Good morning. This is Patricia Klosov welcoming you to ING’s Third Quarter 2020 Conference Call. Before handing this conference call over to Steven van Rijswijk, Chief Executive Officer of ING Group, let me first say that today’s comments may include forward-looking statements, such as statements regarding future developments in our business, expectations for our future financial performance and any statement not involving a historical fact. Actual results may differ materially from those projected in any forward-looking statements. A discussion of factors that may cause actual results to differ from those in any forward-looking statements is contained in our public filings, including our most recent annual report on Form 20-F filed with the United States Securities and Exchange Commission and our earnings press release 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 securities. Good morning, Steven. Over to you.

Thank you, Patricia, and good morning, everyone, and welcome to our third quarter 2020 results call. I hope you’re all in good health, and I’m happy to take you through today’s presentation. I’m joined by our CFO and interim CRO, Tanate Phutrakul; as well as Karst Jan Wolters, currently responsible for the day-to-day risk activities. At the end of the presentation, we will, as always, have time to take your questions. The third quarter of 2020 was another quarter marked by the COVID-19 pandemic, and we continue to support our customers, employees and society during this time. We also continued our efforts to increase the effectiveness of our KYC activities and are pleased that these efforts were recognized in Italy, and we can again welcome new customers. There are a couple of key points I want to make today. Our digital model continues to be a clear strength as we added another 213,000 primary customers, and the number of mobile interactions continued to grow. These also supported us to deliver a strong performance this quarter with pricing discipline, solid fees and cost control, resulting in a resilient pre-provision profit, excluding volatile items. Risk costs were markedly lower than last quarter despite taking a €552 million management overlay to reflect remaining uncertainty and delay in potential credit losses. As the external environment remains challenging, we keep our focus on managing the company through these times and are taking steps to maintain our strong performance. Our margin discipline and risk appetite remain unchanged while we take steps to focus our activities. At this point, we’re announcing adjustments in 2 areas: in Wholesale Banking with a focus on our core clients and where we need to be to service them; and secondly, in the Challengers & Growth Markets, we focus on how to best fulfill our ambition of scalability and being end-to-end digital with more certainty of execution. The CET1 ratio improved from 15% flat to 15.3%. This excludes the €1.8 billion dividend reserve for 2019 and also excludes this quarter’s net profit. This quarter’s profit has been fully reserved for future distribution, reflecting our new distribution policy. With this policy, we are moving to a payout ratio of 50% of resilient net profit. We have adjusted our long-term CET1 ambition from around 13.5% to around 12.5%, reflecting lower capital requirements and more visibility or regulatory RWA impact. This implies a management buffer of around 200 basis points. As long as high uncertainty due to the COVID-19 pandemic remains, we will manage CET1 above the 12.5%, and gradually, we’ll move it to the 12.5%. I’ll come back to our capital ambition and our adjusted distribution policy later in this presentation. Slide 3 shows that also in the current environment, we keep growing our primary customer base, benefiting from the digital experience we offer to our customers. On an annualized basis, the number of mobile interactions is further increasing to 87% of total interactions. And this underscores my belief that our digital mobile-first strategy is the right strategy, and our ambition to keep transforming into a data-driven digital bank remains firm. Having said that, with the current external environment, we do feel the need to refocus some of our activities. In Wholesale Banking, we increased the focus on core clients and simplify our network by closing the offices in South America and some in Asia. Core clients will continue to be served from regional hubs in New York, Singapore, and Hong Kong. In our Challengers & Growth Markets, the focus has resulted in a decision to significantly reduce the scope of our Maggie program, launched to provide a standardized customer experience and integrate the product offering in four of our challenger countries. Effectively, the reduced scope means we stopped the complex and costly cross-border integration of systems and products, and these actions will impact our employees with a reduction of around 1,000 employees by year-end 2021, for which a redundancy provision will be taken in the next quarter. Going forward, we will continue to take a critical look at our activities and our cost base while we keep the focus on our strategic priorities. As you can clearly see, we do this by size because I want to have execution certainty. Now on to the next slide. Data-driven digital leadership to offer our customers a differentiating experience remains a strategic priority. It is about scalability on the one hand and end-to-end digitization on the other. We do this by a number of points: first, rolling out a first-class customer engagement layer using and combining mobile app components. This results in a continued expansion of the customer base with access to our improved digital channels, where all of our retail customers in the Netherlands and Germany are using the OneApp, OneWeb channels; and in Belgium, almost all our private customers have been onboarded. When this is completed, we will have achieved almost all milestones and 80% of the cost savings of our Unite program. Second, when you look at the middle layer of the slide, that’s the purple layer, we will roll out global products and services in insurance, investment products, and consumer lending. On the right side of that middle layer, you see the local products and services, which we will continue to build in a modular way, which is also end-to-end digitalization locally. The complex and costly cross-border integration of local systems and products under the Maggie program will, therefore, be discontinued. The third point is that our digitalization journey is enabled by the foundation that we’ve built over the years, and you see that at the bottom part. This foundation allows us to reuse building blocks throughout ING worldwide and can be applied in the development of local products and services as well as to the rollout of cross-border platform initiatives such as the collaboration with AXA on insurance products. As a digital leader, we continue to move towards an efficient, easy customer platform that caters for our own and third-party