ABN AMRO Bank N.V.

Welcome to ABN AMRO's Q1 2026 Analyst and Investor Call. Please note this call is being recorded, and for the duration of the call, your lines will be on listen only. Analysts will have the opportunity to ask questions after the presentation. This can be done by pressing pound key 5 on your telephone keypad. I will now hand the call over to the speakers. Please go ahead.

Good morning, and welcome to ABN AMRO's Q1 2026 Results Presentation. I am joined today by OCFO and OCRO . I will cover the key messages of progress and strategy in our financial results for the quarter, and after the presentation, we will open the line for your questions. Let me begin with the key highlights of the first quarter on slide two. This first quarter was a strong start to the year, with net profit increasing 12% compared to the same period last year. We booked a net profit of $693 million, leading to a return on equity of 10.7%. There was solid growth in mortgages and corporate loans during this quarter. Growing deposit volumes were the main contributor to higher commercial net interest income. reached a record level driven by strong gearing performance resulting from high market volatility. Underlying costs declined further. We are therefore lowering our full year 26 cost guidance to around 5.5 billion. Credit quality remains solid with limited net impairment and a cost of risk of 9 basis points despite increased geopolitical uncertainty. Our capital position remains strong with a CT1 ratio of 15.5%. Let me now go into more detail on how we are delivering on our strategy targets. For our core projects, mortgages and client deposits, we are on track to reach our 28th ambition. For client deposit growth, we stand at 46% of our 28th ambition, and including the intended acquisition of an IBC at around 63%. With 2 billion of mortgage growth this quarter, 30% of our growth ambition has been realized, and again, including an IBC, this rises to around 73%. We are making sustainability more accessible and financially attractive for homeowners. Now, mortgage interest rates can be linked to the home's energy label. This rewards our clients for making their homes more sustainable. Now, turning to client assets, this quarter was impacted by market volatility and seasonal effects. However, the conversion of cash and time deposits into mandated and advisory products continued. We expanded our investment offering with the launch of regulated crypto investment projects. This gave its clients transparent access to the new asset class. In corporate banking, profitability benefited from record high clearing fees and also strong fees for global markets. This came alongside growth in our transition financing, including defense and renewable energy. Now, on the next slide, turning to our cost ambition. By sanctifying our bank and reducing run rate costs, we are delivering on our promise to right-size our cost base. Over the first quarter, FTEs again decreased by more than 500, mainly on more external staff. Total FTE reductions since the end of 24 now represent around 40% of our 28 targets. In terms of cost savings, a server of 60 million was achieved in Q1. This brings cumulative savings to around $220 million out of a total of $900 million, mainly from increased efficiency and ongoing IT streamlining. Alongside cost discipline, we are also improving productivity by embedding technology and AI more deeply in our daily work. We have moved faster than expected in achieving cost reduction, so I expect the pace to slow down somewhat from here. This quarter, We also made further progress in capital optimization, now turning on to the next page. Optimizing capital allocation is a strategic priority. Corporate banking has three reduction targets for both portfolio optimization and RWA optimization. Together, these targets attend billion reduction, and this quarter we realized an additional reduction of 1 billion. We have, therefore, now realized around 50% of our targets, mainly through RWA organizations. This reflects the partial reintroduction of the SDME support factor, improvements to our data quality, and collateral sourcing. Portfolio organizations are more gradual and include the closure of asset-based finance international. This is proceeding as planned. We have identified 8 billion of RWAs for active portfolio management, and around 20% has been securitized by the SRC transaction we executed in Q4. All these RWA reductions strengthen our capital position and enable us to invest selectively in profitable growth opportunities. We are on track with our commitment to lower the share of allocated RWAs in corporate banking, which currently amounts to 51%. Now, turning to the Dutch economy. The Dutch economy remains resilient despite the current headwinds. Q1 GDP growth slowed to 0.1% quarter-on-quarter. Over the full year, GDP growth is forecast at 1.5%, slightly downgraded due to the Iran conflict and energy shock, while inflation has been revised up to 2.8%. On housing, after two years of work, 8% price growth, we expect prices to moderate to plus 3% in 26 and plus 4% in 27. Transaction volumes hit a 10-year record of around 239,000 in 25, but are expected to decline by 2% in 26 and 4% in 27 amid heightened uncertainties and also limited supply of new homes. Despite this, the economy faces its turbulence from a position of strength. High household savings, low debt ratios, and a still tight labor market are providing meaningful benefits. I'm turning now to our financial performance for the first quarter, starting with client deposits on slide eight. The quarterly movements in client deposits should be seen in the context of some seasonal effects. Around year end, clients tend to hold more cash, while in Q1, we typically see higher tax payments. In this context, broadly flat client deposits in Q1 are a solid outcome. Over the past quarters, we have seen a continuous growth in deposits in regular strategy conditions. Turning to client assets, I already mentioned that volatile markets during March led to lower asset values. Overall, we continue to see that our commercial efforts are leading to conversion to mandated advisory projects, keeping our progress on track. Now, turning to interest income. This quarter, commercial NII improved by 36 million. Mortgage volumes continue to increase, with growth increasingly