ING Groep N.V. (INGA) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. I'm Hans Wijers. As Chairman of the Supervisory Board, I'm pleased to welcome you as shareholders and Central Works Council representatives remotely to this Annual General Meeting of ING. These are still exceptional times and require all of us to adapt. For that reason, we are holding our first meeting entirely virtually, so that within the limits set by the Dutch government at the advice of the RIM, we comply with the COVID-19 regulations. This curtails the health risks for everyone as much as possible. This virtual Annual General Meeting is broadcast from ING's head office. Only a limited number of the Supervisory and Executive Board members are physically present in this building today. The other members are attending the meeting remotely, and no shareholders are physically present. Except, of course, for the Executive Board members who hold shares, visible to you. Herna Verhagen, Chairman of the Remuneration Committee for the Executive Board; Steven van Rijswijk, Chairman of the Executive Board; and Tanate Phutrakul, as you know, is our Chief Financial Officer, CFO. Also present, you can't see them, but they really are here. I can guarantee that. Present and visible to you, Vroukje van Oosten Slingeland, the General Counsel of the company; Cindy van Eldert-Klep, the company Secretary. On behalf of the external auditor for the 2020 financial year, Waldo Bakker from KPMG and also on behalf of KPMG, [indiscernible] as well as the independent civil law notary, Joyce Leemrijse at Allen & Overy. The following members of the Supervisory Board are attending the meeting remotely via an audio link. These include Margarete Haase, Chairwoman of the Audit Committee; and Mike Rees, Chairman of the Risk Committee. In addition, the following Director and Supervisory Director are also attending the meeting remotely. They are to be appointed. Ljiljana Cortan has been nominated as Member of the Executive Board; and Lodewijk Hijmans van den Bergh has nominated as member of the Supervisory Board. As you have heard, this meeting is being held in Dutch just at the presentation by the chair of the Executive Board. English will be spoken only if the speaker does not have Dutch as his or her native language. As approved by the Annual General Meeting, the meeting will be broadcast live on ING's website. Shareholders have been notified of the meeting in accordance with the law and Articles of Association. The meeting can therefore adopt legally valid resolutions. Shareholders have not submitted any motions for discussion at the meeting. Now a few formal announcements. Issued shares on the record date of 29 March consisted of 3,902,484,027 shares. ING Group and its subsidiaries held on that date, a joint total of 691,882 shares and the number of shares on which votes may be cast is 3,901,792,145 votes. 1 vote may be cast for each ordinary share statement of the represented capital and the proxy vote cast will be displayed on the screen prior to the discussion of agenda item 2D. The notarial record of the meeting of 28 April 2020 has been available on the company website since 28 October 2020. The draft minutes have also been available for inspection since 28 July 2020. The minutes of the meeting are taken by the secretary. And once again, this year, a notarial record will be made for the purpose of adopting the minutes. An audio recording is being made at this entire meeting, and that's intended to draft the minutes. Ladies and gentlemen, 2020 has been an exceptional year and has required a lot from all of us from the ING staff and from all of you. We all had to be flexible. For ING, this meant in part a sweeping change in our method of working. In a very short time, about 80% of the employees all over the world switched to working from home and serve customers from there and have continued to do so, and that raises all kinds of questions. How are they doing health wise? How do they arrange things at home? How do they reconcile that with childcare? Also, how did this customer -- impact our customers, both retail and wholesale? How can we support them? Are we doing this alone? Or do we need to do this in conjunction with other organizations? Over the course of the year, I believe that we've worked intensively to keep track of everything and wherever possible to support everybody involved in this fine firm during these exciting and uncertain times. Much of what we're discussing today appears in the annual report and the financial statements and relates to this. Aside from the outer world, within ING, all kinds of special things happened. The special of all may be perhaps that halfway the year we changed CEO and our Chief Risk Officer, Steven van Rijswijk succeeded Ralph Hamers on July 1 as CEO. And that was in the middle of when COVID was upon us, and the appointment of Steven van Rijswijk as CEO will also figure in item 7a to elaborate on everything that happened in 2020. I'll also be addressing 2a in the item, which is the Executive Board report for 2020 and sustainability. Please see the report by the Executive Board as it appears in the annual report, Pages 5 through 81. And as part of the convening notice at item 2B for the record, please see the chapter on risk management in the annual report for 2020 as well, from Pages 82 through 183. I am now pleased to give the floor to Steven van Rijswijk. Steven, you have the floor. Before we transition to that, let's briefly describe the procedure for this meeting explains Vroukje van Oosten Slingeland.

Shareholders who registered has had the opportunity until 72 hours before the meeting to submit their questions, and those questions will be answered at this meeting. This meeting can be attended via the live webcast on ing.com or via the Evote platform. And at this meeting, shareholders will not be able to vote. But prior to the meeting, you have been able to submit a proxy to the civil law notary who is present here, and we'll vote in accordance with your instructions at this meeting. The voting items will be covered and displayed on the screen after each agenda item is covered. Registered shareholders who are participating in this meeting virtually shall also have the opportunity to ask questions via the chat function, which is available on the online platform, and you'll be able to see that if you've logged on to that platform at the top of your screen. Please note questions that you ask or that arrive via the e-mail address that you were able to use to submit questions prior to this meeting, those questions will not be seen during this meeting and will not be answered either. Questions arriving via the chat will be grouped by topic. And when that agenda item concerned is addressed, wherever possible, be answered jointly. So you will not receive replies by the chat function. If there is no more opportunity at this meeting to answer questions arriving via the chat, those questions and the corresponding answers will be published on ING's website, and they will also be included in the notarial record of the minutes. Thank you for your understanding and cooperation with participating in the meeting this year.

Thank you, Vroukje. That was an important addition. Now I'm going to give the floor to Steven.

