Welcome to ABN AMRO's Q2 2026 analyst and investor call. Please note this call is being recorded, and for the duration of the call, your lines will be on listen only. Analysts will have the opportunity to ask questions after the presentation. This can be done by pressing pound key 5 on your telephone keypad. I will now hand the call over to the speakers. Please go ahead.

Good morning and welcome to ABN AMRO's Q2 2026 resource presentation. I'm joined today by our CFO, Ferdinand von Hacher, and our CRO, Serena Chiravanti. I will cover the key messages of progress on strategy and our financial results for the quarter. After the presentation, as usual, we will open the line for your questions. But first, let me begin with the key second quarter highlights on slide two. ABN AMRO delivered another strong quarter, supported by continued client activity and high fees. Net profit increased almost 30% year-on-year to $781 million, with return on equity improving to 12.1%. We saw continued business momentum with growth in lending and deposits. Commercial net interest income increased strongly, and we have raised our full year 26 guidance to around $6.8 billion, now including an IBC. Fees increased further, reflecting strong growth of 25 billion in client assets and another quarter of good clearing results. Progress on cost reduction is ahead of schedule, and we have lowered our full year 26 cost of guidance to around 5.5 billion, also including NIBC. Credit quality remains solid, with another quarter of limited impairments. Our pro forma CEC1 ratio strengthened to 15.9%, supported by growth in capital-like businesses. We set our interim dividend at 68 cents per share, based on 40% of our year-to-date net profit. These Q2 results reflect our progress on the strategic priorities of delivering profitable growth, right-sizing our cost base, and optimizing capital allocation. Let me now address each of these strategic priorities in turn. We are pleased to have completed the NIBC acquisition. It strengthens our position in attractive client segments and adds capabilities that fit well with our strategy. Including NIBC, we have realized around three quarters of our deposit growth ambition and around 80% of our mortgage growth ambition. In July, we announced the partnership between Worldline and ICS. This partnership will strengthen our credit card offering, enhance customer experience, and accelerate innovation. This outsourcing concerns up to 450 FTEs and will deliver further efficiency gains. Turning to wealth management. Client assets grew by more than 7% this quarter, reflecting strong market performance and commercial results that generated 2.3 billion of core net new assets. We are gaining traction in our priority segments, females, next-gen clients, and dual-client business owners. Inflows are typically higher in the second half of the year. So we remain on track to deliver between 5 to 7 billion of net new assets annually. Following the legal merger of HAL in June, our focus now shifts to the technical IT integration in Q4 and the delivery of synergies. Corporate banking is also on the right track with increased cross-sell and another strong quarter for clearing. We also continue to grow in sectors linked to European transition themes including defense. Now turning to our progress on the cost base. We continue to simplify our organization and improve efficiency. In the second quarter, FTE declined by around 250, mainly internal FTEs. While the pace of reduction has moderated, the cumulative FTE reductions are ahead of schedule at 45% of our 28 targets. Over the past year and a half, we realized around 300 million of our 900 million savings target for 28. The savings mainly reflect our ongoing organizational transformation and the streamlining of our IT landscape with a growing contribution from automation and Gen AI initiatives. We now have around 50 use cases in production, including our Gen AI, PowerPoint, VoiceBot, and a GenAI knowledge assistant for KYC and ANL analysts. As we scale, tokenomics helps us manage AI token use across its applications, balancing consumption with quality, risk, and business value. This enables us to select the right model for each use case. Recently, we also announced our partnership with Mistral. Access to European AI models is important because it gives us greater choice in selecting the right model for each use case. Now, turning to capital optimization. Since our Capital Market Day, we have realized 9 billion of RWA optimizations in total, including around 2 billion this quarter. Corporate banking has contributed 6 billion to these reductions, and achieved more than 60% of its strategic RWA reduction ambition. Looking ahead, we expect a number of significant RWA developments in the second half of the year. On the one hand, consolidating NIBC will add around 6.6 billion next quarter. This is expected to reduce OCT1 ratio by around 70 to 75 basis points. On the other hand, in Q4, the termination of the D&D mortgage floor, is expected to reduce RWAs by around 7 billion. The slide does not show several smaller items that will also affect RWAs. The annual update to the EBA property loss rate will reduce RWAs by around 1.5 billion in Q3. The sale of our personal loan business, our fund, will reduce RWAs by a further 1 billion in Q4. RWA increases are expected from business growth and potentially some other updates. These are harder to quantify today. We will conduct our capital assessment in Q4, or first under our distribution policy, of up to 100% of net profits. Now turning to the financial performance for the second quarter, starting with the Dutch economy on slide 7. Dutch GDP grew by a healthy 0.4%, The Dutch housing market has cooled somewhat following years of significant price increases, AMRO Bank N.V. AMRO Bank N.V. Resilient domestic demand, the healthy housing market, and gradually rising interest rates provide a supportive operating environment for the bank. Now, turning to client assets and deposits. Total client assets grew by just over 25 billion in Q2, mainly reflecting strong market performance in wealth management. Personal and business banking also delivered a strong quarter, a growth of more than 4.5%. The