Good morning, ladies and gentlemen. Today’s conference call will be hosted by UniCredit’s CEO, Mr. Jean-Pierre Mustier; and CFO, Mr. Stefano Porro. At the end of the presentation, there will be a question-and-answer session. 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 and welcome to the analyst call for our fourth quarter ‘20 and full year ‘20 results. With the second wave of the COVID-19 pandemic affecting all the countries in which we operate, let me once again express our deepest sympathies for anyone impacted. As an organization, we will continue to do everything we can to protect the health and safety of colleagues and customers. UniCredit will continue to support its clients, the real economy and the communities in the countries where it is present. For the full year of ‘20, UniCredit delivered an underlying net profit of EUR 1.3 billion. This is an impressive performance given COVID-19 resulted in the worst downturn in the last 80 years and given the EUR 5 billion in loan loss provision we took to strengthen our balance sheet in anticipation of future risk. This result is also ahead of our guidance, thanks to a better outturn on both cost and the cost of risk. Our cost of risk for the full year at 105 basis points was toward the lower end of our guidance of 100 basis points to 120 basis points. The figure also included 46 basis points of overlay provisions, equivalent to EUR 2.2 billion. You will remember that our aim was to provide a vision during financial year ‘20 was to proactively capture the future cost of default in the loan portfolio, and therefore, properly reflect the forward-looking economic impact of COVID-19. The strength of the balance sheet can also be seen in our extremely healthy capital position. We closed the year with a fully loaded pro forma CET1 ratio of 15.08%, implying a pro forma MDA buffer of 605 basis points. This is a record for the bank. Let’s turn to Slide 5. Our ability to successfully navigate the last 12 months is a testament to the fundamental strength of the bank and the team behind it, both of which position UniCredit well for the future. Let me summarize the core pillars of UniCredit investment case today. A fortress balance sheet, a deeply embedded risk and cost culture and a focus on delivering sustainable results for the long-term. Over the last five years, the management team has worked tirelessly to clean up and de-risk the balance sheet. The gross NPE ratio for the Group fell to 4.5% as of the fourth quarter ‘20, a reduction of over 11 percentage points since the end of 2015 or almost EUR 57 billion in terms of gross NPEs. This transformation reflected a proactive and disciplined approach to risk management. If we look at the EBA definition for the Group, excluding non-core, the gross NPE ratio at 2.6% is better than the average of our European peers. As a pan-European bank, that is the peer group that UniCredit should be compared to. If we look at our fully loaded CET1 ratio, it now exceeds 15% for the first time ever, an improvement of 4.7 percentage points since the fourth quarter of ‘15. Relative to our MDA, this represents a pro forma buffer of 605 basis points, as I have already said, a record level for the Group. The de-risked balance sheet provides a rock solid foundation for the bank going forward. Let’s turn to Slide 6. Our risk and cost culture are deeply embedded in the bank’s DNA, strict risk discipline manifests itself in our focus on the best rated clients and the [indiscernible] to do volume lending. All our lending decisions are guided by written and expected loss. The expected loss on new business showed the benefit of this disciplined approach. It has continued to decline since the first quarter ‘15 as has the expected loss on stock. The bank also benefits from a strict discipline in its approach to management cost. Absolute costs have incurred by EUR 2.4 billion since 2015, helped by a near 20% reduction in FTEs and an almost 40% branch reduction over the same period. Our cost culture also means that we continue to seek efficiencies. The management team has leveraged the change in our customer behaviors since the start of the pandemic and the greater employees of remote channel to accelerate changes in UniCredit service model. The branch optimization program, for example, is now well ahead of schedule. Let’s turn to Slide 7. Our culture and our values are a fundamental part of how we run the bank. Our commitment is and remains to do the right thing for all our stakeholders, focusing on long-term sustainable outcomes not short-term fixes. 2020 saw UniCredit adopt a best-in-class coal policy with the total phase out of lending to the coal sector by 2028, be recognized as a Top Employer in Europe for the fourth year running by the Top Employers Institute and upgraded by 2 ESG rating agencies, MSCI and CDP. Public recognition, however, is an outcome, not a target of UniCredit’s sustainability commitments. There is a clear ESG roadmap aligned to the highest global standards of policies and principles. Our culture and values are embedded in our people. Through their commitment, professionalism and hard work, the bank successfully navigated the extraordinary events of 2020. I am very proud of how the old bank rose to the challenge. As a team, we have delivered the enhancements to customer service, accelerated digital transformation and implementing Group-wide measures to protect the health, safety and well being of all the bank shareholders. With a de-risked balance sheet, strict risk and cost culture and a commitment to deliver long-term sustainable outcomes, the bank is well placed to support our clients and face the future with confidence. Now, let me hand over to our CFO, Stefano Porro, who will take you through our fourth quarter ‘20 and full year ‘20 results in more detail. We will also host the Q&A later. Stefano, the floor is yours.