Good afternoon. Thank you for listening. I hope you are all well. 2020 was a challenging year for many of us, and we have all been affected in one way or another, and everybody has had to adapt to the new situation. Of course, that includes us at ING. The main challenge was having to do much remotely including shareholder meetings. And unlike last year, this meeting is entirely virtual. I would have preferred to meet you in person, but unfortunately, corona restrictions don't allow that. Now let's start with the first slide, reflecting how ING did, and the year was much dominated by the coronavirus with lots to harmful consequences for the economy. Despite the goings on, we're satisfied with the results, and we presented them in February. I won't go into them in too much detail, but I'll show you the highlights. Despite the adversity caused by the coronavirus, our net result for 2020 was almost EUR 2.5 billion, a decline of 48% on 2019, largely as a result of an increase in risk costs, which were EUR 2.7 billion, more than double the figure in 2019, due entirely to the provisions we had to take to deal with the potential consequence of pandemic. Our annual risk costs were therefore 43 basis points ahead of average customer lending, well below the average of our competitors in the Eurozone, in line with our track record of having the lowest risk cost among major banks in the Eurozone in the last 12 years. Other figures I'd like to highlight in the middle of the page relate to our customer growth. I'm proud that despite the difficult year, we have attracted many new customers. They've increased by 578,000 primary customers. At end 2020, we had a total of 13.9 million primary customers. I'm convinced that this is largely due to our convenience, smart and personal digital-first product range that adds value for our customers and meets their needs and confirms our Net Promoter Score that measures loyalty and customer satisfaction. And we scored #1 in 6 of our 14 retail markets. And for wholesale banking, our NPS was 13% above our peers score. Despite all the attention the coronavirus required, we made progress in sustainability, which you'll see at the bottom, and I'll talk more about that later. Finally, we ended the year with a very strong capital position of 15.5% and a return on equity of 4.8%. This slide is about our dividend policy. I'll discuss that later on at the next agenda item, but I did want to indicate now that we're following the ECB recommendation to distribute a limited dividend. Now COVID-19 pandemic put pressure on loans and income and looking at the deposits, they increased considerably with respect to the previous year. So EUR 20 million growth in deposits in 2019. Excuse me, EUR 20 billion in 2020. Net deposits almost doubled with growth of EUR 41.4 billion in 2020. And they had increased the previous year from 2016 to 2019. So customers save more loans discrete and because of the low to negative interest rates, our net interest income remained under pressure. Of course, the pandemic affected not only our bottom line, it also required us to respond adequately in other areas. We supported employees, customers and society during the coronavirus crisis, and this shows how we did this in line with our purpose. Like many other businesses, we transitioned to working from home. I'm proud that we were able to do this very quickly. I cannot repeat often enough how much I appreciate the resilience and commitment of our employees. In March last year, during the first lockdown, 80% of our employees was working from home. And during the summer, that percentage declined, but it rose back again to 80% later on. And we were also able to continue serving our customers during the coronavirus crisis. We continued talking with thousands of customers every week to help them. In addition, we granted payment holidays of EUR 19.4 billion in loans to more than 196,000 customers. In addition, we supported the economy and otherwise. Thanks to guarantees from the European Investment Bank and the European Investment Fund, we were able to lend almost EUR 800 million to SMEs in the Netherlands on favorable terms to limit the impact of COVID-19. In addition, this relates to society, we supported social initiatives in 25 countries with financing campaigns or donations such as laptops for home schooling, and we contributed EUR 2 million to a UNICEF appeal. So that totals roughly EUR 13 million. In addition, we spent about EUR 11 million on donations. So we donated a total of EUR 24 million in support, both to combat corona and in other areas. Now onto some trends I'd like to tell you about. If you consider corona, you also need to consider what else happened with the bank. And there's some underlying trends that impacted our company. Those trend included increasing regulation in several areas. So there's KYC, Know Your Customer, preventing money laundering, data security, data privacy as well as IT. The second trend concerned the low and even negative interest rates that we see in Europe. Third, customer expectations, which have only increased in terms of mobile and digital experience, and as ING, we're able to accommodate those given that, by nature, we're a mobile and digital company. Finally, sustainability has gained considerably in importance, and I'm happy about that. Because of the corona crisis, these trends have accelerated. I often call them trends on steroids, and that's why it's still more urgent to respond adequately to them, and I'll address a couple of them in more detail. If you consider the trend of persistently low or even negative interest rates, that makes diversifying our income still more important. And we continued doing so last year as well. In 2020, we saw that despite the challenging market conditions, our fee income increased by 5% year-on-year with respect to 2019. That was due largely to our retail banking business. And within that, in terms of our investment products, which were particularly popular. Now on the next slide, you'll see the mobile and digital experience of our customers. And that reflects our focus on mobile-first and digital first, that proved its merits last year, which gave us a considerable edge in this corona crisis. In 2020, we experienced a substantial increase in the number of digital initiatives with customers. And you can see that at the top left of your screen. There, you'll note that 40% of our customers had exclusively mobile contact with the bank and the percentage of mobile interactions increased to 87%. You'll see that at the upper right of the slide. In addition, the number of mobile payments rose from EUR 232 million in 2019 to over EUR 560 million in 2020, so that more than doubled. This slide also shows a successful example of our digital product range in Germany. This, as you can see at the bottom right of your slide, this is a digital investment account in Germany. Last year, 326,000 digital investment accounts were opened, contributing to 20% of the growth in the number of investment accounts. This also led to an increase of 25% in assets under management. Users value the mobile options of the app because business almost tripled in investment products within a year. Also noteworthy is that 20% of these new accounts in Germany was entirely new to ING. So before they started that investment app, they were not yet customers at ING. So that's exemplifies new products that can increase our fee-based income at ING. Now sustainability. Sustainability is also gaining ground. I'm very happy about that. Businesses are increasingly expected to take responsibility and operate sustainably. Sustainability is embedded in our strategy, and we focus in sustainability, and first of all, tackling the climate crisis; and two, helping people gain a better understanding of their finances. The reason we do this is because these are the 2 areas where we can achieve the greatest impact as a bank. In the financial sector, we're pioneers, certainly in terms of our approach to the climate crisis and reducing CO2 emissions. This is acknowledged by external ratings agencies that measure our activities in this area. We call them environmental, social and governance activities, ESG, and they've been given a rating of strong. We're talking about companies such as Sustainalytics, S&P Global and MSCI. And this slide reveals a few of those highlights. In addition, we published our second Terra progress report, which indicates our goals for aligning our lending in our 9 most carbon-intensive sectors to align with the Paris Agreement climate goals. We also published our first climate risk report. And in that risk report, we described how we plan to integrate climate risks into our general risk management. This concerned the climate transition. In addition, we made efforts to help people gain insight into their money matters. And at the mid-left -- excuse me, at the mid-right of your slide, you see 27.8 million people who are customers at ING now feel more financially empowered. And we know this from surveys among our customers. Now on to the next slide. As a new CEO, I am asked many questions about my perception of our strategy. And I answer that our purpose, so -- of course, we are pursuing as our guide and it's rock solid. And the purpose and priorities of our Think Forward strategy are also still relevant, perhaps more than ever because the underlying trends have not changed. In fact, they've grown stronger. The Think Forward strategy is about what? And my focus is on how and where we implement our strategy. And we need to do this with discipline, and we need to be tenacious. We also need to be flexible to accommodate the consequence of pandemic, the changing behavior of our customers and the increasing legislation and regulation. And we need to continue to balance income and expenditure, using what we've already developed, using new insights and best practices. And if there's anything that was proven worthwhile within or outside ING, we need to apply it quickly. And we also need to decide which specific activities we want to focus on so that we can perform still better on our strategic priorities. That means in the coming weeks and months that the following matters will become still more important. First, keep the bank safe and compliant. The why is clear. Trust is a top priority for all our stakeholders, and we have undoubtedly made progress, especially in preventing money laundering, but much work still lies ahead. And we will also focus on our operational resilience and specifically on preventing cybercrime and ensuring data security and data privacy as well as data ethics. And the second element I'd like to highlight is that we need to consider our targets for returns. And that relates to our ambitions for return on equity. 2 matters are of the utmost importance. First, as I mentioned earlier, further diversification of income. We need to develop more fee-based products that add value for customers. And that's how we can get more fees. The second element in our return target concerns cost discipline. We need to optimize where we invest. We need to make clear choices in how and where we become more active. And the third element is that we need to continue digitalizing and that's necessary to become a data-driven digital lender. Digitalization generates many advantages for customers and staff and helps us manage costs and help us meet the requirements of our regulators. And I call this compliance by design. And finally, we need to build on our role of sustainability pioneers. And we're going to pay even more attention to that to build a better world, especially now that society around us values that increasingly. So we can call this build back a better world. Now through ongoing integration of those sustainability activities, we can take the next step, and how will we do that? On the one hand, as I spoke about earlier, we have what we measure our Terra report in the 9 sectors that we measure there; two, we have risk management and the risk report that I mentioned earlier; and third, there's customer interactions. And if we integrate those 3 elements still further, we can take the next step as sustainability pioneers. Now to wrap up, I'm convinced that we'll emerge from this coronavirus crisis stronger. The ingredients are present, as I've explained to you today. And if we continue to build on this with a heightened focus on implementation, then when recovery emerges, we'll be well positioned to utilize these opportunities. And as I said during my presentation of the Q4 figures, our risk items for 2020 will once again result in the average throughout the cycle. In addition, we'll resume our dividend payments to shareholders as soon as the ECB recommendations no longer apply to us. And we'll do all of this with a complete team. Once again, I'm delighted to welcome Ljiljana Cortan early this year as our new CRO, she succeeded me, and I'd also like to thank Tanate Phutrakul and Karst Jan Wolters for taking over CRO temporarily. And I'd also like to thank Isabel Fernandez, who left us last year as Head of Wholesale Banking. Andrew Bester succeeded her this month as Head of Wholesale Banking in that position. Recently, we announced that we intend to split the Executive Board roles for technology and operations so that we can further strengthen the pace of our ambition to become a data-driven digital leader. That's in the management board. Ron van Kemenade will be ING's first Chief Technology Officer and a member of the MBB. We're looking for a successor to the current Chief Operations Officer, Roel Louwhoff, who is taking this opportunity to change course in his career. Roel has played a major role in implementing our strategy and charting it over the past years. And I'd like to thank him for his dedication, valuable contribution. Finally, I'm also deeply grateful to my fellow executive board members and all people at ING all over the world for their exceptional dedication in that unusual year 2020. I'd also like to thank for Ralph Hamers for everything that he has done for ING as well for his advice to me when I succeeded him in mid-2020. We are living in uncertain times, but ING is well positioned now and in the future to continue supporting our customers. Thank you very much for your confidence in us, and I'll hand you back to the Chairman of the Supervisory Board, Hans Wijers.

Thank you, Steven. A number of questions have been raised on the basis of your presentation, but we'll be addressing that later on, strategy and also sustainability. But first of all, we're going to briefly comment on the reported Supervisory Board, which is item 2C of the agenda, and we will also later be discussing the remuneration report. First 2C, which is the report of the Supervisory Board for 2020. I would like to refer to the report as included in the annual report 2020, Pages 188 through 198. This year, the Supervisory Board met 10 times in regular meetings. But obviously, we were in touch with each other more frequently because of the extraordinary times. The Supervisory Board and its committees also continue to focus on supervising and constructively challenging the executive board on the progress of the strategy and the accompanying transformation. And other important items of focus were how ING could help its customers, employees and society at large through the COVID-19 pandemic, the implementation of ING Know Your Customer program and also further strengthening the ING risk culture. We also focused on the progress and delivery of various transformation initiatives, including in-house digitization and a number of issues concerning rules and regulations. We also focused on prioritizing the resources for priorities. And in terms of regulation, the Supervisory Board discussed the implementation of shareholder right directive to and various topical regulatory items with global ING scopes, such as internal capital adequacy assessment process. And we had meetings on data, IT sourcing, requirements for executive positions and other important jobholders. Furthermore, the Supervisory Board focused on the company's financing, taking into account the capital liquidity requirements. And also, we spent quite a lot of time on issues concerning business continuity in the light of the pandemic, capital plan and dividend payout policy of ING. Obviously, we also spent a lot of time working on a number of succession issues, appointments that we just referred to. Last but not least, we also spent a lot of time as the previous year on the remuneration policy. And therefore, I think it's appropriate to give the floor to my colleague, Herna Verhagen. And she's going to address item 2D, remuneration report, as included in the annual report, pages 223 to 240. Herna, you have the floor.

