ING Groep NV (ING) 2025 Q4 法說會逐字稿

Good afternoon. This is Laura, welcoming you to ING's 4Q 2025 fixed income call. Before handing this conference call over to Jaap Kes, Group Treasurer of ING Group, let me first say that today's comments may include forward-looking statements, such as statements regarding future developments in our business, expectations for our future financial performance, and any statement not involving a historical fact. Actual results may differ materially from those projected 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 20-F 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 securities.

Good afternoon, Jaap. Over to you.

Thank you, operator. Welcome all, and thank you for joining us today for the ING fixed income call around our fourth-quarter '25 results. My name is Jaap Kes, and I'm the Group Treasurer for ING Group. Today, I'm here together with Sjoerd Miltenburg, the Head of Investor Relations.

In this call, we will take you through the 4Q '25 results as well as ING's capital position and issuance plans for the coming year. At the end of the call, we will have some time for Q&A.

Before we get started, I would like to point out that the fixed income presentation accompanying this call is available for download from our website. After the presentation, we'll be happy to answer your questions.

With that, let me hand over to Sjoerd.

Yes. Thanks, Jaap. Let me start with slide 2, demonstrating the outstanding commercial growth that we have achieved in 2025. We added more than 350,000 mobile primary customers during the quarter, bringing total growth for the year to over 1 million, fully in line with the ambitious target we set at our Capital Markets Day.

Our growth in customer balances was well above our target level of around 4%. Our loan book grew by 8.3% in 2025, mainly driven by residential mortgages, while the deposit book grew by 5.5%, predominantly in retail banking from private individuals.

Fee income continued its positive trend, growing by 15% on the back of continued customer growth and increased cross-sell. And altogether, the strong commercial momentum translated into very solid financial results as well.

Our return on equity for 2025 was 13.2%, well above our guidance at the start of the year. In addition, we remain fully committed to supporting our clients in their sustainability transitions. Our total sustainable volume mobilized reached EUR166 billion for the year, representing a 28% increase year on year.

Now let's move to the next slide to look at how this commercial momentum drove our financial performance. On slide 3, you can see that despite the lower interest rates, our commercial NII remained very strong in 2025 at EUR15.3 billion. This result was supported by the significant increase in our customer balances, disciplined repricing, and by our prudent deposit hedging strategy. Fee income increased by 15% compared to 2024 with strong contributions across all products and businesses.

Investment products performed particularly well, growing its fee income by 21% with strong performance across all metrics, the number of customers, assets under management, and the number of trades. As a result of the strong NII and fee income performance, total income reached a record level for the third consecutive year.

And with that, let's move to slide 4. On this slide, we highlight the actions taken to strengthen our operational leverage. In 2025, we further reduced friction from the key customer journeys by increasing the share of number of customer journeys handled without any manual intervention.

We also introduced our chatbot in seven retail markets, providing customers with faster and more accurate answers to their questions, resulting in annual savings as well as more satisfied customers. The fact that our customer experience is highly appreciated is well reflected in our strong NPS positions across all markets.

In retail banking, we maintained our number one position in 5 out of 10 markets while being in the top three in all markets. These investments and scalability are also translating into higher efficiency, which is visible in our FTE over customer balance ratio, which has improved by more than 7% since 2023.

And now moving to slide 5. On slide 5, we show how our robust commercial growth, strong development of total income, and proactive cost measures have resulted into strong capital generation. Over the past year, we delivered more than EUR6.3 billion in net profit, contributing almost 2 percentage points to our CET1 ratio.

The strong level of capital generation is driven by our consistent strategy and stable business model, operating across strong economies with a prudent risk management framework, altogether leading to predictable cash flows. And the RWA consumption to generate a strong level of profitability is limited.

In 2025, roughly 15% of our net profit was consumed by RWA growth. This was also supported by a modest use of SRTs in order to optimize capital efficiency in Wholesale Banking with our first two SRT transactions completed in November. On the back of this strong performance, we announced additional distributions for a total amount of EUR3.6 billion, bringing our CET1 ratio closer to our target level of around 13%.

