ING Bank Slaski

Good morning, this is Laura, welcoming you to ING's 1Q2026 conference call. Before handing this conference call over to Stephen Van Rysbeck, Chief Executive Officer of ING Group, let me first say that today's demands may include forward-looking statements, such as statements regarding future developments in our business, expectation for our future financial performance, and any statement not involving a historical factor. Actual results may differ materially from those rejected 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 20F, filed with the United States Securities and Exchange Commission, and our earnings press release as posted on our website today. Furthermore, nothing in today's comments constitutes an offer to sell or a solicitation of an offer to buy any certificates. Good morning, Stephen. Over to you.

Thank you very much, Laura. And good morning and welcome to our results call for the first quarter of 2026. I hope that you're all doing well and thank you for joining us today. Sitting next to me is our new CFO, Ida Lerner. Ida joined us on the 1st of April and we're very happy to have her on board. Welcome, Ida. And next to Ida, I'm also joined today by our Head of Risk, Andrea Cesarone, and we have started the year strongly. The first quarter of 2026 unfolded against a backdrop of geopolitical and macroeconomic uncertainty. However, our performance demonstrates once again the resilience of our business and of our clients. And we have continued to deliver strong and diversified growth and we're well on track to achieve our full year financial outlook. In today's presentation, I will talk about the resilience of our growth strategy and how the consistent execution thereof is delivering increasing value. After that, Ida will walk you through the quarterly financials, and at the end of the call, we will be happy to take your questions. And with that, we now start on slide two. This slide highlights our continued commercial momentum going into 26 with solid growth across all key areas and as you will remember we had ended 2025 with very strong volumes including some seasonal inflows and we have managed to maintain that strong positive momentum also across the first quarter more than absorbing the seasonal effects and continuing to push volumes even further up. Mobile primary customer growth for instance is seasonally lower in the first quarter However, we managed to grow by another 125,000 and we continue to be on track to achieve our 1 million growth target also in 2026. Loan growth was again strong at an annualized pace of more than 8%. In retail banking, we've grown by 9.4% in the first quarter. And besides continuing momentum in mortgages, we also saw strong growth in business banking where we continue to expand the franchise. In wholesale banking, we grew the loan book by 5.6 billion while keeping its risk-weighted assets broadly stable. We also saw solid inflow in deposits at an annualized rate of 4% despite seasonal outflows from current accounts in the first quarter and despite conversion into investment products. Fee income rose by 13% year-on-year, supported by a growing customer base, by higher customer trading volumes and by strong deal flow in wholesale banking. And all of this translated into a return on tangible equity of 13.6% for the quarter. And finally, our sustainable volume mobilized has increased by 11% year on year as we continue to support our clients in their sustainable transitions. Now let's move on to the next slide to take a closer look at the fundamentals of our continued commercial growth. Slide 3 summarizes how the resilience of our business supports our growth strategy, also in a more challenging environment. And let me start by saying that the main driver of ING's commercial growth is the superior experience that we provide to our customers. With a leading net promoter score in most of our retail markets, we continue to attract new customers. And we see even stronger growth in the conversion into mobile primary relationships as more customers choose ING as their primary bank. And this deepening of the relationship with our customers is furthermore supported by the broadening of our product offering. And here we see strong momentum across all of our businesses, helping to further diversify our revenues across a growing range of capabilities. We've recently launched business banking in Italy, and in the Netherlands we are rolling out an insurance broker model to further integrate insurance capabilities into our mobile app. We are achieving most of our lending growth in mortgages. And as the leading European mortgage bank, we benefit from continued strong market fundamentals. The strength of our largest mortgage market is supported by constant low unemployment rates and a resilient market outlook. And our wholesale bank is well positioned to support Europe's strategic resilience with deep expertise in key focus areas, including in infrastructure and DMT. And as a top three MLA and bookrunner in Europe, and with our strong DCM franchise. Also, the bank is ready to support the investment initiatives that are needed to strengthen Europe's position in the global context. And with that, we move to slide 4. And on this slide, you can see how the consistent execution of Australia is driving value, supported by rising profitability, And by consistent deployment of share buyback programs, our EPS has improved by 11% on a 12-month rolling basis. And with EPS and the return on tangible equity clearly on a rising path, we have set firm direction towards our profitability targets by 2027. We see a wide range of strong catalysts that will support further value creation. First of all, we continue to grow our mobile primary customer base by 1 million per year. And this means that we're not just growing the number of accounts. This is growth from customers who actually use ING as their primary bank. And this is the core engine of our growth strategy. This is where growth, income diversification, and superior cost to serve all come together. In addition, that's number two, we continue to expand our business and develop new business streams. We are further rolling out our