Thank you, Jean-Pierre, and good morning, everyone. Let’s turn to Slide 8. As already mentioned, our fully loaded pro forma CET1 MDA buffer now stands at 605 basis points. This represents an increase of 67 basis points over the quarter and 293 basis points over the year. The improvement over the quarter is thanks to both higher CET1 capital as well as lower risk-weighted assets. The latter mainly a result from lower loan volumes across all divisions as well as the increase in guaranteed loans in Commercial Banking Italy. Our very strong CET1 MDA buffer allows us to continue to support our clients and the economies in which we operate. It also allows us to start distributing capital to our shareholders, in line with our strategic goals. In 2021, we plan to, both ordinary and extraordinary distribution, equal to a total amount of EUR 1.1 billion, made of EUR 0.8 billion of shares buyback and EUR 0.3 billion of cash dividends. The buybacks are subject to AGM and supervisory approval. Turning to asset quality, the reduction in gross NPEs has continued, with a net reduction of EUR 1.5 billion over the quarter, thanks to the continuing hard work of the team and disposals, mainly from the non-core. As a result, our gross NPE ratio for the Group further improved to 4.5%. The better than expected performance of our asset quality today is proof of our strict underwriting discipline. Nonetheless, we expect the gross NPE ratio to increase for full year ’21 as government support major runoff. We are prepared having proactively built up loan loss provision in full year ‘20 via overlays. In this quarter, we also wrote down the remaining goodwill on our balance sheet, all of which was attributable to the Corporate Investment Bank. This is also due to a better guidance from ESMA to use downside scenarios in impairment test. Such a write-down has no impact on our CET1 capital nor our underlying net profit, and therefore, no impact on our capacity to return on capital to shareholders. Let’s turn to the Group P&L on Slide 10. Revenues stood at EUR 17.1 billion in full year ‘20, down 9% over the last year. A key driver of the absolute drop was weaker net interest income. Lower net interest income can be attributed to lower customer rates and partially to our strict underwriting discipline which will contribute to lower LLPs in future. We will never compromise our future asset quality to boost net interest income in the short-term. Costs were lower by 1.2% full year-on-full year, reflecting our strict cost discipline and continued focus on further efficiency gains, which more than offset COVID-19 related expenses. I will comment on our revenue and cost components in more detail in the following slides, but I would like to make three specific comments on items below the net operating profit line. The systemic charges were in line with our guidance of around EUR 0.95 billion for full year ‘20, mainly influenced by additional contribution to the Single Resolution Fund and Deposit Guarantee Scheme. The loss on investment in full year ‘20 is mainly due to the release of the negative FX reserves related to Yapi transactions, a small adjustment related to the non-core rundown. These were partially offset by real estate disposals in Germany. In full year ‘20, the Group recognized a negative tax impact, despite reporting a loss before tax. This was largely due to the taxes for real estate sales in Germany and to the effect of non-operating items such as the losses arising from the disposal of the stakes in Yapi and integration cost. Excluding these non-operating items, the underlying tax rate in full year was 19%. Let’s turn to Slide 11. If we look at the distribution of underlying net profit across the Group in full year ‘20, we can see that our diversified business model underpin a resilient performance at Group level in this challenging year. Both CEE and Corporate Investment Banking divisions stand out with solid underlying full year ‘20 return on allocated capitals of 7.8% and 9.2%, respectively. Delivering close to the cost of equity in the middle of the worst downturn in 80 years is a very strong performance. CIB benefit from a robust client activity and an efficient business model, delivering the best-in-class full year ‘20 cost to income ratio of 38.6%, an improvement of 0.2 percentage points full year-on-full year. CEE is a resilient contributor to the Group’s profitability with a full year ‘20 underlying net profit of EUR 0.7 billion, and will continue to be an important growth driver of the bank going forward. Commercial Banking Italy delivered a robust performance at the gross operating profit level, despite the impact of COVID-19 on client activity. Its result was, however, significantly impacted by elevated LLPs, mainly due to overlays and the new definition of default. This resulted in an underlying net profit of EUR 8 million in full year ‘20. Let’s turn to Slide 12. Net interest income was down 2.3% quarter-on-quarter. The quarter was characterized by excess liquidity in the system as well as further downward pressure on key market rates. This impacted our net interest income in four ways: two negative, two positive. First, weak demand for credit, average loan volumes fell quarter-on-quarter, with most of the drop concentrated in CIB, CEE and Commercial Banking Germany, where cash-rich corporates continued to repay loans. Second, lower customer rates. Further reduction in Euribor and other key benchmark rates contributed to lower customer rates in all division bar one. Commercial Banking Italy also saw further growth in its guaranteed loan book. While such guaranteed loans are good business, given their low risk and capital consumption, they are written at lower rates than normal loans of an equivalent maturity. Third and positive, lower-term funding costs where we benefit from lower market rates. Finally, enhanced TLTRO3 terms. The extension by ECB last December of the favorable borrowing cost by 1 year doubled the net benefit we expect to receive. Half of the 37 TLTRO3 contribution, including this quarter, is a catch-up payment for third quarter ‘20 to reflect the enhanced terms. Looking forward, fourth quarter ‘21 will likely see continued headwinds with abundant liquidity in the market, Euribor having weakened further, demands for credit remaining weak, given extended lockdowns and expected incremental growth in guaranteed loans in Italy. Also remember that the fourth quarter ‘20 catch-up payment from TLTRO3 will not be repeated. As we move into the remaining quarters of full year ‘21, we expect net interest income to grow, subject to anticipated recovery in GDP, the pace of which will be determined by the rate at which restriction is. An economic upswing will drive a recovery in the demand for credit, a progressive reduction of the excess liquidity in client accounts as deposits gets spent or invested, as well as an improvement in our lending mix as we normalize our credit risk appetite. That said, we will not compromise our future asset quality to both net interest income in the short-term. To offset the continued pressure from negative rates in the bank, consistent with local regulations, continues to work on action to pass on the impact to depositor by, for example, expanding the use of excess liquidity fees. Let’s turn to Slide 13. Once again, I would like to focus my initial remarks on a quarter-on-quarter comparison rather than the normal year-on-year one, to better capture the underlying dynamics. Fees were up 2.5% quarter-on-quarter, an encouraging performance given the second wave of lockdown seen in the quarter across our geographies. Investment fees were up 8.4% quarter-over-quarter, helped by an especially strong contribution from upfront fees. Upfront fees were at their highest level in over two years, thanks to a robust sales activity in the network, especially in Commercial Banking Italy. We also saw a strong performance in January. Financing fees also increased, up 7% on the previous quarter, thanks to a strong performance from the Corporate Investment Bank, which benefited from healthy client activity in capital markets and structured finance. In contrast, transactional fees were down 6.3% quarter-on-quarter, reflecting weaker client activity in GDP-sensitive subcategories, notably cards. For full year ‘20, overall, fees were in line with the guidance we gave in last August. Compared to the prior year, total fees were down 5.2%, reflecting the lockdown impact on client activity in our core markets from the second quarter onwards. The steady recovery in fees quarter-on-quarter from the middle of the year was helped by the benefits of our digitalization strategy. With the introduction of the paperless branch in Italy last summer, for example, we were able to sell more products remotely. In terms of outlook, let me make some general remarks. Investment fees are expected to continue to benefit from liquidity-rich clients shifting deposits into asset under management, subject to market remaining buoyant. While for financing and transactional fees, we expect client activity to pick up from second quarter ‘21 onwards with the pace determined by the rate at which restrictions ease and GDP recovers. Let’s turn to Slide 14. Trading income in full year ‘20 was EUR 1.4 billion, down 15.4% on last year, as a stronger performance in treasury only partially offset lower client activity. While client-driven trading income rebounded in the fourth quarter compared to the prior quarter, it was still below the level of the same period last year due to a weaker performance in equity and commodities. Equity and commodities was impacted by less certificate business as client activity shifted towards asset under management products, a move which supported the Group’s very strong upfront investment fees. Non-client-driven trading income was up 20.9% full year-on-full year, mainly thanks to treasury and financial risk hedging. As anticipated earlier in the year, trading income, excluding the XVA component, normalized in the fourth quarter. It was in line with our quarterly guidance. This remains around EUR 350 million on average, excluding XVA. The lower contribution from dividends down 34.8% full year-on-full year was mainly driven by the strategic disposal of stakes in Yapi and Mediobanca over the last 12 months. Let’s turn to Slide 15. Our continued focus on cost efficiency resulted in cost falling 1.2% full year-on-full year. Our strict discipline allowed us to more than offset COVID-19 related expenses incurred in the year. Full year ‘20 total costs amounted to EUR 9.8 billion, slightly better than our guidance of flat costs related to full year ‘19. This was mainly thanks to lower HR costs, linked to a reduction in variable compensation