Good morning, ladies and gentlemen. Before I hand over to Magda Palczynska, Head of Investor Relations, a reminder that today’s call is being recorded. Madam, you may begin.

Good morning, and welcome to UniCredit’s First Quarter 2022 Results Conference Call. Andrea Orcel, our CEO, will lead the call. Then Stefano Porro, our CFO, will take you through the financials in more detail. Following Andrea’s closing remarks, there will be a Q&A session. [Operator Instructions] With that, I will hand over to Andrea.

Thank you, Magda. Welcome, and thank you for joining this morning. Our first thoughts over recent weeks have been with those impacted by the war in the Ukraine. It is a tragedy that none of us thought could happen again within Europe’s borders. I’m proud of our employees who donated their time and financial support for relief efforts, which we have matched. In terms of crisis, banks have a dual role. We must help those directly impacted by the war, and we must also help the communities who are seeing their cost of living rise as a result. UniCredit will continue to play an important role in supporting all these people as well as our clients for navigating uncertainty and volatility. In terms of the impact of a war on our financial results, against this backdrop of geopolitical uncertainty and market volatility, we delivered a record-setting quarter across a number of metrics. At the same time, we have granularly assessed our exposure to Russia, made good progress in managing it, and dealt with the first-order impact. We have successfully reduced our position by €2 billion at minimal cost. We have absorbed 70% of the Russia extreme loss scenario, capital impact in Q1 alone, lending at a CET1 capital ratio of 14%, including €400 million for the 2022 dividend accrual and €1.6 billion buyback relating to 2021. Furthermore, and more importantly, in terms of the second-order impact of a war in Ukraine, we are uniquely positioned to absorb possible extreme spillover effects. This is thanks to our strong starting CET1 position, substantially improved profitability, healthy capital generation, conservative coverage strengthened by overlays, but have further been reinforced in 2021, and the conservative LLPs taken in the first quarter against Russian exposure on the back of an internal sovereign rating downgrade. While a critical issue, our exposure to Russia is only 1 small part of our business. Our overall franchise remains incredibly strong and is firing on all cylinders, reflecting our confidence in and focus on the continued successful execution of UniCredit Unlocked. The first quarter in 2022 is the fifth consecutive quarter of profitable growth and organic capital generation, demonstrating the commercial and financial momentum within the business. Excluding the impact of Russia, the group posted €1.2 billion net profit, generating 44 basis points of capital organically, well underway for the 150 basis points annual organic capital generation targeted in our plan. The critical mass and strength of our business is evident across all regions in their profitable growth and strong organic capital generation. At last month’s AGM, shareholders approved a total 2021 distribution of €3.75 billion, which includes the already paid €1.2 billion cash dividend plus €2.6 billion in the form of share buybacks. For the latter, we have requested and received supervisory approval for an initial €1.6 billion buyback, expected to commence as early as next week. I am confident in delivering the remaining €1 billion later this year within the framework I will speak later about. The cash dividend, an initial share buyback tranche represent a very compelling yield of 15% on our current share price. This distribution is only around 40% of the organic capital generated last year, and keeps our current CET1 ratio at a strong 14%. We remain confident that our franchise, excluding Russia, will meet the overall, UniCredit Unlocked 2022, 2024, return on tangible equity and organic capital generation targets, thereby supporting returns subject to AGM and supervisory approval of at least €16 billion to shareholders by 2024, €2.8 billion of which are already being delivered, and €400 million of which have been accrued this quarter. Our focus remains on executing our strategic plan, delivering meaningful, albeit prudent and sustainable distribution funded by recurrent organic capital generation whilst continuing to invest and develop the growth and profitability of our business. Let’s turn to Slide 3. 2 months ago, for transparency, we provided details on our Russian local derivative and cross-border exposures with a connected maximum capital impact, in the event we had to 0 all those exposures. We were clear that this was highly unlikely, and not our scenario. We reduced our exposure by about €2 billion at minimum cost during these 2 months, while we had €1.3 billion of headwinds from hedges expiring, and added €300 million of intra-group commercial exposure to our definition, almost entirely letter of credits. As a result, our Russia exposure maximum impact is reduced to €7 billion. If a full position were 0, we would still remain at a pro forma first quarter ‘22 CET1 ratio of 13% post the €1.6 billion 2021 share buyback and the €400 million dividend accrual for 2022. In the last 2 months, we have reviewed our exposure in detail, and assessed what we consider to be our extreme loss. This includes the current assessment of the full capital hit of our local participation, a cross-border exposure recoverability assumption of 40% following a name-by-name and nature of exposure analysis, and for derivatives and assumption of peak exposure based on our counter-party credit risk internal model, factoring in maximum recent ruble volatility and assuming no collateral posting by our intra-group counterparts. We also assume that the remaining hedge expires. In such an extreme loss assessment, we expect a CET1 capital impact of 128 basis points, of which we have absorbed above 70% this quarter. We have the capacity to fully absorb the extreme loss assessment impact with our excess capital only, which was never factored into our UniCredit Unlocked distribution plans and remain at the upper end of our CET1 ratio target range of 12.5% to 13%. Let’s now go through the exposure starting with a local participation. So local exposure. Due to the expiry of the FX hedge on the capital, the net local exposure has increased to €2.6 billion. The gross exposure has not changed. Our extreme loss assessment scenario assumes such full loss. And in the first quarter, we took the full capital impact, should this be fully written off. This quarter, the €600 million capital equivalent taken is the combination of €200 million via P&L, reflecting a provision on the local portfolio, and €400 million via an equity loss mainly deriving from FX reserves. Turning to derivatives. The maximum loss of derivatives in a jump to 0 scenario was representative, and is not an actual loss. Further, it assumes no collateral posting from intra-group counterparts in that event. As of March 8, this was €1 billion, including €700 million positive effect from FX hedges. As of end of April, it remained effectively unchanged as well we reduced third-party derivative exposure by €700 million. At the same time, we also lost the positive effect of €600 million in hedges. Our extreme loss assessment scenario assumed a loss of €400 million. In this quarter, we took the cost of €100 million for reducing the third-party exposure, and the remaining risk is vastly mitigated in our opinion, by the ruble having become a currency closely managed by Central Bank, and our intra-group counterparts have been and continue to post collateral. Turning to our cross-border exposure. We have minimized and managed our position while complying with all relevant sanctions, resulting in a reduction of €1.3 billion. This is the result of loan transfers to third parties, working with clients to reduce committed lines and reimbursements. It has also been done at minimal to no cost leaving in our portfolio, a limited number of multinational corporation for almost all, not sanctioned and likely to honor their obligation due to their quality and sector. The average life of this portfolio is around 3 years. In our extreme loss assessment, we assume an average loss of around 60% of such an exposure. Given our recent exposure and the quality of our remaining exposure, we conservatively covered our cross-border exposure at just over 30% in this quarter alone. This means that we have covered 50% of our extreme loss assessment just in first quarter 2022. I would like to be clear that the extreme loss assessment is not our base-case scenario. As a result of the above actions, the overall capital impact of Russia in the first quarter accounted for 92 basis points, absorbing above 70% of the CET1 ratio impact of the extreme loss assessment. In the event of a sale or exit of our subsidiary, there should be no further impact on our capital. The equity impact would be more than compensated by around €15 billion of connected risk-weighted assets that would be deconsolidated at the same time. We will update the market quarterly on the Russian exposure rather than with every 25 basis points reduction as we previously communicated. Our conservative provision in Q1 have put us in a position to absorb whatever outcome should affect our local presence solely through our excess capital to the UniCredit Unlocked target CET1 ratio range of 12.5% to 13%. Furthermore, having taken the full capital impact of our local participation in Q1, we now have the flexibility to consider and execute the best solution for all our stakeholders. Let’s turn to Slide 4. Moving on to the second-degree effects of Russia for Europe. These are significant. However, at this point in time, it is difficult to fully assess and mitigate. While we have been among the most cautious on the economic, inflationary and societal consequences of the war in Ukraine, we are better positioned than many to absorb such spillover effects and I am confident in our ability to successfully navigate this period of uncertainty. As part of our analysis, we have assessed the effect of the spillover on each of our countries, considering their mitigating measures and relative resilience but are becoming more and more apparent as well as the cascading effects both on our retail and corporate portfolio. On the latter, the implication for both is more exposed to Russia, high energy prices and supply chain disruptions. The difference in real GDP growth between UniCredit Unlocked conservative at the time, macroeconomic scenario and the revised baseline scenario, which underpins our 2022 guidance, is around 2% for our footprint. In case of a recession, it widens to 4.7%. Inflation in our footprint could rise to around 6% this year on average, in our baseline scenario, and 8% in the severe case. Inflation is not a new phenomenon for countries in our Central and Eastern European footprint, and we have been successfully managing it for a number of years, as you can also see in the cost/income ratio of our banks. In Western Europe, the impact so far has been more limited. However, we expect it to become much more pronounced as we go into year-end and into 2023. Therefore, we have been front-loading our cost reduction and efficiency measures as much as we can to rebase our costs as well as taking other initiatives to mitigate future inflationary pressures. Even faced with the most severe recession scenario, our overlay LLPs of about €1 billion would enable us to absorb most, if not all, of the impact for 2022 and 2023. Furthermore, UniCredit’s provisioning on Stage 1 and 2 loans during the last 2 years has been the most prudent within our peer group with our coverage highest amongst our peers. Apologies. As such, our cost of risk, excluding Russia, is confirmed at 30 to 35 basis points for this year and for the plan year. For the first quarter, it was almost 0, in fact, 5 basis points only without releasing any of our overlays. Our low cost of risk reflects good quality of new origination and the resiliency of our portfolio, which will give us the ability to better withstand the severe recession should this occur. In the eurozone, if the eurozone did enter into a full recession, we will also expect greater supporting measures by government and by the ECB. Our starting point capital trends, even post the first degree effects of our Russian exposure, sustainably increased level of operational efficiency, much improved organic capital generation together with the overlays and provision, give us confidence in delivering UniCredit Unlocked in the slowdown scenario, and being able to absorb shocks to a greater extent than peers. Let’s turn to Slide 5. Our strong capital position and capital generation has enabled us to absorb 92 basis points of impact of Russian exposure to receive supervisory approval for commencing