successful business banking franchise into several countries. We're building our private banking and wealth management as a third retail banking pillar in our existing markets. We're continuously developing new insurance propositions to make insurance a relevant revenue stream. And also banking, we're making strong progress to further diversify our capabilities in capital light revenues. And thirdly, when it comes to growth, Growth becomes powerful only when it is truly scalable. And our continued focus on operational excellence is increasingly enabling us to achieve growth in a truly scalable way. Combined with our capabilities to scale AI solutions quickly, we see a powerful improvement in growing commercial value and volumes at a much faster pace than our cost base. And finally, number four, we continue to improve our already strong level of capital efficiency, supported by continued capital velocity measures, both in wholesale banking and in retail banking. And all of this is not a journey that we will start tomorrow or in the years to come, but one that is already well underway, and one where we see its strong results already clearly today. Now, let's zoom in for a minute on that topic of scalability, moving to slide 5. On slide five, we demonstrate how we're increasingly enabling scalable growth. And first, I want to touch upon what drives our ability to achieve scalable growth. Now, R&D has a long track record of digitalization, and as a result, the vast majority of our key customer journeys are already fully straight through without any human intervention, and this is a key ingredient, not only for superior customer experience, but also for achieving through cost-efficiency. And in addition to a high level of digitalization, we also have built strong foundational capabilities that enable scalability. For example, we have our global hubs network, and it houses 27% of our tech employees and 40% of our operations workforce. And a fully integrated and scalable network organization supports improved productivity and operational resilience. But also our scalable tech platform, which includes... core infrastructure components such as our global private cloud and our global technology platform that provides reusable shared services for product development. And when you add these two ingredients together, digitalization and a scalable tech and operations organization, then you have a very strong starting point to deploy AI solutions. And that is why we have been able to already roll out many AI solutions at scale quickly. More than 90% of our AI pilots have successfully been moved into production. More than 75% of our customer chats are fully resolved by AI without human support. More than 7 million customers have already received hyper-personalized marketing campaigns. We have agentic mortgages, live in production in the Netherlands, and soon rolling out to other countries. And we are on the verge of of globally rolling out conversational banking for our retail customers, which is a personal assistant with agentic experience. Now, then when you then look back over cost performance over the past 12 months, and in comparison to our commercial growth, there you then see the powerful proof of our ability to achieve scalable growth. Because over the past 12 months, we have grown our mobile primary customer base by almost 7%. our customer balances by more than 5%, our volumes in investment products by more than 15%, and fee income even by 15.6%. With our FTEs, however, decreased by 0.6%, while our cost growth was limited to 2%. And with our commercial growth significantly outpacing incremental costs, we are delivering clear, scalable growth, supporting meaningful improvements of our efficiency ratios in the years to come. Now let's move to slide 6. On slide 6, we show how the consistent execution of our growth strategy is resulting in strong capital generation. Over the past 12 months, we have delivered 6.4 billion in net profit, contributing almost 2 percentage points of our CET1 ratio. And of that 6.4 billion, 50% has been reserved for our regular dividend distributions, Around 15% of the capital we generated has been used to fund profitable growth across our markets. And here we see a clear demonstration of capital efficiency. We have generated 65 billion of profitable lending growth over the past 12 months, while consuming only 1 billion of capital. And finally, the generated capital that was not needed for organic growth, we have returned to shareholders. with a total amount of €4.4 billion of additional distributions over the past 12 months, largely in the form of share buybacks. Now let's move to slide 7, where I will show how these distributions have resulted in continued attractive shareholder return. In line with our distribution policy, page 7, we have consistently paid cash dividends and we have been executing significant share buyback programs for several years, and together This results in consistent and attractive total distributions per share. The previously announced share buyback of 1.1 billion euro has been completed this week and today we have already started with another 1 billion share buyback program which will run for the next six months. And when we look ahead, we remain fully committed to strong capital discipline to deliver strong shareholder results and we maintain our semi-annual rhythm of assessing the potential for additional distributions and we will update you again in six months time. Now, before handing over to Ida, let me first take you to slide nine. And on slide nine, we confirm our financial outlook for 26 and 2027. We're well on track to achieve our upgraded outlook, which we communicated in the previous quarter with our full year results. We continue to add one million mobile primary customers per year, we see continued momentum in building out our fee income, we will deliver positive operating jewels in the years to come, and we are delivering on a broad range of catalysts that will continue to support the upper part of our RTE in the years to come as well. Now, let me hand over to Ida, who will walk you through our first quarter of results in more detail, starting from slide 11.

