our culture, with cultures that sum up as doing the right thing for all our stakeholders, driving long-term sustainable outcomes over short-term solution, with commitment to sustainability as recognized in June by MSCI. We upgraded our ESG rating to A after many years with a BBB rating. We have further reinforced this commitment with the appointment of a new head of Group ESG strategy and in banking. And this week, we have adapted our culture we think to industry-leading standards. We have made a direct commitment to fully exit all coal sector financing by 2028 worldwide. And we will have 0 exposure to thermal coal mining and coal-fired plant projects by 2023. Further details on the new policy can be found in the annex on Page 24. Sustainability is fully embedded in how we run the bank. Let's turn to Slide 6. Revenues in the quarter were down 4.8% compared to the first quarter. We even gained place for much of the target across our core markets with significantly lower economic activity and lower fees as a consequence. We are missing a recovery in activity. While Mirko will provide more color shortly, I would like to highlight the performance of Commercial Banking in Italy and Germany, where fees in June were higher and the same month was very good. And at the group level, overall fees were slightly higher in June than the year earlier. In the Annex on Page 36, we have provided a detailed breakdown of our monthly fee performance in both geography and broad product. Gross NPEs are more than €10 billion lower than the year ago. This is despite the hard work and disposal in our noncore. As a result, our gross NPE ratio improved further to 4.8%. Our capital position continues to strengthen. Our fully loaded CET1 MDA buffer at the end of the quarter was 481 basis points, an increase of 44 basis points over the quarter and 280 basis points higher than the year ago. It is thanks to the proactive decision we took to strengthen our balance sheet over the period. The strength of our balance sheet also allowed us to absorb significant provisions over the last 2 quarters to prepare for Team 23 and subsequently for the effect of COVID-19. This provision totaled €4.3 billion pretax and included €1.2 billion for updated Team 23 COVID-19 strategy by '21, €1.4 billion for forward-looking NOS provision and €1.8 billion for restructuring costs, which allow us to accelerate further the transformation of our business. Notwithstanding the substantial provision, our tangible equity is stable year-on-year. Now let me hand over to our Co-CFO, Mirko Bianchi. Mirko, all yours.

