Welcome to ING First Quarter 2022 Conference Call [Technical Difficulty] regarding future developments in our business, expectations for our future financial performance and any statement not involving an historical fact. Actual results may differ materially from those projected in any forward-looking statements. A discussion of factors that may cause actual results to differ from those in any forward-looking statements is contained in our public filings, including our most recent Annual Report on Form 20-F filed with the United States Securities and Exchange Commission. And our earnings press release as posted on our website today. Furthermore, nothing in today's comments constitutes an offer to sell or a solicitation of an offer to buy any securities. Good morning, Steven, over to you.

Thank you very much, operator. Good morning, and welcome to our first quarter 2022 results call. I hope you're all well. I'm joined by our CFO, Tanate Phutrakul; and our CRO, Liliana Cortan. And I'm pleased to take you through today's presentation. After that, we will take your questions. For the first time in 2 years, I started this presentation by saying that from a cover perspective, circumstances seem to be normalizing, which is positive. However, challenges remain with the invasion of Ukraine, which is adversely affecting people, including our colleagues as well as already high energy prices and disruptive supply chains. In these circumstances, we help colleagues to safely relocate and manage the risk of our risk-related exposure. At the same time, we focus on our strategic priorities by financing the green transition and improving our digital channels, and we continue to deliver value. This was reflected in the higher preprovision profits, driven by -- and highlight our efforts to finance a green transition and to improve our mobile channel. Operating profit was up 14% year-on-year and 9% quarter-on-quarter, a strong start to 2022. And I'm particularly happy that all key P&L lines contributed. NII, excluding TLTRO, was up on both comparable quarters, which is a meaningful signal in the context of the liability pressure of the past years. With the yield growth normalizing, we can reinvest our replicating portfolio and more positive yields. And as we always said, the effect will come in over time. However, over 2021, we had approximately €600 million drag from negative rates. That drag has now disappeared. Excluding TLTRO, we expect NII to be up in 2022. At the same , ECB has not yet increased rates. So for now, a negative interest rate charging remains in place with the current contribution of…

[Operator Instructions]. Our first question is from Mr. Robin van den Broek of Mediobanca.

The first one is around the Russian exposure and the actions you've taken this quarter, I mean your introductionary comments and in your slides, you mentioned basically you cover within the CET1 ratio of €2.5 billion. And you also emphasized the faith you have in your track record on your risk framework. I was just wondering to what extent do you think this €2.5 billion should cover, yes, basically the future? Is that best case? Is that worst case? Can you talk a little bit through your thinking here? Is this done for you? Or do you see -- obviously, that has gone up quite a bit more. So I was just wondering if you could give a little bit of guidance on what kind of tailwinds we should expect here because I think this could be high-teens millions of quarterly tailwinds for your NII trajectory, which is quite substantial.

Thank you very much, Robin. And I will give the first question to Liliana and the second question to Tanate.

Thank you for your question. Yes, correctly, we have had the elevated risk costs with respect to the Russian situation of €834 million, as you noticed. And in trying to show to you how much we feel confident and adequate with current provisioning and impact on capital, we have some this impact of the LLPs of €834 million with the additional impact that we have experienced through inflated RWAs, which have resulted in additional 1.7 capital set aside for this cost. So these 2 are summing up to the €2.5 billion that you are saying. So first on the risk cost, as you've seen, only €70 million out of these risk costs referr to the really defaulted exposure. The rest, Stage 2, which is following our very prudent risk management framework, governance and processes in place, is actually reflecting the downgrade of the Russian-related exposure and as well a certain watch listing of the clients taking a prudent approach. On top of that, you have seen that we have in the 60 day were able to actually manage down our exposure by additional €1 billion. So all actions are showing that currently, we feel that our best estimate is adequately provisioned and adequately capital impacted.

Okay. Tanate?