Thank you, Stephen. It is my pleasure to present the results of what has been a very strong first quarter of 2026. On slide 11, we can see that commercial NII has continued its upward trend since the second half of 2025. This is supported by continued volume growth on both sides of the balance sheets, by disciplined commercial pricing, and by the hedging tailwind on our replicated customer deposits. Fee income also continued its upward trend driven by further customer growth and by strong performance, particularly in investment products and in wholesale banking. All other income, on the other hand, was affected by the heightened market volatility towards the end of the quarter. This has resulted in some IFRS asymmetrical effects of which the majority should come back over time given lower interest rate volatility ahead. Overall, the strong customer activity and volume growth noted in the first quarter outweighed the lower all-other income and led to an uptick in total income of 3% compared to the same quarter last year. Let's now move to slide 12, where we will show the development of our customer balances. As you can see, we delivered another quarter of strong commercial growth across both retail banking and wholesale banking. Net core lending increased by $15 billion. Retail banking contributed $9.4 billion, driven by continued mortgage growth with strong production in the Netherlands, Germany, Italy, and Australia. This was coupled with a particularly strong performance in business banking, mainly in Netherlands and Poland. Wholesale banking also delivered strong growth of $5.6 billion. while keeping risk-weighted assets broadly stable. Within this growth of 5.6 billion, we see a strong net inflow of 7.8 billion in lending, which was partly offset by the repayment of a short-term working capital solution for safety. On the liability side, core deposits increased by 7.2 billion. Retail banking contributed 4.3 billion of growth, with strong inflows into savings and term deposits, most notably in Poland, Belgium and the Netherlands. This more than offset the seasonal outflow from current accounts and the conversion into investment products. Wholesale banking added 2.9 billion of customer deposit, as it continues to build out its capital-light income capabilities. On to slide 13. On this slide, we zoom in on commercial NII. Commercial NII grew by 132 million quarter on quarter and was 7% higher than last year. Lending NII was up 41 million in the first quarter despite lower day count driven by sustained volume growth at stable margins. Liability NII increased by 91 million quarter on quarter reflecting both volume growth and a five basis points increase in the liability margin. This higher liability margin is a reflection of the prolonged hedging tailwind on our replicated deposits while maintaining disciplined commercial pricing across the back book of our deposits. What it also reflects is the absence of larger savings campaigns during the first quarter meaning that the level of acquisition costs was relatively low this quarter and will likely normalise again in the coming quarters. As such, let me be clear that we should not expect a five basis points increase of the liability margin every quarter ahead. Looking ahead, on the back of a very strong first quarter and especially the higher than expected volume growth, we can expect a slightly higher level of commercial NII than previously guided. We now expect commercial NII for the full year to be between $16.5 and $16.7 billion. Turning to slide 14. Fee income growth remained strong, increasing 13% year-on-year and was also up on the prior quarter. What is especially encouraging to see is that this strong performance of fee income stems from all products and all markets, supporting the diversification of income sources for the bank. In retail banking, fee income grew by 13% year on year. This was mainly driven by structural factors, such as continued customer growth and improved cross-selling. Investment products, in particular, performed very well. a record quarter even benefiting from 8% growth in customers with an investment account and 15% growth in asset under management and administration, of which roughly half comes from net inflows, while also benefiting from 13% more trades, which besides the higher customer base, was supported by the increased market volatility towards the end of the quarter. In wholesale banking, fee income grew by 11% year-on-year, again demonstrating its strong progress on further income diversification. Let's turn to the next slide. On slide 15, we showed the development of all other income. Here we see that the heightened market volatility towards the end of the quarter had a negative effect on hedge ineffectiveness. as well as our activities within financial markets. It's worth remembering, however, that the P&L impact from the hedging effectiveness is not economic in nature. It is account-driven and should reverse over time. In financial markets, we continue to support our clients through the volatile market conditions. However, all other income was impacted by the sharp increase in interest rates. Overall, We expect all other income for the full year to be slightly lower than our normal run rate, ending somewhere between 2.5 and 2.7 billion. Next, slide 16. Expenses, excluding regulatory costs and incidental items, showed only a moderate increase year-on-year of 1.1%. clearly demonstrating our disciplined approach to cost management and our scalable growth capabilities. The impact from wage inflation was largely offset by savings from prior restructurings, while allowing for ongoing investments to support business growth. Quarter on quarter, expenses were down slightly, mainly driven by seasonally lower customer acquisitions costs in the first quarter. Incidental items of 13 million for the quarter included 25 million of restructuring provisions for the full-time employee reduction in wholesale banking and in retail banking Belgium. Once fully implemented, these measures are expected to lead to approximately 20 million in annualized cost savings. Now let's move to risk costs on slide 17. Total risk costs were 346 million in the quarter, equivalent to 19 basis points of average customer lending, which is slightly below our through-the-cycle average, reflecting the quality and the strength of our loan book. Within this quarter's risk cost, we have included a prudent overlay to address the possible impact of higher energy prices and of the broader economic effects of the war in the Middle East. This 94 million addition to management overlays was, however, partly offset by a large repayment of a State 3 loan in wholesale banking. The State 3 ratio slightly improved to a low 1.5%. Overall, we remain confident in the strength and quality of our loan book. And finally, before handing it back to Stephen, let me take you to slide 18. On slide 18, we showed the development of our core equity tier 1 ratio. Continued strong capital generation and overall solidity allowed us to announce and start a new 1 billion share buyback program today, while maintaining our core equity tier 1 at our around 13% target level. In terms of risk-weighted assets for the quarter, these increased by 3.6 billion, Besides a 0.9 billion FX impact, this mainly reflected continued business growth. Within wholesale banking, the risk-weighted assets remained broadly stable despite strong lending growth, reflecting the continued capital velocity measures that have been taken within wholesale banking. What is new this quarter is a change in our dividend reserving approach to ensure compliance with EBA guidelines As of this quarter, our additional distributions will mainly be financed through upfront reserving. The implementation of this new reserving approach had a one-off effect this quarter of minus 23 basis points. In total, the additional distribution has an impact of roughly 29 basis points on our core equity tier one. This is merely a change in reserving approach. Our distribution policy remains unchanged. And with that, let me hand it back to Steven to wrap up today's presentation.