coming from government-backed mortgages. These mortgages carry lower margins, and this explains the basis point decrease in asset margin. Average liability volumes were higher, reflecting continued underlying growth in deposit volumes. This was the main driver for the growth in commercial NRI. The liability margin was broadly unchanged, reflecting a stable replicating yield. Other commercial NRI also increased in Tier 1, amongst others from higher financing demands from clearing clients. Now, turning to the interest rate outlook and what this means for us. Compared with last quarter, forward rates have risen sharply in reaction to geopolitical events. Current forward rates imply a further tailwind to our liability margin. This creates upside to our full-year commercial NII guidance, as this forward rate This could be close to 100 million additional interest income over 26. However, we have decided to keep our guidance unchanged for now. It is difficult to foresee, indeed, if these rates would persist given the unpredictable nature of current events. We expect we can narrow down our NRI guidance with our Q2 results. And now turning to our fee income. Fee income increased 6% quarter-on-quarter showing growth in scalable, capital-efficient business revenues. In personal and business banking, we introduced new pricing for final accounts at the beginning of the year, and this led to higher fees. The negative market performance in Q1 affected fees in wealth management. By contrast, the higher market volatility led to strong results for clearing due to increased trading volumes. Also, our global market activities had a good first quarter. On other operating income, it has been relatively low the past three quarters. One reason has been the lower equity participation results. Market circumstances are unfavorable for both revaluations and exits. Also, island treasury results have been lower than seen on average over the past three years. I'm now turning to OCO. Given stronger-than-expected delivery and cost predictions, we have decided to lower our cost guidance for 2016 by around $100 million to approximately $5.5 billion. Health discipline is central to our strategy. Compared to Q1 last year, we have a more or less similar cost level. However, when we exclude health, expenses are in fact down 6%, reflecting the impact of lower FTEs and lower IT costs. We are on track with integration of Hull, and this accounts for the largest part of the 63 million integration costs we've booked this quarter. For the remainder of the year, restructuring costs will be limited. We are also starting discussions on the renewal of the current collective labor agreement, which will run until the end of June. Assuming we reach an agreement, this may impact personal expenses starting Q3. Turning to our credit to our credit quality. Credit quality remains solid with a Stage 3 ratio of 2.1% and a coverage ratio of 15.8%. Impairments in Q1 were broadly at the same level as Q4, while individual impairments declined versus last quarter. Model impairments and contrasts were higher this quarter. This reflects updated macro scenarios and a significant increase of our negative scenario weighting from 30% to 55%. The negative scenario includes longer disruption to energy supplies due to the war in the Middle East. With these changes, we believe we have taken into account both first and potential second-order effects. We have not made additions to the management overlay, which remains stable at around 75 million. We continue to actively monitor potential impacts from macroeconomic and geopolitical developments on our loan portfolios. So far, we do not expect a material impact. This reflects the strong quality of our loan book, prudent risk management, and strong collateral across all of our failures. This is also reflected in our very limited private credit exposure of around 200 million. Turning now to our capital position. Our portfolio CET1 ratio rose slightly to 15.5%. This excludes the potential impact of around 70 to 80 basis points from the acquisition of NIDC, which we expect to book with Q3. RWA increased by 1.2 billion in Q1, largely related to business development and corporate banking, partly offset by data quality improvements. RWA's stock period increased from a reversal of the seasonally lower RWA in Q4 and the onboarding of new clients. The Dutch central bank has decided not to continue the mortgage floor beyond the current period ending at the end of November. Depending on market and volume developments, this could lead to a reduction of around 7 billion in our mortgage RWAs. In terms of capital implications, let me start by saying we are committed to returning at least 7.5 billion of capital by paying out up to 100% of net profit over the years 26 to 28. These represent substantial commitments. The removal of the D&D mortgage floor is an upside to our plan and all NCPO benefits our capital position. We said at the CMD that if over a period of time our capital position remains significantly above our target and we are delivering on our strategy competitions, we may consider additional distributions. While we are progressing well on our strategic delivery, we are still at the beginning of our strategic period. So before considering additional distributions, we need to seek capital consistently exceeding our target and further delivery on our strategic ambitions. Let me close with a key takeaway for the quarter. Today's results show that we are delivering on what we said we would do. In Q1, we made strong progress across our strategic priorities, worked profitably, right size of cost base, and optimized capital allocation. We showed profitable growth, adding a further $2 billion to our mortgage portfolio. We also delivered record high fees. We are keeping our NII guidance unchanged while acknowledging the potential upside from current interest rates. We also maintained strong cost discipline and have lowered our cost guidance for full year 26 by $100 million to around $5.5 billion. And with CET1 ratio of 15.5%, we remain well positioned to invest in our strategy, support our clients, or our returning capital to our shareholders. In a nutshell, we are focused, we are committed, and we continue to deliver on our promises. I thank you very much for your attention, and we will now open the line for your questions.

