ABN AMRO Bank N.V.

Quarterly Report • Aug 8, 2018

Interim Financial Report 2018

ABN AMRO Bank N.V.

Notes to the reader

Introduction

This is the Interim Financial Report for the first half of 2018 of ABN AMRO Bank N.V. (ABN AMRO Bank). ABN AMRO Bank N.V. is a wholly owned subsidiary of ABN AMRO Group N.V. (ABN AMRO Group) and operates through the following segments: Retail Banking, Commercial Banking, Private Banking, Corporate & Institutional Banking and Group Functions. The objective of this Interim Financial Report is to comply with regulatory requirements.

The report represents our Interim Report 2018 and our Condensed consolidated Interim Financial Statements for 2018. The Interim Report contains the financial review, and selected risk, capital, liquidity and funding disclosures for the first half of 2018.

Information in ABN AMRO Bank's Interim Report is not an offer, investment advice or financial service. The Interim Report of ABN AMRO Bank N.V. does not give an extensive overview of all proceedings of ABN AMRO Group. The information in this Interim Report is not intended to encourage any person to buy or sell any product or service from either ABN AMRO Group or ABN AMRO Bank, or to be used as a basis for an investment decision. A decision to invest in products and services of both ABN AMRO Group and ABN AMRO Bank can and should be based on the information in this Interim Report in conjunction with information included in a definitive prospectus and the Key Investor Information (if and to the extent required) as well as the Interim Report of ABN AMRO Group N.V.

Presentation of information

The Condensed consolidated Interim Financial Statements in this report have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union (EU). The Condensed consolidated Interim Financial Statements in this report have been neither audited nor reviewed by the external auditor. Certain IFRS disclosures in the Risk, funding & capital information section are labelled as 'IFS' in the respective headings. These disclosures are an integral part of the Condensed consolidated Interim Financial Statements.

This report is presented in euros (EUR), which is ABN AMRO's presentation currency, rounded to the nearest million (unless otherwise stated). All annual averages in this Interim Report are based on month-end figures. Management does not believe that these month-end averages present trends that are materially different from those that would be presented by daily averages.

Certain figures in this report may not tally exactly due to rounding. Furthermore, certain percentages in this document have been calculated using rounded figures.

Other publications

In addition, the Interim Financial Report of ABN AMRO Bank's parent company, ABN AMRO Group N.V., including the reviewed Condensed consolidated Interim Financial Statements is available on abnamro.com/ir. For a download of this report or more information, please visit us at abnamro.com/ir or contact us at investorrelations@nl.abnamro.com.

Executive Board Report

Financial review	3
Results by segment	6
Risk, funding & capital information	12
Responsibility statement	22

Condensed consolidated Interim Financial Statements 2018

Condensed consolidated income statement	24
Condensed consolidated statement of comprehensive income	25
Condensed consolidated statement of financial position	26
Condensed consolidated statement of changes in equity	27
Condensed consolidated statement of cash flows	29
Notes to the Condensed consolidated Interim Financial Statements	31

Other Enquiries

Executive Board Report

Financial review

First half year results 3 Balance sheet 5

Results by segment

Retail Banking	6
Commercial Banking	8
Private Banking	9
Corporate & Institutional Banking	10
Group Functions	11

12

Risk, funding & capital information

Responsibility statement

Other

Financial review

This financial review includes a discussion and analysis of the results and sets out the financial condition of ABN AMRO.

First half year results

Operating results

(in millions)	First half 2018	First half 2017	Change
Net interest income	3,327	3,195	4%
Net fee and commission income	856	888	-4%
Other operating income	433	655	-34%
Operating income	4,617	4,738	-3%
Personnel expenses	1,210	1,288	-6%
Other expenses	1,400	1,432	-2%
Operating expenses	2,609	2,720	-4%
Operating result	2,007	2,018	-1%
Impairment charges on financial instruments	341	-33
Operating profit/(loss) before taxation	1,666	2,051	-19%
Income tax expense	383	475	-19%
Profit/(loss) for the period	1,283	1,576	-19%
Attributable to:
Owners of the parent company	1,258	1,561
Non-controlling interests	25	15

ABN AMRO's profit for the period in H1 2018 amounted to EUR 1,283 million.This decrease of EUR 293 million compared with H1 2017 is mainly attributable to the sale proceeds of the PB Asia divestment and the effect of model refinements driving impairment releases in H1 2017.

Return on Equity for H1 2018 was 12.5% compared with 16.7% in H1 2017, which benefited from the PB Asia divestment and impairment releases. Adjusted for incidentals, the operating result showed an underlying improvement, reflecting growth in net interest income on the back of corporate loan book growth and further decreasing cost levels on the back of FTE reductions.

Operating income amounted to EUR 4,617 million, a decrease of EUR 121 million compared with H1 2017. Excluding the PB Asia divestment, operating income increased predominately on higher net interest income. Net interest income came in at EUR 3,327 million compared with EUR 3,195 in H1 2017. The increase partly related to an incidental release of penalty fees resulting from mortgage interest term renewals (EUR 25 million) in Q1 2018 and positive incidentals (EUR 20 million net) in Q2 2018. The remainder mainly results from an increase in volume growth and improved margins on corporate loans and higher mortgage penalty fees, partly offset by a declining duration related interest result from the prolonged low interest rate environment. Interest income on residential mortgages was stable as average volumes and margins remained flat in a competitive market. Consumer loans yielded lower volumes and margins. Average savings volumes were higher and margins slightly improved.

Executive Board Report / Financial review

Net fee and commission income amounted to EUR 856 million, a decrease of EUR 32 million compared with H1 2017. Half of this decrease is attributable to the PB Asia divestment, as H1 2017 included four months of fee contributions from this business. The remaining decrease occurred primarily within Private Banking as market sentiment in H1 2017 had a favourable impact on net fee and commission income. Although market sentiment recovered in Q2 2018, the fee level of H1 2017 was not reached as a larger number of clients opted execution-only instead of managed portfolios and the raised client threshold for advisory services resulted in lower advisory volumes. At Corporate & Institutional Banking, lower trade & guarantees commissions and lower placement fees were partly offset by higher clearing fees following from increased market activity.

Other operating income decreased to EUR 433 million in H1 2018 (H1 2017: EUR 655 million). Excluding the PB Asia divestment in 2017, other operating income increased following higher results for Equity Participations (EUR 131 million versus EUR 77 million in H1 2017). Less favourable hedge-accounting related income (EUR 40 million versus EUR 118 million in H1 2017) and lower results for CVA/DVA/FVA (H1 2018: nil, H1 2017: EUR 43 million), were largely offset by favourable incidentals in H1 2018. Incidentals included EUR 48 million at Private Banking, the revaluation of equensWorldline (EUR 46 million) and a provision release relating to securities financing activities discontinued in 2009 (EUR 29 million).

Personnel expenses came down EUR 79 million to EUR 1,210 million in H1 2018. Excluding restructuringrelated costs, personnel expenses decreased as a result of lower FTE levels from cost-saving programs. This decrease was partly offset by wage inflation as the new CLA entailed a one-off payment (EUR 16 million) and a 2% wage increase. Restructuring-related costs amounted to EUR 33 million in H1 2018 versus EUR 58 million in H1 2017.

Other expenses were EUR 1,400 million in H1 2018, a decrease of EUR 32 million compared with H1 2017. Excluding the impact of PB Asia divestment, project costs for SME derivatives-related issues and higher regulatory levies, other expenses remained stable. Regulatory levies were EUR 26 million higher in H1 2018 due to an increase in the Single Resolution Fund contribution. Full year regulatory levies are expected to be approximately EUR 325 million.

Impairment charges on financial instruments amounted to EUR 341 million in H1 2018 versus a EUR 33 million release in H1 2017. Despite the continued favourable overall credit quality trend, impairment charges in H1 2018 were high due to charges in specific sectors (natural resources, trade & commodity finance including diamond & jewellery clients, healthcare and global transportation & logistics). Impairment releases in H1 2017 mainly resulted from model refinements on SME lending and mortgages as well as an IBNI release. The cost of risk amounted to 27bps in H1 2018.

Balance sheet

Condensed consolidated statement of financial position

(in millions)	30 June 2018	31 December 2017
Cash and balances at central banks	28,826	29,783
Financial assets held for trading	1,430	1,600
Derivatives	8,648	9,825
Financial investments	41,322	40,964
Securities financing1	16,830	15,686
Loans and advances banks	10,084	10,665
Loans and advances customers	277,817	274,906
Other1	10,408	9,743
Total assets	395,365	393,171
Financial liabilities held for trading	716	1,082
Derivatives	9,700	8,367
Securities financing1	12,756	11,412
Due to banks	14,646	16,462
Due to customers	238,058	236,699
Issued debt	78,251	76,612
Subordinated liabilities	9,683	9,720
Other1	10,266	11,488
Total liabilities	374,077	371,841
Equity attributable to the owners of the parent company	21,245	21,310
Equity attributable to non-controlling interests	43	20
Total equity	21,288	21,330
Total liabilities and equity	395,365	393,171
Committed credit facilities	37,099	32,772
Guarantees and other commitments	16,062	16,165

¹ ABN AMRO classified all unsettled securities transactions as other assets and other liabilities, previously these were included in securities financing. Comparative figures have been adjusted.

Main developments of total assets and liabilities compared with 31 December 2017

Total assets increased by EUR 2.2 billion, totalling EUR 395.4 billion at 30 June 2018. The increase was mainly related to higher loans and advances customers and higher securities financing assets, partly offset by lower cash and balances at central banks.

Total liabilities increased by EUR 2.2 billion to EUR 374.1 billion at 30 June 2018. The increase was mainly related to higher securities financing liabilties, issued debt and higher due to customers.

Total equity remained stable at EUR 21.3 billion. The inclusion of the profit for the period in H1 2018 was offset by the final 2017 dividend payment of EUR 752 million.

5

Results by segment

The results by segment section includes a discussion and analysis of the results and the financial condition of ABN AMRO Bank at segment level for the first half of 2018 compared with the first half of 2017.

Most of the interest expenses and operating expenses incaurred by Group Functions are allocated to the business lines trough net interest income and other expenses, respectively. During the first half of 2018 ABN AMRO transferred the portfolio of Small Business Clients with a turnover up to EUR 1 million from Retail Banking

to Commercial Banking. As a consequence, the segment reporting has also changed. Historical figures have been adjusted for comparability purposes. The transfer has no effect on the historical overall group results or financial position of the bank.

Retail Banking

Operating results

(in millions)	First half 2018	First half 2017	Change
Net interest income	1,594	1,635	-3%
Net fee and commission income	170	175	-3%
Other operating income	15	12	27%
Operating income	1,779	1,822	-2%
Personnel expenses	230	223	3%
Other expenses	784	775	1%
Operating expenses	1,015	998	2%
Operating result	765	824	-7%
Impairment charges on financial instruments	-19	-59	69%
Operating profit/(loss) before taxation	783	883	-11%
Income tax expense	195	221	-12%
Profit/(loss) for the period	589	662	-11%

Retail Banking's profit for the period amounted to EUR 589 million in H1 2018, a decrease of EUR 73 million compared with H1 2017. This was primarily due to decreased operating income, lower impairment releases and higher regulatory levies.

Net interest income declined by EUR 41 million (H1 2017: EUR 1,635 million). The decrease was mainly attributable to an addition to the provision for ICS and the transfer of clients to Private Banking. The underlying trend showed

stable interest income from mortgages and deposits. Interest income from consumer loans decreased as both average volumes and margins were lower

Net fee and commission income declined by EUR 5 million to EUR 170 million in H1 2018, partly due to the transfer of clients to Private Banking.

Other

Other

Personnel expenses increased by EUR 7 million to EUR 230 million in H1 2018. The increase was mainly due to a new CLA which resulted in a 2% wage increase and a one-off payment of EUR 1,000 per employee, partly offset by lower FTE levels. The number of FTEs declined by 387 to 4,779 on 30 June 2018 as a result of digitalisation and cost-saving programmes, which is also reflected in a further reduction in the number of branches. Other expenses increased by EUR 9 million, totalling EUR 784 million in H1 2018, mainly due to higher regulatory levies.

Impairment charges on financial instruments showed a release of EUR 19 million in H1 2018, whereas H1 2017 showed a release of EUR 59 million. The releases were supported by the strong performance of the Dutch economy and a model refinement on mortgages in H1 2017.

(in millions)	First half 2018	First half 2017	Change
Net interest income	820	790	4%
Net fee and commission income	125	126	-1%
Other operating income	24	27	-11%
Operating income	969	943	3%
Personnel expenses	155	156	0%
Other expenses	329	329	0%
Operating expenses	485	485	0%
Operating result	485	458	6%
Impairment charges on financial instruments	114	-114
Operating profit/(loss) before taxation	371	572	-35%
Income tax expense	91	142	-36%
Profit/(loss) for the period	280	430	-35%

Executive Board Report

Other

Commercial Banking

Operating results

(in millions)	First half 2018	First half 2017	Change
Net interest income	820	790	4%
Net fee and commission income	125	126	-1%
Other operating income	24	27	-11%
Operating income	969	943	3%
Personnel expenses	155	156	0%
Other expenses	329	329	0%
Operating expenses	485	485	0%
Operating result	485	458	6%
Impairment charges on financial instruments	114	-114
Operating profit/(loss) before taxation	371	572	-35%
Income tax expense	91	142	-36%
Profit/(loss) for the period	280	430	-35%

Commercial Banking's profit for the period for H1 2018 was EUR 280 million, down by EUR 150 million compared with H1 2017. This is primarily due to elevated impairment charges in H1 2018 versus releases in H1 2017, improved net interest income and stable costs levels.

Net interest income increased by EUR 30 million to EUR 820 million in H1 2018. The increase was mainly attributable to higher income from corporate loans and higher interest related fees. Net interest income benefitted from continued growth in client lending and improving margins. The impact of deposit volume growth was offset by continuing margin pressure.

Net fee and commission income remained stable, totalling EUR 125 million in H1 2018.

Other operating income was EUR 24 million in H1 2018 (H1 2017: EUR 27 million). Both periods included the benefits of positive revaluation results.

Personnel expenses remained stable at EUR 155 million. The impact of FTE reductions resulting from cost savings programmes was offset by the impact of a one-off CLA payment and wage inflation.

Other expenses remained flat at EUR 329 million. Higher regulatory levies were offset by the impact of cost saving programmes.

Impairment charges on financial instruments amounted to EUR 114 million as a result of a number of specific additions, predominantly in healthcare and other sectors. Impairment releases in H1 2017 were mainly resulted from an SME model refinement and an IBNI release.

Other

Private Banking

Operating results

(in millions)	First half 2018	First half 2017	Change
Net interest income	364	326	12%
Net fee and commission income	269	292	-8%
Other operating income	76	274	-72%
Operating income	709	892	-20%
Personnel expenses	202	266	-24%
Other expenses	267	309	-14%
Operating expenses	470	575	-18%
Operating result	240	318	-24%
Impairment charges on financial instruments	12	-4
Operating profit/(loss) before taxation	228	321	-29%
Income tax expense	58	34	74%
Profit/(loss) for the period	169	288	-41%

Private Banking's profit for the period in H1 2018 amounted to EUR 169 million, down by EUR 119 million compared with H1 2017. This was primarily due to the book gain on the PB Asia divestment in 2017. The underlying development showed improved net interest income and lower costs as a result of FTE reductions.

Net interest income rose by EUR 38 million compared with H1 2017, arriving at EUR 364 million. The increase was mainly due to margin improvements in the Netherlands as well as the transfer of clients from Retail Banking.

Net fee and commission income showed a decline of EUR 23 million compared with H1 2017, arriving at EUR 269 million. Excluding the PB Asia divestment in 2017, net fee and commission decreased as market sentiment in H1 2017 had a favourable impact on net fee and commission income. Although market sentiment recovered in Q2 2018, the fee level of H1 2017 was not reached. More clients opted for the self-directed instead of the managed concept, while the raised client threshold for advisory services resulted in lower advisory volumes.

Other operating income decreased by EUR 189 million, compared with H1 2017, arriving at EUR 64 million in H1 2018. Excluding the sale proceeds of the PB Asia divestment in 2017, other operating income went up compared with H1 2017. This was mainly the result of EUR 48 million in positive Q2 incidentals in H1 2018.

Personnel expenses decreased by EUR 64 million compared with H1 2017, arriving at EUR 202 million. Excluding the results of the PB Asia divestment in 2017, personnel expenses decreased following substantial FTE reductions, partly offset by wage inflation. Compared with H1 2017, FTE levels decreased by 495. This was primarily due to progress on the restructuring as well as the impact of the PB Asia divestment, which also resulted in an internal transfer of FTEs to Corporate & Institutional Banking.

Other expenses amounted to EUR 267 million, a decrease of EUR 42 million compared with H1 2017. Excluding the results of the PB Asia divestment in 2017, other expenses increased by EUR 6 million due to higher allocated costs related to IT investments for the further digitalisation of Private Banking.

Impairment charges on financial instruments amounted to a EUR 12 million charge in H1 2018 compared with a EUR 4 million release in H1 2017.

Executive Board Report

10

Other

Corporate & Institutional Banking

Operating results

(in millions)	First half 2018	First half 2017	Change
Net interest income	551	464	19%
Net fee and commission income	277	283	-2%
Other operating income	193	201	-4%
Operating income	1,021	948	8%
Personnel expenses	235	213	10%
Other expenses	374	385	-3%
Operating expenses	609	597	2%
Operating result	412	351	17%
Impairment charges on financial instruments	236	144	63%
Operating profit/(loss) before taxation	177	207	-15%
Income tax expense	26	41	-38%
Profit/(loss) for the period	151	166	-9%

Corporate & Institutional Banking's profit for the period amounted to EUR 151 million in H1 2018 compared with EUR 166 million in H1 2017. Higher impairment charges were mainly offset by improved net interest income.

Net interest income grew by EUR 87 million to EUR 551 million in H1 2018. Net interest income rose on the back of increased client lending and the favourable impact of new deals. Average client loans increased primarily within natural resources, Corporate Coverage and Financial Institutions. This was partly offset by the negative currency impact of the US Dollar, whereas loan margins slightly improved year-on-year. Deposit income increased compared with H1 2017 due to higher average volumes and improved deposit margins, primarily on USD deposits. Moreover, a larger number of professional clients are being charged negative interest rates on deposits. Net interest income increased at Global Markets, partly due to lower results in the area of collateral management activities in H1 2017.

Net fee and commission income came to EUR 277 million (H1 2017: EUR 283 million). Lower trade & guarantees commissions and lower placement fees were partly offset by higher clearing fees following increased market activity.

Other operating income amounted to EUR 193 million (H1 2017: EUR 201 million) and included EUR 131 million Equity Participations results (H1 2017: EUR 77 million).

The decrease was due to lower results for CVA/DVA/FVA (H1 2018: nil, H1 2017: EUR 43 million) and Global Markets saw higher results in H1 2017. Prior year included an increase in the existing (compensation) provision for SME derivatives-related issues (EUR 15 million).

Personnel expenses increased by EUR 22 million to EUR 235 million in H1 2018 due to restructuring costs, wage inflation and a rise in the number of FTEs. Compared with H1 2017, the number of FTEs grew by 174 due to growth initiatives as well as an internal transfer from Private Banking following the PB Asia divestment.