the first €1.6 billion 2021 share buyback tranche and accrue a $400 million cash dividend while maintaining our CET1 ratio at 14% for Q1 2022. Assuming our base-case slowdown scenario, we would be in a position to both complete our 2021 distribution and cover the entirety of our targeted 2022 distribution while remaining at a CET1 ratio of around 13%. We confirm our CET1 ratio target range of 12.5% to 13%. We are operating at above the higher end of the range because it is not in the interest of any of our stakeholders to reduce it given the current uncertain environment. Our performance demonstrates that the model is working, and enables us to remain committed to our UniCredit Unlocked distribution guidance of €16 billion over 4 years. As we turn to Slide 6, I would like to shift focus to the first quarter 2022 and the UniCredit franchise potential. We are fully focused on the execution of 3 levers: Net revenue, cost and capital efficiency, which are largely under management control. On all 3, we are showing strong progress. Please note that we are presenting our financial results today, excluding Russia, but full disclosure is in the annex for transparency as Russia remains part of the consolidated group. In Q1 2022, net revenue reached €4.7 billion, up 8% year-on-year. LLPs were close to 0, as I said, about 5 basis points, reflecting our focus on quality lending and strong capital-light, high-risk return growth across the region. At the same time, the group’s cost discipline led to a 2.6% reduction in our cost base in spite of continued increasing inflationary pressures, particularly in the CEE. As a result, we generated €1.2 billion of net profit, excluding the impact of Russia, producing 44 basis points capital organically, well underway to our target organic capital generation for the year of 150 basis points. As you know, that underpins our distributions. We intend to commence the initial tranche of our 2021 share buyback of €1.6 billion shortly. And I am confident that we will execute the remaining €1 billion keeping the full 2021 distribution of €3.75 billion intact. These assume that we do not have a severe further Russian deterioration. In terms of our 2022 shareholder distribution, if our baseline macro assumption remains valid by the end of the first quarter 2023, and we achieve our UniCredit Unlocked target for this year, which I am confident about, we will seek authorization at next AGM for the same distribution as for 2021 of €3.75 billion. Let’s turn to Slide 7. Our Client Solutions business leverages best-in-class products and services for corporates and individuals across our group, maximizing the benefits of our strong stable client franchise. In Q1 2022, Client Solutions generated $2.4 billion in revenue, up 7% against last year, which was in itself extremely strong, demonstrating the capital-light strategy in action. The performance of Corporate Solutions was exceptional at €1.5 billion. We supported clients in managing the risk through commodity and FX hedging as we navigated an extraordinary level of volatility. The related strong client activity is demonstrated in client risk management revenue, up 21% year-on-year, excluding XVA. These, together with a positive trend in transaction and payment more than offset slower debt issuance. Our loan and debt capital market performance was strong, with loan capital market also benefiting from arranging some liquidity facilities. At the same time, risk-weighted assets have been reduced by €2.3 billion, thanks to our strict capital discipline despite strong loan growth and a market risk-weighted asset increase due to increased volatility. Corporate Solutions RoAC was solid at 15%. The business is more than 90% client-driven with a balance related to our trading and investing. Individual Solutions revenue at €0.9 billion is up 5% year-on-year driven by growth in our insurance business, up 14% reflecting our increased focus and improved quality, also benefiting from the ecosystem we’re building with Allianz. Let’s turn to Slide 8. A cornerstone of our strategy is to fully leverage our differentiated footprint across 4 regions: Italy, Germany, Central Europe and Eastern Europe. These countries combined bring us diversification benefits and the optionality to create value-accretive growth, many other banks do not have. First quarter results across the regions are strong, following an excellent performance in 2021, highlighting the commercial momentum and ability to achieve and beat targets. None of our regions have yet been impacted by spillover effects, delivering a double-digit RoAC despite booking the majority of systemic charges, as always, in the first quarter. Let’s turn to Slide 9. Italy. Italy once again demonstrated the strength of its franchise with the team delivering organic growth and scale in high-return products. Our domestic franchise has over 10% loan market share, well distributed across Italy. In high-return products, such as life insurance, protection and personal loans, our market share is considerably higher. And in Lombardy, we’re delivering about 10% loan market share with far fewer branches, and posting a double-digit growth of new business in attractive high risk-adjusted return products. For example, we originated 50% more loans than branches market share, growing 43% protection and 145% new personal loans year-on-year in the region without relaxing our risk appetite. Net revenue was €2.3 billion, up 8.6% year-on-year, thanks to small net write-backs and strong fee and trading income, which Stefano will take you through. Fees are up 6.3% year-on-year, supported by transactional fees and insurance. Fee share of revenue increased to 52%, including corporate client hedging, which is how we look at fees, and is well balanced between corporates and individuals. We expect net interest income to bottom out this quarter as higher volumes and increases in Euribor should result in NII growth from here. Cost, our well-controlled benefiting from front-loaded FTE reduction with an exceptional cost income ratio of 44.2% in this quarter. Nonbusiness costs have been reduced by 6%, while at the same time, we invested in business activities as we promised. This quarter saw positive cost of risk upon a release of loan loss provision, showing our conservatism. We generated 28 basis points of organic capital, producing a strong RoAC of 13.5% and reducing RWA by €1.6 billion driven by business measures on lower-return portfolios, while we are still working on securitizations. The assets under management conversion to ESG investment is €27 billion, materially exceeding plan expectations. The Italian economy’s reliance on Russian gas has decreased in recent months, with the Italian government accelerating towards increasing its diversification of suppliers. The post-pandemic reopening will boost the contribution to economic growth of tourism-related sectors. The large stock of household savings accumulating during lockdowns, equivalent to 7.5% of GDP, is expected to reduce the drag on consumer spending from high inflation, gives a country greater ability to offset the second-order effect. Let’s turn to Slide 10. Germany. Germany produced the highest quarterly net operating profit in a decade driven by both revenues and costs. Net revenue at €1.3 billion, up 5% year-on-year, thanks to higher commercial revenues despite net write-backs in Q1 2021. Fees are up 16% year-on-year mainly supported by recurrent asset management fees and financing fees from strong loan growth. Net interest income is up 7% net of one-offs, largely driven by higher loan volume and spreads, and the excess liquidity fee contribution. The increase in rates will make deposit NII supportive, which has not been the case for a long time. Costs are down 7% year-on-year as we front-loaded certain savings, and benefited from lower FTEs. We expect to largely offset inflationary pressures this year. The cost income ratio is exceptionally low at 47.4% this quarter. Risk-weighted assets were flat quarter-on-quarter as capital efficiency measures compensated for an increase in market risk and higher lending. RoAC was at 10.4%. ESG continues to grow from strength-to-strength, with investment products AUM and social lending significantly exceeding our first quarter targets. The outlook for the country will be helped by solid financial position, including a high savings ratio for client -- for retail clients. The potential for countermeasures to energy disruption together with government aid packages will help manage spillover effects, while increased public spending in energy transition and defense will create new business opportunities. Our dedicated teams are closely monitoring the potential impact of the crisis on our clients. Let’s turn to Slide 11. Central Europe’s net revenue of $800 million is driven by strong commercial revenue and net write-backs. Again, asset quality is strong. Net interest is up 16.5% year-on-year due to strong loan growth across business line and countries, and interest rate hikes in the Czech Republic and Hungary. Fees are up 7.2% year-on-year, supported by financing and transactional fees. Costs are relatively stable as improved cost efficiency, particularly in Austria, offset nearly 9% inflation. Net of lower pension cost one-off in Q1, cost -- Q1 2021, costs for the region are down 3% year-on-year on the back of streamlining and digitization. Risk-weighted assets remained flat quarter-over-quarter, and RoAC was at 10% in the quarter. In terms of the outlook for Austria, in the absence of a gas delivery stop, limited spillover effects are expected. Czech Republic and Hungary are more exposed. However, counterbalancing measures have been put in place, leading us to expect revenues to be resilient, and any impact on asset quality still manageable. Let’s turn to Slide 12. Eastern Europe. Eastern Europe’s net revenue at €500 million is up 17% year-on-year, thanks to net write-backs and strong fees and NII. Fees are up 12%, mostly on the back of increasing transaction strongly supported by an enhanced digital offering with the highest digital and mobile penetration in the last 5 quarters. NII is up 4% driven by strong commercial momentum with high new loan origination as we regain our natural market share without relaxing our risk appetite. Risk-weighted assets are up €2.3 billion in the quarter driven by increased market risk due to structure, FX regulation and business growth. Active portfolio management actions are in flight, and expected to limit the RWA inflation for the rest of the year. RoAC is the highest of our regions at 21%. The macro outlook for Eastern Europe is expected to be characterized by higher energy prices and generally higher cost of living. We expect Bulgaria to leverage on alternative fuel channels and benefit from management of food stocks, while Romania to benefit from the higher built-in food and fuel independency. Overall, in Eastern Europe, we are better positioned with our footprint in terms of resilience to spillover. The higher prices will have some impact on demand. However, we expect the business to be resilient, supported by rate hikes, high level of transaction and hedging activity. Mitigation measures have been implemented to keep cost inflation at bay, leveraging, as an example, on the transition of clients to digital channels and renegotiations of contracts. Let’s turn to Slide 13. Our business is far more diversified and resilient than we are given credit for, with varied and stable fees delivering in a variety of market conditions. The majority of our trading is also client-driven in particularly supported by client risk management hedging activities, more comparable to fees. The hedging activities for clients generate robust revenues also in volatile financial markets, mitigating potential headwinds on other fee categories. We have a unique geographic footprint, and our business mix is balanced with retail banking generating over half of our revenues, stabilizing results. Our rate sensitivity, which Stefano will explain later in greater detail, will help bolster revenue should we see spillover effects materialize, while our loan loss provision are protected by our conservative coverage and overlays. Our profitability targets have upside coming from European rate recovery as our plan assumed an ongoing negative rate environment. We have a strong track record in cost efficiency. Our plan has a gross cost reduction of €1.5 billion and net of €500 million, reflecting €1 billion investment. These provide us with a further lever to pull if a top line is not materializing or inflation remains high into 2023, contrary to what is expected. We intend to continue to invest in our future, but have flexed to dial back if needed without compromising our key priorities in data and digital. Combined, this makes for a powerful investment case. With that, I will turn over to Stefano to go over the first quarter results in more detail.

