Hello and welcome to the ABN AMRO Q1 2025 Analyst and Investor Call . Please note this conference is being recorded, and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand you over to your host, Marguerite Bérard , CEO, to begin today's conference. Please go ahead.
Thank you very much and good morning everyone. Welcome to ABN AMRO's Q1 results presentation. I am here joined by Ferdinand Vaandrager and Serena Fioravanti. I will update you on the main topics for this quarter, and Ferdinand will discuss our financial results. Following our presentation, we will hold a Q&A session. Let me now take you through the highlights of the first quarter on slide two. We showed solid results across all our client units. Our net profit amounted to EUR 619 million, and this corresponds to a return on equity of around 10%. Our mortgage portfolio increased by EUR 1.7 billion, and corporate loans grew by EUR 900 million. Our net interest income demonstrated resilience despite a further reduction of interest rates by the European Central Bank. Fee growth continued and are up by 8% versus Q1 2024, with all client units contributing to this growth.
We remained disciplined on our cost, which is illustrated by a 5% decrease in our underlying cost compared to Q4. Impairments were again limited this quarter, reflecting our solid credit quality and resilient economy. We have successfully transitioned to Basel IV this quarter and now report a strong CET1 ratio of 14.7%. Lastly, as we announced at our general shareholder meeting, we will hold a capital market day in November this year. Before Ferdinand will discuss his highlights, let me start with our strategic achievements this quarter on slide three. First, our wealth management was awarded Overall Best European Private Bank, reflecting our commitment to excellence, innovation, and client service. Our continued efforts to improve customer experience resulted in an increase in our net promoter score during Q1 2025, showing a positive trend for both consumer and affluent clients.
Customers praised our efficient and good customer service, proactive contact, and ease of digital services. We entered a risk-sharing agreement with the European Investment Bank, covering around EUR 1 billion of SME loans, marking our first SRT transaction. This agreement further helped in supporting Dutch SMEs with favorable financing conditions. We launched a free online Green Building Tool to provide insights to commercial real estate clients into energy-saving opportunities. Additionally, we introduced a new financing facility with transfers, an innovative digital platform, and we launched the index mandate project to attract younger clients. A significant milestone to note in conclusion is that Tikkie, our peer-to-peer payment app, processed a record number of 700,000 transactions in a single day during this year's King's Day celebration. Now turning to economic developments, the Dutch economy continues to demonstrate resilience with GDP growth above the eurozone average, unemployment remaining low, and a strong housing market.
U.S. policy on tariffs has been, let's call it, erratic. However, the latest news on de-escalation with China is good news. In general, the main impact on the Dutch economy from tariffs comes from the indirect effects of a weakened global economy and reduced international trade. However, we may feel some effect from the limited direct exposure to the U.S. and the import tariffs imposed on Dutch exports should this materialize. On the other hand, there are also some mitigating factors. The European Central Bank is cutting its rates, and our economists expect that 1.5% will be reached by September, implying a 25 basis point cut at every ECB meeting. Fiscal expansion in Germany, a key trading partner for the Netherlands, and increased EU defense spending will have positive spillover effects on the Dutch economy.
Finally, the Dutch government is taking measures to bolster household purchasing power by reducing the energy tax, raising social rents, and increasing rental allowances. These mitigants will start to take effect next year. I will now hand it over to Ferdinand to discuss our financial performance. Ferdie?
Thank you, Marguerite. Starting with our lending products, we again had a strong quarter in mortgages, and our portfolio increased by EUR 1.7 billion, continuing the trend from last year. Corporate loans grew by EUR 900 million, driven by our focus on transition themes, new energies, digital, and mobility. Consumer loans decreased somewhat due to repayments, less demand, and phasing out of legacy products due to stricter lending criteria. Total deposits increased with some seasonal effects both in professional and current accounts. An important seasonal effect for the current accounts are the tax payments by business owners during the first quarter. In terms of flow between the different products, we saw clients with maturing time deposits increasingly opt for saving products, driving an increase in demand deposits. Now moving to net interest income on slide six.
