Earnings Call: Q3 2020

Nov 5, 2020

Thank you for joining the ING Third Quarter 20 Century Media Call. I'm happy to give the floor to the CEO of ING, Stephen Van Ruijswijk. Please go ahead, sir. Yes. Hi. Thank you very much, and welcome and thank you for joining us on this call. On the call with me is Sertenetje Pudricoel, our CFO and Interim CRO as well as Carsten Walters, the Head of Risk. And we will give you an update of the developments of our results for the Q3 of 2020. The pandemic continues to have significant impact everywhere, with the 2nd wave in Europe and the U. S. Putting further pressure on consumers and businesses. Helping colleagues, customers and communities safely through the pandemic remains a top priority. In that context, the current environment underscores the strength of our digital business model as we continue to grow primary customers. This quarter again, we had an additional 213,000 customers that have chosen us as their go to bank. We see the number of digital interactions with the bank continuing to increase, and within that, the proportion of mobile transactions is growing. Now if you look back on the Q3, ING's results were resilient. We saw increased fee income from diversified sources coupled with good cost control and lower risk costs. We saw a reduction in net interest income resulting from margin pressure on liabilities combined with lower lending demand. Mortgage lending continued to grow, while corporate loan demand further declined, especially in Wholesale Banking. Overall, net core lending declined by €6,900,000,000 while customary deposits grew by €3,400,000,000 Taken together, that has resulted in a pretax profit of €1,200,000,000 and a net profit of €788,000,000 This is lower than the same quarter a year ago, but a strong improvement from the 2nd quarter. Our ambition to keep transforming into a leading data driven digital bank remains firm. However, the challenging environment requires that we remain flexible in how and where we deliver on our strategy, and therefore, we are refocusing some of our activities. In Wholesale Banking, we will concentrate even more on how we deliver services to our core clients and also simplify our geographical footprint, which will require fewer staff. This includes closing some offices in the regions of South America and Asia. And we will considerably reduce the scope of MEGI, our program to provide a standardized customer experience and integrated product offering in 4 of our European challenger countries. In further developing our digital universal bank, we'll focus our efforts on 3 things: 1st of all, the global use of ING's technology foundation, which includes our shared data lakes, our clouds, but also the modular IT building blocks secondly, the reuse where possible of already developed mobile app components and thirdly, the rollout of global digital product offerings in the areas of insurance, investments and consumer lending. We expect that this refocusing of our wholesale and retail activities will result in a headcount reduction of approximately 1,000 FT feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet feet Es by the end of next year. Apart from these topics, in our disclosure of today, you can also find an update on our ongoing focus on our gatekeeper to ensure the security and compliance of the bank and on the progress we make in the area of sustainability to live up to the transformational role we play in the economy. With that, we're happy to take your questions now. Thank you, sir. Ladies and gentlemen, we will start the question and answer session now. And the first question is coming from Mr. Ruben Eig, The Daily Grace. Please go ahead. Hello, good morning. I was looking at the presentation of the Investors Day from last year. You saw the projects Unite, the Model Bank welcome the local the wholesale. Could you give some more color on what's still left of this presentation? Yes. Hi, Ruben. So I think on the Welcome, that was already finalized last year because when the there, we already then developed the app environment. With regards to Unite, we have integrated the Record Bank branches into ING. We integrated some of our IT systems. And now we have put almost all the Belgian customers on the one app, one web environment. That is also the same app environment as the Netherlands. So the largest part of Unite is in a finalizing phase. And as you can see from Maggie, we have developed a number of components from Maggie and those we will reuse, but the project as such we will largely curtail. That's where we are. And why are we doing that? I think that we're doing that because we have developed a number of elements already. So we already have a one app on web environment in the Netherlands, Belgium and Germany, and we can use those components in other markets as well. We have developed a number of global propositions in insurance, in investment products, in consumer lending, which you can deploy in other markets. And of course, we have our foundational elements, and I think that's also part of the presentation, including TPA, the software building blocks, cloud and the data lakes. And all those foundational elements that you also will seen in those presentation will be reused in other markets as well, including in the mega countries. So we are shifting from, let's say, an intermediate stage to, let's say, the end stage whereby we will reuse much more of all the building blocks we have developed so far in all of the markets. The idea with ModelBank that you had 7,000,000 customers at the end of next year from core countries, It seems like if it's a year ahead that you had already been there Or did were you not completely on track to this? The difficulty, and that's what we also have seen with Unite, is that the integration of the core banking applications between different markets is more difficult. But we have seen that we can do it in a different way by using modular building blocks that I just talked about and realizing a similar effect but by means of a