Welcome, thank you for joining the ING first quarter 2021 media call. I'm happy to give the floor to CEO of ING, Steven van Rijswijk. Please go ahead, sir. Thank you very much, operator, and welcome, and thank you all for joining us on the call. Here in the room with me are Tanate Phutrakul, our CFO, and Ljiljana Čortan, our CRO. We will give you update of developments and our results for the first quarter of 2021. In the first quarter, our customers and colleagues were still affected by the COVID-19 pandemic and the continued lockdowns. Luckily, we see vaccination programs picking up speed. If you look at customer behavior, we saw continued inflow of savings and deposits, some EUR 8 billion this quarter, as customers are still reluctant to spend and are limited to do so because of the ongoing lockdowns. At the same time, in the low interest rate environments, many customers have turned to investing as an alternative for saving, which first resulted in growth in investment products, particularly in Germany and in Belgium. To give you some color on that, over the whole of 2020, we saw an increase of about 700,000 investment accounts. In the first quarter of this year, we saw already a growth of 250,000 accounts. That's growing rapidly. On the lending side, we also saw growth as we were able to apply the ECB TLTRO funding to support the economy, and this resulted in a net growth of our core lending of EUR 17.8 billion. The pricing benefit we got from the TLTRO program helped keep our interest income this quarter, offsetting the continuing margin pressure in the ultra-low rate environments. In this quarter, we also continued to adapt our business to better serve customers and to ensure that we're focusing on the best growth opportunities for the future. 90%, 90% of interactions of retail customers with us are now through their mobile, and 43% of our customers only deal with us through that mobile. Both numbers are still growing. In response to this rise in the used digital channels, we announced a further change in our Dutch retail organization, reducing the number of branches which will be converted to the ING House format and increasing the number of digital service points. We also announced that we'll discontinue retail banking activities in Austria and the Czech Republic in order to focus on markets where we can achieve better scale and profitability. We announced similar measures for a number of wholesale banking countries in November. Financially, our performance in the quarter was strong. As said, our interest income was up on the previous quarter, supported by the benefits from TLTRO. Fee income showed a robust growth of 9% year-on-year, especially in investment products. Our expenses remained under control, but included some incidental costs due to the restructurings that I just described, and risk costs, they were at a low level as the macroeconomic models triggered release of provisions which were offset by management overlay to reflect the delayed credit losses that we expected due to the pandemic. Overall, this led to a pre-tax result of almost EUR 1.5 billion and a net result of just over EUR 1 billion, with a capital ratio remaining at a strong 15.5%. With that, we are happy to take your questions now. Ladies and gentlemen, if you would like to ask a question, please press star one. For questions, star one. Go ahead, please. First question is from Eva Royes, Financieele Dagblad. Go ahead, please. Good morning. I have some questions about the spurt in loan growth in February and March, especially in the Netherlands. Can you give some more detail on what went on there? How did you close those deals? How scared was the competition, and what kind of companies did those deals with, and what was the effect on margin pressure in those months? Right. Thank you, Eva. The loan growth came predominantly from larger clients, both in the Netherlands but also in countries like Germany and France and elsewhere in Europe. That was at least the TLTRO-eligible loan growth. Most of that was with what we call investment-grade companies, so triple B or higher. 90% of the loan growth came from these type of companies. Yeah, we typically price these loans that in line with the credit standing of these companies, and that's what we also did now. Clearly, when 2020 ended and 2021 started, increasingly companies are looking at making investments again. Given the fact that we have been in touch with them already since the start of the crisis, that's also helped them and helped us, to actually discuss potential financing for them in the wake of potential future investments, and that's what we were able to do. You actively approach them to see if they're interested in taking those loans. Yeah. Typically, we always contact our clients, or we work with our clients to see what their needs are. We make presentations to them to see what their capital needs are, given their investment plans. Sometimes clients contact us when there is a particular investment need, so it comes from both sides. Okay. Can you say a little bit more about how did you experience the competition, because you had to meet the TLTRO thresholds to qualify the benefit. Other banks had the same issue. I assume that it was really busy on the market for financing those companies in the last month. I don't know about that. To be honest, I haven't really looked at what other banks exactly did in terms of their financing. We have a very large franchise, and that also means that we have a lot of client contacts. By the way, we had those client contacts already on a weekly basis since March 2020 when the Corona pandemic started, also to see how our