Thank you. If you wish to ask a question, please press pound key 5 on your telephone keypad. If you wish to withdraw your question, please press pound key 6 on your telephone keypad. The next question comes from Julia Aurora Miato from Morgan Stanley. Please go ahead.

Hi, good morning. Thank you for taking my questions. I have two. The first one on... the improved cost guidance of 5.5 billion. It's nice to see an improvement, but it still seems quite conservative to me. And I appreciate that Q4 is normally, you know, seasonally higher. I appreciate the CLA, but I would think it could be, you know, almost 100 million lower than what you're guiding to. So can you help us think about potential upside or if I'm missing something on the course guide? And then secondly, This mortgage floor, so 70 more bips, basically, that is coming your way by year-end, plus the over-delivery so far, how shall we think about the potential for perhaps an interim excess capital distribution? And I hear you, Margherita, you said you want to show a bit more delivery, you're at the beginning of the journey. So, in terms of timing, shall we think about maybe Q3? Is that a realistic timing for ABN to raise a request to the ECD for an excess capital distribution, or what's the best way to think about this? Thank you.

Thank you. Thank you very much, Juliana, for your questions. You know, in terms of our closed guidance improvements, indeed, We are pleased with our pace. We are pleased with our discipline and commitment to delivery. This is what allows us to improve, you know, even though we are early in the journey, to improve our cost guidance by 100 million to 5.5 billion. This is a guidance we are very comfortable with. I also pointed out that, you know, indeed there may be difficulties things to be considered, like, you know, pointing out to negotiations happening in June. So, you know, we, as a rule, we commit to things we are in the capacity of delivering, ambitious targets, but realistic as well, so that we can be predictable. When it comes to, you know, the D&D, mortgage floor and its consequences. You know, we shared the figures with you. As you know, we always assess our capital position at Q4, and there will be no change in that respect. So we will be assessing our position at Q4. And as I shared, we are happy with the way we started the journey, but this is the beginning of the journey. This is a marathon, so we do it quarter after quarter.

Thanks.

The next question comes from Benoit Petrarch from Kepler Shoebrew. Please go ahead.

Yes, good morning, and well done, really, on the OPEX development. So two questions on my side. The first one will be, again, on OPEX. So you've achieved 40% of the plan FTA reduction already in Q1. I think you announced the CMDA just four months ago, so clearly the speed of execution is very strong. Are you already seeking to maybe update the plan at some point? And I was also wondering if in the context of renegotiating the collective labor agreement in H2, whether We should expect maybe a bit of an update at some point during the year around the FT reduction plan for the long term. So that's the question number one. Number two is actually, yeah, maybe on the margin, you know, things are looking better already. And conceptually, do you think your 7.2 billion NI number is still the right one Thank you very much.

Thank you. Thank you very much. You know, on cost, let me reiterate what we shared at OCMV. In terms of FTE trajectory, we connected to, you know, the total reduction of 5,200 by, you know, 28. Indeed, where we look at where we stand now, we are pleased with the pace we've been achieving, you know, 40% of the overall target. I also shared that we do expect this pace to, you know, moderate in the coming quarters, but we like the fact that we started with a strong start. It is the beginning of a strategic plan. Don't get me wrong, you know, Whenever we can do better, we will do better. It is still early in the plan, and right now we are very much focused on delivering on what we already committed. On the liability margin, do you want to take that?