Our net interest income decreased in Q1 as expected, largely driven by a normalization of the treasury results and lower deposit margins. With regards to our lending products, the strong growth in the mortgage portfolio was compensated by slightly lower margins. Margins on corporate loans were stable, while our corporate loan book grew, though this was partly offset by the risk transfer of an infrastructure portfolio. Moving to deposits, as we kept the saving coupon unchanged during Q1, while the replicating income declined, deposit margins decreased during Q1. Last quarter, we guided NII within the range of EUR 6.2 billion-EUR 6.4 billion based on two different scenarios for savings rates. As of May 1, the coupon for our main savings product has been lowered by 25 basis points to 1.25%.
While this benefits net interest income, the end-of-April forward rates came down compared to the end of January, and this negatively impacts our replicating income. We estimate that the combined effect of lower savings rates and lower forward rates at around EUR 100 million net benefits to NII for this year. This implies NII would lend around EUR 6.3 billion, assuming saving rates stay constant and forward rates do not change for the remainder of the year. By maintaining the range of EUR 6.2 billion-EUR 6.4 billion, we are effectively incorporating some downside risk, for example, from a decline in forward rates, as well as the upside potential of lower savings rates. I will discuss fee developments on slide seven. Fee and commission income continued to grow in Q1, increasing a further 1% compared to the last quarter.
In personal and business banking, we increased the payment package pricing as of the 1st of January, raising the monthly fee from EUR 3.25 -EUR 3.70. The fee increase at wealth management reflects higher assets under management, given, on average, positive market developments, higher volumes in discretionary portfolio management, and higher demand for advisory products. Clearing fees increased versus last quarter as trading volumes were higher due to heightened volatility in the financial markets during Q1. Moving to other income, better ALM treasury results and lower deregulation losses led to a slight increase compared to the previous quarter. Now turning to costs on slide eight. After a few quarters of rising costs, underlying costs decreased in Q1. Internal FTEs increased at the expense of external staffing, leading to a net decline in total FTEs.
As agreed in our collective labor agreement, the pension contribution was lowered at the start of the year, leading to EUR 20 million lower costs this quarter. Underlying other expenses also decreased, reflecting some non-recurring costs in Q4 and lower external FTEs. For 2025, we expect costs to be broadly flat compared to last year, so between EUR 5.3 billion-EUR 5.4 billion, including regulatory levies. To deliver on this guidance, we enforced increased controls on consultant expenditures and external hiring. This will require some adjustments, but this will help to reassess capacity needs and optimize our resources. Cost discipline will remain a top priority going forward, as this is an important lever to improve our returns. Turning to impairments on slide nine. Our credit quality remained strong in Q1, with the impaired ratio stable at 2.1%. On a net basis, we booked only EUR 5 million in impairments.
Across various sectors, we took some additions to new and existing clients. This was largely offset by lower than anticipated impact from an IFRS model update for corporate portfolios. Management overlays decreased slightly to EUR 135 million. Around 60% of the total overlay is related to interest-only mortgages, and the remainder is for climate and environmental risks. Although we have limited exposure to the U.S., we have done a deep dive into the effects of the U.S. tariffs by analyzing potentially impacted sectors. The direct impact on our profile is limited. However, we continue to closely monitor the developments. Given the good start to the year, supported by healthy macro indicators, we expect the cost of risk for 2025 to remain below the through-the-cycle cost of risk of 15-20 basis points. Proceeding now to slide 10 on our capital position.
Our quarter-to-year ratio improved to 14.7% as we entered the new Basel IV regime. Overall, RWAs increased by a modest EUR 600 million, mainly in operational risk. This reflects the annual update of the operational risk based on the three-year average of our operating income. Credit risk remained stable as we transitioned into Basel IV. The impact of moving some final models to less sophisticated approaches amounted to a new add-on of EUR 4.6 billion, in line with expectations. As we managed to resolve many issues in our push to implement Basel IV, a number of prudential assumptions we took in our RWAs did not materialize. We have worked hard to improve data quality and have made significant progress on key issues, for example, in the areas of collateral data and sourcing of external ratings.