Very good. Thank you, Ida. And before we move to Q&A, let me recap the key takeaways from today's presentation. The resilience of our business supports the continued execution of our growth strategy also amid geopolitical uncertainty. The consistent execution of that growth strategy is clearly driving value with strong momentum in our profitability metrics, and we have a wide range of catalysts to further increase value. Our commercial growth is significantly outpacing the growth in expenses, reflecting our strong foundational capabilities to achieve scalable growth. And as a result, we see continuous strong capital generation, which enabled us to start a new 1 billion euro share buyback program today. And finally, we are well on track to deliver on our full-year financial outlook. And with that, I would like to open the floor for Q&A. Operator, back to you.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad. And in the interest of time, we kindly ask each analyst to limit yourself to two questions only. Thank you. We will now take our first question from Benoit Petrache of Capital Shoe Rooms. The line is open. Please, go ahead.

Yes, good morning, and welcome, Ida, and we are looking forward to talk to you in the coming days. So, yeah, two questions on my side. The first one will be on the LABIT margin, the 104. Clearly, we should not replicate the plus 5 bits per quarter. But objectively, looking into the second quarter, it looks like there is further support from the short end of the curve. So I wanted to confirm that with you, if you see that as well. And could you please also talk about the competitive environment on the deposit side so far in the month of April? Well, it seems to be still okay, so I just wanted to get a bit of a feeling about how deposits pricing behave in your main markets so far in the second quarter. And then the second question, yeah, sorry, I will just talk about a bit more like the strategy on the insurance because it's interesting what you've done. I think what you announced two weeks ago, you will be a monitored broker in the Netherlands for NNN Allianz. So what is your strategy now on the insurance? I think that things will probably speed up in terms of growth there. I just wanted to understand your long-term plan regarding insurance. And Kelly, with this move into multi-broker, I think you are stepping up in the value chain of insurance, which could accelerate the growth there. So the long-term picture on insurance, please. Thank you very much.

Thanks, Benoit, for your questions. I'll take the question on insurance and Ida will talk about the liability margin. Insurance is a little bit the same as we saw on investment products. I think a couple of years ago we started to talk again to our insurance partners to look at what is the best proposition for which market, for which customer segment and how does each market develop itself. It comes a bit back to what I said previously which is we have been very dependent on interest income, whether it was deposits or lending, and there's nothing wrong with these two products, but in the end we want to build up a broader client relationship when growing our primary relationships across the board. And in that regard, we have also started to do that with insurance. I think a few quarters ago we started to report on that separately. Every market works a bit differently. So in some markets, we have one partner. In this market, we work more with a platform model whereby insurance partners can subscribe to certain products. And increasingly, we're also moving up the value chain. In some of the markets, the insurance fees are still very low. Like I said in the past about investment business, that I said the asset management business compared to other banks that are smaller than us is still relatively benign. that also goes for insurance. So, in my view, we have just nearly started. It is getting better. We've seen that the growth was, I believe, 14% compared to a year ago. This is good, but we're still rolling out in more markets. We're hiring people as specialists, and we're maturing in also the way we provide insurance, and that could indeed also be taking over some more services. We currently don't think about taking over underwriting services, but we really tailored in each market where we're at, and there's quite a bit of upside from where we currently are.

Thank you for your question on liability margin as well as on competition. I think I'll start with the competition on deposits. I think it's important to say that we see strong but rational competition both on deposits but also on lending in all our main markets. We're looking particularly at the first quarter. That's seasonally a lower quarter when it comes to deposits. If you compare it year over year, you need to also keep in mind that in the first quarter last year, we did a larger campaign in Germany, which meant that we have a stronger inflow of deposits. We still see that we have an attractive offering towards our customers, and we continue to balance profitability around growth and ensure that we have a sustainable development also on deposits in line with what we've guided on in terms of an average growth of 5% where we think it would be natural to see a deposit growth. On the liability margin, it's good that you point out that we should not expect a five basis points increase on the liability margin every quarter. And what I think is important to say is that we expect to be in the mid-range of between 100 and 110 basis points this year. also driven by a hedging tailwind which comes in gradually but not exactly linear, and particularly a reflection of the lower than usual campaign-related deposits cost in the first quarter. So that's also something that needs to be taken into account when looking at the liability margin ahead.

Thank you very much.

Thank you, and we'll now take our next question from Chris Helen of Goldman Sachs. Your line is open. Please go ahead.

Yes, two questions. The first one, I see you've introduced on slide 27 a bullet point on the right-hand side to say the range of 100 to 110 could be temporarily exceeded, and I just wanted to ask more conceptually how you think about that opportunity. So on the one hand, you could pay up to sort of source additional deposits and essentially sacrifice and hopefully make you find the demand on the lending side to put that additional liquidity to work, doing what you typically run about 100% LDR. But obviously that ties up more capital and it brings in a bit more credit risk. Now, on the other hand, you can allow volumes to react to your determined pass-through rates and just ride the tide of higher rates and underlying volume growth in your markets. You wouldn't grow deposits by as much, but it's a higher ROE and a lower credit risk strategy. I guess from the outside in, that's a pretty easy decision to make, but I'd just be interested to see and hear how you see the balance between those two strategies. And then second, of this £600 million increase in replicating income in 2025, again, outside 2017, I know that's a gross number, but how much is included in the new commercial NII guidance? And the haircut you're taking in deciding how much of that £600 million to embed in the new guide Is that because you're waiting to see where rates really settle this year, which is a huge amount of volatility, or because you're actually seeing more price competition going through on deposits and there being a bigger difference between the gross and the net number? Thank you.

All right. So the second question I read or I heard as that we gave in our commercial and our guidance is, of plus 200 million and how much is for more liabilities. Is that by the right of understanding, Chris?

Yeah, effectively, your replicating income guidance for 2026 has gone up by 600. Your commercial income guidance has gone up by 200. The replicating income number, though, is gross, so it could be high deposit cost, or it could just be, you know, the latest Ford cab on that replicating income slide. Right. Do you want to put the latest Ford cab into commercial?

Yeah, so basically, I'll take the second question, and that takes the first question. So I think on the 200 million, that is basically all, the increase is all liability income. I think that if you... look at the liability income that's growing both on the volume and of course on the margin that we make and on the average duration and therefore the curves that we see. Now clearly we have been moving up our deposits with 7 billion That is in line with what we typically would do for the year.