Thank you, Andrea, and good morning to everyone. Let’s turn to Slide 15. Before I take you through the Q1 ‘22 results, let me highlight that they are presenting, excluding Russia, given that we absorbed most of the extreme risk assessment, including the capital impact of the local bank. Excluding Russia, means group without the local bank and without the cross-border exposures booked in UniCredit S.p.A. My comments are based on a year-on-year comparison, that is Q1 ‘22 versus Q1 ‘21, unless otherwise noted. As highlighted by Andrea, in Q1 ‘22, we delivered an excellent profit of €1.2 billion, delivering a double-digit return on tangible equity at 10.3%. Group state and net profit at about €250 million as we conservatively booked one-offs related to Russia, which led to a net loss of €0.9 billion in the division in Russia. In Q1 ‘22, we have booked additional LLPs of around €1.2 billion, absorbing the capital impact of our direct exposure and strengthening the coverage of our cross-border exposure to above 30%. Due to a temporary lack of recognition of tax shield on these extraordinary impacts from Russia, the tax rate in Q1 ‘22 is temporarily higher than usual. As we expect the tax shield to be recognized over the coming quarters. As a reminder, the majority of systemic charges are always booked in the first quarter. This year, they amounted to €709 million, an increase of 15% year-on-year mainly driven by the increase in the system-wide single resolution fund target level. This is worth about €100 million and increasing the full year ‘22 guidance for the same amount to about €1.1 billion. The stated CET1 ratio is a strong 14%, about 100 basis points lower quarter-on-quarter, mainly due to the mention one-off related to Russia. This already considers the €1.2 billion cash dividend for 2021 paid in April, and €1.6 billion or 55 basis points for the first share buyback tranche approved by the supervisor. As other key recent financial events, I would like to highlight that we successfully completed the Yapi disposal as planned. The expected positive impact on the consolidated CET1 ratio is mid- to high-single-digit basis points in Q2 2022. Let’s now look at the P&L in more detail, starting with revenue on Slide 16. Net revenue reached €4.7 billion in Q1 ‘22, up 8%. This reflects LLPs almost at 0 in Q1 ‘22 as strong commercial revenue, up 7%. In Q1 ‘22, we generated €4.8 billion revenue, up 6% versus Q1 ‘21, thanks to a strong figure of 8%, and net interest up 5%. If you were to consider the onetime payment in the revenue balance line of about €90 million related to our SIA agreement were in Q1 ‘21, the improvement would be even stronger. Our capital-light strategy is starting to deliver, shifting to better quality revenue. Credit income in Q1 ‘22 was very strong at €0.7 billion, up 15% year-on-year, benefiting from a strong treasury result this quarter, including realized gains on investment portfolio. The majority of our trading is client-driven, more comparable to fees, with hedging from corporate clients reflected in the fixed income, currency and commodity results, up €72 million year-on-year, positively impacted by the market volatility this quarter. Let’s turn to the next slide. Net interest income was up 2% quarter-on-quarter, adjusting for positive nonrecurring item in Germany in 4Q ‘21 in this effect. This is supported by a recovery demand for credit. Average client loan volumes are up €8 billion quarter-on-quarter driven by Austria, Germany and Italy, compensating the negative impact from noncommercial items related to the postponement of the 12.4 TLTRO3 additional take-up repayment to March 2024 from June 2022, and the subsequent distribution of the benefit over a longer period of time. Customer loan rates are flat in the quarter at group level as we experienced ongoing pressure in Western Europe, while low rates in Eastern Europe and in particular, Central Europe are up, higher market rates had also a positive impact on the treasury result, in particular, in Czech Republic and Hungary. The net interest contribution of deposit is stable quarter-on-quarter despite deposit volumes up €8 billion driven by the high liquidity in the system as better deposit pricing in Germany was offset by customer deposit rate increases due to higher rates in Central Europe. Let’s turn to Slide 18. As mentioned by Andrea before, our rate sensitivity will help boost our revenue also in case we see spillover effects materialize. As you know, UniCredit Unlocked has been based on prudent assumption of an ongoing negative rate environment. That does not mean we would not strongly benefit from a higher rate environment. Furthermore, static regulatory sensitivities can be difficult to interpret. As such, with this slide, we aim to show that on a managerial scenario of 50 basis point ECB rate hike in 2 steps in the fourth quarter of this year. And in the second quarter of next year, we would expect a positive impact to net interest income of about €0.7 billion for full year 2023. In full year ‘22, depending on the timing of the actual rate hikes, and your above 3 months behavior, we would expect a marginal positive impact in full year ‘22 as well. After full year ‘23, consistent with the removed back to 0 ECB deposit rate, we would expect to lose the contribution of the excess liquidity fee. The TLTRO repayments will also partially reduce the NII sensitivity. As such, after full year ‘23, we would expect a positive run rate of about €0.5 billion for plus 50 basis point rate increase. In the event of additional rate hikes above 0% ECB deposit rate, we would expect €0.1 billion benefit for any additional 10 basis points until reaching plus 50 basis point ECB deposit rate. Let’s turn to Slide 19. Fees delivered yet again another great performance, up 8% year-on-year, further demonstrating our commercial momentum. Our fees are well diversified, and all categories contributed positively for most transactional and financing fees. Let’s look at the component parts of fees year-on-year development in more details. Transactional fees were up 11%, thanks to current accounts, card and payment fees responding to the pickup in the economic activity. Financing fees were up 11%, supported by loan and guarantee fees in Italy and Germany, and credit protection insurance in Italy. Investment fees were up 4%, thanks to strong recurring asset under management fee compensating lower upfront fees as we expected. Investment fees were also supported by life insurance fees, up 16%, mainly in Italy. Let’s turn to Slide 20. Q1 ‘22 costs came in at €2.3 billion, down 3% year-on-year. Thanks to our continued focus on cost efficiency and rigorous cost discipline, we managed to reduce our cost base even with inflationary pressure. The reduction was mainly driven by non-HR costs, down 5%, thanks to lower consulting and advertisement. HR costs down 1% year-on-year, benefiting from lower FTEs in Italy and Germany. Let’s turn to Slide 21. Cost of risk, excluding Russia is close to 0. The €1.3 billion LLPs booked in the quarter were almost completely related to Russia for the strengthening our overlay provisions. This includes an updated IFRS 9 macro scenario for Russia. The next regular for IFRS 9 macro review is in the second quarter. Our underlying asset quality remains sound. Net NPEs were €7 billion with a ratio of 1.6%. The risk management is the backdrop of the best-in-class banking, and we will not surrender, there is discipline we have worked so hard to acquire in the last few years. With our strong asset quality and overlay LLPs, we are uniquely positioned to absorb spillover effects, both in a slowdown and a severe scenario. Let’s turn to Slide 22. In Q1 ‘22, our risk-weighted asset excluding Russia stood at €309 billion, down €1 billion quarter-on-quarter as active portfolio management measure of €4 billion more than offset the impact of business growth and regulatory headwinds. The latter includes nearly €3 billion for structural effects increasing market risk-weighted assets. Risk-weighted assets related to our Russian participation have increased to €17 billion and for Russia, including the cross-border exposure to €21 billion, up €9 billion quarter-on-quarter, mainly reflecting the internal downgrade of the country. Our business model is focused on capital-light profitable growth. Active portfolio management and efficient capital allocation remain a focus to manage risk-weighted assets and support organic capital generation. Let’s turn to Slide 23. The CET1 ratio came in at 14%, already deducting 55 basis points the first share buyback tranche of €1.6 billion approved by the supervisor, which we will commence as early as next week. Our strong capital position and organic capital generation of 44 basis points in the quarter allowed us to absorb with 92 basis points more of the Russia extreme risk assessment capital impact and field remain comfortably above our target range of 12.5% to 13%. Before I hand over to Andrea, a few comments about our outlook. The environment remains obviously fluid, and we are at an important point in the European economic recovery. As we have commented, we do not see any spillover effects in our region as of early May. As per earlier comments, we have reconfirmed our targets for 2022, excluding Russia, with a net profit of over €3.3 billion after CASHES and additional Tier 1 coupons. A cash dividend, 45% of net profit, excluding Russia, is being accrued with the balance intended to be returned in share buybacks. The group tax rate, excluding any potential tax loss carryforward DTA write-up is expected to remain slightly below 30%. Our net interest income guidance remains for 2022 to be in line with 2021 when excluding the nonrecurring item from fourth quarter ‘21, with potential upside for a positive market rate development, which could be partially offset by lower volumes, as GDP growth is slowing down. Lower volumes provide a natural edge via lower risk-weighted assets. We continue to expect a slight increase in total fees for 2022 compared with 2021. The continued high elevated financial market volatility that can negatively impact the investment fee dynamic is, however, supportive for client risk management activity. Overall trading was already normalizing as we enter the end of the quarter. Please keep in mind that the dividend income this year will no longer benefit from Yapi’s contribution. We continue to expect costs in 2022 to be in line with 2021 as we limit inflationary pressure with disciplined cost efficiency. We are uniquely positioned to absorb spillover effects as explained in detail before. Therefore, our cost of risk, excluding Russia, is confirmed at 30 to 35 basis points for this year, and for the plan period. We expect, according to our base macroeconomic scenario around 50 basis points regulatory headwinds for full year ‘22, of which 6 basis points have been taken in Q1 ‘22. Also this year, our organic capital generation is expected to be in line with the 150 basis point plan ambition on average per year. our CET1 ratio target range remains between 12.5% and 13%. I will now hand back to Andrea.