Together with a more favorable treatment of state-guaranteed mortgages and the risk transfer of EUR 1 billion RWAs on our infrastructure portfolio, this has offset the impact of the add-on. We have now finalized the transition to a simpler model landscape. The largest part of our balance sheet remains under advanced models, specifically mortgages, banks, and financial institutions. Portfolios requiring significant modeling and data efforts have been moved to the standardized approach. We expect that the current models will bring stability and predictability to our risk-weighted assets and therefore to our capital position. Next quarter, we will assess our capital position in light of a potential share buyback, as we have previously announced. With that, I will hand back to Margaret.
Thank you very much, Ferdie. I think we are ready for your questions. The floor is yours.
Thank you. If you'd like to ask a question, please press star one on your telephone keypad. To withdraw your question, please press star two. Our first question comes from Delphine Lee from JP Morgan. The line is open. Please go ahead.
Yes, good morning. Thank you for taking my question. First of all, I just wanted to congratulate you, Margaret, for your new position. Just wanted to.
Thank you.
Yeah. Two questions from me. First of all, just thinking about, obviously, you're going to have your CMD in November, but maybe if you do not mind just sharing your first thoughts about sort of what are the missing bits to grow for ABN and the opportunities for cost reductions. Secondly, also on capital, your comment around simplification of the model landscape, just trying to understand, given how much RWA add-ons you have had over the past few years, I mean, what is the potential here in terms of improvement of the capital levels further from today's levels, which is already quite high? As a follow-up, also, have you already asked ECB for buyback approval ahead of your decision in Q2? Thank you.
Thank you very much for all your questions. I'll take the first one regarding my first thoughts, and Ferdie will take your questions regarding RWAs and share buyback. As you know, I've just been a few weeks in the role, and this is a moment that allows me to keep meeting with all our teams. I'll be, for instance, in Oslo tomorrow, meeting with teams and clients there. Our first thoughts, I think we have a very valued brand. I think we have a very good client franchise, and I think we have highly committed teams. These are all very strong assets we can build upon.
In our capital market day that we will be holding in November, we will be focusing on achieving profitable growth, i.e., it means focusing on our cost and cost discipline, focusing on capital management and steering our capital, and focusing on our strengths so that we can grow meaningfully in each of our business lines. Our strategic review that we are currently conducting encompasses all our activities, and I'm very much looking forward to tell you more about this in November. Now, Ferdie, on our RWAs?
Yes, maybe number one, we did the submission to the ECB for the last remaining portfolios to the ultimate approaches. As we said during the presentation, this simplification will bring stability and predictability to our capital position. Number two, what is the outlook then? As I said before, we still expect further improvements, but there will be more spread over time. It is difficult to give any specific timing or quantification. Number one, we mentioned before data sourcing to get the benefit of the SME support factor, also the streaming of external ratings, and also there is still some aftercare in Basel IV as we still have conservative assumptions for our collateral. Overall, yes, there is scope for further improvements where we are today. Yeah.
You said buyback. You did not say anything about this, Ferdie.
No, maybe I can say something on share buyback as well. As we said before, we will reassess our capital trajectory after the implementation of Basel IV and the proposal of move for the remaining portfolios. That has been done now. So the assessment will take place at the moment, and we will get back to you at Q2 in August.
Thank you very much. Next question.
Thank you.
Thank you. We will take our next questions from Johan Ekblom from UBS. Your line is open. Please go ahead.
Thank you very much. Maybe just to come back, I mean, on the last question on the buyback, I guess the question was, have you applied for an approval with the ECB, or is the assessment of the capital position starting now with that to be concluded later? I guess we're trying to figure out if there is an announcement in Q2, will you be in a position to start immediately, or will that be the starting process of the application with the ECB? Maybe just to continue on the capital front, I realize that there's lots of moving parts, but hopefully more in a favorable direction going forward. Specifically on the SME factor, I'm guessing that's one that you should be able to quantify what the benefit would be. So I'd be interested to hear your thoughts there, please.
Thank you very much. Share buyback is getting a lot of attention, Ferdie.
No, it does. Johan, as said before, no for the comments, but we would review and start a discussion in Q2 to be able to provide you with the outcome at Q2 in August. Let's leave it with that.
I think that's very much in line with what has been said in the last quarter. Nothing new here.