products and services. On Slide 5, you can see that over the years, we have been able to grow our NII in a low-rate environment. Please note, 2020 is annualized and is not guidance. We have 5 levers we apply to support and grow NII: one is loan growth; two is margin discipline; three is charging on accounts to counter the negative rate environment; four is our diversification in non-Eurozone countries; and five is changing the asset mix. Regarding loan growth, I want to state that we are not willing to compromise our lending standards and our margins. However, we benefit from our geographical diversification, and we see loan demand already improving in the U.S. and in Asia. In Europe, demand remains subdued, but we continue to support our customers and the wider community. On deposits, we are increasing the charging of negative rates in the Eurozone, and in non-Eurozone countries, we have lowered deposit rates to counter the effects of significant local central bank rate reductions. We aim to change the lending mix to areas with higher margins within risk appetite. As you can see, we are successfully growing our fee base by increasing daily banking fees and introducing behavioral fees. As you will see later in this presentation, we have managed to keep the pressure on NII limited, while we have not yet included the conditional benefit for TLTRO III and have absorbed significant negative FX impacts in the third quarter of 2020. Please note, we remain confident that we will meet the TLTRO threshold. In light of the current environment, wherein rates have gone more negative and we see low demand for corporate lending, we expect continued pressure on NII in the coming quarters. This means that we will need to build on our good momentum on fees and apply strong focus and discipline on costs, which I have already mentioned in the previous quarter. Turning to Slide 6. As mentioned, we retain the same risk appetite and focus on a high-quality loan book, proven also by our strong track record with lower risk costs through the cycle compared to our Eurozone peers. Looking at the numbers for this quarter, they came in well below the second quarter despite taking a €552 million management overlay. This overlay reflects increasing uncertainty with the second wave of COVID-19 coming and a delay in potential credit losses as support from governments and payment holidays phases out. This overlay consists of 2 parts. The first part offsets the effect of a €380 million release that would come from reflecting the updated macroeconomic indicators in our models. The second part of the overlay was applied to increase provisions for loans that are still subject to a payment holiday. The total amount of loans on which payment holidays were granted remained limited to almost €20 billion or around 2.6% of our loan book. With almost €6 billion already expired, we have around €14 billion remaining, the large majority of which will expire either by the end of this year or in the first quarter of next year. While we don’t see a significant deterioration of the risk for loans with expired payment holidays, we have conservatively taken additional provisions, considering businesses and sectors that we consider higher risk under COVID-19 and the uncertainty the second wave and structural lockdown measures may bring. Slide 7 provides an overview of what we’ve done to strengthen our management of compliance risks, which continues to be a top priority. We have taken steps to implement one global approach to how we manage our know-your-customer activities. That list is obviously not complete but shows some major areas where we have taken steps. I would like to highlight the rollout of some global tools for adverse media screening and pre-transaction screening; several digital solutions we’ve developed to improve the effectiveness and efficiency of our KYC activities such as machine learning to detect when transactions are being broken up into small parts to avoid raising alerts, known as smurfing; and last but not least, I’m proud of that, we were also the first in the sector to put a team in place with people with a psychology degree that are purely focusing on ensuring effective behavior and getting groups to work well together with learnings from these assessments, applied across the organization. In the end, it’s not only about governance and processes but also about behavior, which will make us much more effective. As we’ve said before, we have a responsibility to manage our compliance risks. At the same time, in order to maximize our effectiveness as a gatekeeper, close collaboration with other banks, supervisors, and law enforcement agencies is key. We need to be able to share transactional data to receive feedback on suspicious alert reports and have a common approach across countries on KYC-related regulation and supervision to become more effective as a society. We are pleased to see an increasing awareness on this topic with action plans presented by the Dutch government and by the European Commission. We are part of initiatives to collaborate with other banks on transaction monitoring in the Netherlands and Belgium. Although these are complex matters which will take time to realize, things are moving in the right direction. Now I’ll take you to the third-quarter results, starting on Slide 9. In the third quarter of this year, income was lower both year-on-year and quarter-on-quarter, largely due to an impairment on our equity stake in TMB, mainly reflecting the deteriorated macro environment in Thailand. Excluding these impairments, the lower income compared to the previous year was mainly driven by pressure on liability margins and lower results on foreign currency ratio hedging, which reflected lower interest rate differentials as local central bank rates in non-Eurozone countries were significantly reduced. The largest part of the decrease comes from these foreign currency ratio hedging differentials. Sequentially, excluding the impairment in TMB, income was €155 million lower. This reflects the lower client activity in financial markets compared to the previous quarter, and lower income in the corporate line, again including the lower results on foreign exchange ratio hedging, partially compensated by the annual dividend received from Bank of Beijing. Pre-provision results, excluding both volatile items and regulatory costs, remained resilient. Next to the revenue differences I just talked about, the change compared to the third quarter of last year came from a VAT refund we received in that quarter as well as CLA increases that came in this quarter in loan costs. Compared to the previous quarter, the result next to the revenues was also impacted by slightly higher costs, driven by redundancy and legal provisions. If you would take those legal provisions and redundancy costs out, the operational costs this quarter were lower than last quarter. On to NII on Slide 10. As mentioned earlier in the presentation, we have seen some pressure on NII from the current