Van Lanschot Kempen NV (VLK) Earnings Call Transcript & Summary

Hello, and welcome to the Van Lanschot Kempen Analyst Call 2024 Annual Results. Please note, this call is being recorded. [Operator Instructions] I will now hand over to your host, Mr. Maarten Edixhoven, Chairman of the Management Board, to begin today's conference. Thank you.

Thank you very much, and welcome to all. Good morning. Welcome to Van Lanschot Kempen's 2024 Annual Results Call. I'm here together with our CFO, Jeroen Kroes, and we will talk you through the highlights of the past year of Van Lanschot Kempen. Of course, after our introduction, we look very much forward to your questions. 2024 was clearly a successful year for Van Lanschot Kempen with continued strong momentum and a great result of almost EUR 142 million net. In June last year, we shared our Growing further together strategy, including our updated financial targets for 2027. Our full year results indicate we are well on track in executing our plans. It starts with being a trusted adviser to our clients, especially in these turbulent times we are witnessing today, and I'm proud of my colleagues for doing exactly that every day. Another highlight for me personally is our expanding network, bringing value to our clients by connecting them to each other and our experts in the numerous events we hosted last year. Commercial momentum remains very strong across all segments, and that resulted in a 17% growth in assets under management to almost EUR 150 billion. We maintained our focus on cost as revenues continue to grow faster than our cost. At the same time, we continue to invest in scalable growth, particularly in our Private Banking activities in the Netherlands, Belgium and also Switzerland. These investments focused on client-facing talent in the first place, ensuring we can continue to deliver the most personal service, supported by great technology. Second, we also invested in AI and tech and we'll continue to do so. And third, we continue to invest in our products and services, expanding our private market solutions in particular. We recently launched our third private equity fund in the Netherlands and for the first time, also in Belgium. If you look to the next slide, let's focus a bit on our growth as it's key to our strategy. As said in June last year, we target 10% average asset under management growth year-on-year. This is what we have been able to accomplish since we changed our strategy to become a pure-play capital-light wealth manager in 2016, and we have more than delivered in terms of growth again in 2024. We recorded EUR 9.2 billion in net inflows, mainly driven by Private Banking Netherlands and Belgium as well as in Investment Management. This is a clear reflection of the trust that both existing and new clients put in us. I think that's important to say that the growth is coming from existing and new clients, indicating we gain market share, combined with very high client satisfaction. In terms of inorganic growth, we are making good strides in the integration of Evi and Robeco's online investment platform, which we expect to complete this year. And in Belgium, we completed the acquisition and integration of Accuro, adding EUR 700 million in assets under management and strengthening our investment advisory capabilities. If we go to the next slide, I'm particularly pleased that we can say that all 4 segments contributed positively to our results as it should be. Private Clients Netherlands had a really successful year with continuing strong momentum across all client groups and in particular, among entrepreneurs, resulting in EUR 2.1 billion net inflow. Client satisfaction remained high as our highly personal approach and specialized investment and lending expertise is clearly valued both by existing and new clients. Moving to Private Clients Belgium. Mercier Van Lanschot had its first full year and recorded an impressive 38% growth in assets under management with a net inflow of EUR 2.2 billion. We positioned ourselves as a challenger in the growing Belgium Private Banking market, and both existing and new clients appreciate the distinctive story we have to offer. Within Investment Management Clients, we reaped the fruits of our efforts in the past 2 years to simplify the organization, reduce costs and invest in commercial strength and scalability. Thanks to this focus, pretax profit more than doubled and the cost/income ratio clearly improved. In this segment, we recorded net inflows of EUR 4.9 billion, of which EUR 1 billion in our active investment strategies. Finally, Investment Banking Clients. This segment returned to profitability with an improved cost/income ratio. Commission income increased as market conditions for M&A and capital market transactions improved. However, this is still below the levels we saw in early years. Our focus remains on boosting commission income and further improving results. We continue to focus on the cooperation between Investment Banking and Private Banking, and we see good progress here. Jeroen will elaborate a bit more on that as well later. Then finally, before I hand over to Jeroen, we are long-term investors and look across generations. Hence, we strive to make a positive mark on society, be it as an inclusive employer or by contributing to reduce the footprint of our clients and our own organization. As I said many times, our people are key to our success, and we are very pleased to report that we made progress on all our people targets and clearly able to retain and attract new talent. Within our organization, our average carbon footprint fell by 44% over 2024 from the 2019 baseline, an average annual reduction of 11% that exceeds our targets. Moving to our assets under management. We further reduced our carbon footprint, and we are well ahead of our targets in this regard. I also would like to shout out to colleagues that worked very hard on our first-time CSRD reporting as well as other sustainability data quality and regulation. At the same time, I encourage legislative efforts to reduce complexity in this and other fields. With that, I would like to hand over to Jeroen to dive deeper into the results. Jeroen, over to you.