Thank you, and good afternoon. It's my pleasure to explain ING's remuneration report. ING's remuneration principles apply to all employees, including the members of the Executive Board. And the remuneration policy is focused on attracting long-term value for all stakeholders. And it's important that we'd be able to recruit people, motivate people and retain people. Equal pay for men and women and also competent employees with the right skills and values are of crucial importance in realizing our strategy. It is also ING's responsibility to take into account the interest of all our stakeholders. And therefore, we are in constant dialogue with customer, shareholders, employee organizations, regulators and also proxy advisers. Just as in the introduction of the remuneration policy of the Executive Board and Supervisory Board in 2020, we also engaged with our stakeholders. And in the first months of 2021, we consulted the stakeholders on the remuneration policy, the remuneration for the year 2020 and of course, also the remuneration report. This has allowed us to include the feedback and input of ING stakeholders in decision-making on remuneration and the remuneration report. 2020 was a very challenging year. And Steven and Hans already commented on this year. COVID had a major impact on our society, our people and also our customers. The effects are reflected in the results and of course, that was taken on board in remuneration. COVID, the impact on our performance, but also the input that we received from stakeholders during our engagement processes led to the fact that the Executive Board, along with the Supervisory Board, decided to make sure that the permanent and the fixed remuneration for 2021 be unaltered. Furthermore, the variable remuneration for 2020 was waived by the Executive Board and Supervisory Board. The remuneration policy of the Executive Board and Supervisory Board, as adopted by the AGM 2020 remain unaltered. I would like to say a few words about the remuneration report itself now. In the report, we've included the appraisal of the performance of the individual members of the Executive Board as well as -- and we also took into account the outcomes of the votes for 2020. And this year, the remuneration report 2020 will be put to you as an advisory vote and would also take on board the votes in the remuneration report 2021. Stakeholders have indicated that they would like more transparency, particularly with respect to variable remuneration, and the remuneration report 2020 includes, amongst other things, includes information on the performance of members of the Executive Board, the fixing of the variable remuneration and also the role of the Remuneration Committee and Risk Committee of the Supervisory Board of this connection. Thank you very much. Mr. Chairman, I'd like to give you back the floor.

Ladies and gentlemen, we will now proceed to deal with the questions concerning items 2 a, b, c, and we shall start with 1 round of subjects to questions that were asked with respect to financial performance and sustainability. And after that, we shall address questions about other subjects related to that. And then the third round, if there are any questions, possibly on the remuneration report 2020. I shall read out the questions that were submitted beforehand, which was submitted digitally by you beforehand and shall be answered by members of the Executive Board, and sometimes by members of the Supervisory Board. Questions raised during the meeting via the chat will be received by me. I shall also read them out. And then I shall pass on those questions to the appropriate member. And should you use your -- the chat, please be concise in formulating your questions in the chat.

Allow me to start with the questions concerning item 2a of the agenda. A couple of questions were asked by the VBDO with respect to employee policy. First question is, ING applies its 70% policy on gender, age and nationality diversity, where ING only makes a statement about the implementation of the policy across the entire organization, VBDO is also curious about effects of the policy in different regions and different groups within ING. Can ING publish transparently on the implementation and effects of the 70% policy in the different regions and groups? Steven, you have the floor.

Thank you. As ING, we consider divesting inclusion to be extremely important. So we have the 70% principle for gender, age and nationality. And we measure this at a global level. So globally, we comply with this guideline. And then we break it down further, also into several business lines and countries. And we also look, obviously, at the starting point in those different countries and business lines and to see where we are, what the reference is. And then so we have a reference point, we measure that. And then we check to see whether we need to take action in order to move towards the 70%. Different business lines and countries face different challenges, also with respect to the personnel, the composition of the personnel. So we work with HR teams that design dashboards for us and give us updates in terms of whether we are nearing the 70%. And then furthermore, we also work on -- there's a pilot on this. It's called hiring 123. There's several pilots that we've carried out in several countries in order to make sure that we have the right diverse panels so that we have correct job descriptions before we start with interview so that we can have a well-balanced assessment before we recruit people. All this will contribute to this principle of diversity.

The next question also a question raised by VBDO. At the AGM 2020, ING made a commitment to the VBDO to strive for a global gender pay gap overview based on job levels. VBDO considers this topic to be very important since the average gross hourly wage in the Netherlands for women is 14% lower than it is for men. And the unexplained pay gap between women and men is still 9%. VBDO, however, has not seen any progression in this respect and refers to the annual report, Page 73. Does -- has ING made progress in the global overview based on job levels? And can ING report the results of this study? Steven?

Yes. In more than 10 countries, we have monitoring projects, including in the Netherlands, Belgium and Poland, in order to see whether there are any pay level differences based on gender. And where necessary, we do take action. And it's important to highlight that in order to be able to do this well appropriately and consistently, you need something that we call the global job career framework, a framework in which you lay down your jobs. And so specifically, if you know what job you're talking about, you can make it much more clear whether or not there's a pay gap or not. And we are going to continue to work on that in order to have a complete system, global system, in order to properly compare pay and jobs.

Thank you. This is the Chairman. We have next question raised by Eumedion PGGM, and this is a question about LGBTI rights in Poland. ING has previously indicated that the code of conduct also applies in Poland, as there is speak up and whistleblower programs, but ING also highlighted that there may be a culture where people don't immediately raise alarm and possibly have a strong negative unconscious bias towards LGBTI people. Can ING commit to measuring and monitoring progress in the area of unconscious bias or negative attitude towards LGBTI people? For example, by having employees undergoing IAT test, which is an Implicit Attitude Test, which was developed by Harvard University. Steven?

First of all, diversity and inclusion at ING is considered to be very important as a point of departure. And we're not only doing this because it's the right thing to do, but also because we believe in it as part of our strategy, and we also believe it's going to lead to better performance. And to that effect, we had an Inclusion Week in 2019. We offer several awareness sessions in the countries in which we have operations, diversity of people and inclusion of people within our organization, led to the fact that we are a good mirror, good reflection of this very broad customer base. And it also helps us to improve our performance. So this is something we want to do because we believe in it, but also, it is something that really helps our organization. And we also give guidance to our organization in order to make sure that people comply with diversity and inclusion. We have awareness trainings. We have discussion groups, and we also had these workshops in Poland. We continue to train managers in order to keep an eye on inclusion in all sorts of respects, but also LGBTI. And as far as the tool is concerned, well, obviously, we use several tools as we speak. I always think it's a good idea to look into new tools. I can't make any commitments with respect to this specific tool, but it's always interesting to consider it.

Next question from you Eumedion PGGM about a long-term strategy in combination with digitization. 2 questions. First of all, how does ING's business model monitor further digitization and low interest environment? And the second question, how does ING view the possibility of the emergence of a European digital currency that is only issued and managed by the ECB? Mr. van Rijswijk?

2 major questions. First question, digitization first. We are already a digital mobile-first company, and COVID crisis has helped us make progress in this respect, and we want to continue on that path. And we're looking at digitization from several perspectives, the perspective of the customer in order to be able to create a better customer experience, but also the perspective of the colleagues so the colleagues can focus on adding value to their work and so that we can digitize more mundane duties. And we also look at it from the perspective of cost. And in my presentation, I briefly referred to that. And also the perspective of compliance with rules and regulations and complying with the regulatory authorities' requirements. So if you did can digitize, you can be much more consistent in your work for the organization. Okay. So then we started looking at how to break down these digitization processes, how to classify them? And how can we prioritize these digitization processes in order to make sure that they comply with the 4 elements; clients, colleagues, costs and compliance? And 1 example is the 1 app environment in the Netherlands and Belgium. It's also a matter of reusing matters or things that we've already developed. We are digitizing our processes. If you look at our customer experience in the lending process, in banking, but also in wholesale banking, the flow products, so that on the customer side. And the second element is that we are developing a number of products and services that -- with which we can develop better and digital -- more digital products and also deepen our relationship with customers. And I just gave you an example of an investment app that we rolled out in Germany, and we're also, for instance, working on rolling out digital insurance operations, and we're doing this with AXA partners. And third, there are a number of IT foundations, I mean like LEGO blocks that we use and consistently rolling out all these building blocks, these are LEGO blocks, using data, using the cloud or using other digital functions that will help us to boost our scale in our digital strategy. So this is absolutely something we're focusing on. And there are a number of these processes that we constantly invest in, in order to become an even better digital player than we are right now and also to diversify our income. Obviously, we are operating in a negative interest environment in Europe. And outside Europe, perhaps it's not negative, but it is low. This, as far as the second question is concerned -- or now as far as the second question is concerned, European digital currency. And these are Central Bank digital currencies, particularly. And this is a development that, obviously, we are keeping an eye on and there are a number of elements that I would like to highlight in this respect. In order to make sure that in designing these digital currencies, we deal with these phenomena in the appropriate way. First of all, that would be safeguarding financial stability in this financial sector, making it possible to use deposits as a resource for funding. And then we look at who is serving the customer. Ultimately, it's the banks and the private parties do that. So we need to enter into clear arrangements, i.e., between the central banks and private banks and institutions in terms of who's going to take that role upon himself. And then there's a question with respect to the cost, cost of digital currencies. And obviously, we are very much in favor of limiting those costs for the private parties involved. And then there's this element of competition. How can we, with the digital currency, maintain a level playing field between banks and other private parties that would have to deal with such a digital currency. And then last but not least, what kind of services would be performed by the central banks? And what would banks do? And how can we make sure that the roles between the central banks and the private parties be clear. So these are 5 elements that we consider to be important in this debate on the emergence of digital currencies as we read recently in the media.

