Ing Groep Nv

Good morning, thank you, and good morning, and welcome to our results call for the third quarter of 2025. I hope you're all well, and thank you for joining us. As usual, I'm joined by our CRO Liliane Chortan and our CRO Tanev Putrakul. While macroeconomic and geopolitical uncertainty remains prevalent, we have again delivered a strong quarter as we continue to execute our strategy to accelerate growth, increase our impact, and deliver customer value. In today's presentation, I will start by sharing further insights in how our capital allocation will continue to fuel growth and increase returns. And I will also update you on our long-term capital targets. Thereafter, Tenaid will walk you through the quarterly financials, and as always, we will be happy to take your questions at the end of the call. And now, let's move to slide two. This slide highlights our continuous strong commercial momentum in the third quarter, with solid growth across key areas. We have added nearly 200,000 mobile primary customers during the quarter, bringing growth in the last 12 months to over 1.1 million, well ahead of the targets set at our capital markets day. Our loan book expanded significantly in both retail and wholesale, and retail saw 8.6 billion in net core lending growth, driven mainly by residential mortgages. wholesale banking also delivered a strong quarter, supported by trade, finance services and lending, reflecting increased client financing needs. Core deposits declined slightly following substantial inflows in previous quarters, and this was largely due to the inclusion of promotional campaigns and seasonal spending patterns during the summer in retail banking. On the other hand, wholesale banking posted strong inflows, particularly in payments and cash management, financial markets and cash pooling. Customer balances grew at an annualized rate of 7% in the first nine months of 2025, keeping us well on track to achieve our 4% annual growth target. Fee income also continued its usual trend. Year-to-date fees grew by 12%, and we have raised our full-year 2025 growth outlook to more than 10%. Our four-quarter rolling average ROE stands at 12.6%, and we have also revised our full-year ROE outlook upwards. Finally, we remain committed to supporting clients in their sustainability positions with sustainable finance volumes up 29% compared to the same period last year. Now let's move to the next slide to discuss what this growth means for our capital generation. On slide 3, we show how our contained commercial growth, further income diversification and proactive cost measures have delivered strong capital generation. Over the past four quarters, we have delivered 6 billion of net profit, which contributed an additional 2 percentage points to our CET1 ratio in line with the two prior years. This performance has enabled us to offer an attractive and sustainable dividend with an ordinary cash dividend yield of nearly 6% in the last 12 months and part of the capital we generated was reinvested to support profitable growth across both our business lines. And finally, thanks to our strong capital generation, we have been able to announce and execute additional distributions amounting to 4.5 billion over the last 12 months and 12.5 billion over the last 3 years. Then I move to slide four, where we summarize the total distributions to shareholders, building on what I just mentioned. In our policy, we have consistently paid cash dividends, and we have been executing share buybacks for several years. And these actions have delivered a highly attractive yield, while our share price has risen significantly. The $2 billion share buyback program, which started in May this year, was concluded earlier this week, and today we are announcing an additional $1.6 billion distribution. All that amount 1.1 billion will be returned in the form of a new share buyback, which will have a lasting positive impact on both earnings and dividends per share. And in addition, we will pay a cash dividend of €500 million in January 2026, helping us to meet expected cash flow for the year. Looking ahead, we remain committed to delivering strong shareholder returns, and we will provide you an update with our first quarter of 2026 results. Now let's move to slide 5, where I will explain the rationale behind updating our CET1 ratio target. So here on page 5, our expected fully loaded CET1 MDA has risen over the years from 10.5% in 2020 to around 11.2%, primarily due to regulatory changes. And consequently, we have revised our capital target and will now measure our CET1 ratio at around 13%. And this target gives us a buffer of about 180 basis points above the MDA threshold, which we consider appropriate given the resilience of our business model and the fact that a significant portion of the MDA over one percentage point is attributable to counter cyclical buffers. Any CT1 capital above 13% will be treated as excess and factored into our future capital planning as evidenced by the additional distribution that we announced today. And in the previous slides, and now in slide 