Thank you, Maarten. So let's start at Slide 7 with the blocks. We achieved a net result of EUR 142 million, which is 13% more than the result of 2023. And this allows us to propose a dividend of EUR 2.75. And next to that, our solid capital position and capital-light growth model allow for a proposed capital return of EUR 1.40 per share. And as you can also see, this strong result came on the back of very good developments in assets under management with inflows of more than EUR 9 billion and growth in assets under management to almost EUR 150 billion. Then on the next slide, you see our goals, and these are the goals that we introduced during our Investor Day last year. And I would like to run you through our progress on getting there. And let's start from the left on. As mentioned, our assets under management grew by more than 17%, a lot more than our target. 7% out of this 17% was from autonomous growth with the remainder primarily due to market performance. Our cost/income ratio improved by 1.5% compared to 2023, and it reaches now 70.1%, which is just above our target range. Our return on CET1 increased to 16.2% and lies nicely on the pathway to our goal of exceeding 18% in 2027. The dividend payout of EUR 2.75 is at the top of our target range because it translates into a payout of 88.4%. Together with the -- or after the capital return of EUR 1.40, our CET1 ratio on Basel IV fully loaded will end at approximately 18%. And maybe it's good to also tell you a bit because this 18% is higher than the target of 17.5% that we communicated earlier. Let me explain why we are slightly above the 17.5%. If we want to return capital, we have to file a request for approval with the Dutch Central Bank, and that needs to be done at least 3 months in advance. Therefore, we applied for the capital return in early November, and we base the application on assumptions regarding developments in RWA and capital development. So several factors turned out more favorable for our CET1 ratio than expected, resulting in the higher outcome at the end of the year. Going forward, we continue to steer towards the 17.5%. However, as we need to base our actions on estimations, we might not land exactly on that percentage. Then comparing the result of 2024 to that of 2023, you see from the graph that the biggest delta is in commission income. And the increase resulted -- the increase in assets under management resulted in a growth of EUR 84 million. This increase more than compensated for the 11% decrease in interest income. NII was lower due to a reduced interest margin and because clients shifted part of their assets from savings to investments, driven by positive stock market climate. Our costs remained well controlled while we continued to invest in scalable growth. Then I want to run you through the segments, starting with Private Clients Netherlands. It had a successful year with assets under management growing by 19% to almost EUR 44 billion. Approximately 80% of inflows came from new clients, a lot of them entrepreneurs selling their company. And this indicates our strong positioning in the Dutch Private Banking market. And also good to know is that over EUR 200 million of inflows resulted from the collaboration with the Investment Bank. The Private Bank in the Netherlands saw clients transfer wealth from assets under management to savings in the fourth quarter, and that led to some outflow in AUM in that quarter. This effect was also visible in 2023, but was slightly smaller in 2024. And just like last year, we see that a significant part of this outflow is reinvested in assets under management in the first months of this year. At Evi, we worked on integrating Robeco's online investment platform. We are on track to complete the integration this year. And in 2024, our assets under management at Evi increased to more than EUR 7 billion, and Evi had a positive net result. Our Swiss operation was strengthened by attracting several new colleagues with in-depth knowledge of the Swiss market and the ultra-high net worth segment. And on the back of the good inflows in assets under management, also our financial result increased. As you can see, operating profit before tax, an increase of 9% to EUR 135 million. On the right-hand side, you see the margins and margins on assets under management decreased from 60 basis points to 55 basis points. And let me explain that a bit more. If you split it out, starting with the Private Bank. Within the Private Bank, we see that the margins are somewhat lower, which is due to an increased relative share of advisory products versus discretionary products. The advisory products typically having a lower margin. So it's a mix effect. At Evi, the decline in margin has everything to do with the acquisition of Robeco's online investment platform. These activities are now included for a whole year. And as we earn on average about 30 basis points on these activities, they lower the total average margin to 37 basis points. Then moving to Belgium. We started the year under the new brand name Mercier Van Lanschot and experienced strong momentum. Inflow amounted to EUR 2.1 billion (sic) [ EUR 2.2 billion ] with roughly half coming -- with roughly half coming from new clients and the other half from existing clients. This shows the true strength of the combination of Mercier and Van Lanschot Kempen Belgium with the large majority of inflow in discretionary asset management. Additionally, we acquired Accuro, a specialist in investment advice. Together with the positive market performance, this led to the -- already mentioned by Maarten to the 38% growth in assets under management to more than EUR 15 billion. In line with the significant growth in assets under management, our commission income increased by more than 30% and also our operating profit before tax increased by 36% to EUR 37.8 million. Margins in Belgium are stable. They remain stable at 80 basis points, higher than the Netherlands. And there are 2 reasons for this. One is a larger portion of the Belgium assets under management is in discretionary portfolio management and the margins in Belgium tend to be somewhat higher than in the Netherlands. To accommodate for the strong growth in Belgium, we strengthened our team during the year and the increase in FTE occurred across the entire value chain in Belgium. And although we expanded our organization, the cost/income ratio improved to 55%, demonstrating the scalability of our business. Moving to Investment Management Clients. We reported total inflows of almost EUR 5 billion with nearly EUR 4 billion in fiduciary asset management and EUR 1 billion in our investment strategies. And this EUR 1 billion inflow in our actively managed funds and strategies is noteworthy given the current market trend towards passive investment. And within our investment strategies, we saw the inflows in small caps and credits as well as in our private equity, non-listed