different technology. And that's why we're shifting. Are still the goals of, for example, the CIT ratio, 55% and to do it to run with less retail in IT FTEs, is that so possible in those markets? Yes, it is because, I mean, what we do with those building blocks, we focus on scalability. And scalability on the other hand on one hand, we try to reach through integration of core banking systems and integration of customer engagement layers in markets itself. But another way we So with all those components I just mentioned, indeed, that means that you can reach scalability in many markets also beyond the 4 meggy markets we just talked about. Okay. Thank you. And the next question is coming from Ms. Eva Rogers, Financipe Danklak. Please go ahead. Yes. Hello, everybody. I also have a question about Maggie. Because if I understand it correctly, you are still aiming for 1 digital bank only by other means. And can you explain a little bit more about data leaks and modular building blocks? Because I never heard of data leaks in that sense. How is it different than what you were doing before? And does it have the same as budget, cost reductions, etcetera, the other the old ways had? Yes. So Eeva, thanks for the question. Yes, it is quite technical. So next time, I should have my Head of IT here as well. But we were already also in the programs in integrating parts of the bank, it's a retail bank, building up those building blocks. And the module software systems are such that each little part of software that is being written has to be written with the same program language and has to be put in the same library for everybody to be reused. And people can and countries can reuse that through an API. So for example, if you want to open your account, That is a piece of software code that is being written and by which if you open your app, you can use that. That API is being used for you that if you give the command open my account, that your account is being opened. If you have developed that once, and that's what we call TPA or these software modular blocks, you do not need to develop that in every country in a different way. You can just take it out of the library and then deploy that in every app that you have in different countries. So that's a way that we use it. So that's one element. 2, if you have a product that you're developing, for example, insurance with upside that we're developing, We are developing online real time insurance products. For example, travel insurance. If you go on holiday, you switch the app to home insurance. If you return from holiday, you turn it off again or you can do the same with well-being or house insurance. So we do it amongst 3 themes. And that we have then developed with AXA. And again, by means of this technology, you can deploy it in all of those different markets at the same time without the need to redevelop it completely from scratch. That's the way that we try to that we integrate our apps, our products and the software that we use for it. So still and indeed, what we said, okay, we will not use the technology some of the technologies in Maggie, we will still use a number of them because what they have developed, and this was very tactical, are sales and service journeys, I. E, how do you buy a certain product? The app is only the tip of the iceberg above the water. But the sales and service journey then goes back into your data lakes and core systems to see, okay, what is the question of the client and what is the product that the client desires. And what they have developed there, we're going to reuse in the apps of other countries as well. So we're going to use some of the building blocks developed by Maggi, but at the same point in time, the countries in Maggi will now start to use a number of the building blocks that we've developed elsewhere in the organization. Okay. A lot more clearer than before. And then a more broad question. In the last decade, ING focused in becoming a fintech bank warehouse for all financial products. Are you still striving for that strategy? And is it still achievable by the means you were talking about now? So is it a big fintech bank with a warehouse for all financial products? Yes. Look, I mean, I think that in the end, we are a bank that by nature is very digital. So and you can see that if you look at the analyst report, 87% of our of all our interactions with clients are mobile interactions. That is very big compared to any other bank. And the way that we are dealing with these elements that are what I just talked about will help in creating that platform, in this case, a platform in RNG to, on top of that, build other products and services such as insurance. And we do it on the one hand. We do that in our own environment, which is the environment you just talked about. We also do that by developing other platforms techs. So with Amazon, we have this collaboration on their SME seller platform, whereby SMEs can sell products on Amazon. I'm sure you're familiar with it. But on that platform in Germany, if that SME then needs a loan for their working capital, they click through to RNG. So we still develop it both on our own platform and completely independent platforms as well as on 3rd party platforms such as Amazon. So we continue that direction. Your last question and then I will give the floor to Claudia. You're fading. Maybe you want to Sorry. Last question, and then I will give the floor to somebody else. So besides Maggie, would you say there are other big changes to your innovation strategy? No, not necessarily. I read that this morning somewhere. But the reason because I think that one of the articles mentioned that we are curtailing innovation because we now we put it together. But the reason why we put it together is because we believe that we can benefit from integrating the innovation efforts in Wholesale Banking and Retail Banking by putting them together in one team because then you can roll out innovations that you actually have developed, either by yourself or with third