shift from cash and time deposits towards advisory and discretionary products continued. Client deposits increased over $5 billion. Growth reflected both seasonal holiday allowance payments and progress toward austerity conditions. And next quarter, NIBC will add to these numbers. Now, turning to commercial net interest income. Commercial N.I.I. increased 5% compared to the previous quarter. The main drivers for this increase were higher liability margins, strong clearing results, and higher liability volumes. To put some numbers around this, our liability margin improved by 5 basis points, driven by higher yields on our replicating portfolio. Average liability volume increased by $4 billion, reflecting both our strategic focus on deposit growth as well as seasonal effects. Finally, other commercial NII roles mainly due to increased financing demand from existing clearing clients and an expanding client base as we deliver on our clearing growth ambitions. Moving to assets. The margin there declined by two basis points, reflecting the high share of government-backed capital-like mortgages in new production. These capitalized mortgages are profitable, so this reflects only the difference in margin. Mortgage volume increased by 1.7 billion this quarter, with a market share of 18%. The market is currently very competitive, and we remain disciplined rather than seeking to maintain market share at all costs. Now, moving to our guidance for the full year. At the time of our Q1 results, geopolitical developments had pushed interest rates higher, but it wasn't clear whether those levels would persist. So, it was too early to change our NII guidance. Today, forward rates remain broadly at those levels, and we have just reported a strong interest result for Q2. We are therefore now in a position to raise our full-year commercial NII guidance to around 6.8 billion, including NIVC. As our chart shows, the interest rate environment continues to be a tailwind to a liability margin. For this year, we now assume other commercial N.I.I. of around 0.6 billion. This reflects higher clearing N.I.I. And from August 1st, we will book NIBC's N.I.I. in this line item. Following further integration, NIBC's mortgages and deposits will be booked in asset and liability N.I.I., Now, turning to fee and other income. Fee income increased 2% quarter-on-quarter and reached a record level. Positive market performance lifted wealth management fees during Q2. Corporate banking rose as well. Clearing continued its strong Q1 performance and cross-sell led to several large corporate finance deals this quarter. P&DD fees were broadly stable quarter-on-quarter. Other income improved strongly to $106 million. This was mainly due to favorable ALM results from economic ages. Together, record high fees and improved other income contributed to a 6% quarter-on-quarter increase in operating income. Now, turning to costs. Our priority is to deliver on our strategic targets which require disciplined cost management. N.V. N.V. N.V. Second half of the year costs will depend on the outcome of the collective labor agreement negotiations, which will resume in September. We are not updating our cost target for 2028. The remaining savings will be more spread over time, and the full cost reductions from synergies and outsourcing will only be achieved beyond 2028. We also need to invest in areas such as data centers, AI, cyber resilience, and commercial initiatives. That is said, our good start has created some headroom, but it is too early to change the target that we presented less than a year ago. Turning to credit quality. Credit quality remains solid, with a cost of risk of four basis points and a stable Stage 3 ratio at 2.1%. Our Stage 3 coverage ratio declined, and it is now around 14%, despite strong provisioning discipline. The decline relates to the derisking of our corporate loan book, the runoff and write-off of highly provisioned files, and the greater share of mortgages in the total portfolio. A recent backtest of our coverage ratio showed that it remained consistently above historical write-offs, even during downturns. Impairments were low at 24 million, despite ongoing macroeconomic uncertainty. They were largely attributable to a small number of individual files across various sectors. Following the renewed escalation in the Middle East, we maintained a higher weighting of our negative macroeconomic scenario for Q2. Overall, our credit quality remains solid, reflecting the strength of our loan book, proven risk management, and strong collateral across all our portfolios. Turning to our capital position, Our pro forma CET1 ratio increased to 15.9%. This improvement was driven by the quarterly profit, minus the 50% dividend reserve, and broadly stable risk-weighted assets. Our reported CET1 ratio, which deducts all profit in line with regulatory requirements, remained stable at 15.3%. Turning to the key RWA developments. Within credit risk, Business growth was largely offset by further RWA and portfolio optimizations. Lower market and operation risk contributed further to the decline in our RWAs. Our strong capital position enables continued investment in profitable growth while maintaining a robust capital buffer. Let me close with a key takeaway from the quarter. Today's results demonstrate disciplined execution against our strategic commitments. We advanced on our priorities of profitable growth, cost-based right-sizing, and capital optimization. Strong momentum continued across our core products and client segments. We completed the NIBC acquisition and now include its NII and cost in our full-year guidance. We raised our full-year commercial NII guidance to around $6.8 billion and effectively lowered our cost guidance to around 5.5 billion, both now, including an IBC. Our 15.9 pro forma CZ1 ratio provides capacity to invest in our strategy and pursue profitable growth. Year-to-date, with the bank tax spread evenly across the year, our pro forma return on equity was 10.9%, and our cost-to-income ratio was 56%, Thank you. If you wish to ask a question, please press pound key 5 on your telephone keypad. If you wish to withdraw your question, please press pound key 6 on your telephone keypad.