real estate and sustainable farmland strategies. As you know, over the past year, we invested in simplifying our organizational structure in reducing cost and in the commercial strength and scalability of the IMC segment. And the results of these efforts are reflected in the operating result before tax that with EUR 25 million almost doubled or more than doubled, I should say, not almost, but more than doubled compared to 2023. The margins in IMC, so in Investment Management are stable at 15 basis points on average. But if you split it out, you see that in own funds, it's 57 basis points and in fiduciary management, 5 basis points. Something to say about the own funds is, yes, we do see some margin pressure, but by focusing more on the less liquid strategies, we are able to maintain our margins. The Investment Bank returned to modest profitability in 2024. We remain focused on improving results by growing commission income while keeping a strong focus on cost control. We executed transactions in our core sectors and further expanded the collaboration with the Private Bank, leading to several transactions and the inflow of over EUR 200 million in assets under management within Private Clients Netherlands. Then as mentioned before, the securities commission income is an important part of our P&L, and it is dependent on the amount of assets under management. This slide shows on the left-hand side what our current run rate is for securities commission. And as you can see, this now stands at EUR 494 million. And what the graph says is that if our assets under management that we had on the 1st of January would stay the same throughout the year, we would earn EUR 494 million in security commission. And this is already EUR 25 million above the level we now report for the whole year 2024. But as it is our goal to continue growing assets under management and welcoming new clients, we intend to end 2025 with securities income exceeding this number. The right graph shows that approximately half of our securities commission income comes from Private Clients Netherlands with Private Clients Belgium and Investment Management each contributing about 1/4. Our interest margin returned to a normalized level of around 100 basis points. This was partly due to ECB rate cuts, which were only partly reflected in bank's savings rate. But additionally, we saw Private Clients in the Netherlands investing their savings into assets under management. And for us, this meant that some interest income was converted into securities commission income. All in all, we ended the year with savings in line with those of last year, and that is driven by the growth in savings at Evi. Going forward, we expect further ECB rate cuts in line with market expectations. And based on these assumptions, on our estimation of how banks will react and our current balance sheet composition, we expect interest income to be between EUR 155 million and EUR 165 million in 2025. Then the other income. This consists of income from securities and associates and results on financial transactions. You can see from the top line of this table, we reported a sale of the stake in Movares in 2023. It was a sale from our private equity portfolio. This led to a book profit of EUR 23 million. And in 2024, there were no sales from this portfolio. So that explains the delta in that first line. All in all, other income came in only EUR 9 million below this high level of 2023, and this was driven by good results across all other lines that make up other income. For instance, co-investments in our own investment funds performed well and income from securities and currency trading increased as did the result on hedges. Operating expenses. Key to our strategy is growth, and it is important to us that our growth is scalable. Thus we want our income to grow at a faster pace than our costs. The positive difference between our income growth of 8% and our cost growth of 6% shows that this approach worked well in 2024. So now let me dive a bit into the development of expenses in 2024. The left graph shows that part of the increase is due to acquisitions of the Robeco's online investment platform and Accuro. In addition, we strengthened the teams of Private Clients Netherlands and Belgium to accommodate the significant growth in our Private Banking activities. And we were also able to increase our in-house technology capabilities by replacing external hires with internal employees in our IT department, which you can see from the left-hand graph with internal staff and the minus from the external staff. And as mentioned, with a cost/income ratio of 70.1%, we are on track on reaching our target of 67% to 70%, but this will require a sharp focus on cost. Given the relatively high inflation in the Netherlands and the scarcity in the job market, this will remain a focus point. As you can see from the next slide, our loan portfolio remained stable. Mortgages are about the same size as last year, and there's limited growth in other loans due to an increase in current accounts. Impaired ratio also remained the same at 1.4%, highlighting the good quality of the portfolio. In the field of loan loss provisions, we had a release of EUR 1.4 million, had to do with 2 factors. In general, as mentioned, the quality of our loan book is good, only small loan losses. And secondly, we decided to no longer have a management overlay. So we started the year with a management overlay of EUR 3.4 million. Overlay was formed after the COVID pandemic and the rise in geopolitical tension following the start of Russia's war on Ukraine. And although geopolitical unrest remains substantial, we have concluded that this is now reflected in our models. And for this reason, we decided to no longer apply a management overlay. Then our CET1 ratio. As mentioned, the strong CET1 ratio allows us to propose a dividend of EUR 2.75 and a capital return of EUR 1.40 per share. As mentioned, both are planned for June 2025. Several factors impacted the CET1 during the year. And from left to right, you see that on a Basel IV fully loaded basis, we started the year 2024 at 18.5%. There were some effects that led to a minus. One is, of course, the acquisition of Accuro. Second one is the lease of our new office building in Amsterdam. And we also had to retain more capital because of our growth and more operational risk that is associated with it. On the other hand, we had some pluses. One of them is the partial sale of our management book, the retained profit, obviously, and also some optimizations of our balance sheet in anticipation of Basel IV. So with all of this, we arrived at 19.3% at the end of the year. But after the return of EUR 1.40, that will translate to 18% CET1. Then summing it up, I'm happy to report this solid set of figures to you. We are well on track on achieving the targets for 2027. And with that positive note, I would like to bring it back to Maarten.

