Farquhar Murray

Farquhar Murray questioned Aegon on recent legal settlements, seeking details on the cases, their impact on uncertainties, and the finalization process. He also asked about Aegon's approach to the U.K. strategic review, specifically regarding preferences between cash and equity offers in a potential sale.

Answer

CEO Lard Friese clarified that the legal settlements pertain to two specific cases detailed in the annual report (page 269), are included in the $230 million 'other charges,' and are awaiting court approval. For the U.K. review, he stated it's in early stages, covers insurance and platform businesses (excluding asset management), and an update is expected before summer, with no further comments at this time.

Farquhar Murray inquired about the details and finalization process of Aegon's recent legal settlements, and the company's approach to potential offers (cash vs. equity) during the ongoing UK strategic review.

Answer

CEO Lard Friese clarified that the legal settlements pertained to two specific cases detailed in the annual report (page 269), which are included in the $230 million of other charges and are awaiting court approval. Regarding the UK strategic review, Mr. Friese stated it is in early stages, covers the insurance and platform businesses (excluding asset management), and an update is expected before summer, with no further comments at this time.

Farquhar Murray from Autonomous Research inquired about the expected project costs for the U.S. GAAP implementation and the re-domiciliation. He also asked how the increased focus on the U.S. would affect Aegon's strategic approach to its other global businesses.

Answer

CEO Lard Friese responded that the costs associated with the potential move will be part of the ongoing review, with an update to be provided at the Capital Markets Day. Regarding the global footprint, he stated that the strategy defined in 2020 for the company's perimeter, which includes creating advantaged businesses in its chosen markets, remains unchanged.

Farquhar Murray from Autonomous Research asked for an explanation for the decline in the proportion of multi-ticket agents at World Financial Group (WFG) and inquired about the nature of the new agent activation program. He also sought clarity on the framing of the €150 million buyback, noting it seems insufficient to reach the 2026 cash target.

Answer

CEO Lars Fraser explained that the growth in new WFG agents (up 19% YoY) means more agents are still ramping up, impacting the multi-ticket ratio. He described a granular activation program providing training and support to accelerate their productivity. CFO Duncan Russell clarified the €150M buyback is not part of a regular, predictable program but an action to manage the cash position, confirming it alone won't reach the 2026 target, which will be achieved via investments or further returns.

Farquhar Murray of Autonomous requested a breakdown of the new operating result guidance of €800-900 million per half, asking how much is from business growth versus assumption changes. He also asked for the split of the assumption update charge between term and universal life policies and if it targeted a specific cohort.

Answer

CFO Matt Rider confirmed the guidance uplift is driven by both the assumption reset (€50 million) and underlying business growth in strategic assets. He stated the new range is the expected run-rate for the next half-year, not a gradual target. He added that the assumption update charge was split roughly 50/50 between term and traditional life blocks, with a primary focus on older-age mortality.

Farquhar Murray of Autonomous Research asked for the drivers behind the increased confidence in the full-year fee income guidance. He sought proof points that the growth is 'alpha driven' rather than market-related beta and asked for the current revenue from insurance products.

Answer

CEO Steven van Rijswijk attributed the confidence to strong growth in mobile primary customers, an increasing number of investment accounts, and growing lending deals in Wholesale Banking. He emphasized that broadening the customer base and service offerings is driving structural growth. He specified that insurance income was €69 million for the quarter, a figure now being disclosed.

Farquhar Murray of Autonomous asked why NII guidance wasn't being raised given strong deposit growth and whether the 130 bps lending margin target was now a stretch. He also questioned if the CET1 target would revert to 12.5% this year if geopolitical tensions ease.

Answer

CEO Steven van Rijswijk stated that ING will stick to the 12.8%-13% CET1 target for 2025 to maintain consistency amid uncertainty. CFO Tanate Phutrakul noted that while Q1 volume performance was strong, it is too early in the year to adjust full-year NII guidance.

Farquhar Murray of Autonomous asked for an update on announced core deposit rate reductions and questioned why ING had not yet cut deposit rates in the Netherlands, probing for changes in the competitive landscape.

Answer

CFO Tanate Phutrakul quantified that rate cuts on approximately €200 billion in core deposits would yield a €600 million full-year revenue benefit. Executive Steven van Rijswijk added that while 70% of the deposit book has seen pricing actions, the company cannot comment on future moves in the Netherlands but remains comfortable with its strong franchise position there.

Farquhar Murray asked for details on the €6.5 billion RWA increase from model updates, including which lending books were affected and if there were costs associated with mitigating actions. He also inquired about ING's deposit pricing philosophy heading into an interest rate cutting cycle.

Answer

CRO Ljiljana Cortan stated the RWA update primarily came from the low default portfolio in wholesale banking. CFO Tanate Phutrakul added that the revenue impact from mitigating actions is expected to be minor. Regarding deposit pricing, Executive Steven van Rijswijk explained that the bank will remain 'nimble,' continuously calibrating its strategy based on an economic trade-off between customer growth and profitability, without committing to a specific approach.

Farquhar Murray requested more detail on the EUR 6.5 billion RWA model updates, asking which lending books were affected and if there were costs to the mitigating actions. He also asked about ING's philosophy on deposit pricing as the ECB enters a rate-cutting cycle.

Answer

CEO Steven van Rijswijk stated that the deposit pricing strategy will be nimble and calibrated based on an economic equation balancing customer growth and profitability. CRO Ljiljana Cortan specified that the RWA model update primarily came from the low default portfolio in wholesale banking. CFO Tanate Phutrakul added that the revenue impact from the RWA mitigating actions is expected to be minor as the bank optimizes for revenue, RWA, and return on equity.

Asked about the drivers of the improving OCG-to-cash conversion rate, specifically if Non-life is the only improver and what the group's landing zone for conversion will be.

Answer

Towards 2025, Non-life is the clearest example of an improving contributor to cash conversion. For the group as a whole, the conversion rate is expected to gradually improve from the roughly 80% level seen last year.