AAVMY (AAVMY) Q1 2026 Earnings Report, Transcript and Summary

Welcome to ABN AMRO's Q1 2026 Analyst and Investor Call. Please note this call is being recorded. [Operator Instructions] I will now hand the call over to the speakers. Please go ahead. Marguerite Bérard-Andrieu: Good morning, and welcome to ABN AMRO's Q1 '26 results presentation. I'm joined today by our CFO, Ferdinand Vaandrager; and our CRO, Serena Fioravanti. I will cover the key messages, our progress and strategy and 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 2. 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 EUR 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. Fee 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 EUR 5.5 billion. Credit quality remains solid, with limited net impairments and a cost of risk of 9 basis points despite increased geopolitical uncertainty. Our capital division remained strong with a CET1 ratio of 15.5%. Let me now go into more details on how we are delivering on our strategic targets. For our core projects, mortgages and client deposits, we are on track to reach our '28 ambition. For client deposit growth, we stand at 46% of our '28 ambition and including the intended acquisition of NIBC at around 63%. With EUR 2 billion of mortgage growth this quarter, 30% of our growth ambition has been realized. And again, including NIBC, 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 homes' energy level. This rewards appliance 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 [ client ] deposits into mandated and advisory products continued. We expanded our investment offering with the launch of regulated crypto investment projects. This gives clients transparent access to this 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 simplifying all bank and reducing run rate costs, we are delivering on our promise to rightsize our cost base. Over the first quarter, FTEs again decreased by more than 500 bps mainly more external staff. Total FTE registration since the end of '24 now represents around 40% of our '28 targets. In terms of cost savings, a further EUR 60 million was achieved in Q1. This brings cumulative savings to around EUR 220 million, out of a total of EUR 900 million mainly from increased efficiency and ongoing IT streamlining. Alongside call discipline, we are also improving productivity by embedding technology in AI more deeply in our daily work. We have moved faster than expected 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 clear reduction targets of both portfolio optimization and RWA optimization. Together, these targets a EUR 10 billion reduction, and this quarter, we realized an additional [ reduction ] of EUR 1 billion. We have, therefore, now realized around 50% of our targets, mainly through RWA organizations. This reflects the partial reintroduction of the SME support factor, improvements to date quality and collateral sourcing. Portfolio optimization are more gradual and includes the closure of asset-based finance international. This is proceeding as planned. We have identified EUR 8 billion of RWA for active portfolio management and around 20% has been securitized by the SRT 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 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 2 years of 8% price growth we expect prices to moderate to plus 3% in '26 and plus 4% in '27. Transaction volumes eased a 10-year record of around 239,000 in '25 but are expected to decline by 6% in '26 and 4% in '27 amid heightened uncertainties and also limited supply of new homes. Despite this, the economy faces a turbulence from a position of strength in household savings, low debt ratios and a steel tight labor market are providing meaningful buffers. I'm turning now to our financial performance for the first quarter, starting with client deposits on Slide 8. The quarterly movement 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 or a solid outcome. Over the past quarters, we have seen a continuous growth in deposits in line with our strategy conditions. Now 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 and advisory project, keeping our progress on track. Now turning to interest income. This quarter, commercial NII improved by EUR 36 million. Mortgage volumes continued to increase, with growth increasingly coming from government-backed mortgages. These mortgages are lower margins, and this explains a 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 NII. The [ liabilities ] margin was broadly unchanged, reflecting the stable replicating yield. Other commercial NII also increased in Q1 among others, from higher financing demand for 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 implies a further tailwind to liability margin. This creates upside to our full year commercial NII guidance. As is forward rates, this could be close to EUR 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 assist given the unpredictable nature of current events. We expect we can narrow down our NII 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 client 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 in the past 3 quarters. One reason has been the lower equity participation resource. Market consensus are unfavorable for both revaluation and exits. Also, ALM/Treasury results have been lower than seen on average over the past 3 years. I'm now turning to our costs. Given stronger-than-expected delivery and cost reductions, we have decided to lower our cost guidance of '26 by around EUR 100 million to approximately EUR 5.5 billion. Our discipline essential our strategy. Compared to Q1 last year, we had a more or less similar cost level. However, when we exclude HAL expenses are, in fact, down 6%, reflecting the impact of lower FTEs and lower IT costs. We are on track with integration of HAL, and this accounts for the largest part of the EUR 63 million integration costs we 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 personnel expenses starting Q3. Turning to 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 impairment in contrast 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 lead 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 remained stable at around EUR 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 our portfolios. This is also reflected in our very limited private credit exposure of around EUR 200 million. Turning now to our capital position. Our proforma CET1 ratio was slightly to 15.5%. This excludes the potential impact of around 70 to 80 basis points from the acquisition of NIBC which we expect to book with Q3. RWA increased by EUR 1.2 billion in Q1, largely related to business development in Corporate Banking, partly offset by that quality improvements. Other RWA stock gearing increased from a reversal of the seasonally lower RWAs in Q4 and the onboarding of new clients. The Dutch Central Bank has decided not to continue to mortgage floor beyond the current period ending at the end of November, depending on market and volume development, this could lead to a reduction of around EUR 7 billion in our mortgage RWAs. In terms of capital [ allocations ], let me start by saying we are committed to returning at least EUR 7.5 billion of capital by paying out up to 100% of net profit over the year of '26 to '28. These represent substantial commitments. The removal of the DNB mortgage floor is an upside to our plan, and all [indiscernible] benefits our capital position. We said at the CMD that over a period of time, our capital position remains significantly above our target, and we are delivering on our strategic computations, 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 see capital consistently exceeding our target and further deliver on our strategic ambitions. Let me close with the key takeaways 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, we're profitably rightsize our cost base and optimize capital allocation. We showed profitable growth, adding a further EUR 2 billion to our mortgage portfolio. We also delivered record high fees. We are keeping our NII guidance unchanged while acknowledging the financial upside from current interest rates. We also maintained strong cost discipline and have lowered our cost guidance for full year 100 million to around EUR 5.5 billion. And with CET1 ratio of 15.5%, we remain well positioned to invest in our strategy, support our clients while 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.