No, it's nothing new here. It's too early to comment on that. Number two, what are the possibilities? Yes, SME factor. At the time we said when we stopped having the benefit of here, the impact would be around EUR 2 billion-EUR 3 billion. That would still be the expected effect here. For the rest, it's really sourcing external ratings, but it's also good to point out that we really have started to optimize our capital as well. Evidence of that, for example, is the SRT we recently announced with the European Investment Bank.
Thank you.
Thank you. Next question.
We'll take our next question from Giulia Aurora Miotto from Morgan Stanley. Please go ahead.
Yes, hi. Good morning. Congratulations to Marguerite from my side as well. Two questions. The first one on corporate center, the number of FTEs internal keeps increasing, whereas the external ones keep decreasing. Essentially, you are internalizing some skills, I guess. How should we think about this number going forward? Because 4,000 people in the corporate center to look at data and remediation action seems quite high, although it has been quite stable through time. I was going back to 2000. I think you had a similar number of FTEs. That is my first question.
I'm sorry to go back to the buyback, but given that you're doing a capital markets day in November, which I guess will be all encompassing strategically P&L, capital, etc., wouldn't it make more sense to announce the new capital regime threshold and distribution plans in November rather than August? Thank you.
Thank you very much. Regarding our costs, I'll just say a few words and hand it over to Ferdie. Basically, we are managing our overall cost base. As you've seen in our presentation, we maintain our guidance to keep our overall cost base flat compared to last year. The second point regarding FTEs is that basically we are managing our workforce smartly, i.e., when necessary to internalize specific skills, we do so because we think it's better for the bank. We do not have a specific target for internal FTE or external FTE. This is really about having the right skills for our bank. And then.
Yeah, maybe Julia, why it is in central. The number one message today is that we're reaching inflection points in the increase of FTEs. That's number one. A part of it is related that we start to finalize some of the larger programs, and Basel IV and credit risk modeling is one of them. Also, we will focus on further operational efficiency initiatives like end-to-end processes, procurement savings, retiring IT applications, etc. If you look at center, the decline in FTEs, as you said, it has been stable over the past year. You should start to see going forward the effect of that.
Thank you.
I think we had a second question regarding also our overall Capital Market Day and guidance.
Yeah, okay. Capital Market Day.
Ferdie, keep forgetting your second question.
Yeah, Julia. I thought this was already replied very well by Marguerite. But yes, does it make sense? Julia, for us, it's very important to be very consistent. We delayed an announcement of a potential share buyback at Q4. We set the reasons for that were the implementation uncertainties for Basel IV. And number two, the outcome of a request to the ECB to move our last models to standardized approaches. That effect is clear now. Now we have visibility on the outlook of capital. So we started discussions internally and the discussions with the regulator. To start delaying again now in the light of a capital markets day, in my view, would not make any sense.
Basically, we want to be predictable and reliable and stick to the commitments in terms of timelines we made.
Thank you.
Thank you.
Next question?
We have two other next questions from Chris Hallam from Goldman Sachs. Your line is open. Please go ahead.
Yep. Good morning, everybody. Thanks for taking my questions. The first one is just a bit of a follow-up to Julia's question just now on FTEs. There was a little bit of an increase, as you mentioned, in full-time staff in the group. There are more than 10,000 employees in the corporate center. I think that's where we're seeing the growth. Just what is driving that high number in absolute terms? I think, Ferdie, you said we've reached an inflection point. Where should that number specifically trend to over time? What's the right outcome for that 10,000+ number? Second, and again, I guess similar on capital return, you've clearly got quite a bit of headroom today, right? I guess it's the internal debate you're having around the ROI of restructuring versus a return on investment of a buyback, right?
Reading between the lines, it seems like a resizing of the cost base is going to be a focus in November. Does today tell you from a capital standpoint that you've got maybe a bit more flexibility to do that faster or maybe more easily than you would have initially thought? Is that how we should read into the debate that's going to inform how big the buyback may or may not be in Q2 results? Thank you.
Thank you very much. Ferdie, on the first question regarding our FTEs and the inflection point you mentioned, and then the second question I think is about the dilemmas we would be having in discussing the size of a share buyback versus implementing future growth plan, no?