And then, Robin, on our NII. If look you at our Q4 disclosure, you can work it out that basically, we had a reduction around €600 million in 2021. And that stopped in Q1 -- and you're right that as long-term rates continue to rise that the replication benefit gets bigger. But I think what is a big impetus in terms of NII is when the euro -- the ECB discount rate gets to move, right? Because we do barbell replication, which means that a considerable part of our replication sits in the 3 months bucket. So if the ECB, as anticipated, would move the rates in July, that would accelerate the tailwind that we have today.

So just to come back on the second part. So I think in the past, there was the market at least had the perception that a rate hike from the ECB would initially be a headwind for NII. But I think now you're saying you basically shortened your duration and that's no longer the case?

Well, I don't think we ever said that rising rates is bad for banks. In fact, it's the opposite. We think rising rates coming out of negative rates is actually positive for financial companies and positive for ING, in particular, given our big retail deposit base. And I think rising rates from the ECB will be indeed more beneficial to us.

But also the part from negative to 0 basically, I think that's the more doubtful part of the sensitivity. Can you quantify that by any chance?

Well, we'll give you a bit more detail on Investor Day. But what we can say now is that, as we mentioned, the €600 million compression we saw last year has disappeared. And that we expect, actually this year, that excluding the TLTRO impact, that our NII will be positive this year.

Our next question is from Mr. Stefan Nedialkov from Citi.

It's Stefan from Citi. I have a couple of question [indiscernible] includes two rate rises is that lending margins are under pressure at the moment because yields are not tracking the increase in funding costs. Are you basically saying that you expect repricing to become stronger for the rest of the year? So that's my first question on NII, what rate assumptions and what lending margin assumptions you have? The second question is on Russia. It seems that you're effectively silently writing down the exposure to Russia, both onshore and offshore. You have around €2.5 billion of combined P&L and impact capital. So you're not exiting Russia, unlike some of your other peers. What's the strategic thinking here? You're appeasing shareholders by taking a large provision, but you're keeping the optionality for the future? Is that the thinking? And if I may, a super quick third one on fees. Can you quantify the contribution of partnerships to fees at the moment from partners like AXA scalable capital, et cetera?

Yes. Thanks, Stefan. I'll take the question on NII fees. And the question on Russia, I will do as well actually. So on NII, first question was, does this already assume the rate hikes of the ECB? Answer is no. So we basically say that already with the current improved yield curves that we see, the negative drag has completely gone. NII, excluding TLTRO, this year will be up compared -- we expect it to be up compared to the last year. In that light, with regards to lending margins, what we have seen is that the prices to The Street were up actually across-the-board in many countries. But also our cost of funding went up. And typically, you see that the cost of funding, it takes time to fully price in the cost of funding into The Street price as well. So that's what we have said with that. So it takes time for that cost of funding to fully materialize in the market price. Still arguably, there's still a lot of liquidity in the market. So do we then -- so that also means that we don't necessarily expect a big increase in margins at this point in time, at least not on the the lending margins to our clients. But on the liability income, we have actually turned the corner. And that's actually benefiting the NII going forward. On Russia, well, look, first of all, we want to keep the people safe, which is what we do also in Russia, by the way, and we are making sure that we fulfill all the sanctions. With regards to the book, what we want to do is to make sure that we actually get repaid. So we have said we don't do new business with Russian clients. And that…

Our next question is from Mr. Kiri Vijayarajan, HSBC.

A couple of questions from my side. When I look at the RWA and the ratings migration there, it looks like you've actually had positive ratings migration if you exclude what you've done for the Russia exposure. So I wonder if you could talk a little bit about which portfolios outside of Russia have driven that kind of positive rating migration. And really, what's the risk that reverses in the next few quarters, just given what we're seeing in the macro? And then just coming back to the fees. The growth this quarter is obviously heavily skewed towards the wholesale bank. But focusing on just the retail fees, do you think you can replicate the same kind of double-digit momentum you posted last year? And in your mind, which are the retail markets where you think you're still sort of punching below your weight in terms of particularly kind of investment product penetration? Just sort of more forward-looking commentary there on retail fee would be helpful.