Next question is from the VEB. ING sees growth opportunities in open banking initiatives. Could you indicate which obstacles you see, for instance, in the field of privacy regulatory issues and scalability issues. Steven?

Well, open banking, that's a very broad range, but an important element of open banking are the APIs. These are small software elements that you can download and then use very quickly like doing -- making a payment right now or making a report now. These are small commands, if you will. And these APIs contain a number of elements. And if you take a closer look at those elements, you could say these are APIs on the one hand, that we develop ourselves as banks. And then there are APIs that we source elsewhere in order to improve our services to our customers. First of all, the APIs that we develop ourselves. These are either APIs that we must develop ourselves, which is the case in PSD2. And there, for instance, data security is a very important element. And actually, that applies to all the APIs that are being developed. And then there are second kind of APIs that we develop and they are more offensive APIs. This is from making reports. If customers want to make a report they can use an ING API or if they want to screen certain transactions or look into them, they can also use an ING API. So these are more offensive APIs that we develop ourselves. And here, we have to make sure that those APIs can be developed securely, so that if customers use those APIs, that doesn't enter the ING systems so that customers can do business safely. And then there are other APIs developed by external parties that we source in order to offer broader services, API of an insurance company, for instance, that you can download through ING app, for instance. And scalability here comes into play because just imagine that lots and lots of ING customers would use such an API. And well, then the other party has to be able to provide these services. So you have to look at security and safety, but also how this external company has structured its API so that our customers can use that API safely and securely. So have they taken the necessary precautions and would such a company be able to support scalability of such an API with all the services pertaining to the API. So these are all elements that we are keeping in mind that we're looking into also in terms of cybersecurity and safety, but also data, data use and security and also with respect to scalability. Thank you.

A question about negative interest rates. Questions were raised by Eumedion PGGM and also VEB. First, the question raised by Eumedion PGGM. I'm going to raise both questions so that you can combine your answer. Eumedion PGGM, negative interest for private savings. Doesn't this go against the role of a bank of what are the risks that you see as a result of all this for your customers and society at large? Question raised by VEB, ING generates a sizable percentage of funding from retail and corporate customers, about 72%. How does ING see the view of the Dutch Minister of Finance regarding the unwanted side effects of the negative rates going below the EUR 100,000 threshold? Steven?

But if I look at the role of the banks, and the role of bank should play -- actually, a bank has to do 2 things. Bank has to make sure the bank can offer a safe place for people to save money, to deposit their savings so that we can safely manage the savings. And the second thing we need to do is carry out a transformation function. And so convert this money into lending for private persons, but also for businesses. And that role, as such, doesn't change, whether you have high positive, low positive or negative interest rate, that function remains the same. Now what does come into play is that the service that we provide that service has a price. And if you perform services, you incur costs. For instance, if you want to deposit your money in a safe, you will have to rent a safe that will cost money. Now we're dealing with the situation in which the interest rates are negative and that costs money. And they're also the costs that we incur for staff and everything we do at ING. Companies simply cannot survive if they have to perform services in the long run for which they incur losses. So in some cases, we started charging negative interest rates for a number of customers, and we did this. We've done this for some time now for a number of larger companies and financial institutions. And we lowered the threshold in the Netherlands to EUR 100,000 per account. The question that arises and this ties in with the statement made by the Dutch Minister of Finance about the threshold of EUR 100,000, the minimum threshold. And the minister has indicated that, that rule or that guidance rather was meant to not to involve the ordinary save -- people saving -- not to involve them or make them vulnerable to negative interest rates. So the question arises what is an ordinary person that has savings? If you look at the Central Bureau of Statistics, you see that the level of the ordinary person in our savings is -- well, has savings at a lower level than EUR 100,000. At this point, we're not at this lower level, where we start charging negative interest rates, it's EUR 100,000, which means that 97.8% of our customers will not be affected by this rule.

Now we have a couple of questions on risk management. The first question raised by Eumedion PGGM about the global Know Your Customer enhancement program. Please explain how ING works on culture and behavioral change in which compliance awareness and compliance has increased within ING? Can you indicate whether and how this is being incorporated in ING's Orange Code? Mr. van Rijswijk?

I think it's a bit broader. Behavior and culture is a very important element of becoming better as an organization in terms of compliance. And obviously, you can look at formal and informal behavioral components. Formal components would be governance. So we have increased and improved our governance in the KYC program and also in terms of communication and the turn of the top, you see that a lot of messages are being sent, not only of the Executive Board but also managers of business lines and countries on compliance and security. But it's about our systems, but it's also about assessing and rewarding employees. And then we have this comment about the Orange Code. Orange Code is not so much about what we do. It's about how we do things. And employees' behavior comes into play and employees' behavior is also part and parcel of assessment. So we look at the what element, but also the how element. And within the Orange Code, part of that is the code of conduct. So these are conduct rules that we have drafted. I'm going to show you on camera. These are the rules, the code of conducts. And one of the rules is that ING and its customers have to protect against abuse of the financial system and also money laundering. So the code of conduct addresses countering money laundering. This is second part of the answer. The third part of the answer is, and obviously, we've been working on this for a couple of years, and that is behavioral change. Also having that take place in the informal side of things. And this is about awareness. It's about knowledge. It's also about influencing behavior as an organization. We've set up a team of people with the behavioral science background. And there, particularly, we look at how groups interact with each other, how groups can better cooperate with each other in order to make headway in conditioning the organization in changing behavior. So that is what we're working at.

Question from the VEB. Can a board explain why global approach is chosen instead of a more localized approach regarding the KYC enhancement program? That's also a nice question for you, Mr. van Rijswijk.

And this is because this allows you to address your risks in a more comprehensive and consistent way. Let me give you an example. If you are a business customer, you'd log in several countries, then it would be very helpful if you would be able to use the same systems -- the same measurement systems in order to make sure that you can serve the customer in the same way, consistency in data integrity element comes into play. That doesn't mean that we do everything centrally in 1 location, we carry out a number of these functions, but we try to harmonize it as much as possible, taking into account further additional rules and regulations that would apply in the country concerned.

The next question is for Tanate. This is a Eumedion PGGM question. The external auditor in the key audit matters has stated that the control deficiencies -- that there are controlled efficiencies. Have all these shortcomings been solved? If not, is there anything you can say with respect to the improvement program?

Our auditor has highlighted a number of areas in what is called the key audit matters for 2020, and these are reported to our Audit Committee. I think this year, some of these assessments include: the expected credit loss, an area of focus; the process around impairment of goodwill; and the risk of inappropriate access to our IT system. These are the 3 main focus areas. And management confirmed and along with KPMG that the controls around our financial reporting are effective. That's why you'll hear later from KPMG that we get an unqualified opinion on our financial accounts. To answer your question, where there are deficiencies? These have been remediated or compensating controls have been put in place to make sure our reporting systems are robust. Thank you.

Thank you, Tanate. A question from the VEB. What would it mean for the provisions if the government facilitated something so that they would improve the COVID profile of companies that are already in arrears? Steven?

That's a good question. It's also difficult to foresee. Because at this point, you might expect more companies to have payment difficulties because of this corona crisis. And of course, we don't see that because of the support measures. So basically, the default on the average is relatively low and that undoubtedly relates to those programs. But we don't know exactly what will happen when those programs end. And it depends how they end and in what way, customers would then have to transition to, for example, paying taxes. So that conglomerate, it's difficult to answer, but it is a very good question. That's why we established buffers so that the widespread insecurity is provided for.

The next question is from the VEB, and that relates to the management overlay that the ING applied to the risk costs in the final quarter by 2020. Can you explain how a longer period between GDP and actual default might impact the height of the probability of defaults peak? Steven?

Well, this is going to be a modeling afternoon. Basically, there is a connection between the amount of growth of GDP and the model risks envisaged. So if GDP is lower over an extended period, then there is an increased likelihood and may put more companies in a situation where they cannot make repayments. And it depends on the type of product, where we see that correlation more or less. So you can imagine that with mortgages where there's more collateral that correlation is not as present as we saw in the previous crisis generally. And if we're talking about products with less collateral, that relation may be very present. But in this case, we did see a GDP or negative economic growth in 2020, but no correlation or a limited correlation with the probability of defaults, where people no longer able to repay loans precisely because of all those support measures from the bank and governments. And that makes it difficult to foresee. So we'll have to wait and see what happens when the lockdowns are mitigated and when support measures are run off, what that correlation will mean for the long term.

The payment holidays may not necessarily deteriorate creditworthiness for variance. Contrary to this guidance, ING, very cautiously made management corrections more flexible SME and mid-core loans. What were the reasons that you did not apply such corrections to mortgages that were subject to a payment holiday? Tanate?