clients were doing and how we could help them. We are in regular contact with them already on a weekly or biweekly basis. I'm sure that especially with large companies, they're also in conversations with other banks, but that's something that you would need to ask the other banks how they felt. Right. Last question on this topic. Sorry, Eva, can you speak up a little bit? You're a bit faint. Okay. Sorry. Last question on this topic. Because you said it's mostly large companies, can you say something about the sectors where you see demand picking up? That was very broad. I cannot point at a particular sector in which we extended those loans. Outside of TLTRO, if you look at the broader business side and the larger companies, then we got more loan growth in Asia and the Americas because already their production volumes increased. In China, for example, it picked up already in the first quarter of 2020. In the U.S., you see also an increase in GDP as of earlier this year, also with the Biden administration coming in and the support that they give. If you look at TLTRO, I cannot point at a particular sector in which that happens. Okay. Thank you very much. Thank you, Eva. Next question is from Ruben Eg from De Telegraaf. Go ahead, please. Hello, good morning. I'm glad I wasn't the first one asking a question today. Well, we were expecting you, Ruben. Yeah. I lost the bet. Expect the unexpected, Steven. My question was about growth in investment products. You said it's mostly Germany and Belgium. Could you say if that is specifically because of the low interest rate that people with saving accounts started to invest? Can you also shed some light about the situation in the Netherlands? Do you see that movement as well? Thank you. Clearly, it will likely be the case that more people start to invest with the low interest rate environment. I think it's good that people build up a buffer. They can do that through savings. People also look at the returns that they're making, so that means that they may also well look at investments. For us, I think that we did develop our offerings gradually over the years. We come from an environment whereby we have in a number of markets, we had a limited number of products, and we increased them over time, including an investment app that we launched also in Germany last year. That then we also rolled out in other markets, and that's helped in a digital manner for people also to make their investments through that app. In the Netherlands, what we at least see is that our retail clients, compared to other countries, are a bit less prone to make investments. Also here, we saw an increase in the number of investment accounts opened. Last year, we opened in the Netherlands 40,000 accounts. This year, the first quarter was 16,000. It is more benign than in a number of other countries in which we are active. Okay. Some other questions. If you look at the credit losses or the loan provisions, excuse me, you see, of course, it's less than it was a year ago. Only a negative loan provision in the Netherlands stood out at the consumer bank. Would you say that Dutch consumers are more or less okay at this moment? How is that in other countries? Can you say also something about the situation you see at the wholesale bank? I will pass that question on to Ljiljana, if that's okay. Mm-hmm. That's okay. Good morning. Good morning. Yes, we have seen lower provisions in first quarter, as you notice. Yes, we see a quite confident situation as well in the Netherlands, as in the rest of the world. There were no significant individual cases, neither in wholesale banking nor collective provisionings in the Netherlands, so we feel confident about the quality of the portfolio. You have to take these provisions in advance. These are your expectations you see for the coming quarters? Based on IFRS, you take the provisions on realistic expectations. It is true that we have taken certain management overlays reflecting uncertainties that are still ahead of us. Okay. If you have confidence in the Netherlands and the rest of the world, the expectation is crisis would be over at the end of the summer? That's a very difficult question, and I think this is a crisis we haven't seen before, neither in the depth nor in the shape. We do expect that the second half of the year probably will bring some hiccups in some harder hit industry, but we do consider us being prepared to take those and in line with our guidance. Thank you so much. Thank you. Next question is from Mr. Koen Hagen from de Volkskrant. Go ahead, please. Good morning. Hello. I have two questions. The first is about TLTRO. My question is, would you say that ING lent more money to companies because of this cheap funding, or is it about the same because demand is independent of this, it's just cheaper funding? Sorry, did you have more questions or was this it, Koen? I can ask this other question right away also, but it's about the negative interest rates. I was wondering, what is your opinion about these proposals of, for example, the Consumentenbond, some politicians, to prohibit negative interest rates, and then they often point to Belgium as an example. That's the other question. On the first one, TLTRO, I think it's a mixed bag. On the one hand, it's an increase in investments that companies are starting to make. If you're a larger company, these amounts get big quite quick. Also it's a matter of at least cheaper funding costs, at least for part of our lending book based on the TLTRO benefit that we have been receiving from the ECB. It is a combination. Talking about negative interest rates. I think what we see is that interest rates are very