Thank you very much, Jeroen, and I can only echo that. And let's open it up for questions.

[Operator Instructions] Well, we currently have no questions coming through. [Operator Instructions] The first question comes from the line of Cor Kluis calling from ABN AMRO ODDO BHF.

Indeed, Cor Kluis, ABN AMRO ODDO. A couple of questions. Maybe first on the commission income. There was a miss on the merchant bank and the Private Bank was better than expected, but there was a big miss on the merchant bank. What's exactly going on? Why was that? And I can remember a few reporting periods ago that was also the case. So yes, what's your view on that? And are you going to take some actions to cope with that going forward? Second question is about net interest income guidance. Currently, you basically guide at the top end of the range, the EUR 155 million to EUR 165 million, so basically [ H2 times 2 ]. That was, I think, lower than most people had for '25. Could you give some explanation why that is? Is it really only the -- or is it for which part, is it the volume method, what you say is going from savings towards investments? Or which part, is it a margin effect that we saw at other banks that the margin was also somewhat lower in the Netherlands because some banks are not reducing the rates on savings accounts the way that maybe envisage? Could you elaborate a little bit more on this NII guidance for the H2 and the NII guidance for '25? And the last thing is about expenses. Can you help us a little bit for expenses for 2025? And of course, you cannot give the total guidance for the total expense, but at least wages, for example, but what can we expect for that on a year-on-year basis and maybe also the other income, at least some guidance. Is inflation still having some impact on the year-on-year cost guidance? That's it from my side.

