Good morning, this is Laura welcoming you to ING's 2Q 2024 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 statement. A discussion of factors that may cause actual results to differ from those in any forward-looking statement is contained in our public filings, including our most recent annual report on Form 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 very much. Good morning and welcome to our results call for the second quarter of 2024. I hope you're all well. As usual, I'm joined by our CRO, Ljiljana Cortan, and our CFO, Tanate Phutrakul. In today's presentation, we'll discuss the strong quarter we had, and I will inform you about how we're progressing on the priorities we set out during our recent Capital Markets Day. Tanate will walk you through the financials of the quarter and show you how we're performing compared to our targets. At the end of the call, we will be happy to take your questions. Now, let's move to slide 2. Before going through our strong results in more detail, let's start with a recap of the key messages from our recent Capital Markets Day. First, we've shown that our entrepreneurship, our relentless focus on our customers, and our collaborative culture have made us a very successful bank, delivering value for all stakeholders. This DNA enables us to capture opportunities in the highly attractive markets in which we operate. By executing our Growing the Difference strategy, we will capture this potential and we will accelerate growth, increase our impact, and deliver value for our stakeholders. And I will now take you through how we have done so in the second quarter. On slide 3, we show how we are accelerating growth. After a successful first quarter, we again had very strong commercial performance in the second quarter with an increase in the number of customers in lending and in deposits. The number of mobile primary customers increased by almost 250,000 with increases in all countries where we pursue growth opportunities. And with this increase, we've grown the number of mobile primary customers by well over 900,000 customers in the last 12 months, and we're well on track to reach our target of 1 million per annum. We've also grown our lending book with a particularly strong performance in mortgages where we saw growth across all markets. Growth in wholesale banking lending was offset by loan sales as we continued to optimize capital usage. On the liability side, successful marketing efforts in retail banking and a stronger focus on deposit gathering in wholesale banking resulted in EUR15 billion in flow this quarter. Annualized customer-balanced growth, so that’s lending and deposits combined, amounted to 6.2% in the first half year, exceeding the annual target of 4% we set during our Capital Markets Day. Then I'm moving on to slide 4, and there we show the increasing impacts for all our stakeholders. After growing by 430,000 in the first half year, we now have 13.7 million mobile primary customers. And this growth reflects the appreciation of our products and services. 65% of our customers now only do business via mobile, and we're the most loved bank in many markets we operate with a number 1 net promoter score in 6 out of the 10 retail markets. We have a highly engaged workforce, and we're proud that we're seen as a role model in advancing LGBTQI-plus inclusion in workplaces worldwide. The number of sustainable deals has increased further with EUR32 billion of volume mobilized in the second quarter and EUR57 billion in the first half year, which is EUR10 billion more than last year. In retail, more than 40% of the mortgage production in the Netherlands has at least an A-label. And finally, we're showing excellent financial results for our shareholders. As a result of continuing strong profitability, we have announced an interim dividend of EUR0.35 per share, bringing the year-to-date yield to over 13% already. Slide 5 lists how we are delivering value. Net interest income remained resilient, with an increase compared to last quarter, despite the negative impact of higher accounting asymmetry. Fee income was very close to EUR1 billion this quarter, and we're well underway to reach the EUR4 billion this year that we stated earlier. Most of this growth compared to last year was driven by structural increases, as Tanate will show you in more detail later. Risk costs continue to be below our through-the-cycle average, and we remain comfortable with the quality of our loan book. This has all resulted in a return on equity of 14%, and we're confident that we will end the year with a return on equity of more than 12%. We have achieved this return while operating at a healthy CET1 ratio. With the ongoing share buyback, we've made further steps converging our CET1 ratio towards our target level and will update the market on next steps with our third-quarter results. Then slide 6. And on this slide, I would like to zoom in on an individual country and show how we're executing on our strategy in retail banking. In Romania, we've been the most preferred bank since 2016. And this appreciation of our digital products and services has resulted in strong growth in the number of total customers. Over half of these customers now use us as their primary bank. We've also been able to grow both sides of the balance sheet and make a very healthy return. We firmly believe we can grow further and make more impact for our customers. For example, we completely redesigned our digital onboarding process that now really stands out in the country. We've introduced a digital mortgage in Romania with digital financial approval and collateral appraisal. To increase presence in new segments, as we also talked about during Capital Markets Day, we have introduced dedicated value propositions for Gen Z while we renewed our focus on the affluent segment. We've increased cross-sell within business banking so that more customers use our daily banking packages, which helps to further increase fee income. Overall, Romania is a great example of how we're growing the difference. And now I'll hand over to Tanate, who will take you through the results of the second quarter in more detail, starting on slide 8.