parties, much quicker over the entire bank to also benefit from cross links that are between retail and wholesale. Okay. So no big changes to your innovation strategy? No. No. Okay. Thanks very much. Thank you. And the next question is coming from Mr. New dividend policy? What impact will it have for your shareholders? I give that question to Denise. So Koen, what we have now is basically a new dividend policy, which is different than the last one. The previous one was a progressive dividend policy where dividend would rise on an annual basis. But now we have changes so that is much more linked to the profits that we make on an annual basis. So it becomes more will be paid out as dividend, okay? The second thing that we have discussed also is that if over time we see structural excesses in capital, we would then return that to our shareholders. So this is the element of the changes to our dividend policy. And would it if you're looking at the last few years, would this new dividend policy have led to more dividend for your shareholders? I think if you think about it, it's a change in the way we distribute capital to our shareholders. In the past, you have this progressive. In the future, you would have a, what I would call, business as usual dividend payment based on 50% payout ratio and possible maybe one off returns to capital if we see structural excesses in capital. Yes. But would it have been more with this policy? If you look at the past there, but I know this is Steve, and I do this from Het. I mean, if you look at the past, it would have been less because there, every time, we would have had a higher dividend level. However, it does not preclude us to do one offs. So but what it does is that if you have big provisions or certain gains for assets that you sell, that you do not take these into account when paying dividends. And I think especially under the accounting rules of IFRS, whereby you sometimes take big provisions or you make big gains, at least from an accounting point of view, that then distorts the payment of dividends. And then you suddenly have to pay too much or too little, and we want to keep a much more balanced focus on that. Okay. Meanwhile, stock exchange, IMG is still lower. Does it mean that shareholders are not understanding it right, this new policy? Or shouldn't I interpret it like this? Look, I think it's not for me to comment on the share price. I mean, the share price is a result of supply and demand. And apparently, there are more sellers ups than buyers at this point in time. What we will do is we are focused on our strategy and execution of our strategy and that we'll focus on. Okay. Thank you. And the next question is coming from Ms. Eva Small, RBC. I have two questions. I was wondering why you are reducing the CIT1 ratio ambitions. And secondly, you just said that the dividend policy will be more predictable. I was wondering if I look at the reactions of the FFV, the Fracbonde? Yes, you use. Yes, thank you for searching for the word. They say, well, if the shareholders will get a more predictable dividend, then the people also want a more predictable outcome. And now in talks about the new CR, ING said, well, we want to freeze the loans for the next 3 years. So I was wondering if you could explain to me why you do one thing and do the other thing. Thank you. I think that on the CET1 ratio, that is the amount of capital that we need to hold. We always have a minimum requirement by the supervisor. And on top of that, we put a buffer. And the buffer is to and we calculate that buffer based on stress testing to assess in certain circumstances how much do we need to hold in excess to make sure that we do not get below the threshold as we require to hold from the supervisor. Now in that buffer, also there were uncertainties about regulatory changes to capital that there still were because we did not know where that would go nor what the impact would be on ING. Now we largely know, and hence, we can decrease the buffer that we need to hold on top of the requirement as set by the supervisor. So decreased uncertainty requires to hold lower buffers on top of the minimum requirement. That's the reason why we lower the CET1 ambition level. And then with regards to the dividend policy, I mean, paying dividends is a normal activity that is employed by many a company. We did abort our dividend policy in the Q1 of this year as a result of the ECB measures, and hence, we had no dividend policy anymore as of early of this year. And this was about re announcing the fact that we have a dividend policy. And the dividend policy is therefore more about the structure in which we pay, When we will pay and how we will pay will also depend, of course, on the uncertainty that is still presiding under COVID and the supervisor views that the ECB has, their prevailing views on what they think banks in Europe can pay. And we take that into account, and we, of course, will abide by the supervisory regulations as well as the uncertainties that still remain in this market to see how much we will really pay, but this is the longer term policy. And that's and I think that is good. And I think also with regards to our shareholders, many shareholders, our pension funds, out of which the contributors are people. And they also need to have that return as part of their pension. So I think that's good is to have a dividend policy. And I think that is, in that sense, important to have reinstated after we aborted for 9 months. And with the unions, yes, we have basically also given these uncertain times. Have given a direction of how we of what our opinion is on how we should deal with the CLAs over the next couple of years, but the discussions with the unions are starting. Clearly, it's also important that we take into account the well-being of the employees. Many of them are working from home. So we need to make sure their well-being is good, that we also can continue to grow their skill sets in a different environment than we currently have. And those are all