Thank you, Jean-Pierre, and good morning to everyone. We are on Slide 8. Revenues were down €208 million or 4.8% quarter-on-quarter. As Jean-Pierre already noted, we felt the full effect of lockdown in this quarter. The lower revenues were particularly offset by lower cost as we maintain our strategic discipline and focus on efficiency with operating cost down €49 million or 2% on the first quarter. I will comment on revenue and cost trend in more detail in the following slides, but I would like to make 3 specific comments on items below the net operating profit line. Systemic charges in the quarter increased by 40% year-on-year, mainly due to an additional contribution to the Single Resolution Fund in the second Q '20. As a result, we have revised up our fiscal year 2020 outlook for systemic charges guidance from €850 million to €900 million. Profitable investment in the quarter included a charge linked to the accelerated rundown of noncore and an impairment in Austria partially offset by mark-to-market gains on our remaining stake in Yapi. The group tax rate of 14.4% in the second Q 2020 was driven on by the geographic mix of taxable profit, mainly in CEE, and a tax credit recognition in Italy. Let's turn to Slide 9. If we look at our profit distribution across the group in the quarter, you can see that our diversified business model underpins our stability at group level, notwithstanding the varied timing of lockdowns across our markets. The contribution of CEE and CIB stand out in this quarter. As you can recall, we introduced underlying net profit at our Capital Markets Day last December to create a relevant and true measure of profitability, one that provides a better reflection of income that can be distributed to shareholders. To calculate underlying net profit, we exclude after-tax nonoperating items from stated net profit. This quarter, we had limited nonoperating items. The underlying net profit was, therefore, €528 million. Please see the Annex on Page 42 for all adjustments in Q1 and in Q2. I would also like to comment on our return on allocated capital year-to-date. To put things into perspective, if we adjust for the IFRS 9 macro provisions, the impairments in Austria and spread the systemic charges equally through the year, the underlying return on allocated capital in the first half would have been 7% in Italy, over 8% in Germany and above 5% in Austria. Given the macroeconomic background, this is a good performance, underpinning our fiscal year 2021 guidance of EUR 3 billion to EUR 3.5 billion underlying net profit and 6% to 7% underlying royalty. Let's turn to Slide 10. Net interest income was down 4% quarter-over-quarter. I would like to remind you, however, of the tax-related one-off item in Germany in the first quarter that contributed a positive EUR 50 million. Adjusting for this one-off, net interest income was down by only 2.1%. Loan volumes contributed positively to the net interest income in the quarter. This contribution is based on the average volume of performing commercial loans, which were up 2.4% quarter-over-quarter. The contribution from customer loan rates was impacted by both lower rates and a mix effect. Lower base rates in CEE and U.S. were partially offset by a positive impact on the contribution from deposits. Please bear in mind, however, that the closer interest rates get to 0, the harder it is to offset pressure on the asset side with liabilities. The mix effect reflected our prudent risk appetite. We maintain our cautious stance on consumer finance, a strategy that predates COVID-19 crisis. We continue to focus on higher-rated clients more generally. The second quarter also included the first loans issued under government guarantee schemes. These accounted for 16% of the group's overall new production in the quarter and 30% in Italy. Such loans are naturally at lower rates. Finally, let me now address the topic of TLTRO. As you know, we repaid all TLTRO outstandings in June 2020. At the same time, took the maximum allotment of TLTRO III of EUR 94.3 billion. As we do not do carry trade, rather deposit the excess unused liquidity back to the ECB, the nominal gross benefit is around EUR 300 million per annum. At the same time, however, we lose the benefit of the previous TLTRO programs. The incremental net NII benefit from these transactions combined, if they were expected to be around EUR 75 million per annum throughout the 3-year life of the TLTRO III. Our IR team is happy to take your calls on the details. Let's turn to Slide 11. Fees were down 11.8% year-on-year. That was with signs of commercial recovery towards the end of the period. We saw the full effect of lockdown this quarter. In contrast, the first quarter was only affected from mid-March onwards and included a very strong commercial performance in January and February. As Jean-Pierre said, we have seen clear signs of recovery in June. This rebound in fee income as lockdowns were lifted demonstrates the resilience of our commercial franchise. We are, however, seeing a variety of commercial recovery in terms of geographies and fee categories. In part, this reflects where each market is in terms of the easing of lockdown restrictions. Austria and Germany opened up first, followed by Italy, while CEE, some countries are still in lockdown or in the process of tightening restrictions. The annex on Page 36 provides a detailed managerial breakdown of monthly fee trends by geography and product, so I will limit my comments to the following. Investment fees are rebounding well, driven by a strong performance in Commercial Banking Italy towards the end of the period. By June, investment fees for the group were 9% higher than June last year, which being -- this being said, was a low month, and we expect this to recover -- to be sustained. Initial data from the first few weeks of July also confirmed that. The relative stability in financing fees in the quarter reflect two trends. A very strong demand in debt capital markets across CIB and lower credit professional insurance sales in Italy. The latter are expected to remain subdued, in line with our cautious stance on consumer finance. Transactional fees in the quarter were impacted by the effect of lockdown on economic activity. GDP-sensitive transactional fees such as cards, payment services and nonlife insurers were all lower. Encouragingly, in June, we saw transaction volumes of issued cards match the same levels seen a year ago across Italy, Germany and Austria. As economic activity resumes, we expect these GDP-sensitive transactional fees to partially recover through the second half following the expected recovery in GDP in the markets where we are present. Current account fees were stable in the quarter compared to last year. Overall, we would expect total fees in the second half to be broadly consistent with the first half. Let's turn to Slide 12. Trading income in the second quarter was very strong at 357 million, up 184 million quarter-on-quarter. Client-driven trade was solid, contributing 372 million, up 79% quarter-on-quarter, excluding the volatile XVA component. This strong performance came from fixed income as well as equities and commodities, the latter benefiting from strong sales of certificates in the network. Non-client-driven trading income also performed well, up 113 million quarter-on-quarter. As we said in the first quarter, we expected the mark-to-market losses in our treasury portfolio to recover. I am sure many of you compare the trading income performance of banks across Europe and beyond. Please note that, unlike some banks, we take own credit spread adjustments straight to equity and not through the P&L in the group trading income line. If instead, we have taken these adjustments through the P&L, our trading income would have been €210 million higher in the first quarter and €133 million lower in the second quarter than reported. The lower contribution from dividends year-on-year was driven by the lower profitability in some financial investments in Austria and the impact of strategic disposals of stakes in Yapi and Mediobanca. Let's turn to Slide 13. Our continued cost discipline allowed us to offset increased COVID-19-related costs in the quarter. These included additional expenditures on real estate, security and personal protective equipment following the easing of the lockdown. The total COVID-19-related costs amounted to €50 million in the quarter and €69 million in the first half. For the full year, such costs will be in the region of €100 million, but we will fully -- will be fully absorbed by savings made elsewhere, including lower viable compensation. The decrease in cost year-on-year in the second quarter is mainly thanks to lower FTEs and lower bonuses. The decrease comes despite a tough comparison with the second Q 2019, which benefited from a positive €24 million DBO release in Commercial Banking Austria. For fiscal year 2020 overall, but also for 2021, we expect costs to be broadly in line with fiscal year 2019 and well below Team 23 guidance. Let's turn to Slide 14. Let me start by explaining our way of looking at cost of risk from now on. We have split loan loss provisions into specifics, regulatory headwinds and overlays. Specific provisions, which relate to nonperforming loans, i.e., those classified as Stage 3; regulatory headwinds, which include the impact, as usual, on loan loss provisions from models and the new definition of default; and overlays, which represents all loan loss provisions that are neither specific nor regulatory headwinds. This include IFRS 9 macro scenario provisions, sector-related provisions and provisions arising from preemptive classifications at Stage 2. These additional provisions are on performing loans, i.e., Stage 1 and Stage 2 and aimed to proactively capture future default dynamics in the loan portfolio. In the future, some of these overlays will be set against specific provisions when defaults materialize and the loans are classified as Stage 3. This is how we will be looking at cost of risk going forward. For future details of our approach, please see Page 51 in the annex. In the annex, we also provide further disclosure on our loan portfolio, including classification as Stage 2 by popular demand from analysts and investors. Let me now turn to our performance in the first half and explain how we expect provisioning to evolve through the rest of the year and into the next. Our cost of risk in the first half 2020 stood at 91 basis points. Within this, 32 basis points was accounted for by specific non-loss provisions for loans that were in Stage 3 or moved to Stage 3 during the first half. This is a low number and lower than the 43 basis points in the first half 2019, reflecting our conservative approach to loan origination. Since part of the loan portfolio is likely to be under moratoria for a large part of fiscal year 2020, specific loan loss provisions will likely be lower than they would otherwise have been given the economic environment. Consequently, we will have additional overlay loan loss provisions in the second half 2020 as we had in the first half 2020 to properly reflect the forward-looking economic impact of COVID-19 on our portfolio. The 100 to 120 basis point cost of risk for fiscal year 2020, as per our guidance, is therefore confirmed. Some of these overlays will be set against specific provisions, with the share of loans being classified as Stage 3 expected to rise more significantly in 2021 once the moratoria expires. Considering these assumptions, we also confirm our fiscal year 2021 guidance of 70 to 90 basis points. Finally, please note that there were essentially no loan loss provisions from regulatory headwinds in this quarter. Let's turn to Slide 16. In the second quarter, our gross NPE ratio for the group, excluding noncore, was stable at 3.4%, demonstrating our good underlying asset quality. Using the EBA definition, the group NPE ratio, excluding noncore, is up 2.7%, now below the average of other European banks for the first time. As a pan-European bank, that is the peer group that we should be compared to. As we look ahead, consistent with the underlying assumptions of our projected cost of risk, we expect the NPE ratio to rise as moratoria expire and the default rate increases. The coverage ratio was down by 2 percentage points in the quarter. This is largely a mechanical effect resulting from the disposal of unsecured NPE portfolios where, naturally, the coverage was much higher than average. The quarter-on-quarter increase in UTPs was mainly due to Italy and the proactive management of flows through default. Let's turn to Slide 17. Throughout COVID-19 lockdowns, we have continued to work hard on the noncore rundown, and the process remains well on track. As you will have seen last month, we were the first and remain the only bank to close multiple market-based transaction this year. The sale of 3 unsecured nonperforming loan portfolios were all accounted for in the second Q 2020. As a result, gross NPE in the noncore were down EUR 1.1 billion in the quarter to EUR 7 billion. The NPE market was effectively closed during lockdown. Our strategy and processes, however, remained in place. It's allowed us to quickly reenter the market as the outlook became clear to investors. The Italian NPE market for unsecured asset classes was the first to reopen. Prices in such transactions are largely driven by timing effect on expected cash flows. They are, therefore, less affected by the macroeconomic environment. We are now in the market with secure and UTP portfolios. This market was slow to reopen. Investors required more time to conduct on-site due diligence and became comfortable with the timing of the legal processes. We are confident that our disposal program will be successful. We expect a further reduction of the noncore portfolio reaching our initial target of below 4.3 billion by year-end. The full rundown of the noncore in 2021 is confirmed. Let's turn to Slide 18. Our CET1 capital fully loaded is a very strong event -- is at a very strong 481 basis points buffer over our MDA level. To give this number some context, our MDA buffer is of the same order of magnitude as our current market cap. Please note that this quarter we started to report on additional CET1 values again following ECB guidance on certain items. Our MDA buffer on a transitional basis is 549 basis points at the end of the second quarter. We will disclose it for as long as the guidance remains. But we will, as always, continue to manage the bank on a fully loaded basis. Please see the annex on Page 54 and following for additional disclosure. The 44 basis points increase in the MDA buffer over the quarter was largely thanks to a reduction in risk-weighted assets of more than 10 billion in the quarter. Lower risk-weighted assets were driven mainly by the early adoption of the SME supporting factor, lower loan volumes at the quarter end as well as the increase in guaranteed loans. A directional contribution of loan volumes through risk-weighted assets this quarter diverges from the directional contribution made to NII. This is primarily because NII is linked to average volumes, which were up quarter-on-quarter, while the risk-weighted assets are based on end-of-period volumes, which were slightly down in the quarter. This mainly reflects the timing of when corporates drew down on [indiscernible] partially reimbursed liquidity facilities. The change in the regulatory treatment of software assets also introduced in the so-called CRR quick fix, takes effect in the third quarter. It is expected to have a positive impact of around 10 basis points. Looking forward, we expect our MDA buffer in fiscal year 2020 and fiscal year 2021 to remain above 300 basis points, which is well above our target range of 200 to 250 basis points. As confirmed in our announcement last week, if the ECB does not prolong its payout recommendations, we are committed to gradually returning excess capital. This will be based on the sustained excess capital over our target MDA buffer. Let's turn to Slide 19. In line with the strong increase of our CET1 MDA buffer, our TLAC MDA buffer has increased to 534 basis points, well above our target range. This was driven by the successful completion of our subordinated TLAC funding plan for fiscal year 2020 raising 8.1 billion of eligible instruments at very attractive levels. In July, we executed €1.25 billion of senior loan preferred as pre-funding of the fiscal year 2021 TLAC needs. For the remainder of the year, we will be ready for potential additional 2021 prefunding subject to market conditions. Let's turn to Slide 20. And finally, a quick look at our tangible equity, which was stable quarter-on-quarter at €51.1 billion for the second quarter. For the remainder of the year, we expect a steady increase in tangible equity and tangible book value per share. Let's turn to Slide 22. And Jean-Pierre, back to you. Jean-Pierre Mustier: Thank you very much, Mirko. As I said at the start, this quarter has been characterized by the early signs of commercial recovery. We are ready and open for business. As always, we will continue to run and manage the bank in a conservative and disciplined way and prepare for all eventualities. We confirm our ongoing net profit target for 2021 of €3 billion to €3.5 billion. We also confirm our financial year '20 cost of risk guidance of 100 to 120 basis points as well as our financial year '21 guidance of 70 to 90 basis points. Our balance sheet will remain strong. We expect our fully loaded CET1 MDA buffer to remain above 200 basis points in both end of fiscal year '20 and '21. This is well above our target range of 200 to 250 basis points. We have committed to reinstating our Team 23 distribution policy in '21, subject to the ECB dividend recommendation not being extended. This means a payout of 50% of ongoing net profit in the mixture of cash dividend and share buyback. It also means we're gradually returning excess capital to shareholders through extraordinary capital distributions. As of 2021 and for the remainder of Team 23, the excess capital will be based on the sustained excess over the target fully loaded CET1 MDA buffer of 200 to 250 basis points. Before taking your questions, let me extend my deepest thanks and appreciation to all of UniCredit team members whose commitment, resilience and continued hard work in this unique situation has allowed UniCredit to prosper and to do the right thing for all our stakeholders. Mirko, the rest of the team and I are ready to take your questions. [Operator Instructions]