[Operator Instructions] The next question comes from Giulia Aurora Miotto from Morgan Stanley.

I have 2. The first one on the improved cost guidance at EUR 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 seasonally higher. I appreciate the CLA but I would think it could be almost EUR 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 cost guide? And then secondly, this mortgage floor, so 70 more bps, basically, that is coming your way by year-end, plus the over delivery so far. How should we think about the potential for perhaps an interim excess capital distribution. And I hear you, Marguerite, you said that you want to show a bit more delivery or at the beginning of the journey. So in terms of time so we think about maybe Q3? Is that a realistic timing for ABN to raise a request to the ECB for an excess capital distribution? Or what's the best way to think about this? Marguerite Bérard-Andrieu: Thank you very much, Giulia, for your questions. In terms of our closed guidance improvement, indeed, we are pleased with our pace. We are pleased with our discipline and commitment to delivery. This is what allows us to improve even though we are early in the journey to improve our cost guidance by EUR 100 million to EUR 5.5 billion. This is a guidance we're very comfortable with. I also pointed out that, indeed, there may be things to be considered like pointing out to our CLA negotiations happening in June. So we -- the other 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 the DNB mortgage floor and its consequences, 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.

The next question comes from Benoit Petrarque from Kepler Cheuvreux.

Yes, and well done really on the OpEx development. So 2 questions on my side. The first one will be again on OpEx. So you've achieved 40% of the planned FTE reduction already in Q1. I think you announced the CMD just 4 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 the 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 FTE reduction plan for the long term. So that's the question number one. Number 2 is, actually, yes, maybe on liability margin, things are looking better already. And conceptually, do you think your EUR 7.2 billion NII number is still the right one at the current curve? Marguerite Bérard-Andrieu: On cost, let me reiterate what we shared at our CMD. In terms of FTE trajectory, we committed to the total reduction 5, 200 by '28. Indeed, where we look at where we stand now, we are pleased with the pace we've been achieving 40% of your overall target. I also shared that we do expect this pace to 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, 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?

Yes, maybe more in general, as you asked at Benoit, we have very strong confidence in our NII guidance -- commercial NII guidance for this year of EUR 6.4 billion. But it's also, as Marguerite said during the presentation and current volatile market environment, we expect to have better visibility at the year and also in the disclosures in the presentation, we recognized the forward curve has improved. Hence, the guidance can be seen as somewhat conservative if April curves were to materialize. So that implies upside potential to our guidance of roughly EUR 100 million. But you should not look at isolation at this, right, with higher margin deposit competition, what we see already of smaller players might increase and also higher interest credit 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 Marguerite says earlier, midyear is a better moment to reflect on our guidance for the full year.

