Ing Groep Nv

Good morning, this is Laura, welcoming you to ING's 1Q2026 conference call. Before handing this conference call over to Stephen Van Rysbeck, Chief Executive Officer of ING Group, let me first say that today's demands may include forward-looking statements, such as statements regarding future developments in our business, expectation for our future financial performance, and any statement not involving a historical factor. Actual results may differ materially from those rejected in any forward-looking statement. A discussion of factors that may cause actual results to differ from those in any forward-looking statement is contained in our public filings, including our most recent annual report on Form 20F, filed with the United States Securities and Exchange Commission, and our earnings press release as posted on our website today. Furthermore, nothing in today's comments constitutes an offer to sell or a solicitation of an offer to buy any certificates. Good morning, Stephen. Over to you.

Thank you very much, Laura. And good morning and welcome to our results call for the first quarter of 2026. I hope that you're all doing well and thank you for joining us today. Sitting next to me is our new CFO, Ida Lerner. Ida joined us on the 1st of April and we're very happy to have her on board. Welcome, Ida. And next to Ida, I'm also joined today by our Head of Risk, Andrea Cesarone, and we have started the year strongly. The first quarter of 2026 unfolded against a backdrop of geopolitical and macroeconomic uncertainty. However, our performance demonstrates once again the resilience of our business and of our clients. And we have continued to deliver strong and diversified growth and we're well on track to achieve our full year financial outlook. In today's presentation, I will talk about the resilience of our growth strategy and how the consistent execution thereof is delivering increasing value. After that, Ida will walk you through the quarterly financials, and at the end of the call, we will be happy to take your questions. And with that, we now start on slide two. This slide highlights our continued commercial momentum going into 26 with solid growth across all key areas and as you will remember we had ended 2025 with very strong volumes including some seasonal inflows and we have managed to maintain that strong positive momentum also across the first quarter more than absorbing the seasonal effects and continuing to push volumes even further up. Mobile primary customer growth for instance is seasonally lower in the first quarter However, we managed to grow by another 125,000 and we continue to be on track to achieve our 1 million growth target also in 2026. Loan growth was again strong at an annualized pace of more than 8%. In retail banking, we've grown by 9.4% in the first quarter. And besides continuing momentum in mortgages, we also saw strong growth in business banking where we continue to expand the franchise. In wholesale banking, we grew the loan book by 5.6 billion while keeping its risk-weighted assets broadly stable. We also saw solid inflow in deposits at an annualized rate of 4% despite seasonal outflows from current accounts in the first quarter and despite conversion into investment products. Fee income rose by 13% year-on-year, supported by a growing customer base, by higher customer trading volumes, and by strong deal flow in wholesale banking. And all of this translated into a return on tangible equity of 13.6% for the quarter. And finally, our sustainable volume mobilized has increased by 11% year on year as we continue to support our clients in their sustainable transitions. Now let's move on to the next slide to take a closer look at the fundamentals of our continued commercial growth. Slide 3 summarizes how the resilience of our business supports our growth strategy, also in a more challenging environment. And let me start by saying that the main driver of ING's commercial growth is the superior experience that we provide to our customers. With a leading net promoter score in most of our retail markets, we continue to attract new customers. And we see even stronger growth in the conversion into mobile primary relationships as more customers choose ING as their primary bank. And this deepening of the relationship with our customers is furthermore supported by the broadening of our product offering. And here we see strong momentum across all of our businesses, helping to further diversify our revenues across a growing range of capabilities. We've recently launched business banking in Italy, and in the Netherlands we are rolling out an insurance broker model to further integrate insurance capabilities into our mobile app. We are achieving most of our lending growth in mortgages. And as the leading European mortgage bank, we benefit from continued strong market fundamentals. The strength of our largest mortgage market is supported by constant low unemployment rates and a resilient market outlook. And our wholesale bank is well positioned to support Europe's strategic resilience with deep expertise in key focus areas, including in infrastructure and DMT. And as a top three MLA and