elements, not only to pay, but also how we can best work with employees who are in a different setting that we will take into account in our discussion with the unions. Yes. But there's a difference between asking for a 3 year freeze of what people are earning and more predictability on a dividend. But if the ECB allows it, you will pay out a dividend. I don't think the unions will say you can't pay out dividends, but maybe they are asking we would like to have the same, not a 3 year freeze, but if it's possible, pay out more also to your employees? I understand your question. I think that it is important that we, as a company, we have a stakeholder principle, and we find it important that we are balanced in that regard. And we believe that, as a company, that we are balancing these interests well. In that sense, I think it's good to have a dividend policy also with regards to people who are behind our shareholders and to have a reasonable pay for our staff. And that's the backbone and the background for discussion that we will have with the unions. Okay. Thank you for now. Thank you. There is a follow-up question coming from Mr. Ruben Ek, the Telia Graf. Please go ahead, sir. Some questions about the wholesale bank and the reductions there. Could you share some more light on the underlying reasons to, for example, close branches in South America and some in Asia? On ABN AMRO, earlier this year the discussion was we are too small outside of Europe. What's your vision in this? Yes. Well, we're not as small outside of Europe. Basically, by the way, and maybe that I know that this highlights perhaps well, but this is not about these markets per se. We are in the way that we look at interaction with our clients, We look at their behavior and how we can best interact with our core clients in the most effective way. And for that, we need less people. So also in Wholesale Banking, we are becoming more digital, and we are requiring less people to interact with our core clients on a daily basis. That means that in a number of areas, we will decrease the number of staff. And for some smaller markets, we do not require a presence on the ground. And in this case, that is smaller offices that we have in South America, in Brazil, Argentina and Colombia and in some markets in Asia, that is Malaysia, Thailand, Kazakhstan and Mongolia. But these are relatively small markets. So we will continue to service those clients out of the regional hubs in Singapore, Hong Kong and in New York. We still remain a presence in around 7 or 8 markets in Asia, and we remain having a big presence in the U. S. As well as Mid America, so Mexico, for example. But of course, what I think is very important to mention is that we will be very careful in how to deal with our colleagues and that we will make sure that we offer them solutions as we have always done in how the way that we treat our staff, but also in terms of dealing with our clients to see how we can best service them going forward. Yes. Maybe I misinterpreted that of your €4,300,000,000 comes from the wholesale bank. Is it the wrong reason to interpret that you are focusing more on ING as a consumer bank than a wholesale bank? No. We have a good wholesale bank and a good retail bank. So we will continue with the wholesale banking as we currently have, but we do that in a more efficient manner than we have done to date. Clearly, what we will always look at when we deploy capital is that we deploy capital where we can use it best. And therefore, if it's the case that businesses are underperforming through the cycle, so through good and through bad times, yes, then we will take measures. But this is not a direction to say that we're going to stop or decrease the wholesale bank at all. Okay. Well, there are some business lines in the wholesale that are under In what way are you looking for a new refocus on that for In what way are you looking for a new refocus on that for, I would say, the coming months or years? Yes. I mean, there are business lines that are underperforming, but if you but that's on a product basis. And we look at profitability on a client basis. So we very much focus on how do we deal with clients and have a sustainable beneficial relationship with clients, and that includes lending, that includes payments, that includes working capital, that includes financial markets products. And on that overall clients P and L, if you will, we look at whether we make an adequate return. We do not look at it so much from a product by product point of view because if you take out one product that is then a sub hurdle, you then say, oh, then you need to shift the cost somewhere else, then you take the next product that's a hurdle. And before you know it, you shrink to glory. So we should never lose focus on the fact that we look at our clients and our relationship with clients rather than looking at it product by product. Okay. You mentioned that we do more digital. If I would focus back to the Netherlands and COVID, if you look to the SME segment, there are some complaints what you hear like it's difficult for an SME client to explain my personal situation because it's all standard in central divisions. There's no in the old days at the NMB Bank, a banker in town who knows my situation and who knows the local situation. That's something you look into, especially in a situation like this. Absolutely. I think it's very important to understand our clients well. And in COVID, we reached out to 100 thousands of clients across the globe to be in contact with them. Actually, we had an overview, a weekly overview to make sure that a number of clients that had received signals or gave signals that would be in difficulty that we had in touch with them, both on the SME and the corporate side and in the Wholesale Banking side. So it's a mix between digital channels and digital way of working for simple business tasks. But in terms of more specific service requirements, those will be done by staff. And we have still many relationship managers that