Yeah, maybe more in general, as you asked, Benoit, we have very strong confidence in our NII guidance, commercial NII guidance for this year of 6.4 billion. But it's also, as Mark Reid said during the presentation, in current volatile market environment, we expect to have better visibility at the end of the year. And also in the disclosures in the presentation, we recognize the forward curve has improved. Hence, the guidance can be seen as somewhat conservative if a precursor will materialize. So that implies upside potential to our guidance of roughly $100 million. But you should not look at isolation as this, right? With higher margin deposit competition, what we see already of smaller players might increase. And also higher interest rate curves might be the consequence of higher inflation, which might feed into less growth or higher loan losses. So, yes, we're very confident, but I reiterate what Mark Reed says earlier, need years a better moment to reflect on our guidance for the full year.

Thank you. Just, Marguerite, on the CLA, what can we expect from that, just to clarify a bit what the expectations should be?

What you can expect? Whether you can expect that it is, you know, an important for, an important moment for bank, for colleagues. We, you know, we enter these negotiations in the spirit of, I would say, and respectful approach. I am confident that both from management and unions, everyone will have at heart to, you know, reach an outcome that will be in the interest of, you know, all our colleagues, but also the long-term health of the bank. And, you know, I cannot speculate, of course, on negotiations that have not started. They will happen in June, but I think this period is the right one.

Thank you very much.

The next question comes from Namita Simtani from Barclays. Please go ahead.

Good morning, and thank you for taking my questions. My first question, when you note that the current curve provides 100 million upside to your commercial NII already this year, does that also include an offset from your 100% pass-through assumption, or what's the pass-through assumption here for 2026 in terms of deposits? And then secondly, just on the ROE in the corporate bank, the first quarter ROE of 9.5%, it's a lot better than the fourth quarter, but it still falls quite short of the 12% group ambition by 2028. So, how do you see margins in the corporate business and what else needs to be done to improve ROE here?

Thanks. Thank you very much. I will, then, take your questions to short remarks on my side. One, we have – you may have seen our slide describing how, you know, the underlying assumptions we provide in our – for our replicating portfolios. So I think you have – I will let Beth take you through these assumptions. With respect to CB, I think we are indeed, you know, moving at pace. within our corporate banking in improving our profitability, which is, you know, our main target for CB. So we are actually quite comfortable with the pace we are having. Keep in mind that the target we have for CB, you know, in 2018 is 11% for this division. But Ferdy?

Yeah, Namita, specifically the assumptions for our liability margin. And that's what we explained during the CMD. For the trajectory, we assume broadly stable margins, so 100% path through on interest-paying deposits. So except for current accounts in our replicating portfolio, and have we seen an increase overall in the replicating portfolio to around $175 billion, and roughly 30% or that, or $50 billion is current accounts. And the current accounts where we pay zero interest on, that is structurally accretive. So the current accounts is the full explanation of the increase in the liability margin you see on slide 10 in the presentation, and the margins move in line with the yield of the replicating portfolio.

That's helpful. Thank you.

The next question comes from Delphine Lee from J.P. Morgan. Please go ahead.

Good morning. Thank you for taking my questions. So the first one is just going back to cost.

So just to check, first of all, what was your sort of weight increase assumption in your business plan? just we have kind of like, you know, a rough idea of what to expect with the CLA. And then just in terms of the cost trajectory, I mean, execution really is much stronger. Do you intend to still keep the same target in terms of FTE reduction? Or could that go even further than that? Or do you intend to invest a bit more? just to understand maybe what other sort of moving parts, you know, between now and 2028. And the second question is on the payout. I mean, clearly, I mean, CC1 has been consistently above 15% now, constantly above 15%, and the mortgage floor removal will finance, you know, sort of the NIBC, acquisition largely so just trying to think you know why should we assume that with Q4 results we should definitely get more than 100% total payout And if I could squeeze a last one, if that's possible. Any guidance on other income, which has been a bit weaker, and how much of that is kind of like structural, if you could give a bit, you know, more guidance on that line, that would be helpful. Thank you so much.

