ING Groep N.V. Q2 FY2025 earnings call

• Customer Growth: Mobile primary customer base grew by over 300,000 in Q2, with a 1.1 million increase in the last 12 months, serving over 40 million private individuals globally.
• Loan Book Growth: Retail banking net core lending rose by EUR 11.3 billion, Wholesale Banking net core lending grew by EUR 4 billion, driven by different segments.
• Fee Income Diversification: Fee income increased by 11% vs H1 2024, targeting the higher end of the 5%-10% range for 2025 and EUR 5 billion by 2027.
• Sustainability: Sustainable finance mobilized rose 19% to EUR 68 billion from H1 2024.
• Capital Allocation: Retail banking now accounts for over 53% of capital allocation, shifting from Wholesale Banking to capitalize on more profitable retail business.

Retail Banking: Net core lending grew by EUR 11.3 billion in Q2, mainly driven by mortgages. The mobile primary customer base grew by over 300,000 in Q2, with a 1.1 million increase in the last 12 months. Fee income from retail banking also saw growth. Wholesale Banking: Net core lending grew by EUR 4 billion, driven by working capital solutions and short-term trade finance, but demand for long-term corporate loans remained subdued due to macroeconomic uncertainty. Fee Income: Increased by 11% versus the first half of 2024, now making up almost 20% of total income, with a target of EUR 5 billion fee income by 2027. Customer Balances: Average customer lending balances increased significantly, especially in retail banking and mortgages, while average customer deposits also rose due to strong performance in both Retail and Wholesale Banking.

• 2025 Outlook: Total income expected to be roughly stable vs 2024. Total expenses forecasted at the lower end of the range. CET1 remains unchanged at 12.8%-13%. ROE upgraded to around 12.5%.
• Commercial NII: Expected to be higher in the second half, driven by volume growth, with FX impact considered.
• Fee Income: Expected to grow at the higher end of the 5%-10% range for 2025.

• Macroeconomic and Geopolitical Uncertainty: Impact on loan demand, particularly for long-term corporate loans.
• FX Volatility: Affects NII and total revenue, with an 8% reduction in USD vs EUR in Q2 impacting NII by EUR 37 million.
• Competition: Potential impact on liability margins and deposit pricing, affecting profitability.

Q: Underestimated FX sensitivity?

A: Tanate mentioned an 8% reduction in the U.S. dollar against the euro in Q2 had a EUR 37 million impact on NII and ~60-70 million on total revenue.

Q: Corporate loan demand?

A: Muted, with limited growth in corporate term loans, and too early to tell if it will change.

Q: Expenses and ROE?

A: Expenses managed within guidance, ROE upgrade due to improved fees and cost management.