Now let's move on to slide 9. And on slide 9, we present our outlook for '26 and '27. So for '26, we expect total income to grow to around EUR24 billion. This outlook is supported by continued volume growth and an anticipated 5% to 10% increase in fee income. Total operating expenses, excluding incidentals, are projected to be in the range of EUR12.6 billion to EUR12.8 billion, leading to an ROTE that's expected to grow from 13.6% to more than 14%.

Looking ahead to 2027, we now expect total income to exceed EUR25 billion, which is at the upper end of our previous target range, including a higher fee income target, which we now expect to exceed EUR5 billion in 2027. For operating expenses, again, excluding incidentals, we expect to be at around EUR13 billion, reinforcing our continued focus on cost discipline and operational efficiency. Taken together, these targets translate into return on tangible equity of more than 15%.

Now moving to slide 10. Zooming in on our total income projections, let's start with commercial NII. We assume our customer balances growth of around 5% per year, above the guidance we gave at Capital Markets Day and reflecting the commercial momentum in our franchises. The liability margin is expected to be at the lower end of the 100- to 110-basis-point range that we gave, while the lending margin is assumed to remain stable compared with the fourth quarter.

Fees are expected to grow by 5% to 10%, building on the strong performance we achieved in 2025. All other income is expected to be around EUR2.8 billion, excluding incidentals. Taken together, total income is expected to reach around EUR24 billion in 2026.

And finally, before handing back to Jaap, let me take you to slide 23 to give you an update on our risk cost and staging. Total risk costs were EUR365 million in the quarter, equivalent to 20 basis points of average customer lending, which is in line with our through-the-cycle average.

Net additions to Stage 3 provisions amounted to EUR389 million, mainly driven by individual Stage 3 provisioning for a number of new and existing files in Wholesale Banking. This was partly offset by releases of existing provisions due to repayments, secondary market sales, and structural improvements. As a result, the Stage 3 ratio increased slightly.

For Stage 1 and Stage 2, we recorded a net release of EUR24 million, reflecting a partial release of management overlays and updated macroeconomic forecast. Overall, we remain confident in the strength and the quality of our loan book.

With that, over to you, Jaap.

Thank you, Sjoerd. So now let's turn to slide 25, where we look at the quarterly risk-weighted asset development. As you can see on this slide, overall risk-weighted assets increased by EUR4.5 billion in the fourth quarter. An important driver for this is business growth, in particular, in our mortgage portfolio, but we have also seen operational risk-weighted assets going up due to an update of the SMA model.

At the other end, we saw a partial offset as a result of our first two Wholesale Banking SRTs, which we announced in November 2025. These transactions provide us with first loss protection on diversified portfolios of corporate loans with a total notional exposure of EUR10.5 billion. The impact of the completed SRT transactions is around 12 basis points on our 4Q '25 CET1 ratio.

Bringing these developments together with quarterly profitability and equity distributions, we will look at capital developments on slide 26. This bar chart shows the quarterly development of our capital ratios. The CET1 decreased to 13.1% as the additional distribution of EUR1.6 billion as announced last quarter, has been fully deducted this quarter.

The cash component of the additional distribution was paid in January and the ongoing share buyback is progressing well with almost half of the program completed by now. In addition, a final cash dividend over 2025 of around EUR0.74 per ordinary share is proposed, subject to AGM approval in April 2026.

Moving from total capital to loss-absorbing capacity. Let's move to slide 29 on TLAC and MREL. Here, we show both the TLAC and the MREL requirements measured against RWA. Left -- on the left as well as the against leverage ratio on the right-hand side. We pulled the year-end 2025 actuals against the TLAC and MREL requirements for 2026. As you can see, we are amply meeting these metrics, RWA and leverage with sizable buffers.

Although all metrics are relevant, it is clear the RWA-based MREL is the binding constraint. So this is the measure for us to manage. The roughly 2.5% delta between actuals and requirements provide us with a comfortable buffer of almost EUR12 billion against the requirements. Clearly, to maintain this buffer, we will need to come to the market in 2026.