The next question comes from Giulia Aurora Miato from Morgan Stanley. Please go ahead. Hi, good morning.

Thank you for taking my questions. So my first question, Magritte, and the quarter was great, but of course I'm going to focus on capital, 15.9, and with some tailwind also coming by the end. Can you give us an update on the distribution because you're well ahead the 1375 even if we take 15.3 assuming 100% distribution that is still well ahead of the 1375 target. So I guess the market expects some excess capital distribution and why, second part to the question, Why do we need to wait until full year results? A lot of banks do interim excess capital distribution decisions. So why wouldn't ABN be able to do that? Thank you very much.

Thank you. We are committed to returning at least 7.5 billion of capital and paying out up to 100% of net profit over 26 to 28 years. As we already shared, we will do our annual capital assessment with Q4, and we do not want to speculate ahead of that. We are pleased today with the strong capital position we have and the progress we made on our strategy degree, but we should also all realize that we are still early in our strategic period, only two full quarters, you know, year to date in a three-year plan. So, as also mentioned in our CND and also shared at Q1, If over a period of time our capital position remains significantly above our target and if we're delivering on our strategic ambitions, we may consider additional distributions.

Understood. Thank you very much. And sorry, to follow up on the target, since you are very close or ahead of the target, when would be a good time to give an update on, you know, beyond 2026? Would it be a year from the CND, so perhaps Q3?

As I said, we're very pleased with the progress we're making so far, and this is why we've been able to already update and upgrade our commercial NII, but also our cost target for 26. But we are still early in the plan, so for the moment, we're not changing our 28 targets. But our mission doesn't stop there. Thank you.

The next question comes from Namita Semtani from Barclays. Please go ahead.

Morning, and thank you for taking my questions. The first one is just on the corporate banking loans in the corporate banking division, which were 59.7 billion in the first half of 26 versus 56.5 billion in 2025. It's on the page line of the report, so that growth is 11%. I was just wondering, do you think that's a sustainable level to grow and the right thing to do given it's a lower ROE business than personal banking, for example? And secondly, just relating to that, could you tell me or give an impression of what the margin is like on the corporate loans? And can you give an idea on front book versus back book? And is it, for example, a lower margin than the mortgages? Thank you.

Thank you very much. So as we shared at LCMV, I think, you know, the key – AMRO Bank N.V. AMRO Bank N.V. aim at pursuing profitable growth. This is really the name of the game for CB, and this is what you see in the increased volumes that we shared at Q2 of 2.7 billion. This being said, we also see, because this is a competitive market, margin pressure on the asset side. A lot of the pressure is the outcome, as I mentioned in my presentation, of, you know, N.H.G.-backed mortgages in our business mix. This is also what you see in the slightly lower margins that we share in our investor presentation slides.

That's helpful. Thank you.