Just Marguerite, on the CLA, what can we expect from that just to clarify a bit what the expectation should be? Marguerite Bérard-Andrieu: [indiscernible] what you can expect that it is an important moment for bank, for colleagues. We enter these negotiations in a spirit of, I would say, transparency and respectful approach. I am confident that both from management and unions, everyone will have a halt to reach an outcome that will be in the interest of all our colleagues, but also the long-term health of the bank. And I cannot speculate, of course, on negotiations that have not started. They will happen in June. But I think the period is the right one.

The next question comes from Namita Samtani from Barclays.

My first question when you note that the current curve provides EUR 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 in 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, yes. Marguerite Bérard-Andrieu: Thank you very much. I will -- take your questions to short remarks on my side. One, we have -- you may have seen or slide describing how the underlying assumptions we provide in our -- for our mitigating portfolio. So I think you have -- but I will let Ferdi take you through these assumptions. With respect to CB, I think we are indeed moving at pace within our Corporate Banking, improving our profitability, which is 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 in '28 is 11% for this division. Ferdi?

Yes, 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% pass-through on interest-paying deposits. So except for current accounts in our replicating portfolio and have we seen an increase overall in replicated portfolio to around EUR 175 billion, and roughly 30% of our debt or EUR 50 billion is current accounts, and the current accounts where we pay 0 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.

The next question comes from Delphine Lee from JPMorgan.

So the first one is on -- just going back to cost -- so just to check, first of all, what was your sort of wage increase assumption in your business plan just we have kind of a rough idea of what to expect this? And then just in terms of the cost trajectory, I mean, execution clearly is much stronger -- is -- do you intend to still keep the same target in terms of FTE reduction? Or could that grow even further than that? Or do you intend to invest a bit more? Just to understand maybe what are the sort of moving parts in between now and 2028. And on -- the second question is on the payout. I mean clearly, I mean, CET1 has been consistently above 15% now. comfortably above 15%. And the mortgage floor removal will finance sort of the NIBC acquisition largely. So just trying to think why -- should we assume that with Q4 results, we should definitely get more than 100% total payout and then 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 more guidance on that line, that would be helpful. Marguerite Bérard-Andrieu: Thank you very much for your questions. I will -- Ferdi will take the one on other income. On capital distribution, let me reiterate what I shared with you in the presentation. Indeed, we are committed to returning at least EUR 7.5 billion of capital into pay out up to 100% of our net profit over '26 to '28. This is what we committed at our CMD. These are serious commitments. Indeed, the removal of the DNB mortgage floor is an upside to our plan, and so it benefits our capital position. But we also shared at all CMD if over a period of time, our capital position remains significantly above our target and if we are delivering on our strategic ambitions, we may consider additional distributions, but that assessment, we are not making it today. We're 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 costs. We improved our cost guidance of '26. We are not changing the FTE trajectory we shared at our CMD. We achieved 40% of this trajectory already, but I also indicated that this pace will moderate over time. So it's good that we made a strong start in the plant, but this figure is not being updated or change right now. On other income?

Yes, on other income and the last point, what is in our plans. That was also your question, underlying it's 2% inflation, Delphine. But we also said if inflation is high, we will absorb it to realize the targets and guidance we provided. 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 EUR 10 million to EUR 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 3 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 tried to be helpful in explaining what the underlying buckets are -- the only thing what 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 EUR 100 million net impact book loss for the sale of our consumer credit business, and that will be booked in other income, just to be mindful, try to be helpful for your modeling. Marguerite Bérard-Andrieu: But also to help you going back to your cost question on the CLA just for you to have in mind. First that, just our staff in the Netherlands represents overall 85% of our internal FTEs just to give you an idea of the scope and also as a rule of thumb, 1% CLA increase at least roughly EUR 20 million to EUR 30 million higher cost per annum. Just for you to have these metrics that can help you in your modeling.

The next question comes from Benjamin Goy from Deutsche Bank.