market conditions, which affected the levers we generally use to counter the impact from the low-rate environment. NII, excluding financial markets, was lower year-on-year, reflecting the continued pressure on liability margins, while deposit inflows this year were substantial. We kept lending margins stable, however, lending volumes declined, reflecting the currently lower demand, especially in Wholesale Banking. The impact from foreign exchange was significant this quarter, with interest results on foreign currency ratio hedging significantly lower, driven by local central bank rate reductions in non-Eurozone countries, while also the devaluation of some foreign currencies had a substantial negative impact. Compared to the previous quarter, NII, excluding financial markets, was 2.9% lower. Overall, lending margins improved, however, pressure came in from the aforementioned reasons. We continue to focus on pricing discipline, which will benefit us in the future, and we may increase the benefit from negative rates charged on deposits. In addition, we did not book the conditional benefits from TLTRO III yet. However, we remain confident we will meet the threshold. Our net interest margin decreased by 6 basis points this quarter to 138 basis points. This was mainly driven by a higher average balance sheet reflecting our TLTRO III participation and was partly offset by lower average customer lending. The overlending margin improved, however, pressure on liability margins continued, and NII in the corporate line was lower. Although NIM is an important metric for the market, we note that NIM can be impacted by volatile items, as we’ve seen this quarter, so we believe it is better to look at overall NII development and guidance. Turning to net core lending. As mentioned, loan demand dropped this quarter, especially in the corporate segment. In the current environment, we’re observing that companies are delaying investments and needing less working capital, while demand has been met through direct governmental support schemes. We see some divergence in circumstances between Northern and Southern Europe. In Northern Europe, governments have provided more direct support through tax deferrals and wage support, also reflected in generally low additional uptake of government-guaranteed bank loans. Meanwhile, in Southern Europe, bank lending is the primary support channel for companies. Specifically, for the Netherlands, our largest market, companies were able to adjust their cost base by reducing the number of temporary workers, especially in sectors such as hospitality and tourism. In this context, overall, for the third quarter, net core lending was down by €6.9 billion. In retail, net core lending grew by €1.1 billion, driven by mortgages, with growth mainly visible in Germany. In Wholesale Banking, low demand was visible with an €8 billion reduction in net core lending, mainly driven by further repayments of the COVID-related increased utilization of revolving credit facilities and lending, i.e., the emergency lending that people took, as well as some repayments on term loans. In Daily Banking & Trade, the decline mainly reflects the impact of lower oil prices in trading commodity finance and FX. Net customer deposits increased by €3.4 billion. This level is comparable to previous years. However, in the third quarter, this was composed of higher savings in Retail, reflecting continued uncertainty. In Wholesale Banking, we saw a net outflow as well, reflecting repayments of protective drawings in the first quarter, which had been placed as deposits. As mentioned, the negative net loan growth is a shift in demand which we don’t consider structural, and we expect loan growth to return when uncertainty subsides. With our geographical diversification, we will be able to benefit as demand picks up, with the first positive signs visible in Asia and the U.S. Now on to fees. Year-on-year fee income was higher when adjusted for the reclassification of financial markets last year, with impact from COVID-19 visible in how different product categories developed. In Retail Banking, fees were 5.5% higher, again driven by investment product fees with a continued higher number of trades to benefit from market volatility. In Daily Banking, fees were lower year-on-year, although payment transactions increased following the relaxation of lockdown measures, but these have not yet returned to normal levels. The increase in Daily Banking packages in the first quarter of this year has impacted this, and the full benefit should become visible when transaction levels return to normal. Lower fees in Wholesale Banking remain driven by lower demand, lower TCF volumes or Trade & Commodity Finance volumes, and less activity in financial markets. Sequentially, fees were 1.5% higher. Retail grew by 4.1%, with some recovery in domestic payment transactions visible in Daily Banking. Fees on investment products were slightly lower but still high. In Wholesale Banking, lending fees were higher due to the closing of several syndicated deals for the quarter. Overall, fees in Wholesale Banking were down, reflecting less activity in financial markets. Year-to-date, fees grew by 5%, meeting our ambition level, and under current external circumstances, I find this a great achievement as it shows how well we adapted and have been able to diversify our income streams. Moving to the next slide. Expenses this quarter include a €140 million impairment on capitalized software, driven by the changed scope of our Maggie program. Excluding KYC and regulatory costs as well as this impairment, expenses were up by €25 million year-on-year or 1.1%. This quarter includes CLA increases, while the third quarter last year included a significant VAT refund. Quarter-on-quarter, most segments reported lower operating expenses. Overall expenses, excluding KYC, regulatory costs, and impairments were €20 million higher, but this includes €37 million in provisions. KYC-related costs were comparable to the previous quarter as we work to become more effective and make progress on our final enhancement. These costs are expected to plateau in 2020, but now somewhat below the initially expected run rate of €600 million for the year. Regulatory costs were slightly up year-on-year and lower sequentially, which included a catch-up on contributions to the Single Resolution Fund. As stated earlier in the presentation, with a challenging external environment, we’ve taken steps to refocus our activities with adjustments in Wholesale Banking and to the Maggie program, reflecting a reduction of around 1,000 FTEs by the end of 2021. Going forward, we will continue to monitor developments, critically review our activity and expenses to ensure we can execute. Slide 16 shows the risk cost split per business line, which, in the third quarter, came in at €469 million or 30 basis points on average customer lending and is well below the elevated level of the previous quarter. As explained on Slide 6, this includes a €552 million management