The next question comes from Benjamin Goy from Deutsche Bank. Please go ahead.

Yes, good morning. One follow-up and you are about to mix the commercial NRI going forward because your asset NRI is remarkably stable. It is by the long growth you just mentioned. So should we expect something similar and then the pickup and the second half to come while ability NRI in particular? And then secondly, your similar question on capital level. So very strong. Even with 100% payout, it seems to be difficult to get close to your target. We're just wondering now, you have done two acquisitions, both seem to be going well and a bit ahead of time, whether you still have appetite for more deals, also potentially looking at more cross-border initiatives. Thank you very much.

Thank you very much. I hope I heard you well, because the line was a little bit dim, but that's okay. Fede will answer your question on NII. If I understood correctly, your second question was whether we are considering M&A if we're in a strong capital position. I hope I understood that correctly. So right now, we're very happy. Thank you. We're very happy with the two acquisitions that we've recently met. How in Germany that boost or wealth management franchise in this country, which is effectively also the market, And NIBC, where we only did the closing on August 1st. So right now, we are very much focused on making these acquisitions a success and making them successful by fully also integrating them in our group. This is really what we focus on. N.V. N.V. N.V. N.V. N.V. Maybe, Ferdy, you want to comment on commercial NII development?

Yeah. Benjamin, maybe underlying, coming out of the presentation as well, the drivers of commercial NII were both on the liability side and other commercial NII. Asset NII indeed stable, but underlying you see healthy growth in mortgages and corporate loans. So why is it stable is specifically the offset in lending margins. They were down quarter of a quarter by two basis points. As mentioned already by Marguerite, the biggest driver of this is the lower RWA density of our mortgages portfolio and that has even amplified on the base of four for the state guaranteed mortgages. And you might also see going forward that part of the benefits of the mortgage withdrawal removal will also be partly pass-through. The second effect is the lower LTVs. It's now around 54%. So also there you have your risk premium reduction. And you should also keep in mind that all funds will be sold in Q4 consumer loans with average higher lending margins. So overall, the outlook is good, specifically for corporate loans is more or less stable, but also the portfolio, specifically the lower density is the main driver of low asset margins.

Thank you.

The next question comes from Shrey Shrivastava from Citi. Please go ahead.

Hi, and thank you very much for taking my question. One short term and one longer term, please. The short term one is, we've seen system volume growth in the Netherlands, even excluding this holiday balance effect, of 6% to 7% versus you going to 3% to 4% underlying. So are you sort of willing to not compete on price and cede some market share? Because quite frankly, you can afford to do so. And my second question is, You've now made acquisitions in German wealth management. You've made acquisitions in Dutch retail. When you look at the size and shape of your business, particularly in wealth management, what are the key areas you can see to grow above market? Is it market share gains in Germany? Is it potentially inorganic in, for example, Belgium and France?

Or any other area that you see?

Thanks.

Thank you. I will take your question on M&A and wealth management, and Ferry will comment on volume growth later on. On M&A, right now with the acquisition of HAL and Betfam that we already had in Germany, we have a very strong position of number three in the wealth management market in Germany. And so You know, our goal is to thrive. Our goal is to extract the synergies that will derive from this acquisition. This is why, you know, following the legal merger that we achieved for HAL mid-June, we are now fully focused on the IT technical integration that will happen at Q4. Right now, as I said, Our energy is focused on making, you know, our recent acquisitions, be it HAL or NIBC, to be profitable. We do believe, and that's what we shared at our CND, and, you know, that the ambition we have of achieving, you know, overall $335 billion of client assets by 2028 will be achieved beyond the acquisitions that we have already announced. And so this is why we focus very much on commercial momentum and proactivity with our clients. This is about leveraging our own franchise, which is very strong.

Yeah, maybe on the liability side, indeed, it's very strong. If you look at client funding, it was underlying. If you correct for the short-term custody inflow in Q1, it was plus 5.3 billion. So on an annualized basis, you see an underlying growth of 11%. Yes, indeed, part of it is seasonal. You normally see the holiday allowances in personal and business banking. And last year, you always see increased spending over the summer periods. But also part of it might be more structural because savings tend to increase when uncertainty increases. For example, due to the geopolitical developments. But also what you see here, while the deposit market in the Netherlands grew the first half of the year with 6% to 7%, our market share slightly increased. So also here we have a market share between 14% and 15%, so even a slight increase on a very healthy growth market in the Netherlands, and that's the main underlying driver of our healthy deposit growth.