Yes. Chairman, while we take note of the ECB -- EBA guidance, we evaluate all of our credit exposure for signs of impairment. And for 2020, indeed, as you mentioned, we made certain adjustments to the expected credit losses. Payment holidays are a clear indication that there could be expected credit losses are not reported by our models. And that's why for a portfolio like the SME and in the mid corps, we have taken management adjustment to increase the level of expected risk cost. Now with respect to mortgages, the level of payment holidays being asked has been relatively limited with maybe a small exception in Australia, where the number of payment holidays have been high. And in that particular portfolio, we did make a management adjustment to the expected credit loss.

Thank you. The next question from the VEB is that in 2020, you substantially derisked the balance sheet, including in sectors that were in more trouble. Which part of the 2020 risk-weighted asset reductions were planned before, that's pre-COVID and intended as a mitigant for the upcoming Basel IV RWA inflation? And how does the position Italian debt of EUR 17.5 billion reconciled with your derisking? Tanate?

Yes. Thank you very much. I think for a number of years, we have been prudently managing our credit exposure and putting sub limits on certain portfolio of our credit book, which we deem to be of higher risk. For example, in leverage finance, corporate real estate, or resource-based lending-related to oil price, for example. So these actions have been taken a number of years before the emergence of COVID-19. And so I think these things are not really related to Basel IV at all. It's really prudent risk management about our exposure over time. Now to answer your question with respect to Italy, we have an exposure of around EUR 17 billion. As you know, we have a branch in Italy. We have customers in both retail and wholesale banking. And that's what these exposures are mostly about either in retail mortgages or high-grade commercial loans. And I think we're quite comfortable with the exposure we have in Italy. Thank you.

There's another question from the VEB concerning the cost income ratio, the ING has a strategic objective of 50% to 52%. Even though this efficiency level represents outperformance versus many of ING's peers, it might be stated that the ambition is still too low, given the underlying the CEI ratio, excluding the stake in TMB bank. Does management plan further cost improvements? Tanate?

Yes. I think in terms of our cost income ratio is indeed the case that ING has one of the better cost income ratio in the banking industry. It was 56% during the course of 2019 and rose to 63% during 2020 because of the challenges of what happened in last year. Having said that, we do have an ambition to get to 50% to 52%, and that's on the basis of having a sustainable and a strong bank with an acceptable return on equity for our shareholders. Okay. So we are indeed, as management, taking steps to look at cost efficiency through, as Steven mentioned, digitization, reviewing the geography and our product set as well as reviewing, for example, our physical branches. So these are all actions that have been taken in 2020 and will continue into the future.

Thank you. Next, some questions were asked by [indiscernible] beforehand, and I see an additional question via the chat function. [indiscernible] sent us an extended treaties about cybercrimes, spoofing and other examples of identity fraud and how the bank deals with customers that are victims of this. So last year, [indiscernible] you also asked a question and you're in contact with our staff several times. Your question or in fact, request is basically that can you ensure that customers who are victims may be helped and in -- with respect to previous question, such as the spoofing cases in 2020? And has asked an additional question, now what will the ING board do to address the failure of this spoofing issue in 2020 and to restore this? Steven?

Regarding [indiscernible] suggestions, you were in contact with our colleagues previously. And I understand that they spoke with you about that, if I recall correctly, and you're also in touch with our cybersecurity department to discuss some of your suggestions. Of course, we welcome suggestions, and we can always see how we can use them. And at last year's Annual General Meeting, the topic was also raised, and you received answers there, too. So in that context, we reviewed your suggestions and considered in what measure we could follow them or that we couldn't follow them. As for spoofing, of course, in the course of 2020, we reported on how we deal with that, and we're continuously trying to improve our services, and we're continuing to learn. So it's like a cat and mouse game in cybersecurity. We keep trying to see how we can prevent and resolve any cybercrimes.

Then there's a question asked by the VBDO on the chat function. Can the Central Bank digital currency possible be a solution for both ING and large savers with this centrally held wallet to evade the negative interest rate? Steven?

That's a good question, but it's a tough call because it's difficult to understand why the ECB would have a separate interest rate policy for digital currency. The negative interest rate was intended as a monetary measure of the ECB to pump more money into the economy. And I don't think that would be any different with the digital currency because that wasn't the reason that the Central Bank suggested introducing digital currency. So I don't really see how that would work out.

Now some questions about sustainability. The VBDO has asked some questions in various matters they raised. First of all, the VBDO would like to complement ING on the release of its first climate risk report and the climate leader status once again achieved in the CDP benchmark. The climate risk report provides greater insight into how ING deals with managing climate risks based on recommendations from the task force on climate-related financial disclosures. The VBDO is pleased with ING's progress in making and mapping physical risks as a result of climate change. In the preface to the Climate Risk report, CEO, van Rijswijk, says that the bank can achieve the greatest impact with its loan portfolio. Next, how does the ING ensure that its business companies also include risks as a result of climate change in their risk management? Steven?

Now there are 3 things that we do. First, we look at the Paris Agreement targets and see how we can align our portfolios with those Paris Agreement targets. And I've spoken about that in relation to the Terror report. Second, we are trying to manage risks. VBDO -- that's what VBDO was mentioning, and we tried to ensure that with respect to transition risks and physical risks, we can control our risk management. Examples might include stranded assets. For example, if in certain sectors prospects deteriorate because they're polluting industries or because other companies don't want to finance them, then you don't want to put all your eggs in that basket because then it would be difficult to exit there, and that company wouldn't generate the cash flows for proper operations, especially in the second area. So the climate risk report and the climate risk, we're working with the UNEP Financial Institution's, TCFD, that's a working group that is examining how we can find a good way, but a consistent way that's important to identify and report the risks. Many bodies are now looking at that. As for physical risk, we're working according to a physical and resilient risk statement that also aligns with what the UN has said about that. And that's how we're trying to improve the risk reports to keep managing our risk better tariffs to the outside world. And then the other one is the internal environment. And then there's the customers, we continue to liaise with our customers on the one hand, by ensuring that we indicate what we will not finance in our -- as part of our risk management and also, say, from a tariff perspective, what we're getting out of, such as coal. By the end of 2025, we went to exit coal. And third, we advised them on policy they could pursue. So in 2020, we supported dozens of bond loans that we connected to the corporate objectives based on which they paid a certain interest rate, and that's an inclusive way of helping our customers transition.

Thank you. Next question is also from the VBDO. The VBDO is aware of the steps that ING has taken in 2020 to protect human rights. These steps include launching the test phase of a tool that at portfolio level assesses human rights related risks. Using this tool that combines data from multiple external databases, ING can determine additional steps in relations with customers. VBDO is very curious about this tool. Can ING in the upcoming human rights update, explain in more detail how the tool identifies risks and translates quantitative outcomes to concrete action? Steven?

Yes. That's a good question. The supply chain risk analysis and human rights is often very complex, especially for banks. Because often they're only peripherally involved in that supply chain, but nonetheless, it's very important. So we're trying to examine the risk profile of a client and the sector concerned as well as the risk profile of the region or the area where such a company operates, what are the clients and what are the suppliers of that firm, and that's how we try to come up with risk classification based on which we should understand that this is a higher or a low-risk profile and these are the questions to ask. Right now, we're piloting such a tool. We want to identify this for some wholesale banking customers. Based on that pilot, we will ask questions about human rights that relate, for example, to child labor or forced labor. We're achieving an impact on land-related issues. Those are 3 focus areas. And we're still developing that. When we have something to report about that in next year's human rights update, we'll certainly do that. But I'd like to move ahead towards that objective first.

Next a question from Eumedion PGGM. ING shows ambition in its climate strategy as we read in the previous Terra report. We would like a more progressive climate neutral commitment in the near future. Is ING prepare to formulate an ambitious climate neutral policy by next year's AGM and to submit it to shareholders for an advisory vote comparable to Royal Dutch Shell and Unilife? Steven?

We've been carbon neutral for several years internally as an organization, and we formulated some objectives based on which we would like to operate, and we're committed to align our loan portfolio with the climate goals formulated in the Paris Agreement several years ago. Globally, we're regarded as a leader in ESG and climate policy. I said something about that in relation to the scores we received from various rating agencies. They really do see us as a trailblazer globally. This area is under development, and we're talking about this continually with our larger shareholders. So I think we've already done a lot in this field and will continue to work hard here. So -- but I don't see any reason to put it to a vote in the meantime.

Thank you. Now a question from the VEB. In the Terra progress report 2020, the climate alignment dashboard shows ING's ambition with regards to upstream oil and gas financing. As it appears, ING projects a decline from EUR 4 billion in 2019 to EUR 3.2 billion in 2040 with the actual decrease occurring only after 2030. Does ING see this target is ambitious?

I object to this tone. It's basically a good question though. And of course, there are 9 sectors concerned here. It's a combination of all those different sectors, not 1 single sector. And they all contribute to the increase in CO2 emission. And that Paris Agreement aims to reduce that and to make our Planet Earth climate neutral. So you need to look at it in terms of the interplay in all those 9 sectors, which account for 75% of the CO2 generation directly or indirectly. In addition, we should look at what they call the pathways. So the path chartered for what will happen in those sectors. And the fact we're dealing with is that at present, there is still demand for oil and gas, and that means that, that demand will not disappear overnight. So we need an inclusive strategy that takes our clients on board rather than turning all those clients away. Because that won't change. But in coal, for example. And of course, they're being phased out much faster, we were able to take a firm stand. Because by 2025, we want to phase that out in entirely. So we're looking at where the world is headed, and we provide guidance where we can.