Thank you, Steven. As Steven mentioned in his introduction, net interest income was strong again this quarter and improved quarter-on-quarter, despite a more negative impact from accounting asymmetry. Lending NII increased for the fifth consecutive quarter, driven by higher volumes, while the margin rose by 1 basis point. Liability NII continued to be resilient, as the expected normalization of liability margin was almost fully compensated by higher volumes. The overall net interest margin, which takes the development in the total balance sheet into account, decreased by 3 basis points, driven by the impact of increased accounting asymmetry. Now if you go to page 9, I'll show you more details on this. The point I'd like to make here is that the structural drivers of net interest income developed very well this quarter, while reported net interest income increased by EUR5 million quarter-on-quarter. However, when excluding the impact of one-offs and the increased accounting asymmetry, our net interest income actually increased by a strong EUR65 million compared to the previous quarter. As you know, the negative impact from accounting asymmetry on net income is more than compensated by other income. I'll get back on this on slide 12. On the next slide, we'll show you the strong volume growth in both core lending and deposits. The commercial momentum that we had in the first quarter continues in the second, with strong net core lending growth of almost EUR8 billion. We have been able to grow our mortgage book in all of our retail countries. This was just not driven by recovery of the market, but also by increasing our market share in some countries. In the Netherlands, for example, we have grown our market share in new production to over 16% on the back of providing an excellent customer experience. Growth in wholesale banking lending was offset by loan sales as we continue to focus on capital efficiency. On liabilities, we saw core deposit growth by EUR14.7 billion in the second quarter due to strong performance in both retail and wholesale banking. In retail, we grew across many markets driven by effective marketing and supported by the inflows of holiday allowances in some countries. In wholesale banking, our focus on increasing deposit paid off with strong inflows in payment and cash management in particular. Now turning to slide 11, fee income year-on-year was again double digit as we made almost a EUR1 billion in fees this quarter. This is a record. The growth was particularly driven by retail banking as we were able to grow mobile primary customers, active investment product customers, lifting income from daily banking, investment products, and insurance. In addition, we paid low commissions to independent agents and brokers in Belgium. We also benefited from favorable market conditions that led to higher fees from mortgage brokerage and an increase in the number of investment product trades as well. In wholesale banking, fees were slightly lower due to lending, but were still at a strong level. Given a strong performance across the bank, we remain confident that we can reach our EUR4 billion fee income outlook this year. Now on slide 12 we show what the developments in the different income lines in the first half of the year mean for our guidance for total income this year. We note that we previously provided an outlook for net interest income assuming a stable accounting asymmetry resulting in a range of between EUR15 billion to EUR15.5 billion. However, as this asymmetry remains difficult to forecast, we have now excluded this impact from our outlook. Any impact from accounting asymmetry will be more than compensated in other income. As structural drivers of NII remain strong, we continue to guide for interest income excluding accounting asymmetry to end up in the upper end of the range. We are confident that the fee income will reach the EUR4 billion outlook and as a result, we have increased our total income guidance this year from around EUR22 billion to more than EUR22 billion. Now on slide 13 we like to explain a bit about the cost development. Total expenses in the first half of the year increased by roughly 3%, compared to the first six months of 2023. In the same period, expenses excluding regulatory costs and incidental items were approximately 6% higher, which is in line with our outlook for 2024. This increase was mainly because of the impact of inflation on staff expenses, reflecting salary indexation and collective labor agreement increases across most of our markets. We also continue to invest in our business and had to pay a higher VAT following the implementation of the Danske Bank ruling in the Netherlands. Regulatory costs were significantly lower than last year because no contribution is required to the Eurozone single resolution fund for 2024. For the full year, we continue to guide for total expenses phase of around EUR12 billion. On to risk costs on page 14. Total risk costs were EUR300 million this quarter or 18 basis points of average customer lending, still below our through-the-cycle average and demonstrating the quality of our loan book. In retail banking, asset quality continued to be strong, and we benefited from a strong improvement in the macroeconomic outlook for house prices. In wholesale banking, risk costs including additions to Stage 3 for a number of unrelated existing files we have also transferred a part of the Russian-related exposure from Stage 2 to Stage 3 reflecting the worsening economic outlook in that country. At the end of the second quarter, we still have a stock of overlays amounting to EUR415 million. Page 15 shows the development of our core tier 1 ratio which was mostly impacted by the ongoing share buyback which we announced last quarter. Core tier 1 decreased by EUR1.7 billion as the buyback was partly offset by the inclusion of net profit for the quarter after reserving for dividend. Total risk-weighted assets increased by EUR7.3 billion excluding EUR0.6 billion of FX impact.