Thank you. Thank you. And if I may, just a very quick follow-up. The system's going 67. You're gaining market share. Is it time to re-look at the three defaults and underlined assumptions?

Maybe it's too early to start looking at that. As Mark Reid said already, we're comfortable with the targets we set for 2028. And also here, as I said before, let's also look how much is structural or not. And it's always depending with increasing rates and increasing margins what the head competition element will do. So for now, we're very comfortable with the targets we set during the CME.

Got you. Thank you very much.

The next question comes from Anke Riengen from RBC. Please go ahead.

Yeah, good morning, and thank you for taking my questions. The first is just on other commercial NII is running above your previous guidance. Is this just a more volatile clearing result, or is there any structural reason that we can extrapolate from the 26 guidance X the NIDC impact to the next year's? And just on liability margins, the 119 basis points, do you think that's sustainable or is there anything in the competitive dynamic in the Netherlands? I think Rabo raised some of the rates that could potentially put some pressure on it. And then, sorry, secondly, on cost, the guidance you put the comment out, it's subject to the CLA agreement. Can you just confirm that there isn't a risk? We don't expect the worst for your cost guidance, depending on the outcome from the CLA. Thank you.

Thank you very much. I will take your question on cost, and Ferdi will answer on other commercial NRIs, but also liability margins. Yes, we refer to our collective labor agreement, because as you know, we started the negotiations in June, and they will resume mid-September. In the assumption we shared at OCND, we said that in our financial plan, we had taken a hypothesis for inflation of 2%. And I believe we also gave the guidance, I mean, the information at Q1 that, you know, one percentage point above that would amount to, you know, between 30 and 30 million full year. So I think you have, you know, from that the necessary ingredients. We also shared at the time of our CMD that, you know, anything that would go beyond, you know, the equities we had taken in our financial plan would also be, you know, compensated by additional savings.

Yeah, and the other commercial N.I., the quarter was very good, plus 30%. And the biggest driver here is higher financing needs from our clearing clients. If you look at our overall guidance, 350 to 400 million we provided was also based on a clearing NII, if you look at full year 25, of just above 300 million, so it's elevated levels there. Also in here are the interest-related fees, so those are the underwriting fees which are amortized. And as said by Marguerite, for the coming quarter or maybe quarters, we have added NIBC to our overall guidance on other commercial NII that adds up to slightly below the 150 million. So underlying in the guidance, you would see around 450 million what we expect for other commercial NII for the year. Then if you look at the liability margin, yes, five basis points increase, so that really reflects disciplined deposit pricing. And you start to see the prolonged tailwind of our replicating portfolio, which started already end of last year. So going forward, we expect to benefit from the structure of the replicating portfolio as the higher yielding swaps will be rolling more gradually. But always you are dependent on competition potentially impacting volumes and also potential migration shifts. So for now we're comfortable. We expect the liability margin trajectory to continue as we earlier guided on during our CND.

Thank you.

The next question comes from Matthew Clark from Mediobanca. Please go ahead.

Hi. Just a couple of follow-up questions on the other commercial NII and the liability margin, please. So on the other commercial NII that is implicit, I think, in your new guidance that it drops back down to the former run rate. So if you could just confirm that and then also would you or should we expect the same to happen to the strong NII clearing related fees that you talk about this quarter and then secondly on the liability margin trajectory the chart on slide 10 I'm struggling to understand it looks when I compare that to the same chart last quarter it looks like there's a round about a 10 basis point uplift to the April curve scenario so I'm just a bit unclear why the trajectory has improved for that, if we look at that static April curve scenario between last quarter's outlook and this quarter's outlook. Thank you.

Okay.

Ferdy on other commercial NII And yeah, on other commercial NRI, we did move back. We said other commercial NRI of the guidance we provided that CMB 350 to 400. As I said, clearing is elevated levels. So that is the biggest explanation why we expect it to be around 450 million for the full year. If you look at the underlying guidance of 600 million. So that is the underlying explanation. If you then look at the charts, what will happen on slide 10 to the liability margin, indeed looking forward on the current forward rates, We expect, for example, in 2028, the liability margin roughly 10 basis points higher than the charge we presented during the CMV. But you should take into account that rates are volatile and potential impact of migration or mix shift. once the margin increases further. So overall, the underlying assumption, as we said before, under replicating portfolio, we expect a full pass-through on interest paid deposits, and we expect a full benefit from the current accounts, which is around 50 billion. So that is the explanation why on current forward curves, Sorry, just to come back to that.