Yeah. Both questions, on both your questions, Chris. Number one is FTE. Number one, I think sometimes it's difficult to really make the split what is in corporate center and what is commercial staff in the client unit. For example, if you look at personal business banking, we have digitalized the bank. We have only 25 branches left. Basically, your whole contact center dealing with clients is in central. Also you should take into account if you look over time what changes have been taking place. Do we have a specific number of FTEs? The only thing I want to say here is really the cost base starts trending down. We've implemented strictness in terms of external vacancies and consultants, so that should help overall in the external FTEs to come down.
If you look at RWA development, it's too early to start commenting on anything of restructuring cost or potential reorganization to take into account in terms of our capital planning. What is being very clear, though, we always look at growth. We look at profitable organic growth, and we will also be open if it accelerates the execution of our strategy at bolt-on acquisitions, of which [Hauck Aufhäuser Lampe] is an element in that. What is very clear, we really look at further instruments we have to optimize our capital position. Our growth is going to be less capital-intensive than what we've seen over the past years. I would like to leave it at that.
Thank you. No questions.
Okay. Thank you.
Thank you. We will take our next questions from Namita Samtani from Barclays. Your line is open. Please go ahead.
Good morning, and thank you for taking my questions. My first one, Marguerite, you talk a lot about cost control and capital management to be discussed at the CMD. What about the deposit franchise? I see client deposits shrunk, quote-unquote, or again. I just wanted to understand how you'll fix the deposit franchise and engage long-term shareholders. My second question is, I just wanted to ask why ABN even bothers to write a corporate loan today, given the risk weighting is so high, and especially versus peers, and the ROE must be pretty low. Is this a part of the loan book that will be reviewed into the CMD, and at what point do you give up on corporate lending? Thanks very much.
Thank you very much. If you look at our deposit developments, and then Ferdie will take it from there, but our total deposits have actually been increasing. I think you'll make a reference to client deposits, which are down by EUR 2 billion. There you do have some seasonal effects because basically we are also in that respect in the Dutch market, sort of the daily bank, including for wealth clients. This is when you pay taxes or dividend and so on. These seasonal effects, and I think they're quite classic as far as we are concerned, explain the variation in our client deposits in the first quarter. But maybe if you want to.
No, no. Really, total deposits indeed increase, but it was partly professional. I would say we have a very good deposit franchise. It is stable in competitive markets, and it is also seen it stays stable after repricing. We are comfortable on our deposit base. Yes, we will see a little bit more potentially than some of our peers, the seasonal affecting Q1, because we have many entrepreneurs in our wealth management franchise where you have your tax payments, your bonus payments, your dividend payments, and you normally see a higher effect there because the current account is better.
Thank you very much. The second question we had about.
Yeah, it was specifically over the corporate bank. We can run the corporate bank profitably. Corporate bank is also very important within the broader ABN with the crossover between wealth management and corporate banking. Yes, the RWA density might look higher, but that excludes the off-balance sheet exposures if you look at the number here. Secondly, this is exactly the point that Marguerite made earlier. Capital management is getting increasingly attention within the bank.
Thank you. Next question.
Thank you. We will take our next questions from Benoît Pétrarque from Kepler. Your line is open. Please go ahead.
Yes, good morning. One welcome from my side as well, Marguerite. Just on maybe the first question for you actually is just to try to clarify what is your mandate from the board and whether that includes also potentially big steps on costs. I mean, we have a pretty large gap on cost income versus peers. I was wondering if your mandate also includes potentially big actions there. Second question is on the mortgage growth. This is offset by lower margins as well. So Ferdie, could you maybe clarify on balance how much NII incremental you get from the mortgage business on NI? And then the last one was on the clearing. I mean, clearing is very strong. Could you also maybe quantify how much is currently generated from clearing additionally to the kind of normal run rate? Thank you very much.
Thank you very much. To your first question, my mandate from the Supervisory Board is actually to lead our bank into its next strategic space. This is the story we will be sharing at our Capital Market Day, and that will cover everything, including, of course, how we run our cost base. Ferdie, to mortgages first.
