Hello, and welcome to the Van Lanschot Kempen Analyst Call 2022 half year results. Please note this conference is being recorded and for the duration of the call, your lines will be on listen-only. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star one on your telephone keypad to register your question. I will hand over to your host, Maarten Edixhoven, Chair of the Management Board, to begin today's conference. Thank you. Thank you very much. Dear shareholders, analysts, and other participants, welcome to this special earnings call over the first half of 2022. I would say special not only because of our solid results over the first half of this year in a challenging operating environment, obviously, but also because it will be the last earnings call for our CFO, Constant Korthout. Constant can be credited for his strong and consistent leadership, but also the turnaround over the last decennium of Van Lanschot Kempen, and has positioned Van Lanschot Kempen as a growing independent wealth manager with a very strong capital position. Today I will give the floor for a significant amount of time to Constant after I finish my introduction. Obviously, I also look forward to working together and welcoming Jeroen Kroes as CFO and Wendy Winkelhuijzen as Chief Risk Officer to the team. Obviously I'm very thankful to have worked over the last year with Constant. Let's look briefly at the operating environment. Obviously it was a very challenging operating environment. Geopolitical conflicts, slowdown in China, lower consumer confidence, and also persistent higher inflation led to lower markets over the first half year and especially in the second quarter. The political and macroeconomic outlook is not positive either. In this dynamic environment, we increased the pace of interaction with our clients as a wealth manager should do, and we made sure we help them navigate through the underlying transitions in the economy. Looking at the numbers, I would say they talk. We posted a strong net profit over the first half of EUR 48.2 million, especially on the back of 15% higher commissions, 8% lower interest margins and a low risk loan book. The pace of net inflow, and I'm especially proud of the commercial momentum, increased in the second quarter to almost EUR 5 billion in the first half of the year. As clients, both private and institutional, not only continue to invest with us, but also continue to keep in and bring in new money flows. I especially would like to highlight, by the way, our Belgian operations as we realized strong net inflow over there as well, most in the Mercier Vanderlinden, as Van Lanschot Kempen Belgium franchise. Our capital ratio came in at an expected 20.2%, well above our 15% target, plus the M&A add-on of 2.5%, enabling us to deliver on our promise to distribute excess capital to our shareholders. Constant will shortly come with, of course, much more details on our financials, but I also would like to dive briefly into our sustainability ambitions. While focusing on the implementation, obviously, of the SFDR regulations in our services per August first, we are also on track to deliver on the average 7% CO2 reduction per year in our own investment funds and in our discretionary management solutions. Additionally, we implemented electric car policy, as well as a carbon footprint reduction travel policy. Also, we designed and I'm very proud of that as well, our first company-wide inclusion and diversity policy focusing on gender equality, as well as other areas of building a modern and diverse organization. We are eager to continue next steps in this area. I also would like to highlight that we will introduce a new range of sustainable funds to our private clients in the second half of this year. We obviously remain committed to the long-term growth ambitions as shared with you in May during our capital market day. The markets obviously worked against us, so market performance reduced our AUM to about EUR 100 billion from EUR 112 billion at the beginning of the year. Obviously, in July the market has rebounded somewhat, which is a positive. I'm particularly proud of our staff engaging with our clients, both existing and new, helping them navigate the current environment and leading to a very significant and profitable net inflow of EUR 4.9 billion in the first half of the year, which I deem a very strong commercial momentum. We will continue to look at M&A opportunities in a disciplined way as the wealth management market in the Netherlands and Belgium is expected to consolidate further. Once again, I would like to reiterate our medium-term financial targets. They remain unchanged. A strong CET1 ratio of 15%, an efficiency ratio of 70%, and obviously some work to do there, and a return on CET1 of 12% through the cycle. Also, we continue to invest in growing our business, as we also proved in the first half of the year with the net inflow of almost EUR 5 billion at stable margins. With this introduction, I would like to hand over to Constant to take you in more detail to the financial results. Obviously I'm also available for questions afterwards. Constant. Last earnings call. The floor is entirely yours. Thank you. Thank you, Maarten, and also thank you for your kind words. I will take you to the financial details. I will use the analyst presentation that we've made available this morning, so I'll refer also to the respective page numbers, if necessary. Let me start with some key messages. As Maarten already said, we report a net profit of EUR 48.2 million for the first half. As you know from our report on the first quarter, we had to take a provision for a negative court order of about EUR 10 million. When we