overlay, primarily in Stage 1 and 2, consisting of 2 parts. This was applied to compensate for a €380 million release driven by updated macroeconomic indicators, and the second part related to an increase in provisioning for payment holidays. The resulting €172 million impact on risk costs, i.e., minus €380 million plus €552 million, was allocated to the segments with €105 million in Retail Benelux, €53 million in Retail C&G, and €14 million in Wholesale Banking. Aside from the allocation of the management overlay in Retail Benelux, risk costs mainly reflected some additions to individual files in mid-corporates. In Retail Challengers & Growth Markets, risk costs predominantly reflected higher collective Stage 3 provisioning, mainly visible in Australia, Romania, Germany, and Poland. In Wholesale Banking, Stage 3 risk costs were significantly lower than the previous quarter with some additions to existing Stage 3 files, while the inflow of new clients was limited. The Stage 2 ratio was slightly higher at 7.6% as we conservatively moved more exposure to the watch list. To reiterate, Stage 2 is not a waiting room for default; it implies that credit risk on individual exposure is monitored more closely, not that this exposure is expected to default. When credit risk is no longer being decreased, the exposure moves back to Stage 1. The Stage 3 ratio for the group was slightly higher at 1.7%, which is still low. When excluding TLTRO III from credit outstandings, the Stage 3 ratio remained stable at 1.8%. The next slide shows our CET1 ratio development, which was up by 0.3%, reaching a very healthy 15.3%. CET1 capital was €0.4 billion lower, mainly driven by negative FX impact from the devaluation of the U.S. dollar and the Turkish lira, while net profit for the quarter was not added to capital as it was fully reserved for future distribution. The CET1 ratio was further supported by €9.9 billion lower RWAs, primarily due to €10.5 billion of lower credit RWA, primarily due to FX impact and lower volumes. We also saw some impact from positive risk migration, which might feel counterintuitive in these times, primarily driven by a reduction of outstandings with a lower coverage ratio, resulting in a lower level of required RWA. Market RWA was down, primarily due to lower exposures as markets normalized, while operational RWA increased due to technical updates to the AMA model. Turning to our capital update on Slide 16. During 2020, we have seen several developments contributing to the decision to lower our long-term CET1 ratio ambition from around 13.5% to around 12.5% going forward. This adjustment is driven by a reduction of capital requirements in the course of 2020, partly influenced by the COVID-19 pandemic. We can expect buffers to come back, but part is also structural, such as under Article 104A under CRD V, which was pulled forward. For the CRD V lovers amongst you, that’s Article 104A. Also, during 2020, we’ve taken the RWA impact of the definition of default as well as the majority of the TRIM exercises, so now we have better visibility on our remaining expected regulatory RWA inflation. Our long-term around 12.5% ambition implies a management buffer of approximately 200 basis points above our current SREP requirements, higher than our previous management buffer of 170 basis points, reflecting uncertainty on that part of the capital buffers that may come back. Given the current uncertainty caused by COVID-19, we will manage the short-term CET1 ratio above 12.5% until there’s more clarity, and then we will move to the 12.5%. On to Slide 17, which shows our distribution policy. As we’ve always said, we aim to offer our shareholders a sustainable and attractive return. In March of this year, we suspended our dividend policy following ECB recommendation and did not accrue for dividend in the first half of 2020, while we kept a €1.8 billion dividend reserve for 2019. Our previous progressive dividend policy did not fit with the procyclical impact of IFRS 9 and the related volatility. We now announce our new distribution policy, consisting of a payout ratio of 50% of resilient net profit, to be paid out in cash or a combination of cash and share repurchases, with the majority in cash. We have reserved this quarter’s full net profit for dividends, while the €1.8 billion dividend reserve over 2019 remains reserved for distribution to shareholders, when and how to be determined. We will periodically look at returning structural excess capital. Any dividends or capital distribution are subject to prevailing ECB recommendations. As you can see on Slide 18, both the CET1 ratio and leverage ratio remained ahead of our ambitions. Regarding ROE, in the current environment, it is below our ambition, and we very much intend to continue to provide an attractive total return, looking to add businesses through the cycle. We believe our businesses should aim to cover at least our cost of capital. As mentioned in previous quarters, our cost-to-income ratio was impacted by factors such as the negative rate environment and regulatory costs. This quarter, also, impairments affected this metric in both income and costs, resulting in the 3Q ‘20 cost-to-income ratio of 57.7% on a 4-quarter rolling basis, and for the quarter, it was 54.8%. To reiterate, cost-to-income is not how we run our business, but it remains an important input for our ROE, and we have an ambition to reach 50% to 52% as we further digitalize. We have taken steps to refocus our activities, and going forward, we will critically review expenses to ensure execution certainty. As for dividends, we have just provided you with an updated distribution plan. To summarize, we continue efforts to help our customers, employees, and society deal with the effects of COVID-19. Countering financial and economic crime remains a priority. The current environment reinforces our belief that we are on the right strategic path with our digital model enabling us to continue to grow primary customers and mobile interactions. Loan demand was affected by COVID-19, but still strong in mortgages. However, we saw reduced demand, mainly from our business customers compared to the lending increase at the end of the first quarter. Pre-provision results proved resilient, supported by a focus on pricing discipline and cost control. Risk costs sharply decreased, especially in Stage 3, while we further increased collective provisioning in Stage 1 and 2 to reflect remaining uncertainty. With increasing uncertainty, we keep a focus on margins and asset quality, and we also examine our activities, leading to some organizational adjustments. The CET1 ratio was strong at 15.3%. We announced our capital update with a reduced CET1 ratio ambition of 12.5%. Given the current uncertainty, we will manage our CET1 ratio currently above, but after the uncertainty subsides, around that 12.5%. Finally, we have adjusted our dividend policy to a 50% payout ratio of resilient net profit. Thank you, and I will now open the floor for questions.

