2021 conference call. Before handing this conference call over to Mark Milders, Head of Investor Relations, and Geert Wijnhoven, Group Treasurer, let me first say that today's comments may include forward-looking statements, such as statements regarding future developments in our business, expectations for our future financial performance, and any statement not involving a historical fact. Actual results may differ materially from those projected in any forward-looking statement. A discussion of factors that may cause actual results to differ from those in any forward-looking statement is contained in our public filings, including our most recent annual report on Form 20-F filed with the United States Securities and Exchange Commission, and our earnings press release is posted on our website today. Furthermore, nothing in today's comments constitutes an offer to sell or solicitation for an offer to buy any securities. Good afternoon, Mark and Geert. Over to you. Thank you, madam operator, and welcome all on the call. Thanks for joining us today on this semi-annual credit update call. My name is Geert Wijnhoven, and I'm here with Mark Milders, who you well know. As you know, the ECB press conference starts in 30 minutes, so we will try to keep this brief and make sure that you can also follow that important press conference on time. Right now, we will take you through the highlights of the Q4 results, our capital position and issuance plan for the running year, and then we have time for Q&A. You can clearly see our credit update slides that are available via download from our website. With that, I hand over now to Mark. Mark. Thanks, Geert. Hi, everyone. I'll keep it very brief for those of you who haven't followed our results presentation this morning. Just to highlight, quite pleased that we kept NII stable and strong through our income diversification, absorbing actually the negative rate drag that we have experienced for quite some years now. Fees were very good. We're nearing EUR 1 billion in fees per quarter. We had 925 for the Q4 with several things still in the pipeline, such as packages in the Netherlands, but also, if you look at some of the fees that are still a bit depressed because of the coronavirus situation, namely international travels or international payment transaction fees, as well as wholesale banking syndicated loan transactions are still at subdued levels, so we expect that to recover. Good outlook for growth for 2022. We already saw some strong growth in 2021, which of course did include some TLTRO-induced, perhaps some loan growth was pulled forward on that, as you could see also from the ECB data that was published in the Eurozone in Q1 and Q4, you see clear spikes. As said, fees very strong. On expenses, flat for the year. In the Q4, there was some increase driven by, among others, a catch-up accrual for performance-related pay. We also saw that if you look on the quarter-on-quarter, so Q4 2020 to Q4 2021, there was a sizable VAT return in the Q4 of 2020. If we go to risk costs for the full year, low at 8 basis points of average customer lending. Strong quality of the book, 1% and 1.5% Stage 3 ratio and Stage 2 ratio actually improved. We did take risk costs in the Q1 of EUR 346 million, which is predominantly adjustments to existing Stage 3 files. Two components there. One predominantly in the wholesale bank, where we have taken a different view on recovery and recovery valuations. So that basically means that in certain asset classes, we have adjusted the expectation of recovery of the collateral in that Stage 3 situation. We took a EUR 124 million overlay for mortgages in Holland, Belgium, Germany, and Australia. In those countries, LTVs have dropped the fastest, or to put it differently, house prices have increased the quickest. With the current inflationary and interest rate movements, we do expect that for only the Stage 3, so the weaker part of the portfolio, we could expect an increase in the unable to pay category. That's why we took a EUR 124 million overlay, which on a EUR 370 billion portfolio is modest. there was also EUR 124 million release related to payment holidays in some sectors that were deemed to be a little bit more critical because of COVID, but there we actually see that the performance does not warrant to have an overlay. That was a release. There were quite a bit of movements there. Overall, over the full years, again, 8 basis points is probably one of the lowest in Europe. Capital strong at 15.9%, actually grew from 15.8%. We announce a EUR 0.41 per share dividend to be proposed to the AGM for approval, which brings the total dividend over 2021 to EUR 0.62 per share. As you know, we have a buyback under way, which is nearing completion. We will announce at the latest in the Q1 of 2021 any follow-up steps and are in constructive discussions with the ECB on that. I'll leave it at that. Over to you, Geert. Thank you. Thank you, Mark. I'd like you to turn to slide number 22. There you see the development of our CET1 ratio that has again improved to close to 16%, well above our 12.5% ambition level. Well, in the slide further you can clearly see that we have a buffer of more than 5% over our various MDA levels, and therewith more than adequately capitalized. We also have absorbed all expected RWA inflation from a regulatory point of view. If you look at the composition of the buffer, you can clearly see that the vast majority of that buffer consists of CET1 capital, and not from AT1 or Tier 2. The AT1 ratio was 2.2%, and the Tier 2 ratio was 2.9%. With that, we fully benefit from the capital relief that was provided two years ago by the activation of Article 104a. I ask you to turn to slide 24. Well, Mark already said the final dividend, the share buyback is running, and it will be finalized before May 5th or any time earlier. We hold more than EUR 10 billion of capital in excess of CET1 capital in excess over our 12.5% ambition level. Apart from regulatory requirements or profitable alternative uses of capital, we will return this capital to our shareholders in the coming years on top of our current payout ratio of 50% in order to get to that 12.5% ambition level. I ask you to turn to slide 27, where you can see that TLAC, which starts on the left, ING clearly meets the end state of TLAC with a 30.6% of RWA and more than 10% of TLAC leverage. You also can see that the most constraining requirement in terms of loss absorption is the MREL target as a percentage of RWA that we show on the right of this slide. You can see that we have met our intermediate MREL requirement as of the first of January this year. We also already meet the final requirement of 28.07% that we have to meet by January 2024. Obviously, this requirement is subject to MDA regulatory changes, of which most likely the countercyclical buffer requirements that will change over time will also have an impact on the MREL requirement. On the debt issuance side, we were very pleased to still execute some pre-funding late last year at the