ING Groep NV Q4 2019 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Raul Sinha - JP Morgan Chase & Co, Research Division - Analyst : I've got 2, please. The first one is on the decision to obviously reiterate the progressive dividend policy. We know at some point last year, you were debating whether or not you should treat that. And that's why I was wondering whether that option is still open in terms of once you have full regulatory clarity, you might still look at the appropriateness of that progressive dividend policy. Or do you think that, that is something that you believe is very much set in stone given how you view your capital position, which is obviously quite strong? And then the second one is on fee income. If I may ask about -- a little bit about Retail Benelux, especially whether or not you think that we might have a slightly better performance in fee income for 2020? Or do you think this is still going to be a challenging sort of area whereas the other areas within fee income will be the main drivers?

Question: Raul Sinha - JP Morgan Chase & Co, Research Division - Analyst : So if I can just follow up very quickly on the capital point. As you know, within CRD V, there is also this Article 131, which is quite a negative impact from a systemic risk buffer perspective, depending upon how you interpret this. Have you had any discussions with the regulator about this? And is that kind of driving your view that CRD IV is actually likely to be positive?

Question: Omar Fall - Barclays Bank PLC, Research Division - Analyst : Could you just highlight where we are on the Unite plan, please? I know Belgium isn't the only beneficiary, but the expenses are still growing 3% there. Any sense at this stage of giving us what you think the euro amount savings to come, particularly given the migration to the new app and the Internet banking environment is happening in the coming months? And do you still expect somewhat of a hockey stick effect on cost savings to come from next year? And then similarly, sorry again, on expenses, but just so we can get a sense of the underlying developments. Or it would be helpful if you could give a sense of how the increase in KYC costs, either the EUR 75 million of the Q-on-Q number is split across the divisions or maybe just even a sense of how the stock of KYC costs is split across the divisions, that would be great.

Question: Kirishanthan Vijayarajah - HSBC, Research Division - Analyst : Kiri Vijayarajah, HSBC. First question just really a clarification on the EUR 70 million benefit from the negative interest rate. So what have you assumed on outflows, if any, once you introduce the negative rates on your Dutch deposit base? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. FEBRUARY 06, 2020 / 8:00AM, INGA.AS - Q4 2019 ING Groep NV Earnings Call And then secondly, going back to the fee and commission outlook. You've got your 5% to 10% growth ambition. Do you think that's achievable specifically for 2020? And within that, the wholesale bank fee and commission was a drag in 2019. And I wondered do you think that still remains a bit subdued in 2020 given your cautious risk appetite there on volumes at least in the Wholesale Banking.

Question: Anke Reingen - RBC Capital Markets, Research Division - Analyst : Just 2 follow-up questions. Firstly, on your comment that you work hard on improving operating leverage. Is it too early? I mean it's not in consensus expectations. But is there a scenario where you can actually already deliver operating leverage in -- positive operating leverage in 2020 without being too optimistic on the top line? And then secondly, just on your capital return policy. I understand that you announced changes when you do. But given some of the banks now talk about buybacks, I was just wondering, conceptually, would you consider replacing part of your cash dividend with a buyback? Or is that only really an option as an additional capital return?

Question: Bart Jooris - Banque Degroof Petercam S.A., Research Division - Analyst : Main questions have been asked. So I have a detailed question and a more conceptual one. The detailed question is your net core lending is up for a large part from Retail Belgium. What's the effect there of the disappearance of the woon bonus this year? Is that important in that number? Or is that very small? And then secondly, more on a conceptual basis. You're planning on using AI and machine learning in your KYC processes. However, as I understand it, those machine learning processes often lead to black box algorithms that give you the results. Are your regulators happy with you using black box algorithms in your KYC processes? Steven J. A. van Rijswijk - ING Groep N.V. - Chief Risk Officer, Member of the Executive Board & Member of Management Board Banking I think regarding your first question, the impact is benign. So we do not see a big impact of that. And on the second question, we are in continuous dialogues with regulators when we use artificial intelligence. So when we do model validation on certain parts, for example, and there are AI guidelines that have been coming out from different regulators, we will use that to discuss with those regulators because, in the end, we need to have explainability in our algorithms. And currently, we [build] (corrected by the company after the call) in our views internally developed AI, which in some stages is still in sandboxing, but in other stages, it's sort of advanced. And then when we come to validation in line with our regulatory standards, we will then discuss with the supervisor.