Tanate Phutrakul: I think on liability margin, there’s a number of views that you have to take, and this is one possible scenario, right? And you heard from the Federal Reserve last night that the liability or the discount rate could be delayed, right? So that could be a driving factor. And then as I reminded you at the beginning, half of our replicated portfolio is below one year. So we are driven to a certain degree by what happens to the discount rate by the ECB. So that’s a simulation, that’s a discussion point. The second one that you mentioned is what do we expect in terms of tracking speed in terms of on the way down. It really depends on how sharp the ECB rate comes down, right? If the ECB brings rate down in a gentle manner, then you would expect that tracking will be slower, but if the ECB bring the tracking speed down in a dramatic fashion, then rates would be — the market will be more open to our faster tracking speed on the way down.
I think that will be my opinion. Then on the lending margin itself, yes, it is an assumption that we have shown here. It’s a one possible scenario. But one thing that you could already see in Q4 for ING is that the mortgage margin when rates come down, that margin opens up. So that’s a potential different scenario, a more positive scenario than what we’ve shown here. And then the last question on guidance on total income that we do not give at this time.
Benoit Petrarque: Sorry, Tanate, the tracking speed, just to come back on that, did you assume a relatively slow tracking speed in ’24 versus the speed of the ECB rate cuts?
Tanate Phutrakul: Sorry, that we don’t give us guidance, but what we say is that we’re confident we can manage the liability margin to around 100 basis points.
Operator: And we’re now moving to a question from Sam Moran-Smyth from Barclays.
Samuel Moran-Smyth: So just the first one. So on the bridge in Slide 20, I apologize — appreciate on this, but the other segment, which includes the MRR, I just wondered if you could outline the assumptions behind that, you’re modeling an increase to 2% and then even further in a scenario where it does increase to 2%. Do you think you could get some kind of dispensation on the fact that you’re having to take — gross deposits, which for your business are quite different [indiscernible] should we think about the €8.5 billion doubling if you do go from 1% to 2%. And then secondly, just on the loan growth assumptions of 4%. Could you possibly take us through the assumptions you have on different geographies and different products or at least where you see particular opportunities for volume growth?
Steven van Rijswijk: Yes. Thanks, Sam. With regards to the MRR, indeed, when you talk about the €8.5 billion, which is a deposit rate of 4%. If we don’t get anymore, you — then you get to the €300 million that we have there, if that would not account for 2%, then actually you double that, that means that the 1% growth is 2%, then basically, you double that amount. So that means that, that would have an impact of an additional €300 million on our P&L. So that’s what it would mean. And again, they are studying it that we have said already, we find that we will find it strange given the fact that the more [indiscernible] ECB is focused on bringing inflation down. And the on the one hand and have higher interest rates, on the other hand, would charge banks for their deposits.
That means that banks would move their deposits somewhere else to the capital markets, and that would then bring interest rates down again. So it will almost be counterintuitive to monetary policy. But let’s just see what happens there. The second one is on loan growth. I mean, actually, we see that across the Board happening now. If you look at the fourth quarter loan growth of Wholesale Banking of around €3.5 billion is that is if you extrapolate that to the year, you get to around 4%. That was more or less the average over the last decade or so, excluding the year 2023. So that is coming back. That was actually quite subdued. And also in the mortgage markets, we see, for example, the number of houses being sold this year increase, depending on the market, with a number of percentage points compared to last year.
And the Netherlands, the number of dwellings sold, came down with 6%. In the coming year, we expect that to increase again with 3%. You see that more than half of the offers made is above the asking price, which again shows that it’s going to be a sellers market again. So we see actually growth on all fronts, both on private individuals and the mortgages and on Business Banking and the Wholesale Banking.
Operator: We’re now moving on to a question from Kiri Vijayarajah race from HSBC.
Kirishanthan Vijayarajah: Yes. A couple of questions from my side. So firstly, coming back to the NII guidance, I’m afraid. So the deposit margin assumption, I just wondered, are you baking in another repeat of the aggressive deposit-led marketing campaign you did earlier on in 2023? I know it helped you add to customer numbers. But also you were standing optimistic on deposit volumes. So what have you baked in there in terms of repeating what you did last spring, I think it was primarily in Germany. And then second question, turning to the costs on Slide 22 and your 3% of the cost growth in that waterfall coming from business investments. I just wondered how should we think about that? Is that to drive those operational efficiencies you show on the same slide?
Or is it more about you need those investments to drive the kind of the volume growth assumption, the 4% or to drive the uptick in the fee growth your — marks for 2024. So how do you think about the investment cost growing, adding 3% to your cost base?
Steven van Rijswijk: Yes. Thank you very much. Yes, look, in terms of marketing campaigns, yes, we will not announce a front when we will do specific marketing campaigns. That’s how it works. But what we have penciled into our P&L is investments in marketing to grow our customer base. For example, we have a target in Germany to grow our customer base by 2025 to 10 million coming from 9 million in 2023. So there is a target, and I am confident to meet it, and that’s also why we need to invest in marketing. And in that setting, there are three buckets, if you will, where we invest. First of all is to — is in growth and the marketing is part of that, but the investments in marketing will be there to support customer acquisitions in selected markets.
The second bucket is to make investments in — payments of infrastructure. As you know, we are a top quartile, cost-efficient payment infrastructure. In Europe, we want to get to top decile because then you get more payments on your system and you can broaden your services. And for that, we make investments and we in the same [indiscernible] also make investments in enhancing our financial markets business to also being able to diversify further in financial markets. And the third bucket is that we continue to strengthen the core banking operations as both the core banks, our , our end-to-end digitalization journeys in G6 that we invest in that helps us to gain more customers, helps our customers to become more primary customers and do more with us, but at the same time, also realize those operational efficiencies that you also see on that page.
But those are the three buckets. So marketing, payments infrastructure and financial markets infrastructure and strengthening core banking and [indiscernible] journeys.
Operator: And up next, we have Mike Harrison from Redburn Atlantic.
Michael Harrison: Two aspects, please. One, margin, one on capital. The guidance you’re giving for the NII outlook, I assume that’s predicated the replicating portfolio sitting in [indiscernible]. Why this increase from — I think it was 45% last quarter, and it was 40% about a year ago. And might be the mix of — duration mix of the replicating portfolio shift as rates fall. And then second, just a numbers question really, just on your RWAs. I think your — RWAs grew by €3.5 billion this quarter. Is that the 20 bps for the standardization of [indiscernible] flagged in the previous quarter? Or is that something different?