[Operator Instructions] The first question is from Adrian Cighi with Credit Suisse.

This is Adrian Cighi. 2 question, one on capital return and one on cost of risk, please. On capital, can you please give us a bridge from today's MDA buffer of 481 basis points to be sustained 200 to 250 basis point target rate? And what -- over what period would you expect to get there? And then the cost of risk outlook, you reiterate the full year sort of cost of risk guidance of 100 to 120. What explains the expected increase in H1 -- from the H1 levels in light of the front-loading of IFRS 9 environment and the full effect of the lockdown in Q2? Do you expect things to get worse? Or is this sort of additional overlay you're expecting to take based on additional information to be received in the second half? Jean-Pierre Mustier: On the capital return, as you pointed out, we are very strong in the above front on a fully loaded basis of 481 basis points. We said we expect the buffer to be well above 200 basis points in both the end of 2020 and 2021. Bear in mind that we have the regulatory headwinds in 2020, which have been partially shifted into 2021. And so we target regulatory headwinds, which would be in 2021, also around a negative 140 basis points. So -- and then for the regulatory change in 2022 and 2023. So basically, the capital MDA buffer will only try -- evolve with the earnings. And on the other side, be negatively affected in 2021 by the minus 140 basis points, which is 60 basis points above the initial target. So 100 basis point of the initial target as we have more than 50 basis points translation from 2020 plus 20 basis points of impact -- of the CEE [ph], impact of the other expected loss and 20 basis points of positive impact of first year RR, which has been taken in 2020. So overall, 200 basis points above for our MDA buffer in 2020, 2021, which is partially compensating the net earnings, but by the regulatory investment. For the cost of risk outlook, I will hand over to TJ, but actually we have pointed out on Slide 51 of the presentation where we explain what's meant by overlay. We have a specific cost of risk, which is going to be for the full year at around 50 to 60 basis points. So that's in line with what we can see for the portfolio. We have an overlay of cost of risk of 40 to 50. The overlay is a mix of preemptive reclassification between Stage 1 and Stage 2, sector-based provisioning and a conservative macro assumption. We had an overlay already for Q1 of 83 basis points and of 34 in Q2. And we expect to take additional overlay in the second half. And we have 10 basis points of negative impact of regulatory headwinds, so which gets you then to 100 to 120 basis points. This overlay in order to anticipate the future specific risk that we have when the moratoria expire, probably the moratoria will be extended, most of them. For instance, the moratoria expires the end of September for the CoR price for the individuals. It's more in May or June next year. And so probably, for the corporate, the moratoria will be extended to January next year. So we are not going to see especially provision in 2020. This is why we got this overlay to anticipate the basically future specific provision. And this overlay will basically be turned into specific provisions on this when the loans are moving to Stage 3.