Our four-quarter rolling return on equity remains very attractive at 14%, and we are confident we will be able to provide an ROE of over 12% for the full year. Now on to the Q&A. Over to you, operator.

Thank you. We will now take our first question from Benoit Petrarque of Kepler Cheuvreux. Your line is open, please go ahead.

Yes, good morning, gentlemen. Thanks for taking my questions. So, the first one will be on net interest income, looking at the two main moving parts, so lending NII and liability NII. On the lending NII, obviously very strong growth on the volume side. It sounds like you, or at least I am more positive on the lending NII development going forward. I am also a bit more positive on lending volumes for the rest of the year, and also on lending margin developments. So, that will be the first sub-question in NII. And then on NII again, on page 22, you provide a very interesting sensitivity. Last quarter, you told us that based on the curve end of March, you expect to be between 100 bps and 110 bps on liability margin. I see a delta based on the current curve of EUR600 million on interest income from replicating income in 2026, which will be about 9 bps on the total customer deposit. So, my question is, based on the current curve, are you maybe a bit more positive on this range of 100, 110? Are we more likely to be on the high end of this range based on the current curve? That is the question. And that is just a very tiny question on the asset sales. So, wholesale book is down EUR1 billion. But how much is the kind of effect of the asset sales in Q2 or H1? I just wanted to get the full picture on an underlying basis. And also, you talk about assets in the past and just wondering where you are on that. Thank you very much.

Thank you, Benoit. I will address the asset sales and net interest income, followed by Tanate discussing the graph on page 22. Regarding the net interest income, we are feeling quite optimistic. Starting with mortgage volumes, they were strong. In the Netherlands, our market share of new production reached over 16%, compared to our total market share of around 13%. This performance is supported by the strength of our digital channel and interactions with brokers, which makes me very pleased. We also hold the top MPS position in this market. Furthermore, we are witnessing a gradual increase in volumes in Belgium and Germany, although those markets are recovering more slowly in terms of mortgage sales compared to 2021 and 2022. Even in this slower environment, we are performing well, which boosts our confidence in the future. In wholesale banking, we noted lending growth, alongside underwriting and loan sales. This connects to the earlier questions; we recorded around EUR2 billion in loan sales this quarter. As a result, while total figures may have decreased, we also have a number of undrawn committed facilities. Thus, although growth is not immediately reflected in the numbers, we are observing a stronger market in our deal pipelines. From a volume standpoint, we maintain a positive outlook based on our market share and the recovery in both mortgages and wholesale banking. In wholesale banking margins, we are beginning to see slight margin expansion; while it’s only one basis point, it shows stability. We expect that as market liquidity tightens due to quantitative measures, it could positively influence growth. For this quarter, we have seen a slight increase, and deposit margins remain stable as anticipated. Now, I’ll turn it over to Tanate for the discussion on page 22.