are in country and in markets to deal with those people, not only to meet to work life not only physically, but we also have do these meetings by video because that was, of course, more difficult to visit our clients face to face because there are, of course, limitations, as you well know. And hence, we have many more video contacts, but then still with relationship managers and with our clients. Okay. If I may focus a bit more on that, I hope I'm not taking too much time from other questions. But if you look at the situation in the Netherlands, it seems like the impairments have a bit steadied itself. It's just a bit more than it was like a year ago. Could you explain a bit on where the problems and the non problems are in the business lines in business customers, that's the word, in the Netherlands. Yes. You talk risk costs now, right, Ruben? Yes, exactly. Yes, okay. So I think that if you peel the onion, yes, so we have approximately €469,000,000 64,000,000 risk costs. €69,000,000 That has 3 components. It's against Stage 1, 2 and 3, 3, what is currently in default. And Stage 12 is typical expected loss provisions you take when you just do a loan, always you already reserve a part. And in Stage 2, you reserve more if there is a higher risk perceived, let me put it this way. Yes. This quarter, we would have had a release of EUR 380,000,000 if we would just use the models as we had used them in the past quarters because the accounting rules stipulate that you with your models, you look 3 years ahead. And if we are since we're a quarter further, the Q2 or Q3 in this year is taken out of the model and a quarter somewhere in 2022 is being put on. Now that quarter is, of course, good, at least if you look longer term ahead, that means that if a bad quarter comes off and a good quarter comes on, that you get a release. We have not taken a release, but we have made additional reservations for potential issues. And why have we done that? Because what we currently have is a strange crisis. We have GDP decreases. And if you look, for example, in the Netherlands, we expect a GDP decrease of about minus 5% to minus 7%, and the same goes for Germany. But if you look to Southern European countries, you more look at minus 10%. But we see very little defaults. And that's, of course, different from any other crisis that we have seen so far. And why do we see little defaults is because many of our clients that may experience difficulties has support from fiscal relief or banks that have provided payment holidays or guaranteed loans that are given by banks and supported by the governments or they have an external flexible layer in terms of personnel. And companies are using all these measures to actually not get into default. Now the question, of course, is when these measures stop, what will then the picture be? And we have limited visibility as of yet, and let me then explain that. We have given €20,000,000,000 in payment holidays. Out of that, €6,000,000,000 in payment holidays has resumed the normal schedule, so onethree approximately. And what do we see? Nothing. So all these clients until now have resumed their normal payments as they have done before they took the payment holiday. But we still have €14,000,000,000 outstanding. And if you look at those payment holidays, there was mortgages, but the half of it was SME mid corporates, largely in the Benelux. And a number of those schemes are still continuing until the end of this year or the Q1. And only then we will really see what happened to a number of the vulnerable sectors, vulnerable sectors. And hence, we have taken an overlay for especially those sectors, which we consider higher risk, which includes leisure, transportation, clothing companies, some agriculture. Yes, there we do not see that much as yet, but it could potentially come. And that's why we've taken a provision. Okay. You look anyway if you look at retail, what sort of picture do you see in the Netherlands? Is there a difference? You mentioned the clothing shops? Yes. So I mean, it really depends. So for example, if you look at food retail, that's all going well. Actually, it's going super. It's going better than before, so they grow. If you look at non food retail, then it depends on the segments. So do yourself, do it to do itself, Zag, are also doing well because everybody is refurbishing their house, except for Tenet, but he has a rental apartment, I guess. If you look at non food retail in terms of clothing companies, yes, there it becomes more difficult, but then you have to distinguish fun shopping and run shopping. And so run shopping are non food retail companies like ZEMA, for example, that are close that are not in big shopping malls where you go to just leisurely stroll and buy things that you like, so apparels, if you will. But these type of stores are close to supermarkets where you do your normal groceries and then you also buy socks or underwear or whatever. So these type of clothing companies do well. The higher segments that are in the more in the shopping centers, they experience more difficulties because that relates to the fun shopping. Okay. Like Hema, for example. Except for Seaman that I just commented on, I do not comment on any other individual clients. Okay. We're trying. Thanks so much. And the next question is coming from Mr. David Adrien, Degtyn. Please go ahead. Your line is open now. I have a small question about the Belgian market. You're looking for new CEO of ING Belgium. Are you looking for internal or external candidates? As always, with these high profile appointments, we are prudent. And that means that we always look at internal and external candidates, Then we compare them, and then we will see what is best fit for the organization at that point in time. And when we're done with that process, we also need to have a supervisory approval that then typically takes some time. And after that, we make the announcement. That's how we go about these processes. Okay. And will the announcement come this year? As soon