Sometimes we have campaigns and it goes a bit... Overall, we remain confident in the strength and quality of our loan book. And finally, before handing it back to Stephen, let me take you to slide 18. On slide 18, we showed the development of our core equity tier 1 ratio. Continued strong capital generation and overall solidity allowed us to announce and start a new 1 billion share buyback program today, while maintaining our core equity tier 1 at our around 13% target level. In terms of risk-weighted assets for the quarter, these increased by 3.6 billion. Besides a 0.9 billion FX impact, this mainly reflected continued business growth. Within wholesale banking, the risk-weighted assets remain broadly stable despite strong lending growth, reflecting the continued capital velocity measures that have been taken within wholesale banking. What is new this quarter is a change in our dividend reserving approach. To ensure compliance with EBA guidelines, as of this quarter, our additional distributions will mainly be financed through upfront reserving. The implementation of this new reserving approach had a one-off effect this quarter of minus 23 basis points. In total, the additional distribution has an impact of roughly 29 basis points on our core equity tier one. This is merely a change in reserving approach. Our distribution policy remains unchanged. And with that, let me hand it back to Stephen to wrap up today's presentation.

Very good. Thank you, Ida. And before we move to Q&A, let me recap the key takeaways from today's presentation. The resilience of our business supports the continued execution of our growth strategy also amid geopolitical uncertainty. The consistent execution of that growth strategy is clearly driving value with strong momentum in our profitability metrics. And we have a right range of catalysts to further increase value. Our commercial growth is significantly outpacing the growth in expenses, reflecting our strong foundational capabilities to achieve scalable growth. And as a result, we see continuous strong capital generation, which enabled us to start a new €1 billion share buyback program today. And finally, we are well on track to deliver on our full-year financial outlook. And with that, I would like to open the floor for Q&A. Operator, back to you.

Thank you. Ladies and gentlemen, if you would like to ask a question, please press star 1 on your telephone keypad. And in the interest of time, we kindly ask each analyst to limit yourself to two questions only. Thank you. We will now take our first question from Benoit Petrac of Capital Shuru. The line is open. Please go ahead.

Yes, good morning, and welcome, Ida, and looking forward to talk to you in the coming days. So, yeah, two questions on my side. The first one will be on the liability margin, the 104. Clearly, we should not replicate the plus 5 bps quarter-on-quarter, but objectively, looking into the second quarter, yeah, it looks like there's further support from the short end of the curve. So I wanted to confirm that with you, if you see that as well. And could you please also talk about the competitive environment on the deposit side? So far in the months of April, well, it seems to be still okay. So I just wanted to get a bit of a feeling about how deposits pricing behave in your main markets so far in the second quarter. And then the second question, yeah, sorry, I will just talk about a bit more like the strategy on the insurance because it's interesting what you've done. I think what you announced two weeks ago, you will be a mandated broker in the Netherlands for NN and Allianz. So what is your strategy now on the insurance? It seems that things will probably speed up in terms of growth there. I just wanted to understand your long-term plan regarding insurance. And Kelly, with this move into market broker, I think you are stepping up in the value chain of insurance, which could accelerate the growth there. So, yeah, the long-term picture on insurance, please. Thank you very much.

Yeah, thanks, Benoit, for your questions. And I'll take the question on insurance, and Ida will talk about the liability margin. Look, in insurance, it's a little bit the same as we saw on investment products. So I think a couple of years ago, we started to talk again to our insurance partners to look at, okay, what is the best proposition for which market, for which customer segments, and how does each market develop itself? And it comes a bit back to what I said previously, which is we have been very dependent on interest income, whether it was deposits or lending. And there's nothing wrong with these two products, but in the end, we want to build up a broader client relationship when growing our primary relationships across the board. And in that regard, we have also started to do that with insurance. I think a few quarters ago, we started to report on that separately. Every market works a bit differently. So in some markets, we have one partner. In this market, we work more with a platform model whereby... insurance partners can subscribe to certain products. And increasingly, we're also moving up the value chain. In some of the markets, the insurance fees are still very low. Like I said in the past about investment business, that I said the asset management business compared to other banks that are smaller than us is still relatively benign. That also goes for insurance. So in my view, we have just nearly started. It is getting better. We've seen that the growth was, I believe, 14% compared to a year ago. This is good, but we're still rolling out in more markets. We're hiring people and specialists, and we're maturing in also the way we provide insurance, and that could indeed also be taking over some more services. We currently don't think about taking over underwriting services, but we really tailor it in each market where we're at, and there's quite a bit of upside from where we currently are.

And thank you for your question on liability margin as well as on competition. I think I'll start with the competition on deposits. I think it's important to say that we see strong but rational competition both on deposits but also on lending in all our main markets. When looking particularly at the first quarter, that's seasonally a lower quarter when it comes to deposits. If you compare it year over year, You need to also keep in mind that in the first quarter last year, we did a larger campaign in Germany, which meant that we have a stronger inflow of deposits. We still see that we have an attractive offering towards our customers, and we continue to balance profitability around growth and ensure that we have a sustainable development also on deposits in line with what we've guided on in terms of an average growth of 5% where we think it would be natural to see a deposit growth. On the liability margin, it's good that you point out that we should not expect a five basis points increase on the liability margin every quarter. And what I think is important to say is that we expect to be in the mid-range of between 100 and 110 basis points this year, also driven by a hedging tailwind which comes in gradually but not exactly linear. and particularly a reflection of the lower than usual campaign-related deposits cost in the first quarter. So that's also something that needs to be taken into account when looking at the liability margin ahead.