I was just trying to identify with the party asking the question and the underlying emotion. Ladies and gentlemen, I see that no additional questions are being asked via the chat box. So now I would like to ask that the capital represented be displayed. You can see that today, we have represented 64.97% of the capital. 2,534,899,012 ordinary shares, representing 2,534,889,012 votes may be cast on these shares. That's our information from our greatly appreciated civil law notary, Leemrijse. Ladies and gentlemen, that takes us to the voting results for the remuneration report for 2020, which is on the agenda for an advisory vote. And that will be displayed in a moment. I'm pleased to give the floor to Vroukje van Oosten Slingeland to announce the voting results.

I'll be happy to do that, but I don't see them yet. 98.9% voted in favor. 98.19% voted in favor. Thank you for this information.

That takes us to item 2E of the agenda, the financial statements for 2020. And please see the financial statements for 2020 as included in the annual report, Pages 248 to 388. The financial statements were drafted on March 8, 2021 by the Executive Board in English, and since March 11, 2021, has been posted on the ING website. The financial statements have been available for inspection at ING's head office, where they were available free of charge to shareholders at the instructions of the Annual General Meeting resolution of May 11, 2015. The financial statements have been examined by the auditor. The auditor has issued an unqualified opinion. And the supervisory Board proposes adopting the financial statements. I'm pleased to introduce you to Waldo Bakker from KPMG, and I'm pleased to give the floor to him. Waldo?

Thank you, Mr. Chairman. I'm pleased to take the opportunity to explain our involvement as your external auditor. I'm Waldo Bakker and on behalf of KPMG since 2016, I have been involved in the audit of ING Group since January 1, 2020. I have had final responsibility as signing off external auditor for the audit of ING. As auditor, we're ordinarily bound by confidentiality, but for this AGM, ING has relieved us of our confidentiality obligations. So I am able to provide you with the explanation of our audit opinion and our audit procedures. As the Chairman has explained because of COVID-19, this AGM, as last year, is held through video conferencing. In the next 10 minutes, I'll give an explanation. COVID-19 has impacted ING's operations and therefore, substantively, our audit as well and has led to a partial change in the way we conducted the audit. I'll be discussing this further in the point below. Now what did we audit? In accordance with our engagement with the company, we audited the consolidated financial statements of ING Group for 2020 and we issued an unqualified audit opinion for these annual financial statements. We also issued an assurance report on selected nonfinancial information as included by ING in its annual report. This assurance opinion is unqualified. ING Group also has a listing on the U.S. stock exchange, which is why we have also issued an opinion on the financial statements as filed with the SEC. That's known as the 20-F form, and we issued a statement on the effectiveness of internal control measures on financial reporting by ING Group. Both statements are unqualified in nature. To structure my explanation of operations, I will use our auditor report as included from Page 389 to Page 395 in the financial statements of the annual report. I will briefly summarize the key elements of our auditor's report here. Based on our work, we have concluded that the financial statements convey a true and accurate impression of the financial position as at December 31, 2020 and of the results and cash flows for 2020 based on IFRS EU and Dutch law. The financial statements have been drafted on the assumption of going concern of operations. Based on our work, we have concluded that this assessment by management is appropriate. We are globally independent of ING group and its subsidiaries all over the world. At least twice a year, we report on our independence to the Audit Committee and the Supervisory Board of ING. In auditing the ING Group financial statements, we applied a materiality of EUR 250 million. This materiality is determined based on normalized profit before tax. The profit before tax in 2020 is lower compared with 2019. As a result, our materiality in 2020 of EUR 250 million is lower than the materiality in 2019 when it was EUR 300 million. This materiality, in fact, determines the level of detail in how we audit the financial statements. All audit misstatements that we find in the figures above EUR 12.5 million are communicated to the Audit Committee and the Supervisory Board in writing. Scope of our audit. In addition to being the external auditor of ING in the Netherlands, we are the external auditor in nearly all countries where ING operates. We determine for group purposes where and in what scope the audit needs to be conducted. Because of the lower materiality, we reviewed more entities in the scope of the audit. About 92% of the assets and 83% of the profit before tax has been the subject of audit by local auditors. The remaining part has been covered by work performed by us at ING Group level. We assessed the results of the local audits and discussed them with our teams in digital meetings. We collect the findings centrally, and based on that, reach our final opinion. Due to travel restrictions, we were unable to visit foreign auditors to conduct the file reviews this year. That is why we have assessed the audit work of the local auditors in a different way, in some cases. We have asked auditors of selected locations to give us digital access to their local files to evaluate their work. Laws and regulations. ING is required to comply with many laws and regulations in the countries where ING operates. Some laws and regulations directly affect the financial statements, such as the reporting standards under Title IX and IFRS. We have established compliance with these laws and regulations as part of our audit procedures with regard to the financial statements. In addition, many laws and regulations may not directly affect financial statements and/or disclosures such as -- as a consequence of fines or claims for noncompliance. This concerns the law to prevent money laundering and terrorist financing as well as sanctions law. The audit standards in identifying noncompliance with these indirect laws and regulations result in limited activities. These include questioning management, inspecting correspondence with regulatory bodies as well as taking oath of legal correspondence. If there are any signs of noncompliance with the laws and regulations, we check whether this impact the financial statements. For example, whether a provision or an explanation is necessary. We also report, if applicable, our findings of any signs of noncompliance to the Executive or the Supervisory Board and supervisors and regulators. In the annual report, the Executive Board explained how ING is implementing the bank-wide know-your-customer improvement program. This program aims to improve governance systems and tools around client due diligence and transaction monitoring. Based on our auditing standard 250, our activities in this context include instructing local auditors, interviewing management, interviewing the Head of Legal Affairs, the Compliance Officer and the Head of the Internal Audit Department. In addition, we take note of communication with regulators, internal progress reports and reports from the internal auditors. Given the size, duration and complexity of the improvement program, we expect that this will require considerable time and attention from the Executive Board, the Audit Committee and the Supervisory Board. Key audit matters in our audit are matters that have been most significant in auditing the financial statements. In our statement, we have included 3 key audit matters: The provision for expected credit losses, impairment of goodwill and information technology. The key audit matter for impairment losses on loans in advance because of the uncertainty in estimates in determining the provision for impairment losses. We regard this as a key audit matter in our audit, the uncertainty of audit increase in 2020 as a consequence of the economic circumstances relating to COVID-19. ING has approximately EUR 598 billion in loans to customers and approximately EUR 25 billion in loans from banks. These portfolios are valued at amortized cost and the provision in the event that these loans are irrecoverable is approximately EUR 5.8 billion, and this provision comprises collective and specific provisions. Determining the provision requires estimates, including assumptions about the probability of default for estimates of future cash flows, macroeconomic scenarios and identifying a significant increase in credit risk. Also, for example, adjustments to the provision known as management overlays. These management overlays have been formed because of uncertainties in the estimation of future economic developments and the estimation and the solvency of debtors using payment holidays, introduced by management for clients at the time of COVID-19. To assess the amount of the provision, we work together with our specialists. This is due to the complexity of the models and the estimation of assumptions underlying the provision. Together, we included the assumptions, methodology, cash flows and collateral value in the audit. As part of our work, we tested internal controls to determine expected credit losses. This includes, for example, controls around assumptions, monitoring expected credit losses, determining risk categories and estimating future cash flows for collateral enforcement. We also tested internal controls against certain assumptions to determine the collective provision, including the use of management overlays. In addition, we independently assess credit files worldwide to check the specific provisions. Based on this work, we can agree to the valuation of the loan portfolio and the related explanatory statements and disclosures in the financial statements. The next key audit matter concerns the impairment of goodwill. ING has capitalized about EUR 0.5 billion in goodwill on the balance sheet. Management performs an annual impairment test or does so earlier if the book value exceeds the realizable value. In the impairment test, the book value of the goodwill is compared with the higher of the realizable value and the value in use. If the carrying amount is higher, loss should be recognized as a consequence of COVID-19. In the course of the year, economic assumptions deteriorated and the recoverable amount of goodwill has decreased. We have identified the impairment of goodwill as a key audit matter due to the degree of estimation uncertainty in the assumption used in the calculation of recoverable amount. For example, the forecasts, the long-term growth and the capital ratio and the discount rates in our work. We also tested whether the forecast were reasonable as well as the other assumptions and determine the mathematical accuracy of the model. In our work, we include a specialist. And based on these procedures, we can agree to the valuation of goodwill. Then the last key audit matter concerning information technology, which was mentioned in the questions. The IT infrastructure is very important for ING Group for the reliability and continuity of business operations and its financial reporting and financial statements. What matters, in particular, is whether access to the IT systems to ensure segregation of duties is sufficiently guaranteed. Given the importance of this issue, we considered it to be a key audit matter. Among other things, we tested the design implementation and operating effectiveness of user access management and change management. Findings have been followed up by management based on the mix of internal control testing and substantive audit activities. We concluded that there is sufficient basis to rely on the operation of the IT systems for audit of the financial statements. This completes my explanation. Chairman, I am pleased to give you back the floor.