Thank you. Thank you very much for your questions. I will, Teddy will take the one on, you know, other income. On Capital distribution, let me reiterate what I shared with you in the presentation. Indeed, we are committed to returning at least $7.5 billion of capital and to pay out up to 100% of our net profit over 26 to 28. This is what we committed at OCND. These are serious commitments. Indeed, the removal of the D&D mortgage floor is an upside to our plan, and so it benefits our capital position. What we also shared at OCND is that, you know, if over a period of time, our capital position remains significantly above our target, and if we're delivering on our strategic ambitions, we may consider additional distributions. But that assessment, we're not making it today. We're, you know, at an early stage of our plan. We are pleased with the strong start we are making, and right now very much focused on our execution. I will reiterate the same on cost. You know, we improved our cost guidance for 26. We are not changing the ST trajectory. We shared adult C and D. We achieved 40% of this trajectory already, but I also indicated that, you know, this space will moderate over time, so it's good that we made a strong start in in the plan, but this figure is not being updated or changed right now. Another income?

Yes, another income. And the last point, what is in our plans, that was also the question underlying is 2% inflation, Delphine, but we also said if inflation is higher, we will absorb it to realize the targets and guidance we provided. Yes. Then for other income that has been lower than average in the past few quarters, mainly led to number one was the results of equity participations and direct equity investments. That was roughly 10 to 30 million lower than average because it's clearly not a very favorable market for revaluation and exits. And number two, it was the ALM results in other income. That was in the past three years. that was lower negative than what we currently see, and that is mainly relating increased hedging costs due to market volatility. So those are the underlying explanation. It's volatile, so we do not provide specific guidance on other income, but we just try to be helpful in explaining what the underlying buckets are. The only thing that I want to mention, and we said that before, you do see incidentals in there. And, for example, we already indicated that for Q4 this year, we expect roughly 100 million net impact book loss for the sale of our consumer credits business. And that will be booked in other income, just to be mindful, try to be helpful for your mobility.

But also to help you going back to your, you know, cost question on, you know, the CLA, so just for you to have in mind, first that, you know, just all stuff in the Netherlands represents, you know, over 85% of all total internal FTEs, just to give you, you know, an idea of the scope. And also, as a rule of thumb, you know, a 1% CLA increase is roughly, you know, 20 to 30 million higher cost per annum, just for you to have these metrics that can help you in your modeling.

Perfect.

Thank you so much. The next question comes from Benjamin Goy from Deutsche Bank. Please go ahead.

Good morning. Two questions, please, on commercial net interest income. The first on loan demand. Your remarks on the Dutch economy sound quite positive, but I just want to confirm the trends you see on loan demand now with basically two months of higher interest rates, whether it's on the mortgage side, whether you see a small impact going forward maybe, and on the corporate side, whether there is a change in behavior, whether you see less investment loans and demand for that. And then secondly, your liability margin stabilized in Q1. Should we expect the current rates already in inflection and moving up in Q2, or when do you think would that happen? Thank you.

Thanks, Teddy. We take a question on liability margins. What we observe in the economy right now, and also, you know, based on many conversations we currently have with our clients, first, you know, the Dutch economy is resilient, and as I said, it has been entering this period from a position of strength. And overall, this is an economy that is overperforming, you know, on average, the EU economy and has, you know, very strong buses. We gave, on the mortgage side, I think, very clear indications on what we, you know, observe in the housing market, i.e., after record years of growth, We do expect, you know, housing prices to moderate, and we do expect the number of transactions to slightly decrease in 26 and 27 compared to the record high we had reached last year. What we, you know, see in the conversations we have with our clients is that they are overall, I would say, resilient. I think they know how to adapt. At the same time, of course, they have concerns on the current, I would call it, geopolitical stalemate because we are also aware and, you know, you have it in the notes of our economic bureau that a prolonged conflict would have, you know, an additional impact on energy prices, and we factor it in more in, you know, I would say end of June, you know, beginning of July, if no solution were to be found, that could be impactful, you know, in terms of secondary effects on growth and inflation. So I think right now we're comfortable and we find, you know, the economy resilient, but it will all depend on the length of the conflict. Fergie, on liability margin.

Yes, Benjamin, you don't get it directly from the margin graph, but the liability margin very marginally improved in Q1. That's in the 114 basis points, so it's just less than one basis point. But that increase was more pronounced clearly at the end of the court in March when the interest rates started moving. And what you do see for this quarter that the improvement is mainly from the replicating portfolio with shorter duration. So that is mainly wealth portfolio. And it will take more time for the benefit of portfolios with a slightly longer duration to start feeding into our replicating portfolio. So the higher yielding swaps are gradually coming in. So that means that further liability improvements over the coming quarter is definitely expected. And lastly, Benjamin, just to reiterate that, in the liability margin is only an increase of the current accounts because it's our underlying assumption that you have a full path for deposits where interest is being paid.