Turning to slide 30. In 2026, we plan to issue around 6 -- or between EUR6 billion and EUR8 billion of HoldCo Senior, which is in line with what we have issued in 2025. For AT1 and Tier 2, we are comfortable with the current AT1 and Tier 2 ratios at 2.2% and 3.1%, respectively. So any issuance is driven by replacement needs and/or to accommodate RWA growth.

For AT1, the first upcoming call date for an AT1 instrument is November 2026. For Tier 2, we have a EUR1.5 billion instrument with a three-month par call window from February until May 2026. So now I will finish the '26 issuance guidance first, but I will come back to how we think about par call options in a little bit.

First on Opco Senior. We currently don't expect much other than potentially some local issuance in Australia in line with what we've done last year. As we mainly use this instrument for internal ratio management and general funding purposes, this can obviously change in case of unforeseen balance sheet developments. Lastly, for secured issuance, we expect to issue between EUR6 billion and EUR8 billion from our various issuance entities and also including RMBS.

Now on par call options, let me spend a few [seconds] on this topic to clarify how we look at this. Over the past year, we observed a market practice evolving, whereby peers are exercising par call options at the beginning of the call period -- of the call window rather than at the first reset date, which diverges from our initial expectations. ING's capital planning and economic call policy are both based on the first reset date. Instruments with par call features have been priced, booked and hedged with this date in mind.

Our first Tier 2 instrument with a three-month par call option will enter its par call window this February. And while we do not comment on the likelihood of exercising the call now, we emphasize that ING retains the right to call the instrument on any day during the three-month window. Not calling on the first day window should not be interpreted as a non-call event.

Finally, and perhaps zooming out a bit further to the liability side of our balance sheet, let's turn to slide 37. ING has a very stable liquidity profile, where over two-thirds of the balance sheet is funded by customer deposits, of which retail deposits are the main component. We are seeing continued growth of our deposit book with a customer deposit growth of 4.5% in 2025, driven by continued customer acquisition and successful promotional campaigns, for instance, in Germany.

Due to the success of the Growing the Difference strategy, ING managed to achieve very strong commercial growth and balance sheet growth, outstripping market growth. Next to our LCR of 140%, which is supported by a conservative bond portfolio and sizable cash position, we maintain large pools of ECB eligible assets consisting of retained corporate bonds, retained securitizations, and also credit claims. We continue to focus on the increase of these pools of assets that can be transformed to liquidity rapidly if needed.

With that, I provided my key points and suggest we open the floor for some questions. Operator, please?

(Operator Instructions) Arne Petimezas, AFS Group.

Arne, can you please go ahead? Unmute your audio, please. Arne, please go ahead, your line is open.

Sorry, I had a problem with my phone. Can you hear me now? So I'm going to repeat my question. So do you have any plans for tapping the ECB, MROs, and LTROs at some point as excess liquidity continues to decline? Thank you.

Thanks for the question. Yeah, we -- so as a rule, we don't want to rely on central bank operations. So we want to be self-sufficient. But there can obviously be reasons to draw on MROs or LTROs or in the past, even TLTROs, which is multiple reasons. So in the end, there can be too little cash to support the financial system. For now, there is a lot of excess cash. So that is not the case yet.

But it can also be very economical to draw on these operations. So it can also be very beneficial from a pricing perspective, or there can be specific programs that support the economy like we've seen with the TLTROs.

So we don't believe there is a stigma anymore on the usage of MROs or TLTROs, and we will look at it, but mostly from these reasons and not to sustain -- or on a structural basis to support our balance sheet. Thanks.

Yeah. Thank you, [Jaap]. That clears everything up.

(Operator Instructions) There are no further questions in queue. I will now hand it back to Jaap for closing remarks.

Okay. Then I think we have been very clear and also this morning, obviously, with Steven's call. So thank you, operator, and thank you all for joining this call today. The Investor Relations team is available for potential follow-up questions or else we are looking forward to see you during our investor calls and roadshows in 2026.

Have a great day. Thanks a lot. Bye-bye.

Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.