Thank you very much, Cor, and great to hear your voice. I'll take the first question, and then Jeroen, I think the questions #2 and 3. With regard of the Investment Bank, as we said, we expect the results to improve further towards the results we saw prior to '23. Of course, we are glad that the trend is good and that the Investment Bank is profitable. But as you said, commission income could have been higher. Having said that, the momentum is good. And it is also a question for the Investment Bank with 1 of our 2 transactions just falling in at the seasonality effect in the 1 year or the other year. We have seen a great transaction where we advised on the acquisition of Forum Estates by Cibus, for example, now that was just pushed into January. So yes, we think we are on the right track there. We have cost in control, and it's just to work on the revenue side. And sometimes you're lucky with the seasonality and sometimes you're not. But the trend is good. And we foresee that to improve further in terms of commission income and revert back to the pre-'23 period in the years to come. Jeroen, for you, the...

Yes, the question on NII guidance, yes, I think you're right, it's slightly lower than what we discussed before. What is the reason? It's partly both things that you mentioned. Let's start with volumes. Yes, we -- of course, we make projections of how the balance sheet will look, what our clients will do, how much they will put into savings and how much they will invest. And we can say that our clients chose to invest more and so put more in assets under management than we at first had expected making our projections. So that's one. And going forward, we say that they will not switch back that much again to savings, but that the current situation will continue. And secondly, the margin effect, yes, you also make projections on the number of ECB rate cuts and the way that banks will react. Just like you said, especially in the Netherlands, we saw banks not moving that fast when rates went up, but they're certainly not moving fast when rates go down again. So that also has an effect. And the combination of those 2 led to this guidance. Then the -- somewhat more to say about expenses. The starting point is that our -- the general increase in salaries will be 3.5%, and that is applicable from the 1st of January. So that will be in -- will be a whole year effect. Next to that, yes, we still see the impact from inflation. Inflation is relatively high in the Netherlands. As you know, we still see impact on our cost, especially also on the IT side that we have -- that we see those -- that effect. That being said, so that -- those are things to work from. Other things is we are investing in growth, and we do that through M&A, but we also invest autonomously. So what we've done in 2024 is that we invested in the Private Bank in the Netherlands in young bankers, and we are now also attracting mid-career bankers to accommodate further growth. So that will also lead to -- yes, that will lead to a larger workforce and will also have an upward effect. But that is, of course, connected to the fact that we want to grow our top line as well. As mentioned, we will keep a close eye on top line growth that should -- that the positive jaw should stay there.

The next question comes from the line of Benoit Petrarque calling from Kepler Cheuvreux.

So few questions on my side. So the first one will be on the net new money going into '25. I know you don't guide on '25 specifically for the net new money, but clearly, the momentum was very strong in '24. And I was wondering if you could comment on, yes, what you see so far this year and what the momentum is, let's say, into '25 regarding net new money. That will be the first question. I think you answered a bit my second question, which was about operating jaws. So you expect cost to grow. And I was wondering if you also expect income to grow faster than cost in '25. The third question is actually on NII to come back on that one. I just want to make sure what is in your assumptions around NII? And do you expect or put an assumptions around deposit rate cuts? I'm asking because we are likely to see, well, banks adapting or cutting deposit rates at some point in '25. And I was wondering if you can tell us if that's something you already included in your guidance or that's something which could basically surprise your guidance on the positive side? And then maybe the last one on the seasonality. I think you said that it reversed in Q1. But just wondering if you could maybe put a figure on the seasonality effect in H2 on the net new money just to get an underlying number.