Yeah, maybe if you look at mortgages, Benoit, and if you look at the underlying trend, number one, a big part of the new production is state-guaranteed NHG mortgages. They come at lower margins, but they also have lower RWA. Number two is that clients are proactive in asking for a discount if they come in a different risk bucket. With rising house prices and repayments, that means that the discount is applicable there. Those are two of the elements why the overall margins are somewhat under pressure in mortgages. We do not say specifically how substantial the NII from mortgages is, but we continue to see the trend what we saw last year. If you look at our overall loan volume growth, a big part comes from mortgages.
You also see that in the overall asset margin mix effects because mortgages have on average lower margins, but higher ROE. Your second question, clearing in general. Clearing has another good year, a good start of the year, Benoît, as it had a very good year last year. Overall, we're comfortable in these markets that the trend can continue, but on a quarter-by-quarter basis, it can be more volatile. We said overall what the impact was, it roughly provides between EUR 350 million and EUR 400 million CC income, but also around EUR 300 million in net interest income on an annual basis.
Thank you.
Thank you.
Next question.
Our next question comes from Farquhar Murray from Autonomous. Please go ahead.
Good morning, all. And indeed, welcome, Marguerite. Two questions, if I may. Firstly, I just wondered how the kind of recent macro uncertainties and turbulence may have fed into your thinking around the CET1 target of 13.5%, and also whether it's fed in a little bit into the regulatory conversations at all. And then secondly, just coming back to the deposit franchise, I mean, it's up about 3% if I look at the personal banking year on year. I just wondered what responses you've seen to the deposit rate cuts that you've put through in March, May, and in particular whether the term deposit to savings account trend that you've seen has continued. Thanks.
Thank you so much. To your first question, yes, the economy is going through, I would say, volatile episodes since the beginning of the year, to put it mildly. Of course, we want to run the bank soundly and prudently since it is always part of the overall assessment we carry on. We take everything into account while running the bank. Looking at, I think your next question was about our deposits and the impact of rate cuts on our NII, I expect.
Yeah, Farquhar, another question. I tried to answer that before. Yes, confidence in the stability of our deposit franchise and have not seen any effect from the lowering of the savings rates with 25 basis points as of the 1st of May. Yes, we have seen in the first quarter more migration from term to demand. That's it.
Did that continue in the second quarter?
Yes.
Yes. You see the trend there. We have not seen any change in trend start of the second quarter, Farquhar.
All right. Thanks much.
Thank you. Next question.
We will take our next questions from Kiri Vijayarajah from HSBC. Your line is open. Please go ahead.
Yes, good morning and welcome, Marguerite. A couple of questions from my side. Firstly, when you think about the corporate bank and some of the growth opportunities, Marguerite, you alluded to Germany, fiscal stimulus, infrastructure investment. Do you feel you've got the coverage capability, the geographic footprint, particularly outside of the Netherlands, to really take advantage of that? I know that the de-risking in the corporate bank under your predecessor means you've had to retrench there a little bit. How does that leave you in terms of capturing the growth versus some of your peers? Second question, more drilling down a little bit on the NII, Ferdie. I wonder if you could just give us some color on what's been happening with the replicating portfolio? I know one of your peers said they've been increasing duration.
I know you mentioned last year, because of the deposit trends, the replicating portfolio actually needs to shrink. Just what's the outlook there for the replicating portfolio size and duration, please? Thank you.
Thank you so much for that question. To your first question regarding [Corporate Bank] , we do have a very good footprint in Northwestern Europe. I've been meeting with teams in Germany, in the U.K.. As I mentioned, I'm going to Oslo tomorrow, meeting clients there. I can tell you that we have very good coverage capabilities and very good client franchise. I have all confidence there in terms of the quality of our teams and franchise. Moving to your question on our replicating portfolio, Ferdie.
Yes. For the replicating portfolio, Kiri, it is around EUR 155 billion. We have provided a range before that between the 40% and 45% reprices every year. There can be some movement in that. Duration has not significantly changed. We said before it is roughly a three-year duration. The size of the non-maturing deposits might change on the plus side if the migration into demand deposits continues. What we have seen last time, it can also go down as you really try to replicate the behavior of clients. That means sometimes that the most volatile or the least sticky, which is more priced at, for example, one month, [Euribor] , that can go out. There can be some moving parts, but over the past period, it has been relatively stable.