low across the globe, and in Europe or the Eurozone, they are negative, and that does have an impact on the business model of banks such as ING. It also means that we take various actions to also lower the interest rates for the savers, and in some cases, we charge negative interest rates. In the end, every service requires a price. If a client is buying a vault or rents to put his or her money in, that also costs money. We also make costs for our clients to enable to get their money safely and securely. Now that's why we are having charged negative interest rates for savings or deposits over certain amounts in various countries. The cases are different for each country, depending on the market circumstances. In the Netherlands, currently there is a sort of a border at EUR 100,000. I think that the Minister of Finance said that he would find it unwanted, I believe, if the ordinary depositor or saver will be confronted with levying negative interest over the savings amounts. We do understand that, and we also understand that clients require a buffer for unexpected costs or expenses that clients would need to make. The question is, okay, what is an ordinary depositor or ordinary saver? If you look at figures from the CBS or also the Nibud, these point at average amounts that are below EUR 100,000. For us, and having said that, in the Netherlands, we have indicated and we have announced that as per the 1st of July, we charge negative interest rates over an amount of EUR 100,000. That actually means that close to 89% of our clients will not be touched by that. Mm-hmm. Thank you for this answer. The question about prohibiting this by law, because I am also asking this because ING is a dominant player in both the Netherlands and Belgium, so you have experiences with both ways, actually. In Belgium, by the way, that depends on the type of account, because also there we charge negative interest rates over EUR 250,000. It's not the case that it is prohibited overall. It is prohibited on specific particular accounts. Yeah. Look, like I said, I think that in the end, that goes for all type of businesses, not banks only, if you need to provide a service for a negative interest rate or a negative margin over the longer term, that's unsustainable. We clearly take in mind the buffers that people need to hold to save. The question is what a normal buffer should be. For now, we have said that we stick to the EUR 100,000. Yeah. Would you say that if, because you're telling that it just costs money for banks, so if they can't compensate that through negative interest rates, it would have to be compensated through, for example, fees for having a banking account? What we do see is that we as a bank are relatively dependent on interest rates. Over three quarters of our revenue comes from interest rate related products. It does mean that we need to diversify our business models to also provide other services for which we can ask for commissions beyond the interest rate products that we provide to our clients. That's what we're doing. We're broadening our service scope, and it has also led, in our case, to an increase in fees, amongst others, due to the increased amount of investment products. Thank you. Ladies and gentlemen, if there are any additional questions, please press star one. For additional questions, star one. Go ahead, please. Our next question is from Mr. Ruben Eg from De Telegraaf. Go ahead. Hello again. A follow-up question on the last. If you say that 89% of your customers in the Netherlands is being affected by the negative interest rates. You would say in what way does that 2% would help? Could you shed some light on that? Yes. This conversation has focused on our retail clients, so private individuals. We also do charge negative interest rates to our larger clients. For example, in wholesale banking, we have been doing that already for a longer period of time, and that's more substantive. Okay. In what way does that easens the pain, over the last period? It doesn't. No, it doesn't. That weighs on is too. We have a role to play, of course, with our clients, and that's why we're careful with our retail clients. We have over EUR 400 billion in deposits. The interest that we pay on that is approximately EUR 1.5 billion. The measures that we've taken in all countries, what we announced for our retail clients, would amount to EUR 200 million in this year. That's why you see pressure on the net interest income for banks all across the board. Okay. You take measures in cutting down costs, left some countries, with the retail bank, where growth is difficult. I saw an investment presentation on a slide, the amount of offices, which went from 383 in 2016 to 290 in 2020. Does that help? Do you expect that this is it for the coming years? In the way that digital banking grows and grows during lockdowns, you expect that, on a short amount of time, there will be more to do? I think that when you make a reference to the presentation, you point at the slide on Poland, where we did decrease over the past four years, our branches with approximately 25% to 289. That was in Poland. Okay. It was in Poland. Now in the Netherlands, I believe we go from 128 to 59, by July 2022. Yeah, in the end, it depends on the customer behavior. We do see a change in customer behavior that's, of course, also accelerated by COVID. If we look at the number of clients that use our mobile-only service, that was 40% end of last year, and now within one quarter has already grown to 43%. If you look at the total number of interactions the last year, end of year was 87, is now already 90. You see how quickly this goes, and that means that we