Thank you very much.

Thank you, and we'll now take our next question from Chris Helen of Goldman Sachs. Your line is open. Please go ahead.

Yeah, so two questions. The first one I see you've introduced on slide 27, that bullet point on the right-hand side to say the range of 100 to 110 could be temporarily exceeded. And I just wanted to ask more conceptually how you think about that opportunity. So on the one hand, you could pay up to sort of source additional deposits, essentially sacrificing margin for volume and hoping that you find the demand on the lending side to put that additional liquidity to work, given you typically run about 100% LDR. But obviously, that ties up more capital and it brings in a bit more credit risk. Now, on the other hand, you can allow volumes to react to your determined pass-through rates and just ride the tide of higher rates and underlying volume growth in your markets. You wouldn't grow deposits by as much, but it's a higher ROE and a lower credit risk strategy. I guess from the outside in, that's a pretty easy decision to make, but I'd just be interested to see and hear how you see the balance between those two strategies. And then second, obviously, 600 million increase in replicating income In 2026, again, on 527, I know that's the gross number, but how much is included in the new commercial NII guidance? And the haircut you're taking in deciding how much of that $600 million to embed in the new guide, is that because you're waiting to see where rates really settle this year, obviously there's a huge amount of volatility, or because you actually see more price competition coming through on deposits and there being a bigger difference between the gross and the net number? Thank you.

All right. So the second question I read or I heard is that we gave commercial and high guidance of plus 200 million and how much is for more liabilities. Is that by the right understanding, Chris?

Yeah, effectively, your replicating income guidance for 2026 has gone up by 600. Your commercial and high guidance has gone up by 200. The replicating income number, though, is gross, so it could be high deposit cost, or it could just be that you're using the latest forward curve on that replicating income slide. You don't want to put the latest forward curve into your commercial income.

Yeah, so basically I'll take the second question, and Ida takes the first question. So I think on the 200 million, that is basically all – the increase is all liability income. I think that if you – look at the liability income that's growing both on the volume and, of course, on the margin that we make and on the average duration, and therefore the curves that we see. Now, clearly, we have been moving up our deposits with $7 billion. That is in line with what we typically would do for the year. Sometimes we have campaigns and it goes a bit quicker, but also comes at lower margin. Now, we didn't do campaigns, and if you ship out the campaigns, we are still at what we typically do in a quarter. And, of course, the margin is supported by a higher short-term interest rate that helps our current accounts. Of course, we're also helped in this case by the higher forward curve, It also will help savings margins, but in the end, what we see in the past from competition, that always trends back to a certain level. But based on what we currently have seen and have done to date, this is the increase of liability income we expect on commercial NRI for 2026. So it has nothing to do with lending or lending margins. It's just a matter of the volumes that we expect at higher margins and a better replication rate.

Thank you. I think it's important to say that the slide 27, which I think you're referring to, is a visualization of what we would see bearing in mind a specific forward curve. And that's also the forward curve that we saw in March. That has been quite volatile, as you know, during the quarter. Some of the benefit, as Stephen also alluded to, some of the benefit from higher short-term rates is from current account volumes and therefore structurally accretive to NII. However, most of the benefit for us comes from the savings volumes, which is more sensitive to competition and historically has shown that the margins are fairly stable over time and is expected to also come down. And I would link that to the range of 100 and 110 basis points in terms of the long-term perspective. Taking purely the forward curve from March into account, you would say that, yes, we would potentially be higher than 100 and 110, but we also know that there's a fierce competition. There's also a very rational behavior in the bank focusing on profitability above growth over time. When you'd also asked about the composition in terms of will we prioritize lending over deposits, I think we've said that our long-term goal is to grow approximately equal by 5% on both sides of the balance sheet.

Great. Thank you.

Thank you. And we'll now take our next question from Julia Aurora of Morgan Stanley. Your line is open. Please go ahead.

Yes, hi, good morning. Thank you for taking my questions. I have two. So the first one, the commercial momentum was very strong in Q1, and Stephen, you called out momentum in mortgages, also growth in business banking. How is this evolving now, considering the change in the macro backdrop? So are you still seeing good demand for loans, or has that slowed down? First question. Second question, on cost of risk, the 94 million overlay, what oil price do you assume there? And could we see more coming in Q2, considering how things are evolving, literally, as we speak? Thank you.

All right, Giulia. Thanks for your question. I take the question on commercial momentum. And Andrea will take the question on the 94 million overlay. So on the commercial momentum, look, there's many elements that we anticipate to continue, and there are some elements where we could expect and could see an impact. If you look at the lending and the deposit space, I think a large part of our loans is in mortgages, and there the main drivers are unemployment rates and housing shortages, and that hasn't really changed. And so we've seen it also in previous cycles, maybe except when rates increase very, very quickly, as we've seen in the course of 22 and 23, then there was a little bit of a bump in the housing demand. But other than that, we have actually seen a continued rise in demand for mortgages, given the fact that there is housing shortage and there is low unemployment rate. So that's an important element to it. When we look at fees, many of our fee growth is alpha-driven. That's just having more customers doing more with us and driving more impact and relevance in the markets where we are, And I just talked also to the question to Benoit about, okay, rolling out new insurance propositions, rolling out broader investment propositions, having deeper payment capabilities in various markets, deepening our financial markets capabilities in terms of pricing for certain products. So it's just enabling ourselves because we have these customers to do more with them, and that I don't see change either. I think the biggest impact that we could potentially see, but it's too early to call, is that when we look at the lending demand and wholesale banking, there we've seen in the second half of last year quite a pent-up demand after the pipelines were full in the first half but didn't really convert based on the uncertainty given Liberation Day. That then converts in the second half and we see continue in the first quarter, but with all the uncertainty going on, that could be more muted in the quarters to come, but let's see what happens. That's what I could see at this point in time. Andrea? Andrea? on the overlay.