bookrunner in Europe, and with our strong DCM franchise. Also, the bank is ready to support the investment initiatives that are needed to strengthen Europe's position in the global context. And with that, we move to slide 4. And on this slide, you can see how the consistent execution of Australia is driving value, supported by rising profitability, And by consistent deployment of share buyback programs, our EPS has improved by 11% on a 12-month rolling basis. And with EPS and the return on tangible equity clearly on a rising path, we have set firm direction towards our profitability targets by 2027. We see a wide range of strong catalysts that will support further value creation. First of all, we continue to grow our mobile primary customer base by 1 million per year. And this means that we're not just growing the number of accounts. This is growth from customers who actually use ING as their primary bank. And this is the core engine of our growth strategy. This is where growth, income diversification, and superior cost to serve all come together. In addition, that's number two, we continue to expand our business and develop new business streams. We are further rolling out our successful business banking franchise into several countries. We're building our private banking and wealth management as a third retail banking pillar in our existing markets. We're continuously developing new insurance propositions to make insurance a relevant revenue stream. And also banking, we're making strong progress to further diversify our capabilities in capital light revenues. And thirdly, when it comes to growth, Growth becomes powerful only when it is truly scalable. And our continued focus on operational excellence is increasingly enabling us to achieve growth in a truly scalable way. Combined with our capabilities to scale AI solutions quickly, we see a powerful improvement in growing commercial value and volumes at a much faster pace than our cost base. And finally, number four, we continue to improve our already strong level of capital efficiency, supported by continued capital velocity measures, both in wholesale banking and in retail banking. And all of this is not a journey that we will start tomorrow or in the years to come, but one that is already well underway, and one where we see its strong results already clearly today. Now, let's zoom in for a minute on that topic of scalability, moving to slide 5. On slide five, we demonstrate how we're increasingly enabling scalable growth. And first, I want to touch upon what drives our ability to achieve scalable growth. Now, R&D has a long track record of digitalization, and as a result, the vast majority of our key customer journeys are already fully straight through without any human intervention, and this is a key ingredient, not only for superior customer experience, but also for achieving through cost-efficiency. And in addition to a high level of digitalization, we also have built strong foundational capabilities that enable scalability. For example, we have our global hubs network, and it houses 27% of our tech employees and 40% of our operations workforce. And a fully integrated and scalable network organization supports improved productivity and operational resilience. But also our scalable tech platform, which includes... core infrastructure components such as our global private cloud and our global technology platform that provides reusable shared services for product development. And when you add these two ingredients together, digitalization and a scalable tech and operations organization, then you have a very strong starting point to deploy AI solutions. And that is why we have been able to already roll out many AI solutions at scale quickly. More than 90% of our AI pilots have successfully been moved into production. More than 75% of our customer chats are fully resolved by AI without human support. More than 7 million customers have already received hyper-personalized marketing campaigns. We have agentic mortgages, live in production in the Netherlands, and soon rolling out to other countries. And we are on the verge of of globally rolling out conversational banking for our retail customers, which is a personal assistant with agentic experience. Now, then when you then look back over cost performance over the past 12 months, and in comparison to our commercial growth, there you then see the powerful proof of our ability to achieve scalable growth. Because over the past 12 months, we have grown our mobile primary customer base by almost 7%. our customer balances by more than 5%, our volumes in investment products by more than 15%, and fee income even by 15.6%. With our FTEs, however, decreased by 0.6%, while our cost growth was limited to 2%. And with our commercial growth significantly outpacing incremental costs, we are delivering clear, scalable growth, supporting meaningful improvements of our efficiency ratios in the years to come. Now let's move to slide 6. On slide 6, we show how the consistent execution of our growth strategy is resulting in strong capital generation. Over the past 12 months, we have delivered 6.4 billion in net profit, contributing