Thank you, Benoit. I think we wanted to provide this mechanical replication of the U curve for the Eurozone deposit book. I think this is one determinant of where our net NII for liability will go. But I think there are three other developments. I think volume is clearly one in terms of deposits. And you can see that we are quite optimistic about our momentum in terms of volumes, given what we see in Q1 and also Q2. We also will be determined by the mix of our deposits between term deposits, savings, and current accounts. What we also saw is that the migration from current account to savings account has stopped. So that is a clear trend line, which is also positive for NII liability. And the third is the deposit rates itself. And that, of course, we do not give forward guidance, but we reaffirm the guidance that going to '25, the liability margin should be between 100 to 110 with some of those positive moments that I mentioned.

Thank you. Thank you very much.

Thank you. I will now move on to our next question from Giulia Miotto of Morgan Stanley. The line is open. Please go ahead.

Hi, good morning. Thank you for taking my question. The first one, I want to stay on the same topic and double click on the margins by country. Is it correct that Belgium is still under pressure probably on lending and deposits, whereas the Netherlands and Germany look better? Or, you know, any further color that you can give us by country would be welcome. And then my second question is that it goes on a different topic, capital, the EUR6.5 billion temporary model increases. So can you give us a bit more color there? What are those and how do you why are they temporary, essentially? How do you then offset them? Thank you.

Yeah, on the margins, I will take the question and Ljiljana will take it on the EUR6.5 billion temporary increase. Yeah, it is true that in terms of the countries, if you look at mortgage margins, that they are better in the Netherlands and Germany than they are in Belgium. So what we clearly do, of course, is when we look at pricing of our products and of our services to our customers, we look at whether we make the right return on it. And we're a return-focused bank. And if we are able to make a return that meets our internal return hurdles, then we'll do it. And if not, we don't. And that's also therefore, however, if you look at the expansion of the mortgage book, you see a significant expansion in the Netherlands, also as a result of the fact that it's an attractive market. But I must say that also the mortgage markets in Belgium and Germany are still a bit slow. So there is some recovery, but not to the tune that we have seen in the Netherlands already, which is now already back at the level of house sales as of 2022. That's where we currently are.

Good morning, Giulia. On the models, yes, we have seen a temporary increase this quarter, which is a bit higher than usual of EUR6.5 billion. We say the majority of it will be reversed before the year-end, with no implications for our capital outlook. And what do we mean with that? You know that we execute in line with our ING model roadmap strategy. Every quarter, the model updates. In some quarters, it goes up or down, depending on the timing of the changes taken, but as well on the timing on the mitigating actions that are being taken in parallel in order to work on that impact. What we have seen in the second quarter is the negative impact that you've mentioned. However, most of it will be taken through different mitigating actions, primarily risk transfers that we use in order to, I would say, come to the structure level of RWA that we will operate at. If you look, for example, in the last six quarters, you will see a net impact of our model changes of around EUR1 billion to EUR1.5 billion, which is the proof that we actively manage our RWA throughout the year, in which some quarters might have the upticks due to these changes, but then in the others, taking a risk mitigating action in place, they're going down.

Okay, thank you. So, if I understand it correctly, this negative EUR6.5 billion impact will be offset by SRTs, is that correct?

Not just SRTs, there is a number of other, I would say, actions, which are insurance policies, derivatives, hedging, so different risk transfers, mitigations, and yes, largely, it will be offset.

Okay, perfect. Thank you very much. And if I can go back on the margin question, anything on the deposit margin by country, instead? Thank you.

I'll give this to Tanate.