of more than EUR 100 million compared to last year, and to lower than expected non-HR cost linked to fewer external supplier-related costs and lower travel expenses. We experienced a higher than usual 4Q seasonality in non-HR costs. These were 7.7% higher quarter-on-quarter due to higher IT expenses and security costs, partially offset by lower credit recovery expenses. For full year ‘21, we expect costs to be flat related to full year ‘19. We expect a normalization of variable compensation in full year ‘21 as well as an increase in IT expenses linked to our ongoing investment in digitalization. Let’s turn to Slide 16. When we announced Team 23 in December of 2019, we targeted further reduction in FTEs of around 8,000 and additional cut of around 500 branches. We confirm that FTE reduction is on track, having reached agreement with our trade unions in fourth quarter ‘19 and fourth quarter ‘20. Meanwhile, the branch network optimization is well ahead of schedule. Our relentless focus on cost efficiency and digitalization continues to yield tangible results. Let’s turn to Slide 17. Our approach to provisioning that we introduced during 2020 is to proactively capture the future cost of default in the loan portfolio and properly reflect the forward-looking economic impact of COVID-19. Loan loss provision, therefore, include overlays as well as specific provision and regulatory headwinds. Please remember that just like the macro assumption on which they are based, one should always look at cost of risk for full year ‘20 and full year ‘21 together. LLPs are a lagging indicator of GDP, and a sharper drop in full year ‘20 should lead to a stronger rebound in full year ‘21. Looking at the two years together also makes sense, given the extension of the moratoria, especially in Italy. Our cost of risk in full year ‘20 stood at 105 basis points, at the lower end of our guidance range of 100 basis points to 120 basis points. Within this, 47 basis points were accounted for by specific LLPs, 46 basis points by overlays LLPs and the remaining 12 basis points by regulatory headwinds. We experienced a significant quarter-on-quarter increase in LLPs in fourth quarter ‘20, driven by a number of factors, as well as the usual seasonality. These include the anticipation of future impacts of lockdown for increased overlays, proactive classification and regulatory headwinds. The latter are mainly connected to the new definition of default, with first-time introduction resulted in LLPs of EUR 0.5 billion. Full year ‘21 stated cost of risk is expected to be close to 70 basis points, with the underlying cost of risk close to 60 basis points. Let’s turn to the balance sheet on Slide 19. In the fourth quarter, the gross NPE ratio for the Group, excluding non-core, increased to 3.8%. This was due to an increase in UTPs, mainly resulting from proactive classification, partially offset by disposal of bad loans. Our underlying asset quality remains sound with no material impact from COVID-19 yet. The coverage ratio was down 0.3 percentage points quarter-on-quarter due to a mix effect. There were relatively more UTPs which have a lower coverage ratio than bad loans. And within UTPs, there were more secure files benefiting from government guarantees and, as a result, lower coverage ratios. Using the EBA’s definition, the Group NPE ratio excluding non-core at 2.6% continues to be better than the average of other European banks. Let’s turn to Slide 20. We continue to focus on the non-core rundown, and the process remains well on track. As a result, gross NPEs were down EUR 2.2 billion in the quarter to EUR 3.7 billion. This was materially better than our target, which had already improved in fourth quarter ‘20. Given the current economic environment, this is a very strong performance. Disposal continued to be a key lever in our de-risking. For the full year, we completed EUR 3.4 billion of disposal within the non-core, while for the Group as a whole, we executed EUR 5.6 billion of disposal, of which, EUR 5 billion were in Italy. This is proof of our ability to execute deals in all conditions, with the bank benefiting from the considerable skills and expertise it has developed in this area. The financial impact of non-core on Group performance for full year ‘21 is minimal, and the net economic risk embedded in the non-core rundown remains close to 0. The CMD 2019 profit and loss guidance is confirmed, and the overall non-core portfolio is provisioned to sell. We confirm the rundown of the non-core in 2021. Let’s turn to Slide 21. Our pro forma fully loaded CET1 ratio sit at 605 basis points over our MDA level, an increase in the buffer of 67 basis points over the quarter. To put our MDA buffer into context, it matches our current market cap. The increase in our MDA buffer over the quarter is a function of both a higher CET1 and lower risk-weighted assets. Points to note. First, other items include the benefit to the numerator of the CET1 ratio from the revised regulatory treatment of software. This is now only partially deduction from CET1 capital assuming three years of useful life and add debt to risk-weighted assets. The total net benefit is 22 basis points. Second, the decrease in risk-weighted assets was mainly driven by lower volumes across all business units, as well as the increase in guaranteed loans in Commercial Banking Italy. Regulatory dynamics within our risk-weighted assets provided a very small tailwind in the quarter with negligible effects from PD rating migration. See the Annex on Page 55 for more details. Third, total regulatory headwinds in fourth quarter ‘20. If we combine the impact on both the numerator and denominator of the CET1 ratio, it was plus 25 basis points. This is better than our November guidance, thanks to a higher than expected benefit from software and its more than expected impact from PD rating migration. Fourth, the implementation of the new definition of default reduced our CET1 ratio by 15 basis points. This is included in non-operating items. Finally, please remember that the goodwill impairment we took this quarter has 0 impact on our CET1 ratio. Looking forward, regulatory headwinds are confirmed at less than 1.4 percentage points in full year ‘21. This includes TRIM and PD rating migration. Please remember that rating migration will revert over the time as GDP recover through the cycle. Our MDA buffer in full year ‘21 is confirmed to be well above 300 basis points, which is above our target range of 200 basis points to 250 basis points. I will update you on our capital distribution plans at the end of the presentation. Let’s turn to Slide 22. In line with the strong increase in our CET1 MDA buffer, our TLAC MDA buffer increased to 737 basis points. The 2020 TLAC funding plan has been completed, and we have pre-funded around EUR 2 billion of subordinated TLAC funding needs for 2021. Despite the tough environment, we executed a EUR 2 billion dual tranche senior preferred in January at very attractive spreads. Let’s turn to Slide 23. Finally, a quick look at our tangible equity, which stands at EUR 50.5 billion, slightly lower quarter-on-quarter, mainly due to non-operating items. Let’s turn to Slide 25. Thanks to our strong balance sheet and the commitment of our team members, we are well placed to keep supporting our clients whatever the environment. We run and manage the bank in a conservative and disciplined way and prepare for all eventualities. As always, the health and safety of our employees and customer comes first. Assuming a progressive economic recovery over the year, the pace of which will be determined by the rate at which restrictions ease and subject to the interest rate stabilizing, full year ‘21 revenues and costs will be in line with previous guidance. Our full year ‘21 underlying cost of risk guidance is expected to be close to 60 basis points, equivalent to loan loss provision of EUR 2.9 billion. The overlay provision we took in full year ‘20 underpin the credibility of our guidance, as some of these overlay provision will be used in full year ‘21 when higher defaults are expected to materialize. Indeed, our recent asset quality experience, including moratoria expiration suggest that the outturn for the cost of risk may be better than current expectations. Our underlying net profit for full year ‘21 is expected to be above EUR 3 billion. With a strong balance sheet, we can also resume distributing capital to shareholders. Our capital distribution policy is confirmed with an ordinary distribution of 50% of underlying net profit, comprising cash dividends and share buybacks. As an exception in 2021, in order to comply with the ECB’s recommendation, our ordinary distribution will be kept at the maximum allowed, which is EUR 447 million. This distribution will occur shortly after the AGM. In addition, at the AGM in April, we will submit a resolution for an extraordinary capital distribution of EUR 652 million, fully in the form of share buybacks to be executed in the fourth quarter, subject to supervisory approval and provided that ECB will repeal its recommendation on distributions. Combining this ordinary and extraordinary distributions equates to a total amount to shareholders in 2021 of EUR 1.1 billion, made up of EUR 0.8 billion of shares buybacks and EUR 0.3 billion of cash dividends. Our long-term CET1 MDA buffer targets remain at 200 basis points to 250 basis points. Before moving to Q&A, I would now like to hand the floor back to Jean-Pierre. Jean-Pierre Mustier: As it is my last analyst call as CEO of UniCredit, it is time for me to say goodbye. A few thank you. I would like to start by thanking the analyst and investor community for the interest you have shown in the bank and the many engaging and robust discussions we have had over the years. I would like to thank the senior management team for their dedication, hard work and wise counsel throughout my time as CEO. Their leadership and tireless efforts shaping and implementing our strategic plans have created solid foundations that the bank enjoys today and have allowed the bank to navigate 2020 so effectively. Most important of all, I would like to extend my sincere thanks and deep gratitude to all UniCredit team members for their continued commitment, resilience and hard work throughout my time at the bank. Together, they have allowed UniCredit to prosper and do the right thing for all our stakeholders. I would like also to warmly welcome my successor, Andrea Orcel who will join the bank after the AGM in April. Andrea brings a wealth of experience to the bank and an impressive track record in international finance. He’s well placed to take UniCredit on the next leg of its journey. So stay safe. Thank you and goodbye. [foreign language]