Other expenses decreased to EUR 374 million (H1 2017: EUR 385 million). Excluding incidentals and higher regulatory levies, other expenses decreased due to lower allocated costs, mainly resulting from cost-saving programmes. In H1 2018 the provision for projects costs related to SME derivatives-related issues was increased by EUR 37 million (EUR 54 million in H1 2017).

Impairment charges on financial instruments amounted to EUR 236 million compared with EUR 144 million in H1 2017. Despite continued favourable overall credit quality trends, impairment charges were elevated on a select number of clients and sectors (natural resources, trade & commodity finance including diamond & jewellery clients and global transportation & logistics).

Other

Group Functions

Operating results

(in millions)	First half 2018	First half 2017	Change
Net interest income	-2	-21	91%
Net fee and commission income	15	12	27%
Other operating income	125	142	-12%
Operating income	138	132	4%
Personnel expenses	387	431	-10%
Other expenses	-355	-366	3%
Operating expenses	32	65	-51%
Operating result	106	67	58%
Impairment charges on financial instruments	-2
Operating profit/(loss) before taxation	107	67	60%
Income tax expense	13	37	-65%
Profit/(loss) for the period	95	30

Group Functions' profit for the period amounted to EUR 95 million in H1 2018 (H1 2017: EUR 30 million). The increase was largely due to the favourable impact of incidentals in H1 2018.

Net interest income amounted to EUR -2 million (H1 2017: EUR -21 million). Adjusted for in total EUR 60 million positive incidentals in H1 2018, net interest income decreased primarily due to a lower duration related interest result from the prolonged low interest rate environment from the prolonged low interest rate environment. H1 2018 included an incidental release of penalty fees resulting from mortgage interest term renewals (EUR 25 million) and a provision release related to securities financing activities discontinued in 2009 (EUR 29 million).

Net fee and commission increased by EUR 3 million to EUR 15 million in H1 2018

Other operating income amounted to EUR 125 million (H1 2017: EUR 142 million). Less favourable hedgeaccounting related income (EUR 41 million versus EUR 118 million in H1 2017) was largely offset by the revaluation of equensWorldline (EUR 46 million) and a provision release related to securities financing activities discontinued in 2009 (EUR 29 million), both in H1 2018.

Personnel expenses declined by EUR 44 million to EUR 387 million in H1 2018, partly resulting from higher restructuring provisions in H1 2017. The underlying trend showed decreasing personnel expenses on the back of substantial FTE reductions, partly offset wage inflation following the new CLA. The number of FTEs declined by 577 to 6,175 at 30 June 2018 reflecting progress in cost-saving programmes.

Other expenses increased by EUR 11 million mainly because fewer costs were allocated to the commercial business segments.

Risk, funding & capital information

Risk developments

(in millions)	30 June 2018	31 December 2017
Total loans and advances, gross excluding fair value adjustments	285,281	284,337
- of which Banks	10,089	10,671
- of which Residential mortgages	150,393	150,562
- of which Consumer loans	12,329	12,426
- of which Corporate loans1	98,368	94,220
- of which Other loans and advances - customers1	14,102	16,459
Total Exposure at Default (EAD)	402,537	393,596
- of which Retail Banking	172,428	174,545
- of which Commercial Banking	51,950	48,921
- of which Private Banking	19,881	19,963
- of which Corporate & Institutional Banking	82,919	77,769
- of which Group Functions	75,358	72,399
Credit quality indicators2
Past due ratio	1.1%	1.4%
Stage 3 Impaired ratio3	2.5%	2.5%
Stage 3 Coverage ratio3	34.0%	33.0%
Regulatory capital
Total RWA (REA)	104,490	106,157
- of which Credit risk4	83,494	84,141
- of which Operational risk	19,247	19,626
- of which Market risk	1,748	2,391
Total RWA (REA)/total EAD	26.0%	27.0%
Mortgage indicators
Mortgages with Nationale Hypotheek Garantie (NHG)	37,262	38,049
Exposure at Default	164,630	165,107
Risk-weighted assets (risk exposure amount)	16,931	17,236
RWA (REA) / EAD	10.3%	10.4%
Average Loan-to-Market-Value	67%	70%
Average Loan-to-Market-Value - excluding NHG loans	65%	67%

¹ Excluding loans and advances measured at fair value through P&L.

² Loans and advances customers measured at amortised cost only.

³ The 31 December 2017 amounts are based on IAS 39 figures and therefore do not have stage information. The impaired ratio per 31 December 2017 has been compared with the IFRS 9 stage 3 ratio, as the assets that were impaired under IAS 39 are classified as stage 3 under IFRS 9. The IAS 39 coverage ratio was calculated by dividing the amount of allowances by the impaired exposure. The IFRS 9 equivalent of this ratio is therefore the stage 3 coverage ratio.

⁴ RWA (REA) for credit value adjustment (CVA) is included in credit risk. CVA per 30 June 2018 is EUR 0.6 billion (31 December 2017 EUR 0.7 billion).

	First half 2018	First half 2017
Cost of risk (in bps)1	27	-3
Impairment charges on loans and other advances (in EUR million)2	341	-33

¹ Annualised impairment charges on loans and advances - customers for the period divided by the average loans and advances - customers on the basis of gross carrying amount and excluding fair value adjustment from hedge accounting.

² Including off-balance sheet exposures.

12

Developments over the first six months Portfolio review

Total loans and advances increased to EUR 285.3 billion (31 December 2017: EUR 284.3 billion). Within the total portfolio Corporate loans increased by EUR 4.1 billion as a combination of increased business volume within CIB portfolio and Commercial Banking. In addition corporate loans benefited from a stronger USD exchange rate. Residential mortgage portfolio slightly declined.

Exposure at Default

EAD increased to EUR 402.5 billion (31 December 2017: EUR 393.7 billion).The increase was primarily the result of business growth within both CIB, Commercial Banking and securities financing within Group Functions partly offset by lower positions with central banks.

Credit quality indicators

In this analysis, 30 June 2018 figures were compared with 31 December 2017 figures, although the basis of presentation for some figures was different due to the implementation of IFRS 9. The IAS 39 impaired ratio has been compared with the IFRS 9 stage 3 ratio, as the assets that were impaired under IAS 39 have been classified as stage 3 under IFRS 9. The IAS 39 coverage ratio was calculated by dividing the amount of allowances by the impaired exposure.

The IFRS 9 equivalent of this ratio is therefore the stage 3 coverage ratio. The past due ratio has not been impacted under IFRS 9 and has been calculated in line with IAS 39.

The underlying risk drivers continued to perform well, although specific clients in certain segments experienced difficulties and therefore negatively impacted the ratios.

The past due ratio improved to 1.1% (31 December: 1.4%). Most of the sub-portfolios contributed to this decline, with the largest decreases visible in the short term arrears (<30days). Past due but not impaired on Residential mortgages recorded the highest decrease in the short term arrears, largely in relation to an internal review of amounts in arrears in the first quarter and due to holiday allowances received by clients in the second quarter in 2018. Corporate loans past due decreased in the short term arrears due to an outflow of mainly Real

Estate clients in Commercial Banking. The decrease of the past due but not impaired exposure was partly offset by increases in Other loans and advances.

The stage 3 impaired ratio remained stable and the coverages ratio increased slightly for the loans and advances customers portfolio at year-end 2017. At subportfolio level, exposures for residential mortgages in stage 3 continued to decline, while the allowances for credit losses increased due to the reallocation of allowances, mainly relating to allowances for private banking mortgages that were previously classified under consumer loans. These movements resulted in a coverage ratio for residential mortgages of 12.7% (31 December 2017: 10.9%), while the stage 3 impaired ratio improved slightly.

Consumer loan portfolio ratios were impacted by the combined effect of clients returning to performing, repayments and write-offs, as well as the reallocation of certain allowances to the residential mortgages portfolio.

The coverage ratio for corporate loans increased slightly and the impaired ratio remained stable in the first half of 2018, despite a number of specific clients experiencing difficulties in the sectors energy, diamond & jewellery clients and shipping in the CIB portfolio. Commercial Banking exposures in stage 3 were impacted by new impaired files mainly in the healthcare industry, partly offset by positive developments such as loans moving back to the performing portfolio, partial repayments and write offs.

Regulatory capital

Total RWA decreased to EUR 104.5 billion (31 December 2017: EUR 106.2 billion), driven by a decrease in credit risk and market risk and to lesser extent operational risk. The decrease in credit risk was mainly the result of developments in Retail Banking and Group Functions, partly offset by developments within Commercial Banking. RWAs for Retail Banking decreased due to higher credit quality and higher collateral values, while for Group Functions the decrease resulted from active balance sheet management. The decline was partly offset by the RWAs for Commercial Banking, which rose due to increased business volume. Market Risk RWA decreased mainly

due to updated market risk models combined with a reduction of positions in Q2 2018. Operational risk saw a modest decline.

Cost of risk

The EUR 341million impairments in H1 2018, largely related to specific files in stage 3, resulted in a cost of risk of 27 bps (H1 2017: EUR 33 million release, cost of risk: -3bps).

The increase in impairments largely related to Commercial Banking, which recorded net additions of EUR 114 million in Q2 2018 compared to a net release of EUR 114 million in H1 2017. This increase largely resulted from substantially lower releases combined with higher impairments in the healthcare industry. The remainder was spread across various industry sectors. The significantly lower level of releases compared with last year was to a large extent explained by a model refinement in Q2 2017.

Impairments recorded in CIB in H1 2018 increased to EUR 236 million (H1 2017: EUR 144 million). The increase was mainly driven by additional impairments on a few specific files within natural resources (energy portfolio), trade & commodity finance (including diamond & jewellery clients), and global transportation & logistics (shipping including the OSV portfolio).

Retail Banking recorded a net release of EUR 19 million in H1 2018, compared to a net release of EUR 59 million in H1 2017. H1 2017 benefited from IBNI releases and a model refinement that impacted the residential mortgage portfolio. The release in H1 2018 was driven by a mix of smaller drivers, including a decrease of the impaired portfolio and indexation of collateral.

Past due (but not impaired) loans n

				Days past due		30 June 2018	31 December 2017
(in millions)	Gross carrying amount	<= 30 days	> 30 days & <= 90 days	> 90 days	Total past due but not impaired	Past due ratio	Past due ratio
Loans and advances banks	10,089
Loans and advances customers
Residential mortgages1	150,393	1,574	147	13	1,734	1.2%	1.6%
Consumer loans	12,329	219	75	46	340	2.8%	3.5%
Corporate loans1, 2	98,368	347	90	118	554	0.6%	0.8%
Other loans and advances customers1, 2, 3	14,102	249	214	51	514	3.6%	2.0%
Total Loans and advances customers2	275,192	2,389	526	229	3,143	1.1%	1.4%
Loans at fair value through P&L	1,876
Total Loans and advances	287,156	2,389	526	229	3,143	1.1%	1.4%

¹ Gross carrying amount excludes fair value adjustments from hedge accounting.

² Excluding loans at fair value through P&L.

³ Other loans and advances customers consists of Government and official institutions, Financial lease receivables and Factoring.

Coverage and impaired ratio by stage n

				30 June 2018
(in millions)	Gross carrying amount	Allowances for credit losses	Coverage ratio	Stage ratio
Stage 1
Loans and advances banks	10,026	-3	0.0%	99.4%
Residential mortgages	146,098	-22	0.0%	97.1%
Consumer loans	10,936	-42	0.4%	88.7%
Corporate loans	83,881	-136	0.2%	85.3%
Other Loans and advances customers1	13,186	-17	0.1%	93.5%
Total Loans and advances customers stage 1	254,100	-217	0.1%	92.3%
Stage 2
Loans and advances banks	36	-1	3.4%	0.4%
Residential mortgages	3,369	-16	0.5%	2.2%
Consumer loans	956	-53	5.5%	7.8%
Corporate loans	9,183	-111	1.2%	9.3%
Other Loans and advances customers1	654	-11	1.7%	4.6%
Total Loans and advances customers stage 2	14,162	-191	1.3%	5.1%
Stage 3
Loans and advances banks	27		0.0%	0.3%
Residential mortgages	927	-117	12.7%	0.6%
Consumer loans	437	-235	53.8%	3.5%
Corporate loans	5,304	-1,972	37.2%	5.4%
Other Loans and advances customers1	262	-34	13.1%	1.9%
Total Loans and advances customers stage 3	6,930	-2,359	34.0%	2.5%
Total of stages 1, 2 and 3
Total Loans and advances banks	10,089	-5	0.0%
Residential mortgages	150,393	-155	0.1%
Consumer loans	12,329	-330	2.7%
Corporate loans	98,368	-2,219	2.3%
Other Loans and advances customers1	14,102	-63	0.4%
Total Loans and advances customers2	275,192	-2,767	1.0%
Loans at fair value through P&L	1,876		0.0%	0.0%
Fair value adjustments from hedge accounting
on Loans and advances customers	3,516		0.0%	0.0%
Total Loans and advances banks	10,089	-5	0.0%
Total Loans and advances customers	280,584	-2,767	1.0%
Total Loans and advances	290,672	-2,771	1.0%
Other balance sheet items3	107,471	-7	0.0%
Total on-balance sheet	398,143	-2,779	0.7%	0.0%
Irrevocable loan commitments and financial guarantee
contracts	47,320	-20	0.0%	0.0%
Other off-balance sheet items	5,861		0.0%	0.0%
Total on- and off-balance sheet	451,324	-2,798	0.6%

¹ Other loans and advances customers consists of Government and official institutions, Financial lease receivables and Factoring.

² Excluding fair value adjustments from hedge accounting on Loans and advances customers

³ The allowances for credit losses excludes allowances for financial investments held at FVOCI (30 June 2018: EUR 3.0 million).

Coverage and impared ratio

				31 December 2017
(in millions)	Gross carrying amount	Impaired exposures	Allowances for Impairments for identified credit risk3)	Coverage ratio	Impaired ratio
Loans and advances banks	10,671	71	-1	1.5%	0.7%
Loans and advances customers
Residential mortgages1	150,562	1,019	-111	10.9%	0.7%
Consumer loans	12,426	507	-285	56.2%	4.1%
Corporate loans1)	94,220	5,114	-1,844	36.1%	5.4%
Other loans and advances customers1, 2	16,459	269	-40	15.0%	1.6%
Total Loans and advances customers	273,666	6,909	-2,280	33.0%	2.5%
Total Loans and advances	284,337	6,980	-2,281	32.7%	2.5%

¹ Gross carrying amount excludes fair value adjustments from hedge accounting.

² Other loans and advances customers consists of Government and official institutions, Financial lease receivables and Factoring.

³ Amounts excluding Incurred But Not Identified (IBNI).

Loans impairment charges and allowances in the first six months

							First half 2018
(in millions)	Securities financing	Loans to Banks	Residential mortgages	Consumer loans	Corporate loans	Other loans	Total
Balance at begin of period		9	182	362	2,055	2	2,610
Changes in existing allowances		-2	8	-1	408	5	419
Originated or purchased		1		2	21		24
Matured or sold loans		-3		-3	-29		-35
Changes in risk parameters				1	-6		-5
Write-offs			-19	-50	-189		-258
Foreign exchange and other movements			-15	20	15	-2	17
Balance at end of period		5	155	330	2,276	6	2,771

							First half 2017
(in millions)	Securities financing	Banks	Residential mortgages	Consumer loans	Corporate loans	Other loans	Total
Balance at begin of period		3	258	433	2,973	2	3,670
Impairment charges for the period		3	17	36	290		346
Reversal of impairment allowances no longer required			-46	-33	-257		-336
Recoveries of amounts previously written-off			-14	-20	-9		-43
Total impairment charges on loans and other advances		3	-43	-17	24		-33
Other adjustments			-40	-35	-431		-507
Balance at end of period		6	175	381	2,566	3	3,130

(in millions)	First half 2018	First half 2017
On-balance sheet	363	-33
Off-balance sheet	-22
Total impairment charges on loans and other advances	341	-33

Executive Board Report / Risk, funding & capital information

(in millions)	Stage 1	Stage 2	Stage 3	Total
Impairment charges on loans and advances
Balance at 1 January 2018	214	213	2,184	2,610
Change in existing allowances	20	-11	410	419
Originated or purchased	21	3		24
Matured or sold	-25	-10		-35
Write offs			-258	-258
Changes in risk parameters	-1	-1	-3	-5
Changes in models
Foreign exchange and other movements	-9	-1	27	17
Balance at 30 June 2018	220	192	2,359	2,771

Reporting scope risk

	30 June 2018		31 December 2017
(in millions)	Gross carrying amount	Loan impairment allowance	Carrying amount	Gross carrying amount	Loan impairment allowance	Carrying amount
Loans and advances banks	10,089	5	10,084	10,671	7	10,665
Residential mortgages	152,541	155	152,387	152,825	134	152,691
Less: Fair value adjustment from hedge accounting	2,148		2,148	2,264		2,264
Residential mortgages, excluding fair value adjustments from hedge accounting	150,393	155	150,238	150,562	134	150,428
Consumer loans	12,329	330	11,999	12,426	304	12,122
Corporate loans	99,724	2,219	97,505	95,645	1,971	93,674
Less: Fair value adjustment from hedge accounting	1,356		1,356	1,425		1,425
Corporate loans, excluding fair value adjustments from hedge accounting	98,368	2,219	96,149	94,220	1,971	92,250
Corporate loans at fair value through P&L	1,872		1,872
Other loans and receivables customers1	14,113	63	14,051	16,470	51	16,419
Less: Fair value adjustment from hedge accounting	12		12	11		11
Other loans and advances customers, excluding fair value adjustments from hedge accounting1
Other loans at fair value through P&L	14,102	63	14,039	16,459	51	16,407
Total loans and advances customers, excluding fair value adjustments from hedge accounting	4 277,068	2,767	4 274,301	273,666	2,460	271,206
Fair value adjustments from hedge accounting on Loans and advances customers	3,516		3,516	3,700		3,700
Total loans and advances customers	280,584	2,767	277,817	277,366	2,460	274,906
Total loans and advances, excluding fair value adjustments from hedge accounting	287,156	2,771	284,385	284,337	2,467	281,871
Total fair value adjustments from hedge accounting on Loans and advances	3,516		3,516	3,700		3,700
Total loans and advances	290,672	2,771	287,901	288,037	2,467	285,571
Other		7	107,464			107,600
Total assets		2,779	395,365			393,171

¹ Other loans and advances customers consists of Government and official institutions, Financial lease receivables and Factoring.

Market risk

Market risk in the banking book is the risk that unfavourable market movements cause the bank's value or income to decline. The market risk in the banking book consists predominantly of interest rate risk, which arises from holding loans with interest rate maturities that are different from the interest rate maturities of the deposits. The assets have a longer average maturity than the liabilities. This applies to contractual as well as behavioural maturities.

ABN AMRO uses a combination of portfolio (macro) hedges and specific asset or liability (micro) hedges to swap fixed interest rates for floating interest rate positions. The resulting interest rate positions, after application of interest rate hedges, are in line with the bank's strategy and risk appetite.

The risk appetite for interest rate risk has been lowered in the annual review of the risk appetite statement for 2018, while also anticipating a periodic methodology review and stricter regulatory testing. In addition the way non maturing deposits are modelled has been updated to assure accurate measurement and management of interest rate risk. Duration of equity decreased from 2.2 to 1.6 years. Although duration of equity increased due to business developments and the implementation of the updated non maturing deposits (NMD) model (shortening the modelled duration of liabilities), the effect was more than offset due to active hedging of the portfolio. Duration of equity reflects changes of the economic value of equity due to small parallel shifts of the yield curve.