Our next question is from Andrea Filtri with Mediobanca.

One question on capital and one question on cost of risk. On capital, Slide 53, could you tell us what is the positive that is implicit on regulation when we exclude the impact of cyclicality and of the SME supporting factor. Did you include any regulatory hurdles which were previously meant to come in 2021 already in this quarter? And on NII, if you could tell us what the future contribution you expect from your pipeline of government-guaranteed loans and update on your ALCO portfolio, what is your position regarding how it was Q-on-Q duration breakdown and contribution to NII? Jean-Pierre Mustier: Sure. Thank you very much, Andrea. I will let Mirko comment on the NII for your second question. On the first question, we'll go to Slide 53 in the [indiscernible] which is the risk weighted asset evolution. We had a settlement of positive, as you said and so on the regulation side. So on the regulation side, we had the decrease of the risk-weighted assets by 2.4 billion. We had an increase of risk weighted assets of 4.9 billion, which was due to procyclicality, and we had a 4.4 billion impact for the first half of 21 basis points, so 2 basis points in the first quarter, 18 basis points in the second. We expect procyclicality on the third quarter to be around 14 basis points and on the fourth quarter to be 10 basis points. And for 2021, 20 basis points. So that's the forecast risk weighted asset by quarter. This increase of risk weighted asset due to procyclicality was offset by the SME supporting factor, which was originally anticipated in 2021. So for a decrease of 4.4 billion of risk weighted assets. So basically, SME supporting factor as such and there was the procyclicality. We had a decrease of 1.2 billion of risk weighted assets after the new sovereign temporary benefit. So it's a risk of exposure. So then there is FX, which has been moving from 50% to 0%. And this will last up to 2022. And we have a decrease of 800 million of risk weighted assets into the new regulation and it contributes to [indiscernible] which is all the superior loans -- employee loans. Because there has been a decrease in the density from 75% to 35%. So that's the broad explanation of this reduction of 2.4 billion of risk weighted assets for the quarter. And I'll let Mirko comment on the NII side.

Yes. Thank you, Jean-Pierre. On the -- first of all, in terms of the govies, we have exposure of 43.4 billion. So, it's down basically 0.5 billion from last quarter. As you know, basically, more than half is classified into head collect. And the rest is fair value [indiscernible] We have, let's say, duration of the portfolio of 3.3 years. So it's in line with last year. Now in terms of the contribution, in terms of contribution of the NII, I don't have the exact breakdown here. What I can say is that quarter-over-quarter, we were quite stable in terms of the NII that we were able to extract for -- from a quarter-on-quarter basis. So we will continue to reduce this exposure as we go towards the target of 50% of our total tangible equity.

The next question is from Britta Schmidt with Autonomous Research.

Yes, 3 questions, please. Firstly, with regards to your guidance of the €3 billion to €3.5 billion of underlying income in 2021, are there any material nonoperating items that we should adjust for? And where do you see the biggest potential year-on-year improvement in this number to explain the big gap versus market expectations? The second one is, could you update us on the macro assumptions regarding the loan position, GDP outlook? And the third one is to give a bit more specifics on the NII outlook for 2021? Jean-Pierre Mustier: Sure. Actually, I'll take the first and third question in one go, and I will make TJ comment on the second question. So as far as the €3 billion to €3.5 billion net income for 2021, as we said in the previous quarter, we expect from what we were projecting for '22 to have NII down by more or less 5%, so from €10 billion to €9.5 billion. We expect our fees to be down by single digit, low single digit. So there should be a recovery of fees versus that we were forecasting for Team 23. And we expect the cost to be more or less flat versus the cost we had at the end of 2019, so lower than what we had with Team. And the LLPs, we followed with the guidance of 70 to 90 basis points. So I was talking about the underlying net income. And so when you look at the combination of that and a specific change in the [indiscernible] remaining to the €3 billion to €3.5 billion net income, as so we have confirmed. So no underlying item, just coming from the normal operating activity of the bank with stabilization of the NII, normalization of the fees, have improving profit, which is back to normal discipline and cost saving and position lower than 2020 is in the range of 70 to 90 basis points. TJ, do you want to comment on the macro assumption?

Yes. Thank you, Jean-Pierre. In Q2, we do not see any need to update our macro assumption, and we are comfortable that our macro reflects the environment. And we confirm both our cost of risk guidance for the year of 100 to 120 with this assumption. Jean-Pierre Mustier: And before we move to the next question, just a point on the nonoperating items. If you meant the difference between stated and underlying net profit, these remain as per CMD19 guidance. So it's only the headwinds start of LLPs and any potential impact from the FX trends.

Your next question is from Antonio Reale with Morgan Stanley.

Two follow-ups and one question. The first one is on your guidance for the second half of the year. I think, if I understood correctly, I think we're seeing underlying profits in the first half of just shy of EUR 400 million. The first half was affected by non-growth, largely due large one-offs. And in the second half, if I understand correctly by looking at your guidance, will be affected by obviously higher loan loss provisions. Can you help us understand better what that means in particular for NII fees and costs in the segment? And last, a comment on the tax rate, which is always difficult to forecast. Related to that, can you also remind us what is the book value of Yapi. And the second one is a follow-up on cost of risk. My question is really on moratorium, and I would like to understand what you're asking -- assuming in terms of defaults on these loans. I'm looking at Slide 47 until Slide 51, relating to the spread. But what percentage of the EUR 35 billion do you assume in your profit guidance will default. Is it fair to assume sort of 40% might be right? I think your cost of risk estimates for the full year as estimated implies that it is 43.5%, in first half it was 2.4%. Can you give us just a little bit more color underlying your assumptions, that would be great. And the last point is on NII. We've seen, obviously, yourself as well as revenue kind of back [indiscernible] so long. How do you think your sector or how you're seeing the sector coping in terms of your lending spreads? Are you seeing any changes in the comparative dynamics? I'm just trying to put together the net contribution flat of EUR 75 million a year, which seems quite low. And also related to that, I guess, with your answer, do you see any impact medium term on lending spreads depending on incomes? Jean-Pierre Mustier: Thank you very much. That's more than 2 questions there. Can you put -- let me give a brief answer to your first question. I will let Mirko comment on the book value of Yapi and then on the NII. And then TJ can comment on the cost of risk of the moratoria loans. On the second half guidance, we don't give a guidance. We just give an indication, but we are taking additional overlay provision in the second half to properly reflect the evolution of the loans in our balance sheet, which are under moratorium. So by taking this addition overlay, we will reach the 100 to 120 basis point cost of risk, which included 10 basis points regulatory headwind, as I previously mentioned. So we expect that the overall net income will be of the same order of magnitude of the first half. But we don't give a detailed breakdown on anything as the larger things like the evolution of the situation. That's the expectation that we could have. So not very different in terms of underlying net income than the first half. I hand over to Mirko for the book value and NII.