Yeah. Okay. So the primary purpose of the overlay, which we build, was indeed to adjust the quarter-end macroeconomic scenarios which feeds into our credit risk estimates to reflect the potential deterioration linked to the ongoing escalation in the Middle East. And let's say from the coming quarter, let's say consider a wider set of assumptions and microeconomic variables than the pure oil price. From the coming quarter, we expect to revert. to the normal process whereby economic, macroeconomic consensus is feeding naturally into our low loss provisioning process and therefore this overlay should diminish while the net impact on the low loss provisions will be actually depending on how the, let's say, higher oil price will affect the macroeconomic outlook. I would say, so in a nutshell, let's say this is the setup. It's too hard to come to a conclusion about the potential impact of the current oil price volatility on our loan operations.

Thank you. And we will now take our next question from Delphine Lee of JP Morgan. Your line is open. Please go ahead.

Yes, good morning. Thank you for taking my questions. So my first one is, sorry, just to come back on the liability margins and your comment about exceeding temporarily and out of years. So just to understand, when you say temporarily, just understand, you do think that there will be a significant change in competition, which you're saying at the moment is rational, but the new players and newcomers could really trigger potential change. Do you think this would be sudden? Just to understand how quickly that could bring down liability margin back into the long-term range of 100, 110 basis points. Second question is on capital. Just wanted to get your thoughts around the change on the mortgage floor in terms of the impact that you have on your C2-1 ratio and your distribution policy. You want to run around 13%. So seeing a bit of a positive impact, would that change how much you distribute in terms of buybacks? Thank you.

Thank you very much. I take the question on capital, and Ida will take the question on liability margins. when we look at the mortgage floor and what happened is that it was recently announced also by the D&B that they took a decision and as a result of which the Dutch mortgage floor expires as per the 1st of December 2026 and that decision will lead to a 4 billion lower risk-rated assets that is about 15 basis points over a CT1 ratio and And like we previously said, we are looking at a target of around 13%. We use our capital for growth and for distribution and normal distribution. And if there is any structural amount over that around 13% that we have in capital, then we'll pay it back to shareholders. And so we'll treat it in the same way as we normally do.

And thank you for the question on liability margin. Well, first, I think it's important to look at the composition of our portfolio as well and also link it back to what we saw in 2023. In 2023, we saw a rapid increase in terms of margins, which then came down gradually over time as there is quite strong competition. I think it's also important then to look at when I link it to our portfolio in terms of the percentage-wise split between savings accounts and current accounts, That also means that, as I mentioned before, that we expect the savings margins or margins on savings accounts to come back to a long-term level that we have seen before.

Thank you very much.

Thank you. And we'll now take our next question from Ben Goy of DB. Your line is open. Please go ahead.

Just like a warning, two questions, please. So first on cost, it seems like if you want good cost control and you are a bit ahead of your full year guidance, just maybe you can comment a bit more on that, whether it was FX and how the benefits of the operations restructuring should help in the rest of the year. And then on deposit campaigns, obviously you didn't do a big campaign. Should we generally expect bigger campaigns as you did in the past, or should it be more below the radar, potentially cheaper micro-campaigning type campaigns? Thank you.

I know. All right. So on both of the questions, Luc, What we have been able to do is that with the contained cost discipline but also scalability that I talked about in the presentation, we were able to largely offset the wage inflation and therefore we also allow ourselves to make investments. So in the end, what we want to do is to be able to further grow and diversify ourselves so the more we're able to to have efficiencies coming from our scalability, both from digitalization and our scalable tech and offs, that we can then reuse to get better customer experience by making investments into our products, as we talked about, and that will then support the long-term value and the drive of our ROE. And in that sense, we continue to confirm also the outlook that we have for 2026 and 2027. But we do see, and that's what I mentioned on page five of the presentation, continued improvements on that front, on the front of scalability, and it gives us opportunity to play with the levers of investments versus costs, which is very helpful. But the outlook remains the same at this point in time. When we talk about campaigns, yeah, it's mixing and matching. So in the end, we want to grow our customer base, And in the meantime, we want to, in the long term, balance loans with deposits. We've seen for a number of quarters that deposits were growing faster. Now we've seen a couple of quarters where loans are growing faster. And so we want to do that in a balanced way. In the end, our purpose is to get more primary relationships in because these clients will do multiples in terms of end products, but also in profitability and in stickiness with us. And therefore, we will tailor it as to how we can grow and develop our customer base while keeping an eye on our balance sheet. So that's a mixing and matching of both more micro campaigns and potentially more above the line campaigns that we've seen in previous years.

Thank you.

Thank you. And we'll now take our next question from Tarek El-Majad of Bank of America. Your line is open. Please go ahead.