6, I outlined how we have deployed excess and newly generated capital over the past years, delivering strong shareholder returns, and although we are no longer in a position of excess capital, we remain firmly focused on generating strong capital going forward. And our allocation priorities are well defined. First, we will maintain an attractive shareholder return, supported by our 50% dividend payout policy. Second, We will continue to invest in value-accretive growth, further diversifying income streams, expanding the loan book in a capital-efficient way, and considering M&A opportunities that meet our strict criteria. And these investments will help us to accelerate growth and enhance earnings potential as the return on new business is higher than a return on share buyback. And finally, we will return any capital structurally above our CET1 target to shareholders. Moving to slide 8, where we present our improved outlook for 2025. So far this year, we have added nearly 700,000 mobile primary customers and remain on track to achieve our annual growth target of 1 million in 2025. We have raised our expectation for fee growth and now anticipate fees to come in more than 10% higher than last year. And as a result, we have also increased our outlook for total income, which we now expect to reach around €22.8 billion this year. Prudent expense management remains a key priority. We continue to take proactive measures to operate efficiently while selectively investing for growth. And despite additional incidental expenses this quarter, we continue guiding total costs towards the lower end of the €12.5 to €12.7 billion range. As explained earlier, our CT1 target has been updated to around 13%, and given our improved outlook for income and disciplined approach on costs, we have also raised our ROE expectations for this year to more than 12.5%. We will share our outlook for 2026 and revisit our 2027 targets with the fourth quarter results. And now I'll hand over to Tenaid, who will walk you through the third quarter financial results in more detail, starting on slide 10. Tenaid. Thank you, Steven.

Yes, on slide 10 shows the development of total income, which has increased further this quarter. It was close to the record level we achieved one year ago. Commercial NII rose by a strong performance in wholesale banking lending. and the conclusion of a promotional campaign, savings campaign in retail banking Germany. These factors more than offset the impact of lower average ECB deposit facility rates and a stronger Euro. Fee income continues its upward trend, growing by 15% year on year. Most of this growth is structural, which is why we have raised our full year expectations. Finally, all other income which includes other NII, investment income and other income was supported by continuous strong results in financial market and treasury as well as the final dividend payment from our equity stake in Bank of Beijing. Let's discuss slide 11 where we show the development of our customer balances. We delivered another quarter of strong loan growth across both now retail and wholesale banking. Net core lending increased by 14.2 billion. Retail contributed 8.6 billion of that, driven by continued growth in mortgages and increasing consumer lending portfolio, primarily in Germany, Poland, and the Netherlands. Wholesale banking lending also posted strong growth. as a relatively large number of deals originated in earlier quarters were converted in the third quarter. On the liability side, core deposit declined by around 200 million euros after significant inflows in prior quarters. The decline was largely attributable to outflows in Germany and Belgium after the conclusion of promotional savings campaigns, with part of these funds moving into investment products. Seasonal effects also played a role as customers went more during the summer holiday period. Wholesale banking posted a strong inflow, reflecting increased deposit volume in payment and cash management area, financial market, and other cash pooling business. On slide 12, you can see that commercial NII grew quarter on quarter. This increase is particularly strong in retail Germany's liability NII after the end of the bonus rates for fresh money from a promotional campaign. This was also the main driver behind the one basis point improvement in liability margin. Lending NII also rose due to robust volume growth in wholesale banking lending. The lending margin remains stable as the growth in wholesale banking lending offset the impact of continued growth of our residential mortgage portfolio, which deliver higher return on equity but lower average margin. For full year 2025, our outlook for liability margin and lending margin is unchanged at around 100 basis points and around 125 basis points respectively. We expect commercial NII to come in between $15.2 and $15.3 billion. It is worth noting that the higher than expected NII growth in the third quarter was partly driven by a large number of transactions in the wholesale bank. which has been in the pipeline for an extended period of time. Turning to