I think, as I mentioned already, Giulia, deposit margin is depending on volume and on mix, to be clear, and the mix, I think, we have seen favorable developments in terms of stabilization of current accounts, so I think that's good on the mix. And I think in Q2, we had such a high inflow of deposits, so it moved the net interest margin down a little bit. We had quite a big promotion in Germany, so I think, I just repeat the key drivers, replicated income, volume growth, and mix, those are the key drivers for margins, but we stick with our guidance that we expect net interest margin for liability for this year to be above 110, and that it will be in the corridor of around 100 to 110 going forward.

Yes, thank you very much. I was looking for more, like, comment by country, if you have any, I don't know, if any country is looking differently, or if these trends are sort of similar across countries?

I think limited change per country. What I can say is that the margin is actually expanding somewhat in the non-Eurozone countries where interest rate environments are somewhat more favorable for us.

Thank you. And we'll now move on to our next question from Tarik El Mejjad of the Bank of America. The line is open, please go ahead.

Hi, good morning. Two quick questions, please. First, follow-up on the liability margins. One of the moving parts is the pricing on deposits you can't comment, it depends on competition and other factors, but can you, in your three main Eurozone retail markets, describe a bit the dynamics there in terms of competition and pressure on pricing there? And the second question is on costs. I understand your approach on costs, which is being very kind of continuous and looking for opportunities to optimize costs as it goes, but what are the areas we could potentially look for in terms of finding some levers to offset the sticky high inflation in costs and help the joes? And maybe you can just confirm that despite, I mean, looking at your guidance for costs and revenues, we should expect quite wide negative joes this year and negative joes next year with potentially slim to slightly improving in 2026? Thank you.

All right. The cost question goes to Tanate and I will say something about the liability margin. First of all, like Tanate already said, the margin is holding up well. So, and there are different price points, so in the Netherlands, the base deposit rate is relatively high, and that is a bit lower in Belgium and in Germany, but there you still see in Belgium they work with loyalty premiums, i.e., the longer you stay as a depositor in Belgium, the more you get, and in Germany they work with marketing actions. So what we currently see, and you see it in the past quarters, is that we, of course, we look at our own products, our own balance sheets, and we also look at how to grow in a profitable way our primary customers, and that's how we are also looking at deposit gathering. Now, what we therefore especially see in Germany that with marketing actions, and we saw it in the first quarter again, as we have done in the first quarter also the last year, or maybe it was April last year, that we started a marketing action at the right point, in a profitable way, by which we got a significant amount of deposits in, and that's how we continue to look at. How do you balance growth of customers, profitable growth of customers, with balance sheet management, and with getting more deposits in the bank? Now, and there you see a bit more action in Germany than you see in Belgium and the Netherlands.

Then, a question, Tarik, on expense development, as we kind of highlighted on page 13, we do expect that the cost development for this year to be around 3%, a combination of regulatory expenses and operating expenses. We do expect that, you know, if you look at the first half of the year where the increase in business growth come from, some of the big buckets are really, as we mentioned on our Capital Markets Day, we have increased the level of customer acquisition costs. These include front office staff, marketing expenses to acquire customers, and you see that the volume of new primary customers is developing nicely. This would be one of the big principal drivers of business growth that we see, and you're right that we don't take restructuring provisions on a program basis, but as they come, and in this quarter, we took around EUR34 million restructuring provision for restructuring in Belgium, which is related to a reduction of our operational staff levels. To give you the comfort about the outlook for the future, we stick with our CMD guidance, which is that cost-to-income ratio is ready to rise to around 54% next year and gravitate back to 2027 of around 52% to 54% cost-to-income ratio. So those would be reaffirmation of our guidance for the CMD.

Okay, thank you very much.

Thank you, and we'll now take our next question from Samuel Moran-Smyth of Barclays. Your line is open, please go ahead.