I will Thank you. I will take the question on fees, and Ljiljana will take the question on RWA. With regards to fees, like we said, I'm confident that we can continue to to grow also this year our fees by 5% to 10% per annum. And why am I confident about that is different things. First of all, we continue to grow our primary clients and the level of interaction with them. That's point one. Point two is that in many of the markets, we are competing with, let's say, local champions or local banks who increasingly feel pressure to increase fees on the back of of difficult market circumstances. We have seen it, by the way, lately in the Netherlands where ABN AMRO increased their payment package fees with 50%. And we see that in other markets as well. And three, in a number of markets, we're still actually relatively low in terms of our fee potential also in terms of the interaction we have with our clients. And even though, and I proudly always say every quarter okay, and now we have 2 million brokerage accounts in Germany And this quarter, we have 2.1 million brokers accounting in Germany, and that's all fantastic. But if I look and that goes for all the markets compared to the total number of clients we have, let's take Germany. We have 9 million customers in Germany with only €2 million we have brokerage accounts and that ratio for some markets is even worse. So it also means that we have still a quite some way to go to deal with this leaving alone what we do charge for payments, what we do with insurance. We come from an environment or ING as a business model whereby fees as the old ING direct model was relatively benign compared to activities that we did. And we're gradually catching up, but we're not there yet at all of where we are supposed to be to, let's say, our "fair market share," if you will, compared to the side that we have as an organization.

And on the RWA, yes, you're correct. In total, we do see increase in inflation of RWA based primarily, as we say, on the credit risk side due to introduction of the risk weight for the Dutch residential mortgages. And on the other side, €9 billion, as Stephen mentioned, for the increased density for the Russian portfolio. If we would actually neglect these 2 points, we would see on the rest of portfolio and specifically on the Wholesale Banking side, a decrease. This comes from 2 sources. One is definitely on the volume side. We have seen in certain industries, for example, RF some small increases in the portfolio, which absolutely contributed to the decrease of RWA. But as well in the other parts of the Wholesale Banking, we do see reduced RWA based on improved structure, both in terms of the rating of clients but as well in terms of the products and maturities. So in total on Wholesale Banking side, when isolating Russia, the improvements are positive.

Following question is from Mr. Benoit Petrarque of Kepler Cheuvreu.

So here are my questions. So first one is on the special distribution. I was trying to understand or you came with this €1.25 billion. I mean it's roughly 35, 40 bps impact. So is such a level the kind of natural level for you given the macro uncertainties? And is that a level we can -- you can repeat in the current macro also in the coming years? So I just wanted to ask about kind of the you determine this the appropriate size of the special. Second one is actually on cost, very strong, down 2% clean. We have to think about cost going forward and the cost trajectory for the remaining of the year? And also given the current inflationary pressure, or do you -- or will you be able to kind of maintain cost flat? Can we expect a bit more restructuring going forward? Anything special there, please? And then just a final one will be on the front book margins in the Netherlands on the mortgages, which seems to go the right direction. I think you mentioned some pressure in Q1. But that was probably a timing issue. We see very strong repricing on mortgages as we speak. So it seems that the funding cost is going to the clients, clearly, there. So you update us on front book versus back book currently?