Great. Very clear. Thank you guys.
Thank you. Next question.
Thank you. We take our next questions from Anke Reingen from RBC. Your line is open. Please go ahead.
Yeah, thank you very much for taking my question and welcome, Margaret. I just have two questions on net interest income. Firstly, on 2026, so you give us the headwinds from the replication portfolio. I realize there's uncertainty on the rates, but if you can maybe provide us a bit of confidence on your ability to offset the step down in 2026 versus 2025 as rate cuts, volume growth, and so on. On that point for 2025, can you give us some what you assume in terms of loan growth and also in terms of corporate banking spreads or margins? Thank you very much.
Ferdie, on these two questions regarding NII.
Yeah, let's start with the replication and confidence in the NII guidance, Anke. We try to be helpful and provide you a number for this year instead of a range. That was basically an increase from EUR 100 million on the back of a lower savings coupon and a lower forward curve. The 6.3x is really assuming constant savings rates and no changes in the forward rates. Yet clearly, you have upside potential either if you're going to see a further lowering of savings rates. You can see a positive by further deposit growth. That can also be a positive of a steepening of the curve. That's basically what we've seen in the past week, right? The rates for the two-year swap are back above 2%. There are certain elements in there which might be positive.
We're still very confident in the guidance with providing a range for that. If you look at the loan growth for 2025 and the business momentum there, yes, specifically mortgages, the strong growth continued in Q1 with new production of EUR 5 billion. We expect this to continue because the housing market is strong in the Netherlands. Yes, for the corporate loans, there's more uncertainty at the moment. We are in constant dialogue with our clients where we can support them. It might lead as a second-order effect that certain investment decisions are going to be delayed. Up until now, we've not seen any significant change so far. To look at your last question, what will happen for 2026 NII?
In the analyst presentation on slide 15, we provided an update on the sensitivity, but that is really on the back of constant volumes and pricing compared to the earlier sensitivity we provided. Just by the other elements I provided you with, that might have further positive impact on the back of the sensitivity provided there.
Okay. Thank you.
Too early to start to become explicit on 2026 guidance in Q4 and Q1.
Yeah. Thank you. Thank you very much.
Thank you.
Next question.
Our next questions come from Juan Pablo Cobo from Santander. Your line is open. Please go ahead.
Yes. Good morning, everyone. Thank you for taking my questions. I got two. First one is regarding margins. We see the strong growth on mortgages. I do not know if you could provide some color regarding RAROC, so the return adjusted on capital, risk adjusted return on capital. On these products, it would be interesting to see if even with the tighter margins, they are still accretive in terms of RAROC. It would be also interesting for corporates if you could give us some color on this. My second question, and sorry for coming back to capital, just to be sure and to double-check that we are more or less on the same page. Right now, the CET1 is 14.7%. The main movements in the short term, I guess, is the integration of HAL. This is around 45 basis points impact, if you can confirm this.
This will move down CET1 ratio to something around 14.2%, 14.3%, plus the organic capital generation of the second quarter. Here, we are with more than EUR 1 billion excess capital over the 13.5% threshold. Just to double-check that we are not missing any short-term impacts on capital. Thank you.
Thank you very much. Regarding capital, your figures are correct, i.e., our CET1 ratio is 14.7%. The indication we gave for the HAL transaction regarding its impact on our capital is indeed 45 basis points. I think you have all the figures correct there. Now, I think I turn to Ferdie and Serena regarding the margins. I think you had questions on mortgages and annual corporate loans, if I'm not mistaken.
Yeah, maybe on margins, I tried to answer that earlier specifically for mortgages. Yes, if you look overall at our net interest margin, which came down specifically here, mortgages, what we do see still some outflow from higher-yielding mortgages. The second point, as I said, due to continuous rise in house prices, clients are more proactively asking for discounts when they come in a lower-risk bucket. You also see the effect of repayments. If you look at overall corporate loans, what we see there is that overall asset margins are relatively flat versus the previous quarter.
Serena, do you want to add anything?