I think on capital, as we guided, we are looking to, over time, get to that 12.5% target. We do review our capital structures almost every quarter, looking at the prospects for the future and our current standing. But how fast and at what pace you need to get to that 12.5% is also essential. We must ensure that as we glide to that target, we must have sustainable structural reduction in the capital needs of the company.

Yes, it's Benoit Petrarque from Kepler Cheuvreux. The first question is about capital. Thank you for the detailed information you've shared today. You mentioned a periodic review of excess capital. Is this review going to happen once a year or more frequently? Additionally, regarding capital, you intend to maintain a buffer during the pandemic due to uncertainties. What is the current size of this buffer? Can you help quantify how much you require at this moment, especially considering the second lockdown and the ongoing situation? I would like to know if you would be able to distribute capital to shareholders early next year, assuming the ECB approves it in December, or will this be a late decision? That’s my first question. My second question is about costs. Given the challenging outlook for net interest income, how do you foresee costs evolving? I noticed a year-on-year reduction of about 1% in costs in Q3, which is favorable. What trends do you anticipate for costs in 2021? Could you assist us in modeling the cost line moving forward in this difficult top-line environment?

Yes. Thank you very much, Benoit. I will take the question on costs, and then Tanate will address the question on capital. So on costs, we’ve taken clear actions in Wholesale Banking and with the Maggie program. The provisions regarding that will be taken in the fourth quarter. That’s just how we need to do it from an accounting point of view. But as I said in the previous quarter, the nose on the cost level needs to come down. So costs need to move down from here.

I think on capital, as we guided, we are looking to, over time, get to that 12.5% or around 12.5% target. We do review our capital structures almost every quarter, looking at the prospects for the future and where we stand. But I guess the question is how fast and at what pace you need to get to that 12.5%. We just need to ensure that as we glide to that 12.5% target, we must have a sustainable structural reduction in the capital needs of the company. So that’s what we will do over time.

Like this additional buffer you’re planning to keep for the time being, how much is that roughly? I mean you are mentioning, like, 200 basis points above the MDA. But I’m not sure that is your current buffer.

Our current buffer is almost 500 basis points, as you can see. We think that over the cycle, we can comfortably accommodate a 200 basis points buffer.

I have a question regarding net interest income, which I'll break down into a few shorter inquiries. First, regarding the foreign exchange impact, can we consider it a one-time event? It seems more like it will be a one-off rather than a recurring issue, depending on how the exchange rates evolve. Second, concerning the TLTRO accrual decision, will your auditors need to approve this in the fourth quarter or at the beginning of next year, or is it primarily a management call? Third, with respect to the pricing of your lending products, are you already factoring in the full impact of Basel IV on capital when setting prices? How do you see your competitors dealing with Basel IV, especially during the COVID period? I'm trying to understand if there's potential for net interest income to improve over time now that the Basel IV impact is included. Lastly, about negative rates, you mentioned implementing them in Belgium, but I thought there is an 11 basis point minimum for retail. Are you referring to the SME and large corporate sectors, and what about Germany, considering the 50 basis points above 100? Any clarification on the implementation of negative rates in countries outside the Netherlands would be appreciated. Sorry for squeezing in four questions.

Thank you. I will take the questions on negative rates and pricing. For FX and TLTRO, we’ll give the floor to Tanate. On the negative rates, we started to charge negative rates in Belgium to corporates and SMEs. The 11 basis points goes for our current accounts for retail customers. So like we have already been doing in other markets for corporates and for SMEs, we will also now start to charge negative rates above certain amounts for these corporates. We also apply schemes in Germany whereby if clients only open a savings account, then we charge negative rates to nudge clients either to do more business or to do business with ING. We do that in different ways to protect our P&L and to encourage clients not to stall deposits at our bank. We will continue to monitor that. With regard to pricing, we are part of the market. Therefore, we are not setting the market price, but we price based on market conditions. If we could direct the price, then I’m sure regulatory authorities would engage. We want to ensure we make a sustainable return through the cycle with our clients. So the fact that we go to lower capital targets gives us more room to still win transactions and make an adequate return.

Stefan, to answer your two other questions. On FX, I wouldn’t characterize it as one-off, but the impact on the differential interest rates between dollars or Turkish lira against the euro has already happened significantly in Q3. We don’t expect that drag to be very significant going forward in the coming quarters. Regarding TLTRO III and when we would book potential gains, that’s really a management judgment based on our confidence regarding expected income.