adjust for that, you can conclude that the results for the first half are fairly close to the results of the first half of 2021. If you look more in detail, we see a strong growth in commission income, 15%, and a decline in our interest income with 8%. I will come back on that later. Also, we see expenses going up due to the growth that we observe both organically and inorganically. We are very happy with the inflows. Despite the unrest in the markets, we are able to realize almost EUR 5 billion net new money throughout the organization. Our assets under management are down as a result of the markets, which is of course obvious in our business. If you look at our loan portfolio, the portfolio is still very healthy and we are able to release loan loss provisions again. Last but not least, in line with the statements and the promise we made regarding our capital strategy during our capital markets day in May, we now propose a capital return of EUR 1.50 per share later this year. On the next slide, you see, let's say all the numbers presented again. I would like to focus a little bit on our efficiency ratio, cost income ratio, which stands at 73.7%. Still some work to do, but basically also in line with the efficiency ratio of a year ago. Our assets under management, as already stated, is down as a result of markets by 11%, and our capital ratio 20.22%, which is very strong. On the next slide, we present the detailed P&L. I won't go through it line by line. I would like to make a few little remarks. First of all, as you might recall, when we discussed the P&L for 2021, we already explained that due to the structure of the transaction with Mercier Vanderlinden, we have specific expenses related to the accounting treatment of this transaction, which is due to IFRS rules. You see that line back. Last year, of course, we didn't have that item in our P&L. Now, we have. Also, on the line miscellaneous, we report the negative court order. That's also these two elements make the main difference between the reported profit and the underlying net result. You see the line underlying net result is almost at a similar level as last year. On slide 10, you will see the main components if you compare 2021 to 2022. Of course, commission income strong upwards. Interest income a little bit down. Also you see expenses are increasing. The block special items, again, includes the provision for the court order, but also the accounting items related to Mercier Vanderlinden. Let me take you to our businesses, and I start with our private client business. There we are very pleased with a strong inflow again in the first half. As we said already, it is in circumstances that were different from previous years, but still we see a very strong inflow. Basically, if we go back, we see that 2020 and 2021 were also strong years. If you would take the full 2.5 years since early 2020, our total net inflow in private clients amounts to EUR 6.6 billion. As we discussed before, it is primarily also that we see continued interest from our existing and new clients with a strong focus on entrepreneurs. We also saw that trend continuing in the first half. The profitability of our private client business increases on the back of assets under management growth, because in that this segment, we see 30% commission growth year-on-year. Of course, assets under management went down as a result of market performance, which is something you will see also in the other segments. Within private clients, we have our Belgian franchise. Important to make a few remarks on that as well, because it's a focal point in our strategy following the acquisition of the 70% stake in Mercier Vanderlinden last year. What we see now is that both entities, Mercier Vanderlinden and Van Lanschot Belgium, generate significant inflows in the first half. Together, they're good for EUR 0.6 billion in net inflow. Also we see that the collaboration between the two entities is doing very well. One of the steps that we also intended, but will also now be executed later this year, is that Mercier Vanderlinden clients will use Van Lanschot Belgium as their custodian for their clients. Next to that, we see in Belgium a strong growth in Lombard lending. Now let me move to the segment wholesale and institutional clients. There we see also a net inflow. The net inflow is largely driven by the fiduciary management mandate that we got awarded from the pension fund from KLM cabin crew. That mandate amounts to roughly EUR 4 billion, which is a very strong win and drives the inflow for the first half. If we look at the P&L of wholesale and institutional, we see a lower result, EUR 0.6 million. As we presented already during the Capital Markets Day in May, we are focusing on a more profitable growth in the Netherlands and UK for this segment. For that matter, we have a number of plans in place. More specifically, in the next 2-3 years, we will focus on more efficiency, also focus on more the profitability on a client level and also put more additional focus on alternative asset classes, which are very important in this segment. Related to that, I'll take you to the next slide because the next slide shows more in detail our offering within this segment. We introduced a new part of our offering, which is called asset class solutions. Asset class solutions is focused on a new offering that offers a total solution to our institutional clients to invest in illiquid asset categories that could include Kempen funds, but also could include third-party funds. We offer this including strategic advice, selection capabilities, structuring and reporting. We think this is a promising offering that we could offer to institutional