are adjusting also our service to the needs of our clients. Therefore, you do see a reduction in branches, but we will always do that in line with the service levels and keep our service levels up for our clients. We also provide, that goes for this country, service points, as well as call opportunity or video chat opportunity, because we do see and continue to see there is sometimes a need for more personal interaction, and that's what we want to cater for. Two more questions, if I may. I heard you also say this morning that you're still looking at the return on equity to 10%-12%. Is it even possible if you see that the interest margin goes lower again? It's 1.64%, if I'm correct. It's 1.46%. Yeah. Yeah, look, there is pressure on the interest side. What's there, if you look at the levers that we can pull, that's on the revenue, on the cost, and on the capital side. On the revenue side, it means that, if we get back to more normal economic activity, that will also mean that across the board, that should help loan growth to come back. We've seen until 2019, we grew with 3%-4% loan growth on average during that period. I'm not making a forecast, but I can imagine that there is some pent-up demand. Demand that will catch up initially, but with growing GDP, we would also see loan growth coming back. That's the first lever that we pull. If you look at the Netherlands, the forecast for this year we have is that the GDP will grow with 3.2%. I know that the first quarter was still negative. For 2022 it's 2.9%. The second lever we pull is that, where possible and where reasonable, we will also charge negative interest rates. Of course, we are diversifying our business model, and that's what you see, especially in the fee income or the commission income, that grew with 9% year-over-year or 11% quarter-by-quarter. That's a trajectory 5%-10% this year of growth in fee income that we're comfortable with. The next lever is the cost. I think that we have developed quite a number of digital building blocks over the years that we can reuse. We will do that and increasingly do that in the next coming years. That should give a scale benefit. You see that with the One App rollout in the Netherlands and Belgium. It's now also being rolled out in Germany. It will be then thereafter be rolled out in other countries as well. That basically means that you do not need to develop that as a country or a business line yourself. That will in the end give the scale benefit that will also help our costs. In that sense, digitalization, and especially end-to-end digitalization, but also across countries, is important. The last one is our capital. Our capital currently stands at 15.5%. It wasn't quite sudden, although it went quite quick. It is 3% above the capital that we would like to hold, because we believe that 12.5% is sufficient. Now, you all are aware of the dividend restrictions that we are currently under. Based on the latest information of the ECB, those limitations will be lifted by September in this year. We remain hopeful that that will be the case, but it, of course, also depends on the economic recovery, which we fully understand. That is also then a means for us to gradually move towards the 12.5%, and it will also help in increasing our returns. We're still confident that we'll make that, but it will require a number of steps and it will require a couple of years. Okay. Final question. In the Netherlands, two of the three largest banks, there are investigations against former CEOs. How do you look at that, and do you still feel comfortable leading a large bank knowing this is a possibility for the future? Well, look, if I wasn't, I wouldn't be sitting here. One thing is clear, that if someone is under investigation or a suspect, whether justified or not, that is, of course, very sad for everybody involved. This is the case for everybody in such a situation, whether you're working in a bank or somewhere else. If you'd ask me about the case specifics, I have to be careful, because every case is different, and it's very hard to judge that from the outside. That's not for me to say. When I look at our attractiveness as an employer, I think that many factors play a role here, and I think that especially our digital nature, our purpose client-led environments that we have, our international demeanor that we have as a company, are very attractive for people to work with. If I look around me with a Thai CFO and a Croatian CRO, I think that proves the point. I think ING remains a very attractive employer for everybody, including myself. Okay. Thanks so much. Next question is from Eva Royes, Financieele Dagblad. Go ahead, please. Yes. I have one more question about the TLTRO theme. During the analyst presentation, you named some numbers, how much you expect to benefit the coming quarters, but I missed the exact numbers. I was hoping you can name those again. A question about the management overlay you took. I see a lot of banks doing that, and that makes me question, how sound is the current IFRS 9 system if banks have to keep taking these overlays? You don't want me to gang up against accountants, do you? Let me answer the first question, and then Ljiljana can answer the second question. The amount for the next five quarters will be approximately EUR 75 million per quarter. I have to be a bit more specific. Under this TLTRO III scheme, we have one more quarter to go. Because we met the milestone as per end of March, we basically now booked three quarters, i.e. from July last year until March this year, we now booked in one go. That is EUR 233 million. We'll book approximately EUR 75 million remaining in the second