How much of the decline in core lending was due to the repayment of protective drawings? Are we now at the lowest point of volume growth in Wholesale, especially considering the restructuring announced today? Additionally, why didn’t you take this opportunity to address the financial markets in Wholesale? The business has not generated a return on equity that covers its capital costs in almost a decade, so wouldn’t it be a clear choice for restructuring?

If you look at the decline in core lending, that was driven by repayments of emergency drawings of about €5 billion. The largest share of the decline came from lower corporate demands as companies repaid their emergency drawings. We have been seeing lower economic activity, also meaning lower investments. At the same point in time, we see that in our payment business, activity has gradually been moving up again. We see increased demand coming from Asia and the U.S. When companies start to invest again, that will also importantly affect loan demand. In regard to not restructuring Financial Markets, we look at our return on equity on an overall basis, hence, we don’t compartmentalize different elements because if we shrink one part, we need to ensure that it's as a client-driven and customer-focused bank.

With regards to Maggie, yes, that is unrelated to Unite. We’ve seen complexity in Unite that has also arisen in Maggie by the integration of local engagement layers and product elements proving to be difficult. We’re lucky that we have built several of our modular blocks, including our software blocks in terms of TPA, cloud infrastructure, and Data Lakes. We have already built an app environment in the Benelux and in Germany. We can use all those blocks also in countries in C&G, where we can redirect both scalability and end-to-end digitization of the project.

Got it. And sorry, just a quick follow-up on the TLTRO. How is the allocation across divisions just so we can model the impact on NII and NIM?

The TLTRO is related to lending within the Eurozone. So if you want to see how we are doing, it’s key to look on a geographical basis for loan growth within the Eurozone.

I hear your comments on the regulatory inflation, and you talked a lot already. So just wondering on the Basel IV ratio where you’re currently standing? Also, I guess, Dutch mortgages at some point could come in. So how does this compare to the 12.5%? And secondly, on your fee income, I guess this will gain importance going forward. The €200 million of fees from investment products this quarter indicate a nice growth rate. Just wondering how much of this is driven out of Benelux and Germany perhaps next. But any other countries where there’s already a significant contribution? Any color would be appreciated.

On RWA inflation, all these regulatory elements, DoD, TRIM, changing models, Basel IV have, for us, been largely dealt with, except for the final Basel IV output factor. Other than that, the impact for us is almost benign. Hence, we’ve been able to peg our CET1 level down to 12.5%. Assuming that Basel IV would be fully implemented in 2023 and gradually leading up to 2027, that total impact will be around 50 to 60 basis points over the years. In regard to fees, yes, we come from a digital environment with our direct banks where we had a very low fee share. We are now starting to enhance our fee business, especially in investment products. We’re seeing growth in Germany and rolling out investment propositions in other countries. We’re still at a very low level compared to our peers.

Just a couple of questions. Firstly, coming back to the pullback in Wholesale Banking from Asia and LatAm, can you just give us a feel for what kind of volume RWAs or revenue impact we should be thinking about? And timing-wise, when does this shrinkage get underway? Is it fair to assume a lot of it’s going to overlap with your oil and gas commodity and shipping book? And the second question is on capital, more just really a technical point because I think at the first half, you were letting your profits flow into CET1 capital. But then I see at the third quarter stage, you’re not letting the profits flow into CET1 capital, so sorry if I missed it, but what’s the thinking there? Have the regulators said something there? So just some color on that sort of moving parts on your CET1 capital, please.

On Wholesale Banking, it’s not so much a matter of shrinking volume in RWA because we will continue to service a number of those clients from regional hubs. It’s basically an efficiency measure to service those clients from hubs rather than from various offices. We will close down three offices in South America and four smaller ones in Asia. However, we can still service our clients effectively across Wholesale Banking with fewer personnel.

If you're asking why we did not add net profit of the previous quarters to CET1, it’s because we did not have a dividend policy we were following. We now resumed in the third quarter, adding the entire profit for a sort of catch-up.

I have a couple of questions. First, from a strategic perspective, you've made clear announcements regarding capital and costs. Should we anticipate an Investor Day that will provide more clarity on cost direction or revenue initiatives? Or have you evaluated the situation and concluded that these are the only initiatives you plan to disclose over the next year? This is my first question. My second question pertains to the 50 to 60 basis points you mentioned for Basel IV and your considerations regarding the mortgage overlay from the DNB. I understand it has been postponed, but is it still a possibility? Is that included in the 50 to 60 basis points, or would it be in addition to that? Lastly, regarding the IT, on Slide #4 about product platforms—insurance, investment, consumer lending—does this imply that whenever a product is launched, it will be available across all your markets, leading to a quicker increase in fees?

I’m reviewing all business lines and all business that we have in ING. If there are measures to be taken, we will take them. I mentioned execution certainty because I want to avoid announcing big megalomaniac plans for the long term that are not executable. If there are new things to be done, then I will announce them at that point in time. So there is not currently a plan for an Investor Day with additional direction. But I am sure the IR team will discuss this further with you. Regarding the Basel IV impact and the mortgage overlay of DNB, if it were still to come, it would be a front-running of Basel IV, which is included in that 50 to 60 basis points. In Retail, we have developed products locally before, there are still local products. Some products are local, while others can be applied globally. We will start rolling out these global products, so we can easily make them scalable across more markets, which is both from a revenue and cost point of view, more effective and efficient.