as we have the right candidate and the supervisory approvals there, the announcement will come. I can only make the announcement when I can make the announcement. Otherwise, I would have known, and I will only know as soon as I get the approval or as soon as we are done with the process. Okay. Thanks very much. Thank you. And the next question is coming from Ms. Eva Rogers, Finanscheide Dagblob. Please go ahead. Yes. Well, Ruben asked most of the questions I wanted to ask. Next time, Eva, I will let you go first because I need Ruben has a tendency to do that. So thanks. But maybe then a follow-up question on the small and mid corporates. How are you responding to them if they want an extension of the payment holidays? So what's your approach there? And we already talked about retail and how difficult it is for certain retail segments and also leisure. So how what's your approach to these companies if they want a loan, a guaranteed loan scheme? Is that mostly impossible because they our revenue is so difficult? Or is there still an option there for those kind of stuff? Yes. So I think maybe I need to split the answer in 2 or 3. Yes. So if you look at the payment holidays, those were payment holidays that were generic. So we said if you apply for a payment holiday until such and such date, then that payment holidays will be there for 3 or 6 or 9 months. Those were standard schemes that were adopted by all the banks in this country in good collaboration with the government. When those payment holidays lapse and what you then do is that you look at were companies healthy when they went into the crisis, right, because if there is something else going on, you need to do a better credit review because then it's about something else. It's not about the crisis. So you do a first test. Now when these payment holidays lapse, then these generic schemes are not there anymore. That does not that is not to say that we will then not continue to support our clients, but then we will take much more a one to one approach than we've currently done with the schemes overall. So we will then still continue to talk to and help our clients, and many clients can be helped, but they're not anymore under the umbrella of the broader national schemes, but more on an individual approach that we take as a bank. That's maybe the first element. The second element that was a support scheme were a number of the guaranteed loans. And these guaranteed loans already existed before there was COVID, so there were already support loans for the MKB, the SME. So you had the BE MKB and the CAMCA B. So there are different schemes that were following each other. And these schemes are have been somewhat amended to also cater for this situation, and they have been extended also to self employed people, for example. And they and these schemes, to some part, are still there, so people can still use those schemes. Again, that is subject to a test whether they are healthy by nature outside of COVID, for example. So that's maybe the second question. So those parts will continue. And of course, the government is currently looking at do we need to put other things in place, and we are part of those discussions. And then maybe a final point. In the end, we urge all our clients to continue to talk to us, and we reach out to those clients as well when we see a signal that something is happening by means of which they would get into trouble. But in the end, not all companies can be safe. There will be companies that will be unable to make it that are not sustainably sufficiently healthy to go through this crisis. And then you have to be very careful to not push more debt onto a company if they are structurally unable to repay it because then basically you're doing not the right thing for the company to even push them into a bigger difficulty in which they are currently already. And it's called, yes, if you call that my CRO is now saying it's called overgrudging, but that's a technical term for what that means. Yes. Thanks a lot. Thank you. And there is a follow-up question coming from Mr. Koen Huygens, the Volkskran. Please go ahead. I have one more question or actually 2 more questions about the wholesale bank. One of the unions, FNV, was talking this morning about maybe 200 or 300 jobs that could disappear in Amsterdam. How accurate is this estimate, do you think? Yes. I mean, look, I can say that we are present in 40 old countries in Wholesale Banking. So it was 43. And after what I announced this morning, it will be around 37 or 36. So it's a diversified spread over those countries. As you know, the Netherlands is also part of the Wholesale Bank, so it will also affect people in the Netherlands. But we first want to talk to the people themselves, to the unions and to the World Council before we become more specific. Okay. Thank you. And a follow-up question. I think Ruben was also talking about this, but I'm not sure if I understood it right. You are did you say that you are not focusing on certain sectors within this wholesale bank? Was that what you meant with the focus on clients and not on profitability, not on sector profitability? No, no. Well, what I take from this question is that let's all agree on this call that next time, Ruben can only ask his questions last. So I think that's a consensus on this call. But no, no, I did not mean that. I said when I look at profitability, sustainable, good engagement with our clients, we look at it through the cycle, yes, because we have good years and bad years, but longer term good relationship and profitability with our clients. And we do it on a client basis, not necessarily on a product basis because one product will not make such good profitability, other product will make better profitability. And overall, you try to have a good balanced and healthy relationship with your clients. So it was more from a product point of view than from a sector point of view that I spoke. Okay. Thank you. And one last question about Retail Netherlands. In the quarterly report, there