ING Groep(ING)2023-08-05 08:56Financial Data and Key Metrics Changes - The company reported a total income growth of 23% year-on-year, primarily driven by higher interest income on liabilities [24][32] - The four-quarter rolling average return on equity increased to 11.7%, with a CET1 ratio of 14.9% [24][50] - The net interest margin for the quarter decreased by 3 basis points to 156 basis points, driven by an increase in the total balance sheet [42] Business Line Data and Key Metrics Changes - In Wholesale Banking, total income reached €47 billion in the first half of 2023, a growth of 17% compared to the same period in 2022 [23] - Retail mortgages continued to grow, particularly in Australia, the Netherlands, and Germany, despite a significant drop in mortgage transactions in those markets [43] - Fee income from Wholesale Banking increased due to higher deal flow, while Retail Banking saw stable fee income despite lower investment product fees [45] Market Data and Key Metrics Changes - The company experienced a significant inflow of deposits in Germany, amounting to €16 billion, with two-thirds coming from existing customers [44][113] - The overall loan demand is expected to remain subdued due to heightened macroeconomic uncertainty [43] Company Strategy and Development Direction - The company aims to enhance customer experience and has increased the straight-through processing of retail customer journeys to 69%, targeting over 75% by 2025 [26][27] - Sustainability is a key strategic pillar, with initiatives to support clients in transitioning to sustainable business models [28] - The company plans to maintain a strong capital position while aiming for a CET1 ratio target of 12.5% by 2025 [36][98] Management's Comments on Operating Environment and Future Outlook - Management remains vigilant regarding the economic environment, particularly concerning inflation and interest rates, while expressing confidence in the quality of the loan book [38][73] - The company expects continued tailwinds from higher interest rates, with a focus on prudent lending practices [32][116] Other Important Information - The Dutch Central Bank reduced the systematic risk buffer requirement for the company from 2.5% to 2%, leading to a decrease in the fully loaded SREP requirement [37] - The company will pay an interim cash dividend of €0.35 per share on August 14, 2023, bringing total year-to-date distributions to around €4.5 billion [24][58] Q&A Session Summary Question: On net interest income sustainability - Management indicated that the reallocation of Treasury positions to other income can be volatile, and while NII is expected to remain strong, it may decline slightly in Q3 [61][63] Question: Cost of risk guidance for the second half of the year - Management refrained from providing specific guidance but noted that the quality of the portfolio has proven resilient [64][66] Question: Timing of NII peak given expected ECB rate changes - Management acknowledged the uncertainty but emphasized the importance of customer deposits and competitive dynamics in various markets [70][72] Question: Deposit campaign in Germany - The campaign aimed to increase customer numbers, with a goal of reaching 10 million customers by the end of 2025 [113][114] Question: Growth of the replication portfolio - The growth in the replication portfolio is driven by customer activities and market conditions, with expectations for continued growth as deposit demand remains strong [121][135]