Okay. I will do the -- thank you, Benoit. I'll do the question on front book and costs, and Tanate will talk about the distribution. First of all, on the front book, yes, I mean, typically, you see that in the quarter where you produce, so you go to the market to offer that then is delayed. With the quarter before, you can typically price in the full funding costs. So that you will expect as funding costs continue, then also margins will be impacted. Of course, it's a comparative dynamic, but that's what we typically have seen in the past. But one thing to note is that if that happens, also when you then look at prepayments, we're also benefiting always from prepayment income, whereby people pay a penalty for prepaying part of their mortgage. But when the interest rates goes up, that part of your income will decrease. So yes, the margin will restore itself. But that is excluding the prepayment income, which will likely decrease when margins go up, which is logical. When we talk about costs, I mean, yes, we have now seen -- well, first of all, we are strict in costs, very focused on making sure that we can deliver what we need to deliver with the applicable FTE amounts -- number. But secondly, we've also taken a number of decisions in the past year or 1.5 years, and those decisions are now gradually filtering through. So we're [Audio Gap] That's why I said even with all the inflation going on in all the markets, we cannot ignore that. We are confident that we can remain our cost at least flat compared to '21 operating costs in 2022 as well. And going forward, we then need to look at what additional measures do we need to take. Obviously, we also need to invest. And if inflation stays the way it is currently, yes, that is a challenge for all of us. But we're also, in the meantime, digitalizing processes our, which both have a benefit for our customers, but also for our cost to serve. And we keep on focusing on that trajectory as well to keep our costs under control as I've done over the past almost 2 years now.

And Benoit, on capital, clearly, we go through the normal capital management analysis to come with the €1.25 billion. We look at the outlook on earnings and how we can generate capital. And clearly, the tailwind on NII helps support that. We look, of course, at the Russian exposure, what the worst case could be, a stress test scenario. And based on a combination of that as well as any potential regulatory capital coming our way, and that's how we derived the €1.25 billion, which is rightsized from where our thinking was at the end of February prior to the war. That's how we have done that. And of course, we have been having constructive discussions with the ECB to arrive at this number, which they approve for us.

Our next question is from Mr. Raul Sinha of JPMorgan.

A couple of follow-ups from my side. I guess the first one is just your thinking around the mix of distributions between dividends and share buybacks going forward -- I'm wondering what you think the impact of speculation would be on the bank. I'm sure you're running internal scenarios, particularly from a stress testing perspective. How do you think ING will behave in a sort of -- environment in your core economies?

Thank you, Raul. First, Tanate, I think on share buyback, and then Ljiljana on --

Raul, on the share buyback, I think it's a uniqueness of Dutch tax requirement that we need a certain minimum cash payments for share buyback to be exempted from withholding tax. And that's why we have that particular split that we talked about in this quarter, it's 70 against the 380 payment. We have also said in our policy that the majority of our cash -- or capital distribution will be in cash. So we stick with that guidance that the majority will be in cash. But having said that, of course, looking at the share price, if it's discounted from book value substantially, then we will be focusing more on share buyback. But this is the guidance we can give for the time being.

On stagflation, yes, we deem the -- I would say, the threat, if not already reality, of stagflation is present in our economies. This means the lower growth than expected is definitely being built in our base case and clearly higher inflation for longer. With that respect, we have already on the assumptions for the loan growth, I would say, downsized it to the lower range of the 3% to 4% loan growth yearly. We do, however, benefit, I would say, from the -- our books and coverage to manage this going forward. Clearly, it remains the challenge for all of us, and we are following the situation and assessing the scenarios making sure that we are adequately provisioned.

If I could just start on that. What do you think is the impact on the cost of risk relative through-the-cycle guidance that you've given scenario?

Well, it's difficult to say. We definitely keep our, I would say, through the cycle look for the years to come. It might be different from year to year, but through the cycle, I believe we're going to be there. We have significantly, as I said already, provisioned part of the portfolio through Stage 2 provisions and also through still some existing overlays from COVID time and also from the mortgage book, you will remember from the last quarter. So we do believe there is plenty of opportunities in our book to manage this with no significant volatility in cost of risk other than 25 bps.

Next question is from Mr. Jon Peace of Credit Suisse.

