ING Groep NV Q3 FY2026 earnings call

• Strategic Execution: The 'Growing a Different' strategy is driving structurally increasing profitability, with Return on Tangible Equity (ROTE) reaching 16% in Q3, exceeding Capital Markets Day targets.
• Customer Growth: Added 259,000 mobile primary customers in Q3, totaling over 1.1 million growth in the past 12 months. Mobile primary customers are 7x more loyal and 2x more profitable than non-primary customers.
• Fee Income Diversification: Fee income grew 9% YoY, driven by cross-selling and deeper customer engagement. Average fees per private individual customer increased by 14%.
• Operational Scalability: Digitalization and global hubs enable scalable growth without proportional cost increases. Headcount reduced by 1.5% YoY, with productivity targets for 2027 being front-loaded.
• Capital Efficiency: Significant progress in Risk-Weighted Asset (RWA) optimization through Securitizations (SRT), freeing up 16 basis points of CET1 ratio year-to-date. SRT transactions generated EUR 3 billion in RWA relief in Q3 alone.
• Shareholder Returns: Announced an additional EUR 1.9 billion distribution (EUR 1.65 billion share buyback + EUR 250 million cash payout) while strengthening CET1 ratio to 13.3%.
• Wholesale Banking Restructuring: Renaming units to 'Corporate and Institutional Banking' to simplify structure. Expecting ~400 redundancies globally, with EUR 175 million provision booked in Q4 2026, leading to EUR 75 million annual savings from 2028.

The transcript does not provide a detailed breakdown of financial performance (absolute revenue and contribution %) for each specific product segment (e.g., Retail vs. Wholesale) in the format requested. However, it highlights that Total Income rose 6% year-on-year. Commercial Net Interest Income (NII) grew 13% year-on-year, while Fee Income increased 9% year-on-year. Retail Banking fee income rose 10%, and Wholesale Banking fee income rose 9%. Specific absolute revenue figures per segment are not explicitly isolated in the provided text beyond aggregate totals.

• Total Income: Expected to exceed original 2027 target by at least EUR 1 billion due to strong momentum.
• Fee Income: Target raised to reach EUR 5 billion mark in 2026, one year ahead of plan (up EUR 400 million from previous forecast).
• Costs: Operating expenses expected to be around EUR 300 million below the original 2027 target, reflecting stronger operating leverage.
• ROTE: Expected to exceed the 2027 Capital Markets Day target by 2 percentage points, reaching above 16%.
• Commercial NII: Full-year expectation maintained at EUR 16.8 billion to EUR 17 billion, with liability margin targeting around 110 basis points.
• All Other Income: Full-year expectation between EUR 2.5 billion and EUR 2.7 billion.
• CET1 Ratio: Maintained at 13.3%; any capital structurally in excess of 13% will be returned to shareholders.

• Interest Rate Volatility: Heightened volatility caused negative results from hedge ineffectiveness in Q3, though this is accounting-driven and expected to reverse over time.
• Asset Quality Model Update: EUR 111 million risk cost related to an IFRS model update, which is non-economic and reflects prudent risk management rather than deterioration in loan quality.
• Restructuring Costs: Significant upfront costs (EUR 175 million in Q4) associated with Wholesale Banking simplification, impacting short-term earnings but aiming for long-term efficiency.
• Competitive Pressure: Strong competition in deposit markets, particularly in Germany, requiring disciplined pricing strategies to maintain margins.

Q: Benoit Petrarque asked about the 2030 cost growth trajectory and competitive pressure on liability margins, noting the strong sequential improvement in liability margins.

A: Steven van Rijswijk explained that cost control remains strict, with core markets (NL, BE, DE) seeing flat or declining costs while investments flow into expanding franchises like Private Banking and Transaction Services. He emphasized scalable propositions and digital foundations. Ida Lerner added that liability margins benefit from repricing of the replicating portfolio and disciplined pricing, remaining confident despite strong competition.

Q: Giulia Miotto questioned the high Q4 restructuring provision (EUR 175m) for Wholesale Banking and the potential for further SRT benefits given low starting RWA levels compared to peers.

A: Steven van Rijswijk clarified that the restructuring aims to simplify client relationships and improve ROE from 2028 onwards, with full benefits realized later. He noted they continue to seek efficiency opportunities. Ida Lerner stated that SRTs contributed 12 basis points to CET1 in Q3, bringing total 2026 relief to 16 bps. She affirmed continued focus on SRTs where profitable, targeting 15-20 bps of CET1 benefits annually.

Q: Benjamin Goy asked if mortgage loan growth would normalize to 5% due to higher rates and what portion of primary customers' wealth is held outside ING.

A: Steven van Rijswijk noted that lending has grown 6% annualized, slightly above the 4-5% historical trend, with no immediate dampening effect seen yet, though early signs of decline in new house mortgages may appear. Regarding wallet share, he highlighted that only 14% of customers use investment capabilities, indicating significant runway to capture more assets under management as customers become more engaged.

Q: Shrey Srivastava asked for clarification on the definition of 'mobile primary' customers versus competitors and why the payoff from Wholesale Bank restructuring (EUR 175m cost for EUR 75m savings) seemed lower than industry norms.

A: Steven van Rijswijk defined mobile primary customers as those with a salary account and another product, making them main banks but potentially using others too. He noted 60% of customers are not primary, offering substantial growth runway. On restructuring, he explained the provision reflects the specific nature of role changes in Wholesale Banking, differing from operational cuts, and cannot be directly compared to other banks' efficiencies.

Q: Delphine Lee asked why commercial NII guidance remained unchanged despite improving liability margins and rising rates, and queried potential adverse impacts on capital from regulatory reviews.

A: Ida Lerner explained that while upside potential exists, interest rate curve volatility and strong competition limit aggressive NII growth expectations, keeping the range valid but leaning toward the upper end. Andrea Cesaroni confirmed no material adverse impact expected from capital/RWA models or DCB reviews, citing extensive prior multi-year model reviews ensuring regulatory compliance.