Jean-Pierre, I would like to thank you on behalf of the senior management team as well as all our colleagues throughout the bank for the outstanding contribution, hard work, vision and leadership you have shown during your five years as CEO. Throughout this time, you have shown the utmost professionalism, commitment and dedication to the bank for which we are all very grateful. We wish you well in your retirement, although I suspect that there will be no such thing. We will, however, let Jean-Pierre retire from the next part. Before the rest of the team and myself take your questions, I would like to confirm that the Board of Directors and Jean-Pierre have reached an agreement for an early exit in light of the designation of the new CEO. Consequently, the Board has appointed Ranieri de Marchis as interim General Manager until Andrea Orcel’s formal appointment at the AGM. Now, I will hand over to Jorg Pietzner, our Head of Group Investor Relations for the Q&A session.

Hello, everyone. If you be, please or kind as to limit your questions to a maximum of two each. Also, I’m sure you will have lots of questions about Andrea Orcel’s appointment and the bank’s strategy, but it would be premature to answer these until he joins the bank after the AGM in April. Many thanks, and open for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question is from Alberto Cordara with Bank of America. Please go ahead.

Yeah. Many thanks for taking my call and congratulations for the great job at UniCredit. I’m sure I speak also on behalf of any of my other colleagues in the analyst community, fantastic job, the capital and the NPE position, they speak for themselves. It’s a completely different bank, a very solid bank. Now, getting back to business. My first question is, if I read your press release, you say that full year revenues and cost for 2021 are in line with previous guidance. So revenues should still be around EUR 17.7 billion, if I remember correctly, and cost around EUR 10 billion. However, based on the evidence of the quarter, it seems to me that your previous NII target of 9.5% is difficult to achieve. So can you provide us with a more detailed breakdown of revenue targets for 2021 and why cost shouldn’t be doing better than your EUR 10 billion guidance? How much you can flex cost to adapt to potentially lower revenues? And then my second question is, you proposed a capital distribution of EUR 1.1 billion. That is surprisingly high. It’s 85% of the adjusted earnings of EUR 1.3 billion. Shall we take it that also in the future, for instance next year, when you expect to achieve EUR 3 billion of adjusted earnings, we may see such high payout? Thank you.

Thank you very much, Alberto. On the first question, where you said the revenues and cost guidance is in line with previous guidance, you’re correct. The previous guidance is EUR 17.7 billion for the revenues and is FY ‘20 costs in line with FY ‘19, so just below EUR 10 billion. But I’ll hand over that question to Wouter Devriendt, our Head of Finance & Control. And then on the capital distribution, it will be Stefano Porro answering afterwards.