Thank you, Stefano. UniCredit Unlocked is based on 5 strategic imperatives that support our achievement of our financial ambitions. Across all these, we are delivering tangible proof points only 1 quarter into a 3-year plan. I particularly want to call out our ESG progress, where we are running ahead of ESG total volume targets for ‘22 to ‘24. We incorporate sustainability in all we do, and have been very successfully supporting our clients’ green and social transition. UniCredit entered this phase with a sound business model and a plan focused on improving both profitable growth and organic capital generation. Franchise performance so far allows us to confirm our financial guidance for 2022 adjusted for the impact of Russia on revenue and cost that effectively means that the remaining franchise will compensate in terms of revenue, and cost reduction for the absence of Russia, and that our net income is confirmed as is our RoTE. The French franc is more than compensating of any profit and organic capital generation contributed from Russia expected for 2022. That we’re not factoring in our guidance. At our strategy day in December, we have a plan that would lead us into an era of purpose, growth and value creation, creating a bank that would deliver for all our stakeholders, the bank for Europe’s future. Our plan has embedded profitable growth from internal action largely in our control, and over long term from prudent assumption on macro. We have a unique pan-European footprint that offers us both significant diversification and exposure to growing economies. It is a multiyear industrial plan, enabling us to manage a near-term slowdown. This is a plan out to end 2024, targeting 10% return on tangible equity. We’re already delivering positive outcomes by combining the 3 levers of net revenue, cost and capital efficiency. I remain committed to distribute at least €16 billion to investors between 2021 and 2024, in line with UniCredit Unlocked delivery. This is predicated on our revised baseline macro function of a slowdown, but we are also well prepared to weather a potential recessionary environment. It is not what we expect at the moment, but we are mindful of the fact that the situation can and will change rapidly. Even in a severe recession case, we’re in a privileged position to absorb a significant portion of the shock and the impact on our strategic plan, UniCredit Unlocked. And why am I confident? We have managed the first-order Russia FX. We benefit from strong capital, strong coverage, high overlays to manage second-order impacts. The extreme Russia impact is absorbable while maintaining a robust CET1 ratio. If there is a top line slowdown, we can slow down investment while protecting key priorities. We have upside from rate increases, which we have not factored in the plan. And we have the commercial momentum and diversified model, delivering profitability and organic capital generation as part of our multiyear plan, supported once again by excellent quarterly results. Our distribution over the plan are based on returning our net annual organic capital generation to shareholders as part of ordinary distribution only. We do not rely on returning excess capital to shareholders, meaning that in any given year, our CET1 remains protected. This is a prudent approach. I’d like to take the opportunity, before we close, to reflect briefly on the year since I had the honor as starting as CEO. I’ve been blown away by the quality and dedication of UniCredit’s talent and commercial potential. Last year, we immediately came together to change how we do business, how we operate internally, and how we support our communities. The willingness of the business and regions to operate together has been incredibly powerful. We have delivered 5 strong consecutive quarters, and this is just the start. There is much ahead for UniCredit in the coming years. The current geopolitical development remind us what is really important in life. There will be no way to make up for the tragedy of war. But if we can take anything from this conflict, it is for the hope for more United Europe. This unity will be crucial as we defend our shared value, and help our continent rebuild and transform for the better. The long-term economic impact of the Ukraine conflict is yet to be determined, but the banking sector has a responsibility to help navigate this turbulent period. As the bank with a true and deep presence across the continent, UniCredit’s responsibility is to the whole of Europe. This means not only helping to deal with inevitable challenges, but also to make the most of opportunities and build a better future for us all. Moderator, could you please open the lines for questions? Thank you.

[Operator Instructions] The first question is from Ignacio Cerezo with UBS.

I had 2 quick questions for me. First one is on the local Russian bank, given the flexibility you have shown in terms of disposing or selling, or walking away basically from the unit without additional capital cost that the measures taken in Q1. I was just curious to understand basically what are the pros and cons of doing one thing or the other? How are you thinking about it? The challenge is basically or taking that measure versus staying in the country? And the second question is on fees. Specifically, if you can give us a little bit of color basically on how sustainable the strength we have seen in Q1 actually is in the coming quarters, specifically on financing fees, actually, as the line that surprised me the most?