If I could just follow on from Raul's question. Some of your peers have said that a low Stage 3 losses means that 2022 can still be below through-the-cycle rates. And I just wondered if ex Russia you would share that view as you see things today? And then a question on capital return. If Russia visibility improves, would you contemplate any additional returns later this year? Or are we done now until next year's results? And also, you said that the €1.25 billion figure was rightsized from your expectations at the end of February before Russia. Did that mean that in a normal level of --

What Ljiljana also said and what we typically do is that we -- what you have seen through the cycle is that our cost of risk of all the European banks in the eurozone have been the lowest throughout the last 12 years on average. And what we have done also the last quarter on the wake of higher inflation, on the back of disrupted supply chains is already take overlays for mortgages and part of the Wholesale Banking book in risk cost. Now that, of course, is helping us now that, that inflation is really coming or persisting. So it also means that, yes, we still have a buffer based on corona. We build up buffers basad on inflation. That's helping the rest of the book and, indeed, when looking at the first quarter. If you look at the remaining risk cost outside of Russia, the total risk costs were €987 million, Russia also about 85% of that. So it basically shows that for this quarter, we do not see current big problems looming. Otherwise, we would have taken the cost.

Then on capital, it's not a simple mathematics that because Russia cost us €2.5 billion, we would have paid more from that perspective in capital returns. I think we just take a comprehensive view, what is our earnings ability going forward. We look at stress testing. We look at issues like stagflation and what the economies will bring. And then we'll form our view at any given point in time about that convergence to the 12.5%. As for are we going to announce any future plans on capital return this year? Well, the future is the future. We don't comment on any actions we may take in the coming period. [Audio Gap]

Following question is from Giulia Miotto of Morgan Stanley.

I had a question on the rundown of the Russian book. So it decreased basically €2 billion in -- sorry, €1 billion in 2 months. Is that a normal rundown? Or can you share some light on the maturities of this book? Because was there any other proactive action? Or is this just the normal rate of decline? So that's my first question. And then secondly, on -- just a follow-up on the question that was just asked around the negative rate charging. So is €300 million only for the Retail bank? Or is €300 million the group level NII that you're making on charging negative rates? So is there something more in the wholesale bank?

Okay. So I give the floor due to Tanate. And Russia, I give the floor to Ljiljana.

So maybe starting with Russia and the rundown question. Yes, this is the normal, I would say, rundown of our portfolio based on the maturities. As you might know, our exposure is partially short term, partially long term. On the long-term side, we are involved in several projects and asset-based financing where we are as well credit insured for the good part of the portfolio. So what we are currently running down is the short part of the book, and we will continue to do that. Clearly, the good relationship with the clients and long-standing relationship the clients helps out in that respect, which was obvious in the last 60 days when we were able to, in a regular way, manage down the portfolio by almost €1 billion.

Then the question on negative rates charging, the €300 million that Steven referred to is mostly retail-related benefits. And from the wholesale bank, we are neutrally geared towards negative rates. As negative rates disappear, we don't expect to lose revenue. In fact, we should benefit from that actually in terms of PCM business.

Okay. And sorry, going back to the run rate of decline -- half of the book or any more because it seems like you have a large shorter part, but you also have one. So I don't if you can give, let's say, by year-end, you will be done with half of the book or something like that? Is there any comments you can make?

Yes. Thanks, Giulia. So look, this is an emerging market. So what do you do with the emerging market? -- the lion's share would runoff this year. Next quarter, Giulia.

Next question is from Mr. Omar Fall of Barclays.

Could you just discuss loan growth specifically in wholesale, please? Even outside of FM, there wasn't any. And presumably, that's not just in Russia related. So what's the outlook here? Especially, previously, you said the resumption of corporate lending was a key driver for you both in the next couple of years. Then second, thanks for the helpful guidance for this year on NII. But the only place has been actual meaningful sequential increase in NII is basically Poland given the policy rate rises there. So what would be most helpful is to finally get some actual sensitivities like your peers are giving over a longer time frame because these effects of higher rates are exponential in future years. So would it be possible to get this at some point even if it's at your Investor Day? Then finally, sorry, [indiscernible] but what -- could you give us a sense of the value or scope of the impact of lower prepayment fees in the Netherlands given the drop there is quite quite large in NII?