end of November that allowed us to stay sidelined at the early weeks of January, which proved to be a very crowded week. This year, we plan to issue between EUR 8 billion and EUR 10 billion of group holdco debt subject to the balance sheet evolution. This is higher than what you have seen in the prior year. We note that we have EUR 4.5 billion of bullet senior holdco redemptions. We expect RWA growth on the back of our volume growth targets, and also the RWA impact of our Dutch mortgages. Our aim is to optimize our MREL stack by replacing the CET1 surplus with senior holdco over time. In other words, in case we would announce an additional capital return, for that amount we need to then issue clearly holdco debt instead. For AT1 and Tier 2, we strive toward the optimization of our capital structure. Currently, we feel comfortable with the levels of 2.2% and 2.9%. Covered bond activity, obviously linking into TLTRO repayments. As you know, the very favorable rate on the TLTRO for banks that have met the zero lending asset growth target at the end of this year, that favorable rate will end in June. Then from 2023 to 2024, TLTRO needs to be repaid, but it continues at the deposit facility rate. And obviously, depending on further announcements, we will be very prudently planning to prepay the TLTRO before it comes to final maturity. Replacement of part of these funds with covered bonds are to be expected. We see limited need to issue senior from our bank operating company. If so, it will be for tactical reasons and at a relatively short credit duration. Let me stop talking now and open the floor for any questions for Mark or myself. Back to you, operator. Thank you, sir. Ladies and gentlemen, we will start the question and answer session now. In the interest of time, we kindly ask each analyst to limit yourself to two questions only. If you have a question or remark, please press star one on your telephone. Go ahead, please. Star one for questions or remarks. The first question is coming from Robert Smalley, UBS. Please go ahead. Your line is open now. Hi, good morning, good afternoon, and thanks very much for doing the call. Just wanted to circle back on the provisioning in the Q4. On the wholesale side, addressing Stage 3, were these loans that were basically on life support that had gotten subsidies through due to COVID, and now you no longer see them as viable or is it a mix of other things? Then on the mortgages, we're really not seeing that from your competitors. Is there any characteristic of your borrower that is different than your competitors in this area that would prompt you to act differently? Thanks. Yeah, I'll take that. Thank you very much for your question. To your first part on the wholesale. No, that's not the case. It has more to do about the recovery expectation on certain asset classes. These are customers that are already in Stage 3 or in the restructuring department, where, given the COVID situation, but also given markets, that we believe that we had to take a different approach to recovery and have a more critical view at the expected recovery valuation. That's more an LGD kind of thing. Towards mortgages, yeah, I can't speak for others. What I try to explain is that in certain markets we have seen a very sharp increase of house prices and for that proportion of our book that is already in Stage 3, we expect the spending power of individuals to be affected by inflation. On the other hand, the purchasing power perhaps to reduce over time on the for the mortgages, which would have an impact on property valuations. Maybe we are known as a prudent and conservative bank in this area. Maybe we are, maybe others will follow, but you would need to ask them. This is what we see and what we have a view on that could have an impact. Great. That's very helpful. Thank you. Ladies and gentlemen, if there are any additional questions or remarks, please press star one on your telephone. Go ahead, please. The next question is coming from Mr. Lee Street, Citigroup. Please go ahead. Hello. Thanks both for my question. Just one quick one on the issuance of holdco. You're very clear about how much you intend to issue this year. As I look through time, as you bring your CET1 ratio down from, I think, 15.9% to 12.5%, should I be thinking about that sort of that incremental differential all being funded with sort of net new holdco issuance as we look ahead, as you sort of seek to maintain your MREL ratio? That's my question. Thank you. Yeah. Lee, indeed. That's the way you should look at it. Now, I can't give you the pace, but if that would take three years and CET1 would drop to the ambition level of 12.5%, then effectively we lose roughly EUR 11 billion with today's metrics of MREL stack consisting of the most expensive part, which we will then very limitedly replace by additional Tier 1 and Tier 2, simply in order to manage the ratios. The bulk will clearly be refilled by holdco group senior. Yes. All right. That's very clear. Thank you. There are no further questions. Please continue. Oh, there was a question. An incoming question from Mr. Luis Garrido, Bank of America. Please go ahead, sir. Sir, please go ahead. Yes. Can you hear me? Yes. Yes, we can hear you. Perfect. Just want to clarify, on the 12.5% target, you seem to have underlined to equity investors that this is unlikely to be revisited. Is it that you're comfortable with having, say, a 1.8 percentage point buffer to MDA in a couple of years, or that you really expect some of today's buffer requirements to go? For instance, you pushed back against the idea of the G-SIB buffer. Which of the two is more likely, do you think? Thank you. Look, we on a very frequent basis calibrate our management buffer over MDA. In that calibration, we take into consideration the return of pro-cyclical regulatory measures, like for instance, the reintroduction of countercyclical, but now also for the first time in Germany, making use under CRD V, the introduction of a sectoral systemic risk buffer. All of that is part of the calibration of the management buffer. Hence, we talk about a management buffer of up to 200 basis points, but there is room to absorb additional regulatory pressure in that buffer. Now, if the regulatory pressure exceeds the room that we have calculated in the management buffer, then obviously things will have to change. As it looks now, with what we know from the past, including the countercyclical buffers, we believe that the current management buffer is sufficient to target a 12.5% ambition level of CET1. Mr. Garrido, are you still there? Very clear. Thank you very much. You're welcome. There are no further questions. Please continue. Thank you, operator. Thanks, everyone. We are in time to listen to Madam Lagarde. Of course, the investor relations team is available for any follow-up questions. Just reach out to them. I wish you a very nice day. Thanks for listening in. Bye-bye. Ladies and gentlemen, this concludes this ING event call. You may now disconnect your line. Thank you.