Let me take the question on seasonality and Jeroen, yourself again on NII and the operating jaw. And thank you, Benoit. Good to hear you, and thanks for raising those questions. What we basically see in that, maybe take one step back, the -- like I said in my introduction, the continued strong commercial momentum across -- and let's focus there on Private Banking in the Netherlands, Belgium and Switzerland. There are a couple of drivers that we continue to see happening. One of them is that we gained market share. In the Netherlands, we saw, for example, that 80% last year of new money is from new clients. So that means basically that we are gaining market share there. It's also driven by 2 other effects that continue to have that and support that positive momentum. That is that there are still a lot of families and entrepreneurs selling their businesses. And then, of course, they need to diversify their money. And that for us is new inflow, both from existing clients where we have long relationships as well as new clients. And second, a big driver in the Netherlands, especially is also the changes in the housing market. So as we also read in the newspapers, a lot of our clients are basically also selling their real estate portfolios due to the regulation and tax effects. And of course, that money needs to be reinvested as well. And so that's a driver that we expect at least a couple of years if the legislation and the tax regulation is not changed, and there's no sight on that will also continue. Now in Belgium, we have another important driver underpinning our growth and net flows momentum, and that is about the fact that we are now a much larger entity after we combine Mercier Vanderlinden and Van Lanschot Kempen Belgium. So what we see there, not only had a EUR 2.2 billion net inflow, not only from new clients, but also existing clients that give a larger share of their wallet towards us because we're now in Belgium part of a larger organization. So that's another driver that we also expect to continue for some time to come. So we have a couple of solid drivers underpinning our net flow momentum in terms of assets under management. Then on the seasonality, yes, that is also -- that's especially in the Netherlands. That's also a result of the tax regulations. And like we saw for the first time last year that assets under management were converted to cash in Q4. This time, again, that happened in Q4 to a bit lesser extent than the year before. And of course, that could be expected to reverse again in the first quarter and partly second quarter as we saw also last year. So that's a seasonality effect, but that's really for the Netherlands, that's not in case for Belgium, Switzerland or the Investment Management activities. Jeroen?

Yes. And I think Maarten already mentioned that momentum is good also now in the start of 2025, and we expect momentum to remain. And therefore, Benoit, we expect income, yes, to grow faster than costs. To a certain extent, like we said, we invest in further growth and those investments can be timed somewhat. But yes, we are certainly working on income growing faster than cost going forward, and we see the momentum heading that way. Then your question on NII guidance, did we already include some expectations that other banks might follow the cuts of the ECB? Answer is yes, but we see that they are very slow. So also in our expectations, we think that there will be some reaction at some point and that it will be slow, but that is included in our guidance. Then some further words on the seasonality effect. Maarten already explained it. But if we look at the outflow in Q4 of this year in Private Clients Netherlands, so really the place where the seasonality effect sits, it was about EUR 200 million, and that was a lower outflow than we saw in 2023.

Benoit, thank you for attending and raising those good questions. Any further questions for today?

The next question comes from the line of Henk Slotboom calling from the IDEA!.

Most of my questions have already been answered, but I have 2 left. One is on the operational leverage. Obviously, you're growing your asset management at a faster rate than you had targeted yourself. That creates a form of operational leverage. You've been talking about adding more staff to your organization and having worked for Van Lanschot for 8 years altogether, I know the importance of people's -- that people's business is very important there. But what about automation and that sort of things? I remember in earlier calls, you were alluding about adding -- replacing external staff, which were active with all sorts of projects within the bank, hiring internal staff, basically also helping you to -- well, to automize things where possible. Perhaps you can update us on that. And the last one is a brief question. Where are we with the integration of the Robeco business? Those were my questions.

Thank you very much, Henk. And we have an excellent division of tasks here because Jeroen will again take 2 questions, and I will answer one of yours and let me take the privilege with that, your question on automization and staff. Well, first of all, we are investing especially with a focus on client-facing staff also to support our growth and really give them an excellent service. We are looking at really client-facing people there, for example, private bankers, relationship managers. And also, we're able not only to retain our key people there because our clients value the long-term relationships they have. But also for all of those new clients, we, of course, also need to make sure we have the best talent. And we are successful also in getting talent from other -- we raised them ourselves via Private Banking Academy, which is a great -- really great academy to raise and educate private bankers, but also we are able to attract talent from competitors, but they really have to fit our culture. So that is another important one. And then back towards the automation. The way we see the -- and we are full-fledged applying AI now in our businesses, but also other digital processes. We get very high remarks from our clients. But we see that as supportive towards our highly personal approach towards our clients. Nowadays, it almost seems that it's distinctive if a bank picks up the phone, and that's really what we get from our clients, but we want to make sure that we have that personal touch when our clients need that and when they need the proper investment advice in these turbulent times. So we used the AI applications, for example, to automate our transaction monitoring, CDD that makes the work and life of our bankers and our clients better. That's the main focus. So -- and it also helps us in making sure that we don't add too many people in the support roles, but more in the client-facing role. So that's where we have our focus in terms of digitalization, AI, and that's also where we invest big time in because it also helps us to attract the best clients and to give the best service. Then also one other specific remark. We have indeed seen Henk, and that was a very good remark. that we have had the switch from external staff to internal staff. So there is also an increase in staff. We are almost at the end of that. So also because of the new legislation, especially in IT, we have converted quite a number of people to internal staff if they want to work with us, but also we terminated contracts with external staff if that was not the case or the projects were finished. So that trend will not continue. Jeroen, over to you.