Okay. Thank you, Jorg. Very quickly on the results of this year quarter-on-quarter, as Stefano explained, the NII was down 2.3% quarter-on-quarter, fees were up 2.5% quarter-on-quarter. Now your question is about guidance going forward, but let me highlight again the dynamics that we have seen in the last quarter. The context is very well known, excess liquidity in the system and a downward pressure on key market rates. And so, what has been driving the quarterly results on the NII side was a clearly weaker demand on the credit side, with an impact of EUR 47 million. That has to be seen in the context of the excess liquidity that we see in the market that results in a weaker demand, especially, driven by the corporate side. That is a reverse trend of what we have seen earlier this year. When we look back at the beginning of the first wave of the COVID cycle, corporates were filling basically the revolving credit facilities. And at the end of the first wave, what we have seen is that, you know they refinanced debt liquidity either in the capital markets or gave back that excess liquidity to the banks, and that is part of what we have seen in Q3, but also in Q4, lower credit demand. There’s another element in all of that is also our prudent credit underwriting in the current cycle. I mean, it has been a very deliberate decision of UniCredit at the beginning of this crisis that we would tighten our risk appetite, and that is also something that can be seen in the current results. A second component explaining the lower NII in the last quarter was the lower rates. We have seen lower rates continued on the Euribor, but also on a couple of other key benchmark rates and other markets where we operate. And all in all, the drop in rates was 6 basis points. So if you apply that just to our overall loan book of a little more than EUR 390 billion, that translates pretty much in the EUR 54 million of drop that we have seen also on NII. Now, loan volumes, lower rates have been partially offset, as also explained by Stefano, by beneficial TLTRO3, by a benefit that we have seen on lower-term funding costs and also by repricing of deposits, on which we have been actually particularly affected, especially in Central Eastern Europe. Now, where does this bring us going forward? We have [make] [ph] in a deliberate decision to guide only on total revenues for ‘21, and that is in line, as you also mentioned, with previous guidance. But given the COVID-19 environment, we expect that the revenue mix in itself might slightly change throughout the year, and that’s why we focus on the overall revenue stream instead of going more granularly into fees, into NII or into trading. All I could say on NII is, going forward, what we see in the first quarter of this year is a continuation of certain headwinds that we have observed in Q3 and also in Q4, a further weakening of the Euribor, a lower demand, a weakened demand of the credit and also an ongoing growth of guaranteed loans in Italy. However, what we expect is a recovery in GDP, a growing economic activity as we proceed in the year, hopefully, as of Q2. And as the pace of restriction resulting from the COVID crisis eases, we hope that we will see more economic activity. And that economic activity, that upswing, that should give a boost to credit demand. That should also result in a normalization of our credit risk appetite. We also expect that the economic uptrend will result in more deposits that will get spent or either invested as well. So we will also, obviously, continue to manage more actively the negative rates, the impacts that has on our deposits. But that is as much as I can say in terms of guidance on NII. And obviously, when it comes to fees, as I said, strong quarter of the year, up 2.5%. And as you will see economic recovery, we expect a further continuation of growing fees, fees that have been particularly strong on the investment side in the fourth quarter and for which we have seen an ongoing very favorable trend in the first month of this year.

Thank you very much. Then maybe, Stefano on capital.

Yeah. Before moving to capital, Alberto, you asked about cost. Our strict discipline in relation to cost is maintained, meaning, we will focus on whichever type of action that can allow us to benefit on the cost side. Having said that, as I was highlighting before, we are better than ‘19 this year due to the variable compensation part that will be normalizing during 2021. And we have also to bear in mind, the depreciation effect of the IT investment that we will do in order to keep on improving on the digitalization. So we will also increase the IT investment in 2021. In relation to capital, the ordinary capital distribution policy will be 50% of the ordinary payout. It means that, in 2021, when we will have an underlying profit greater than EUR 3 billion, we will propose a capital distribution of 50% of this amount.

Thank you. Next question, please.

Very clear, thanks.

The next question is from Britta Schmidt with Autonomous Research.

Yeah, hi there. Thanks for taking my questions. Could you please comment a little bit on the volume growth outlook that you planned for 2021? Which segments do you intend to grow in? What sort of risk appetite does that reflect in terms of expected loss on new business? And also what sort of RWA growth could come with that? And the second question will be on the Stage 2 loans. Can you explain in a little bit more detail what you have reclassified? That was a very significant increase quarter-on-quarter. And also what out of this, you would expect to move into Stage 3 assets over the next one to two years? Thank you.

Okay. Well, thank you, Britta. Maybe quickly on the volume outlook before I hand over the Stage 2 question or the staging question to Stefano. As you know, we don’t give volume targets to the business, because we have a very strict risk discipline. We don’t do volume lending. We don’t do carry trades. So there are no volume targets as such. What I think is fair to say is that, obviously, with our GDP assumptions, which you see a rebound in ‘21 across the geographies where we operate, that we expect a rebound in loan as a lagging indicator to that GDP growth. But we don’t give explicit targets to the business. On the staging to Stefano.

Yeah, before moving to the staging, as highlighted by Jorg, taking into consideration the link on the volume dynamic to the GDP rebound, we are expecting relative terms to have higher lending growth in CEE and Germany. Overall, we are expecting, for the Group, an increase of the lending growth in all the division of the Group. The two divisions we’re expecting higher in relative terms also connected to the development of the economy are, CEE and Commercial Banking Germany. In relation to the loan stages, as a matter of fact, you have all the details at Page 53 on the Market Presentation. Commenting a little bit about that, we have moved around EUR 40 billion to Stage 2 loans, if you look fourth quarter ‘19 in comparison fourth quarter ‘20. As a matter of fact, the overall percentage of Stage 2 loans in relation to the total amount of loans is around 18%. Just to give you the detail about Italy, the percentage in Italy is 15%. So out of the total amount of loans that we have in Italy, 15% are in Stage 2 loans. If you look to the coverage, in Italy, the coverage is 5%. To put this into perspective, the amount of moratoria loans that we have in Stage 2 is near 68%. So this is also explaining to you, the amount of overlay provision that we had in 2020, because a portion of the 46 basis points I was highlighting to you before, are deriving from this movement. The movement to Stage 2 are deriving either from the movement of the PD per se of the obligor or more specifically by specific analysis that we did on the most impacted sector by COVID-19.

Thank you. Next question, please.

The next question is from Adrian Cighi with Credit Suisse. Please go ahead.

Hi, there. Thank you very much for taking my questions. I have a follow-up question on capital and one on fee income. On capital, you now have an MDA buffer, which puts you at the very top of the European bank peers. Still you are proposing an extraordinary return which is still below 100% of your underlying income, given the combination of loan growth and capital generation expected into 2021. You remain on track to build capital going forward. Should we see this capital currently MDA buffer as tracked? Or is this something that you’ll return to move towards the 200 basis points to 250 basis points range? And on the fee income, you’ve mentioned the upfront component of investment fees was at the highest level in three years. Is there any way to quantify them for us as well as maybe give us an insight into the quantum of the performance fees to get an idea of the underlying trends in Q4? Thank you.

Thank you, Adrian, for that. The fee one, including any potential performance fees that are in there will be answered by Wouter. On the capital one, I’ll hand it over to Stefano in a second. The only thing I think that’s fair to remind everyone of is that, we will have, at the AGM in April, in the middle of April, we will have a new CEO, a new Chairman and a new Board, which will obviously, consequently sit down and review – potentially review our strategy. So I think the very forward-looking component of your question that I think, would need a little bit of patience. But definitely on 2021, Stefano can answer on the capital. Maybe Stefano first on the capital and then Wouter on the fees.

Thank you, Jorg. So as I was highlighting before, our medium-term to long-term CET MDA target is confirmed so at EUR 200 million and EUR 250 million. In 2021, in relation to evolution of the capital were fundamentally three macro components. So the first one is the underlying net profit, net of the dividend distribution policy that I was highlighting before. The second one is regulatory headwinds dynamic that is below 140 basis points of capital. The third one is the business volumes, meaning, the risk-weighted asset connected with the business volume increase that we are expecting during 2021. As a consequence of that, we are expecting also at the end of 2021 to remain with an MDA buffer well above 300 basis points. Capital allocation is a key of our strategy. As highlighted by Jorg, after AGM, the CEO together with the Board will review the strategy, including the asset allocation component of that.