Thank you for this very clear presentation. Ladies and gentlemen, no prior questions were raised for this item on the agenda. I don't have any information that any questions were raised in the chat box. In any case, I will now proceed under item 2e. So I should now proceed to the voting results for this item on the agenda. They will be shown in a moment. And now I'd like to give the floor to Ms. van Oosten Slingeland in order to inform us of the voting result.

99.74% has voted in favor of this item.

And so I can -- I note that the motion has been adopted. This takes us to item 3 of the agenda, which is dividend policy. First of all, 3a, profit retention, dividend policy. This is a discussion item. I'd like to refer to the annual report, Pages 371 to 372. In the third quarter of 2020, ING announced a change in its distribution policy, in which in brief, 50% of net profit is distributed. The payment can take place in cash or in a combination of cash and share repurchases, and therefore, periodically, it will be considered where there's a structural capital excess that can be paid in addition, taking into account macroeconomic circumstances and the outcome of our internal capital planning. I see that there are no questions here that were received prior to the meeting nor have any questions been raised in the chat function. So this takes us to item 3b, which is dividend for 2020. This is a voting item. I'd like to refer to the annual report, Pages 60, 61 and 373. Currently, at least until the end of September 2021, there's a recommendation by the European Central Bank to limit profit distributions up to that date, 30 September 2021, to 15% of the net profit adjusted for the ECB definition for the financial year 2020, which means that the ING's policy to distribute 50% of the net profit is currently effectively limited. Distribution of 50% of net profit income corresponds to an amount of EUR 0.39 per ordinary share, and that would also be -- amount of the retained -- the amount retained for distribution for the financial year 2020. With respect to the proposal to formally adopt the interim dividend of EUR 0.12 per ordinary share, we're taking into account the opinions of the shareholders with respect to the technical implications of the ECB recommendations for profit distribution and timing of such payments. The balance of the net profit, which is EUR 0.27 per ordinary share, will be appropriate to the reserves in accordance with the ECB recommendation of 15% in 2020. ING intends to make an additional payment for 2020 of EUR 0.27 per ordinary share after the 1 October 2021, which will be paid from the general reserve. Furthermore, we intend to pay out the amount reserved for the -- on the profit 2019 after September 2021. A question was raised, ladies and gentlemen by [ Mr. Bot ] from the town of Voorburg in the Netherlands. And his question is, "It is ING's intention to, after 30 September, in line with ING's dividend policy, to make an extra payment of EUR 0.27 per ordinary share as well as for the payout of the reserved payments for 2019 and to pay as much as possible. Can you confirm that after the ECB recommendations has been lifted, that the remaining EUR 0.27 per ordinary share for 2020 and the EUR 0.45 for 2015 -- the 2019 be paid out 100% in cash, and so not as repurchase of ING's own shares?" Tanate?

On your question, I can confirm that for 2020, the EUR 0.27 will be paid as a cash dividend. For 2019 of EUR 0.45, we have announced that there's a possibility of us paying it as partly in share and partly in cash. That decision on that proportion has not been made, and we'll make that announcement as soon as the Board make that decision. Thank you.

[Foreign Language] No further questions have been received in the chat box. So we can show you the results, the voting results for the proposal to adopt the dividend for 2020. We'll be showing that in a moment if Vroukje takes the initiative. 99.99% has voted in favor of the dividend proposal. So we can conclude that the proposal has been carried. Ladies and gentlemen, this takes us to item 4a and 4b of the agenda, which are items that concern the release of liability for members and former members of the Executive Board and Supervisory Board. I suggest that before addressing the questions that we deal with these matters jointly. You know what release of liability is. I'm going to see whether there are any questions with respect to discharge or release of liability. No questions were received in the chat nor prior to the meeting. And so, yes, there is a question from Mr. Bot that was received. Oh, no, we dealt with it just now. No. So granting release of liability for the members and the former members of the Executive Board for performance of their duties in 2020, that is what we're going to deal with now, and no questions were raised beforehand. No more questions raised in the chart. So now I'd like to give the floor to Vroukje van Oosten Slingeland to announce the results.

20 -- no, 97.5% has voted in favor.

Thank you. 4b now, which is release liability of members and former members of the Supervisory Board in respect of their duties performed during the year 2020. And here, I'd like to refer to the explanatory notes to the agenda in the notice of the meeting under agenda item 4b. Here again, 97.5% voted in favor of this item. Thank you. So as a Chairman, ladies and gentlemen, let us proceed to -- so well, the proposal has been carried. I can confirm as much. Item 5 of the agenda now, which is a limit to variable remuneration for selected global staff. This is a voting item. I'd like to refer to the explanatory notes to the agenda and the notice of the meeting under item 5. I'm not going to bother you. I'm not -- by reading it out and repeating it all, but I would like to highlight that the AGM in 2017 has adopted the variable cap of 120 -- of 200% for a number of staff, starting with the performance year 2017. So now we are trying to extend it. A question was raised on this item prior to the meeting. A question raised by [indiscernible] PGGM. They say, "We're in favor of a moderate remuneration policy. And we'd like to see that the variable remuneration in relation to the fixed remuneration does not exceed the fixed remuneration and therefore, maximum of 100%. And you, again, also [ implies ] that outside the European economic area for the option to increase this ratio up to a maximum of 200%, we shall vote against this proposal. Could you commit to make extremely restrictive use of this authorization and to evaluate whether such an increase is really necessary and is not just a nice -- something nice to have." Steven?

ING has, outside the EEA, has a number of contracts that may require this authorization, is the contracts that were entered into with the employees, and that would require this authorization. But I can indeed commit to a restrictive use of this authorization over the past few years. So far, no use was made of this authorization.

Thank you. No questions were received on this matter through the chat. I'd like to give the floor to Vroukje to please announce the voting results.

I can't see them on the screen. Yes, I can. The proposal has been carried with 99.16%. I confirm that this proposal has been carried.

Item 6 of the agenda now, which is amendment of the articles of association. I would like to refer to the description in the explanatory notes to the agenda as part of the notice for the meeting under agenda item 6. You've taken cognizance of that because, well, it is a technical matter. I'm not going to repeat it or you -- well, surely you have had the opportunity to study it. I'm just going to check whether any questions were raised beforehand. No questions were raised, nor were any questions received in the chat. So I would like to hear what the results of the vote are.

99.98% in favor.

Excellent. So I confirm that this proposal has been adopted. This brings us to item 7 of the agenda, which is the composition of the Executive Board. Ladies and gentlemen, the Supervisory Board proposes to reappoint Mr. Steven van Rijswijk; and to appoint Ljiljana Cortan as members of the Executive Board. ING's former CEO, Ralph Hamers, left ING, and I referred to that earlier on, on the 30th of June 2020. After which, ING appointed Steven van Rijswijk as CEO with effect from the 1 July 2020. Steven van Rijswijk was already a member of the Executive Board as Chief Risk Officer. And the current term of office of Steven van Rijswijk as a member of the Executive Board expires at the end of this Annual General Meeting. And by the appointment of Steven van Rijswijk as CEO, there's a vacancy for the office of CRO as per 1 July 2020. Following a careful selection process, ING appointed Ljiljana Cortan as CRO, a member of the management board banking of ING in the -- with effect from the 1 January 2021. 7a concerns the reappointment of Steven van Rijswijk as a member of the Executive Board, and you are asked to confirm this. And I'd like to refer to the explanatory notes of the agenda part of the notice of the meeting under our agenda item 7a. Well, I don't think we need to explain why we're nominating, Steven here. In his previous positions, he has clearly shown to be a big talent, and we're very pleased that he has taken it upon himself to be the CEO as per the 1 July. He's the right man in the right place in order to help ING grow further. I'm going to see whether any questions have been received. No questions were submitted prior to the meeting, and no questions were received in the chat. So I would like to hear from Vroukje van Oosten Slingeland what the results of the vote are.

The proposal has been carried with 99.91%.

I confirm that the proposal has been carried. I'd like to congratulate Steven van Rijswijk with his appointment. And also these percentages, of course, I mean that conveys a lot of trust. Item 7b, the appointment of Ljiljana Cortan as member of the Executive Board. I'd like to once again refer to the explanatory notes to the agenda part of the notice of the meeting under agenda item 7b. Why are we proposing this appointment? Ladies and gentlemen, shareholders, Ljiljana is a very experienced banker. She has experience in strategic and commercial positions, including corporate investment banking, marketing and mergers acquisitions, and she has international experience in a very regulated environment and these challenging positions she had in several countries and in several economic cycles, her appointment is based on her track record in terms of risk management, her experience in business credit portfolio and her understanding of money laundering models and artificial intelligence. And she contributes to diversity in the Executive Board. And given her leadership, she is a valuable addition to the Executive Board. VEB, ladies and gentlemen, has submitted a question. Could Ms. Cortan, viewed through the lens of a risk manager, share her thoughts as to whether she foresees a consolidation in the European banking sector? And if so, whether that happening would constitute a business risk to ING, especially if ING would not be part of such a consolidation. In the introduction, I already informed you that Ms. Cortan is listening in, but she cannot take the floor. And obviously, she discussed the details of this question with our CEO. So I suggest that Steven answers the question on his own behalf and on her behalf.