Liquidity risk

The objective of liquidity management is to manage the liquidity position and to comply at all times with internal, regulatory and other relevant liquidity requirements. The liquidity objectives are measured by several indicators. The survival period reflects the period that the liquidity position is expected to remain positive in an internally developed (moderate) stress scenario. The survival period was consistently longer than 12 months in H1 2018. The Liquidity Coverage Ratio (LCR) and the Net Stable Funding Ratio (NSFR) both remained above 100% in H1 2018.

The Loan-to-Deposit (LtD) ratio increased to 114% at 30 June 2018 (31 March 2018: 112%).

The liquidity buffer remains EUR 72.5 billion at 30 June 2018. The increase in government bonds is largely offset by the decrease in retained Residential Mortgage Backed Securities (RMBS).

The liquidity buffer consists largely of cash and deposits at central banks, government bonds and covered bonds (CB). Most of the securities in the liquidity buffer, with the exception of retained RMBS/CB, qualify for the LCR.

Furthermore, both the liquidity buffer and the LCR buffer face haircuts based on their market value. These haircuts are applied in order to determine the liquidity value. Haircuts may differ between these two buffers, as the internal assessment of the liquidity buffer deviates from the LCR Delegated Act. This explains the differences between the liquidity values. Government bonds, for example, will be subject to a higher internal haircut than the haircut based on the LCR Delegated Act. As a result, the value of government bonds for the liquidity buffer is lower than the value that qualifies for LCR.

Funding

Client deposits increased to EUR 237.3 billion at 30 June 2018 (31 December 2017: EUR 235.9 billion). Total wholesale funding (defined as issued debt plus subordinated liabilities) increased to EUR 87.9 billion at 30 June 2018 (31 December 2017: EUR 86.3 billion).

Long-term funding raised in H1 2018 amounted to EUR 6.5 billion. This consisted of EUR 3.7 billion in covered bonds, a EUR 1.5 billion in unsecured USD-denominated medium-term notes, a green senior unsecured bond of EUR 0.8 billion and a EUR 0.5 billion senior unsecured GBP-denominated bond. Covered bond funding was raised in order to support mortgage origination with very long interest rate maturities. The remaining funding was mainly issued to replace maturing funding.

The maturity calendar assumes redemption on the earliest possible call date or the legal maturity date. Early redemption of subordinated instruments is subject to approval by the regulators. The targeted long-term refinancing operations II (TLTRO II) of EUR 8 billion were reported at the legal maturity of four years, although there is a voluntary repayment option after two years.

The average remaining maturity of the total outstanding long-term wholesale funding increased to 5.4 years at 30 June 2018 (31 December 2017: 5.1 years) due to additional long-term covered bond issuances.

Capital management

The Common Equity Tier 1 (CET1) capital base continued to increase during Q2 2018, reflecting profit accumulation partly offset by an increase in the dividend reserve. Total RWA (REA) declined to EUR 104.5 billion at 30 June 2018 (31 December 2017: EUR 106.2 billion). Therefore, at 30 June 2018, the fully-loaded Bank Common Equity Tier 1, Tier 1 and Total Capital ratios strongly improved to 18.3%, 20.2% and 26.3% respectively (31 December 2017: 17.7%, 19.5%, 25.4%). All capital ratios meet the bank's risk appetite and strategic ambitions and were well above regulatory minimum requirements.

The CET1 capital target range under Basel III is 17.5%-18.5% for 2018. This consists of a Basel IV implementation buffer of 4-5% CET1 on top of the SREP capital requirement for ABN AMRO Group, Pillar 2 Guidance and management buffer (totalling 13.5%). Following the RWA decline, the CET1 ratio of 18.3% at the end of Q2 2018 is at the upper end of the CET1 target range. The 0.8 percentage point increase in the CET1 ratio compared to Q1 2018 mainly reflects a decline in RWA and to a lesser extent the accumulation of retained earnings. Total RWA decreased to EUR 104.5 billion (31 December 2017: EUR 106.2 billion), driven by a decrease in credit risk and market risk and to lesser extent operational risk. The decrease in credit risk was mainly the result of developments in Retail Banking and Group Functions, partly offset by developments within Commercial Banking. RWAs for Retail Banking decreased due to higher credit quality and higher collateral values, while for Group Functions the decrease resulted from active balance sheet management. The decline was partly offset by the RWAs for Commercial Banking, which rose due to increased business volume. Market Risk RWA decreased mainly due to updated market risk models combined with a reduction of positions in Q2 2018. Operational risk saw a modest decline.

The Maximum Distributable Amount (MDA) trigger level for ABN AMRO Bank is at 8.18% CET1 capital. Based on full phase-in of the capital conservation buffer (from 1.88% in 2018 to 2.5% in 2019), the fully-loaded MDA trigger level is expected to increase to 8.80% in 2019, including a counter-cyclical buffer (0.05%). The current CET1 ratio is also comfortably above the MDA trigger level.

The CRR capital rules introduced a non-risk based leverage ratio which is expected to become a binding measure with effect from 2021.

ABN AMRO aims for a leverage ratio of at least 4% by year-end 2018. At 30 June 2018, the fully-loaded leverage ratio of ABN AMRO Bank is 4.3% (31 December 2017: 4.3%).

ABN AMRO expects a change in the methodology for calculating the Exposure Measure. BCBS and ECOFIN both reached agreement on the use of the SA-CCR calculation methodology for clearing guarantees, providing further confidence that this will be implemented via CRR2 in the short to medium term. The total CRR2 adjustments including SA-CCR are estimated to decrease the Exposure Measure by approximately EUR 52 billion, which improves the fullyloaded leverage ratio by 0.5 percent to 4.8%. Despite the favourable effects of applying SA-CCR, ABN AMRO continues to monitor and report the leverage ratio at 4% based on the current CEM methodology.

The binding MREL requirement for ABN AMRO Bank is set at 8.91% (including senior debt) of Total Liabilities and Own Funds (TLOF), equalling EUR 32.9 billion and 31.55% of RWA at year-end 2016. Taking into account MREL eligible senior debt, ABN AMRO currently exceeds this requirement. Subject to further changes in the MREL framework, the ambition remains to meet a MREL of 29.3% of RWA in 2019 based on own funds and subordinated instruments (including, in time, non-preferred senior notes). At the end of the second quarter MREL including only own funds and subordinated instruments is at 29.2%.

CRD IV and CRR constitute the framework for implementation of Basel III in the European Union. CRD IV and CRR have been phased in since 1 January 2014 and will be fully effective by January 2019. Further to this, the European Commission issued draft texts in November 2016 to amend CRD IV and CRR.

On 7 December 2017, Basel reached a final agreement on the completion of Basel III, with a 72.5% output floor applying to the Revised Standardised Approach (RSA). The Basel Committee has set the implementation date at 1 January 2022. From 1 January 2022, the output floor will be phased-in gradually over a period of 5 years. We aim to meet the fullyloaded Basel IV CET1 requirement early in the phase-in period. Basel IV will significantly impact ABN AMRO's portfolio. We are monitoring Basel IV developments and working on plans and responses.

ABN AMRO has taken notice of a press release, issued by the Ministry of Finance on 29 June 2018, regarding the loss of tax deductibility of AT1 (Additional Tier 1) coupon payments as from 1 January 2019. ABN AMRO continues to value the role of AT1 in its capital structure. Based on this publication, ABN AMRO does not intend to exercise the tax call in the EUR 1,000m 5.75%, perpetual AT1 (XS1278718686) and the EUR 1,000m, 4.75%, perpetual AT1 (XS1693822634) instruments.

(in millions)	30 June 2018	31 December 2017
Total equity (EU IFRS)	21,288	21,330
Cash flow hedge reserve	1,022	919
Dividend reserve	-609	-752
AT1 capital securities	-1,986	-1,987
Other regulatory adjustments	-556	-718
Common Equity Tier 1	19,159	18,793
AT1 capital securities	1,986	1,987
Other regulatory adjustments1	-5	-96
Tier 1 capital1	21,139	20,684
Subordinated liabilities Tier 2	7,625	7,674
Other regulatory adjustments1	-75	-128
Total regulatory capital1	28,690	28,230

¹ As a result of the minority interest rule regulatory capital between the ABN AMRO Group and ABN AMRO Bank deviates. Because of this deviation Q4 2017 capital for ABN AMRO Bank was restated.

(in millions)	2018	2017
Common Equity Tier 1 capital
Balance at 1 January	18,793	17,775
Addition of net profit attributable to shareholders	1,258	2,774
Reserved dividend	-609	-752
Interim dividend paid		-611
Other, including regulatory adjustments	-284	-392
Balance at end of period	19,159	18,793
Additional Tier 1 capital
Balance at 1 January	1,891	829
New issued Tier 1 eligible capital instruments		993
Redeemed Innovative hybrid capital instruments
Other, including regulatory adjustments	90	68
Balance at end of period	1,981	1,891
Tier 1 capital1	21,139	20,684
Tier 2 capital
Balance at 1 January	7,546	7,032
New issued Tier 2 eligible capital instruments		1,398
Redeemed Tier 2 ineligible capital instruments
Other, including regulatory adjustments	4	-884
Balance at end of period	7,550	7,546
Total regulatory capital1	28,690	28,230

¹ As a result of the minority interest rule regulatory capital between the ABN AMRO Group and ABN AMRO Bank deviates. Because of this deviation Q4 2017 capital for ABN AMRO Bank was restated.

Responsibility statement

Pursuant to section 5:25d, paragraph 2(c), of the Dutch Financial Supervision Act (Wet op het financieel toezicht (Wft)), the members of the Executive Board state that to the best of their knowledge:

• Å The Condensed consolidated Interim Financial Statements, for the six months period ending on 30 June 2018, give a true and fair view of the assets, liabilities, financial position and profit or loss of ABN AMRO Bank N.V. and the companies included in the consolidation; and
• Å The Interim Report, for the six months period ending on 30 June 2018, gives a true and fair view of the information required pursuant to section 5:25d, paragraphs 8 and 9, of the Dutch Financial Supervision Act of ABN AMRO Bank N.V. and the companies included in the consolidation.

Amsterdam, 7 August 2018

The Executive Board

Kees van Dijkhuizen, Chief Executive Officer and Chairman Clifford Abrahams, Chief Financial Officer and Vice-Chairman Christian Bornfeld, Chief Innovation & Technology Officer Tanja Cuppen, Chief Risk Officer

22

Other Interim Financial Statements 2018

Condensed consolidated Interim Financial Statements 2018

Condensed consolidated income statement	24
Condensed consolidated statement of comprehensive income	25
Condensed consolidated statement of financial position	26
Condensed consolidated statement of changes in equity	27
Condensed consolidated statement of cash flows	29

Notes to the Condensed consolidated Interim Financial Statements 31

1	Accounting policies	31
2	Segment reporting	42
3	Overview of financial assets and liabilities
	by measurement base	49
4	Operating income	50
5	Operating expenses	51
6	Income tax expense	51
7	Financial assets and liabilities held for trading	52
8	Derivatives	53
9	Financial investments	54
10	Securities financing	55
11	Fair value of financial investments	56
12	Loans and advances banks	62
13	Loans and advances customers	63
14	Aquisitions and divestments	64
15	Due to banks	64
16	Due to customers	65
17	Issued debt and subordinated liabilities	65
18	Provisions	66
19	Commitments and contingent liabilities	68
20	Related parties	69
21	Post balance sheet events	71

Certain IFRS disclosures in the Risk, funding & capital information section are labelled as 'IFS' in the respective headings. These disclosures are an integral part of the Condensed consolidated Interim Financial Statements.

Condensed consolidated Interim Financial Statements 2018

Condensed consolidated income statement

(in millions) Note	First half 2018	First half 2017
Income
Interest income from financial instruments measured at amortised costs
and fair value through other comprehensive income	6,429	6,245
Interest income from financial instruments measured at fair value through profit or loss	52	70
Interest expense	3,154	3,121
Net interest income	3,327	3,195
Fee and commission income	1,611	1,589
Fee and commission expense	755	701
Net fee and commission income	856	888
Net trading income	118	154
Share of result in equity accounted investments	25	13
Other operating income	290	487
Operating income 4	4,617	4,738
Expenses
Personnel expenses	1,210	1,288
General and administrative expenses	1,314	1,335
Depreciation and amortisation of tangible and intangible assets	86	97
Operating expenses 5	2,609	2,720
Impairment charges on financial instruments	341	-33
Total expenses	2,951	2,687
Operating profit/(loss) before taxation	1,666	2,051
Income tax expense 6	383	475
Profit/(loss) for the period	1,283	1,576
Attributable to:
Owners of the parent company	1,258	1,561
Non-controlling interests	25	15

Condensed consolidated statement of comprehensive income

(in millions)	First half 2018	First half 2017
Profit/(loss) for the period	1,283	1,576
Other comprehensive income:
Items that will not be reclassified to the income statement
Remeasurement gains / (losses) on defined benefit plans
Items that will not be reclassified to the income statement before taxation	14
Income tax relating to items that will not be reclassified to the income statement	3
Items that will not be reclassified to the income statement after taxation	11
Items that may be reclassified to the income statement
(Un)realised gains/(losses) currency translation	26	-124
(Un)realised gains/(losses) available-for-sale	-25	-45
(Un)realised gains/(losses) cash flow hedge	-137	-78
Share of other comprehensive income of associates	-124	1
Other changes
Other comprehensive income for the period before taxation	-260	-246
Income tax relating to items that may be reclassified to the income statement	-39	-32
Other comprehensive income for the period after taxation	-221	-214
Total comprehensive income/(expense) for the period after taxation	1,073	1,362
Attributable to:
Owners of the parent company	1,048	1,346
Non-controlling interests	25	15

Condensed consolidated statement of financial position

(in millions) Note	30 June 2018	31 December 2017
Assets
Cash and balances at central banks	28,826	29,783
Financial assets held for trading 7	1,430	1,600
Derivatives 8	8,648	9,825
Financial investments 9	41,322	40,964
Securities financing 10	16,830	15,686
Loans and advances banks 12	10,084	10,665
Residential mortgages 13	152,387	152,691
Consumer loans 13	11,999	12,122
Corporate loans 13	107,580	101,118
Other loans and advances customers 13	5,851	8,975
Other assets	10,408	9,743
Total assets	395,365	393,171
Liabilities
Financial liabilities held for trading 7	716	1,082
Derivatives 8	9,700	8,367
Securities financing 10	12,756	11,412
Due to banks 15	14,646	16,462
Current accounts 16	83,383	83,627
Demand deposits 16	125,692	125,995
Time deposits 16	27,852	26,536
Other due to customers 16	1,130	541
Issued debt 17	78,251	76,612
Subordinated liabilities 17	9,683	9,720
Other liabilities	10,266	11,488
Total liabilities	374,077	371,841
Equity
Share capital	800	800
Share premium	4,041	4,041
Other reserves (incl retained earnings/profit for the period)	15,066	14,814
Accumulated other comprehensive income	-646	-331
AT1 capital securities	1,984	1,987
Equity attributable to the owners of the parent company	21,245	21,310
Equity attributable to other non-controlling interests	43	20
Total equity	21,288	21,330
Total liabilities and equity	395,365	393,171

Condensed consolidated statement of changes in equity

(in millions)	Share capital	Share premium	Other reserves including retained earnings	Accumu lated other compre hensive income	Net profit/ (loss) attributable to owners of the parent company	AT1 capital securities	Total	Non-con trolling interests	Total equity
Balance at 1 January 2017	800	4,041	11,334	-9	1,762	1,004	18,932	5	18,937
Total comprehensive income				-214	1,539	22	1,346	15	1,362
Transfer			1,762		-1,762
Dividend			-414				-414	-3	-417
Paid interest on AT1 capital securities						-22	-22		-22
Other changes in equity
Balance at 30 June 2017	800	4,041	12,682	-223	1,539	1,004	19,843	17	19,860
Balance at 31 December 2017	800	4,041	12,093	-331	2,721	1,987	21,310	20	21,330
Impact of adopting IFRS 9			-215	-104			-319		-319
Balance at 1 January 2018	800	4,041	11,878	-435	2,721	1,987	20,991	20	21,011
Total comprehensive income				-210	1,219	39	1,048	25	1,073
Transfer			2,721		-2,721
Dividend			-752				-752	-2	-754
Increase/(decrease) of capital						-3	-3		-3
Paid interest on AT1 capital securities						-38	-38		-38
Other changes in equity						-1	-1		-1
Balance at 30 June 2018	800	4,041	13,847	-646	1,219	1,984	21,245	43	21,288

The opening balance of total equity has changed compared to the closing balance of prior year due to the impact of IFRS 9. The total impact of the IFRS 9 implementation on total equity is EUR 319 million negative. The current year change in equity is EUR 277 million. The addition of current year's net profit has increased equity with EUR 1,219 million. The payment of dividend to the owners of the parent company impacted equity with a total amount of EUR 752 million. The decrease of capital of EUR 3 million consist of AT1 capital securities held for client facilitation purposes in Global Markets for H1 2018.

Specification of accumulated other comprehensive income is as follows:

(in millions)	Remeasure ments on post retirement benefit plans	Currency translation reserve	Available for-sale reserve	Fair value reserve	Cash flow hedge reserve	Accumu lated share of OCI of associates and joint ventures	Liability own credit risk reserve	Total
Balance at 1 January 2017 (IAS 39)	-13	166	557		-843	124		-9
Net gains/(losses) arising during the period		-124	-38		-183	1		-344
Less: Net realised gains/(losses) included in income statement			8		-105			-98
Net gains/(losses) in equity		-124	-45		-78	1		-246
Related income tax		1	-13		-19			-32
Balance at 30 June 2017 (IAS 39)	-13	41	525		-901	124		-223
Balance at 31 December 2017	-21	-32	490		-919	152		-331
Impact of adopting IFRS 9			-490	450			-64	-104
Balance at 1 January 2018	-21	-33		450	-919	152	-64	-435
Net gains/(losses) arising during the period		26		-25	-137	-124	14	-246
Less: Net realised gains/(losses) included in income statement
Net gains/(losses) in equity		26		-25	-137	-124	14	-246
Related income tax		1		-6	-34		4	-35
Balance at 30 June 2018	-21	-8		431	-1,022	28	-54	-645

The total movement in accumulated other comprehensive income for the first half of 2018 was EUR 209 million negative (first half of 2017: EUR 214 million negative). The main cause of this movement is related to the movement in the cash flow hedge reserve (EUR 103 million), the currency translation reserve (EUR 26 million) and the accumulated share of OCI of associates and joint ventures (EUR 124 million negative).

Condensed consolidated Interim Financial Statements 2018

Condensed consolidated statement of cash flows

The following table shows the determination of cash and cash equivalents.