is something is being said about SEK 30,000,000 for provisions, among others, for legal claims. What is that about? Yes. We never talk about legal claims. We always have discussions here and there. So we have legal claims. But not only legal claims, it's also the branch closures that we announced in July for which we've taken a provision that's in that amount as well. Yes, I understood that. But I was wondering because I didn't see the legal risk part, something about this. But maybe I missed something. No. These are provisions that we now and again take, but this is a loan provision in total inside of a bigger provision. Okay. Thank you. Thank you. And the next question is coming from Mr. Felix Holtermann, Handelsblatt. Felix Walderman here from Handelsblatt from Frankfurt. I have two questions. The first question is on the German retail business of ING. To my knowledge, ING is planning to introduce a lot of new fees for German customers. For example, a fee if you want to buy back a fund or other fees for the storage of money with ING in Germany on savings accounts. Could you comment on that? When will that start? And how many of new fees will we see in the future? Is that also a shift in your strategy in Germany, which you might extend to other countries, to other markets where you are active? And I have one follow-up question, but perhaps we can start with that one. Okay. Thank you very much. I think that fee scheme will be that will be introduced in February of the year of the next year. And in general, we see compression, of course, on interest income. There is negative interest rates, which is putting quite a lot of pressure on our liability income. And hence, where possible, we do introduce negative rates. At the same point in time, we remain careful with that to focus on the higher amounts or in cases whereby clients would only store money with us without having further business. So in Germany, that's more focused on that element. I think in general, in Germany, I think we are very much continue to work with our digital proposition there. As you know, we have 0 branches there and over 9,000,000 clients. This quarter, we again grew the primary customers in Germany with over 60,000 clients. We're developing a business with them with regards to insurance but also into brokerage. I think we have done much more brokerage this year than we have last year. And our relationship with our clients in Germany develops itself very well. Okay. Wonderful. And one additional question. There are new discussions in Berlin about the future of the Commerzbank. Mr. Harmer has had some talks with Mr. Silke in the past about a potential merger with Commerzbank. Is ING still interested? Are you still looking into Commerzbank or into other potential options to extend your German business? We as I've said before, we're very much focused on our organic growth strategy. That has worked very well. Every quarter, we grow both our clients and our primary clients. So in that sense, the organic first is the way to go. If we would focus on acquisitions, we first look at the technical skill sets, so technology elements that can improve the interaction with our clients or an extension of the supply chain in terms of interaction that we have with our clients. So that's bucket 1. Bucket 2 would be buying additional skills. I talked about consumer lending and insurance and brokerage, but there are other services that you can think of that we would buy, so additional type of services that we can bring in a total proposition to our clients on our platform. And 3 would be in market consolidation as that gives the most logical synergy benefits from an operational cost point of view. If you look at cross border consolidation, which I think that is what you are talking about, yes, we've been a strong advocate of the banking union because currently, there are many pockets of capital and liquidity that are trapped. And in the current circumstances, that will not change with the merger. So currently, we're very much focused on an organic and on the 3 pillars I just talked about. Okay, wonderful. One last very short question. Are you still in contact with Mr. Hammers? How is he doing in Zurich? This morning, actually, he sent me an app. Oh, wonderful. What kind of app? Good luck with today. Congratulations and all the best. So something in that tone. So we still have a regular context. And now he has started, I think, in September, but then sitting next to the then CEO. And as of the 1st November, he came into his role, and I'm sure that he will do very well there as well. Okay. Wonderful. Thank you so much. Good luck from Germany. Thank you very much. Thank you for calling in. And the next question is coming from Ms. Eva Schmale, INRC. Two questions. You were talking about increased fee income and the declines of the rental margin pressure. Maybe you could elaborate on that. Where do you see the fees grow and where do you see the rental margins go down except for the negative rates you already told that? And the second question is, you're talking about the loan schemes and the payment holidays. And the core in that is that all the companies should be healthy in the core before the crisis. But well, the crisis is still there. So how do you still see if a company is healthy in these days? Yes. Then you basically well, maybe to start with the last question, then you look through the cycle in and how they have been performing before the crisis started. So you can go back and say, how did the company perform through the before the crisis? And what is happening now? And can we link that back to what we see happening in the crisis? But the crisis will maybe change the economy for a longer period. So if a hotel, for example, is doing very well in the past, it's not a guarantee that it will do well in the future. No, that is true. And so that's the uncertainty that we need to deal with. And hence, therefore, past the payment holidays, you need to take a more individual approach in terms of those