Hi, morning. Thanks for taking my question. So two questions on, I guess, either side of the balance sheet. So on assets, net core lending this quarter when annualized was above your 4% annual growth target, but also significantly above Eurozone system growth. When you came to Benoit earlier, you commented on the core retail markets, so Netherlands, Belgium, Germany, but it looks like the highest relative growth this quarter was actually in your challenger markets. So perhaps you could give us some color on which markets you feel you're taking most market share and where you expect that to continue? And then my second question is on the liability side. You mentioned a couple of times your marketing campaigns in Germany. I appreciate the latest campaign started in Q1 and went into Q2, but when I look at net core deposit growth in Germany this quarter, it was actually quite subdued compared to other quarters where you've had those promotions. So should we think about that as a net number where you have had inflows, but you've also had outflows? And if so, are those outflows going to competitors or are they going into asset management products or I suppose any color there would be really appreciated. Thank you.

All right. So maybe on the marketing campaign in Germany that led to a big inflow in Germany of EUR11 billion in the first quarter. So I was talking about that in the context of the first quarter inflow in Germany that was EUR11 billion. And so indeed that it has not been those levels in the second quarter because we did not do a marketing campaign this quarter. That was last year where we did a marketing campaign in April which then led to an inflow of I believe from the top of my head EUR16 billion. So this quarter is actually a deposit inflow all around in the various markets. But depending on at which point in time we want to again push the pedal to grow our customers, we'll do new marketing campaigns, but I cannot say anything about that. But now you see actually increase of deposits across the various markets in which we operate. Then there was a bit of a static on the line, but I believe the first question was about where do you see most growth in markets in lending? Is that correct? Can you repeat that question, Sam?

Yes, specifically in reference to your challenger markets.

To the challenger markets? Well, I mean, also there we see significant growth in most of the markets. We also see a return of the market in Poland whereby the economy is gradually improving again, and there we see particular growth coming in that market as well. So next to the Netherlands that we saw was very strong, gradually markets coming back in Belgium and Germany, but not to the level that we have yet seen a few years ago. We see a return of growth in Poland, and we see also Italy doing particularly well.

If you don't mind, if I could just quickly follow up on German deposits. When you talk about marketing campaigns, if I was to go on your German retail banking website right now, I can still get, I think it's 3.3%. So the promotion is still there, but are we talking more specifically about actual marketing rather than just a higher bonus rate? Just to clarify, sorry.

Yeah, what we typically talk about when there's a marketing campaign, so that means that you are allowed to get a certain interest rate for a certain period. And when we talk about the campaign itself, it is about the start of that campaign. The start, when we start to offer something new for a certain period, that is when you see a big increase in the deposits flowing in.

Thank you. And we'll now take our next question from Benjamin Goy of Deutsche Bank. Your line is open, please go ahead.

Yes, hi. Good morning. Two questions, please. So first on costs, and thank you for the breakdown of the cost inflation. Now we have seen your two largest markets. You have essentially seen the CAs of the sector or of key competitors. So wondering if you can help us a little understand how your cost CAGR looks throughout the plan. Was it slightly elevated initially given these CAs? And then secondly, on the deposits, and particularly if you can share a bit more color on the current accounts, which were nicely up quarter-on-quarter. Is that in the byproduct of these savings campaigns that people also bring over current accounts and use them more frequently? Or how can you explain the growth? Thank you.

All right. I'll do the current accounts question. Tanate talks about costs, as he typically does. So if you look at the current account growth that indeed, part of it is just growth of new customers coming in. You see 250,000 mobile primary customers. And with these customers, we do more. And they also typically keep more money on our accounts. But also, we have a current account growth on the back of holiday allowances amongst the Netherlands, Belgium, and Spain. But also, we had a campaign in Italy this quarter as well. So that's what caused it as well. But typically, holiday allowances cause current accounts to go up. The flip side of it is that what we typically also see in the third quarter of the year is that you see an increase of transaction fees in the third quarter on the back of the holiday period because then people start to spend that money, typically, in our case, by way of credit card fees. So that will then have a positive impact on the transaction fees. That's what we have seen over the past year. So that's a bit how it goes. Second quarter increased due to holiday allowances. Third quarter increasing credit card uses because of the holidays.

