ING Groep NV Q3 FY2024 earnings call

• Accelerating Growth: Strong commercial performance with highest total income in 3Q, growth in customers and client balances. Lending book grew by €9B, mortgages strong, Netherlands market share in new production increased via digitalization.
• Increasing Impacts: Growth in customer numbers, top Net Promoter Score in 5 retail markets, digitalization of product offering (e.g., one app in Germany), improved employee experience, sustainability progress with €28B sustainable volume in 3Q.
• Delivering Value for Shareholders: Strong capital generation (4-quarter rolling ROE 13.8%, CET1 ratio 14.3%), announced €2.5B distribution including €2B share buyback and €500M cash dividend in Jan 2025.
• Poland Franchise: Large and growing customer base, high digitalization, leading in private, business, and private banking segments, strong profitability with 9% CAGR in customer balances since 2019.
• Climate Action: Terra approach expanded to aluminum and dairy sectors, co-developed standards for industries, oil and gas policy changes (stopping new financing for pure-play upstream oil/gas and new export LNG terminals after 2025).

Retail Banking: In Q3, mobile primary customers increased by 189,000, with a 12-month growth of around 900,000. Lending book grew by €9 billion, particularly strong in mortgages, and ING increased market share in Netherlands new production via digitalization. Wholesale Banking: Lending and financial markets growth was offset by capital usage optimization. Belgium deposit campaign brought €5.5 billion, but Germany campaign ended with outflows; net inflow in Wholesale Banking deposits. Fee Income: Exceeded €1 billion for the first time in Q3, with fee income growing due to structural drivers.

• Total income expected to end above €22.5B (up from >€22B).
• Total costs unchanged at around €12B, resulting in cost/income ratio ~53%.
• Full-year return on equity forecasted to be more than 13%.

• Macroeconomic uncertainty impacting loan book quality.
• Volatility in treasury-related income affecting net interest income.
• Impact of regulatory changes (e.g., ECB minimum reserve requirements) on NII.

Q: On replicating income and retail AUM/e-brokerage volumes.

A: Steven and Tanate answered on inflows (AUM up 15% to ~€230B, 9% increase in investment product customers) and replication income confidence due to stable liability margin and lower deposit costs.

Q: M&A strategy.

A: Steven stated organic growth is first focus, but would consider domestic consolidation in retail and product skill acquisition if fitting criteria and ROI/ROE positive.

Q: Wholesale Bank RWA efficiencies and Mittelstand sector.

A: Ljiljana discussed RWA efficiency focus and small portfolio in Germany Mittelstand, noting macroeconomic considerations and digital focus.

Q: Belgian deposits and replicating portfolio.

A: Steven explained €5.5B deposit campaign with cross-selling potential, and Tanate confirmed replication portfolio maturity mix remains ~50% less than 1 year and 50% more than 1 year.

Q: Asset quality and liability NII.

A: Ljiljana talked about stable risk costs and monitoring commercial real estate, while Tanate addressed liability NII balance between margin and growth in lower rate environment.

Q: Lending NII and other income.

A: Steven and Tanate discussed lending NII volatility from one-offs and other income stability with breakdown of components.