Thank you. The next question comes from Matthew Clark from Mediobanca. Please go ahead.

Good morning. Two questions please. One is on the wealth management cost of risk or credit loss provisions which have been unusually high for the past couple of quarters. So can you give us a bit more insight on what's driving that because it's a bit unusual to see that in wealth management divisions. And then the second question is on the D&B mortgage floor. with capital release coming later in the year. Do you expect to see some of that benefit passed on to customers via tighter mortgage spreads, or do you think that benefit all stays with shareholders as capital relief? Thank you.

Thank you very much for your questions. Céline, I may let you answer the question on wealth management and cost of risk. on the D&B mortgage for impact. We are, of course, operating in a competitive market, and so since, you know, this is an impact that is benefiting, you know, all banks in the Netherlands, this will also be reflected in, you know, the competition market and the pricing. This is something that will happen, you know, in November, so it is too early to speculate on price impact, but indeed, you know, this is a competitive market, so all things being equal, it will also be reflected in pricing. Serena, on wealth management.

Yeah, thanks, and thanks for the question. Indeed, low impairments showed an increase in wealth management. This is due to a few single cases and individual cases and files. which we're booking our wealth management franchise, but our underlying are also corporate loans. We feel comfortable with the positions and on the underwriting criteria, and these are just individual activities, but no correlations with others.

Can you clarify whether they're part of your legacy business or whether they're part of the how business?

No, this is part of our underlying business. of entrepreneurs and wealth management activities. And we are continuing to do these activities in all the countries in the wealth franchise. And again, it's a couple of single cases that we do not comment on.

But all in all, what you have to bear in mind is that our dual clients from wealth management and CB and our underwriting process are exactly the same for these clients in wealth management. These are the same teams, so you should not have any specific concerns.

Thank you.

The next question comes from Johan Ekblom from UBS. Please go ahead.

Thank you. Just maybe starting on the cost side, if we look at the FTE reductions you've achieved, it looks like the vast majority, certainly this quarter, but also last year, came from reduction in external FTEs, which I guess is the positive. They'll probably be, on average, more expensive, but the slower reduction pace we're seeing internal FTEs, is that a timing effect, or are there big differences between gross and net from internalization. Just trying to understand if kind of the easy pickings are done and it gets harder from here or if there's anything else we should consider there. And then secondly, just coming back to the mortgage floor release, I guess, have you had any conversations with regulators as to whether this capital release is kind of distributable. I mean, there's been a number of banks that have struggled to push beyond the 100% payout, but as this is the kind of one-off capital relief on your side, is that an opportunity to engage in such a discussion with the regulator, or have you attempted to do so?

Thank you very much. I like very much the way all of your questions, and I fully understand it, all try to, you know, get more on this topic, but I will only reiterate, and so not speculate on anything, only reiterate on what I've already said when it comes to capital distribution. Again, this is, you know, we assess a capital situation at Q4, and we don't speculate before that. On FTD, Reductions, right. The bulk of the impact so far has come from reductions in our external workforce. What we have done also in these past quarters is internalize some of these external talents into our internal teams because we want to make sure that we always have the best talents and expertise It is true, for instance, in IT or tech, but not only. So that also explains the differences you may observe between internal and external SEs. As we shared also at OCMD, everything we shared in terms of cost savings, and I would say everything we shared in the CMD, is grounded in business cases. So basically... We actually know how we are executing on this trajectory. It is grounded on, you know, it's a bank-wide effort, grounded in overall simplifications of all banks. We provided a number of examples in terms of integrating ARC or asset-based finance within the main bank, simplifying risk, simplifying BFC, you know, you name it, so everything is grounded, so we know how to execute on that over time. And as I indicated, you will see the pace moderating in the coming quarters, and this is expected in particle trajectory.

Yeah, and maybe on the mortgage floor, What I can say there, Johan, we said it before, and we see it also as simplification, gold plating, and also a fragmentation of macroprudential buffers. We've always said we do see quite an overlap with a countercyclical buffer, so we think it's a logical step, but you should not have a direct link between the release of the mortgage floor into distributable capital.