Then, Ben, in terms of costs, particularly the collective labor increase, we do see the delayed impact in terms of wage inflation. You have mentioned we watch our competitor in a number of markets like Germany and the Netherlands. So we do expect that the cost increase in the short term, so '24-'25, to remain sticky, but that the normalization in terms of wage increase to become more prevalent in '26-'27. So more uptick in the first part of our planning period and more normalization in the back end.

Thank you. And we'll now move on to our next question from Anke Reingen of RBC. Your line is open, please go ahead.

Yes, thank you very much for taking my questions. The first is on the slide 22 again. Sorry for following-up. But in 2025, a EUR500 million step up in the replicating portfolio income. Why should it not be a similar step up in the guidance you gave on the 4.4 post the deposit cost? Is there anything that would make the headwind larger so it's not a EUR500 million step up? And then secondly, on the loan volume growth, I mean, it's really quite impressive. And you mentioned market share gains. Can you elaborate a bit about what you're doing to grow faster than the competition? Thank you very much.

All right. I'll talk about loan growth. Tanate talks about page 22. Well, I mean, in the end, but I think we always highlighted that it's a matter of customer experience. And what we do is we build very strong channels. Like we talked also about Romania, for example, where we said we have a digital approval or digital collateral valuation. And it just means that we continuously work very diligently, very focused on lower time to yes and lower time to cash. So how long does it take when you get an approval? How long does it take when you get your money? And in the Netherlands, we have with our brokers and the broker channel is the largest channel for mortgages. The time to yes is less than 24 hours, which is just very good. And I think it's the best in the market. You also see, and I don't know where you come from, but in Germany, we also there is being sold a lot through brokers. But also you see that in the way that we do it with our clients, we continuously work on do that fully digital as far as we can, as far as law permits us to do so. So in the end, it's creating an environment where there's more certainty for customers in a quicker and less friction type of way. So easy, instant, personal relevance. That's the name of the game. And that's just hard work every day.

Then Anke, in terms of the step up on page 22, that's the replicated income. And I think the other legs of it, which we don't, we cannot disclose is what happens to customer rates. But we do give on that page a sensitivity analysis that every 10 basis points or pass-through has an impact of around EUR400 million on NII. So that's the second leg. The only thing I would describe is that competition for deposits from what we see in the second quarter has remained benign, that we are able to gather quite significant volume in many markets that we operate in. So those are the missing pieces that you need to make your judgment is what is the outlook in terms of competition, in terms of retail deposits, and what tracking do you assume in your model?

Thank you. We will now take our next question from Hugh Moorhead of Berenberg. Your line is open, please go ahead.

Good morning. Thanks very much for taking my questions. One on fees and one on risk cost, please. So firstly, on fee income, strong performance and insurance this quarter. Is that sort of should we see that as being driven by one-off like a marketing campaign, for example? Or are we seeing a bit more of a structural recovery in that business? If you could just give a bit more insight, that would be great, please. And then secondly, on loan losses, I think cost of risk this quarter, excluding the overlay ride back is 25 bps, a bit above your through-the-cycle guidance. How should we view this quarter in terms of risk cost normalizing? How are you guys thinking about the evolution of the overlay as the quarters come? For example, will you sort of continue to use the overlay to keep the cost of risk at around 20 basis points? And also finally, sorry, are you able to quantify the Russia, the impact of the transfer of the Russia exposures from Stage 2 to Stage 3 as well, please? Thank you.