Two questions, please, on commercial net interest income. The first on loan demand, your remarks on the Dutch economy sounded quite positive, but I just want to confirm the trends you see on loan demand now with basically 2 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 at the current rates already an inflection and moving up in Q2? Or when do you think would it happen? Marguerite Bérard-Andrieu: Thanks. Ferdi will take the question on liability margins. What we observed in the economy right now and also based on many conversations we currently have with our clients. First, the Dutch economy is resilient, and as I said, has been entering this period with -- from a position of strength. And overall, this is an economy that is overperforming on average, the EU economy and has very strong buffers. We gave on the mortgage side, I think, very clear indications on what we observed in the housing market, i.e., after record years of growth, we do expect housing prices to moderate and we do expect a number of transactions to slightly decrease in '26 and '27 compared with the record high we had reached last year. What we see in the conversations we have with our clients is that they are, overall, I would say, resilient. I think they know how to out. At the same time, of course, they have concerns on the current, I would call the geopolitical stalemate because we are also aware, and you have it in the notes of our economic role, that a prolonged conflict would have an additional impact on energy prices, and we factor in more in -- I would say, end of June, beginning of July, if no solution were to be found, that could be impactful in terms of secondary effects on growth and inflation. So I think right now, we are comfortable and we find economy resilience, but it will all depend on the length of the conflict. Thirdly, on liability emerging.

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 1 basis point. But that increase was more pronounced clearly at the end of the quarter in March when the interest rate started moving. And what you do see for this quarter that the improvement is mainly from the replicated 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 reiterated in the liability margin is only an increase of the current accounts because it's our underlying assumption that you have a full both for deposits where interest is being paid.

The next question comes from Matthew Clark from Mediobanca.

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 DNB mortgage floor 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 stays with shareholders as capital relief? Marguerite Bérard-Andrieu: Thank you very much for your questions. Serena, I may let you answer the question on wealth management and cost of risk. On the DNB mortgage store impact, we are, of course, operating in a competitive market. And so since this is an impact that is benefiting all banks in the Netherlands. This will also be reflected in the competition market and the pricing. This is something that will happen in November. So it is too early to speculate on price impact. But indeed, this is a competitive market. So all things being equal, it will also be reflected in pricing. Serena on Wealth Management?

Yes. Thanks. And thanks for the question. Indeed, low impairment showed an increase in Wealth Management. This is due to a few single cases and individual cases and files, which were booking our wealth management franchise that 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 other.

Can you clarify whether they're part of your legacy business or whether they're part of HAL business.

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 these are our dual clients from wealth management and our underwriting process are exactly the same for these clients in Wealth Management are they are for [ CB ], these are the same teams. So you should not have any specific concerns.

The next question comes from Johan Ekblom from UBS.

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 a reduction in external FTEs. Which I guess is the positive -- there'll probably be on average, more expensive, but the slower reduction pace we're seeing internal FTEs. Is that a timing effect rather big differences between gross and net from internalization. Just trying to understand 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 engaged in such a discussion with the regulator? Or have you attempted to do so? Marguerite Bérard-Andrieu: Thank you very much. I like very much the way we -- all your questions, and I fully understand it, I'll try to get more on this topic. But I will only reiterate and so not speculate on anything, only reiterate to -- on what I've already said when it comes to capital distribution, again, we assess our capital situation at Q4, and we don't speculate before that. On FTE reductions, you're 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 talent 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 FTEs. As we shared also at our CMD, everything we shared in terms of cost savings, and I would say of everything we said in the CMD is grounded in business cases. So basically, we actually know how we are executing on this trajectory. It is grounded on it's a bank-wide effort grounded in overall simplifications of all bank. We provided a number of examples in terms of integrating or asset-based finance within the main banks simply filing recently fine DFC. You name it. So everything is rounded -- 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 part of our trajectory.

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

The next question comes from Alberto Artoni from Intesa Sanpaolo.

I just have one because the other one has been already answered. On NII, you provided the indication that the current forward rate would everything else being equal, improve the NII for 2026 by about EUR 100 million? And what would be the impact in future years? Should we think of a similar type of impact or higher or lower? Marguerite Bérard-Andrieu: Thank you for your question. Ferdi, you can sort of infer it for more graphs, but I don't know if Ferdi if you want to elaborate on that.

Yes. 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 EUR 7.2 billion, including NBC based on the economic outlook and interest rate for cost at that time. And for now, it's too early to start looking at do we want to change this indication or not. But as Marguerite said earlier, we maybe midyear is a better point to start reevaluating for the interest rate at that time. So for now, no changes.

The next question comes from Anke Reingen from RBC.

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's gone up from EUR 165 million to EUR 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 accounts has come down from EUR 65 million to EUR 50 billion. Or is it not quite comparable, if you can please clarify?

Yes. On the NII guidance, yes, the replicating portfolio increased, but the biggest part there was demand deposits are 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 EUR 50 billion in this. So that is the basis for our guidance for '26.