Thank you. So I’ll start with the local presence. What we have done in Q1 allows us to evaluate all options calmly without pressure and without further impact on our CET1 based on the scenarios that we have today. So that would mean that if we were to lose the entire bank because of nationalization that some people raise because of intervention, the impact on capital will remain what you have seen. So there would not be any additional impact. If we were to sell, combine or do something with our local subsidiary, we would get whatever upside from the -- for what we get from that transaction. If we were to, for the time being, stay because the time is elongated, we would again not have further capital commitments in our opinion. So what we have done here given the complexity of the situation -- and I would urge all of you to focus on substance and not on signaling or on commitments because if we look at people or firms that have substantial presence in the country, and their actual exit, it is proving to be complex as we said it would be. So it is not something that can be done easily. We think that the position we have taken allows us to evaluate all the options. The direction of travel, I think, is quite clear from what you’re seeing financially, but it allows us to evaluate all the options in a way without pressure, and trying to do what’s best, and maximize value for our shareholders. With respect to the fees, I would have a general comment, and then I’ll pass it to Stefano. I think we have a setup where what we consider fees in our client solutions is quite diversified. As you see this quarter, we have had a slowdown on asset management fees as we would in an environment such as this one. But we have had a vast acceleration in client hedging fees because our SMEs have wanted to hedge on FX, and on commodities as they should. So there are a few things that are accelerating independently and that were not there before, but it’s primarily protection and some areas of insurance, but are due to the new agreement with Allianz. It’s a strong partnership, and there are further options to improve that contribution as we put together an ecosystem. The rest, I will pass to -- obviously, is dependent on the quarter but there -- was very active in all areas. I’ll pass it to Stefano.

Thanks, Andrea. So as we commented before, we are expecting for the full year dynamic of the fees higher than 2021. Transactional fees were stronger. So we’re up around €58 million year-on-year, €17 million quarter-on-quarter. We think that during the course of the year, the dynamic of the transactional fees will remain well supported, also taking into consideration the expected dynamic of fees connected with payments, credit cards and so on. Financing fees have been also well supported including also the contribution of protection. These are linked to the dynamic of loans as we were discussing before during the quarter, around €8 billion more on average from the loans perspective we are expecting growth -- such a growth in a consequence, the lending dynamic can be lower than expected in case there is a reduction in the growth. In relation to the investment fees as commented by Andrea, this quarter, quarter-on-quarter, we had more upfront fees, less management fees. Management fees in reality impacted by the dynamic of the markets. So what we are expecting is a normalization. However, in a situation where the commercial dynamic is strong. This quarter, we have around €15 billion gross sales of asset under management and insurance product that is showing you that the activity that all the network is doing in relation to the overall management of the clients is really good and well supported.

The next question is from Antonio Reale with Morgan Stanley.

It’s Antonio from Morgan Stanley. Two questions also from me, please. The first one on strategy and the second one on the outlook for cost basically. So on the first question, your plan included a buffer ahead from your capital target in 2024. And initially, this was intended to cover for any opportunities or any unseen -- unforeseen circumstances, such as the one we’re seeing in Russia. If I add higher rates, which were not in the plan, together with some of the flexibility you’ve talked about on cost and IT investments that should give you additional headrooms. Can you remind us of your strategic priorities in light of recent events? And is there any risk that higher rate imply that some of the corporates that have been using the market fund themselves come back on your balance sheet. In other words, I’m wanting to explain how your rates affect your plan go to a capital-light model, and where do your strategic priority stand? And my second question is on cost of risk. You’ve given a very good message, cost of risk to remain at the 30 to 35 basis points range. I understand you’ve got €1 billion of covered overlays. If I look at your Q1 results, and the underlying cost of risk, it was 5 basis points. You certainly have not seen releases on overlays, but you’ve seen some write-backs in some regions, excluding Italy. What gives you the confidence on the relevance of the credit cycle? And how do you see credit quality for the key geographies you’re in? If you could comment on some of those key markets, that would be great.

Maybe I’ll take just the introduction, I’ll pass it to Stefano. You’re right to point out that in UniCredit Unlocked, we were very clear that our target CET1 ratio was 12.5% to 13%, and we would be moving within that range but that there was excess capital, but quite significant excess capital that was not factored in into UniCredit Unlocked, and was going to be used for 3 purposes we said at the time. One was potential M&A, another one was to further complement distribution to shareholders, and another one was to absorb unexpected shocks. Well, we didn’t expect that one, but it is there for that. So the shock from Russia has affected most of that capital excess, not all of it. We remain at 14%, and depending on where the situation conclude, in any case, we will remain above 13%. So that’s why we bifurcate, and we say very clearly that the remaining part of the franchise that is now running faster can deliver -- can remain with the CET1 ratio where it was, bridge the gap for Russia and deliver on the distribution without that being affected by Russia, given what has happened, obviously, our flexibility or our excess capital on top has been reduced. So that I would say is the point. The other thing generally -- and then I’ll pass it to Stefano, but I will say on cost of risk just as a -- well, now 12 months outsider. This bank has provisioned very conservatively, and so we should. This quarter is no exception. Last year, in 2021, last quarter, as you know, instead of using overlays for whatever reason, we increased overlays. And in this quarter, we could have -- potentially, there is always a judgment call, made substantially more write-backs than we have. We get them to a minimum required. And therefore, we continue to think that our existing portfolio is extremely well covered that we have on top of that overlays, and a very, very conservative assessment of Stage 1 and Stage 2. And we, on top of that, have made a provision for the Russia first-order effect that is, in effect, a combination of a normal provision and another overlay. So that’s what’s giving us confidence to be able to manage the cost of risk in the 30 to 35 basis points.

So Antonio, integrating what Andrea added. In relation to overlays, we were commenting before the ability of the macro scenario, the macro scenario for Russia only. As a matter of fact, of the more than €1 billion overlay, where €500 million is the macro related. So in case of deterioration of the macro scenario, as a matter of fact, we can use those. Second point is default rate. If you look at the default rate in Q1, the default rate of the group was 0.7. So it was below and we are at 1 or below 1 in all the countries. So in Italy, Germany, Central Europe and Eastern Europe. Third point is expected loss, i.e., the quality of the portfolio that we are originating the expected loss of the new business at group level is 27 basis points. That is absolutely in line with the expected off of last year. And also on the stock, there is no deterioration. So the combination of this effect is allowing us to be confident that we will achieve a cost of risk in 2022 in the target range of the plan, so 30, 35.

The next question is from Delphine Lee with JP Morgan.

I just -- my 2 questions. First, on capital and then second one on Russia. On Russia to check, the reduction in the net cross-border exposures that we have seen. Is that mainly related to trade finance and short-term transactions? Just wanted to understand how you managed that €1.3 billion reduction? And also checking sort of the intra-group exposure, is that for the subsidiary? Because you mentioned no further commitments on capital, but you would support in terms of financing with additional intra-group, if necessary. And so on capital -- so my second question is, just trying to understand really the process for the remaining €1 billion, which is depending on Russia. Sorry for the background noise. It’s just because you already had 13.6%, so that’s well above your 12.5%, 13% range. So just under -- just trying to understand what should we expect? I mean because you said 13% as your minimum. So does it need to stay well above 13% for you to stop at $1 billion, if you could just elaborate leading on the process on the remaining $1 billion.

Okay. I’ll start and then Stefano will certainly correct me. So on the cross-border reduction, what we have done in these 2 months is a number -- pull a number of levers. The first thing that we’ve done is strictly within the sanctioned framework. We have swapped position with mostly Russian counterparts that are not sanctioned. So they may have a loan towards a European company. We have a loan towards a Russian company. We swapped at nominal value. So we’ve been able to reduce exposure for both sites without any economic impact. That’s 1 lever. The second lever that we have had is going to all of the clients that had letter of credit in flight for us and other type of short-term support, and review with them whether really they were going to continue to need those letter of credit due to the fact that the business in Russia is terminated. And in many cases, we have been able to disengage from a number of those exposures. The other way -- the other areas that we have looked at is on derivatives where we have unwound our positions, mostly with third-party banks, the position that we have done that at minimal cost because we were on par. The remaining part of the position is, I think, all intra-group, and that means with our subsidiary in Russia. Let’s be clear on the derivative -- and the assumption, and I’ll put it in management term probably. The derivative exposure jumped to 0 that we have is mostly linked to the ruble versus the dollar and the euro. Once that exchange rate changes, there is margining from our local bank. So for us to lose money on those derivative position, we need 2 things. One -- but the ruble vastly depreciates against the dollar and the euro. And in that process, that our local bank does not post margin. On the first point, as I have indicated, personally, I believe that now the ruble is mostly a managed currency locally. You’ve seen the strengths of the currency, which actually has costed us our hedges. And I do not see scenarios where it is in the best interest of Russia to let the ruble depreciate very substantially. And given that it is managed, we have taken a more positive view but our maximum risk loss. But even if it was going to be devalued, we would need for the local subsidiary not to pay us or not to margin, something that they have done partially until now. With respect to the Russian -- to the local exposure, you have seen we’ve taken €600 million, what remains, and Stefano is going to take you more through that. But obviously, about €600 million do not benefit from the release of RWAs that we would have if we were to exit or otherwise lose the subsidiary. So the remaining equity that is there would be -- the loss of the remaining equity that is there would be compensated by the deconsolidation of the RWAs that we have locally, which is why you see the numbers that you see on the table.