clients, and you see already a few examples in this slide. On the left-hand side, you see the more traditional fiduciary management activity, which accounts for almost EUR 50 billion. On the right-hand side, you see investment strategies, which are our active management strategies and the various categories we offer. You see that the amount of EUR 7.6 billion, this is only the amount within the wholesale institutional clients. If you would add also the amount of investment strategies that are counted within the private client segment, the total volume of our active strategy line-up is about EUR 14 billion. Focusing on the management fees, which is our main source of income, we tend to show how the recurring run rate is evolving over time. Notwithstanding the inflows that we reported to the market had an effect, had a negative effect on our recurring run rate, as you can see on this slide. We see an 8% decline in the first half. However, I think markets rebounded significantly in July, so I can share with you that during July, already half of this decline was made up by the increase in markets that we observed in July. Also important to note that margins both in private clients and wholesale institutional are very stable. We see still 62 basis points in the private client segment and 12 basis points in wholesale and institutional. Now our investment banking division. Of course, the investment banking division feel the impact of the slowdown that that is happening within equity capital markets over the first half. However, our investment banking client division is able to compensate that to a large extent by doing more activities in M&A and also having an activity in debt advisory. Overall, we see a decline of commission income, but still, we see that if you take it more in a long-term perspective, that the commission level is sort of at the average of the first of the last two and a half years. Also, we are very pleased with continued focus on the correlation within investment banking and private clients division. A few P&L items I would like to elaborate, and let me start with interest income. There we see interest income is lower. The main reasons behind that is that we see in the first half significantly less prepayments and renewals of mortgages. Typically, we get compensated for that, so we received less compensation for that. Next to that also, we saw in the first half due to also rising interest rates that the margins on mortgages were lower than in the years before. Of course, the picture on interest income is changing with the current interest environment that we see. As I indicated before also during the Capital Markets Day, eventually this will benefit us, but it will happen gradually. We expect the impact for 2020 will be limited, but if interest rate expectations are proven to be correct, we expect to see a much more meaningful, significant impact in 2023. The line income from securities and associates shows a positive result. This line includes the result that we realize on the investment in our private equity portfolio, but also the co-investments in our own funds. With respect to private equity, we can report one book profit in the PE portfolio, so that is also driving the results there. On the co-investments, as you probably already know, in this line, we report the results on the co-investments itself, but a large portion of the risk is being hedged and the hedge is being reported at a different line. This line includes the results on co-investments itself, and these are negative in the first half. If you include the hedge, we were able to realize a modest positive result on the co-investments. Here you see that part. That brings me to the next line, which is a result of financial transactions. That line includes the hedge on the co-investments, which was very effective during the first half. Also in this line, the so-called structured products are included. I can report to you that, also during the first half, we were able to make further progress on the rundown of our micro hedge part of the structured products portfolio. I think also important to note that, we saw quite a lot of volatility in markets during the first half. As you know, of course, since two years, we operate under a much tighter risk limit system for our structured products. Basically, we can conclude, although there was a slightly negative result on structured products, that this, tighter risk framework, proved to be effective during the first half. Expenses on the next slide 20. In line with the growth that we see both organically and inorganically, you see our expenses increasing. First and foremost, of course, the acquisition of Mercier Vanderlinden is part of this increase since Mercier Vanderlinden wasn't part of our P&L in the first half of last year. Also you see that we see higher staff costs visible in our cost numbers. We feel that we have a significant commercial momentum, as is shown also by the inflows. We feel also we have and we will continue to invest in our organization that's visible in these numbers. Now moving to the loan portfolio. As I said before, I think we have a healthy loan portfolio. Mortgage book increased slightly, but also we see the other loans a little bit increasing. That is predominantly Lombard lending that we see. We also see that our impaired ratio improved quite a bit in the first half as we were able to resolve some of our legacy files in that portfolio. That also shows up in the release of loan loss provisions on the next slide. We show a net release of EUR 7.2 million. Also in our loan loss provisions, we keep a management overlay of about EUR 3.2 million, which is based on the fact that we see