Yes. Maybe on your question on return on adjusted risk capital on the mortgage book, we see very strong both ROE and risk-adjusted return on the mortgage book, driven by very good credit quality of the book and relatively low cost of risk, also versus through the cycle analysis. You see it in our numbers, and we have experienced that also in Q1, and the trends are also below through the cycle. When you look at the risk-adjusted nature of our mortgage book, it's very strong and well above our target.
Thank you, Serena. Next question.
Thank you. As a final reminder, if you would like to ask a question, please signal by pressing star one on your telephone keypad. We'll take our next questions from Matthew Clark from Mediobanca. Your line is open. Please go ahead.
Good morning. Two questions. Firstly, on the first quarter capital movements, you'd clearly forewarned of the headwind from the add-ons to come, but you hadn't forewarned of the significant benefit from data efficiencies. I'm just wondering why that was. Is it that you have less visibility on those data efficiency benefits coming through, so you didn't feel able to guide on it ahead of time, or was it just that you chose not to? Second question is on the HAL acquisition. I'm just curious why it's taking so long to close. I know the original guidance was for it to close in the first half of this year, but I'd have thought it would be a fairly straightforward transaction in that its geographies you're already present in, a relatively limited number of geographies, a straightforward business model that you already have expertise in.
I'm just curious why the delay in that closing, and can you be a bit more specific on what's holding it up? Thanks.
Thank you so much. I'll take your second question and Ferdie as well. Basically, the HAL transaction is perfectly on track, I think. As we mentioned, this is a transaction we expect to be closing at the end of the second quarter. This is what's going to happen. As you know, you need authorizations from value supervisors in that specific case, first the BaFin and then the ECB. Everything is on track, and we do not foresee and expect no problem at all on that front. It's just taking time, supervisors have their own timelines. This is on track and will happen at the end of the first semester, basically. On your first question regarding.
Yeah, Matthew, did we know that? Yes, we gave the indication what the effect would be of the transition of the final portfolio to less advanced approaches. We have always said that we are in the middle of the formal production of Basel IV numbers, so the actual implementation. There you see the impact from going to proxy to formal production. There are actually some more positive benefits in there, but that is really on the back of very hard work internally to get most issues resolved by actively steering in the bank on data improvements. We had applied, as we said in Q4, still some conservatism on both collateral and segmentation. We have also really worked hard in improving the coverage of external rated clients because they are really a benefit on the Basel IV SA .
The last two points maybe which were, and you never know the timing, number one is that we announced the sale of an infrastructure portfolio that had the benefit of EUR 1 billion. You never know the timing of that or can forewarn on that. Lastly, you also see some benefits specifically linking to Serena's point, lower risk rates on NHT, the state-guaranteed mortgages on the Basel IV that has an effect of roughly EUR 1.5 billion. If you combine that with the quality improvements specifically from the mortgage book, it ended up that our credit risk of RWA remained stable to Q4.
Can I just follow up on that? Just to, can you break down that? I guess it is like EUR 3.5 billion of offset excluding the infrastructure sale. How much of that was coming from better Basel IV, and how much of it was from incremental data improvements?
I wouldn't want to say too much about it. You say already sales infra was roughly EUR 1 billion. I said the more favorable treatment of state-guaranteed mortgages is somewhere between the EUR 1 billion and the EUR 1.5 billion. For the rest, it's asset quality improvement and data.
Surely the state-guaranteed mortgage expect should have been predictable, right? That shouldn't be a surprise.
No, but I'm just explaining to you more or less what's in the bridge here between the two.
Okay. Thank you very much.
Thanks a lot. We'll take the next question. Thank you.
We'll take our next questions from Namita Samtani from Barclays. Your line is open. Please go ahead.
Sorry, just one follow-up. Maybe I missed it, but the forward card, you base it on what point in April? Is it the end of April?
Yes, correct.
It is.
Perfect. Thanks very much.
Thank you.
Did everyone share on all questions?
Next question.
I will hand back to Marguerite for any additional or closing remarks. Please go ahead, ma'am.
Thank you very much for your time this morning and for your questions. We wish you a very good day, and we're very much looking forward to interacting with you in the coming days and weeks. You take care. Bye-bye.
This concludes today's call. Thank you for your participation. You may now disconnect.