Thank you.

The next question comes from Alberto Artoni from Intesa San Paolo. Please go ahead.

Good morning. Thank you very much for taking my question. I just have one because the other one has been already answered. On the NII, you provided the indication that the current forward rate would, everything else being equal, improve the NII for 2026 by about 100 million, and what would be the impact in future years? Should we think of a similar type of impact or higher or lower?

Thank you for your question, Fede. You can sort of infer it from our graph, but I don't know if, Fede, you want to elaborate on that.

Yeah, I mean, what we can say here, have forward curve chase continuously, but if you look at the forward curve today, there are definitely potential benefits. For 2028, we have not provided guidance, but during the CMD, we provided an indication that NII, commercial NII, could rise to 7.2 billion, including NFBC, based on the economic outlook and interest rate forecast at that time. For now, it's too early to start looking at do we want to change this indication or not. But as Marguerite said earlier, maybe mid-year is a better point to start re-evaluating for the interest rate at that time. So for now, no changes.

Okay, thank you very much.

The next question comes from Anke Riengen from RBC. Please go ahead.

Yeah, good morning, and thank you for taking my question. I just have a follow-up question on the replication portfolio. I just wanted to confirm that your NII guidance basically assumes stable volumes on the replication portfolio. And then I was wondering, I guess it went up from $165 to $175 billion in the quarter. Would that not already explain quite a large part of the upgrade in NII or not because the part of current account has come down from 65 to 50 billion, or it is not quite comparable? If you can please clarify. Thank you.

Eddie? Yeah, on the NII guidance, yes, the replicating portfolio increased, but the biggest part there was the amount of deposits and not current accounts, so that is underlying this assumption. And then secondly, your question, again, on NII sensitivity, we really plot that versus the current account, which is roughly 50 billion in this. So that is the basis for our guidance for this year.

So just to confirm, on your NII guidance, you assume a replication portfolio unchanged with 50 billion of current accounts, and the 50 billion is comparable to... A replication...

Underlying, if you look at our assumption, we do expect deposit growth. We said that earlier. It's what deposit grows from roughly $2 billion per quarter, so seasonally a bit lower. A part of that might be current accounts. So there's also underlying assumptions clearly in our NRI guidance that we do see volume growth.

Okay. All right. Thank you. Yeah.

The next question comes from Shrey Shrivastava from Citi. Please go ahead.

Hi, and thank you very much for taking my question. Just again on the NI, on the 100 million. uplift, obviously it assumes a full pass-through. Let's see if dynamic you're seeing that would suggest this, because if I look at what happened in the last hiking cycle, it would seem particularly on the demand deposit side that you passed through a significant proportion less than this, of the old 50% to 60%. And the second one is just a clarification, if you could confirm and how much of your sort of short-duration replication portfolio is geared to three months versus six months versus the other buckets. That's all right. Thank you.

For your question, I would like to hear the answer then, but bear in mind that since we are operating in a competitive environment, we also, I would say, take fairly mechanistic measures assumptions in a replicating portfolio so that you can make your calculation. But we do not make, you know, hypotheses in terms of, you know, pricing behavior based on competition in the market because that would have, you know, also a commercial impact. So we don't do that. So you have more, I would say, a mechanistic approach of the behavior of the portfolio. But there it is.

Yeah, so exactly you could say are we conservative or not, but there's definitely competition in the market. So you could argue it's conservative. And if we have more indication of path through, we will update our guidance on the back of that. If you look at our replication portfolio, we invested over the whole curve, so up until 10 years. The only thing we said there, around 40% of the replicating portfolio reprices within one year, and a big part of that is in the three-month bucket. The overall duration is three years of the replicating portfolio, to give some more indication.

Thank you very much. And if I may just very quickly follow up, assuming we do get some ECB rate hikes this year. Do you expect any material difference in competitive behavior from the last time the ECB hiked rates a few years ago? Has anything changed that we should be thinking about?

Well, one thing also you need to take into consideration in the hypothesis of our economic bureau is that we price, you know, like the market, we price right now two hikes in 26 at the same time, or assumptions, and that's also based to normalization of the current geopolitical events, is that these increases will be reversed in 2027. And that's not necessarily what you see in the forward curve. So this is also, I would say, different assumptions. And I mention it because then, depending on the more or less lasting effects, you may have also different competitive and pricing behavior and also expectations from clients. So it depends really on how you expect the current events to evolve over time.