declines. And do we believe that there will be sustainability in this company then going forward beyond the crisis? And then you have to take certain assumptions. Okay. Thank you. The second question? Yes. Then on the question on I think you were talking about the interest income and the pressure on that, right? Yes. And also the fee income. I was wondering where you grow in fees. Sorry, sorry, sorry. Yes, in fees. Well, actually, the fees are actually growing in most parts and especially in Retail Banking. So we do more in insurance. We do more in brokerage, so that is asset management. We do more in payment packages, albeit that given the payment volumes still now are lower than they were before the crisis, they have come back a little bit, but they are still not to the level that we had in the past. So what you see in the debit cards payments that there, the fees are still lower than they were before the crisis. In Wholesale Banking, we see sort of a rebound in lending because we closed a number of good syndicated loans. So the syndicated market has come back a little bit where you underwrite and then you distribute the loan. Has come back a little bit in the Q3, whereas in the Q2, there was not so much there. Those were only loans being done by banks individually, but not as a collective. The financial markets activity was a bit lower than in the Q3 because the volatility was relatively low. And if there's lower volatility, then there is also less trades being done and that impacts the fees on that front. So good in Retail Banking on more fronts, but still not at the level before crisis in Daily Banking. In Wholesale Banking, it's a mixed picture. But overall, you see that we've been able to grow our fee business 5% compared to the same period in last year. So that's a good development. Yes. And the rental margin pressure, you are writing that there's subdued lending growth. Is that also in wholesale or also in retail? It's largely in maybe copper can say And I will and I always have to be low minded. But in Wholesale, what you saw was a big spike at the end of the Q1 and the early Q2, and I call that emergency loan drawing. So there were many large corporates who drew their recurring credit facilities, and those are facilities under which you can draw, existing facilities. And they hoarded the cash because they want to make sure that they had the cash when they needed it. Now what you now see is that those companies actually see that they do not need the cash. So the panic has a bit gone, and hence, they don't need that money anymore, and hence, they pay it back. So in Wholesale Banking, you see the loan volumes coming down. In Retail, the picture is mixed because in Retail, you can say, let's split that between SME mid corporates on the one hand and then Private Individuals on the other hand. If you look at SME mid corporates, there you see in the Benelux that loans are about flat. And why is that? On the one hand, people need loans. On the other hand, the economic activity, as in Wholesale Banking, is also lower, so they don't need that much. And moreover, in especially in the Netherlands, clients could benefit from not only guarantees, but guarantees loaned by the governments, by a flexible external layer, by fiscal measures. And hence, they have been able to offset pressure in various ways. And that was actually the government should be applauded for that. I think that was better than in most countries. So I think the Dutch government did a good job. If you look at Southern American sorry, Southern American Southern European countries, there you see that those measures were differently and there is much less ability to look at other pockets of cash. And there you see the loan demand continue to increase. So it's the tale of 2 cities, if you will, right? And then if you look at Private Individuals, there you do see an ongoing growth in mortgages across the different countries in Europe. And the last follow-up question is coming from Ruben Eig, Degroof. Please go ahead. Of course. Yes. I saved a few questions because I was afraid I would be accused of stealing everyone else's. But what there's a €7,000,000 legal provision in Spain. What's that for? It has to do with mortgages. I think that there's been a long debate and discussion with regulatory authorities on what costs could be charged for mortgages or not and is the provision for that. Okay, all right. Which, by the way, is not the case for NGL alone, it's for all the banks. This was a generic measure. Okay. Yes. I remember. Is there any news about the €180,000,000 impairment from the fraud case in Germany? Can you give us that? We don't comment on individual clients, as you know. Other than that, I we read with interest what's happening on that front. Okay. There's no news you heard from the process about the rewinding of that customer and if there's any money coming back. No, but that will take years to actually get that done. Okay. It will take years. Okay. That's all. Thanks. There are no further questions. Please continue. Okay. Thank you. To wrap it up, as the pandemic continues, helping colleagues, customers and community safety through the pandemic remains a top priority. We also talked about that quite a bit during this call. And in that environment, our Easy, Smart and Personal Digital First offering keeps attracting customers with a net increase of 213,000 primary customers in the Q3. Financially, we booked a resilient results with increased fee income and continued cost control, while interest income was affected by margin pressure and subdued lending growth mainly in Wholesale Banking. Risk costs were sharply lower than in the previous quarter, and we continued our ambition to keep transforming into a leading data driven digital bank, which leads to some adjustments in the focus of our wholesale and retail operations. And with that, we leave you for now. Thanks for your time. Thanks for all your questions, and I hope to talk to you soon. Thank you. Ladies and gentlemen, this concludes ING