Thank you very much. Omar, on the loan growth, if you look at the loan growth for Wholesale Banking and when we saw -- well, first of all, let me give you a few pointers. So if you look at the fees in Wholesale Banking, the growth there comes from syndicated markets. So -- and that is because the syndicated markets have returned after corona. So what we do see is positive is larger underwriting, syndicated deals with comment fees, which are, in general, more attractive for banks as well. So that's a positive. So we do see pipelines that are good, and they continue to be good. And so I think this quarter, and that will continue a little bit. So that's one. Two, on real estate finance, that came down a little bit also on the back of corona less need for certain uses of buildings. And we're actually focused on that, where do we have multiuse of buildings and where not. And we stay focused on that end as well. So those are 2 effects that came in, in the first quarter. Corona repayments -- sorry, corona repayments, the repayments of TLTRO-related facilities will continue in 2022 at a lower rate. So it means that for Wholesale Banking, we do expect loan growth, but at a lower pace than the 3% to 4% that we initially indicated. With regards to NII on the sensitivity, I mean, clearly, you mentioned Poland, but I can also mention Romania. I can mention Australia. So there are many non-Eurozone markets where the rates already moved and where the central banks already moved rates. That is for us a positive. We are looking forward to the announcements that the ECB is going to make. But there's, every day, so much news about…

That's very helpful, especially that we'll hear more on the sensitivities at the Investor Day.

That was the most important part? I should have said it in the first place.

Next question is from Benjamin Goy of Deutsche Bank. Mr. Goy, Are you there?

Just one major one left. I mean you gave guidance on your Wholesale Banking loan growth. But just wondering about the mortgage book from here with higher mortgage rates. I mean in some markets, they moved up a lot year-to-date, Germany, 2.5x. So how do you expect this impact your origination ultimately loan growth in mortgages?

The loan growth in the first quarter was good. There were number of elements. We have, of course, the impacts on the -- on the other hand, we see that in the Netherlands, there is -- couple of quarters is that we booked a record mortgage growth in Germany as well, and we don't see that demand decreasing in the short term. So we're positive about continued loan growth in retail.

Our next question is from Mr. Farquhar Murray, Autonomous.

Just two questions, if I may. Firstly, just coming back to the capital update and specifically the kind of question around how the €1.25 billion was arrived at. Should we think of a pro forma 14.5% CET1 level as a kind of near-term threshold perhaps to year-end? And then secondly, just coming back to Russia. In answer to Giuilia's question, you give a bit of a sense of how the exposures will develop. Can I ask if the RWA would develop in a similar manner? And on a subsidiary point, the €4.5 billion of market RWA we saw in the quarter, how would that have develop given the markets we've had since? And could we expect some of that to reverse?

Good questions. And that's not my forte. We're short of answers. So on capital, should we look at a pro forma 14.5% as our target level for the end of the year? No. We have guided that we want to move gradually towards 12.5% in the next couple of years. On Russia, on the market risk WA, was that because of high volatility? Yes. Will that -- if the royalty drops away, will that reverse? Also, yes. Sorry, did I miss a question?

And the actual the credit component as well in Russia, will it develop in line with the exposure.

Yes. I mean, look, we have seen currently a decrease of our exposure with approximately €1 billion. I've just said to Giuilia, I believe, that we have a sort of a barbell in our exposure, has short-term unsecured, long-term secured. And the short-term exposure, if that gets repaid back, we also see some write-backs or term banks in RWA because that happens when we reduce the exposure.

Our next question is from Mr. Tarik El Mejjad of Bank of America.

Just a quick question again on dividend. So just to clarify the 50% payout for the ordering dividend, is it -- so definition on resilient earnings. Should we assume that the Russian Stage 2 provisions, exposure this provision should be included or adjusted for? And then on the capital return, I mean you just said again, like in Q4 that would like to convert towards 1.5% within the next 2 years. We understand it's important for your ROE. I mean that makes it really very cash up to do in the next two years. So I mean now if you believe the 14.5 already captures the -- in the next few quarters? I think someone asked the question. But really want to understand already what's the discussion? Are you just being refrained by the ECB or is it your own business?