So on the book value of Yapi, it's around EUR 0.5 billion for the 20% stake that we still have. On the NII side, first of all, the current situation, the current situation is that we are down 2.1%, driven mainly by interest base rates going down in CEE countries and the dollar. So this is something that structurally will continue to be there. Then there is also, let's say, a mix effect. On one side, our cautious stance on products like consumer finance and then government guaranteed loan margins that, as you know, are lower than normal, let's say, lending. So, in terms of trying to project this going forward, I would say that NII, of all the revenue line items, is probably the one that will suffer a little bit more in the next two quarters, also basically driven by, let's say, competitive environment and TLTRO III pressure. So that's basically how you should forecast NII going forward. Underlying items in the P&L look better. Fees that you are seeing, what we said, meaning we have a better outlook. And we are seeing the rebound. And also, trading looks like back into track into delivering what it's supposed to deliver. So from that perspective, revenue probably on the NII is probably the line item that is going to slightly be weaker going forward.

And on the moratoria, your question on the default sort of rate, on Page 47, you can see that Italy, we have 14% in terms of the total sort of loan portfolio. That's the focus area for us. And you can see very little on Germany and Austria and fees look at the [indiscernible] country, but overall is 12%. For Italy, of the 24 billion we -- they are roughly about 5.5 billion of individual. Enterprise is about 18 billion, of which we have -- you can break down by leasing. And then the small business as well as the corporate. We confirm sort of our guidance in Q1 of 3.5% for Italy, which is almost double the full year '19 and higher than the 2008 and '09 financial crisis, 2.5%. And clearly, we also look to break down by sort of rating around the rating classes, roughly the total or weaker rating in Italy. We're assuming default is as high as 30%. But overall, on Italy moratorium, we're seeing a default rate of almost 6%, which is almost double the 3.5% for Italy.

The next question is from Domenico Santoro with HSBC.

Just a clarification on your guidance on 2021, and this 3 billion, 3.5 billion. Because if my understanding is correct, you're guiding for 5% NII below the level that you guided for the -- in the investment plan, which is around probably €9.5 billion; fees, south of 6.2. On the cost and provision, you're very clear. So I'm just wondering how can we bridge this to this €3 billion, €3.5 billion. Either there is a very low tax rate, or are there adjustments that we have to just do? You mentioned before potentially the regulatory headwinds on the cost of risk. So can you try to help us to reconcile a little bit this €3 billion, €3.5 billion with the guidance on the main P&L lines? And the other question is on the cost of risk, whether there is any top-up on the noncore to accelerate a little bit the run-down on top of already booked in Q2. Jean-Pierre Mustier: Thank you. On the noncore, there's no top-up. Basically, we confirm the target of a full rundown by 2021. We actually did already in Q2 many transactions. We'll resume our provisions and we're working on other in Q3. And we reconfirm as well in terms of yearly guidance of [4] for the year, for beyond 2020. On the P&L lines, as I've said, the NII will be around 5% lower than what we were planning in Team 23. The fees will be only a few percent lower, which had low single-digit decrease, so it is loss of 6.2%, as you said, and it's -- of course, I mean, it's lower than 6.5%, but loss at 6.2%. And we have a trading profit, which goes back to the normalized level of trading profit which is €1.3 billion to €1.4 billion. So when you add that up and you take the cost level and the LLP guidance of 70 to 90 basis points, you end up with a net income of €3 billion.

The next question is from Hugo Cruz with KBW.

So a couple of questions. First, there's been some market speculation that Mr. Mustier might leave UniCredit for another bank. It would be great if you could clarify or share with us your thoughts on your next steps in your career. And second, around capital return in 2021, if the ECB allows -- remove the blanket ban, how could we see kind of the timing of capital return? Could we see some interim dividend? Or will you ask for a buyback as soon as possible? Then if you could discuss that, that would be great. Jean-Pierre Mustier: Thank you very much. So I can confirm that I'm working together with the team in order to make sure that we deliver [indiscernible] I think that should close any question mark about what I do. As far as the capital return is concerned, for 2021, there is 2 things. One, is we are reinstating our normal dividend policy of the net income of 50% of the underlying net income, which should be a mix share of 30% cash dividend and 20% share buyback. We might adjust the split if necessary, but that's what we are targeting. On top of that, we will consider gradually -- and gradually is important, returning the excess capital above the range of 200 to 250 basis points based on our capital projection over the duration of the plan, basically. And so that will be done gradually year-over-year and not as a one-off on the expectation that it's much better and it was a smooth and gradual return of excess capital.

Our next question is from Giovanni Razzoli with Equita.

One question, a clarification on what Tj said as far as the default rate is concerned. You said that the Commercial Banking Italy parameter, you expect an increase in default rate from 2.4% to 3.5% in 2020. On top of that, I would like to know whether you can share with us what is the default rate at the Italian parameter, that is including commercial banking, noncore and corporate Italy? And a clarification on what you have answered before, where you do expect a 6% default rate on your moratoria loans? Jean-Pierre Mustier: Well, as you're asking a question to Tj, I hand over to him immediately. So Tj, if you could give clarification?

Yes. For the Italian parameter, clearly, noncore, they are all NPs, so there won't be any default rate per se. So what we mentioned about the so-called 3.5% is indeed for the entire Italian sort of parameter. And for -- clearly, the -- we look at it by different sort of subsectors of within this 3.5%. For corporate side is 2.4% -- for the corporate side is 2.4% versus the full year of 1.5%. Small business is 6.5% versus the 2.7% that we have in 2019. And then consumer is 7.4% against a 2.8% and 3.6% against -- on the mortgage side against the 0.9% that we have last year. So a fairly conservative assumption. Jean-Pierre Mustier: Just to clarify your question, this is for the Commercial Banking Italy. If they include what other banks might report -- for Italian bank might report and if we include the CIB side, which has a much lower default rate, the combined CIB and Commercial Banking Italy default rate will be much lower. And if you look, for instance, the first half, we have the 2.4% default rate for Commercial Banking Italy, should include this default rate of 2.4% [ph] to 1.4%, which should be the default rate to compare with other domestic bank [indiscernible] Italy will be used.