Maybe Wouter very briefly on performance fees that you mentioned, and then I’ll comment on the upfront fees you asked.

Yes. I can be very short on the performance fees. They actually don’t play a material impact for us. They’re single-digit. So Jorg, I can give that back to you for the other part of that question.

Yes. That was quick. Thank you. And as regards to the upfront fees, they are roughly one-third of the investment fees. Next question –

Thank you very much.

Thank you. Next question, please.

The next question is from Andrea Vercellone with Exane. Please go ahead.

Yeah, good morning. I may have two questions, one on NII, the other one on the profit guidance or 2021. On profit guidance, EUR 3 billion underlying net income, I just want to know if that number includes any DTA write-up? And if so, what amount you had included? On NII, can you disclose the amount of deposits you put back at the ECB in excess of tiering both as of December and as of September? And also I’m a little bit surprised that the contribution from the replicating portfolio in 2020 was basically the same number as in 2019, despite the fact that all swaps keep rolling off. So I’d like to know if you can give us an explanation of why is that, what are the moving parts and what headwind, if any, do you expect from this component in 2021? Thank you.

Thank you, Andrea. I’ll hand both of these questions over to Stefano. I’ll just point out the small part where you already gave a little bit of the answer yourself. Obviously, the replicating portfolio replicates the non-maturity deposits. So as majority – as non – as deposits go up, obviously, also those volumes go up. But on the other questions over to Stefano.

Thank you, Jorg. So in relation, I will start from the tiering. We have around EUR 24 billion of deposit in ECB considered for the tiering. The estimated impact from NII perspective is around EUR 100 million contribution to the net interest income. The amount has increased in December in comparison with September, following the increase of the deposit, because it’s a function of the amount of deposit. In relation to the replicating, we have a net contribution of the replicating portfolio at Group level of around EUR 1.4 billion. We were stable 2020 compared to 2021, because it’s the net benefit of the replicating strategy. So it’s including the dynamic of the fixed component, but also dynamic of the floating leg of the replicating. As you have highlighted during 2021 due to the rolling of some of the [pre-used] [ph] executed edge, we are expected a slightly less contribution from the replicating portfolio. In relation to the 2021 underlying profit, this is based on a tax rate of around 20%. We are including an amount of DTA write-up of around EUR 100 million. The final amount of DTAs write-up, as you know, will be dependent, however, from the DTA test that will run in the second part of 2021 and will also depend on the future profitability of the bank going forward.

Thank you.

Sorry, my question on deposits at the ECB was not, what is the amount and the tiering, but what is the excess deposited over tiering. Could you disclose that number?

Yeah, you can have that also in the balance sheet, the excess that we have over the tiering has increased during the year that’s reached more than EUR 100 billion at year end.

Thank you.

You’re welcome.

Thank you, Andrea and next question, please –

The next question is from Domenico Santoro with HSBC. Please go ahead.

Hi, good morning. Thank you for the presentation. All the best, of course, to Mr. Mustier. Just two follow-up, please. One on the NII. My understanding from the call is that, you upfronted some contribution from the TLTRO3. So I’m just wondering, because of the new, of course, conditions, just wonder what should be the run rate from now on and whether we see a further decline in the first quarter of this year? The second question is on your tangible book. I mean, you are deliberately, of course, reducing the loan book. That’s my understanding. Your Core Tier 1 is improving. I mean profitability was not great this year. But your tangible book at Page 23, it keeps falling. So you don’t have, if I’m not wrong, big hedging policy effects, I mean, in place like the other European banks. And you, for sure, have some benefits from high FX reserves. So I’m just wondering whether there is a structural you know impact in terms of whatever you might want to comment that we should account given the reduction in tangible book? Thank you very much.

Thank you, Domenico. I think both of them will be answered by Stefano, that both on the sort of, let’s say, one-off impacts on TLTRO3 increased terms in the fourth quarter and the implications for the run rate as well as the sort of moving pieces in the tangible equity.

Yeah. So as we highlighted before, the contribution in the quarter was showing an improvement of EUR 37 million. If your question is related to the run contribution is around EUR 150 million per year. That would remain stable over time. So we will not have a further pickup during 2021, considering the current take that we have in relation to TLTRO3. In relation to the tangible book, as a matter of fact, the dynamic quarter-on-quarter is fundamentally connected to the impact deriving from non-operating items like DoD, that is clearly a one-off, and the contribution of the additional Tier 1 coupon and cash use of around EUR 200 million. Otherwise, the dynamic of the tangible equity would have been slightly up during the quarter. In relation to the hedging of the FX reserves, currently we are not hedging our FX reserve exposure. Having said that, the sensitivity deriving from the FX currency due to the participation has reduced, taking also into consideration the sale of Yapi that we had during 2020.

Thank you. And maybe just to add, Domenico, on the net benefit from the TLTRO3, this is exactly in line with what we said before. Before they improved the terms, you remember, we had a net benefit of EUR 75 million. Now they extended the bonus payment, if you will, from one year to two, so it doubles to the EUR 150 million that Stefano mentioned. Next question, please.

The next question is from Antonio Reale with Morgan Stanley. Please go ahead.

Hi, good morning and thank you for the presentation. I would also like to add my thanks to Jean-Pierre for the tremendous work delivered. And I’ve got two questions, please. One on capital distribution and the other one on government measures. On capital distribution, we’ve seen in this reporting season, banks being particularly confident announcing generous capital plan with the Q4 results. So my question is, do you see any risks of further delays or rather risks of further limitations? It doesn’t seem to be the sort of gradual approach of returning capital that they use, Jean-Pierre, and the regulator has been talking about. So I’d like to hear your thoughts there. And my second question is on the government measures, as I said, if you could talk about this a little bit more, how is demand for such schemes coming through for both government guaranteed loans and moratoria and how are these performing so far? Also, if you could put this into context versus your expected, I think it was 6% default rate for the moratoria loans, please? Thank you.

Yes. Thank you, Antonio. The government guarantees and moratoria will be answered by TJ. And then on the capital distribution, again, just bear in mind, sort of the long-term outlook on excess capital, I think, it’s fair to wait for our new CEO. But for 2021, for sure, and the sort of short-term risk, if you will, from ECB restraints, not restraints, will be answered by Stefano.

Yeah, thanks. So your point was in relation to potential, let’s say, headwinds in relation to the capital distribution. So you have seen our capital and the MDA buffer that we have. Clearly, we comply with ECB. Having said that, we do think that the extraordinary capital distribution is an amount that makes us confident in relation to also the overall regulatory assessment. The overall regulatory assessment will not be only on us, it will be on the system. And this is why the capital distribution, the extraordinary one, is subject to also ECB repealing the overall distribution recommendation that currently are in place.