On the dividend, does the -- I didn't say two years. I said a couple of years. And I'll give the floor on the further answer to Tanate

Yes. A couple of years means [indiscernible] converge over time. And I think in the capital return, our conversations with the ECB has been very constructive. And it's really very much based on our own capital management, looking at the geopolitical situation, looking at capital generation that will determine ultimately the pace at which we get to 12.5 So you can imagine that given where we are today, the clarity of the future, it's a little bit more foggy than it was in February. That's why we rightsized the capital returns based on what we see now. But suddenly not being constrained by the ECB, it's more how we see the geopolitical and credit risk as we stand today.

Sorry, I didn't understand the comment about 2 years. 2 years is next 2 years. So I don't understand what -- because you have €6.5 billion excess now. So what's the...

We are saying that we will converge to 12.5% over the coming years. Maybe a couple of year means it's over that number of years. It doesn't mean 2 years precisely.

Our next question is from Anke Reingen of RBC.

The first is just coming back to Russia. The €800 million of provisions, can they sort of be used against onshore as well as offshore? Or is there some accounting so it's partly just onshore? And just on the sanctions exposure, the €3.3 billion, and your comment imply no additional exposure, I guess, would suggest that the €2.5 billion capital is largely against that exposure. And I mean how confident are you that, I mean, that the amount could go up with more repayments are received? Is that short term as well? Was it more long term? And just in terms of how fast this number can be coming down. And then sorry, one last question. You briefly mentioned potential regulatory headwinds in your capital path consideration. Is there something on the horizon other than Basel IV in the rest of the year we should be aware of?

Okay. I'll take the question on the regulatory headwinds and the repayments. And then Ljiljana will take the question on provisions onshore/offshore. On the regulatory headwinds, no, we don't see that. We have had -- I've said before, Basel IV includes all the trim missions and Basel IV and the output and the input. And so there are different moves. But in the end, it all comes down to the same Basel IV direction of the ECB. There is no further programs in that regard. We do see now and again, based either on volatility or based on model updates, you see spikes up or you see spikes down. But that is usual, so we don't have anything else going to report on that. Then about repayments, I mean, are we confident? I mean is sanctions could increase, that's true. It does not mean that people who are sanctioned cannot repay. It means we cannot -- with Russian companies. So we do get repayments, and we are allowed to receive repayments also from sanctioned entities. So as long as companies are performing, we get repaid -- move them to stay. And explore that we see over the next couple of quarters. Yes, by and large, except for the €71 million we have seen, our Russian clients are performing. And it means that we also expect them to repay also in the next quarters. Ljiljana?

Yes. On the total risk cost for Russia, €834 million, approximately a bit less, around €200 million refers to the onshore exposure. The rest refers to the offshore exposure.

And our next question comes from Guillaume Tiberghien of BNP Paribas Exane.

My question relates to the subsidiary in Russia. It has €1.3 billion of exposure incurring losses in that subsidiary, in which case we would worry to lose up to €1.3 billion or when the capital is gone, it's gone and the subsidiary goes away, including the RWA? And what are the RWA in that subsidiary, please?

So look, I mean, we're currently talking about going concern. So we're currently looking to get repaid, both onshore and offshore. If you look at our capitalization of our Bank in Russia, that's currently €100 million. And I never -- we don't give you comments on whether we will capitalize in the future. If worse comes to worst, if that's gone concern, which basically means you would lose your sub in Russia, that means that we would look -- that we would lose the equity in Russia, which would, in this case, be €100 million.

So you would not recapitalize it?

I've said that we're not going to make comments on the future. But if you say if you would lose your subat this point in time, what would that mean? It would mean we would lose our equity, that would be €100 million.

Okay. What are the RWA, the subsidiary?

Excuse me?