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

Underlying, if you look at our assumption, we do expect deposit growth. We said that earlier. It's a deposit growth from roughly EUR 2 million per quarter. Seasonally a bit lower, a part of that might be current accounts. So there's also underlying assumptions clearly in our NII guidance that we do see volume growth.

The next question comes from Shrey Srivastava from Citi.

Just again on the NII. On the EUR 100 million, uplift, obviously, assumes a full pass-through active 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 older 50% to 60%. And a second one is just a clarification. If you could confirm how much of your sort of short duration replication portfolio is geared to 3 months versus 6 months versus the other buckets? Marguerite Bérard-Andrieu: For your question, I will let Ferdi answer that. But indeed, bear in mind that since we are operating in a competitive environment, we also, I would say, take fairly mechanistic assumptions in our replicating portfolio so that you can make your calculation, but we do not make hypothesis in terms of pricing behavior based on competition in the market because I would have also a commercial impact. So we don't do that. So we have more, I would say, a mechanistic approach of the behavior of the portfolio, but Ferdi.

Yes. Then so exactly you could say, are we conservative or not, but there's definitely competition in the market. So you got early, it's conservative. If we have more indication of pass-through, we will update our guidance on the back of that. If you look at our replication portfolio, we invested off the whole curve. So up until 10 years, the only thing we said there, around 40% of the replicating portfolio reprices within 1 year, and a big part of that is in the 3-month bucket. The overall duration is 3 years of the replicated portfolio to give some more indication.

And if I may just very quickly follow up, if 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 hike rates a few years ago? Has anything changed that we should be thinking about? Marguerite Bérard-Andrieu: Well, one thing also you need to take into consideration in the hypothesis of our economic is that we price like the market with price right now, 2 hikes in at the same time or assumptions, and that's also based to the normalization of the current geopolitical events that -- this increase will be reversed in '27. And that's not necessarily what you see in the forward curve. So this is also, I would say, different assumptions. And I mentioned 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 coming -- I mean, the current events to evolve over time.

And it's also the main banks don't price directly of ECB rate that was price on the back of the replicating portfolio yields, so also take that into account as most of the larger bank run their deposits in replicating portfolios.

The next question comes from Farquhar Charles Murray from Autonomous.

Two questions from me. The first one is actually following on the competitive discussion on the last question. So on the deposit competition side, have you actually seen 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 the scenarios that are out there kind of encourage us to move quickly or actually slowly? And then secondly, the leverage ratio is off quite a bit Q-on-Q. I know there's some kind of seasonality to that, but it seems a bit of 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? Marguerite Bérard-Andrieu: Certainly, on the competitive dynamics of the market and behavior of...

Farquhar, clearly, what you do start seeing in some of the more challenger and smaller banks are starting to price up. So you do see the competition there. So there are 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 Tier 1 and Tier 1 capital.

The next question comes from Giulia Aurora Miotto from Morgan Stanley.

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. On the restructuring costs, I was a bit 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 the 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 10-year mortgage today, which has a tenure -- which matures in a time when you already have the output floors. In theory, you should sort of price the same. So I was a bit surprised that you said, well, yes, potentially the pricing adjusts. I don't know if you have any thoughts on that? Or maybe give us an indication that the output floor is not going to come through. Marguerite Bérard-Andrieu: I will let Ferdi answer your question on the output floor, but I think based on also on last report disclosure, you can calculate it. But Ferdi, will lead you through that. In terms of restructuring costs, what we shared at our CMD is out we had a total of roughly EUR 400 million over the course of the plan. We already took around EUR 100 million in '25. We indicated at Q1 out of the EUR 63 million we are booking at Q1. This is primarily related to the integration of HAL. So this is most of what you would expect. So I think we gave you a fairly good indications of where you should see this restructuring charges impact over time. They are the reflection of us implementing quarter-after-quarter or strategic plan and for this quarter, primarily the integration of HAL. Ferdi, on the impact of the output.

Yes. Giulia, on the ARPU floors I made in my comments earlier that the structural overlap and all the different buffers. So the Dutch markets floor was put into place for a 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 because the result of this is clearly that for the biggest part of non-retail, we are standardized. So yes, there's quite a gap between the full phasing of the output for 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 is no impact in the thinking of the DNB that might also have been some part of thinking in that with the full phasing of the output floor is an additional prudential lever for potential and systemics. Marguerite Bérard-Andrieu: 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 Investor Relations team is, as always, at your disposal. Have a very good day.