I have two questions, please. First, regarding capital targets, I want to confirm if your current target of 12.5% and the 200 basis points MDA buffer already account for the anticipated increase in the countercyclical buffer in the future. Secondly, I would like to inquire about fee income. It was mentioned recently that banks may look to expand those lines and possibly include asset managers in their overall business strategies. You have often discussed AXA and your initiatives there. Can you elaborate on what you are doing in the Netherlands concerning asset management and insurance to enhance that area?

On the first question, the answer is yes. The 12.5% already accounts for a possible increase in countercyclical buffers in the future. Regarding Mr. indiscernible's article, it mentioned the establishment of an asset management company for non-performing loans, but our capital levels are robust, we have effective risk management, and low non-performing loan levels, so I don’t believe that is necessary for ING. More specifically, if you examine our insurance business and fee generation, our past was rooted in a savings bank environment with no fees. We are now focusing on enhancing our fee business, including in insurance and brokerage, where we are experiencing growth in Germany, and there is significant potential for improvement, as our peer analysis indicates we have not been performing to our full capacity.

My first question relates to the net interest income. If I look at consensus for next year, the consensus is around €3.47 billion per quarter while you’re running at €3.3 billion. I wanted to know if we need to take the current run rate and back the FX ratio hedging and then slip from that given the pressure on deposit margin, or can we stay stable from that level? The second question relates to the wholesale division. You explained that given the lower equity Tier 1 target, you can price at lower rates. But don’t you think that prior to the reduction in the equity Tier 1 target, you actually had to increase your price to meet satisfactory return on the previous target? I’m a bit confused whether you intend to price lower rates or still improve the discipline in Wholesale.

That’s a good question. Up front, we price competitively in the market conditions. We price based on market prices to ensure adequate returns. The fact that we go to lower capital targets gives us more room to still win transactions and make adequate returns. This means we do not have to simply track the market prices but aim to provide competitive offers that make sense for both us and our clients. Regarding NII, I’ll let Tanate elaborate.

Regarding NII, there are three components to why NII is compressing. Part of it is due to the FX impact discussed earlier, with no expectation of that drag being a challenge going forward. The second part is related to the balance sheet extension because of TLTRO. While we don’t book the income here, it contributes to another 2 basis points. The last piece accounts for the negative rates, margin compression in our deposits, and lower volume. We expect to try to increase our NII through various actions we’ve discussed, including maintaining pricing discipline.

Can I have 2, please? The first one is just on dividends. If the ECB were to allow dividend payments next year, are you intending to pay the 2019 reserve dividend of roughly €1.8 billion as well as 50% for 2020? Otherwise, I’m struggling to understand why you’re accruing the €788 million that you have taken in the third quarter. So that clearly implies you intend to pay into 2019 as well as 50% payout for 2020. If you confirm that, that would be helpful. And then the second one is a broader question on the return on tangible equity target that you’re reiterating, the ambition of 10% to 12%. I’m really struggling with that, I have to say. I mean, you’re at 5.1% this quarter. The cost of risk is not that far away from a through-cycle normalized level. In terms of your sort of cost messaging put against the NII pressures, it doesn’t look like there’s going to be a very significant step down in the cost-to-income ratio. So even if I rightsize your capital base, which I suspect will take you many years to do, what am I missing that would double your returns from the current capital?

If you look at the ROE ambition, we have largely met that ambition over the past five years. While this year, we remain significantly below that target, we continue to focus on controlling costs and diversifying our fee business. Risk costs in this quarter were around €470 million; in previous years, they were considerably lower, typically between €600 million and €1 billion. The increase in costs is influenced by IFRS which can pull forward costs. Thus a normal risk environment should bring those risk costs down. It’s our aim to return to that ROE ambition of 10% to 12%. Regarding dividends, yes, so we have reserved €1.8 billion and the entire profit from this quarter.

Just a quick question on costs, please. Just Raul said, I mean to bridge the gap with your 10% to 12%, clearly, cost is a key component. CET1 ratio and capital is also another, as the denominator will come down. So on capital first, I understand you want to take your time and have visibility on how the pandemic could evolve. But I guess you’re taking that action through your provisioning Stage 1 and 2, so on. Why this extra level of cautiousness, which will delay as well the profitability recovery? And then on costs, it would be really helpful to give us a sense of how much savings you could generate from the projects you’ve announced today, or should we have to wait for Q4 to get these savings numbers?

On capital, we're cautious because of the second wave of uncertainty with COVID-19 and risks of defaults. If we did not take a management overlay, we would have shown a release of €380 million in risk costs. So, while we see good fundamentals, we are conservatively provisioning to mitigate future risks. We’ll continue to focus on cost control, which will reveal itself in our reports moving forward. Regarding savings, we outline our actions today regarding 1,000 FTEs; we’ll update more details in Q4.