quarter of this year. There's a second phase of TLTRO. The second phase uses a different start and end points, and the start point will then be October 2020 until December 2021. There we have said that we take a different position now compared to what we did previously. Previously, we were less confident that we would make it. Where we currently stand, we are more confident that we will make it, and therefore, we will unlikely book it only at the end. We will more likely book it quarter by quarter, and that would then mean that for the next four quarters thereafter, so the third, the fourth, and then the first and the second in 2022, we would again book EUR 75 million in each quarter for the remaining four quarters. In short, next five quarters, EUR 75 million per quarter. Okay. The second question goes to Ljiljana. Good morning. On the management overlays, yes, correctly, everything we do is aligned and signed off with our auditors, clearly. The reasons why, in this case, management overlays are allowed, not just to us, but to the whole industry, is the fact that the models cannot recognize the happenings in this pandemic based on the fact that there is as well government support that hasn't been seen in the past. Actually, models are just not able realistically to accept what is the risk profile. In order to remain prudent, it is clearly under the supervision of the auditors agreed to take such overlays. Okay. One more question about that topic. There are specific models that you have to use to determine how high your provisions are. How much freedom do you have to decide how high the management overlay are going to be? How much freedom does a bank have? Clearly, it is all based on the argumented methodology, which takes into account observations and takes into account data that we have witnessed so far. It's the question of how do we show that what we think is going to be needed in the next quarters is really realistic on the data that we see. As I said, it's always discussed and aligned with the auditors. One more question for Steven. Would you say the pressure on NII is the thing that concerns you most as the CEO of the bank? Concerns me most, clearly it is a challenge for us and other financial institutions who are dependent for a large extent on interest income. We do see the interest being negative in Europe now in the short term and also in the long term. If you look at the interest rate curves, these remain negative for also the medium- term and the long-term rates. That is impacting the banks. That means that we need to adjust our business model to cater for that, so that indeed keeps me busy. Yeah, it keeps you busy. If I look at your numbers, they're actually quite strong. Still, the exchange of ING investors are not buying ING right now. I think it must be the NII that concerns them most. That's why I'm wondering if that's also the main topic, of course, there's a lot of topics you are concerned about, but that is a really big priority for you at the moment. The main topics in ING are, one, how do we continue to help our clients, and stay prudent in the way that we are dealing with our clients? That's the first topic. How do we deal with the COVID pandemic from a client's point of view, but also from an employee point of view? The second topic is how do we build our business model into a more sustainable business model? We do that by further diversifying, continuously look at where we best allocate our capital and I point to the decisions that we've taken in the Czech Republic and Austria. Further digitalization, because that helps both building better customer journeys, a better employee, so colleague experience, but also it will help our cost to serve and will also help us to be compliant by design. I call it the four Cs, colleagues, clients, cost- to- serve, and compliance. Then, how do we further extend our ESG profile, both from the way that we measure our own portfolios, but also how we help clients with that, because that is a big problem for societies at large. That transition, we're in the midst of, and we really want to be part of that. Okay. Thank you. Next question is from Koen Hagen from de Volkskrant. Go ahead, please. Thank you. I have one more question. Earlier this year, it was with Q4, you warned for a cliff effect when state support for companies would end. Do you think the risk of this, since then, decreased or increased? I don't know. Maybe if you look at businesses and even with the second lockdowns, you can see that although the lockdowns were stricter mid-December than in March of last year, with retail stores were forced to close down. The economic consequences so far were less profound. Why do I say that? Because there were a number of businesses that could adjust their business models. I just name restaurants who were switching to home deliveries, and they got also their distribution channels for online shopping better in order. This also in turn boosted investment in, for example, transport equipment for online consumer spending. Now, you saw consumers, they spent more online, so they bought more online, and that substituted service consumption for the purchase of goods. There's also a bit less uncertainty because the vaccine programs really are kicking in. They are making progress. That therefore means that you already see that there's higher investments being made than during the first lockdown. We do not only see that from our loans, but we also see that from manufacturing, because manufacturing is holding up quite well with stronger foreign demands than in the spring of 2020. As you know, Netherlands is a big world trade country, and that already