My question is specifically on the April curve. So you presented last quarter projections based on the April curve, and then you've shown a reconciliation this quarter also on an April curve. and it's meaningfully higher now than you're expecting last quarter based on that April curve scenario and so it's the comparison with last quarter rather than the CMD which I struggle to N.V. N.V.

And you have not seen any changes in our deposit pricing over the past period. So that is the explanation of that. Okay, thank you. And the compound is still 1.25%. And that is since the 1st of May last year. So that's the explanation. So every quarter when the forward curves improve, the starting point will be higher.

Thanks. But the starting point is five basis points higher this quarter, but the projection is 10 basis points higher. Is that just a fully phased benefit of the higher starting point?

I'm not sure if I get you completely. The 10 basis points is a translation of the sensitivity slide you see at the back of the report, but it's all under the assumption that you see a full path through and that's the overall mix. and overall volume will stay constant. So you really should look at the underlying assumptions for that and maybe I will ask investor relations to provide you some more detail on those underlying assumptions because they're unchanged to what we provided at the CME.

Thank you.

The next question comes from Juan Pablo Lopez Cobo from Santander. Please go ahead.

Yes, good morning. Thank you for taking my questions. I got a follow-up, sorry for that, on the liability margin. I would like to ask if your NII guidance, you mentioned that you assume constant margins on interest-bearing deposits. I don't know if you could give us some sensitivity on your guidance if we include My second question is in OPEX regarding the ICS worldwide transaction agreement. It's my understanding that the cost savings were already included in the capital market space, in your targets, but if you could give us any color regarding the cost savings and the phase 10 of those cost savings, if There would be some cost, higher cost at the beginning and then some cost savings later. Thank you.

Yeah, we'll take your question on ICS and FedE. We'll follow up on liability margin. Basically, in the agreement we're making right now with Worldline, so, okay, A small part, part of it was, you know, included in our cost target ambition presented at the CMD for 28, but a fair amount of, you know, the synergies, i.e. the full benefits, will be only in 29. As is being said also, there will be restructuring costs that will be, you know, taken at the beginning of the period, but also, as we shared at OCND, you should consider that restructuring cost on average represents for us on a yearly basis around 100 million. So we are not changing also this 100 target for 26. Liability margin, 30.

Yeah, the liability margin, no. I mean, it's... It's an important question. So our guidance, to be clear, also for what we said at the CMD, that the full year 28 could rise to 7.2 billion, that was based on a liability and also the charge we provided there of around 1.25%. And now in the chart you see 10 basis points higher. So yes, you could simply translate that in plus 250 million. But again, I would say rates are volatile. You might see migration shifts and competition might increase as well. The key question is the income of the replicating portfolio is based on constant volumes, but clearly in the guidance we provide on NI, we take into account our CAGR we provided in terms of deposit growth. That is extremely important for us, and that is also a clear strategy. And also we take into account what we don't disclose clearly, what our expected price actions are.

Okay, thank you.

The next question comes from Alberto Artoni from Intesa San Paolo. Please go ahead.

Good morning. Thank you for taking my questions. You have to just follow up on the liability margins and just the qualification costs. N.V. N.V. N.V. A quick clarification, the 5.5 billion guidance for this year, does it include a restructuring cost or it excludes the restructuring cost? Thank you very much.

Thank you very much. So on cost of 5.5 billion guidance excludes restructuring cost and includes NIBC, just to be fully clear of what's in and what's out, okay? Okay. On competition on the saving market in the Netherlands, this is a healthy, a competitive, a transparent market. So, of course, pricing evolves on the basis of interest rate curves, client behaviors. Behaviors from competition, whether it comes from incumbents or whether it comes from, you know, newcomers and syntax. N.V. N.V. N.V.

Yeah, maybe just to add to my grade, so it's also clear for all the analysts. Yes, our guidance excludes restructuring costs, but it also excludes incidentals. Like an early incidental, we had to relieve on the pension. That's also excluded from the cost guidance.

