ING Groep N.V. Q1 FY2025 earnings call

Key Points

• Strong growth in first quarter with deposits and mortgage volumes up.
• Relentless focus on customer value led to growth in private customers, loan book, and fee income.
• Diversified presence helps navigate geopolitical and macroeconomic uncertainty.
• Mortgage market has positive outlook with low default rates.
• Wholesale Banking is geographically diversified and proactive in key sectors.
• Announced €2 billion share buyback, with over €28 billion distributed to shareholders since 2021.

Private individual customers increased to over 40 million. Net core lending and retail banking grew by €8.6 billion, driven by mortgages, business, and consumer lending. Wholesale Banking saw modest lending decline. Deposits had exceptional growth, with core deposits up almost €23 billion. Fee income rose 10% vs 1Q 2024. Sustainable finance volume mobilized rose 23% to €30 billion. CET1 ratio ended 1Q 2025 at 13.6%, with target of 12.5% but steering to 12.8%-13% by end of 2025.

Reaffirmed 2025 outlook with CET1 target refined to 12.8%-13% for 2025, while long-term target remains 12.5%. 2027 targets reiterated. Announced €2 billion share buyback with focus on providing attractive shareholder return.

• Geopolitical and macroeconomic uncertainty leading to lower growth forecasts.
• Potential indirect impacts from tariffs on asset quality not clear.
• Interest rate volatility impacting margins, but disciplined repricing actions taken.

Q: On liability and lending margin, and share buyback A: Steven said target CET1 is around 12.5%, but steering to 12.8%-13% in 2025 due to uncertainty. Tanate discussed liability NII expected to remain similar in Q2, and lending margin impacted by day count, mix shift, and funding lengthening.

Q: On acquisitions and old school banks A: ING focuses on autonomous strategy, diversifying within existing segments and filling blanks in markets, with no specific acquisitions to announce currently.

Q: On loan growth in Wholesale Banking and Van Lanschot stake A: Healthy pipeline in Wholesale Banking but uncertainty in conversion. Van Lanschot stake shifts capital towards Retail Banking to increase return levels.

Q: On liability margins and cost of risk A: Tanate discussed liability margin expected to stay similar, with deposit growth strategy and cost of risk influenced by macroeconomic forecasts and model updates.

Q: On replicating portfolio and Business Banking rollout A: Replication portfolio shifted gradually with barbell strategy, and Business Banking rollout in Germany progressing well with digital focus.

Q: On customer behavior and tariffs impact A: Retail lending strong due to low unemployment and market recovery, while Wholesale Banking shows caution in investments and demand due to tariffs.

Q: On mobile customers and deposit cuts A: No correlation between mobile customer growth and deposit cuts, with 1 million target still on track, and deposit cut in Germany included in €1 billion guidance.