Yes. In relation to the local subsidiary sales sufficiency, the subsidiary is self-sufficient from a capital standpoint, so the local capital ratio is around 15%, and independent from a funding standpoint. We are a net borrower, so no support, neither from a capital and liquidity standpoint. In relation to the further €1 billion buyback, that is connected to the overall performance of Russia that we will evaluate during the course of the next weeks, and compliant with the target common equity ratio that we have reiterated would be between 12.5% and 13%, and based on the slowdown scenario, expecting to be in the upper end of the range at year-end, so around 13%.

I would maybe make one comment on that. As you know, cash dividends and share buyback did not go through the same process. Cash dividends as long as you have appropriate capital levels and net income are in "quite" freely payable. Share buyback require an approval from the supervisor that reviews your capital plans over a 3-year period, your profitability over a 3-year period, et cetera, et cetera. So the bar is different. As such, while we are absolutely confident that our CET1 will remain well above 13%. Well, we have reviewed all the scenarios and the shocks that were possible. And we believe that we will show that further in Q2. Obviously, we need to go through a process that evaluates -- that not only evaluates what has happened in 2021, but takes into consideration what is happening today. So I take it as a positive that we have been already authorized to execute the first €1.6 billion as of today. I remind everybody that €1.6 billion on the current market cap is a much larger percentage of shares that are going to be reacquired vis-à-vis what they were in December when we announced the plan, and that there is a minimum time to be able to reacquire the shares. So in a way, even if we were approved for the entire amount, we would not be able to execute it for quite some time because we cannot intervene in the market for more than a certain percentage. So from a management standpoint, we’re comfortable with the distribution under the conditions that we have highlighted. But we are duly respectful of the processes of our supervisor and therefore, you hear from us what you’re hearing.

Next question is from Hugo Cruz with KBW.

So following a bit on that, when do you expect to have enough clarity on Russia to confirm the second tranche of the buyback. But also I think your pro forma CET1 ratio that you show in the slide for 2022, that includes the buyback out of 2022 earnings as well. So when do you expect you could have clarity there as well? And my second question is really around rate sensitivity. The guidance you gave is very appreciated. I was just wondering you gave guidance up to ECB rate of 50 basis points positive. And if we go above that level and the market expectations are to go above that. What level do you think ECB rates will stop being a positive for the NII? And when do you think it starts to have a negative impact on fee growth and the cost of risk?

Thank you. I’ll take again, Russia. So I believe that Q2 will be important for all of us in terms of articulating where we are on Russia. I mean I’m sure you have noticed the speed of change in terms of sanction and waves of sanctions. I guess we have reached a point where if the current speed continues, we will have much more clarity of what the end game scenario is, call it this way during Q2. And I think that’s an important checkpoint for all of us and for any prudent management of the business. We strongly believe at least in the management team, that while the last billion of buyback is related to 2021 and not to 2022. And had it been a dividend, it would have already been paid. It is prudent and correct to observe what the situation is before jumping. And therefore, we are aligned, in my opinion, with the -- our supervisor in evaluating what happens this quarter. That said, we have said very clearly that in the extreme loss scenario, the cost to our capital would be 128 basis points. We’ve taken 92 in this first quarter. So if we even went to the extreme loss scenario at the end of Q2, which we consider highly unlikely, the impact on capital would be a further 36 basis points. We start from 14. We have capital generation coming in Q2. Hence, you understand our comfort or confidence in our ability to prudently distribute or execute the additional €1 billion. So that’s on the Russian share buyback. You want to take rates?

Yes. So thank you. So Hugo, on rates, with an assumption of plus 50, we’re expecting to have a positive impact on net interest income in ‘23 of plus €700 million. One important element this is already including the effect, not only from TLTRO, but also excess liquidity fee. Because as a matter of fact, with an increased level of the rates, as a matter of fact, we will have an impact on the excess liquidity fee. Currently, the excess liquidity fee contribution from this quarter has been around €100 million. If you look the forward rate and if you look only on the forward rate, the NII impact will be meaningfully above €1 billion in our case in 2023. With regard to the effect on other top line, as a matter of fact, we think that the different in terms client ever can start from 50 -- plus 50 basis points. Still, however, with only a portion of the deposits that will reprice. So we will, however, remaining positive rate-sensitive, also with rates above 50. With rates above 50, it’s not sufficient in order to have negative effect, neither on loans nor on LLP. So what we are expecting is a level both in ‘22 and ‘23 of rates that should not create impact either on the top line or on the cost of risk. For the top line, as we were commenting also during the presentation, there is a natural hedge because in case we have less loans, we do have also less risk-weighted assets.

Next question is from Giovanni Razzoli with Deutsche Bank.

Just a follow-up clarification on Slide #3, regarding the impact of Russia. So basically, you are very effective into reducing the cost of the extreme scenario of flash 128 basis points and you do expect some additional costs in the second quarter. My question is to what extent you are in the condition by a managerial action to reduce even more this 128 basis points in the next quarter? And is it mostly related to the further action on the cross-border exposure? Or is there something else?

Okay. So 2 things. The first thing, to be clear, and I think we may have led the misunderstanding. The -- I would separate the exposure from the loss. So the exposure is the net reduction of €400 million from the €7.4 billion to €7 billion, okay? And that’s one thing. The second thing is the extreme loss of the base-case scenario loss, but we expect on those exposure. So on those exposure, at the moment, the extreme loss that we expect is 128 basis points. Obviously, we do not expect to be at the extreme loss because otherwise, we would have provision even further during the quarter. So starting from the 128 basis points over €5.3 billion that are the results of the following, assuming complete loss or exit or nationalization or whatever on the local subsidiary, plus a 40% loss on our derivatives that I explained are linked to the ruble and the margin, what we think is extreme, plus a 60% loss on our remaining cross-border loans, which are mostly absolutely top-tier, high-quality sector that the European Union and actually the Western world has not sanctioned for a reason. Therefore, it’s quite a significantly conservative assumption to think we’re going to lose 60% of those. We could. If Russia was completely rolled off. So starting from both, you have your 128 basis points. Now can we reduce further to 128 basis points? There are a number of actions that we have to ask. Number one, obviously, if the outcome of the local subsidiary is better than a, let’s say, exit at 0, that reduced the environment. Secondly, if our derivatives continued unwinding is better than taking a 40% loss because the ruble actually is rather stable or the margin continues, and that is better. And with the passing of time, you’re going to see that unwind. Thirdly, on the cross-border, and on the letter of credit, we will continue to do what we have done, swaps, renegotiation with clients and things like that. When we are able to do them, they’re very efficient from an economic standpoint because both party exchange, there is no what loss do you take to buy it for cash. It’s an exchange, or it is business that we no longer do and therefore, the clients, exits it. and we will continue. But I want to warn you, which is why we have been cautious. Every time the sanction tightened, the window shrinks. And every time the sanction have tightened, there have been a number of opportunities, but the team has spent day and night trying to execute but in 2 cases, we lost 2 major possibilities to reduce our exposure much further than that. Because 24 hours or 48 hours before we were ready to execute, new sanction were executed and the windows closed. And therefore, we need to start all over again. Obviously, given the level where the sanctions are today, the window has become quite small. So the opportunity to continue and optimize at 0 cost, as we have done so far is less and less for the time being. So this is a little bit the general how we have approached the exposure, how we will continue to approach the exposure, and why I do believe that Q2 is quite important. Because by the end of Q2 with the direction of travel, and the speed at which the geopolitics are changing, I do believe that we will have full clarity on where we stand by the end of the quarter. There was another -- no that was it.

The next question is from Andrea Filtri with Mediobanca.

Clarification. Firstly, on Russia, it seems like the jump from the 200 basis points maximum loss estimated first in your press release to 128 today. There are also a number of factors, but largely from the 40% recovery rate assumption in Russian corresponding exposure. If you could explain what has changed in your assumptions vis-à-vis your first press release? And how should we take in your view, the partial approval by the ECB of the buyback. It’s true that it’s certainly a positive, the €1.6 billion is being validated. But even if you were to have gone ahead with the entire buyback, you would have still been at your CET1 target range. So is it that ECB does not validate the recovery assumption that we want to have more clarity? That’s the first question. The second one is when should we expect the capital release from the asset deleverage from the UniCredit Unlocked plan? And just finally on the one-off. So this is just a follow-up on the other question, before Stefano mentioned about upfront fees in the quarter, if there are any evident one-offs that we should be aware of in this quarter?