Yes. Let me add one small thing on operational leverage. Part of the operational leverage we seek is also to give our bankers more time to spend on clients. And that means that we are investing in lowering the so-called burden that they have with client due diligence. Of course, they should do that, but they should do it in the most efficient way. And we can help by automating that part of the business and/or arranging that better with support. So that's part of the operational leverage we seek. Then going back on your question -- getting back on the question on integration of Robeco. It is well on track. Maybe good also to say that the teams work together from the same location. So it's already one team. But we're now in the last stages of integrating the IT system. So we will work from one combined IT system. And in the course of this year, that part will -- so that part of integration will also be finished.

Yes. And we were glad to say that already last year, the combination of Evi and Robeco was profitable. So that really adds now to the bottom line as well. Henk, will that be okay for you?

Absolutely. Thank you very much.

Thanks for joining again, Henk. Appreciate it.

My pleasure.

There are no further questions. So I will hand you back to your host to conclude. Last question, very last second one, another question coming from Benoit Petrarque calling from Kepler Cheuvreux.

Yes. Sorry for that. [ Maarten ] just on the excess capital, so you have 18%. I mean just to clarify, do you plan to distribute the 50 bps somewhere in '25 or early '26?

Yes. The -- as I said, we're steering towards the 17.5%. We're now at 18%. If you make the calculation, you see how that translates into the capital, this 0.5%. We will take a look towards the end of the year where we stand. And the year is still long. There is a possibility for bolt-on M&A. We might grow our balance sheet in -- on the lending side. So looking at all of these factors, we will see where we are expected to end at the end of the year. But in general, we will steer towards the 17.5%.

Another...

Yes. Go ahead.

Another question calling -- coming from Jason Kalamboussis calling from ING.

Maybe I was on mute and I was not getting, sir. I have some quick questions, if I may, and follow-up questions. The first, just on CET1, if you don't mind explaining how it comes that you ended up at 18%. Just want to understand if this is more Basel IV related so that next year, we are not going to have this kind of discrepancy if you want? Or if there are reasons where we could expect that as well next year? The second thing is you have -- on the Netherlands, I mean, it's very clear why the margins were a bit lower. But how do you expect them to evolve in 2025? If you could get us an idea? Also on the Netherlands, the seasonality that you mentioned was subdued in Q4. Fair enough, but that means that I would presume that the Q1, Q2 more positive counterbalancing effect will be more subdued than Q1 '24. And a couple of other quick ones on Belgium, if you could give us the split on new and existing clients in terms of inflows? And on Switzerland, we have a bit of, I think, a small growth in AUMs. But do you expect that '25, you could see a stronger growth? Or it is something that's a slow burner and will come more in '26, '27?

Okay. Could you -- before we answer, Jason, could you repeat the question on Belgium because we did not really get that one.

In the inflows, as you said, in the Netherlands that you have 80% from the inflows is new -- coming from new money, not existing clients. I was curious to understand the same split in Belgium. I think it looks more 50-50. I mean you did say a lot of existing bringing in new money, but just to get an idea.