And on that one I think, Antonio, you should take comfort from the fact that they used the wording, unless there is a material adverse change. So I think if you read the press release from the ECB from December that should give the observant reader some comfort as to the security. TJ on moratoria?

Thank you, Jorg. Antonio, on the moratoria, you know, clearly, just to point out, in Germany all the moratoria have expired. We have observed very little sign of deterioration. And in Australia – in Austria, sorry, is also – a lot have been expired. CEE, two-third have expired. And there are clearly, the expiration of what we have seen is better than what we have projected. And the remaining of the CEE, one-third, will happen in the course of first half of this year. In Italy, about 20% have expired. Clearly, the moratoria has been extended to June. We think it will end, but we cannot rule out further extension. So in there, clearly, in Italy, today, you’ve seen that in the Annex you know that we have put in on Page, I think, 14 in the Annex side, that of the so called, EUR 22 billion of original moratoria, you know, the expired is about EUR 12 billion. So we continue to see that moratoria is expiring sort of very quickly. In terms of the guaranteed side, we will be closer to the EUR 20 billion. I think a large part will be taken in Italy. I think we’ve exceeded our so called, target of EUR 15 billion. The granted amount so far is EUR 15.6 billion.

On this, Antonio, a comment in relation to the different demand that we are receiving in different countries, in countries like Germany, Austria, as a matter of fact, who have not any more demand for state-guaranteed loans, while as highlighted by TJ, still we have demand in Italy even if at a lower growth pace in comparison with the last quarter.

Thank you. Next question, please.

The next question is from Delphine Lee with JPMorgan. Please go ahead.

Hi, thank you for taking my questions. So I would like to just come back on the moratoria and just wanted to understand a bit you know, what kind of default rate you expect on this and when do you expect NPLs to peak? And you know, I think in the past, you had given us a bit of some default rate assumptions that you had for ‘21, ‘22, if you could just update us on this. And just maybe a very quick one, actually, on net profit guidance, which is now above EUR 3 billion. Is there any changes to systemic taxes or any other non-operating items that maybe we should be aware of?

Thank you, Delphine. The one on the moratoria default rates, expected development will be answered by TJ in a second and the guidance will be taken by Stefano. Maybe TJ first?

Yeah. Thank you, Jorg. Hi, Delphine. Clearly, in the moratoria, as I’ve said earlier, Germany very low that we have seen. The default rate is more like the – going to NPE, more like 2.6%. Austria, if we strip out what has gone to, is sort of similar amount. In Italy, it’s far too early, very little default. But again, the bulk of the moratoria will be expiring in the middle of this year. CEE, if we strip out what is already in NPE, it’s closer to around the 5% type number. So this is much lower than our projection.

Thank you, TJ. We’ll actually have the underlying net profit guidance answered by Wouter.

Yes, again, very short. On systemic charges was your question, so we confirmed our guidance for systemic charges around EUR 950 million for 2021.

And otherwise, I would just argue that greater than EUR 3 billion. Also, EUR 3.5 billion is greater than EUR 3 billion. Next question, please.

Okay, thank you.

The next question is from Benjie Creelan-Sandford with Jefferies. Please go ahead. Benjie Creelan-Sandford: Yes, good morning. A couple of quick follow-ups from me, please. First of all, just on asset quality and NPL. I mean you’ve pointed to NPLs rising in 2021. I just wondered whether you could be any more specific on the extent. And on the Stage 2 loans that you’ve already touched on, can you give any detail on what proportion of those Stage 2 loans relate to either loans under moratoria or also with customers associated with guaranteed loans? My second quick question was just whether you can disclose the level of unrealized gains on the bond portfolio at the end of the year, and perhaps how we should think about that in the context of the revenue guidance for 2021? And whether you’d be you know, willing to, I guess, crystallize some of those gains to support trading through 2021 if line items like NII are remaining under pressure in the short-term. Thank you.

Thank you so much. We’ll hand over the Stage 2 percentage – the percentage of loans in Stage 2 and moratorium guarantees to TJ in a second and the unrealized gains on the bond portfolio to Stefano. The one thing to be aware just on the bond portfolio, as you know, we’ve had a strategy over the last couple of quarters to shift more of our bond portfolio into the held-to-collect bucket and there’s only a very limited amount we can sell. But then, of course, there’s still some numbers in fair value through OCI, and I’ll hand that to Stefano. But maybe TJ first on the Stage 2 loans and how much of that is moratoria-ed and guaranteed.

On the Stage 2 loan for – on moratoria, in Italy, we have proactively, as mentioned by Stefano earlier, it’s one of the overlay action to proactively capture the future impact. We classified quite a substantial amount between Q3 and Q4, something in the order of almost over EUR 15 billion. And the Stage 2 within the moratoria side, it’s around 70% of the outstanding today. So a large chunk. So we feel very comfortable that you know this so called, proactive classification will enable us to anticipate future impact in this year, in ‘21.

Thank you –

In addition to fair value reserve on financial assets, at year end we have near EUR 800 million positive gain. This is split that in around EUR 1 billion that is positive in relation to sovereign. Out of this, around EUR 400 million is the portion of the Italian sovereign. As already highlighted by Jorg, we have a portfolio of around EUR 53 billion of Italian government, more or less out of this is held-to-collect.

Thank you. Next question, please.

The next question is from Patrick Lee with Santander. Please go ahead.

Hi, good morning, everyone. Thanks for taking my question. Firstly, a general one on the net interest income and business volume, and then the second one on the asset quality. Firstly, on the net interest income weakness, which part of it was driven by lower volume which you alluded to in the presentation is due to you know, risk appetite of the Group being more cautious. I think in the past, you mentioned that you will avoid consumer finance. So if I look at your disclosure on Page 38, it also shows that quite a sizable loan contraction in CIB and in geographies outside Italy. So I just want to ask you like, which are the segments of your loan book that you are most wary of at this point in time? And secondly, on asset quality, I think the provisionary charge was clearly at the lower end of guidance this year for fourth quarter. But within that, in your detailed disclosure, there’s a big jump in the specific charge from 36 basis points to 89 basis points. You indicated that there was some proactive recognition of unlikely to pay driving this. But do you think you can give us some qualitative comments on the underlying actual charge? Like, if you had not done this extra-cautious split, what specific charge have fallen in the fourth quarter? And also how does that 89 basis points specific relate to the guidance for 70 basis points next year? I mean, is it fair to assume that by 2021, given the overlay taken, the majority of this you know, 70 basis point outside regulatory would be mainly specific? Or are you assuming some sort of release from the preemptive provisioning already? Thanks.

