Third quarter 2022 results

ING posts net result of €979 mln

Steven van Rijswijk, CEO of ING

3 November 2022

Key points

  • We continue to have confidence in our strengths in a changing economic environment, with the right strategy and a good financial performance
  • We execute our strategy by creating a superior customer experience and supporting the transition to a more sustainable society
  • Pre-provisionprofit excluding regulatory costs and volatile items, was up 18.8% YoY and 9.4% QoQ. This was supported by accelerating NII momentum and resilient fees, which enables total income growth going forward. Expenses were well-contained despite increasing inflationary pressure
  • Loan growth in Retail Banking was €0.9 bln, driven by mortgages, while in Wholesale Banking loan growth was €3.8 bln. Net core deposits growth was €10.5 bln
  • Risk costs were €403 mln and included €205 mln for increased macroeconomic uncertainties and overlays for risks from secondary impacts. Russia-related exposure was reduced further, leading to a release in Stage 2 provisions. The Stage 3 ratio improved to 1.3% and we have confidence in the quality of our loan book and our proven risk management framework
  • CET1 ratio remained solid at 14.7%. We will distribute an additional €1.5 bln via a share buyback in 2022. Any amount remaining after 31 December 2022 will be paid in cash on 16 January 2023
  • As a post-quarter event, the ECB has announced to change the TLTRO conditions. As a result, we had to unwind our TLTRO-related derivative position. Adjusted for the remaining TLTRO benefit until 23 November 2022, this will lead to a ~€-315 mln impact on pre-tax profit in 4Q2022

2

The changing world around us

Expected interest rates more than doubled

Implied year-avg euro short-term rate in bps

299 302 297

140 139

23107

-34

2022

2023

2024

2025

Forward rates April 2022

Forward rates September 2022

Significantly higher and prolonged inflation in the eurozone

Eurozone CPI (% YoY)

8.4%

5.6%

6.4%

2.2% 2.2%

2.3% 2.1% 2.1%

2022

2023

2024

2025

ING Economic Forecasts April 2022 ING Economic Forecasts October 2022

Forecasting a modest economic contraction for the eurozone

Eurozone GDP (% YoY)

3.1%

2.2% 1.9% 1.7% 1.4%

1.3% 1.3%

-0.7%

2022 2023 2024 2025

ING Economic Forecasts April 2022 ING Economic Forecasts October 2022

3

We are executing our strategy

Strengthening our customer experience

  • In Spain, we launched an account, co-created with customers, that offers an instant online onboarding process and services such as online purchase protection
  • In the Netherlands, department store HEMA will be the first retail chain to test an app, co-developed by ING, that turns a mobile phone into a payment terminal for contactless payments

Mobile-only active customers*

57%

up by 4%-points compared to 2Q2022

Net promoter score (NPS) Primary customer growth

#1 in 7 out of

+139,000

in 3Q2022, reaching

10 retail countries

14.4 mln in total

Supporting clients and society on sustainability

  • Following the Netherlands and Poland, we now offer eco- mortgages in Germany and Italy
  • On 14 September 2022, we published our 3rd Climate Report, which included intermediate 2030 targets aligned with net zero pathways for our Terra sectors and updated heatmaps for our Wholesale Banking and mortgage books

Volume mobilised in 9M2022**

€64.5 bln

versus €57.3 bln in 9M2021

Sustainability deals in 9M2022***

306 deals

versus 284 deals in 9M2021

* Definition: Retail customers who used the mobile channel at least once in the last quarter

** Volume mobilised includes loan products, capital markets, derivatives and advisory propositions that support clients by financing their sustainable activities and in the transition to

a more sustainable business model. In case of an ESG lead role the pro-rata share of the transaction is included, otherwise our final take is included

4

*** Sustainability deals include sustainability loans and bonds, green loans and bonds, sustainable structured finance, social loans and bonds, and sustainable investments

Well-positioned to benefit from higher rates

NII tailwind from higher rates

Implied year-average euro short-term rate in bps

299

302

297

107

140

139

23

-34

2022

2023

2024

2025

Forward rates April 2022

Forward rates September 2022

Sensitivity of our €461 bln Retail eurozone replicating book including illustrative pass-through scenario*

Delta in NII versus 2021 replicating result in € bln

+2.9+2.9

+2.3

+2.0

+1.4

+0.6+0.8

+0.2

2022

2023

2024

2025

Fwd rates Apr-22 - instant 50% pass-through (Investor Update Jun-22) Fwd rates Sep-22 - gradual 50% pass-through

  • With our significant customer deposits book, NII benefits from further increasing interest rates, with the net impact depending on several factors
    • Speed of pass-through on savings deposits, which differs per country, depending on local strategy and competition
    • Speed of replicating book repricing, which depends on the maturity profile, with ~40% rolling-off <1 year

Assumptions

  • Discontinuation of negative charging
  • Illustrative pass-through scenario of positive rates
    • Instant 50% pass-through for April forward rate scenario
    • Gradual pass-through of 30% in 2023, 40% in 2024 and 50% in 2025 for September forward rates scenario,
      to reflect increased asymmetry with the replicating result following the steep increase in interest rates

* Based on constant investment principles

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ING Groep NV published this content on 03 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 November 2022 06:04:02 UTC.