Okay. I’ll take the first one. So then, I think most probably, we were -- although I thought we had been, but we were not clear when we put out our press release. When we put out our press release, we said clearly, this is our exposure we didn’t say this is our loss. Actually, there is a paragraph that starts "This is not our scenario. This was just providing clarity with our exposure." I understand that other banks have come out directly with their expected loss. We never did because we didn’t think we had enough elements to assess it. So I would compare the €7.4 billion of exposure to the €7 billion. That’s the first thing. So it went down €400 million to €1 billion net [indiscernible]. But then in terms of loss or expected loss, we went granularly through everything. In an extreme scenario -- again, our working scenario and base scenario internally is not the extreme scene. We’re just giving you our extreme scenario. So our extreme scenario goes through, as we said, one, that "the worst that can happen because we have also been very clear that we will not support a local subsidiary with equity or cash." Our extreme scenario will inevitably resolve in either nationalization, intervention, exit at 0. This is the worst case. So we continue to believe that, that is an exposure. It is also the worst case that can happen. In the case of derivatives, where you see, if I remember correctly, top of my mind, the €900 million, €100 million and we go to €400 million. Why do we reduce? Because the €1 billion assume that the ruble goes to 0 value. That’s why in my opinion, but I leave you to yours, is not realistic. The worst-case scenario assumes that the ruble is well into the 160, 170 against the dollar, and that there is no margin from our local subsidiary. The €100 million, i.e., what we took in Q1 assumes that the rubles moves around the 70, 80, 90, and that we have, and we continue to have margin, and we have put a buffer for certainty -- for conservatism. So these are the differences between the 3. When you arrive to cross-border what has changed, in general? So what has changed is, number one, that the numbers we started from has been reduced through swaps and cancellation of contracts on letter of credit and other things of the like. And it has been reduced, thankfully without having to leave money on the table. Now you have what remains. What remains has concentrated because we have been able to reduce the worst exposures, worse means not necessarily worse from a credit standpoint, but companies that either were sanctioned or were going to be sanctioned or that could have interrupted their international payments with limited disruption to Russia. What we have kept is, as I have said, is a company that instead provide commodities to not be more specific, but I can think of 2. That we consider highest quality, not only because of the quality of the company, but because the Western world is still very dependent from their provision of commodities, and therefore, the probability that they get sanctioned is more remote and therefore, the probability that they don’t pay is even more remote. Let’s remember that a lot of the payments are going to occur or not, not because these companies are not able to pay, but because the company are getting sanctioned. It’s a political impact. It is not an economic or credit impact. And I think the interesting thing in my opinion is, but differently from previous prices, you’re seeing, at least for now, a greater risk on the cross-border, so on the Eurobonds, et cetera, et cetera, than you’re seeing locally. And that is a result of the fact that the crisis is not economic -- or is not yet economic, is political. So locally, "continues" as they wanted to continue. Cross-border, it’s affected by the sanction and the politics between the countries. So that’s why I think the scenario is different from what has been in other crisis of other countries that have run in credit difficulty as opposed to a war which is very different. So I think this is the change between the 2. The second part, I’ll let you...

Yes. So in relation to overall capital generation action in the plan if you remember, were around €30 billion, more or less €10 billion each disposal, securitization and then specifically, portfolio management action committed with reduction in a negative client, improvement of collateral and so on. But it’s more skewed towards ‘22 and ‘23. As a matter of fact, a portion of that was already taken in ‘21, i.e., in ‘22 full year, we’re expecting more than €10 billion, with main part of the execution commented to requisition and disposal to be done starting from Q2, but especially in the second part of the year. In relation to the fees, you are referring to one-offs. As a matter of fact, we had some one-offs in fourth quarter ‘21. So if you look for the quarter, I think that we had between €20 million and €30 million performances in general, €10 million in Austria and then around €20 million in Italy, while in this quarter, we are having in terms of assets under management around €690 million, there are not relevant one-offs to be allotted.

So sorry, Andrea, I said the ECB, about one thing. So we have not asked ECB for €2.6 billion. We have asked ECB for €1.6 billion, what we asked we got. So actually, I would read it a little bit differently. I would read it that in the middle of the crisis, in May, with full knowledge of what is happening, ECB has supported our request for a share buyback of €1.6 billion. All the other distribution that are not share buyback, do not have to go through that due diligence. With respect to the additional €1 billion, why did we not ask it? Number one, because it’s prudent, and we run this bank prudently. Number two, because effectively, it can be executed for 3 months or more because we need to buy back €1.6 billion out of a market cap that is not much higher. And if you now try to buy that day-to-day, keeping -- not affecting the stock, it takes time to be executed. So it [indiscernible] to converged. And so thirdly, you have heard me. I am confident that we will get the €1 billion because of the numbers, but you correctly pointed to.

Next question is from Britta Schmidt with Autonomous Research.

Just 2 quick follow-ups from me. I think you mentioned that net interest income is expected to autumn in Italy, and then grow. Could you also give us an indication for the expectation around Germany? And then maybe you can give us a little bit more color on the cost levers that they are to go. Are you talking about potentially delaying some of the investments? And which ones are those that do not impact the digital strategy?

So on the cost lever, very simply. We had -- we highlighted in UniCredit Unlocked that we had €1.5 billion to take, and we also said we would take €1 billion and reinvest. We also said that we would reinvest in a number of things. Our technology, more investment in the front line in terms of more advisory, in insurance or asset management for Italy or for Germany and so on and so forth. It is obvious -- but if the front line is not there because the economic conditions are not there, we’re not going to go full throttle on hiring people to advise and sell. And in the commercial front line as much as we had before, we’re going to delay that to when the business picks back up. And what we have been doing because of this environment has been 2. Front load the cost that we can front-load as much as we can, and we will try to continue to do that while for the time being, not renouncing to the investments that we want to make to strengthen our franchise. If things become -- in a slowdown scenario, we will continue to do that. If things go in deep recession and severe, obviously, we will pull back, and we will pull back quite significantly. I remind you all that those cost reduction are fully provisioned already against our capital at the end of 2021. So they are there, and we just need to crystallize them. If not, we have a reversal of provisions.

In relation to net interest income, Italy and Germany will have, in a way, similar dynamic. So the net interest income of Italy in the quarter was down, but in reality, mainly for noncommercial items. So if you look to the commercial items, from Italy there is a stable net interest income. The situation would be similar during the course of the next quarters, i.e., with NII in line with Q1. We’re stabilizing rates because as a matter of fact, the overall client rate is stabilizing, and the same in Germany. So why we have already higher client rates in Central Europe and in Eastern Europe, both in Italy and in Germany we’re stabilizing. So it will be fundamentally [indiscernible] from 2 phenomenon. One is volumes. And the second one that I was highlighting before, we might have also some upside potentially driving from the dynamic of the rates, and mainly in relation to dynamics of Euribor.

The next question is from Domenico Santoro with HSBC.

Can we just come back on Page 3 of the presentation, it is absolutely very clear. I mean the difference between the loss and exposure and your assumptions, they look very reasonable. I’m just talking hypothetically. I understand the hypothesis regarding recoverability. I just want to understand in terms of derivatives exposure, what could be in a sort of hypothetical scenario in case there is a total depreciation of ruble, the maximum losses here is still €1 billion or €900 million now that you have taken a €100 million provision or as reduced. It’s just to have for sake of clarity, the total maximum losses regardless of any consideration or assumption. And the other question is about the 44 basis points capital generation for the rest of the year. My understanding is that you’re going to upfront the 50 basis points regulatory headwind that you have assumed in the plan. Is this including already any negative from procyclicality on the non-Russian business on risk-weighted that we probably are going to see for the next part of the year, and whether this includes also the risk of the asset optimization that the CFO was just mentioning before?

So in relation to derivatives, maximum capital impact connected to the maximum exposure is €1 billion, currently what we are showing in the presentation. That’s the maximum. But it’s taking into consideration now posting of the collateral from the counterparty, and ruble fundamentally valuing nothing. So if 1 of the 2 conditions is realizing, there is not that impact, for example, if the counterparty keep on posting collateral like we have now, there is no risk. So coherently with what we have been communicating in the slide in relation to first quarter ‘22. In relation to the regulatory headwinds. So yes, you are right. So the regulatory headwinds around 50 basis points are fundamentally -- the vast majority of the fact that we will have during the horizon of the plan, ‘22, ‘24 are not including any capital generation actions because are only regulatory headwinds. So when you look to the dynamic of the year, on one end, we have regulatory headwinds. For example, this quarter, we had 6 basis point regulatory headwinds, 44 basis points organic capital generation. The same would be for the year. So for the year, we are expected to be in line with 150 basis points organic capital generation and a 50 basis point regulatory headwinds. The regulatory headwinds are also including the procyclicality component in line with the base-case slowdown scenario that we have communicated, and based on which we have also communicated the expected dynamic of the capital ratio.