(in millions) Note	First half 2018	First half 2017
Profit/(loss) for the period	1,283	1,576
Adjustments on non-cash items included in profit:
(Un)realised gains/(losses)	933	-367
Share of profits in associates and joint ventures	-25	-11
Depreciation, amortisation and accretion	181	206
Provisions and impairment losses	465	116
Income tax expense 6	383	475
Tax movements other than taxes paid & income taxes	-19
Eliminations of exchange differences	-1
Operating activities
Changes in:
- Assets held for trading	185	-3,051
- Derivatives - assets	743	2,514
- Securities financing - assets	-890	-12,403
- Loans and advances banks	-529	3,525
- Residential mortgages	355	-1,190
- Consumer loans	19	-1,266
- Corporate loans	-4,971	-5,954
- Other loans and advances customers	1,534	-530
- Other assets	-372	587
- Liabilities held for trading	-773	1,525
- Derivatives - liabilities	1,736	-3,711
- Securities financing - liabilities	1,183	10,915
- Due to banks	-1,807	4,687
- Due to customers	1,090	11,910
Liabilities arising from insurance and investment contracts		-133
Net changes in all other operational assets and liabilities	-2,691	-3,112
Dividend received from associates	92	63
Income tax paid	-576	-814
Cash flow from operating activities	-2,472	5,556

continued >

Investing activities Purchases of financial investments -8,349 -7,861 Proceeds from sales and redemptions of financial investments 7,997 9,975 Acquisition of subsidiaries (net of cash acquired), associates and joint ventures -46 Divestments of subsidiaries (net of cash sold), associates and joint ventures -15 84 Proceeds from sale of private banking activities in Asia and the Middle East -1,188 Purchases of property and equipment -173 -221 Proceeds from sales of property and equipment 74 25 Purchases of intangible assets -15 -8 Cash flow from investing activities -527 806 Financing activities: Proceeds from the issuance of debt 20,763 16,368 Repayment of issued debt -19,279 -19,706 Proceeds from subordinated liabilities issued 16 1,402 Repayment of subordinated liabilities issued -26 -83 Proceeds from other borrowing -3 Dividends paid to the owners of the parent company -752 -414 Interest paid AT1 capital securities -51 -22 Dividends paid to other non-controlling interests -2 -3 Cash flow from financing activities 666 -2,458 Net increase/(decrease) of cash and cash equivalents -2,334 3,904 Cash and cash equivalents as at 1 January 33,165 24,954 Effect of exchange rate differences on cash and cash equivalents 25 -71 Cash and cash equivalents as at 30 June 30,857 28,788 Supplementary disclosure of operating cash flow information Interest paid 3,261 3,754 Interest received 6,461 6,514 Dividend received excluding associates 5 27	(in millions)	Note	First half 2018	First half 2017

(in millions)	30 June 2018	30 June 2017
Cash and balances at central banks	28,826	26,648
Loans and advances banks (less than 3 months)1	2,031	2,140
Total cash and cash equivalents	30,857	28,788

¹ Loans and advances banks with an original maturity of 3 months or more is included in Loans and advances banks. See note 12.

Condensed consolidated Interim Financial Statements 2018

Notes to the Condensed consolidated Interim Financial Statements

1 Accounting policies

The notes to the Condensed consolidated Interim Financial Statements, including the reviewed sections in the Risk, funding & capital information section, are an integral part of these Condensed consolidated Interim Financial Statements.

Corporate information

ABN AMRO Bank N.V. (referred to as ABN AMRO Bank) provides financial services in the Netherlands and abroad, together with its consolidated group of entities. ABN AMRO Bank is a public limited liability company, incorporated under Dutch law on 9 April 2009, and registered at Gustav Mahlerlaan 10, 1082 PP Amsterdam, the Netherlands (Chamber of Commerce number 34334259).

As at 30 June 2018, all shares in the capital of ABN AMRO Group were held by two foundations: NLFI and STAK AAG. On that date, NLFI held 56.3% in ABN AMRO, of which 49.9% is directly held via ordinary shares and 6.4% is indirectly held via depositary receipts for shares in ABN AMRO. STAK AAG held 50.1% of the shares in the issued capital of ABN AMRO Group N.V. With the cooperation of the ABN AMRO Group, STAK AAG has issued depositary receipts for shares in ABN AMRO Group, which are traded on Euronext Amsterdam.

ABN AMRO provides a broad range of financial services to retail, private, commercial and corporate banking clients. These activities are conducted primarily in the Netherlands and selectively abroad.

The Condensed consolidated Interim Financial Statements of ABN AMRO Bank for the six months ending on 30 June 2018 incorporate financial information of ABN AMRO Bank N.V., its controlled entities, interests in associates and joint ventures. The Condensed consolidated Interim Financial Statements were prepared by the Executive Board and authorised for issue by the Supervisory Board and Executive Board on 7 August 2018.

Basis of presentation

The Condensed consolidated Interim Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting as endorsed by the European Union (EU).

The Condensed consolidated Interim Financial Statements do not include all the information and disclosures required in the Annual Financial Statements and should be read in conjunction with ABN AMRO Bank's 2017 Consolidated Annual Financial Statements, which were prepared in accordance with the International Financial Reporting Standards (IFRS) as endorsed by the EU. The same accounting policies are followed in the Condensed consolidated Interim Financial Statements as compared with the 2017 Consolidated Annual Financial Statements of ABN AMRO Bank, except for the adoption of IFRS 9 and IFRS 15, the amendments to IFRS 2 and the amendments of the Annual Improvements to IFRS Standards 2014-1016 Cycle (IFRS 1 and IAS 28) as of 1 January 2018. For more information refer to the "Changes in accounting policies" section.

Condensed consolidated Interim Financial Statements 2018

The Condensed consolidated Interim Financial Statements are prepared under the going concern assumption. The Condensed consolidated Interim Financial Statements are presented in euros, which is the reporting currency of ABN AMRO, rounded to the nearest million (unless otherwise stated).

Changed presentation of due to banks and due to customers

During the first half of 2018 ABN AMRO considered regulatory guidance and market practices for the presentation of deposits included in due to banks (refer to note 15) and due to customers (refer to note 16). As a result it was concluded that a change in presentation would be appropriate, since it better aligns with the level of regulatory reporting of financial liabilities and provide more relevant information about the effect of these financial liabilities on our financial position and performance.

The change in presentation did not impact measurement of these items and neither on retained earnings nor profit for any period. Comparative figures have been adjusted accordingly. As a result, the following definitions apply to the new classification of due to banks and due to customers:

• Å Current accounts include amounts held at ABN AMRO which are available to the owner for the execution of payment transactions.
• Å Demand deposits are available to the account owner for frequent and immediate access but cannot be used for payment transactions. As these deposits are on demand, they can be drawn or transferred by the client without prior notice to the bank.
• Å Time deposits are not available to the account owner for immediate access and have an agreed maturity. In special circumstances early withdrawal may be permitted in exchange of a penalty payable by the account owner.
• Å Other includes payables for cash collateral received in derivatives transactions and other financial liabilities to banks and customers.

Current accounts in due to customers in particular has been restructured to include products that were previously reported on demand deposits. Saving deposits are recorded under demand deposits.

Applying the previously used presentation the due to banks demand deposits amounted to EUR 2.5 billion, time deposits to EUR 1.1 billion and other deposits to EUR 12.8 billion per 31 December 2017. As per 1 January 2018 applying the new presentation the current accounts amounted to EUR 2.6 billion, time deposits to EUR 11.1 billion and cash collateral on securities lent to EUR 2.7 billion.

Per 31 December 2017 the due to customers demand deposits applying the previously used presentation amounted to EUR 127.7 billion, savings deposits to EUR 95.8 billion and time deposits to EUR 13.3 billion. As per 1 January 2018 applying the new presentation the current accounts amounted to EUR 83.6 billion, demand deposits to EUR 126.0 billion, time deposits to EUR 26.5 billion and other due to customers EUR 0.5 billion.

Reclassification of unsettled securities transactions

During the first half of 2018, ABN AMRO has reclassified all unsettled securities transactions that were previously included in securities financing as 'other assets' and 'other liabilities'. These assets were reclassified to reflect their nature as they comprise of all unsettled securities transactions and therefore do not necessarily relate to securities financing. Per 1 January 2018 an amount of EUR 1.0 billion of assets was reclassified from securities financing to other assets, liability amount of EUR 1.5 billion was reclassified from securities financing to other liabilities. Comparative figures have been adjusted.

Changes in accounting policies

During the first half of 2018 new EU endorsed standards became effective. The following standards were adopted:

IFRS 9 Financial Instruments

As from 1 January 2018 ABN AMRO has adopted IFRS 9 "Financial Instruments". IFRS 9 was issued by the IASB in July 2014 and endorsed by the EU in November 2016. ABN AMRO applies the principles of IFRS 9 retrospectively from 1 January 2018 onwards. Prior years were not restated in line with the transitional provisions of the standard. IFRS 9 replaces IAS 39 "Financial Instruments: Recognition and Measurement" and includes requirements for the classification and measurement of financial instruments, impairment of financial assets, and hedge accounting.

IFRS 9 has impact on the financial statements in two areas: classification and measurement of financial assets and liabilities and impairment of financial assets. ABN AMRO has decided to continue applying IAS 39 for hedge accounting, including the application of the EU carve-out. Refer to the IFRS 9 transition disclosures in this note for the transitional impact of IFRS 9.

Classification and Measurement

The classification and measurement of financial assets under IFRS 9 is determined by the business model in which the assets are held and whether the contractual cash flows are solely payments of principal and interest (SPPI). Under IFRS 9, financial assets can be measured at amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss (FVTPL). These categories replace the IAS 39 classifications of loans and receivables, available for sale (AFS), FVTPL, and held-to-maturity.

Financial assets are classified based on the business model in which they are held. The business model is determined at a portfolio level. Portfolios are based on how ABN AMRO manages financial assets as a group to achieve a particular business objective. The business model assessment is based on the level of sales, risk management, performance evaluation, and management compensation. Derecognition is used as condition in order to determine whether a transaction results in a sale.

Three business models are distinguished:

• Å A 'hold to collect' business model, in which cash flows are primarily generated by collecting contractual cash flow until maturity of the financial instrument. Sales can occur, as long as they are incidental, infrequent and insignificant. The assessment of frequency and significance of sales is determined based on comparison with sales in the underlying portfolio. Sales that result from increases in credit risk of the counterparty or take place close to maturity do not contradict the hold to collect business model.
• Å A 'hold to collect and sell' business model, in which the selling of financial assets is integral to achieving the business objective. In this business model sales take place more frequently and have a greater value compared to a business model with an objective to hold to collect.
• Å 'Other' business models not meeting the criteria of the business models mentioned before, for example business models in which financial assets are managed with the objective of realising cash flows through sales (trading book) or are managed on a fair value basis. Under these business models, the financial assets are measured at FVTPL.

After determining the business model, the contractual cash flows of financial assets have to be assessed. Debt instruments can only be classified at amortised cost or FVOCI when the contractual cash flows are SPPI compliant. Contractual cash flows that are SPPI are consistent with a basic lending arrangement in which consideration for the time value of money and credit risk are typically the most significant interest elements. Instruments that do not meet the SPPI requirements are mandatory measured at FVTPL. Financial assets are assessed in their entirety including any embedded derivatives.

As part of the transition to IFRS 9 ABN AMRO performed an analysis of the business models and contractual cash flows of all financial assets which has resulted in two changes. Additional information on these changes is provided in the IFRS 9 transition disclosure.

ABN AMRO has chosen not to elect the FVOCI option for equity securities and therefore measures these instruments at FVTPL under IFRS 9, whereas some equity instruments were classified as AFS under IAS 39. The IFRS 9 measurement criteria for financial liabilities designated as FVTPL have also changed, as a result of which changes in fair value attributable to changes in the credit risk of that liability will be presented in other comprehensive income. This has resulted in a transfer from retained earnings to accumulated other comprehensive income as at 1 January 2018. The cumulative amount of changes in fair value attributable to credit risk of issued debt is presented as Liability own credit risk reserve in equity.

The fair value reserve presented separately in equity includes the gains and losses, net of tax, from a change in the fair value of debt instruments measured at FVOCI. When the instruments are sold or otherwise disposed of, the related cumulative gain or loss recognised in equity is recycled to the income statement.

There were no other significant changes in the classification and measurement of financial instruments as at 1 January 2018.

Measurement of financial instruments

• Å Amortised cost Financial instruments measured at amortised cost are debt instruments within a hold to collect business model with fixed or determinable payments which meet the SPPI criteria. These instruments are initially measured at fair value (including transaction costs) and subsequently measured at amortised cost using the effective interest rate method, with the periodic amortisation recorded in the income statement. This category includes financial instruments reported in Cash and balances at central banks, Securities financing and Loans and advances. Financial instruments at amortised cost are presented net of credit loss allowances in the statement of financial position.
• Å FVTPL Financial instruments measured at FVTPL include instruments held for trading, derivatives, equity instruments for which the FVOCI option is not elected and instruments whose cash flows do not meet the SPPI requirements. Changes in the fair value of these instruments are directly recognised in the income statement. FVTPL instruments are reported in Financial assets held for trading, Derivatives, Financial investments and Corporate loans.
• Å FVOCI Financial instruments measured at FVOCI are debt instruments which are held in a hold to collect and sell business model and which meet the SPPI criteria. They are initially measured at fair value, with subsequent unrealised changes recognised in other comprehensive income. Equity instruments for which the fair value option is elected are also measured at FVOCI. FVOCI instruments are reported in Financial investments of which the majority is measured in this category.

Derecognition and modification

Financial assets are derecognised when ABN AMRO loses control and the ability to obtain benefits over the contractual rights that comprise that asset. This occurs when the rights are realised, expire or substantially all risks and rewards are transferred. Financial assets are also derecognised if the bank has neither transferred nor retained substantially all risks and rewards of ownership, but control has passed to the transferee.

Financial assets continue to be recognised in the balance sheet, and a liability recognised for the proceeds of any related funding transaction, unless a fully proportional share of all or specifically identified cash flows are transferred to the

lender without material delay and the lender's claim is limited to those cash flows, and substantially all the risks, rewards and control associated with the financial instruments have been transferred, in which case that proportion of the asset is derecognised.

On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income is recognised in the income statement.

When the contractual cash flows of a financial asset are renegotiated or otherwise modified (for example in forbearance measures) ABN AMRO analyses both qualitative and quantitative whether the modification should be accounted for as derecognition. Generally a 10% difference in the present value of the cash flows is accounted for as derecognition. If the modification does not result in derecognition of that financial asset, ABN AMRO will recalculate the gross carrying amount of the financial asset based on the present value of the renegotiated or modified contractual cash flows, discounted at the financial asset's original effective interest rate. The effect will be recognised and disclosed as a modification loss in profit or loss. Based on historic forbearance measures, ABN AMRO has not identified significant modification losses to be retrospectively recognised per 1 January 2018.

Financial liabilities are derecognised when the liability has been settled, has expired or has been extinguished. An exchange of an existing financial liability for a new liability with the same lender on substantially different terms, qualitative and quantitative (generally a 10% difference in the present value of the cash flows) is accounted for as an extinguishment of the original financial liability and recognition of a new financial liability. The difference between the former amortised cost and the consideration paid is recognised in the income statement.

Impairments

IFRS 9 replaced the incurred loss model with the expected credit loss model (ECL), which is designed to be forwardlooking. The IFRS 9 impairment requirements are applicable to financial assets measured at amortised cost or FVOCI. Additionally the scope of IFRS 9is broader than under IAS 39 as loan commitments and financial guarantee contracts are also included. These financial instruments are divided into three groups, depending on the stage of credit quality deterioration:

• Å Financial instruments without a significant increase in credit risk (stage 1): the portion of the lifetime expected credit losses associated with default events occurring in the next twelve months (12M ECL) is recognised. Interest income is recognised based on the gross carrying amount;
• Å Financial instruments with significantly increased credit risk (stage 2): lifetime expected credit loss (LECL) is recognised. Interest income is recognised based on the gross carrying amount;
• Å Credit-impaired financial instruments (stage 3): these financial instruments are defaulted and consequently a LECL is recognised. Interest income is recognised based on the amortised cost.

ABN AMRO has chosen to apply the same default definition under IFRS 9 as it has always used for credit risk management purposes. A default is considered to have occurred when one of the default triggers (e.g. unlikely to pay, involuntary restructuring, bankruptcy or fraud) is hit. In addition, 90 days past due is used as a backstop.These triggers are also applicable for forborne exposures.

The key quantitative metric determining when a financial instrument is transferred to stage 2 is the deterioration of the lifetime probability of default (LPD) from the date of origination to the reporting date. The LPD represents the likelihood that a counterparty will default during the lifetime of the financial instrument and depends on credit risk drivers such as product characteristics (e.g. repayment and interest terms, term of the product and claim seniority), the financial condition of the borrower, the number of days past due, the geographical region and future developments in the

Condensed consolidated Interim Financial Statements 2018

economy. If the LPD deterioration of a counterparty is above a threshold that is determined per portfolio, the counterparty will be transferred to stage 2. Due to limitations in the availability of historical data, ABN AMRO currently uses a proxy for LPD.

When a financial instrument meets one of the following qualitative triggers, the bank transfers the instrument to stage 2:

• Å Forbore status of a borrower;
• Å Watch status of a borrower. ABN AMRO assigns the watch status to individual counterparties with an increased risk. This process allows for intensive monitoring, early detection of deterioration in the credit portfolio and appropriate follow-up measures. Or;
• Å 30 days past due.

Favourable changes in credit risk are recognised consistently with unfavourable changes in credit risk, except when applying a probation period for financial instruments that are forborne or more than 30 days past due. Forborne financial instruments are only transferred back from stage 2 to stage 1 after a two-year credit risk improvement period. Stage 3 forborne instruments transfer back to stage 2 consistently with other defaulted instruments. For 30 days past due financial instruments a three-month period is applied for transfers from stage 2 to stage 1.

The amount of expected credit loss allowances is based on the probability weighted present value of all expected cash shortfalls over the remaining life of the financial instrument for both on and off balance sheet exposures. ABN AMRO makes a distinction between two types of calculation methods for credit loss allowances:

• Å Individual LECL for credit-impaired (stage 3) financial instruments with exposures above the EUR 3 million: if significant doubts arise regarding a client's ability to meet its contractual obligations and/or one of the default triggers is met. And;
• Å Collective 12M ECL and LECL for (stage 1, 2 and 3) financial instruments that have similar credit risk characteristics are clustered in portfolios and collectively assessed for impairment losses. Also for exposures smaller than EUR 3 million, a collective impairment calculation is applied. ABN AMRO has introduced new models to quantify the Probability of Loss (PL), Loss Given Loss (LGL) and Exposure at Loss (EAL) for calculating the collective 12M ECL and LECL for these financial assets. Whereas the credit loss allowance is collectively determined for these assets, the stage is determined per individual financial instrument.

Lifetime expected credit loss

ABN AMRO defines the lifetime as the maximum contractual period over which the bank is exposed to credit risk and not a longer period, even if that longer period is consistent with business practice. For some contracts no end date is specified or amounts can be contractually withdrawn by the lender at short notice, such as overdraft facilities or credit cards. In these cases ABN AMRO uses behavioural maturity models that rely on historic client behaviour as the exposure to credit losses can extend beyond the contractual period. ABN AMRO developed transition matrices that are used to convert 12-month PLs into lifetime PLs and 12-month LGLs into lifetime LGLs. Furthermore, ABN AMRO developed models that estimate lifetime EAL based on behavioural exposure profiles.