Yeah. And it's also the main banks don't price directly of ECB rates. They always price on the back of the replicating portfolio yield. So also take that into account. as most of the larger banks run their deposits in replicated portfolios.

Yes, that's very helpful. Thank you very much.

The next question comes from Farquhar Charles Murray from Autonomous. Please go ahead.

Good morning all. I have two questions about May. The first one is actually following up a little bit on that competitive discussion on the last question. smaller players move and is that on the savings accounts or more on the term side of things and more generally from your own perspective does the degree of volatility you see in the scenarios that are out there kind of encourage it to move quickly or actually slowly and then secondly the leverage ratio is off quite a bit queue on queue I know there's some kind of seasonality to that but it seems a bit at the heavier end of things so I wondered whether the volatility in the market and maybe clearing it played a part in that and what we might then expect in the second quarter thanks

Sandy, on the competitive dynamics of the market and behavior of, you know... Oh, Parker, clearly what you do start seeing is some of the more challenger and smaller banks are starting to price up. So you do see the competition there. So there I'm also ahead. That's also one of the underlying reasons we are more conservative there in our assumption. If you look at the leverage ratio, that was your second question. Yes, it decreased to just below 5%, but that is mainly what you see in Q1, because the exposure measure increases, and that is more the on-balance sheet exposures. And at the same time, it was partly offset by an increase in our pro forma T01 capital.

The next question comes from Julia Aurora Miato from Morgan Stanley. Please go ahead.

Hi. Sorry for coming back on the queue. I thought it's an efficient short call, so maybe there is space for a couple more if everyone else has been answered. Under restructuring costs, I would be surprised that these have been moved mostly to 27, 28. And I don't know whether to interpret that as, Number one, well, maybe it's actually cheaper to achieve what you set out to achieve, and so you just keep them there, push them forward, but maybe ultimately they're not going to come, which is something that some other banks are hinting to, thanks to AI, or for some reason, I don't know, you're going more slowly on the internal FTE reduction, and therefore these are going to come more in 27 and 28. And then a second follow-up, on this mortgage floor which is coming out, So my understanding on this floor is that it was put in place for, essentially, to make sure that the banks already think about the output floors, right? Because the output floors can be quite impactful on mortgages. And if we remove it, but you write a 10-year mortgage today, which has a 10-year, you know, in a time when you already have the output floor, in theory, you should sort of price the same. So I was a bit surprised that, you know, you said, well, yes, potentially the pricing adjusts. I don't know if you have any thoughts on that, or maybe this is an indication that the output floor is not going to come through.

Thank you very much. I will let Fede answer your question on the output floor, but I think based also on our, you know, you can calculate it. The study will lead you through that. In terms of, you know, restructuring costs, what we shared at OCMD is that, you know, we had a total of roughly 400 million over the course of the plan. We already took, you know, around 100 million in 25. We indicated this, you know, at Q1, you know, out of the 63 million, we are looking at Q1. This is primarily related to... the integration of HAL, so this is, you know, this is most of what you would expect. So I think we gave you fairly good indications of where you would, where you should see these restructuring charges impact over time. They are the reflection of, you know, us implementing quarter after quarter or strategic plan and for this quarter primarily the integration of HAL. Ferdy, on the impact of the output.

Yeah, Julia, on the output floor, what I made in my comments earlier, that there's structural overlap in all the different buffers. So the Dutch market floor was put into place for potentially systemic risk in the housing market in the Netherlands by the dependency or the... big part of mortgages on the balance sheet of banks. There was clear overlap with a countercyclical buffer, which is 2% in the Netherlands, which is also a releasable buffer. If you look at the phase-in period of the output floor towards 2032, we have said earlier, specifically for us, that will not have any impact, the biggest And a result of this is clearly that for the biggest part of a non-retail, we are unstandardized. So, yes, there's quite a gap between the full VIP phasing of the output floor versus the RWA we're currently reporting. So, arguably, that buffer is getting smaller with the discontinuation of the output floor. So for us, there's no impact in the thinking of the DMV. There might also have been some part of thinking in that with the full facing of the output floor is an additional prudential lever for potential systemic risks.

Got it.

Thank you very much. Thank you. I believe there are no further questions in the line. So if that's the case, We want to thank you very much for your attention participating in this call this morning. And, of course, should you have any further questions, our Investors Relations team is, as always, at your disposal. Have a very good day.