slide 13, fee growth remains strong with a 15% increase year-on-year driven by structural revenue drivers across both retail and wholesale banking. In retail banking, growth was supported by continued rise in mobile primary customer, which boosted daily banking fees. Investment products had a strong quarter, reflecting an increase in the number of investment accounts and higher asset under management. Wholesale banking delivered a quarterly record fee income of $383 million, driven by strong performance in lending, supported by greater number of lead roles, increased loan underwriting activities and higher lending volumes. Given the strong performance in the first nine months of this year, we are confident that we can grow our fee income by more than 10% in 2025. On slide 14, we showed the development of all other income. Income from financial market is mostly driven by client activity. We continue to support our clients through volatile market condition, mostly with FX and interest rate management. income from our financial stakes. This quarter included a final dividend from our stake in Bank of Beijing, while other income also benefited from a gain on sale of an associate company in Belgium. Slide 15 Our expenses, excluding regulatory costs and incidental items, rose less than 3% year-on-year. reflecting our prudent approach. The increase was largely reflecting wage inflation and our ongoing investment in business growth and scalability. On the growth side, we continue investing in our customer acquisition and product development, including expanding our offer for new customer segments. Another good example is business banking, where we broaden our product suite and make it easier to digitally onboard customer. In terms of scalability, we focus on enhancing and strengthening our tech platform. At the same time, we're seeing benefits from operational efficiencies, which help offset part of the cost increase. We remain committed to digitizing our services to further strengthen our operational leverage going forward. We're actively integrating generative AI capabilities through our organization. Our GenAI chatbot is now live in six markets, providing improved customer support. And in consumer finance, we use AI to assist applications and process loan applications automatically. Incidental expenses mostly related to restructuring provisions for planned FTE reductions in retail banking, which are expected to result in $30 million in annualised cost savings once fully implemented. We still expect total expenses to finish at the lower end of the previously guided range. The outlook includes incidental items recorded in the first nine months, whereby continued focus on operational efficiencies will lead to some incidental costs in the fourth quarter. Now let's move on to risk costs on the next slide. Total risk costs were $326 million this quarter, equivalent to 19 basis point of average customer lending, which is below our through-the-cycle average and reflect the quality of our loan book. Net addition to Stage 3 provision amount to $361 million, mainly due to collective provisioning in retail banking and a number of newly defaulted files in wholesale banking. The Stage 3 ratio remains stable. Stage 1 and Stage 2 risk costs show a net release of $35 million, mostly reflecting portfolio movements. Overall, we remain confident in the strength and quality of our loan books. On slide 17 we show development of our quarter one ratio which increased compared to last quarter. Quarter one capital increase on the back of strong capital generation partly offset by dividend reserving and a lower market value of our state in Bank of Beijing. The total risk weight assets remain broadly stable. Credit risk weighted assets excluding FX impact increased by 2.2 billion. this quarter, mainly due to volume growth. It was partly offset by a change in the profile of the loan book, equity revaluations and various other effects. Operational risk-weighted assets remained flat, while market risk-weighted assets decreased by $1.7 billion. We announced additional distribution of 1.6 billion. We have a pro forma impact of 48 basis points on the quarter one ratio, bringing it more in line with our updated target. Now I'll hand back to Stephen to wrap up today's presentation.

Thanks, Nate. And before we move to Q&A, let me recap the key takeaways from today's presentation. We delivered another strong quarter, maintaining solid commercial momentum that is fully aligned with our growth strategy and the sustained performance translated into robust capital generation, enabling attractive shareholder returns while continuing to selectively invest in our business. Today, we announced a 1.6 billion euro distribution, bringing our CET1 ratio in line with our updated target. Going forward, we remain committed to deploying capital to fuel growth and further enhance returns. And finally, we have improved our outlook for 2025, expecting higher fees, stronger total income, and a return on equity above 12.5%. And with that, I would like to open the floor for Q&A. Operator, over to you.