1.4%? You said 1.4, right? Jean-Pierre Mustier: 1.4%, yes, 2.4% [ph] to 1.4%.

The next question is from Jean Neuez with Goldman Sachs.

I just wanted to ask quickly on cost of risk. I just wanted to understand whether, in your view, an extension of moratorium from the perspective, the narrow perspective of the cost of risk of UniCredit is helpful or, on the opposite, it is a hindrance in terms of asset quality so that we can judge whether if they are extended further, that would be essentially good or bad. It's not obvious to me at least. And my second question is more strategic. I couldn't help noticing that in the same week, a couple of weeks ago, the ECB held 2 calls, one which extended the blanket ban for dividends by a few months. This was based on data on the presentation, which actually showed the banking system was quite resilient. But in another call a few days later, there was more encouragement for M&A. And we can see that banks around you are actually using depleting capital levels in order to pursue inorganic growth. And essentially, my question is, if the dividend bans or the share buyback bans were to be extended further, at what level would you -- what would make you change your mind essentially and potentially consider inorganic growth as essentially your sole avenue or another avenue for using your excess capital? Jean-Pierre Mustier: Thank you. On the first question, it's a bit difficult to see what should be the positive or negative impact of an extension of moratorium. As I said, I don't think they are going to be extended for a very long period of time, and so probably by a few months up to end of next year as far as the Italian side is concerned. I think that it's probably on cost of risk, one has to look at the social aspect. And if all the moratorium are stopping at the same time, there could be waves of bankruptcies and waves of redundancies, which can create some social issues. So staggering the end of the moratorium in different countries might help from a political and social angle. If it's an extension of six months, I don't think it's going to meaningfully change the perspective we have as far as the cost of risk is concerned. And in any event, we are taking a valid provision to properly deflect the overall risk profile of our portfolio, especially the portfolio and the moratorium. As far as the ECB is concerned, and it's clear that, from a political point of view, it was extremely difficult to allow dividend payments in the year where the government in the different countries are extending credit guarantees for the bank so that they can extend loan to their clients. The banks have thought of this solution, so benefiting the clients, not the bank. And we are convinced and highly confident that the ECB will lift its recommendation next year, so I don't think that there's any doubt about it. This is why I was saying that the whirlwind state on the ECB confirm that they lift the condition on normal dividend policy as well as extraordinary payment as well the excess capital. Basically, on the M&A side, as already mentioned, we want to use our excess capital today in order to finance the economy, which is first priority and our job; secondly, to do share buyback. We think that a share buyback have low execution risk. And to be able to present the highest return that we could have for shareholders, we prefer to transform the bank. And Team 23, we have already provisioned, as we said in the presentation, all the cost of restructuring so that was a coincidence if I may say. And so we have no additional cost. But we have already agreed with the union about the FTE efficiency. So what we are doing with the [indiscernible] group is to [indiscernible] the plan we had in Team 23, focusing on remote banking, which is remote [indiscernible] call centers, digital Internet in order to make sure that we can follow and anticipate the client evolution. So we better transform than integrate basically and buy back our shares where we have low execution risk and immediate accretion for shareholders.

The next question is from Andrea Vercellone with Exane.

My first question is on Slide 51, and my second is on TLTRO NII booking. So the first one is if you can reconcile the full year 2020 cost of risk guidance with what you state for 2021. If I take the midpoint of the 70, 90, and I assume that I also take the midpoint of the 40, 50 Stage 2 overlay, let's assume you are right, spot on, for what will turn to Stage 3 in 2021, therefore, that's 45 bps. Then you're going to have some regulatory charges also in 2021. I remember it's €400 million. If you can confirm that, it would be helpful. So that leaves with a very, very low specific charge for anything else. So I'm struggling a little bit to tie the two together. The second question is on the TLTRO booking. My understanding is that you were planning to book the TLTRO in 2020 at minus 0.5 and then only take the benefit of minus 1% in 2021. So the question is, is that still the case? And if that is still the case, your guidance of NII for 2021, does it include the extra bps related to 2020 or that comes on top? Jean-Pierre Mustier: Thank you very much. We are getting into quite technical issues, so I will hand over to Tj for the reconciliation of the 2020 cost of risk and to 2021. And knowing what I said that we have in 2021 higher regulatory headwinds than we have in 2020, again has been rating migration. But Tj will give you the detail on that. And on the TLTRO booking, Mirko or Stefano Porro, our co-CFOs, will comment on the way we do the TLTRO and the impact in the different channels. But Tj, first, if you can comment on the cost of risk '20 versus '21.

Yes. Thank you, Jean-Pierre. Again, if you see Slide 51, as you said, the specific cost of risk for the full year, we're assuming sort of 50 to 60. And clearly, that depends on the extension of moratoria. Assuming no moratoria, I think this will be in this range. And you can see that we have done quite a bit of overlay, almost more -- about half. And the 10 basis points of regulatory headwind, that also include the new deferential default. So this is really taken in full year 2020. So we are frontloading, I would say, anticipating if a lot of these moratoria spill over into 2021, we will expect definitely lower cost of risk in terms of the provisioning has already been done. And some of the overlay will be used against the specific LLP when the moratorium expire.

So some of the overlay that you book in 2020 you are still planning to maintain beyond 2021? So this is what this guidance implies? And also the other extra bit, is there a regulatory headwind element also in 2021 or not?

Most of the regulatory headwind in terms of the LLP component are taken already in Q4 '20. And the overlay clearly are, I would say, to the extent that the timing we have the specific LLP charge, the overlay will be released against the specific charges. Jean-Pierre Mustier: In other words, if the moratoria are lifted in 2021, most of the overlay will be released in 2021 and will offset the specific provisions for the loans which move into Stage 3. Based on the evolution of the moratoria, if they are extended further, quarter-by-quarter, you could have a different evolution. So it will depend exactly on the timing of the moratoria, the [indiscernible]. And the default question, so 2021 will be a mix of specific provision one side and release of overlay in the other which will compensate each other on a full year basis. On the TLTRO side, you can, Stefano or Mirko, comment.