Thank you so much, Patrick. I’ll hand over the asset quality to TJ in a second, especially sort of cost of risk and the split in 2021. And then on the NII and risk appetite, sort of consumer loans volumes, to Stefano. Maybe TJ can start with the asset quality.

Yeah. Thank you, Jorg. Hi, Patrick. As stated in our guidance, we are in the lower end. And the specific cost of risk, one has to look at for the whole year, the context of 47 basis points. Clearly, in Q4, we have seen, clearly for some countries, particularly the CEE, where two-thirds of the moratoria that have expired, we proactively classify via the UTP test you know, some of the files, just to ensure that we do not have the cliff effect. And if you then project that with the Stage 2 that we have done decisively, as Stefano pointed out, we’ve done over EUR 40 billion of – you know from last year in staging, that it would put us well in terms of our guidance for the lower end in terms of the cost of risk. Clearly, when we have seen a lot of the moratoria have expired, some of the asset quality that we have seen, as mentioned in one of the questions earlier, it’s much better than what we have expected. So we feel confident of our guidance towards the lower end for this year.

Thank you. And Stefano?

Yeah. So in relation to the volume dynamics, the strict underwriting discipline is applied fundamentally to all the asset class. If we look more to the retail part, yes, the most impacted one is consumer financing, especially on the new business, partially on the stock, more on the new business, and more in Italy and CEE. Having said that, as highlighted before, we will normalize our risk appetite throughout the year. And so as a consequence of that, we are expecting also to have an increase of the new business in relation to some asset classes like consumer financing that has been penalized, if you look from this perspective during 2020. In relation to the dynamic quarter-on-quarter, as highlighted before, when you look to CIB and Germany and Austria, the dynamic was also impacted by prepayment by corporates. So it was not really connected to an underwriting discipline point, but more with the cash situation of the corporates.

Thank you. Next question, please.

The next question is from Ignacio Cerezo with UBS. Please go ahead.

Yeah. Hi, good morning. First of all, thank you and good luck to CEO, Mustier. A couple of questions from me. The first one is on NII. We have seen term funding as one of the few tailwinds, if you want, actually throughout 2020. So, if you can give us some information around maturities and if you expect that tailwind to continue. And the second question is on cost of risk. It’s a little bit complicated probably to answer, but then what is your best approximation to cost of risk beyond ‘21? Should we expect additional declines? I mean you used to have cost of risk guidance in the region of 40 basis points to 45 basis points. I know it’s early actually, but if you can share your thoughts on that front. Thank you.

Thanks, Ignacio. On the funding, Stefano will answer that. And then on the cost of risk outlook, I’ll give it to TJ. But just to be mindful, of course, he’ll give you his best answer, but then we gave guidance for ‘21, I think, for a reason. And again, we’ll have an AGM in the middle of April and so long-term questions, of course, are a bit tricky. But I’m sure TJ will handle that one just fine.

Thank you, Jorg. Ignacio, hi. Clearly, as what Jorg say, you know, beyond sort of ‘21, we will update during the CMD when we do that. But you know, if you look through you know, the so called, 2021, a lot of action has been taken in terms of either via overlay proactive classification. So we think, hopefully, by you know ‘22 when the world will start to normalize, that things should be normalizing, but it’s too early to mention any specific – any cost of risk guidance for – beyond ‘21.

Yeah. Maybe the other one on Stefano. Before he answers that, just quickly, Ignacio. I mean, as you correctly said in the old Capital Markets Day, the last year of the plan had around 40 basis points both on expected loss underlying adjusted for the headwinds and cost of risk. So at the time, that made – it made sense at the time. So then it’s up for you. But as TJ said, we’ll have a Capital Markets Day after the strategic review. Stefano, on term funding?

Yeah. Thank you, Jorg. So the dynamic of the term funding contribution to NII is dependent on two elements. So one is volumes, the second one is rates. In relation to rates, there will be a positive dynamic, both in consideration to the Euribor level but also the spread level that has started over time. So we are expecting, from that perspective, to have new issuances at an average lower spread than the issuance that will mature during 2021. In relation to the volumes, as you know, we have a really strong liquidity position. So the amount of the funding plan related to TLAC/MREL needs is between EUR 9.5 billion and EUR 12 billion. Having said that, the execution will be also dependent on the overall evolution of the risk-weighted asset over the year. So if the risk-weighted asset evolution will be lower than expected, then we will adjust the funding plan accordingly with a potential benefit on the NII.

Thank you. Next question, please.

The next question is from Alexei Lougovtsov with Bank of America. Please go ahead.

Hi. Hello, thank you very much for the call and thank you for proposing the large capital distribution. And I wanted to ask in the light of big distribution to equity, would you expect to exercise your right to pay coupons on CASHES instruments after May 2021?

Thank you so much. This one is for Stefano, who was here even when we launched the CASHES.

Yes. As we did during 2020, also for ‘21, the expectation is to pay out the coupon of additional Tier 1 and the use of RoTE on the CASHES. So the answer is yes.

Thank you. Next question –

Okay, okay. thank you very much.

You’re welcome.

The next question is from Hugo Cruz with KBW. Please go ahead.

Hi, thank you. So just a quick question on the risk appetite for NII, you know that should normalize. I’m just trying to understand the shape of that normalization. Is it going to be gradual during the year? Or are there going to be specific catalysts, such as, for example, the new CEO being on the Board or knowing the results of the ECB’s stress test or perhaps getting to the level of vaccination, where we can be sure on this GDP growth forecast? If you could explain that to me, it would be great.

Well, hi, Hugo. Well, thank you very much for the question. I mean, I think what we’ve said as regards to the current situation, I think we’ve been restrictive in ‘20 and we can expect a normalization, but I think the heart of your question on sort of risk appetite on NII, I think, is something that we need to ask a little bit of patience, because we’ll have the AGM and then the new CEO, Chairman and the Board to review the strategy. Maybe TJ wants to add something on risk appetite?

Just to add to what Jorg mentioned, you know, clearly, when we look through one of the path that we will continue to follow is the risk discipline, the risk culture. But as the economy start to open up, we can expect clearly the normalization to take place. At that point, we will look at a risk-based approach to our lending activities.

Thank you. So I think it’s fair to say that TJ has managed over the last five years to firmly ingrain the risk discipline in the organization and that will bar any change in strategy. But then, of course, the details of that shape, we’ll ask for patience. Thank you. Next question.

[Operator Instructions] Gentlemen, there are no more questions registered at this time.

Well, in that case, we thank you very much for your attention and hope to see most of you at the analyst breakfast tomorrow morning and then also during some road shows later. Thank you so much. Take care and stay safe.

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