So I'll start with the first question and then hand it over to Maarten. You say the CET1, why 18%. So really at the start of my presentation, I spent some words on it. The main reason is that if you want to return capital, you need to apply with Dutch Central Bank 3 months in advance. And then you need to apply for a certain amount, and you need to fix that amount. We fixed that amount based on assumptions on what we thought our RWA and our capital would do for the rest of the year, such that we thought we would end pretty close to the 17.5%. What happened since the beginning of November is that some factors developed in a favorable manner for us such that we ended up slightly above the 17.5%. So going forward, 17.5% is where we will steer towards. We will always have to work from assumptions because of what I just explained. And therefore, ending exactly at 17.5% is probably not possible. But this is what we will -- how we will work from it. Then you said the margins in 2024 in Private Clients Netherlands are lower, what is your expectation for 2025? Let me not give you a guidance, but let me tell you what we are focusing on. And that in a certain way, that also helps. We are focusing on increasing the inflow of discretionary asset management money. So the part of the discretionary product should increase vis-a-vis the advisory product. As I mentioned, that comes at a higher margin, so that should be helpful. And secondly, a lot has to do with the mix of what our clients want. They -- if they are more interested, let's say, in the field of the money market funds, that is a somewhat lower margin business than if they turn to equities. So that's something that you can keep in mind and that will drive margins going forward. So -- and as mentioned, it's largely a mix effect and not so much margin pressure in that part of the business. The seasonality effect, did we see money flow back into assets under management in the first month of this year? The answer is yes.

Then...

Yes.

That is a very clear answer, Jeroen, and I'll also give a very clear answer, Jason, on Belgium, it's 50-50. So -- and the difference basically with the Netherlands is that in Belgium, we see that next to acquiring a lot of new clients and gaining market share, we also gained market share by the fact that we increased the share of wallet of our existing clients. So in the past, they would have 10% or 20% of their assets with either Van Lanschot Belgium or Mercier Vanderlinden. Now in the combination, Mercier Van Lanschot, it's a bigger franchise with, of course, a listed company behind it. And we see that clients trust a bigger share of their wallet to us, typically maybe 50% or 60% of their wealth, and that effect is also expected to continue for a while. So that explains the [ 50%-50% ] split in Belgium. And let me, although not asked, answer -- also share another focus area of ours, and that is in the private markets category, both in the Netherlands and Belgium, where we also now launched for the first time our private market funds, which we already have in the Netherlands. And obviously, that's also money which is -- stays for us for a longer time at strong margins, but also delivers a great value to clients, including a liquidity premium. So that's another focus area of future growth in the cooperation between Investment Management and Private Clients Netherlands, Belgium and Switzerland. Then on to your question on Switzerland, I think we will see -- we have -- in Switzerland, we have a new team under the lead of our new CEO, Daphne Engelke there. So yes, we have also there high expectations of growth. I think you -- well, we can debate, as you also said, will that be '25, '26, '27, but we see good momentum, which is also partly based upon the fact that given the turbulent geopolitical times, clients also appreciate a position of their wealth in Switzerland. So in that sense, it's also very strategic to our activities. Thank you, Jason. Is that...

I would have just one clarification for Benoit's question on NII. I mean I think a lot of banks are expecting somewhere in the year about 20 to 30 basis points. Is that probably a ballpark number on the saving rates to have in mind that you are putting in your guidance and thoughts?

As mentioned, I'm not going to mention a specific number. What I mentioned is that we expect banks to be quite slow in reacting. And you can feel if you think that the 20 basis points to 30 basis points connected to the ECB rate cuts is considered to be slow, but that is -- we think that will be slow in reacting, and that's what we put in the guidance.

There are no further questions for sure. So I will hand you back to your host to conclude today's conference. Thank you.

Well, thanks, first of all, to you for your good guidance of this meeting and of course, to the analysts that called in this morning and for your questions. That always keeps us on our toes and sharp. But let me wrap up. And thank you, Jeroen, of course, for your contribution as well. I think to summarize, we had a very successful year with strong commercial momentum and high appreciation from our clients. I think we are uniquely positioned in Western Europe as an independent and growing wealth manager. We are well on track for our Growing further together strategy with our focus on scalable growth and continue to invest in what will drive our success going forward for the coming years, strong teams, digital excellence and a distinctive product and servicing -- service offering. With that, we are well on way -- on our way to reach our 2027 targets. And with all that, I would like to thank you for your attention this morning and look forward to further interaction in the days, weeks and months to come. Thank you very much.

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