We are accruing 50 basis points now. The additional will be accrued linearly in 3 years equal to the 16.7 basis points yearly, so that's the delta. And we will start, depending on, let's say, the technical calculation based on the regulatory rules. So 50 is already in there now and the rest will be accrued linearly over 3 years.

The next question is from Ignacio Cerezo with UBS.

A couple of things from me. The first one is on NII, the comment that Mirko is making around the discrepancy between quarter loans and average loans through the quarter. I think I understood that, that was attributed to reduced drawdowns from corporates throughout the quarter. So do we need to think about volumes sinking under pressure in the second half as a result of that? Or it's something that has already come to an end? And the second one, more a clarification, you can maybe let us know whether the tax rate you are working with in 2021 is around 20% still? Jean-Pierre Mustier: Yes, I will let Mirko or Stefano comment on the tax rate, is on the quarterly loan, we said that the other difference between the average loan evolution one side is the end of period loan. You have to see that because of drawdowns specifically on the CIB side at the end of the first quarter 2020, we actually have a sharp increase of the loan on the CIB side at the end of the first quarter. But the [indiscernible] side have remained more or less stable in the second quarter. So the drawdown are going to be partially paid back by the corporate client but only partially, so -- and that should be not a meaningful impact on the CIB side by [indiscernible] just to the loan volume evolution. You have to take into account in the CIB side, that we have in the second quarter a specific number of contribution coming from the treasury side, which had a positive impact on the NII I or in the management of some of the treasury portfolio, which contributed positively, for low double-digit million euros of NII. On the tax rate, [indiscernible] comment.

Yes, on the tax rate, the 2021 guidance is confirmed between 18% and 20%. We have no real guidance for 2020, considering the low level of profit before tax affected by, let's say, irrelevant nonrecurring, nonoperating items. So I would keep basically the 18% to 20% for 2021 as the valid one.

The next question is from Patrick Lee with Santander.

I just have 1 follow-up on asset quality and 1 on fee income. Firstly, on the asset quality side of things, the Stage three loans actually fell 5% versus the first quarter. And I believe some of that was driven by disposals and write-offs. But can you give us some color or the magnitude of the underlying deterioration that was migrated from let's say Stage 2 to Stage 3 this quarter? And how do we square this with the doubling of specific loan loss provisions in the second quarter versus the first quarter? And secondly, on fee income, despite the difficult market environment, et cetera, et cetera, the net new AUM was actually positive in second quarter with AUM also up 6% versus the first quarter. Investment fee fell by some 20%. So I guess there's a matter of timing within the quarter when the fees came in. But is there something structural going on there with customers let's say buying lower-risk, lower-margin products? Or can we just assume a much healthier level of fees income in the second half of the year? Jean-Pierre Mustier: Thank you very much. I will let TJ first to comment on the Stage 3 loan evolution, so -- and I will comment on the fee income afterwards.

Thank you. As you can see, in terms of the staging that we have on Slide 50, the loan -- the so-called Stage 1 to Stage 2 went from 48 billion to 62 billion, of which a large part come from Germany, about 8 billion. And it's a very highly rated MMC side, it's a relative set of criteria. In Italy, we have 4 billion, roughly about 2 billion due to PD deterioration and 2 billion was more of a proactive action in terms of classification. And 2 billion in CE. So overall, it's 12.5%, we move from Q1 to Q2. And it is about 30% increase. So a large part comes from Germany, which is actually a very good rating. And in Italy, of the 4 billion, 2 billion are proactive classifications. Jean-Pierre Mustier: And the fee income, we can then go to the Slide 36 of the presentation, which it gives you a breakdown month by month on the evolution of the group by products. Basically, you can see that we have sharply increased in June versus June '19 of the investment fees. And so client have been more active. But we have pushed much more in June certificates, basically, [indiscernible]. Also clients were looking at a product which have the probably more stable risk profile and less risky and where they shifted into more AUM in July, when the situation has stabilized. And we confirm the recovery in fees in July that we have seen in June. So investment fees, the [indiscernible] are higher in June '20 than June '19 as you can see. And we expect that investment fees will keep performing quite well in terms of [indiscernible] fees and placements over the second half of the year.

The next question is from Delphine Lee with JPMorgan.

I just have 2 clarifications to ask you. First one is on dividends. So if we think about the full year '19 dividend, so if I understand your messaging on your capital distribution policy, you basically intend to sort of distribute that over time as potentially exceptional distribution over time? Is that how we should look at it in terms of buybacks? The second question is on sort of domestic consolidation. You've been very clear about M&A and ruling out M&A. But just looking at sort of your current market shares in Italy, are you satisfied with what you have right now in your current setup? Or would you opportunistically look at adding presence potentially if the opportunity presented itself? Jean-Pierre Mustier: Thank you. Your understanding on the dividend side is correct. We are looking at a gradual payout of the excess capital over the years of Team 23. We said that we are targeting [indiscernible] buffer, which will be above 100 basis points at the end of 2020 and 2021. And we want to pay back to our shareholders excess capital over the period, so looking at the overall direction of the plan, which is above our range of 200 to 250 basis points. We'll do that gradually year by year, basically, to smooth out the payback to investors on top of the normal payout of 50% of underlying net income. As far as the domestic contribution is concerned, we have basically more than 10% market share, 11% market share. And as I said, we will grow our business on a purely organic basis. We prefer to transform the bank rather than integrate. Our approach is very simple which is basically post COVID when cost of risk is going to increase meaningfully, so we are seeing for our own portfolio, and we think that the risk profile is as such that we should just focus on our business, benefit from the market disruptions which have been brought by COVID to target clients with a very good risk profile. It's very important to be extremely disciplined on the risk side and keep transforming our network and keep cross-selling to the clients which are the right clients. We are managing the bank in a very disciplined way, we have already said that, and taking the right kind of risk. And we think that's the best way to increase our market share. If you compare Italy to other countries, if you compare to Spain, to the U.K. or to France, you can see that there could be banks with larger market share and other banks which have a market share which is high single digit, low double digits, which are very well -- which are performing very well. So I don't think there's a magic level of market share where one could say we need to do consolidation. We think that we should not do consolidation. Consolidation [indiscernible] small FTE. We want to keep reducing FTEs. Consolidation brings us more branches. We want to keep cutting branches. And consolidation would bring more loan loss provision and additional nonperforming exposure. And we keep reducing our nonperforming exposure. So basically, no consolidation. We grow organically. We accelerate the transformation rather than integrate. And we give back to our shareholders our excess capital.

The next question is from Gonzalo Lopez with Redburn.