rebounded. Service exports remain weak. Goods exports are strong and 5% higher than the pre-COVID-19 peak, and that's despite the Brexit results. There are some positive signs, and so that's what I want to mention. The flip side is that even though that we have now been for nine months in various lockdowns or in a subdued economic environment, we still do not see a big fallout in companies or clients that are defaulting, i.e., that are no longer being able to pay. That is, of course, has to do with all the measures that have been taken by the governments and as well as the payment holidays by the banks. What we really need to do is to look at what will happen after we get out of these lockdowns, after economic activity returns to normal, but also need to see what happens to these aid programs. There is a bit of a concern that if these aid programs suddenly stop, that would mean there is some catch-up costs that these companies need to make, because suddenly they need to pay taxes, suddenly they need to pay salaries, suddenly all the fiscal stimulus are then gone, while only gradually their revenues will recover. Then the question is, do these companies have enough working capital? Do they have enough buffer to sustain that sudden shift? That's why I advocate that these measures are only built down gradually rather than too abruptly. Okay, that's the big risk. That is a potential concern that could cause a cliff effect. Yeah. Where in time would you place that cliff effect with the knowledge we have now? Is it still in the end of the summer or autumn or maybe later? Look, what I would look at is when economic activity gets back to near normal levels that we expect in the course of the third quarter at this point. Then we would need to see, okay, what does it actually mean for the economic activity and the strength of these businesses? I think that's what we need to take into account when building these measures. Yes. Thank you. That's very clear. Thank you. Next question is from Mr. Patrick Luwel from De Tijd. Go ahead. Good morning, all. I've two small questions. One was about the negative interest rates. I was wondering, you were talking about increased fee income. I was wondering if that's also the case with the retail clients. You see, of course, the challenger banks who are charging EUR 8 a month for a bank account. Wouldn't that be a fairly easy solution to level out the negative interest rates? Yeah, we are charging for services that we provide to our clients. In the past where we came from is that we had a number of these challenger banks, only savings accounts. Well, I don't need to explain to you what revenue that we'll be making given the negative interest rate environments. It means that you need to charge the cost that you make in another way or shape so that we do indeed charge for our daily banking services, increasingly also in other countries. At the same time, we try to develop better services and other services to our clients. We are broadening the service to our clients, for which if there is a good service, we can charge for that. Sure. Okay. Another question I had, you said something about the One App strategy. Of course, the Project Maggie is stopped. You were now talking about starting out in Germany and rolling out in other countries. What's the difference between this project and the Maggie project? I think that what you saw in a Maggie project, is that in a number of those IT projects that we embarked upon, we tried to do too much, at the same time, also including integrating our back offices, and we call that our core banks, at least in retail, you call that core banks. Those are the elements that includes all the client and product information. That is something that takes many years and is very complicated from an IT point of view to do. When you're in a changing environment, such as we came in as a result of COVID, I've basically said I want to refocus on a shorter period of time with more execution certainty when integrating certain elements. We've stopped Maggie to step away from integrating the middle or the back end of our systems and focus more on step-by-step integration. Rolling out an app or rolling out a services journey and a service journey, you can look at that. If you look at your app, you say, okay, make a payment, that is a service journey. To develop that, and when we have developed it, roll it out gradually country by country by country. The cycles are shorter, but the execution certainty is higher with lower investment, and that is what I have chosen. Okay. Clear. Thank you. Ladies and gentlemen, if there are any additional questions, please press star one. Star one for questions. Go ahead, please. Sorry, it was one more question or no more question? No more questions. No questions. Okay. I misheard you. I'm sorry. Okay, let me then wrap up this call. The first quarter of 2021 showed a strong performance with a net profit of just over EUR 1 billion. The result was driven by higher interest income on the back of the TLTRO program, which offsets the ongoing margin pressure. At the same time, we saw robust growth of fee income of 9% year-on-year, driven by investment products. Lending, that grew with about EUR 18 billion increased [audio distortion] as we saw the effects of the pandemic continue. Risk costs remained low as the macroeconomic effects were offset by overlays for the expected delay in credit losses due to the pandemic. With that, we leave you for now. If you have any further questions, all of you know very well how to contact our media team, and otherwise, we will for sure speak soon, but at least in the next quarter. Thank you very much.