All right. So I'll give the question about the risk cost overlays, Russia, trends to Ljiljana, and I'll talk about fees. That makes my job fun. So well, I mean, there are many reasons why our fee performance is strong. It starts with getting more customers in the bank who do more with us. And we have new mobile primary customers. Then it's about them doing more with us when they're in the bank. So if you look at the investment accounts, we increased and I told on the capital markets that we have approximately 4.5 million investment accounts on a total of 40 million customers. So that's only, let's say, 11%. So there's nothing wrong with it. But that means there's a lot of upside. And that grew over the past year with 8% and this quarter with 3%. Then in insurance, because we do more, and we also made specific agreements with insurance providers in different markets for private individuals, but now also starting in business banking, still relatively small. We also now are selling more bespoke insurance products to our customers, which we did not do in the past. So we start from a very low base. And as I said previously, there is a lot more we can do with our customers. We just need to offer it to them and start offering it to them, which we started to do also a bit more in insurance fees. And that's why you see the increase coming from. And the same goes for daily banking, where in some countries, there were some increases in price packages. And then on top of it, and that's more, let's say, the beta side of the story. Like I told you, there is some recovery in the mortgage markets, in the various markets, and also in Germany and Netherlands. And therefore, you see that we have a bit more mortgage fees than we had in the previous quarter. So that's gradually recovering back. But a lot of things have to do, to summarize, by just doing more with our customers and offering more bespoke solutions to them in the fields of investments and insurance. Ljiljana, risk costs.

Hello, and good morning. Yes, the risk costs were EUR300 million, or if we look at the net amount, it's 18 bps through the cycle. Overlays are being made when we believe our models are not able to capture fully the risk that we see in the environment. They are to be used once these risks happen, or they are to be released if we don't see these risks happen. So also the average calculation of through the cycle, risk cost includes always overlays. When it comes to the specific Russian impact this quarter, you will have seen the uptick, I would say, in S3, so Stage 3 provisions. And from Russia, that uptick is approximately EUR133 million on the side of the S3, so that's why the increase. However, there is as well a partial offset on the Stage 2 impact. The net impact on Russia is EUR39 million additional risk costs this quarter.

Great, thanks very much.

We will now take our next question from Farquhar Murray of Autonomous. Your line is open, please go ahead.

Morning all, just two questions, if I may. Firstly, just going back on the model updates, EUR6.5 billion of RWA, which parts of the model or lending books did that come from? And in terms of the separate mitigating actions, could we just, it should be expected cost from those? And then secondly, as we move into a cutting cycle, what's ING's philosophy going to be on deposit pricing? I think on the way up, you characterized it as a slow follower. Is ING willing to move the other way on the way down? Thanks.

All right, I take the question on the deposit cycle or the cutting cycle. And then Ljiljana talks about the model updates. I mean, clearly, we cannot say anything about our strategy in terms of our deposit rates going forward. Clearly, indeed, depending on whether we grow and want to grow in customers and make our income there, it's an economic position we take on it. So in the end, it's a balancing act between do we want to have more customers on who we in total then, because we have more customers, make more money? Or do we have an impact by leaving rates as they are or lowering them and therefore make more money or less customers? And that's just an economic equation which we can't continuously calibrate. We have been in a period whereby rates moved up very quickly. And then at some point, competitors started moving. And there we have seen that in markets where you typically see that as a challenger, we grow our customers very quickly. We start with marketing actions and sometimes rates higher a bit quicker to get those customers in. And in markets where that is not the case, we keep it much more stable. And we are in a good position in practically all the markets in which we operate. So we will be nimble in terms of our approaches, depending on where we want to grow and where we want to be stable in terms of our share or our total balance sheet. And that's how we take it. That’s all I want to say about that going forward.

Good morning. On the model updates, yes, the update comes from actually various models, but the majority one comes from the low default portfolio in the wholesale banking space.

And is there any cost to the mitigating actions?

There are risk transfer mitigating actions. As I say, those are the low default portfolios. So there are a number of instruments available also in the market and internally to manage those.

Thank you for your questions. Are there any further questions?

Thank you. There are no further questions in case. I will now hand it back to Steven van Rijswijk for closing remarks. Thank you.

Good. Thank you very much for listening in and for the call on the second quarter of 2024. I wish you a great summer. I hope that you still have some time to take some time off and go on holiday. And I'm sure we'll speak again on the third quarter. Thanks very much.

Thank you. This concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.