Just a quick follow-up, please. Could you please confirm that you're expecting to take the EUR 600 million net regulatory headwind impact on cost of risk as you announced in the Capital Market Day, please? And you mentioned 10 basis points cost of risk in 2020. Could you please quantify at this point if there is going to be anything in 2021? Jean-Pierre Mustier: I will let Tj comment on that. But as we said earlier, there has been a rating migration for some of the regulatory headwinds because of the COVID crisis, validation of the model by ECB and decision by the ECB to delay some of the impacts. So as far as 2020 is concerned, we were targeting in 2020 at the Capital Market Day negative 50 basis points of regulatory headwinds. We target for 2020 now which are the different impact a negative 20 basis points of regulatory headwinds, which includes, as I mentioned, the rating migration impact from the integration, which is between 40 to 50 basis points basically negative. So that's that. And in 2021 because there has been a shift of some of the regulatory headwinds from 2020 and we have a regulatory headwind of minus 140 basis points compared to the 50 basis points that we were giving at the Capital Market Day. And this increase is coming from some regulatory shifts. And Tj can give you the breakdown, some additional rating migration impact and the fact that there has been some positive of 2021 we shall take in 2020. And we don't expect any change this coming 2022 and 2023 of the Capital Market Day regulatory headwinds of 60 basis points in '22 and 40 in '23. But Tj can give you a little bit more details.

Thank you, Jean-Pierre. Just on your first question in terms of the 600 million LLP, a large part is taken in 2020, over 400 million. There will be remaining in '21. And clearly, this will also depend on the evolution of the loan books and the volume dynamics. And as Jean-Pierre said, in terms of the capital sort of point of view, we already mentioned, for 2020, the original CMD was minus 50 and it, as of today, is roughly about 16 basis points, minus 16. And all of this difference are clearly some due to the regulations, quick fix, which is positive, including some of the model implementation postponement. Then there's the so-called rating migration, which is negative and other impact. All of this have a negative 34 basis points. That's why the guidance from the Team 23 in CMD in 2020 is minus 50, is now minus 16. And for '21, there's obviously a shift from 2020. All of the models, RWA accuracy side, something in the region of 61 basis points. Plus we are anticipating the regulation quick fix, the SME supporting factor as well as software 17 and then the pro cyclicality, almost 100 basis points swing from -- due to the postponement of the model, quick fix anticipation and further with the PD deterioration that Jean-Pierre just mentioned of minus 20. So next year, we're anticipating the regulatory headwind would be more in the order of around 140 negative. Jean-Pierre Mustier: Basically, to point, it's 140 regulatory headwind negative impact. We still confirm that our CET1 number for next year will be over 300 basis points, as mentioned earlier, so yes.

The next question is from Benjie Creelan-Sandford with Jefferies. Benjie Creelan-Sandford: Most of my questions have been answered, but perhaps just one coming back to the point on extraordinary capital returns. And I guess, historically, the regulator has appeared somewhat uncomfortable with implicit payouts above and beyond 100% of profit. I'm just wondering whether, going forward, do you think that remains the implicit cap, that 100% payout ratio? Or do you think the regulators shift to more absolute capital buffers? Jean-Pierre Mustier: Actually, what we said in terms of extraordinary payout, we never say something which would not have been in line with what the regulator is saying. So we always mention a certain number of items in 2017 Capital Market Day, the regulatory headwind last year, the [indiscernible] vertical [indiscernible] we are speaking the extraordinary dividend. And in each time we make sure that we are fully aligned with what the regulator is saying. So when I said that we are going to gradually return our excess capital. And so I think the gradual return of excess capital could be probably an answer to your point.

The next question is from Christian Carrese with Intermonte.

Just one quick question on the Italian sub-boarding project. We read on the newspaper that, by autumn, the project could be done, if you can give us an update. And if these projects could help to reduce faster DTA. Jean-Pierre Mustier: On the sub-boarding, if you go back to the presentation we made in the Capital Market Day '19 on the Slide 21, we said that in terms of group structure, and we will look at the project of sub-boarding but this project mean that we want to optimize the [indiscernible] requirements. But the first stage is the reduction of intra-group exposure, and we've been working on that, and the improvement of the group [reservability]. So the teams are just progressing on this project. It's not an easy project and a simple project. And if there's anything to mention, we'll mention it when the project progresses. For the moment, nothing specific. And the target is to optimize the [indiscernible] requirements.

Maybe to complete, on the DTA, there is no benefit on DTA from an international sub-boarding.

[Operator Instructions] As there are no further questions, I would like to hand the call back over to Mr. Jean-Pierre Mustier for any closing remarks. Go ahead, sir. Jean-Pierre Mustier: Yes. Thank you very much. Thank you very much for your question and your continued interest in UniCredit. So before you go, I'd like to wrap up by reminding you of the journey that we've been at UniCredit and why this puts us in a strong position to further develop our client franchise as [indiscernible]. Thanks to the continuous hard work and successful execution of Transform '19. We entered in the year with a significant balance sheet. We have disposed of more than €50 billion of nonperforming exposure and a significantly strengthened balance sheet having raised €13 billion of equity for rights issue and having sold more than €16 billion of nonstrategic assets. As a result of this action, at the end of the second quarter of 2020, we achieved a significant reduction of our NPL ratio to 3.4% for the bank excluding noncore. And using the easy definition, it is at 2.7%, now below the average of other European banks for the first time. We have a best-in-class NPE coverage ratio, and we have the highest CET1 fully loaded end of year buffer ever at 481 basis points and in line with our current market cap. And we have a very high level of liquidity with a point-in-time liquidity coverage ratio of 173%. So we'll continue to manage the bank in a very conservative and disciplined way with this priority to long-term sustainable outcome over a short-term solution as well we do not do volume lending nor do we do carry trade. And from this position of strength, we believe the opportunities presented by the crisis to accelerate the [indiscernible] banking and digital offering of the bank and to grow further our client franchise while maintaining a strict risk focus. And bear in mind that the [indiscernible] adjustments for the [indiscernible] for which we have been provisioned and [indiscernible] for Team 23 before the crisis. We confirm our underlying net income target for 2021 of €3 billion to €3.5 billion, which is equating to our RoTE of 6% to 7%. And as already said, we will reinstate our capital distribution plan for 2020 and onward subject to the ECB recommendation being extended targeting a distribution of 50% of underlying net profit. So, that concludes our second quarter results. I would like to wish you all a most enjoyable summer break and I look forward to talking with you all again in three months' time, if not before. Keep safe and have a good summer. Thank you very much.

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