Next question is from Benjie Creelan-Sandford with Jefferies. Benjie Creelan-Sandford: You largely dealt with my question in the previous answer, but just to be absolutely clear, because we’re just looking at Slide 5, and the capital walk through the rest of the year. Just trying to reconcile what that means for RWAs and profitability. I guess based on what you said about the RWA optimization expected in the second half of the year, is the expectation that RWAs trend down from here? Or is that optimization going to be offset with underlying growth or other impacts. And then on the profit side, just wanted to clarify, is the base-case slowdown scenario is that that’s included in the capital work, is that now also the basis on which you have the €3.3 billion profit target for the year, i.e. the reiterated profit target ex Russia is now based on your new slowdown scenario?

Yes. Thank you, Benjie. So with risk-weighted asset. We are expecting to have a dynamic of the risk-weighted asset more or less in line with the one-off this quarter, i.e., when we look at the group excluding Russia, as a matter of fact, we have been able to put in place portfolio management action in order to more than offset regulatory headwinds and the business dynamic. So we are fundamentally expecting for the remaining part of the year, a similar dynamic. Then can be a little bit more of the action that we can put in place in compare with the dynamic of regulatory headwinds and business-related risk-weighted asset. But all in all, this is what we are expecting. It’s confirmed -- i.e., we are confirming that excluding all the contribution of Russia also from second quarter to fourth quarter, we are confirming that we will have a net profit above €3.3 billion. And the €3.3 billion, as per definition, that were discussed in the plan is also taking consideration the coupon of the additional Tier 1 and the CASHES, i.e., the stated profit would be higher than that. This is the 1 coherent with the definition that we have communicated at Investor Day.

The next question is from Andrea Vercellone with BNP Exane.

I’ve got 3 questions actually, but they’re all in the same topic, which is the buyback. And 2 are just technical thing. So your AGM has approved €2.6 billion. There’s, however, a cap to 10% of maximum share capital being treasury shares, and then canceled. I’m just wondering whether you now have 2 separate caps, i.e., you could execute the first, cancel them and then you restart from 0, or the 10%, it’s still combined for the €1.6 billion plus the possible €1 billion second branch of the buyback. The other clarification, if you can remind us whether the authorization to purchase the shares runs until year-end, or the date of the 2022 AGM, i.e., you could still launch the second tranche, and you will still have a few more months to complete it? And the third one is still relative to the buyback. You -- sorry, the second tranche of the buyback in this case, you are telling us that Q2 is very important to almost draw the line on Russia, i.e. you will have a much better visibility in Q2 than you have now. And you’re saying that there will be probably slower adjustment after that. You are also telling us that out of your extreme loss assessment, the Russian loss is 128 basis points of capital, of which only 35, 36 outstanding. You’re telling us you are going to generate capital also for the remainder of the year. It takes a bit of time for the ECB to approve a second tranche. So I’m just wondering whether you will draw the line on whether you will ask authorization to complete the second tranche or not at the Q2 results.

So I will start. So the AGM approval was related to maximum amount, so €2.6 billion and the maximum number of shares coherent with the percentage limit that you have mentioned. So as a matter of fact, we need to be in line with both of them, i.e. it would be important to understand which will be the number of shares that we will purchase, and that will be dependent also on the dynamic of the stock. In case then there is no sufficient amount of buffer we need to go to convening another AGM. So if we’re buying at this level of the stock, taking in consideration the amount of share that we will buy in order to execute the further €1 billion for a portion, we are able to do that. For another portion, we need to call another AGM in order to get the authorization. The authorization is giving us sufficient time in order to execute the full amount of €2.6 billion also beside the deadline of 2022. Process-wise, as a matter of fact, with ECB, the process will start in the moment when we will fill the authorization. So depending on the moment when we have sufficient availability during the next months in relation overall evolution of Russia, then from that moment on, we’ll be able, we think, in a sufficiently reasonable time, to get the response in relation to the related authorization. So as highlighted by Andrea, we need to, however, take into consideration that it will take a while or some months to execute the first tranche of the buyback, i.e., we have sufficient time in order then to take into consideration also the result that will include also the evolution of Russia of Q2.

The next question is from Christian Carrese with Intermonte.

Two quick questions. The first one on financial portfolio and the interest rates. Are you willing to increase your financial portfolio to support net interest income? And if you can give us an update on the sensitivity on the capital from BTP bond spread? And the second one on trading, do you think that the level we saw in the first quarter is sustainable? Or there are some exceptional items? So the client-driven trading, what is the amount that we can plan for the following quarters?

So the financial portfolio is currently €144 billion, so it’s stable. The Italian govies portfolio slightly reduced. So it’s currently around €41 million. The duration is below 4. We have around 55% of the position in the Italian govies held to collect. So with no volatility to the capital for having 10 basis points of widening the impact to capital is below 3 basis points. So it’s more around 2.5 basis points. The other point was...

Trade income. Financial portfolio, if you want to increase also, I don’t know your strategy on the financial portfolio with -- is going up.

No, we are currently -- I mean, rates is not real the point because as a matter of fact, we are swapping the investment portfolio. So it’s more a matter of credit dynamic, if you want. We are currently expected to remain with a stable -- substantially stable amount of Italian govies that was ranging between 40 and 45. Please consider that we have rolled over. So taking consideration the rollover that we will have -- in the next couple of years, we can, however, benefit from the rollover from higher spreads. In relation to the trading, this quarter, we have a gain from the management of the investment portfolio around €190 million. So as a matter of fact, and the contribution of the trend driven was €388 million, so was really strong. As I was commenting before, the trading was already normalizing in March, and normalized in April. So while we’re expecting a good contribution from the client-driven, as a matter of fact, we think the dynamic would be more normalized in comparison with Q1.

The next question is from Andrea Lisi with Equita.

Just one, it is about your risk appetite on lending. If you can provide us an indication on how has it changed? Or is it expected to change in the current environment?

Okay. So on the risk appetite on lending, I mean it’s not really changed, i.e., we kept the same risk parameter and we are keeping the same risk parameter. There is an important point to take into consideration that we have already taken into consideration is the monitoring on the stock and especially on the new business on the most impacted sector, I mean, not only by COVID but the current evolution of the Russian-Ukraine crisis. So this is the main, if you want point of attention in relation to the lending. But the key priorities of the lending dynamic and credit policy in the plan are remaining the same, including, for example, the consumer financing dynamics. So -- and also the market shares that we have shown recently during the course of 2022, is confirming that, in Italy, for example, we are just above 12% market share in new production in consumer financing.

The next question is from Patrick Lee with Santander.

A couple of questions from me. Firstly, on your rate sensitivity disclosure today, that the 50 basis points and €0.7 billion benefit. Can you just give some general color in terms of how the benefit squeeze in your main geographies? And should I assume that most of the benefit will be coming from Italy or limited in Germany and more of a Central Europe and Eastern Europe? And then secondly, a more general question on Russia. I know it has been kind of exhausted now. But in terms of the different possible strategy that you can take there, we get reasonable interest in the subsequent call-outs of Russia earlier this year. But that actually affect your ability to negotiate a potential exit or positively or negatively? And are there any ongoing conversations with the local regulator and Russian bank who pays and has ever been effectively stopped?

So maybe I’ll take Russia. So first of all, we -- I said that to one of your colleagues, we strongly believe in executing first and talking less. I think if you look at all the signaling that has happened around Russia, there is a long list of signaling of call-outs and plans, try to see how much of that signaling has been executed. So I think that the important point is what is the substance. And we continue to work on the substance. And I think that through the presentation, it is pretty clear our direction of trial. The rest, we hope to be able to discuss with you an actual outcome when we have it.

In relation to the net interest and sensitivity, is skewed towards Western Europe country, more specifically, Italy. So Italy is representing 2/3 of -- so more than 60% of the overall net interest income sensitivity. In Central Europe and Eastern Europe, the 2 countries were -- I mean we are showing with the IR sensitivity are Czech Republic and Hungary for both of them, every 10 basis points is €2 million more of net interest income.

Mr. Orcel, there are no more questions registered at this time. The floor is back to you for any closing remarks.

So thank you very much for your time. Maybe my only closing remark is, while I understand that Russia is extremely topical, please don’t let it overshadow the performance from the franchise, which is actually well in excess to what we had set in UniCredit Unlocked from the get-go. And please take the time in looking at that as well. Thank you very much, everybody.