- Total Income: Reached the highest level ever in the third quarter.
- Mobile Primary Customers: Increased by 189,000 in the quarter, 900,000 over the last 12 months.
- Lending Book Growth: Increased by EUR9 billion, with strong performance in mortgages.
- Deposits: EUR5.5 billion of deposits from a successful campaign in Belgium.
- Annualized Customer Balance Growth: Lending and deposit combined growth of 5.3% in the first nine months.
- Fee Income: Exceeded EUR1 billion for the first time.
- Return on Equity: Four-quarter rolling return on equity of 13.8%.
- CET1 Ratio: Operating at a CET1 ratio of 14.3%.
- Additional Distribution: Announced EUR2.5 billion, including EUR2 billion share buyback and EUR500 million cash dividend.
- Total Income Outlook: Expected to exceed EUR22.5 billion for the full year.
- Total Costs: Expected to remain around EUR12 billion.
- Cost Income Ratio: Expected to be around 53%.
- Net Interest Income: Impacted by treasury results, core lines resilient.
- Net Core Lending Growth: Around EUR8.5 billion.
- Core Deposit Increase: Almost EUR3 billion in the second quarter.
- Net Interest Margin: Decreased by seven basis points.
- Fee Income Growth: Double-digit year-on-year growth.
- Total Expenses: Increased by just over 3% compared to the same period last year.
- Risk Costs: EUR336 million this quarter, or 20 basis points on average customer lending.
- Core Tier-1 Ratio: Increased to 14.3% at the end of the third quarter.
Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ING Groep NV (ING, Financial) reported a record level of total income for the third quarter, with fee income surpassing EUR1 billion for the first time.
- The company experienced strong commercial performance, with an increase of 189,000 mobile primary customers this quarter and a total of 900,000 over the last 12 months.
- ING Groep NV (ING) achieved significant growth in its lending book, particularly in mortgages, with an increase of EUR9 billion.
- The company announced an additional distribution of EUR2.5 billion, including a EUR2 billion share buyback and a EUR500 million cash dividend, providing an attractive return of 17% a year.
- ING Groep NV (ING) has made substantial progress in sustainability, mobilizing EUR28 billion in sustainable volume in the third quarter and EUR85 billion in the first nine months, a 15% increase from last year.
Negative Points
- Net interest income was impacted by treasury results, with a decrease in lending NII due to lower margins, especially in the wholesale banking segment.
- Total expenses increased by over 3% compared to the same period last year, driven by inflation impacts on staff expenses and higher VAT costs.
- Risk costs amounted to EUR336 million this quarter, reflecting macroeconomic uncertainty and additions to stage three provisions.
- The wholesale banking segment experienced a decrease in lending margins due to growth in low-risk segments and some one-off impacts.
- The company faces challenges in maintaining liability margins in a lower rate environment, with expectations to operate at the lower end of the 100 to 110 basis points range in 2025.
Q & A Highlights
Q: Can you provide more color on the replicating income and the confidence in repricing deposits?
A: Steven Van Rijswijk, CEO, explained that total assets under management increased by 15% to EUR230 billion, with a 9% increase in active trading accounts. Tanate Phutrakul, CFO, added that despite two ECB rate cuts, the liability margin remained stable due to strong tailwinds from replication and volume growth, with deposit costs starting to decrease.
Q: What is ING's strategy regarding M&A, especially in the context of potential cross-border consolidation in Europe?
A: Steven Van Rijswijk, CEO, stated that while ING's primary focus is on organic growth, they are open to opportunities that meet strict criteria for return on investment and equity. They are particularly interested in domestic retail consolidation and acquiring skill sets or products they currently lack.
Q: Could you discuss the main drivers of volume growth expected in the coming quarters?
A: Steven Van Rijswijk, CEO, noted that growth is primarily expected in retail, particularly in mortgages, as markets like the Netherlands and Germany recover. Wholesale banking growth will depend on GDP recovery, but retail is expected to be the main growth driver.
Q: How does ING plan to recoup the initial loss from the Belgian deposit campaign?
A: Steven Van Rijswijk, CEO, explained that the campaign aims to convert depositors into primary clients, allowing cross-selling of daily banking, investment products, and mortgages. Previous campaigns in Germany showed that two-thirds of the money remained after the campaign, turning customers into primary clients.
Q: What is the outlook for cost optimization and potential savings?
A: Tanate Phutrakul, CFO, mentioned that while wage inflation is expected to persist, ING is optimizing its balance between investment and operational efficiency. They are focusing on client acquisition, front office hires, and building tech platforms, while optimizing branch networks and contact center expenses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