Forward looking information

Three different scenarios of future economic developments are incorporated into the IFRS 9 expected credit loss calculation and risk stage determination in a probability weighted manner (during the first half of 2018: Baseline 60%, Up 20%, Down 20%). These scenarios are developed by ABN AMRO Group Economics at least on an annual basis and reviewed at each reporting date. The macroeconomic variables forecasted by Group Economics and used for the expected credit loss calculation are chosen per specific portfolio and based on statistical relevance as credit risk driver and expert judgement of the business. ABN AMRO has aligned its forward-looking scenarios with those used in the

budgeting process. Specific forecasts of macro-economic variables are made for two to three years, subsequent periods gradually align to the long term average.

Practical expedients and low credit risk exemption

ABN AMRO applies the simplified approach for trade receivables and contract assets. For these assets ABN AMRO measures lifetime expected credit losses by using a provision matrix.

IFRS 15 Revenue from Contracts with Customers

This new standard establishes a comprehensive framework for determining when to recognise revenue and how much revenue to recognise. The standard was endorsed by the EU in October 2017 and is effective for annual periods beginning on or after 1 January 2018. The standard does not has an impact on the Financial Statements of ABN AMRO.

IFRS 2 Share-based Payment

In June 2016 the IASB issued amendments to IFRS 2 "Share-based Payments": Classification and Measurement of Share-based Payment Transactions. The issuance consists of three amendments that clarify how to account for certain types of share-based payment transactions. As ABN AMRO currently does not have any IFRS 2 share-based payment plans, this amendment does not impact ABN AMRO.

Annual Improvements to IFRS Standards 2014-2016 Cycle

This cycle of annual improvements comprises three amendments, one of which became effective on 1 January 2017. This amendment relates to IFRS 12 Disclosure of Interests in Other Entities and provides clarifications on the scope of the standard. The other two amendments became effective on 1 January 2018. Neither amendment, IFRS 1 relating to First-Time adoption and IAS 28 relating to Investments in Associates and Joint Ventures, have a significant impact on the Financial Statements.

New standards, amendments and interpretations not yet effective

The following amendments to IFRS are issued by the IASB and endorsed by the EU, but are not yet effective. Note that only the amendments to IFRS that are relevant for ABN AMRO are discussed.

IFRS 16 Leases

The new standard on leases was issued by the IASB in January 2016 and will become effective on 1 January 2019. IFRS 16 replaces IAS 17 Leases and removes the distinction between operating and financing lease for lessees. The requirements for lessor accounting remain largely unchanged. ABN AMRO is currently adjusting the operating procedures and systems to implement the new requirements of the standard.

Amendments to IFRS 9

The IASB issued amendments to IFRS 9, Prepayment Features with Negative Compensation, which allow instruments with symmetric prepayment options to be measured at amortised cost or at fair value through other comprehensive income. As ABN AMRO currently does not has any financial instruments with these features, these amendments do not have an impact.

New standards, amendments and interpretations not yet endorsed

The following new or revised standards and amendments have been issued by the IASB, but have not yet been endorsed by the European Union and are therefore not open for early adoption. Note that only the amendments to IFRS that are relevant for ABN AMRO are discussed below.

Condensed consolidated Interim Financial Statements 2018

IAS 28 Investments in Associates and Joint Ventures

In October 2017, the IASB issued amendments to IAS 28 that will become effective on 1 January 2019. The amendments clarify that IFRS 9 should be applied when accounting for long-term interests in an associate or joint venture to which the equity method is not applied. Based on an initial analysis, the amendments will not have a significant impact on ABN AMRO.

Annual Improvements 2015-2017 Cycle

In December 2017, the IASB issued the "Annual Improvements to IFRS Standards, 2015-2017 Cycle." These amendments are required to be applied for annual periods beginning on or after 1 January 2019. This cycle of annual improvements comprises amendments relating to IFRS 3 Business Combinations, IFRS 11 Joint Arrangements, IAS 12 Income Taxes and IAS 23 Borrowing Costs. The impact of the amendments on the Financial Statements is expected to be insignificant.

Transition to IFRS 9

This section provides insight of the impact on the consolidated statement of financial position at transition date, 1 January 2018, resulting from the transition to IFRS 9. The impact is the result of specific changes following from new classification and measurement requirements, combined with an increase in the allowances for expected credit losses following from the new impairment requirements.

For the other off balance sheet items, which mainly consist of revocable loan commitments, ABN AMRO reclassified the provisions thereon from Loans and advances customers to Provisions.

	IFRS 9 IAS 39
			31 December 2017	Reclassi fications		Remeas urement		1 January 2018
	Ref	Measurement Category	Carrying amount	From L&R to FVTPL1	From AFS to FVTPL	C&M	ECL	Carrying amount	Measurement Category
Cash and balances at central banks		L&R	29,783					29,783	AC
Financial assets held for trading		FVTPL	1,600					1,600	FVTPL
Derivatives	1	FVTPL	9,825	-141				9,684	FVTPL
Financial investments (FVTPL)	2	FVTPL	679		415			1,094	FVTPL
Financial investments (AFS)	2,7	AFS	40,285		-415			39,870	FVOCI
Securities financing		L&R	15,686					15,686	AC
Loans and advances banks	4	L&R	10,665				-2	10,662	AC
Residental mortgages	4	AC	152,691				-48	152,644	AC
Consumer loans	4	AC	12,122				-58	12,064	AC
Corporate loans (AC)	1,3,4	AC	101,118	-310		-190	-35	100,583	AC
Corporate loans (FVTPL)	1,4	FVTPL		2,044		-33		2,012	FVTPL
Other loans	1	AC	8,975	-1,619				7,356	AC
Tax assets	5	AC	431			56	52	540	AC
Other assets		L&R	9,311				-1	9,311	AC
Total assets			393,171	-25		-166	-92	392,888

¹ This column includes the reclassification of previously embedded derivatives to Corporate loans at FVTPL.

Condensed consolidated Interim Financial Statements 2018

• 1. Certain portfolios of corporate loans have embedded derivatives that were bifurcated under IAS 39. These are loans where the return is based on the price of underlying commodity contracts or loans with a floating interest rate, and where the interest reset period does not match the interest reference rate. These contracts were analysed in their entirety in accordance with IFRS 9 and they failed the solely payment of principal and interest (SPPI) criterion. As a result, the loans together with the embedded derivatives that were previously bifurcated have been reclassified as FVTPL at 1 January 2018. The amounts relating to the reclassification are EUR 1,929 million for loans, EUR 141 million for derivatives assets and EUR 25 million for derivatives liabilities. As the fair value of these loans is EUR 33 million below their carrying amount under IAS 39, this has resulted in a C&M remeasurement.
• 1. ABN AMRO has chosen not to elect the FVOCI option under IFRS 9 for all equity securities. As a result, an amount of EUR 415 million has been reclassified from available-for-sale (AFS) under IAS 39 to FVTPL under IFRS 9. In addition, the cumulative AFS reserve of EUR 42 million (net of tax) relating to these equity securities reclassified to FVTPL has been transferred to retained earnings.
• 1. For a portfolio of corporate loans that had been reclassified from held for trading to loans and receivables in 2015, a revised amortised cost measurement has been applied in accordance with IFRS 9, as if these loans had always been measured at amortised cost. This results in a reduction in the carrying amounts of these loans at 1 January 2018, reflected as a C&M remeasurement of EUR 190 million negative in the table above.
• 1. The IFRS 9 impairment requirements resulted in ECL remeasurement of total assets by EUR 92 million and liabilities by EUR 61 million, largely as a result of a EUR 141 million impact on loans and advances to customers and a EUR 52 million increase in tax assets. Allowances for irrevocable loan commitments and financial guarantees are included in provisions.
• 1. The tax effect recognised in other assets is EUR 108 million.
• 1. IFRS 9 changes the measurement criteria for financial liabilities designated as FVTPL as a result of which the cumulative change in the fair value attributable to changes in the credit risk of that liability are presented in accumulated other comprehensive income. This change results in the transfer of EUR 64 million (net of tax) from retained earnings to accumulated other comprehensive income as at 1 January 2018.
• 1. Allowances for credit losses of EUR 2 million on FVOCI instruments are recorded in accumulated other comprehensive income. These allowances for credit losses have no effect on the carrying value of FVOCI financial assets, which remain measured at fair value. The adoption of IFRS 9 results in a transfer of EUR 2 million from the fair value reserve to retained earnings to reflect the cumulative impairment recognised in profit or loss.

Condensed consolidated Interim Financial Statements 2018

			IAS 39					IFRS 9
			31 December 2017	Reclassi fications		Remeas urement		1 January 2018
	Ref	Measurement Category	Carrying amount	From L&R to FVTPL1	From AFS to FVTPL	C&M	ECL	Carrying amount	Measurement Category
Financial liabilities held for trading		FVTPL	1,082					1,082	FVTPL
Derivatives	1	FVTPL	8,367	-25				8,342	FVTPL
Securities financing		AC	11,412					11,412	AC
Due to banks		AC	16,462					16,462	AC
Due to customers		AC	236,699					236,699	AC
Issued debt (AC)		AC	75,429					75,429	AC
Issued debt (FVTPL)	6	FVTPL	1,182					1,182	FVTPL
Subordinated liabilities		AC	9,720					9,720	AC
Provisions	4	AC	1,529				61	1,590	AC
Tax liabilities		AC	110					109	AC
Other liabilities		AC	9,849					9,849	AC
Total liabilities			371,841	-25			61	371,877
Share capital			940					940
Share premium			12,970					12,970
Other reserves (incl retained earnings/ profit for the period)	1-7		5,724			-62	-153	5,509
Accumulated other comprehensive income	2,6,7		-331			-104		-435
Equity attributable to the owners of the parent company			19,303			-166	-153	18,984
AT1 capital securities			2,007					2,007
Equity attributable to other non-controlling interests			20					20
Allocation equity		AC
Total equity			21,330			-166	-153	21,011
Total liabilities and equity			393,171	-25		-166	-92	392,888

¹ This column includes the reclassification of previously embedded derivatives to Corporate loans at FVTPL.

The tables below provides a reconciliation from the IAS 39 allowances / IAS 37 provisions to the IFRS 9 ECL allowances/ provisions recognised as of 1 January 2018 upon adoption of IFRS 9.

		IAS 39		IFRS 9
		31 December 2017		1 January 2018
	Measurement Category	Allowances for credit losses	Remeasurement	Allowances for credit losses	Measurement Category
Financial investments1	AFS				FVOCI
Loans and advances banks	L&R	7	2	9	AC
Residental mortgages	AC	134	48	182	AC
Consumer loans	AC	304	58	362	AC
Corporate loans (AC)	AC	2,020	36	2,055	AC
Other loans	AC	2		2	AC
Loans and advances customers	L&R	2,460	141	2,601	AC
Total loans and advances		2,467	143	2,610
Other assets	L&R	3	1	4	AC
Total on-balance sheet allowances		2,470	144	2,614

¹ Allowances for credit losses of EUR 2 million on FVOCI instruments are recorded in accumulated other comprehensive income. These debt securities remain at FVOCI on the balance sheet.

Condensed consolidated Interim Financial Statements 2018

	IAS 39/IAS 37		IFRS 9/IAS 37
	31 December 2017		1 January 2018
	Allowances and provisions for credit losses	Remeasurement	Allowances and provisions for credit losses
Allowances for irrevocable loan commitments and financial guarantees	6	19	25
Provisions for other off-balance sheet items		42	42
Total allowances and provisions on off-balance sheet items	6	61	67

				IFRS 9
				1 January 2018
	Stage 1	Stage 2	Stage 3	Total
Loans and advances banks	7	1	1	9
Residential mortgages	26	24	132	182
Consumer loans	42	74	246	362
Corporate loans	138	112	1,805	2,055
Other loans	1	1		2
Total Loans and advances customers	206	212	2,183	2,601
Other assets		1	3	4
Total allowances on-balance sheet	214	213	2,187	2,614
Allowances for irrevocable loans commitment and financial guarantee contracts	9	1	15	25
Total allowances on-balance and off-balance sheet	222	215	2,202	2,639

	IFRS 9	IAS 39
(in millions)	1 January 2018	31 December 2017
Total equity as at 31 December 2017 (IAS 39)	21,330	21,330
Impact of adopting IFRS 9	-319
Total equity as at 1 January 2018 (IFRS 9)	21,011
Cash flow hedge reserve	919	919
Dividend reserve	-752	-752
AT1 capital securities	-2,007	-2,007
Profit attributable minus interest paid to holders of AT1 capital securities	21	21
AT1 capital securities	-1,987	-1,987
Other regulatory adjustments	-502	-718
Common Equity Tier 1	18,689	18,793
AT1 capital securities	1,987	1,987
Other regulatory adjustments1	-92	-96
Tier 1 capital	20,584	20,684
Subordinated liabilities Tier 2	7,674	7,674
Other regulatory adjustments1	-118	-128
Total regulatory capital	28,140	28,230

¹ This includes the impact of IFRS 9 on minority interest calculation.

Condensed consolidated Interim Financial Statements 2018

The transition to IFRS 9 has resulted in a decline of RWA-based capital ratios and leverage ratios. This impact is attributable to classification and measurement changes and risk weighting of the related potential future tax savings. In addition, the allowances for credit losses have increased due to IFRS 9, but the regulatory capital impact was more than offset by a reversal in the IRB Provision Shortfall. Transition to IFRS 9 has resulted in a decrease of CET1 capital by 12bps.

The regulatory transitional arrangements which allow for gradual phasing-in of the negative impact on own funds will not be applied by ABN AMRO due to the limited expected impact on CET1 capital. If future IFRS 9 credit loss allowances increase significantly, ABN AMRO may apply the transitional provisions, subject to prior permission from the ECB.

2 Segment reporting

During the first half of 2018 ABN AMRO transferred the portfolio of Small Business Clients with a turnover up to EUR 1 million from Retail Banking to Commercial Banking. As a consequence, the segment reporting has also changed. Historical figures have been adjusted for comparability purposes. The transfer has no effect on the historical overall group results or financial position of the bank.

Retail Banking

Retail Banking provides banking products and services to individuals. In addition, a wide variety of banking and insurance products and services are provided online and through our branch network, contact centres and subsidiaries. ABN AMRO Hypotheken Groep, Alfam, ICS and Moneyou are part of Retail Banking.

Commercial Banking

Commercial Banking serves business clients with a turnover of up to EUR 250 million, and clients active in Commercial Real Estate (excluding publicly listed companies, which are served by CIB). ABN AMRO's Asset Based Finance activities are included in Commercial Banking.

Private Banking

Private Banking provides comprehensive solutions to meet its clients' global wealth management needs and offers a rich array of products and services designed to address their individual requirements. Private Banking operates under the brand name of ABN AMRO MeesPierson in the Netherlands and internationally under ABN AMRO Private Banking, as well as local brands such as Banque Neuflize OBC in France and Bethmann Bank in Germany.

Corporate & Institutional Banking

CIB serves business clients with revenues exceeding EUR 250 million. In Northwest Europe, clients with revenues exceeding EUR 100 million are served in eight selected sectors. CIB covers loan products (structured finance and trade & commodity finance), flow products (global markets) and specialised products (clearing and private equity). CIB's business activities are organised according to sector, geography and product.

Group Functions

Group Functions supports the business segments and consists of Innovation & Technology, Risk Management, Finance, Transformation & HR, Group Audit, Strategy & Sustainability, and the Corporate Office. The majority of Group Functions' costs are allocated to the businesses. Group Functions' results include those of ALM and Treasury and the securities financing activities.

Executive Board Report

Segment income statement of the first six months of 2018

						First half 2018
(in millions)	Retail Banking	Commercial Banking	Private Banking	Corporate & Institutional Banking	Group Functions	Total
Net interest income	1,594	820	364	551	-2	3,327
Net fee and commission income	170	125	269	277	15	856
Net trading income		-1	5	85	29	118
Share of result in equity accounted investments	12	1	8	4	1	25
Other operating income	4	23	64	104	95	290
Operating income	1,779	969	709	1,021	138	4,617
Expenses
Personnel expenses	230	155	202	235	387	1,210
General and administrative expenses	262	67	121	187	678	1,314
Depreciation and amortisation of tangible and intangible assets	3	5	10	4	64	86
Intersegment revenues/expenses	519	258	136	183	-1,097
Operating expenses	1,015	485	470	609	32	2,609
Impairment charges on financial instruments	-19	114	12	236	-2	341
Total expenses	996	598	482	845	30	2,951
Operating profit/(loss) before taxation	783	371	228	177	107	1,666
Income tax expense	195	91	58	26	13	383
Profit/(loss) for the period	589	280	169	151	95	1,283
Attributable to:
Owners of the company	589	280	169	126	95	1,258
Non-controlling interests				25		25

Executive Board Report

Segment income statement of the first six months of 2017

						First half 2017
(in millions)	Retail Banking	Commercial Banking	Private Banking	Corporate & Institutional Banking	Group Functions	Total
Income
Net interest income	1,635	790	326	464	-21	3,195
Net fee and commission income	175	126	292	283	12	888
Net trading income	2	1	19	134	-1	154
Share of result in equity accounted investments	9	1	1	2		13
Other operating income	1	25	253	65	143	487
Operating income	1,822	943	892	948	132	4,738
Expenses
Personnel expenses	223	156	266	213	431	1,288
General and administrative expenses	252	66	158	176	683	1,335
Depreciation and amortisation of tangible and intangible assets	3	2	19	6	66	97
Intersegment revenues/expenses	519	261	132	202	-1,114
Operating expenses	998	485	575	597	65	2,720
Impairment charges on financial instruments	-59	-114	-4	144		-33
Total expenses	939	371	571	741	65	2,687
Operating profit/(loss) before taxation	883	572	321	207	67	2,051
Income tax expense	221	142	34	41	37	475
Profit/(loss) for the period	662	430	288	166	30	1,576
Attributable to:
Owners of the company	662	430	288	151	30	1,561
Non-controlling interests				15		15

Retail Banking

Net interest income declined by EUR 41 million (H1 2017: EUR 1,635 million). The decrease was mainly attributable to an addition to the provision for ICS and the transfer of clients to Private Banking. The underlying trend showed stable interest income from mortgages and deposits. Interest income from consumer loans decreased as both average volumes and margins were lower.

Net fee and commission income declined by EUR 5 million to EUR 170 million in H1 2018, partly due to the transfer of clients to Private Banking.

Personnel expenses increased by EUR 7 million to EUR 230 million in H1 2018. The increase was mainly due to a new CLA which resulted in a 2% wage increase and a one-off payment of EUR 1,000 per employee, partly offset by lower FTE levels. The number of FTEs declined by 387 to 4,779 on 30 June 2018 as a result of digitalisation and cost-saving programmes, which is also reflected in a further reduction in the number of branches.

General and administrative expenses increased by EUR 10 million, totalling EUR 262 million in H1 2018, mainly due to higher regulatory levies.

Impairment charges showed a release of EUR 19 million in H1 2018, whereas H1 2017 showed a release of EUR 59 million. The releases were supported by the strong performance of the Dutch economy and a model refinement on mortgages in H1 2017.

Condensed consolidated Interim Financial Statements 2018

Commercial Banking

Net interest income increased by EUR 30 million to EUR 820 million in H1 2018. The increase was mainly attributable to higher income from corporate loans and higher interest-related fees. Net interest income benefitted from continued growth in client lending and improving margins. The impact of deposit volume growth was offset by continuing margin pressure.