uncertainties in the market still following COVID and also following, let's say, the events in Ukraine. Our capital, on the next slide 23, we report a capital ratio of 20.2%. As you know, we have set a target of 15% plus a buffer for 2.5% for M&A. If you take that into account, you can calculate that the excess capital for the end of June amounts to EUR 122 million. I also would like to note that that doesn't include any retained profits for the current year since we only add that to our capital at year-end. The first half, we saw capital ratios coming down, mainly as a result of the new mortgage floor that was introduced by the De Nederlandsche Bank. Also we saw some negative valuation results on our bond portfolio within treasury. The latter, by the way, something that that will have a temporary effect because at the end of the day, that will reverse in the coming years. We propose an excess capital return later this year of EUR 1.50 per share, as we have basically also indicated already during our Capital Markets Day. Also we reiterate again what was communicated during our Capital Markets Day, our intention to return additional capital in excess of the 17.5% to our shareholders in 2020 and 2023, of course, subject to regulatory approval. If you take a look at our financial targets, quite a nice picture in the sense that capital ratio is well above our target. Also, the return on CET1 for the first half is above the target that we set for the medium term. Efficiency ratio needs still some work, but also fairly close to the target of 70%. All in all, I think we can look back at a specific first half. It was a different period in terms of market, but at the same time, I think these numbers show that our business model proved to be resilient, since inflows continue at a high level and our underlying result is stable and in line with what we reported last year. We're pleased to be able to deliver on our promise to propose an excess capital return. I think also we look to a very good book of business that we have. We look forward to positive developments forward. That's where I want to leave it. Let's open the floor for questions. Who would like to pose any questions on the first half results of Van Lanschot Kempen? As a reminder, if you would like to ask a question, please press star one. The first question comes from. Please go ahead. Yes. Good morning, everybody. Yeah, thank you very much, Constant, for all those years. You know, my model is only looking back at 2011. I think you joined in 2010. I was just looking back in 2011, the fees were at kind of EUR 230 million. I think you're on track to post EUR 400 million this year. I think it's a 5% CAGR over the years, so very strong achievement. The cost base was, like, EUR 412 million in 2011. It's about the same level than today. I think also that's a very strong achievement. I think return on equity was actually 2.5% at that time. Well done, really, and thank you for all those years and the presentation you have been giving us. Yeah, the first question. I've got a couple of questions, by the way. The first one will be on the NI. Just wondering if you could provide the level of prepayment penalties in the first half, because I will assume that will further drop in H2, but just wanted to check that to see if that's true. Also, yeah, I think you've mentioned that there will be a recovery of NI, potentially meaningful, at the current interest rate in 2023. You know, could you provide us a bit of kind of sensitivity to the current curve for 2023 and maybe 2024? That would be very useful. The second question is actually on costs. Yeah, I mean, we do see cost inflation in H1. Where are you on the CLA negotiations? What can we expect in terms of cost inflation for the second part of the year? Do you still expect inflation to come in? You know, could you give us a bit of trends there? That would be very useful as well. I was wondering on Belgium if you expect any synergies from the transfer to the customer activities for Van Lanschot. Could you give us some data points on Lombard lending? Where are you, well, at the end of 2021, and how much growth do you expect there? That would be also quite useful. Then maybe, well, on wholesale and institutional and also on the investment bank. We do see pretty low profitability really on wholesale and institutional and also on the investment bank. I think those two units are generating EUR 2 million net profit, pre-tax profit in H1. How do you plan to address the profitability issue here? You know, is there any adjustment on the cost base, potentially? Or, you know. Just wondering, are you going to, well, make sure that this is a bit higher than the kind of EUR 2 million figure we've seen in H1. Thank you very much. Thank you, Benoit, and thank you also for the nice words for Constant. I noticed here that arrived well. Let me take the question on profitability and cost inflation, and then Constant will address the net interest margin and Lombard lending questions. On profitability, you're right. In the current market environment of the first half, we saw a reduced profitability for both investment banking and also in institutional. I think they are two different animals. Last year, we had an extremely strong result for the investment bank, and obviously, the markets and the number of transactions were lower. I think the investment bank did a fantastic job in turning from equity capital markets type of transactions towards more M&A corporate finance type of transactions. Still a solid number and pipeline of transactions. We will follow that obviously closely how the market will achieve. We also are positive on the outlook there and too early to take