Thank you. And I think that we have said this before. ING primarily believes in organic growth. We have good solid positions in different markets. This past year, we've been able to grow 2020. There's been a growth in a number of primary customers, even though it was a difficult year, and we've shown that we are able to continue this growth. And what we do, do is that we constantly look at whether there are certain technical skills or elements that we lack with which we could improve service to our customers. Are there certain product competencies that we don't have or products that we don't have, with which we would be able to expand our product offering. In terms of international or transactions, of course, there's a limit in terms of free transfer of capital and liquidity. And banking union is not there yet, and that is a restriction with respect to the shifting of capital liquidity in order to optimize your cash flow or balance sheet. And obviously, this also has restrictions with respect to international company mergers. And we are very much in favor of a bank union, and we will be following the developments very closely.

Thank you. I would like to put this item to vote because no further questions have been asked. Vroukje?

Yes, this proposal for the appointment has been carried with 99.9% in favor.

So I confirm that this proposal has been adopted. I'd like to congratulate Ljiljana with her appointment. I'm looking forward to a very pleasant and intense cooperation with her. Ladies and gentlemen, this brings me to the item concerning the composition of the Supervisory Board. Supervisory Board proposes to appoint 1 new member and to reappoint 2 existing members of the Supervisory Board. The aim is to ensure that Supervisory Board at all time is adequately composed so that it can perform its duties properly and adequately. Now this is not that easy to find suitable candidates. Also because we need to comply with several statutory requirements and also with respect to the composition, including background knowledge, experience, ancillary positions, independence, et cetera. The proposed appointment of reappointments under agenda items 8, 8a, 8b, 8c and taking into account the member who's retiring, the percentage of women in the Supervisory Board will be 1/3 or 33.33%. ING is convinced that with the proposed appointment, the reappointments, the composition of the Supervisory Board will be such that it can carry out its duties properly. On the screen, you will see a photo and a profile of each proposed appointment and reappointment. It's not very modest, but let's start with 8a, which is my reappointment. I'll give the floor to Herna Verhagen. Obviously, I cannot take the floor on a matter concerning myself.

I'm raising the reappointment of Hans Wijers as a member of Supervisory Board with effect from the end of this annual general meeting. I'd also like to refer to the proposal with explanatory notes in the agenda and the notice of the meeting under agenda item 8a. The reappointment is for a period of 4 years and will end at the AGM of 2025. Hans Wijers is nominated for reappointment based on his in-depth knowledge of international companies, financial services, human resources and corporate governance as well as his successful track record, his competencies, extensive experience and of course, the way in which he performs as a Chairman of the Supervisory Board of ING, Chairman of the Nomination Corporate Governance Committee and a member of the Remuneration Committee, Risk Committee and Audit Committee. No questions have been submitted prior to the meeting, nor have any questions been raised in the chat. And so I'd like to ask Vroukje to inform us about the number of votes in favor.

Yes, 97.44% in favor. Hans Wijers, congratulations, we're very pleased with that. Thank you.

Thank you for taking this responsibility, Herna. 8b, reappointment of Margarete Haase as member of the Supervisory Board as per the end of this AGM. I'd like to refer to the explanatory notes to the agenda in the notice of meeting under agenda item 8b. Margarete has been nominated for reappointment based on her finance and audit expertise, her performance as a member of Supervisory Board, Chairwoman of the Audit Committee and a member of the Risk Committee of ING. Furthermore, Margarete Haase is considered to be a financial expert, as defined by the SEC, with reference to Section 407 of the Sarbanes-Oxley Act of 2002, and she's also a wonderful colleague. So no questions were received prior to the meeting nor in the chat. So I'd like to give the floor to Vroukje to hear what the outcome of the vote is.

97.26% in favor.

I confirm that the proposal has been carried, and I'd like to congratulate Margarete with her reappointment. This brings us to item 8c of the agenda, which is the appointment of Lodewijk Hijmans van den Bergh as a member of Supervisory Board, with effect from the end of this AGM. Let me see. I'd like to refer to the proposal with the explanatory notes to the agenda in the notice of the meetings, agenda item 8c. Lodewijk Hijmans van den Bergh was a partner of a renowned law firm for 20 years. He was a member of the Executive Board of Ahold. He has extensive experience in executive and nonexecutive roles in several sectors and industries. And in these roles, he gained a comprehensive experience in legal affairs, including governance acquisition and disposal. He also actively contributed to the development of -- and the implementation of strategic agendas, development and responsible retail strategy and has brought a number of important lengthy proceedings to a successful conclusion. Thanks to his expertise in the field of legal affairs, corporate governance, compliance, corporate social responsibility and his engagement with sustainability, Lodewijk Hijmans van den Bergh will make a valuable contribution to ING's Supervisory Board. No questions were raised in advance nor any questions made in the chat. You see him here. No, unfortunately, not physically himself, just a picture. Vroukje, the outcome?

94.43% has voted in favor of this proposal.

The proposal has been adopted, and I'd like to congratulate Lodewijk with his appointment, and we're looking forward to an excellent cooperation with him over the next few years. This brings us to item 9 of the agenda, ladies and gentlemen, authorization to issue ordinary shares. I'd like to refer to the verbatim text in the agenda under item 9a. The Executive Board, both for agenda items 9a and b, requires an authorization of the AGM. The proposals discussed at this meeting correspondence with proposals adopted in previous AGMs and authorization to issue 40% of issued capital plus authorization to issue 10% of the issued capital. The motions make -- or the proposals make it easier for ING to respond quickly, where necessary, to unfavorable developments in financial markets and enable ING to manage its capital adequately. The proposals under 9a, 9b take into account the way in which similar international banks manage their capital and also takes into account the best practice guidelines of ING's institutional shareholders. Ladies and gentlemen, this takes me to 9a, item 9a. Are there any questions with respect to 9a? No questions have been received, neither prior to the meeting or in the chat, so I'll give the floor to Vroukje so she can announce the results of the vote.

94.41% has voted in favor of this proposal.

So I confirm that the proposal has been adopted. Agenda item 9b now, which is the 10% authorization to issue shares that I referred to earlier on. No prior questions were received nor were any questions received in the chat. So here, once again, I'd like to ask Vroukje what the outcome of the vote is, which is 95.06% that has voted in favor. So this proposal has been carried as well. This brings us to item 10 of the agenda, which is authorization of the Executive Board with the approval of the Supervisory Board to obtain fully paid up ordinary shares in the ING. I'd like to refer to the explanatory notes of the agenda and the notice of the meeting under agenda item 10. The authorization applies to a maximum of 10% of issued share capital and a period of 18 months. I see there are no questions have been raised beforehand, prior to the meeting or have any questions been asked in the chat. So Vroukje, I'm giving you the floor to announce the results.

98.24% has voted in favor of this proposal.

So I can confirm that this proposal has been carried as well. That takes me to the close of this meeting. The definitive result of the votes will be posted on the ING website in a few days. Before we close this meeting, I will say a word of thanks to Jan Peter Balkenende, Tanate Phutrakul, Karst Jan Wolters and Ralph Hamers, obviously, for various reasons. First, Jan Peter will be leaving us. In 2017, Jan Peter joined our Supervisory Board. At the time, you were a professor of governance institutions and internationalization at Erasmus University in Rotterdam, and you held many offices such as external adviser to Ernst & Young where until 2016, you were a partner in corporate responsibility, but we know you, especially, as Prime Minister of our fine country when things were a lot less turbulent, as I would almost say, from 2002 until 2010. You contributed a wealth of knowledge and experience and were therefore particularly valuable supervisory director at ING and you are dedicated to all kinds of topics, such as sustainability, which you cherish. And you decided that at the end of this meeting, you will step down to dedicate your time to other endeavors. And we find that very sad, but we thank you for your dedication, for your contribution to the development of ING, and we wish you all the very best, and you will undoubtedly be extremely successful. Next, as [ Davin ] did, I would also like to mention Tanate, Karst Jan Wolters. And with the appointment of Steven as CEO, we have to look for a successor. And we're delighted that in the meantime, Tanate and Karst Jan Wolters, who stepped in as Chief Risk Officer, wholesale banking could takeover temporarily. Karst Jan took daily risk management and reported to Tanate. And during that period, Tanate was responsible for risk within the Executive Board in addition to his other responsibilities. We already knew Karst Jan as an extremely capable risk management, very familiar with ING. And partly because of his previous role as CRO wholesale banking, but during those 6 months, he excelled and Tanate excelled as well. And I would like to thank both of them on behalf of the Supervisory Board and the shareholders, I believe, for their dedication and cooperation during that extremely difficult period when they took on that task and performed it and also transferred it to Ljiljana, who is an excellent successor. Now finally, he's been gone for a while, but I would like to take this opportunity, on behalf of the Supervisory Board, and I also believe on behalf of many shareholders, to thank Ralph Hamers, who really did an awful lot for ING and got the company on the right track forward in this area of digitalization. His efforts to digitalize ING certainly gave us a leading-edge in this corona period, and we're very grateful for the way he transferred his duties to Steven during the early months in his new role. Thank you very much, and we wish you all the very best, Ralph. Ladies and gentlemen, on the ING website, www.ing.com/agm, 3 months after this meeting, the draft minutes will be posted. And after 6 months, the official report from the meeting to my right -- excuse me, all that remains to me is, please stay healthy. Hopefully, next year, we can meet next year face-to-face. This meeting is over. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]