Q2 2026 ING Groep NV Earnings Call Transcript
Key Points
- ING Groep NV (ING) delivered strong Q2 2026 results with a 17% ROTE, up 1.5 percentage points year-on-year, driven by positive operating leverage and sustainable earnings growth.
- Customer growth accelerated, adding 377,000 mobile primary customers in the quarter and over 1 million in the last 12 months, ahead of the Capital Markets Day target.
- Fee income grew 14% year-on-year, with the company on track to reach EUR5 billion in fees in 2026, one year ahead of plan, and upgraded 2027 outlook to EUR5.3-5.5 billion.
- Commercial NII outlook upgraded to EUR16.8-17 billion for 2026, supported by strong volume growth (8%+ annualized lending and deposits) and a prolonged hedging tailwind on liability margins.
- Capital efficiency improved significantly, with CET1 ratio rising to 13.1% despite reserving 100% of quarterly net profit, driven by RWA optimization including SRTs and model updates.
- The company upgraded its ROTE outlook by 1 percentage point for both 2026 (above 15%) and 2027 (above 16%), reflecting strong execution of the 'Growing the difference' strategy.
- Wholesale Banking RWA management was particularly strong, reducing RWAs by EUR5.3 billion in the quarter despite lending growth, and the retail/wholesale capital allocation target was exceeded 18 months ahead of plan.
- Deposit franchise remains a cornerstone, with strong net inflows (EUR15.9 billion in Q2) and successful campaigns, while maintaining disciplined pricing and improving liability margins.
- The company is making progress in diversifying income through private banking expansion (e.g., 40% stake in Singular Bank) and new subscription models, with 17 million customers already migrated.
- Risk costs remained low at 15 basis points, well below the through-the-cycle average of 20 basis points, reflecting prudent risk management and strong loan book quality.
- Lending margins decreased slightly in Q2, driven by growth in lower-risk, lower-margin loans such as mortgages and investment-grade wholesale loans, which could pressure future NII.
- All other income decreased year-on-year when excluding hedging ineffectiveness, due to lower results from foreign currency exchange hedging in treasury, impacting overall income growth.
- Expenses, excluding regulatory costs and incidental items, rose 4.2% year-on-year in Q2, with cost growth tracking at 2.7% year-to-date, which may limit operating leverage if revenue growth slows.
- The company faces intense competition in deposit markets, particularly in Germany and Belgium, which could pressure liability margins and require more aggressive campaigns to maintain growth.
- Wholesale Banking income over RWAs remains below peers, and the sustainability of RWA optimization through SRTs and secondary loan sales is uncertain, especially in a downturn.
- The company's reliance on deposit campaigns, which often attract customers who may leave after promotional periods, raises questions about the durability of deposit growth.
- The CET1 ratio of 13.1% is only slightly above the 13% target, leaving limited buffer for unexpected capital shocks or regulatory changes.
- The outlook for liability margins above 110 basis points in 2027-2028 is dependent on interest rate curve developments and competitive dynamics, which could prove optimistic.
- The company's aggressive growth in lower-risk assets may dilute overall returns, as seen in the lending margin decline, potentially impacting long-term ROTE sustainability.
- The consolidation of TFI and other incidental items will add incremental costs, which could pressure the cost base and offset some efficiency gains from digitalization.
Good morning. This is Laura, welcoming you to ING's 2Q 2026 conference call. Before handing this conference call over to Steven van Rijswijk, Chief Executive Officer 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 morning, Steven, over to you.
Thank
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