My first one is around NII. I’m a little bit confused still on TLTRO because I think you indicated you’re confident of getting the benchmark. Yet, you mentioned in Q3 not accounting for the eventual benefit. If you assume closed books today on benchmark, are you there already? Or do you still need some growth in Europe? I have remarked that French and Italian peers are booking up to the full 100 basis points. In Q2, you indicated coordinated efforts regarding TLTRO bookings but that's not materializing. Second, I wonder if you could quantify the impact for NII from rate-mitigation actions you announced today. Lastly, a quick one. Are you also going to put the Q4 profit fully in your shareholder distribution bucket, or should we expect some of that to go into the ratio?

Regarding TLTRO, different banks take different treatment of thresholds, with our internal view that measurements occur at the end of March 2021, leading us to wait until we can be more confident before booking that income. The impact of announced rate mitigation plans, be it in the Netherlands, Belgium, or Germany, is expected to yield an annualized amount of €140 million. We intend to accrue the Q4 profit into our capital.

Just 2 questions from me. The first is just on the deposits, which is actually a bit of a follow-up to Robin’s question. But can you give us the numbers around how much deposits fall into negative rates in Q4 and Q1, which I presume is behind the €140 million you just gave? And secondly, just on capital management, can you give us a little bit of an outline of how you’re going to think about the split potentially between cash dividend and share buybacks when you reach those decisions?

In terms of deposits, we don’t disclose that information directly, but you can see the declining levels of thresholds over the past 12 to 18 months. The thresholds started with the Netherlands at €1 million, then went to €500,000, and now further down to €250,000. Additionally, on stock buyback, we will pay out a majority in cash but won’t comment on how much would be done in stock buybacks versus distributions at this time.

What you can expect is that we will issue a majority in cash. We do not comment at this point about how much we would consider doing regarding buybacks. We will assess depending on price and intrinsic value at that time.

A couple of things. The first one is on AXA. It’s often mentioned, but the contribution to results is still insignificant. When do you expect this to start being more significant? And do you expect to have more such deals now that you've shown how you are structuring the products? The second question is on costs. With this change in the model bank, we are missing that before we would have had a number of IT systems decommissioned. That was part of a long-term plan, but it’s something we’re still lacking. Are there other structural areas where you see potential for cost efficiencies? Finally, you are reducing by 1,000 FTEs, but your total FTEs are around 56,500. In 2019, they were 54,500. It looks like over the last three years, you've seen an increase between 2% and 4% in your FTEs. Could you share your thoughts on this and how you view the reduction of 1,000 in comparison to the larger increases we've seen over the past three years?

We have a partnership with AXA and have been rolling out several products across five countries. We keep advancing as we speak in more countries, and this, we believe, will significantly boost our revenue. We will continue evolving these partnerships as it provides differentiated experiences to customers for highly-needed products. Regarding cost efficiencies, we aim to avoid developing things multiple times and have invested in foundational building blocks that can be utilized across ING worldwide. We realize questions on our FTEs require a broader understanding. Internal FTEs increased, but the shift has been towards lower-cost internal placements. Thus, those figures might not provide the full understanding as compared to work packages and external FTEs.

Yes, I wanted to ask the same question in a different way. Regarding the cost, is it realistic to maintain flat costs, or does "nose down" imply the possibility of lowering them in a normalized environment? Also, when you mention the NII pressure, does this include the benefits from the TLTRO or exclude them?

I said down, so I didn’t say flat. The nose needs to come down, and it will come down. Regarding NII, currently, it is excluding TLTRO; when we record TLTRO, that will be then.

On my first question regarding Net Interest Income, could you provide some insights on where you anticipate Net Interest Margin will trend from here? It appears relatively weak quarter on quarter, but the effect from the sizable TLTRO III is certainly significant. Considering your reduced capital goals, does this imply that you're willing to accept a decline in Net Interest Margin to remain competitive, provided that profitability remains aligned with your objectives? Additionally, regarding my inquiry on NII, can you clarify the incremental negative charge expected next year compared to this year? The new lower thresholds will impact more customers starting in January. Specifically, regarding the €140 million mentioned earlier, will this be annualized for next year or this year? I'm trying to assess if there will be any supportive factors. That's my first question on NII. Moving on to costs, I understand your approach to evaluating the cost base and identifying opportunities for effective execution. However, what actions were taken in Q3 to reduce costs? Even after adjusting for impairments, costs seem flat quarter on quarter and have increased year on year. Given the presence of KYC costs, surely you must have eliminated some underlying costs? Could you elaborate on what you achieved in Q3?

Please note that you need to continuously look at where you cut since CLA’s costs will increase annually. So to maintain flat, you need to cut. However, as you may have seen in July this year, we've announced closure of branches in the Netherlands; COVID has shown us that the digital direction is proving to be right as clients increasingly engage with us digitally. We will continue to reevaluate the branch footprint and have done so in Q3. Hence, you see costs being largely flat, including provisions for branch closures. On NII and its pressures, there is a mix of multiple contributing factors, including negative rates and regulatory impacts. We are conscious of continuing discussions and the different sentiments surrounding our results. As we wind down this meeting, I appreciate all the questions and insights that have been shared, and wish to reiterate our commitment to managing uncertainties while seeking opportunities in our strategic priorities moving forward. Thank you for your engagement today.

This concludes the quarter three 2020 analyst call. Thank you for your attention. You may now disconnect your lines. Thank you, sir. Bye, bye.