That was a Q1, if you remember.

Very clear. Thank you very much.

The next question comes from Chris Hallam from Goldman Sachs International. Please go ahead.

Hi, everyone. I just have two questions on capital and costs. So on capital, you said that if over time your capital ratio remains significantly above your target, i.e. greater than 13.75, you may consider extraordinary distribution above the 100% level. So to me, it feels like that overtime in that sentence is doing a lot of the heavy lifting. Is it fair to assume that Q4 results in February are just too early to expect distribution above 100%? That's really something for 27 or 2028 rather than the earlier part of the plan. And then on cost, secondly, I think I'm still a bit confused on the guidance, just what's included and excluded in the cost guidance versus what you report as underlying expenses. Just to confirm, the guidance of 5.5 billion, that's your headline operating expenses and then excluding restructuring. And I think you also just said excluding incidentals by 82 million in the first half. If we look at H2 versus H1, your guidance implies about a 13% pickup, H2 versus H1. There are a couple of things in there. I guess, first of all, there's obviously the NIBC contribution in the second half, which will lift costs optically. And then there's the levies that happened in the second quarter or second half of last year were about 135 million. I guess if I adjust for those, I'm sort of getting mid-to-high single-digit cost H2 versus H1. Does that sort of sound like a fair reflection of the cost development you're seeing in the business?

Thank you, sir. Ferdy, we'll go through your cost question. And indeed, there are some, as you rightly pointed out, some costs that we only book Act 2.4, including, for instance, the banking tax. Regarding our distribution policy, indeed, what we said is that if, and I know you want more details on what I mean by over a period of time where capital position remains significantly above a target, we may consider additional distributions. Indeed, we still consider that right now and that in the first year of our plan, this is still early stage because, you know, this is a three-year plan. But we are very happy with the progress we're making and, you know, I don't want to speculate about what will be coming next, but we are very confident about, you know, all targets and the strength of our capital position.

Yeah, and I think, Chris, I agree with your calculation. Just take into account, I mentioned earlier also the CLA negotiations ongoing, and that will impact the bridge towards the second half of the year. It's the banking tax. It's the inclusion of how you also see if you look, for example, of NIVC, if you look at ICS, for the announcement we did in the outsourcing. We expect there to take a provision in Q3 of around 30 million. If you look year-to-date, restructuring versus pension exit fee, more or less balances out. But we take out incidentals, we take out restructuring, and take into account you always see a cost bump in Q4, and you have your regulatory leverage then as well.

Okay, thank you.

The next question comes from Farquhar Charles Murray from Autonomous. Please go ahead.

Just two questions, if I may. Firstly, if I recall from the CMD, those targets did factor in a kind of mixed shift towards NHG and a drift lower on LTVs, and then the associated decline in asset margins, which I think was around about maybe 15 bits across the full planning period. How does what you're seeing currently compare to that kind of target trajectory and do you feel like you're wandering off that or is what we're seeing consistent with that? And then secondly, just on the cost side, what is the regulatory cost expectation for full year 26 and for full clarity is that also in the 5.5 billion? Thanks.

Maybe on the regulatory cost, yeah, banking tax, you need to start adding N.R.V.C. So I would say tax going forward around 150 million is a rough indication. Then your second question was specifically on expected migration shift or specifically on mortgage market?

I think it was more on mortgage market. Mortgage margins, given the share of NHG-backed mortgages in our mix.

Yeah, and I think that is it. Had the mix shift there, and now the majority of the new production is up until 10 years, and also within the NHG guarantee, so that has a larger effect. AMRO Bank N.V. AMRO Bank N.V. That is maybe element number three, and maybe element number four, but you know that, and the de-risking of interest-only mortgages. We tightened our criteria for new production up till an absolute cap, and the underlying margins of IO was higher than the average. So I think there are quite a few elements in here, and it's still to be seen what the effect of the removal of the mortgage floor is, if part of that will be priced N.V. N.V. N.V. N.V. N.V. N.V. N.V.

There are no more questions at this time. I will now hand the word back to the speakers for any closing remarks.

Well, thank you very much all for joining us today. All the more that I expect that some of you are still on vacation, probably dialing in from their vacation. So we're very happy to have you with us. And we do hope that for those who are in Europe, some of you may be able to enjoy the eclipse tonight. In the meantime, have a great day.