Net fee and commission income remained stable, totalling EUR 125 million in H1 2018.

Other operating income was EUR 23 million in H1 2018 (H1 2017: EUR 25 million). Both periods included the benefits of positive revaluation results.

Personnel expenses remained stable at EUR 155 million. The impact of FTE reductions resulting from cost-saving programmes was offset by the impact of a one-off CLA payment and wage inflation.

General and administrative expenses remained flat at EUR 67 million. Higher regulatory levies were offset by the impact of cost-saving programmes.

Impairment charges amounted to EUR 114 million as a result of a number of specific additions, predominantly in healthcare and other sectors. Impairment releases in H1 2017 mainly resulted from a SME model refinement and an IBNI release.

Private Banking

Net interest income rose by EUR 38 million compared with H1 2017, arriving at EUR 364 million. The increase was mainly due to margin improvements in the Netherlands and transfer of clients from Retail Banking.

Net fee and commission income showed a decline of EUR 23 million, compared with H1 2017, arriving at EUR 269 million. Excluding the contribution of PB Asia in 2017, net fee and commission decreased as market sentiment in H1 2017 had a favourable impact on net fee and commission income. Although market sentiment recovered in Q2 2018, the fee level of H1 2017 was not reached. More clients opted for execution-only instead of managed portfolios and the raised client threshold for advisory services resulted in lower advisory volumes.

Other operating income decreased by EUR 189 million, compared with H1 2017, arriving at EUR 64 million in H1 2018. Excluding the sale proceeds of PB Asia in 2017, other operating income went up compared with H1 2017. This was mainly the result of in total EUR 48 million in positive Q2 incidentals in H1 2018.

Personnel expenses decreased by EUR 64 million compared with H1 2017, arriving at EUR 202 million. Excluding the results of Private Banking Asia in 2017, personnel expenses decreased following substantial FTE reductions, partly offset by wage inflation. Compared with H1 2017, FTE levels decreased by 495. This was primarily due to progress on the restructuring as well as the impact of the PB Asia divestment, which also resulted in an internal transfer of FTEs to CIB.

General and administrative expenses amounted to EUR 121 million versus EUR 158 million in H1 2017. This was primarily due to costs related to the sale of PB Asia in 2017.

Impairment charges amounted to a EUR 12 million charge in H1 2018, compared with a EUR 4 million release in H1 2017.

Condensed consolidated Interim Financial Statements 2018

Corporate & Institutional Banking

Net interest income grew by EUR 87 million to EUR 551 million in H1 2018. Net interest income rose on the back of increased client lending and the favourable impact of new deals. Average client loans increased primarily within natural resources, corporate coverage and financial institutions. This was partly offset by the negative currency impact of the US Dollar, whereas loan margins slightly improved year-on-year. Deposit income increased compared with H1 2017 due to higher average volumes and improved deposit margins, primarily on USD deposits. Moreover, a larger number of professional clients are being charged negative interest rates on deposits. Net interest income increased at Global Markets, partly due to lower results in the area of collateral management activities in H1 2017.

Net fee and commission income came to EUR 277 million (H1 2017: EUR 283 million). Lower trade & guarantees commissions and lower placement fees were partly offset by higher clearing fees following increased market activity.

Lower net trading income (EUR 85 million in H1 2018 versus EUR 134 million in H1 2017) was primarily attributable to lower results for CVA/DVA/FVA.

Other operating income increased from EUR 65 million in H1 2017 to EUR 104 million in H1 2018, mainly due to higher Equity Participations results.

Personnel expenses increased by EUR 22 million to EUR 235 million in H1 2018 due to restructuring costs, wage inflation and a rise in the number of FTEs. Compared with H1 2017, the number of FTEs grew by 174 due to growth initiatives as well as an internal transfer from Private Banking following the PB Asia divestment.

General and administrative expenses amounted to EUR 187 million in H1 2018 versus EUR 176 million in H1 2017, mainly due to higher regulatory levies.

Impairment charges amounted to EUR 236 million compared with EUR 144 million in H1 2017. Despite continued favourable overall credit quality trends, impairment charges were elevated for a select number of clients and sectors (natural resources, trade & commodity finance including diamond & jewellery clients and global transportation & logistics).

Group Functions

Net interest income amounted to EUR -2 million (H1 2017: EUR -21 million). Adjusted for in total EUR 60 million positive incidentals in H1 2018, net interest income decreased primarily due to a lower interest mismatch result. H1 2018 included an incidental release of penalty fees resulting from mortgage interest term renewals (EUR 25 million) and a provision release relating to securities financing activities discontinued in 2009 (EUR 35 million).

Net fee and commission increased by EUR 3 million to EUR 15 million in H1 2018.

Other operating income amounted to EUR 95 million (H1 2017: EUR 143 million). Less favourable hedge accounting related income (EUR 40 million versus EUR 118 million in H1 2017) was partly offset by the revaluation of equensWorldline (EUR 46 million).

Condensed consolidated Interim Financial Statements 2018

Higher net trading income (EUR 29 million in H1 2018) relates to a provision release related for securities financing activities discontinued in 2009.

Personnel expenses declined by EUR 44 million to EUR 387 million in H1 2018, partly as a result of higher restructuring provisions in H1 2017. The underlying trend showed decreasing personnel expenses on the back of substantial FTE reductions, partly offset by wage inflation following the new CLA. The number of FTEs declined by 577 to 6,175 at 30 June 2018 reflecting progress in cost-saving programmes.

General and administrative expenses decreased by EUR 5 million to EUR 678 million in H1 2018, mainly reflecting cost savings.

Intersegment revenues/expenses amounted to EUR -1,097 million in H1 2018 reflecting fewer costs allocated to the commercial business segments.

Selected assets and liabilities by segment

	30 June 2018
(in millions)	Retail Banking	Commercial Banking	Private Banking	Corporate & Institutional Banking	Group Functions	Total
Assets
Financial assets held for trading				1,430		1,430
Derivatives			19	7,581	1,048	8,648
Securities financing				3,338	13,491	16,830
Residential mortgages	147,465	8	2,765		2,148	152,387
Consumer loans	6,942	545	4,462	50		11,999
Corporate loans	1,632	40,564	4,882	56,580	3,922	107,580
Other loans and advances customers	8	362	4	5,252	225	5,851
Other	1,788	1,903	8,434	10,033	68,482	90,640
Total assets	157,835	43,382	20,567	84,264	89,317	395,365
Liabilities
Financial liabilities held for trading				716		716
Derivatives			10	7,660	2,030	9,700
Securities financing				870	11,886	12,756
Current accounts	15,459	27,926	17,858	21,509	631	83,383
Demand deposits	72,074	13,261	39,715	636	6	125,692
Time deposits	7,857	3,889	7,462	5,194	3,450	27,852
Other due to customers	151		1	932	45	1,130
Other	62,294	-1,694	-44,480	46,746	49,981	112,846
Total liabilities	157,835	43,382	20,567	84,264	68,029	374,077

Condensed consolidated Interim Financial Statements 2018

						31 December 2017
(in millions)	Retail Banking	Commercial Banking	Private Banking	Corporate & Institutional Banking	Group Functions	Total
Assets
Financial assets held for trading				1,599		1,600
Derivatives			19	8,659	1,146	9,825
Securities financing				2,711	12,975	15,686
Residential mortgages	147,495	7	2,926		2,264	152,691
Consumer loans	7,295	453	4,324	49		12,122
Corporate loans	1,552	39,160	4,926	51,377	4,102	101,118
Other loans and advances customers	3	464	3	8,250	254	8,975
Other	1,777	1,855	8,963	7,824	70,735	91,154
Total assets	158,123	41,940	21,162	80,470	91,476	393,171
Liabilities
Financial liabilities held for trading				1,082		1,082
Derivatives			12	6,368	1,987	8,367
Securities financing				657	10,755	11,412
Current accounts1	14,555	26,521	18,554	23,370	628	83,627
Demand deposits1	72,107	13,695	39,280	906	6	125,995
Time deposits1	7,442	3,969	7,173	5,745	2,207	26,536
Other due to customers1	216	4	24	253	45	541
Other	63,804	-2,250	-43,882	42,090	54,519	114,281
Total liabilities	158,123	41,940	21,162	80,470	70,146	371,841

¹ Change in Due to customers effective as of 1 January 2018.

Total assets increased by EUR 2.2 billion, totaling EUR 395.4 billion at 30 June 2018. The increase was mainly related to higher loans and advances to customers and higher securities financing assets, partly offset by lower cash and balances at central banks.

Total liabilities increased by EUR 2.2 billion reaching EUR 374.1 billion at 30 June 2018. The increase mainly related to higher securities financing liabilties, issued debt and higher amounts due to customers.

Executive Board Report

3 Overview of financial assets and liabilities by measurement base

					30 June 2018
		Fair value through	Fair value through	Fair value through
(in millions)	Amortised cost	profit or loss - Trading	profit or loss - Other	other comprehen sive income	Total
Financial assets
Cash and balances at central banks	28,826				28,826
Financial assets held for trading		1,430			1,430
Derivatives		7,703	945		8,648
Financial investments			1,141	40,181	41,322
Securities financing	16,830				16,830
Loans and advances banks	10,084				10,084
Loans and advances customers	275,941		1,876		277,817
Assets held for sale	552		2,689	1	3,242
Other assets	1,042				1,042
Total financial assets	333,275	9,134	6,651	40,182	389,242
Financial Liabilities
Financial liabilities held for trading		716			716
Derivatives		8,126	1,574		9,700
Securities financing	12,756				12,756
Due to banks	14,646				14,646
Due to customers	238,058				238,058
Issued debt	77,206		1,045		78,251
Subordinated liabilities	9,683				9,683
Liabilities held for sale	2,022		2,689		4,711
Other liabilities	896				896
Total financial liabilities	355,267	8,842	5,308		369,417

					31 December 2017
		Fair value through	Fair value through	Fair value through
(in millions)	Amortised cost	profit or loss - Trading	profit or loss - Other	other comprehen sive income	Total
Financial assets
Cash and balances at central banks	29,783				29,783
Financial assets held for trading		1,600			1,600
Derivatives		8,749	1,076		9,825
Financial investments			679	40,285	40,964
Securities financing	15,686				15,686
Loans and advances banks	10,665				10,665
Loans and advances customers	274,906				274,906
Assets held for sale	385		2,728	7	3,120
Other assets	959				959
Total financial assets	332,384	10,349	4,482	40,292	387,507
Financial Liabilities
Financial liabilities held for trading		1,082			1,082
Derivatives		6,696	1,671		8,367
Securities financing	11,412				11,412
Due to banks	16,462				16,462
Due to customers	236,699				236,699
Issued debt	75,429		1,182		76,612
Subordinated liabilities	9,720				9,720
Liabilities held for sale	2,092		2,729		4,821
Other liabilities	1,464				1,464
Total financial liabilities	353,278	7,777	5,583		366,637

4 Operating income

(in millions)	First half 2018	First half 2017
Net interest income	3,327	3,195
Net fee and commission income	856	888
Net trading income	118	154
Share of result in equity accounted investments	25	13
Other income	290	487
Total operating income	4,617	4,738

Operating income in the first six months of 2018

Total operating income decreased by EUR 121 million, amounting to EUR 4,617 million for H1 2018, compared with EUR 4,738 for H1 2017.

Net interest income increased by EUR 133 million, totalling EUR 3,327 million in H1 2018, compared with EUR 3,195 million during the same period in 2017. The increase was predominantly driven by volume growth in corporate loans.

Net fee and commission income came down 32 million, arriving at EUR 856 million in H1 2018, compared with EUR 888 million in H1 2017. Because of the sale of PB Asia in Q2 2017 (EUR 13 million) fee income was lower in H1 2018, while commission income received for securities transactions and re-insurance, mainly in France, (EUR 6 million), was also lower than in H1 2017. In Retail Banking, net fee and commission declined EUR 5 million mainly due to lower commission payments and lower advice fees (EUR 9 million), mainly offset by increased fees and commision income received by International Card Services. At Corporate & Institutional Banking, the decrease of 6 million was mainly attributable to lower trade & guarantees commision and lower placement fees (EUR 9 million), offset by market activities in the clearing business (EUR 3 million).

Net trading income decreased by EUR 36 million in H1 2018, totalling EUR 118 million. This decrease was due mainly to the effect of CVA, DVA and FVA results which amounted to EUR 0 million (gain in 2017: EUR 43 million) and a provision release for securities financing activities discontinued in 2009 (EUR 29 million).

Share of result in equity accounted investments increased by EUR 12 million to EUR 25 million in H1 2018, compared with EUR 13 million in H1 2017.This increase was driven mainly by higher results from equity associates in France and the joint venture results in the Netherlands.

Other income amounted to EUR 290 million in H1 2018 and was EUR 197 million lower than in the same period in 2017. This decrease was due mainly to the sale of PB Asia divestment (EUR 255 million) in 2017. Hedge accounting related-results were lower in H1 2018 than in H1 2017 (EUR 40 million versus 118 million). The result of Equity participations in H1 2018 amounted to EUR 129 million versus EUR 81 million in H1 2017.

For H1 2017, ABN AMRO reclassified EUR 36 million of fee income relating to Stater (mortgage service provider) from other operating income to fee and commission income. ABN AMRO considers it more transparent to record all servicerelated fee income under a single line item (fee and commission income).

5 Operating expenses

(in millions)	First half 2018	First half 2017
Personnel expenses	1,210	1,288
General and administrative expenses	1,314	1,335
Depreciation and amortisation of tangible and intangible assets	86	97
Total operating expenses	2,609	2,720

Operating expenses in the first six months of 2018

Total operating expenses decreased by EUR 111 million to EUR 2,609 million compared with EUR 2,720 million during H1 2017, driven by lower personnel expenses (EUR 78 million) and general and administrative expenses (EUR 21 million).

Personnel expenses amounted to EUR 1,210 million for H1 2018, a decrease of EUR 78 million compared with H1 2017. Fore more details, please see Personnel expenses.

General and administrative expenses decreased by EUR 21 million compared with H1 2017. This mainly related to an increase in the provision for SME derivatives-related issues and the impact of the PB Asia divestment in 2017. In H1 2018, regulatory levies were higher than in H1 2017.

Personnel expenses

(in millions)	First half 2018	First half 2017
Salaries and wages	815	851
Social security charges	120	120
Pension expenses relating to defined benefit plans	2	2
Defined contribution plan expenses	174	188
Other	99	127
Total personnel expenses	1,210	1,288

Personnel expenses in the first six months of 2018

Personnel expenses came down EUR 79 million, totalling EUR 1,210 million in H1 2018. Personnel expenses decreased as a result of lower FTE levels following from cost-saving programmes. This decrease was partly offset by wage inflation as the new CLA entailed a one-off payment (EUR 16 million) and a 2% wage increase. Restructuring-related costs amounted to EUR 33 million in H1 2018 versus EUR 58 million in H1 2017.

6 Income tax expense

(in millions)	First half 2018	First half 2017
Income tax expense	383	475

Income tax expense amounted to EUR 383 million in H1 2018, EUR 92 million lower than in the same period of 2017. This was mainly the result of lower operating profit combined with more tax exempt income and less non-deductible expense compared to H1 2017.

Condensed consolidated Interim Financial Statements 2018

7 Financial assets and liabilities held for trading

Financial assets and liabilities held for trading relates mainly to client-facilitating activities carried out by the Global Markets business. These contracts are managed on a combined basis and are therefore assessed on a total portfolio basis and not as stand-alone asset and liability classes.

Financial assets held for trading

The following table shows the composition of assets held for trading.

(in millions)	30 June 2018	31 December 2017
Trading securities:
Government bonds	806	1,071
Corporate debt securities	578	401
Equity securities	29	111
Total trading securities	1,414	1,584
Trading book loans	16	16
Total assets held for trading	1,430	1,600

Financial assets held for trading decreased by EUR 0.2 billion to EUR 1.4 billion at 30 June 2018 (31 December 2017: EUR 1.6 billion).

Government bonds decreased by EUR 0.3 billion, mainly on account of changes in French, Belgian and Luxembourg bond positions. These portfolios are mainly a result of the primary dealership in these countries and for the purpose of client facilitation. Most of these contracts are hedged with short positions in corporate debt securities, government bonds and futures.

The EUR 0.2 billion increase of corporate debt securities resulted from movements in various bonds and countries, of which Dutch positions are the main part.

Equity securities decreased by EUR 0.1 billion, driven by a decrease in derivative contracts used for client facilitation (CFD) and in stock positions.

Financial liabilities held for trading

The following table shows the composition of liabilities held for trading.

(in millions)	30 June 2018	31 December 2017
Bonds	555	850
Equity securities	21	65
Total short security positions	576	915
Other liabilities held for trading	140	167
Total liabilities held for trading	716	1,082

Financial liabilities held for trading decreased by EUR 0.4 billion to EUR 0.7 billion at 30 June 2018.

The decrease resulted from lower short positions in bonds, mainly Dutch, French, European Union (excluding ECB) and German government bonds, and corporate debt securities.

8 Derivatives

Derivatives comprise derivatives held for trading and derivatives held for risk management purposes.Derivatives held for trading serve to help us facilitate the needs of our clients. Derivatives held for risk management purposes include all derivatives that qualify for hedge accounting and derivatives included in an economic hedge.

Derivatives comprise the following:

								30 June 2018
		Derivatives held for trading		Economic hedges			Hedge accounting	Total derivatives
(in millions)	Interest rate	Currency	Other	Interest rate	Currency	Other	Interest rate
Exchange traded
Fair value assets	1		4			30		34
Fair value liabilities	4		38			71		114
Notionals	679	88	221			656		1,644
Over-the-counter
Central counterparties
Fair value assets
Fair value liabilities
Notionals	910,208			211			127,264	1,037,683
Other bilateral
Fair value assets	4,053	2,635	556	102	317	6	945	8,614
Fair value liabilities	3,839	2,953	485	108	627		1,574	9,586
Notionals	130,142	203,998	1,562	1,044	23,720	1,043	10,193	371,701
Total
Fair value assets	4,054	2,635	560	102	317	36	945	8,648
Fair value liabilities	3,843	2,954	523	108	627	71	1,574	9,700
Notionals	1,041,029	204,086	1,783	1,255	23,720	1,699	137,457	1,411,029

							31 December 2017
		Derivatives held for trading				Economic hedges	Hedge accounting	Total derivatives
(in millions)	Interest rate	Currency	Other	Interest rate	Currency	Other	Interest rate
Exchange traded
Fair value assets	27		6			5		38
Fair value liabilities	23		17			132		172
Notionals	62	97	189			1,522		1,869
Over-the-counter
Central counterparties
Fair value assets
Fair value liabilities
Notionals	784,438			501			139,506	924,445
Other bilateral
Fair value assets	5,860	1,946	326	107	336	136	1,076	9,786
Fair value liabilities	4,098	1,477	297	53	577	21	1,672	8,195
Notionals	133,341	140,914	3,053	1,034	28,483	1,738	11,609	320,173
Total
Fair value assets	5,888	1,946	332	107	336	141	1,076	9,825
Fair value liabilities	4,121	1,477	314	53	577	153	1,672	8,367
Notionals	917,841	141,011	3,241	1,535	28,483	3,260	151,115	1,246,486

Condensed consolidated Interim Financial Statements 2018

Over-the-counter derivatives cleared by a CCP are not presented in our Statement of financial position.