Hi, good morning, everyone, and welcome from myself as well, Ida. Looking forward to talk more in the future. So I just want to follow up first on volumes. I understand the uncertainty element that could reverse if things get better in Iran and the conflict. But what about if we have a more sustained higher energy prices, lower consumption, and maybe higher inflation on your wholesale landings? if we see something more structural rather than the reversal uncertainty, which areas you see and what could be the impact on your lending. And the second question is on the SRTs that you're planning to do for the rest of the year, I think 15, 20 bps boost of capital. How is discussions with the ECB and how do you see the market evolving in this current uncertainty? Is that something you still see as... as on track in terms of delivery and pricing and also on what kind of loans you put there. Thank you.

Yeah, thanks, Tariq, for your questions. And I'll take the question volumes and Ida will take the question SRTs. So I think on volumes, look, in retail, like I said, we have seen over the past six, seven years, different elements that impacted the macroeconomic volatility. But again, most of our retail lending and predominantly mortgages is much more linked to unemployment rates and shortage of housing. And therefore, how sad the war is, and how sad the war is, that is not directly impacting those macroeconomic indicators and therefore we expect a continuation of demands for mortgages and depending on the pricing and we will therefore further grow that book. When it comes to wholesale banking, there we saw in the first quarter, if you annualize, sorry, if you now annualize the growth rate that we saw in the first quarter on lending, in total it was 8%, that is quite a bit higher than the 5% that we, for 5% we saw previously over the years. sectors in wholesale banking that could be affected are sectors that are one linked to the oil price i.e. that have the oil price and energy price as quite an input factor on the cost base you could think about the chemical sector or fertilizers or construction or transport and logistics those are sectors that are typically impacted and then the question for those companies is are they able to pass on those energy prices. The second element that you could see is that Asia, which is even more dependent, I would say, on the Middle East, the Strait of Hormuz, in terms of getting their oil in, if that is impacting their production levels and therefore also impacts the delivery of supply chains to a number of other companies in the world, including the U.S. and Europe. So those would be the main macroeconomic impacts. So far, and we are watching that closely, clearly a number of the companies that we talk to are much more flexible than they were a number of years ago because they have been dealing with the war in Ukraine and Corona. So they are more used to changing in terms of uncertainty. So far, we don't see so much in our book. You saw the risk costs that are below the three-cycle average, and it also includes an overlay. So the risk costs are still quite benign. and that's just a matter of waiting and looking and helping our customers, but it's too close to see what is really happening. We just need to stay close to the clients, especially in the sectors I just outlined.

And on SRTs, SRTs are an important tool in our toolbox to ensure capital efficiency and also optimize our capital position. As you know, In November last year, we announced the successful completion of our first two SRTs in wholesale banking, which provided a core equity tier one relief of 12 basis points. We aim to continue using SRTs across wholesale as well as retail banking portfolios in the coming years. And we've previously also said that we expect to do additional capital reliefs in 2026 of between 15 to 20 basis points. and that still remains the plan. We have a very good and constructive dialogue with ECB, so I don't see any negative trends there at all or hesitations from their side. And it's also important to say we are kind of in the early phase of doing SRTs and therefore are not an outlier in any way.

Thank you.

Thank you. And we'll now take our next question from Sri Shubhastava of Citi. Your line is open. Please go ahead.

Hi, and thank you very much for taking my question. Apologies if it's been touched on already. I just joined. But if you look at your 2026 commercial NRI guide, it's been uplifted by about 200 million, if you take the midpoints. If you compare that against the gross replicating income uplift on slide 27, it's about $600 million. So therefore, you're guiding to an implied faster of close to 70% in 2026, if I'm not mistaken. Can you just explain what's driving that, what key markets and what opportunities you see? Thank you.

Okay, Ida? Yeah.

Hi, Shrey, and nice to speaking to you again. As you rightly say, we saw a strong momentum on the commercial NII. It was much better than expected and what we had guided for before. I think there are mainly four factors impacting this. We had a particularly strong lending growth, good deposit growth also in the first quarter, in spite of the seasonal outflows that you always see in the first quarter. Then we see the positive impacts of the hedging tailwinds, as you saw already from the second half of last year, really showing an impact also this quarter. And then lower deposits costs related to promotional campaigns. When you look at slide 27, it is important to say that that's more of a visualization of where what we see in terms of replication development driven by a specific forward curve. So what we're saying there is that, yes, you will see a positive impact given the interest rates environments coming into play, but we're also then saying that we will be in the mid, we expect to be in the mid range on liabilities margins and on between 100 and 110 basis points this year and could potentially, given the interest rate path that we're seeing today, be slightly above 110 in the two coming years. But we also expect, given the portfolio mix that we have, to see that trending down to a more normalized level over time, as we also know that there is strong competition also on the savings side, which we also saw in 2023. Thank you.

Understood. Thank you very much, and good to see you, Yanida.

Thank you, and we'll now move on to our next session from Matthew Clark of Mediabunker. Elaini Thurston, please go ahead.

Good morning. More questions on liability margin, I'm afraid. So I guess, firstly, I was just hoping to understand a bit better whereabouts on the curve the movements were that benefited the liability margin this quarter. I mean, interest rates only really moved through March, so only for the last month. So just trying to understand, was it three months, six months, 12 months that really drove that five basis point benefit that we hadn't seen in the past? Presumably it would take too long for the longer end to be benefiting the margin that much. And then a related question is just in terms of the changes.