almost 2 percentage points of our CET1 ratio. And of that 6.4 billion, 50% has been reserved for our regular dividend distributions, Around 15% of the capital we generated has been used to fund profitable growth across our markets. And here we see a clear demonstration of capital efficiency. We have generated 65 billion of profitable lending growth over the past 12 months, while consuming only 1 billion of capital. And finally, the generated capital that was not needed for organic growth, we have returned to shareholders. with a total amount of €4.4 billion of additional distributions over the past 12 months, largely in the form of share buybacks. Now let's move to slide 7, where I will show how these distributions have resulted in continued attractive shareholder return. In line with our distribution policy, page 7, we have consistently paid cash dividends and we have been executing significant share buyback programs for several years, and together This results in consistent and attractive total distributions per share. The previously announced share buyback of 1.1 billion euro has been completed this week and today we have already started with another 1 billion share buyback program which will run for the next six months. And when we look ahead, we remain fully committed to strong capital discipline to deliver strong shareholder results and we maintain our semi-annual rhythm of assessing the potential for additional distributions and we will update you again in six months time. Now, before handing over to Ida, let me first take you to slide nine. And on slide nine, we confirm our financial outlook for 26 and 2027. We're well on track to achieve our upgraded outlook, which we communicated in the previous quarter with our full year results. We continue to add one million mobile primary customers per year, we see continued momentum in building out our fee income, we will deliver positive operating jewels in the years to come, and we are delivering on a broad range of catalysts that will continue to support the upper part of our RTE in the years to come as well. Now, let me hand over to Ida, who will walk you through our first quarter of results in more detail, starting from slide 11.

Thank you, Stephen. It is my pleasure to present the results of what has been a very strong first quarter of 2026. On slide 11, we can see that commercial NII has continued its upward trend since the second half of 2025. This is supported by continued volume growth on both sides of the balance sheets, by disciplined commercial pricing, and by the hedging tailwind on our replicated customer deposits. Fee income also continued its upward trend driven by further customer growth and by strong performance, particularly in investment products and in wholesale banking. All other income, on the other hand, was affected by the heightened market volatility towards the end of the quarter. This has resulted in some IFRS asymmetrical effects of which the majority should come back over time given lower interest rate volatility ahead. Overall, the strong customer activity and volume growth noted in the first quarter outweighed the lower all-other income and led to an uptick in total income of 3% compared to the same quarter last year. Let's now move to slide 12, where we will show the development of our customer balances. As you can see, we delivered another quarter of strong commercial growth across both retail banking and wholesale banking. Net core lending increased by $15 billion. Retail banking contributed $9.4 billion, driven by continued mortgage growth with strong production in the Netherlands, Germany, Italy, and Australia. This was coupled with a particularly strong performance in business banking, mainly in Netherlands and Poland. Wholesale banking also delivered strong growth of $5.6 billion. while keeping risk-weighted assets broadly stable. Within this growth of 5.6 billion, we see a strong net inflow of 7.8 billion in lending, which was partly offset by the repayment of a short-term working capital solution for safety. On the liability side, core deposits increased by 7.2 billion. Retail banking contributed 4.3 billion of growth, with strong inflows into savings and term deposits, most notably in Poland, Belgium and the Netherlands. This more than offset the seasonal outflow from current accounts and the conversion into investment products. Wholesale banking added 2.9 billion of customer deposit, as it continues to build out its capital-light income capabilities. On to slide 13. On this slide, we zoom in on commercial NII. Commercial NII grew by 132 million quarter on quarter and was 7% higher than last year. Lending NII was up 41 million in the first quarter despite lower day count driven by sustained volume growth at stable margins. Liability NII increased by 91 million quarter on quarter reflecting both volume growth and a five basis points increase in the liability margin. This higher liability margin is a reflection of the prolonged hedging tailwind on our replicated deposits while maintaining disciplined commercial pricing across the back book of our deposits. What it also reflects is the absence of larger savings campaigns