The notional amount of the interest rate derivatives held for trading at 30 June 2018 amounted to EUR 1,041 billion, an increase of EUR 123.2 billion compared with EUR 917.8 billion at 31 December 2017. This increase was mainly attributable to higher client activity within Financial Institutions through clearing with central counterparties.

The notional amount of the currency derivatives held for trading at 30 June 2018 amounted to EUR 204.1 billion, an increase of EUR 63.1 billion compared with EUR 141 billion at 31 December 2017. This increase was mainly due to higher client activity caused by increased volatility of the foreign exchange market compared with 2017.

The notional amount of the other derivatives held for trading at 30 June 2018 amounted to EUR 1.8 billion, a decrease of EUR 1.4 billion compared with EUR 3.2 billion at 31 December 2017.

9 Financial investments

Financial investments can be broken down as follows:

(in millions)	30 June 2018	31 December 2017
Financial investments:
Debt securities held at fair value through other comprehensive income	40,181
Equity securities held at fair value through other comprehensive income
Available-for-sale		40,285
Held at fair value through profit or loss	1,141	679
Total financial investments	41,322	40,964

Condensed consolidated Interim Financial Statements 2018

Financial investments were mainly impacted by IFRS 9 becoming effective. We refer to note 1 for more information. The financial investments held at fair value though profit or loss mainly consist of equity securities.

Financial investments held at fair value through other comprehensive income/available for sale

The fair value of financial investments held at fair value through other comprehensive income/available for sale including gross unrealised gains and losses is as follows:

(in millions)	30 June 2018	31 December 2017
Interest-earning securities:
Dutch government	5,367	6,197
US Treasury and US government	3,547	2,698
Other OECD government	19,034	19,275
Non OECD government	1,368	896
International bonds issued by the European Union	1,584	1,714
European Stability Mechanism	2,716	2,585
Mortgage- and other asset-backed securities	3,160	2,551
Financial institutions	3,215	3,949
Non-financial institutions	189	6
Subtotal	40,181	39,870
Equity instruments		415
Total investments held at fair value through other comprehensive income/
available-for-sale	40,181	40,285

10 Securities financing

		30 June 2018		31 December 2017
(in millions)	Banks	Customers	Banks	Customers
Assets
Reverse repurchase agreements	3,247	8,072	1,324	10,181
Securities borrowing transactions	3,252	2,258	2,574	1,606
Total	6,499	10,330	3,899	11,787
Liabilities
Repurchase agreements	1,121	9,098	913	8,404
Securities lending transactions	785	1,752	773	1,321
Total	1,906	10,850	1,686	9,726

Securities financing transactions include balances relating to reverse repurchase activities and cash collateral on securities borrowed. ABN AMRO controls credit risk associated with these activities by monitoring counterparty credit exposure and collateral values on a daily basis and requiring additional collateral to be deposited with ABN AMRO when deemed necessary.

The movements of securities financing assets and liabilities with banks and customers result from the cyclicality of the business.

ABN AMRO has reclassified all unsettled securities transactions that were previously included in securities financing as other assets and other liabilities. Refer to note 1 for more information.

55

Condensed consolidated Interim Financial Statements 2018

11 Fair value of financial investments

The internal controls of fair value measurement, the valuation techniques and the inputs used for these valuation techniques are consistent with those set out in the notes to ABN AMRO's 2017 Consolidated Annual Financial Statements.

Fair value is defined as the price that would be received when selling an asset or paid when transferring a liability in an orderly transaction between market participants at the measurement date.

Fair value hierarchy

ABN AMRO analyses financial instruments held at fair value in the three categories described below.

Level 1 financial instruments are valued using unadjusted quoted prices in active markets for identical financial instruments.

Level 2 financial instruments are valued using techniques based primarily on observable market data. Instruments in this category are valued using prices quoted for similar or identical instruments in markets which are not considered to be active; or valuation techniques where all the inputs that have a significant effect on the valuation are directly or indirectly based on observable market data.

Level 3 financial instruments are valued using a valuation technique where at least one input, which has a significant effect on the instrument's valuation, is not based on observable market data. The effect of fair value adjustments on the instrument's valuation is included in the assessment.

ABN AMRO recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change occurred.

The following table presents the valuation methods used for determining the fair values of financial instruments carried at fair value.

Government debt securities 33,201 414 33,616 Corporate debt securities 2,675 690 40 3,405

Other debt securities 3,160 3,160

income 39,036 690 455 40,181

Other financial assets held for trading 16 16 16 16 Financial assets held for trading 1,336 95 1,430 1,569 31 1,600 Interest rate derivatives 1 5,016 84 5,101 27 6,847 89 6,963 Foreign exchange contracts 2,612 23 2,635 1,929 17 1,946 Other derivatives 33 879 913 11 904 915 Derivatives 34 8,507 107 8,648 38 9,681 106 9,825 Equity instruments 269 65 802 1,135 63 610 673 Other 6 6 7 7

through profit or loss 275 65 802 1,141 70 610 679

Financial investments at fair value

Financial assets held at fair value through other comprehensive

Equity instruments

				30 June 2018				31 December 2017
(in millions)	Quoted market prices in active markets	Valuation techniques - observa ble inputs	Valuation techniques - significant unobserva ble inputs	Total fair value	Quoted market prices in active markets	Valuation techniques - observable inputs	Valuation techniques - significant unobservable inputs	Total fair value
Assets
Government debt securities	806			806	1,071			1,071
Corporate debt securities	500	78		578	386	15		401
Equity securities	29			29	111			111

Exe
cut
ive
Bo
ard
Re
po rt

57

Government debt securities				32,938		427	33,364
Corporate debt securities				3,210	702	43	3,955
Equity instruments				189	66	160	415
Other debt securities				2,551			2,551
Financial assets available for sale				38,888	769	629	40,285
Unit-linked investments1	1,802	887	2,689	1,813	914		2,728

Financial assets available for sale 38,888 769 629 40,285 Unit-linked investments1 1,802 887 2,689 1,813 914 2,728 Loans and advances at fair value through profit or loss 1,863 9 1,872 Total financial assets 42,483 12,106 1,373 55,962 42,378 11,394 1,344 55,117 Liabilities Short positions in government debt securities 459 459 495 495 Corporate debt securities 76 20 96 345 10 356 Equity securities 21 21 65 65 Other financial liabilities held for trading 140 140 167 167 Financial liabilities held for trading 556 160 716 905 177 1,082 Interest rate derivatives 4 5,521 5,525 23 5,770 5,793 Foreign exchange contracts 3,581 3,581 1,477 1,477 Other derivatives 110 485 594 149 949 1,098 Derivatives 114 9,586 9,700 172 8,195 8,367 Issued debt 885 160 1,045 1,014 168 1,182 Unit-linked for policyholders 1,801 887 2,689 1,814 914 2,728

Total financial liabilities 2,472 11,518 160 14,150 2,890 10,300 168 13,359 ¹ In 2017 these instruments were classified as held for sale and therefore included in note 24 of the Annual Financial Statements 2017, Non-current assets and disposal groups held for sale.

Transfers between levels 1 and 2

There were no material transfers between levels 1 and 2.

Transfers from levels 1 and 2 into level 3

There were no material movements between level 1 and 2 into level 3.

Movements in level 3 financial instruments measured at fair value

The following table shows a reconciliation of the opening and closing amounts of level 3 financial assets that are carried at fair value:

					Assets		Liabilities
(in millions)	Financial investments available for sale	Financial assets held at fair value through other compre hensive income	Financial investments at fair value through profit or loss	Derivatives held for trading	Derivatives not held for trading	Derivatives not held for trading	Issued debt
Balance at 1 January 2017 (IAS 39)	1,358		731	93	14	14	241
Purchases	1		64
Sales	-12		-62
Redemptions	-717		-21
Gains/(losses) recorded in profit and loss1			8		-1	-1
Unrealised gains/(losses)2			10	-4	-13	-13	-73
Transfer between levels	-1			16
Other movements			-120
Balance at 31 December 2017 (IAS 39)	629		610	106			168
Balance at 1 January 2018		469	769	106			168
Purchases			33
Sales			-139
Redemptions			-3
Gains/(losses) recorded in profit and loss1			52
Unrealised gains/(losses)2		-14	117	-6			-8
Transfer between levels				7
Other movements		-1	-27
Balance at 30 June 2018		455	802	107			160

¹ Included in other operating income.

² Unrealised gains/(losses) on instruments measured at FVOCI are included in Other comprehensive income.

Level 3 sensitivity information

Derivatives

Securitisation swaps linked to the RMBS transactions are valued using a discounted cash flow model for which the behaviour of the underlying mortgage portfolio is also relevant. The inputs used to determine fair value are the interest rate curve and prepayment rate. The latter is the significant unobservable input that classifies these instruments as level 3.

The sensitivity analysis is performed by stressing the prepayment rate. Interest rate swaps related to RMBS transactions are valued based on assumptions about the behaviour of the underlying mortgage portfolio and the characteristics of the transaction. Cash flows are forecast and discounted using appropriate forward and discount curves.

A credit valuation adjustment (CVA) reflects counterparty credit risk in the fair value measurement of uncollateralised and partially collateralised OTC derivatives. For counterparties that do not have an observable credit spread, ABN AMRO applies a proxied credit spread extracted from counterparties of comparable credit quality that do have an observable credit spread. ABN AMRO performs a probability of default assessment for each counterparty and allocates an appropriate internal credit risk measure known as a Uniform Counterparty Rating (UCR). This UCR, which is significant to the entire fair value measurement of the derivative contracts included in the following table of Level 3 sensitivity information, is internally generated and is therefore an unobservable input.

Financial investments at fair value through profit or loss

Preferred shares are shares for which the dividend is fixed for a period of 10 years, after which the dividend is redetermined, and the shares can also be redeemed. The position is valued using a discounted cash flow model for which the relevant inputs are the interest curve, liquidity spread and credit spread. The liquidity spread and credit spread are unobservable inputs and are derived from similar securities. The sensitivity of the preferred shares is determined by using a range of reasonable spreads and by considering the call option that is held by the issuer.

Equities at fair value through profit and loss and classified as level 3 mainly comprise private equity investments.

Private equity shares are designated at fair value, with two calculation techniques being applied:

• Å Using comparable pricing in accordance with the European Private Equity and Venture Capitalist Association (EVCA) guidelines. This valuation technique is based on earnings multiples of comparable listed and unlisted companies. The fair value calculation of an investment is strongly linked to movements on the public equity markets;
• Å Net Asset Value (NAV) for fund investments and asset-backed investments. This is determined by using audited and unaudited company financial statements and any other information available, publicly or otherwise. As a consequence, the net asset value calculation of an investment is strongly linked to movements in the quarterly performance of the company and can be used as an indicator of fair value. Net Asset Value is used as an indicator of fair value only after a materiality assessment has been made.

New investments are initially valued at fair value and subsequently at cost for the first year of investment. Thereafter, the fair value technique, either the EVCA technique or NAV calculation, is applied for direct investments.

The sensitivity for using comparable pricing is determined by stressing the earnings multiples in a positive and negative market scenario, whereas sensitivity testing for the NAV calculation based on the quarterly performance cannot be applied.

Financial assets held at fair value through other comprehensive income

ABN AMRO has a position in a Polish bond, denominated in euros, for which the market is relatively illiquid. The bond is valued using a discounted cash flow model. The main inputs are the interest rate curve, liquidity spread and credit spread. The valuation spread is determined using an internal model. The sensitivity analysis is performed using a range of reasonable valuation spreads.

Issued debt

Issued debt measured at level 3 is valued using a discounted cash flow model for which credit spread is the main unobservable input. These instruments are issued notes with institutional investors as counterparties. Given the few market participants there is little market activity for these instruments.

Condensed consolidated Interim Financial Statements 2018

				Possible alternative
	Valuation technique	Unobservable data	Carrying value	assump tions			Unobservable data range	Unobservable data base
(in millions)				Applying minimum	Applying maximum	Applying minimum	Applying maximum
30 June 2018
Equity shares	Private equity valuation Private	EBITDA multiples	280	-51	18	4.7	10.6	8.7
	equity	Net asset
Equity shares	valuation	value	522	-22	9
Interest-earning securities - Government bonds	Discounted cash flow	Liquidity and credit spread	414	-27	10	36	117	58
Interest-earning securities - other	Discounted cash flow	Liquidity and credit spread	40	-7	3	325	841	413
Derivatives held for trading	Discounted cash flow	Probability of default	107	-5	9	0.2%	100.0%	34.4%
Issued debt	Discounted cash flow	Credit spread	160	-3	3	98	121	108
31 December 2017 (IAS 39)
Equity shares	Private equity valuation	EBITDA multiples	286	-38	40	4.7	8.3	6.7
Equity shares	Private equity valuation	Net asset value	483	-18	15
Interest-earning securities - Government bonds	Discounted cash flow	Liquidity and credit spread	427	-27	15	17	105	47
Interest-earning securities - other	Discounted cash flow	Prepayment rate	43	-9	2	211	774	298
Derivatives held for trading	Discounted cash flow	Probability of default	106	-5	8	0.2%	100.0%	16.7%
Derivatives not held for trading - assets/liabilities (net)	Discounted cash flow	Prepayment rate
Issued debt	Discounted cash flow	Credit spread	168	-1	8	97	130	111

Financial assets and liabilities not carried at fair value

The methods and assumptions applied to estimate the fair values of financial instruments not carried at fair value are consistent with those set out in note 21 of the Consolidated Annual Financial Statements 2017.

Condensed consolidated Interim Financial Statements 2018

						30 June 2018
	Carrying value				Total fair value	Difference
(in millions)		Quoted market prices in active markets	Valuation techniques -observable inputs	Valuation techniques -significant unobservable inputs
Assets
Cash and balances at central banks	28,826	28,826			28,826
Securities financing	16,830		16,830		16,830
Loans and advances banks	10,084		8,824	1,269	10,093	9
Loans and advances customers	275,941		17,951	264,296	282,247	6,306
Total	331,681	28,826	43,605	265,565	337,996	6,315
Liabilities
Securities financing	12,756		12,756		12,756
Due to banks	14,646		5,376	9,227	14,603	43
Due to customers	238,058		59,359	168,565	227,924	10,134
Issued debt	77,206	45,789	32,128		77,918	-712
Subordinated liabilities	9,683	9,690	514		10,204	-521
Total	352,349	55,479	110,133	177,792	343,405	8,944

						31 December 2017
	Carrying value				Total fair value	Difference
(in millions)		Quoted market prices in active markets	Valuation techniques -observable inputs	Valuation techniques -significant unobservable inputs
Assets
Cash and balances at central banks	29,783	29,783			29,783
Securities financing	15,686		15,686		15,686
Loans and advances banks	10,665		9,671	990	10,661	-3
Loans and advances customers	274,906		19,454	263,914	283,369	8,462
Total	331,039	29,783	44,811	264,905	339,499	8,459
Liabilities
Securities financing	11,412		11,412		11,412
Due to banks	16,462		7,531	8,917	16,447	15
Due to customers	236,699		88,095	147,501	235,596	1,103
Issued debt	75,429	42,752	33,725		76,477	-1,047
Subordinated liabilities	9,720	8,922	1,595		10,517	-797
Total	349,722	51,673	142,358	156,417	350,448	-726

Condensed consolidated Interim Financial Statements 2018

12 Loans and advances banks

(in millions)	30 June 2018	31 December 2017
Interest-bearing deposits	3,511	4,914
Loans and advances	4,088	2,871
Mandatory reserve deposits with central banks	314	251
Other	2,176	2,635
Subtotal	10,089	10,671
Less: loan impairment allowance	5	7
Loans and advances banks	10,084	10,665

Loans and advances banks decreased by EUR 0.6 billion to EUR 10.1 billion at 30 June 2018, mainly as a result of a decrease in the interest bearing deposits partly offset by an increase in the loans and advances.

Interest-bearing deposits decreased by EUR 1.4 billion to EUR 3.5 billion at 30 June 2018, mainly as a result of a decline in interbank deposits.

Loans and advances increased by EUR 1.2 billion to EUR 4.1 billion at 30 June 2018, mainly as a result of higher pledged cash collateral relating to derivatives.

Mandatory reserve deposits are held with local central banks in accordance with statutory requirements. These deposits are not available to finance ABN AMRO's day-to-day operations.

Other loans decreased by EUR 0.5 billion to EUR 2.2 billion at 30 June 2018, mainly as a result of a drop in discounted drafts for commodities customers.

13 Loans and advances customers

This item is comprised of loans and advances to non-banking clients.

(in millions)	30 June 2018	31 December 2017
Residential mortgages (excluding fair value adjustment)	150,393	150,562
Fair value adjustment from hedge accounting on residential mortgages	2,148	2,264
Residential mortgages, gross	152,541	152,825
Less: loan impairment allowances - residential mortgage loans	155	134
Residential mortgages	152,387	152,691
Consumer loans, gross	12,329	12,426
Less: loan impairment allowances - consumer loans	330	304
Consumer loans	11,999	12,122
Corporate loans	98,368	94,220
Fair value adjustment from hedge accounting on corporate loans	1,356	1,425
Financial lease receivables	4,872	4,530
Factoring	3,388	2,962
Corporate loans, gross1	107,985	103,138
Less: loan impairment allowances - corporate loans	2,276	2,020
Corporate loans at amortised cost	105,708	101,118
Corporate loans at fair value through P&L	1,872
Corporate loans	107,580	101,118
Government and official institutions	1,472	1,595
Other loans	4,369	7,371
Fair value adjustment from hedge accounting on other loans	12	11
Other loans at fair value through P&L	4
Other loans and advances customers, gross	5,856	8,977
Less: loan impairment allowances - other	6	2
Other loans and advances customers	5,851	8,975
Loans and advances customers	277,817	274,906

¹ Excluding loans at fair value through P&L.

Loans and advances customers increased by EUR 2.9 billion to EUR 277.8 billion at 30 June 2018, mainly as a result of an increase in corporate loans.

Corporate loans and other loans were impacted due to IFRS 9 becoming effective. We refer to note 1 for more information.

Residential mortgages decreased slightly by EUR 0.3 billion to EUR 152.4 billion. Redemptions exceed new production slightly.

Consumer loans also decreased slightly, by EUR 0.1 billion, arriving at EUR 12.0 billion, mainly due to repayments on loans by retail clients.

Corporate loans increased by EUR 6.5 billion to EUR 107.6 billion, mainly due to an increase in term loans (EUR 3.0 billion) and in cash positions for trading customers (EUR 1.7 billion).

Other loans and advances customers decreased by 3.1 billion to EUR 5.9 billion, mainly due to a decrease in the Clearing business (EUR 1.4 billion).

The changes mentioned above include the fair value adjustment from hedge accounting on mortgages and corporate loans.

Details on loans impairments are provided in the Risk, funding & capital information section.

ABN AMRO Bank Interim Financial Report 2018

14 Aquisitions and divestments

		First half 2018		First half 2017
(in millions)	Acquisitions	Divestments	Acquisitions	Divestments
Net assets acquired/Net assets divested	46			1,400
Cash used for acquisitions/received for divestments	-46	-15		-1,104

The acquisitions and divestments in the first half of 2018 mainly regard the investments in equity accounted investments.

The divestments in the first half of 2017 regard the sale of ABN AMRO's Private Banking operations in Asia and the Middle East, which was completed on 30 April 2017.