What are the RWA in the subsidiary?

We don't disclose that. That will be released.

And we have a follow-up question from Mr. Stefan Nedialkov of Citi.

A quick follow-up for me. A lot of numbers on NII flying around, and you did mention you will provide some more details with the Investor Day. But obviously, that's more than a month away, and people need to think about their NII numbers in the meantime. So I would really appreciate it if you can give us some sensitivity to the potential ECB rate rises? I'm assuming 1 happens in the summer and 1 towards the end of the year. What would that mean for your NII? You obviously mentioned the €600 million headwind from from the liability margin is going away this year. And there's a €300 million benefit from negative charging, which is partly offsetting that. So when you put all that together, with 2 basically rate rises, what does that mean in terms of extra NII over and above your guidance for '22?

Yes. I mean, by the way, I think the assumed rate rises stay on or after the Investor Day, but I'll grant you that. We stick with what we have said. And I see that you need, and I understand that, that you want to have more guidance on NII and what it does. So we have said quite a number of things. First of all, although the market has said in the past that -- so you said that there is no -- they may not -- we thought that R&D there was no benefit of rate rises. We have said there is a benefit of rate rises. We have said the €600 million drag is already out. We have said this year that will have a positive impact on NII. This year will be higher. We said we see benefits in many markets. And we'll give you more guidance on NII in sensitivity on 13th of June. It's 5.5 weeks and then we can talk about it.

And we have a follow-up question from Benoit Petrarque of Kepler.

Just a short one on Basel IV, given the risk assets have been moving quite substantially this quarter. What is your forma Basel IV CET1, please, at the end of Q1?

We did not have any further impact on Basel IV in the first quarter.

Okay. So I think the difference was less than 30 bps, right?

You mean the -- I will give this to Ljiljana. But I guess that you mean the remaining impact to come from Basel IV was 30 bps, is that what you imply?

Yes. Yes. It's.

Less. It's almost zero.

And we have a question from Esther Castro of Banco Sabadell.

Can you hear me?

We can.

Yes. Can you hear me?

Yes, Esther, we can hear you very well. Thank you.

Sorry. Just only a follow-up concerning the GDP growth, I mean, the sensitivity. Could you share with us, gentlemen, please any kind of sensitivity scenario concerning the new macro like, for example, for every 1% drop on GDP, which will be the implication of the cost of risk if, of course, you can share with us? And which are the moving parts in this GDP, well, factor to provision?

Thank you very much, Esther. And look, I mean, GDP is only one of the elements that doesn't impact as GDP. But then the question is what does it do to inflation? What does it do to unemployment? What does it do to energy prices? So there are heaps of elements that link that are not necessarily that you then also would need to know, but because GDP stand-alone is a much too simple metric to base the cost of risk on. Otherwise, we wouldn't have needed Ljiljana for this because it's actually quite complicated. So there are more layers behind this and that we do not disclose.

We have a follow-up question from Robin van den Broek of Mediobanca.

Sorry to come back into the queue. Could you maybe give us a bit more explanation about the tax implications to do buybacks in the Netherlands I guess it has to do with how much cash dividends you pay, but I'm just trying to understand how this will affect future decisions on capital return, cash versus buybacks. And secondly, I was wondering if you could give any disclosure about how much revenue P&L would be lost on the back of your unwind of the Russian activities?

Okay. I mean on -- thank you, Robin. We don't disclose the demand on Russia. But you do see is -- well, you know how big the book is. You typically know what the NIM is, then you can make sort of an extrapolation at certain levels what the revenue on an annual basis was with Russian clients. By the way, it's gradually winding down, so part short term, part longer term. But in the meantime, of course, and that's what I said also in the past, if you look at the total exposure, we have a total exposure -- shares coming down. So the impact of that is limited. So if we can't grow there.

I'll speak soon.

Thank you for joining First Quarter 2022 ING Analyst Call. Thank you for your attention. You may now disconnect your lines.