any specific cost measures which would jeopardize the franchise. On the wholesale and institutional segment, we've also stated we indeed also see that we want to increase the profitability there. That's, in our view, more a 2-3-year plan to make sure that we, as we also announced at the Capital Market Day, move from the current 90+ cost income ratio to a cost income ratio of about 80%. Also there we are currently investing in our IT, in our processes to make sure that we have a platform for profitable growth. We need to make sure that we fulfill that program. That's the plan a bit more long term there in terms of wholesale and institutional segment. Regarding the inflation tendency for an impact for 2022, we believe that that will be limited, like also in the first half. For 2023, that is too early to tell, as in our case at Van Lanschot Kempen especially, of course, the staff costs are an important variable and that's a discussion and negotiation with our works council. That of course needs to play out. Rest assured we will manage costs tightly while continuing to invest in the growth we see. We want to keep that momentum. We will really focus on keeping our margins as we also did successfully both in the institutional segment and the private segment in the first half of the year. The focus is especially on the margins there. Constant over to you for the Sure. Hope that's helpful, and over to you for the Lombard lending and net interest questions. Yeah. Benoit, thank you very much, also for your nice words. Very much appreciated. Regarding your question related to NII, you asked specifically about the prepayment penalties that we received in the first half. That amount is about EUR 3.5 million. There you are. You also asked about sensitivity going forward. Well, of course, I think it's obvious that the outlook is positive. In our case, the determining factor is also what happens in the savings and deposit market. As you know, our main funding source is savings money from our clients. We don't have that much wholesale funding. Of course, we are entering now a phase where the ECB will probably go to positive rates. Of course, also, as for our clients, we will abolish the negative rates. The question is how does that evolve going forward? What is the ECB going to do, and how much of that is being translated into savings rates in the Dutch market? I think that's a very important element in how it will evolve in our case. Our view is that that will for sure have, of course if expectations come, will become real, that will have, as I said, a meaningful impact in 2023. We think for the remainder of 2022, the impact will be much smaller. That's how we see that. With respect to the Belgian case, I think if you look at the current situation, as I said, both entities, Van Lanschot Belgium, Mercier Vanderlinden, had a very successful first half. We see inflows in both entities and also meaningful inflows. In terms of synergies, our plan was of course not so much cost synergies, but more revenue synergies. The first two projects that we identified was providing Lombard lending to Mercier Vanderlinden clients and also transferring the Mercier Vanderlinden clients from other custodian banks to Van Lanschot Belgium. Well, in both cases, we make very good progress. Lombard lending is already happening, and the custodian transfer will take place in October. What we see and because Lombard lending in Belgium, it's quite good business for us. It is also a more active business than we see in the Netherlands. I believe our Lombard lending book in Belgium is a few hundred million, so EUR 300-400 million that we have, and we see it also growing. There, I think, also the Mercier Vanderlinden clients are very much looking for doing business with Van Lanschot Belgium. Of course, after the transfer, the custodian transfer, we also expect that there will be more interaction with Mercier Vanderlinden clients since they can become more familiar with our franchise. I think we have still good expectations that this cooperation will be very fruitful. I think already we see that both businesses are prospering at this point in time. Thank you very much. Just a small follow-up on the net interest income. If you think about stage two, you will remove the negative carry. Obviously your replicating portfolio and rates are already much higher than in stage one. On balance, do you expect a positive or neutral or eventually negative effect from removing the negative carry in stage two on NI? Well, of course, you can see that on our balance sheet. Of course, we had and we have a significant amount of cash parked at the ECB. As long as, let's say, the ECB goes to zero and we don't charge negative rates to our clients anymore, that's a wash to our P&L. We don't see any initial impact of that. Of course, the other part of the balance sheet start to generate also a better yield. I think step by step, we see positive. I would expect that not so much the abolishment of negative interest rates will benefit us significantly, but also the remainder of the balance sheet will benefit a little bit from what's happening. As I said, that will be gradual. Yeah. Great. Thank you very much. We currently have no questions on the line. If you would like to ask a question, press star one. There are no further questions on the line. All right. Then, let's wrap up. Thank you, and especially also Benoit, thank you very much for your attendance and questions. Once again, this was the last earnings call of Constant Korthout. Next time I'll be here with Jeroen Kroes, looking forward to that. Thank you very much and have a nice day. Thank you for joining today's call. You may now disconnect.