15 Due to banks

This item comprises amounts due to banking institutions, including central banks and multilateral developments banks.

(in millions)	30 June 2018	31 December 20171
Deposits from banks:
Current accounts	2,109	2,588
Demand deposits	41	31
Time deposits	11,867	11,147
Cash collateral on securities lent	607	2,673
Other	22	23
Total due to banks	14,646	16,462

¹ The comparative figures have been restated. For additional information, refer to note 1.

Due to banks decreased by EUR 1.8 billion to EUR 14.6 billion at 30 June 2018 (31 December 2017: EUR 16.5 billion). This decrease was mainly attributable to a decline in Cash collateral on securities lent.

Current accounts decreased by EUR 0.5 billion to EUR 2.1 billion at 30 June 2018, mainly due to positions of international credit institutions.

Time deposits increased by EUR 0.7 billion to EUR 11.9 billion at 30 June 2018, mainly as a result of Collateral Management.

Cash collateral on securities lent decreased by EUR 2.1 billion to EUR 0.6 billion, mainly as a result of a decrease in Cash collateral on securities lent from several central banks and credit institutions.

64

16 Due to customers

This item is comprised of amounts due to non-banking clients.

(in millions)	30 June 2018	31 December 20171
Current accounts	83,383	83,627
Demand deposits	125,692	125,995
Time deposits	27,852	26,536
Other	1,130	541
Total due to customers	238,058	236,699

¹ The comparative figures have been restated. For additional information, refer to note 1.

Due to customers increased by EUR 1.4 billion to EUR 238.1 billion at 30 june 2018. This resulted from an increase in time deposits (EUR 1.3 billion) and an increase in other (EUR 0.6 billion), offset by a decrease in current accounts (EUR 0.2 billion) and demand deposits (EUR 0.3 billion).

Time deposits increased by EUR 1.3 billion to EUR 27.9 billion at 30 june 2018, mainly due to the increase of activities on the money market.

Other increased by EUR 0.6 billion to EUR 1.1 billion at 30 june 2018 mainly due to an increase of cash collateral in Markets.

17 Issued debt and subordinated liabilities

The following table shows the types of debt certificates issued by ABN AMRO and the amounts outstanding at 30 June 2018 and 31 December 2017 respectively.

(in millions)	30 June 2018	31 December 2017
Bonds and notes issued	62,894	59,527
Certificates of deposit and commercial paper	14,305	15,896
Saving certificates	6	6
Total at amortised cost	77,206	75,429
Designated at fair value through profit or loss	1,045	1,182
Total issued debt	78,251	76,612
- of which matures within one year	26,179	23,790

Total issued debt increased by EUR 1.6 billion to EUR 78.3 billion at 30 June 2018 (31 December 2017 EUR 76.6 billion). This increase was mainly driven by growth in long term mortgages resulting in a rise of the long term covered bond portfolio. Moreover, corporate loan growth led to an increase of unsecured medium notes. The increase of long term issued debt was partly offset by a decrease in certificates of deposit and commercial paper within our targeted bandwidth for short term funding.

The amounts of issued and redeemed debt during the period are shown in the Consolidated statement of cash flows. Further details of the funding programmes are provided in the Risk, funding & capital chapter.

Financial liabilities designated at fair value through profit or loss

The change for the period in fair value of the structured notes attributable to a change in credit risk amounted to a loss of EUR 14 million in H1 2018 (full-year 2017: EUR 15 million).

For all financial liabilities designated at fair value through profit or loss, the amount that ABN AMRO would contractually be required to pay at maturity was EUR 0.9 billion at 30 June 2018 (31 December 2017: EUR 1.1 billion).

Subordinated liabilities

The following table shows the outstanding subordinated liabilities issued by ABN AMRO and the amounts outstanding at 30 June 2018 and 31 December 2017 respectively.

(in millions)	30 June 2018	31 December 2017
Subordinated liabilities	9,683	9,720

Subordinated liabilities remained stable at EUR 9.7 billion at 30 June 2018 compared with 31 December 2017.

No perpetual loans were recorded at reporting date.

The issued and outstanding loans qualifying as subordinated liabilities were subordinated to all other current and future liabilities.

18 Provisions

The following table shows a breakdown of provisions at 30 June 2018 and 31 December 2017 respectively.

(in millions)	30 June 2018	31 December 2017
Insurance fund liabilities	8	62
Provision for pension commitments	74	76
Restructuring provision	306	404
Other staff provision	117	122
Legal provisions	605	692
Credit commitments provisions	43	6
Other provisions	105	167
Total provisions	1,257	1,529

Total provisions decreased by EUR 0.3 billion to EUR 1.3 billion at 30 June 2018, compared with EUR 1.5 billion at 31 December 2017. This was mainly due to decreases in the restructuring provisions (EUR 0.1 billion) and the legal provisions (EUR 0.1 billion), which were partly offset by more credit commitments provisions resulting from IFRS 9.

Interest rate derivatives to SME clients

In 2015 ABN AMRO started a review, at the request of both the Netherlands Authority for the Financial Markets (AFM) and the Dutch Ministry of Finance, to determine whether the bank had acted in accordance with its duty of care obligations with respect to the sale of interest rate derivatives to SME clients. In the second quarter of 2015 ABN AMRO first recognised a provision for the compensation of clients who had suffered losses. In December 2015 the AFM announced that it found the review performed by banks to be insufficient. In light of this finding, the Dutch Minister of Finance appointed a committee of independent experts (the Committee) to develop a Uniform Recovery Framework in consultation with the participating banks.

On 5 July 2016 the Committee presented the Uniform Recovery Framework. On that same date ABN AMRO announced it would adhere to this framework. As a result, ABN AMRO increased its provision. Since 5 July 2016, the Committee,

the AFM, the banks and the external file reviewers have worked together to monitor how the Uniform Recovery Framework works in practice. The Committee has now added the findings to the Uniform Recovery Framework, which was finalised on 19 December 2016.

ABN AMRO has set up its own client reassessment process and the related checks and balances. In the first quarter of 2017, ABN AMRO started the reassessment of around 6,800 clients with some 9,000 interest rate derivatives. Later, the reassessment was slightly expanded so that on 31 May 2018 the reassessment consisted of 7,079 clients with 10,638 interest rate derivatives. Due inter alia to the complexity of the reassessment, it was not feasible to propose a solution to the Issuer's clients before the end of 2017. ABN AMRO aims to propose a solution under the Uniform Recovery Framework for the vast majority of these clients before the end of 2018. However, it is possible that the review of some of the more complex files will not be finalised until 2019. At various points in the process, the reassessments will be checked by an independent external file reviewer, in ABN AMRO's case audit firm PwC, and will be supervised by the AFM. The total provision for SME derivatives-related issues amounted to EUR 396 million at 30 June 2018. This amount consists of the total client compensation (EUR 541 million) and project costs (EUR 232 million), after payments already made for both elements (EUR 377 million).

Euribor-based mortgages

ABN AMRO has sold mortgage loans with floating, often Euribor-based, interest rates (close to 1% of the total mortgage portfolio) to consumers. An important element of the pricing model of these mortgage loans is the ability of ABN AMRO to on-charge costs, allocated and unallocated, to its clients by adjusting the margin charge on the Euribor. In many of these products, ABN AMRO has structured its ability to do so in provisions in its terms and conditions that allow it to unilaterally adjust the margin charge or the floating interest rate, pricing or contract terms. ABN AMRO's external funding costs (spread on top of Euribor) have gone up and in 2009 and 2012 ABN AMRO adjusted the margin charge upward in many cases. As a result, clients are contesting the ability of ABN AMRO to do so. The complaints are based on a number of specific and general legal principles. In 2012, on top of multiple individual cases, class actions were brought by Stichting Stop de Banken and Stichting Euribor in relation to mortgage agreements with a floating interest rate based on Euribor, alleging that ABN AMRO was contractually not allowed to unilaterally increase the level of the applicable margin and that it had violated its duty of care. ABN AMRO lost the class action cases in the lower court in November 2015. In its judgement, the Amsterdam court took a rather principled view of unconditional (pricing) amendment provisions. ABN AMRO filed for an appeal against this judgement. On 19 December 2017, the Amsterdam Court of Appeal Amsterdam ruled that ABN AMRO was not allowed to increase the surcharges. The Court ruled that the amendment clauses which ABN AMRO used to increase the surcharges were unfair and consequently these clauses were quashed. ABN AMRO decided to appeal to the Supreme Court (Hoge Raad) and filed the necessary documents in view thereof at the Supreme Court on 16 March 2018. Currently the bank is working on further documentation for the appeal proceedings which will be filed in late August 2018. A verdict of the Supreme Court is expected early in 2019. ABN AMRO has recognised a provision for this matter.

ICS Redress scheme

International Card Services B.V. (ICS), the credit card business of ABN AMRO, has identified certain issues from its past in respect of the granting of credit to consumers, as a result of which certain clients have been provided with loans above their lending capacity. This has been reported to the AFM. ICS has drafted a redress scheme to address remedial measures for clients affected, which will, among other things, include financial compensation for certain clients. The recovery framework is currently being executed and is expected to be finalised by the end of 2018. ABN AMRO has recognised a provision in respect of this redress scheme.

19 Commitments and contingent liabilities

(in millions)	30 June 2018	31 December 2017
Committed credit facilities	37,099	32,772
Guarantees and other commitments:
Guarantees granted	2,538	2,509
Irrevocable letters of credit	5,861	6,526
Recourse risks arising from discounted bills	7,663	7,130
Total guarantees and other commitments	16,062	16,165
Total	53,161	48,938

The total of committed credit facilities, guarantees and other commitments increased by EUR 4.2 billion to EUR 53.2 billion at 30 June 2018, compared with EUR 49.0 billion at 31 December 2017. This was mainly the result of an increase of EUR 4.3 billion in the committed credit facilities, offset by a decrease of EUR 0.1 billion in the guarantees and other commitments.

The increase in committed credit facilities related to a higher volume of credit lines granted to government and official institutions and commercial clients of EUR 4.3 billion combined with a higher volume of outstanding credit offers (excluding residential mortages) of EUR 0.5 billion, which was partly offset by a lower volume of outstanding credit offers on residential mortgages of EUR 0.3 billion.

Other contingencies

ABN AMRO is involved in a number of legal proceedings which relate to the ordinary course of business in a number of jurisdictions. In presenting the Condensed consolidated Interim Financial Statements, management makes estimates regarding the outcome of legal, regulatory and arbitration matters and takes a charge to income when losses with respect to such matters are probable. Charges other than those taken periodically for defence costs are not established for matters when losses cannot be reasonably estimated. Other contingent liabilities include an Irrevocable Payment Commitment (IPC) to the Single Resolution Board (SRB) in Brussels. In April 2016, the SRB provided credit institutions the option to fullfill part of the obligation to pay the annual ex-ante contributions to the Single Resolution Fund (SRF) through IPCs. To secure full and punctual payment, when called by the SRB, credit institutions needed to constitute cash collateral and fully transfer legal ownership to the SRB.

Interest rate derivatives to SME clients

On 1 March 2016, the AFM published a press release and a letter addressed to the Dutch Minister of Finance advising him to appoint a panel of independent experts for advice on the reassessment of SME and middle market interest rate derivatives. On 5 July 2016, the Uniform Recovery Framework prepared by this panel of independent experts was presented, and ABN AMRO has committed to this framework. The Uniform Recovery Framework was finalised on 19 December 2016. Due inter alia to the complexity of the reassessment, it was not feasible to propose a solution to the Issuer's clients before the end of 2017. ABN AMRO aims to propose a solution under the Uniform Recovery Framework for the vast majority of these clients before the end of 2018. However, it is possible that the review of some of the more complex files will not be finalised until 2019. It is unclear how the Uniform Recovery Framework will impact pending and future litigation. As this is a possible liability dependent on a future event, there is no provision for this possible outflow of resources and it is therefore considered a contingency. In this respect, reference is made to note 18 Provisions.

Cross liabilities

Section 2:334t of the Dutch Civil Code requires that in the event of an entity being divided into two or more parts through a legal demerger, each part remains liable to the creditors of the other demerged part. Such liabilities relate only to obligations existing as at the date of the legal demerger. As explained in more detail in Note 34 of the 2017 Condensed consolidated Annual Financial Statements, ABN AMRO was subject to a demerger with RBS N.V. in 2010.

Indemnity agreement with the Dutch State

On 1 April 2010 ABN AMRO signed an indemnity agreement with the Dutch State (currently represented by NLFI) for a shortfall in capital above a certain amount related to specific assets and liabilities of RFS Holdings B.V. In July 2015 ABN AMRO was informed by NLFI about a claim it had received from RBS relating to these assets and liabilities in RFS Holdings B.V. This gives NLFI the right to file a claim with ABN AMRO. As of the publication date of these Condensed consolidated Interim Financial Statements, ABN AMRO is not aware that a claim will be filed by NLFI. This situation could change in the future.

20 Related parties

Parties related to ABN AMRO Bank include ABN AMRO Group N.V. with control, the Dutch state and NLFI with significant influence, associates, pension funds, joint ventures, the Executive Board, the Executive Committee, the Supervisory Board, close family members of any person referred to above, entities controlled or significantly influenced by any person referred to above and any other related entities. ABN AMRO has applied for the partial exemption for government-related entities as described in IAS 24 paragraphs 25-27. For further information, see note 35 of the Consolidated Annual Financial Statements 2017.

As part of its business operations, ABN AMRO frequently enters into transactions with related parties. Transactions conducted with the Dutch State are limited to normal banking transactions, taxation and other administrative relationships with the exception of items specifically disclosed in this note. Normal banking transactions relate to loans and deposits and are entered into under the same commercial and market terms that apply to non-related parties.

Loans and advances to the Executive Board, Executive Committee members and close family members, where applicable, consist mainly of residental mortgages granted under standard personnel conditions. For further information, see note 36 of the Consolidated Annual Financial Statements 2017.

Balances with joint ventures, associates and other

(in millions)	Joint ventures	Associates	Other	Total
30 June 2018
Assets	23	401		424
Liabilities	162	651		813
Guarantees given		15		15
Guarantees received		4		4
Irrevocable facilities		23		23
First half 2018
Income received	18	20		38
Expenses paid	5	3	144	153
31 December 2017
Assets	4	352		356
Liabilities	82	585		667
Guarantees given		15		15
Guarantees received		4		4
Irrevocable facilities		23		23
First half 2017
Income received	19	26		45
Expenses paid	6	3	161	170

Assets with associates increased by EUR 49 million at 30 June 2018 compared with 31 December 2017, mainly due to higher balances on current accounts with other financial corporations.

Liabilities with Joint ventures increased by EUR 80 million at 30 June 2018 compared with 31 December 2017, mainly due to higher balances on demand deposits with other financial corporations.

Liabilities with Associates increased by EUR 66 million at 30 June 2018 compared with 31 December 2017, mainly due to higher customer deposits with other financial corporations.

Expenses paid in the column Other reflect pension contributions paid to the ABN AMRO pension fund.

Balances with ABN AMRO Group N.V. and the Dutch State

(in millions)	30 June 2018	31 December 2017
Assets:
Financial assets held for trading	499	480
Derivatives	862	1,076
Financial investments	5,367	6,197
Loans and advances customers	790	760
Other assets	9	9
Liabilities:
Financial liabilities held for trading	366	98
Derivatives	1,539	1,753
Due to customers	816	882
Subordinated liabilities
	First half 2018	First half 2017
Income statement:
Interest income	60	69
Interest expense	18	20
Net trading income	-2	-2
Other income	19	10

Royal Bank of Scotland (RBS) is still the legal owner of specific Consortium shared assets and liabilities. This means that these assets and liabilities are for the risk and reward of RBS, Santander and the Dutch State as the shareholder of RFS Holdings B.V. On 1 April 2010, ABN AMRO signed an indemnity agreement with the Dutch State for a shortfall in capital above a certain amount relating to specific assets and liabilities of RFS Holdings.

Transactions conducted with the Dutch State are limited to normal banking transactions, taxation and other administrative relationships. Normal banking transactions relate to loans and deposits, financial assets held for trading and financial investments available for sale, and are entered under the same commercial and market terms that apply non-related parties.

Transaction and balances related to taxation, such as levies in the Netherlands, are excluded from the table above.

Derivatives relating to both assets and liabilities decreased by EUR 0.2 billion at 30 June 2018 compared with 31 December 2017, mainly due to lower lending positions with the Dutch State. Derivatives transactions with the Dutch State related to the normal course of business.

Financial liabilities held for trading increased by EUR 0.3 billion at 30 June 2018 compared with 31 December 2017, mainly due to higher Dutch government bonds resulting from primary dealership in the Netherlands and client facilitation. Most of these contracts are hedged with short positions in government bonds.

21 Post balance sheet events

On 30 July 2018, ABN AMRO announced that it had agreed to acquire Societe Generale Private Banking NV in Belgium. The planned transaction is subject to approval by the relevant regulatory and merger control authorities. The acquisition will enable us to double our assets under management of Private Banking in Belgium to approximately EUR 12 billion. Closing of the transaction is expected in Q1 2019 and is estimated to have a minor impact on the CET 1 capital ratio.

Oth
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Interim Financial Statements 2018

Other

Enquiries

ABN AMRO Investor Relations

investorrelations@nl.abnamro.com +31 20 6282 282

Investor call

The Executive Board will host a conference call for analysts and investors on 8 August 2018 at 11:00 am CET (12:00 GMT).To participate in the conference call, we strongly advise analysts and investors to pre-register for the call using the information provided on the ABN AMRO Investor Relations website.

More information can be found on our website abnamro.com/ir.

ABN AMRO Press Office

pressrelations@nl.abnamro.com +31 20 6288 900

ABN AMRO Group N.V.

Gustav Mahlerlaan 10, 1082 PP Amsterdam P.O. Box 283, 1000 EA Amsterdam The Netherlands abnamro.com

Information on our website does not form part of this Interim Report, unless expressly stated otherwise.

Disclaimer & cautionary statements

ABN AMRO has included in this document, and from time to time may make certain statements in its public statements that may constitute "forward-looking statements". This includes, without limitation, such statements that include the words "expect", "estimate", "project", "anticipate", "should", "intend", "plan", "probability", "risk", "Value-at-Risk ("VaR")", "target", "goal", "objective", "will", "endeavour", "outlook", "optimistic", "prospects" and similar expressions or variations on such expressions. In particular, the document may include forward-looking statements relating but not limited to ABN AMRO's potential exposures to various types of operational, credit and market risk. Such statements are subject to uncertainties.

Forward-looking statements are not historical facts and represent only ABN AMRO's current views and assumptions on future events, many of which, by their nature, are inherently uncertain and beyond our control. Factors that could cause actual results to differ materially from those anticipated by forward-looking statements include, but are not limited to, (macro)-economic, demographic and political conditions and risks, actions taken and policies applied by governments and their agencies, financial regulators and private organisations (including credit rating agencies), market conditions and turbulence in financial and other markets, and the success of ABN AMRO in managing the risks involved in the foregoing.

Any forward-looking statements made by ABN AMRO are current views as at the date they are made. Subject to statutory obligations, ABN AMRO does not intend to publicly update or revise forward-looking statements to reflect events or circumstances after the date the statements were made, and ABN AMRO assumes no obligation to do so.