during the first quarter meaning that the level of acquisition costs was relatively low this quarter and will likely normalise again in the coming quarters. As such, let me be clear that we should not expect a five basis points increase of the liability margin every quarter ahead. Looking ahead, on the back of a very strong first quarter and especially the higher than expected volume growth, we can expect a slightly higher level of commercial NII than previously guided. We now expect commercial NII for the full year to be between $16.5 and $16.7 billion. Turning to slide 14. Fee income growth remained strong, increasing 13% year-on-year and was also up on the prior quarter. What is especially encouraging to see is that this strong performance of fee income stems from all products and all markets, supporting the diversification of income sources for the bank. In retail banking, fee income grew by 13% year on year. This was mainly driven by structural factors, such as continued customer growth and improved cross-selling. Investment products, in particular, performed very well. a record quarter even benefiting from 8% growth in customers with an investment account and 15% growth in asset under management and administration, of which roughly half comes from net inflows, while also benefiting from 13% more trades, which besides the higher customer base, was supported by the increased market volatility towards the end of the quarter. In wholesale banking, fee income grew by 11% year-on-year, again demonstrating its strong progress on further income diversification. Let's turn to the next slide. On slide 15, we showed the development of all other income. Here we see that the heightened market volatility towards the end of the quarter had a negative effect on hedge ineffectiveness. as well as our activities within financial markets. It's worth remembering, however, that the P&L impact from the hedging effectiveness is not economic in nature. It is account-driven and should reverse over time. In financial markets, we continue to support our clients through the volatile market conditions. However, all other income was impacted by the sharp increase in interest rates. Overall, We expect all other income for the full year to be slightly lower than our normal run rate, ending somewhere between 2.5 and 2.7 billion. Next, slide 16. Expenses, excluding regulatory costs and incidental items, showed only a moderate increase year-on-year of 1.1%. clearly demonstrating our disciplined approach to cost management and our scalable growth capabilities. The impact from wage inflation was largely offset by savings from prior restructurings, while allowing for ongoing investments to support business growth. Quarter on quarter, expenses were down slightly, mainly driven by seasonally lower customer acquisitions costs in the first quarter. Incidental items of 13 million for the quarter included 25 million of restructuring provisions for the full-time employee reduction in wholesale banking and in retail banking Belgium. Once fully implemented, these measures are expected to lead to approximately 20 million in annualized cost savings. Now let's move to risk costs on slide 17. Total risk costs were 346 million in the quarter, equivalent to 19 basis points of average customer lending, which is slightly below our through-the-cycle average, reflecting the quality and the strength of our loan book. Within this quarter's risk cost, we have included a prudent overlay to address the possible impact of higher energy prices and of the broader economic effects of the war in the Middle East. This 94 million addition to management overlays was, however, partly offset by a large repayment of a State 3 loan in wholesale banking. The State 3 ratio slightly improved to a low 1.5%. Overall, we remain confident in the strength and quality of our loan book. And finally, before handing it back to Stephen, let me take you to slide 18. On slide 18, we showed the development of our core equity tier 1 ratio. Continued strong capital generation and overall solidity allowed us to announce and start a new 1 billion share buyback program today, while maintaining our core equity tier 1 at our around 13% target level. In terms of risk-weighted assets for the quarter, these increased by 3.6 billion, Besides a 0.9 billion FX impact, this mainly reflected continued business growth. Within wholesale banking, the risk-weighted assets remained broadly stable despite strong lending growth, reflecting the continued capital velocity measures that have been taken within wholesale banking. What is new this quarter is a change in our dividend reserving approach to ensure compliance with EBA guidelines As of this quarter, our additional distributions will mainly be financed through upfront reserving. The implementation of this new reserving approach had a one-off effect this quarter of minus 23 basis points. In total, the additional distribution has an impact of roughly 29 basis points on our core equity tier one. This is merely a change in reserving approach. Our distribution policy remains unchanged. And with that, let me hand it back to Steven to wrap up today's presentation.