ING Groep N.V. (NYSE:ING) Q3 2025 Earnings Call Transcript

ING Groep N.V. (NYSE:ING) Q3 2025 Earnings Call Transcript October 30, 2025

ING Groep N.V. beats earnings expectations. Reported EPS is $0.7, expectations were $0.64.

Operator: [Audio Gap] 3Q 2025 Conference Call. Before handing this conference call over to Steven van Rijswijk, Chief Executive Officer of ING Groep, 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 in 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.

Steven van Rijswijk: Good morning. Thank you, and good morning, and welcome to our results call for the third quarter of 2025. I hope you’re all well, and thank you for joining us. As usual, I’m joined by our CRO, Ljiljana Cortan; and our CFO, Tanate Phutrakul. While macroeconomic and geopolitical uncertainty remains prevalent, we have again delivered a strong quarter as we continue to execute our strategy to accelerate growth, increase our impact and deliver customer value. In today’s presentation, I will start by sharing further insights in how our capital allocation will continue to fuel growth and increase returns. And I will also update you on our long-term capital target. Thereafter, Tanate will walk you through the quarterly financials.

And as always, we will be happy to take your questions at the end of the call. And now let’s move to Slide 2. This slide highlights our continued strong commercial momentum in the third quarter with solid growth across key areas. We have added nearly 200,000 mobile primary customers during the quarter, bringing growth in the last 12 months to over EUR 1.1 [ million ], well ahead of the target set at our Capital Markets Day. Our loan book expanded significantly in both Retail and Wholesale and Retail saw EUR 8.6 billion in net core lending growth driven mainly by residential mortgages. Wholesale Banking also delivered a strong quarter, supported by trade finance services and lending, reflecting increased client financing needs. Core deposits declined slightly following substantial inflows in previous quarters and this was largely due to the inclusion of promotional campaigns and seasonal spending patterns during the summer in Retail Banking.

On the other hand, Wholesale Banking posted strong inflows, particularly in payments and cash management, financial markets and cash pooling. Customer balances grew at an annualized rate of 7% in the first 9 months of 2025, keeping us well on track to achieve our 4% annual growth target. Fee income also continued upward trend. Year-to-date, fees grew by 12%, and we have raised our full year 2025 growth outlook to more than 10%. Our fourth quarter rolling average ROE stands at 12.6%, and we have also revised our full year ROE outlook upwards. Finally, we remain committed to supporting clients in our sustainability transitions with sustainable finance volumes up 29% compared to the same period last year. Now let’s move to the next slide to discuss what this growth means for our capital generation.

On Slide 3, we show how our continued commercial growth, further income diversification and proactive cost measures have delivered strong capital generation. Over the past 4 quarters, we have delivered EUR 6 billion of net profit, which contributed an additional 2 percentage points to our CET1 ratio in line with the 2 prior years. This performance has enabled us to offer an attractive and sustainable dividend with an ordinary cash dividend yield of nearly 6% in the last 12 months, and part of the capital we generated was reinvested to support profitable growth across both our business lines. And finally, thanks to our strong capital generation, we have been able to announce and execute additional distributions amounted to EUR 4.5 billion over the last 12 months and EUR 12.5 billion over the last 3 years.

Then I’ll move to Slide 4, where we summarize the total distributions to shareholders, building on what I just mentioned. In our policy, we have consistently paid cash dividends and we have been executing share buybacks for several years. And these actions have delivered a highly attractive yield, while our share price has risen significantly. The EUR 2 billion share buyback program, which started in May this year was concluded earlier this week. And today, we are announcing an additional EUR 1.6 billion distribution. All that amount, EUR 1.1 billion will be returned in the form of a new share buyback, which will have a lasting positive impact on both earnings and dividends per share. And in addition, we will pay a cash dividend of EUR 500 million in January 2026, helping us to meet the expected cash flow for the year.

Looking ahead, we remain committed to delivering strong shareholder returns and we will provide you an update with our first quarter 2026 results. Now let’s move to Slide 5, where I will explain the rationale behind updating our CET1 ratio target. So here on Page 5, our expected fully loaded CET1 MDA has risen over a year from 10.5% in 2020 to around 11.2%, primarily due to regulatory changes. And consequently, we have revised our capital target and will now measure our CET1 ratio at around 13%. And this target gives us a buffer of about 180 basis points above the MDA threshold, which we consider appropriate given the resilience of our business model and the fact that a significant portion of the MDA over 1 percentage point is attributable to countercyclical buffers.

Any CET1 capital above 13% will be treated as excess and factored into our future capital planning as evidenced by the additional distribution that we announced today. And in the previous slides, I’m now on Slide 6, I outlined how we have deployed excess and newly generated capital over the past years, delivering strong shareholder returns. And although we are no longer in a position of excess capital, we remain firmly focused on generating strong capital going forward, and our allocation priorities are well defined. First, we will maintain an attractive shareholder return supported by our 50% dividend payout policy. Second, we will continue to invest in value-accretive growth, further diversifying income streams, expanding the loan book in a capital-efficient way and considering M&A opportunities that meet our strict criteria.

And these investments will help us to accelerate growth and enhance earnings potential as the return on new business is higher than a return on share buyback. And finally, we will return any capital structurally above our CET1 target to shareholders. Moving to Slide 8, where we present our improved outlook for 2025. So far this year, we have added nearly 700,000 mobile primary customers and remain on track to achieve our annual growth target of 1 million in 2025. We have raised our expectation for fee growth and now anticipate fees to come in more than 10% higher than last year. And as a result, we have also increased our outlook for total income, which we now expect to reach around EUR 22.8 billion this year. Prudent expense management remains a key priority.

We continue to take proactive measures to operate efficiently while selectively investing for growth. And despite additional incidental expenses this quarter, we continue guiding total costs towards the lower end of the EUR 12.5 billion to EUR 12.7 billion range. As explained earlier, our CET1 target has been updated to around 13%. And given our improved outlook for income and disciplined approach on costs, we have also raised our ROE expectation for this year to more than 12.5%. We will share our outlook for 2026 and revisit our 2027 targets with the fourth quarter results. And now I’ll hand over to Tanate, who will walk you through the third quarter financial results in more detail starting on Slide 10. Tanate?

Tanate Phutrakul: Thank you, Steven. Yes, on Slide 10 shows the development of total income, which has increased further this quarter and was close to the record level we achieved 1 year ago. Commercial NII rose by a strong performance in Wholesale Banking Lending and the conclusion of our promotional campaign — savings campaign in Retail Banking Germany. These factors more than offset the impact of lower average ECB deposit facility rate and a stronger euro. Fee income continues its upward trend, growing by 15% year-on-year. Most of this growth is structural, which is why we have raised our full year expectations. Finally, all other income, which includes other NII, investment income and other income was supported by continued strong results in financial market and treasury as well as the final dividend payment from our equity stake in Bank of Beijing.

Let’s discuss Slide 11, where we show the development of our customer balances. We delivered another quarter of strong loan growth across both our Retail and Wholesale Banking. Net core lending increased by EUR 14.2 billion. Retail contributed EUR 8.6 billion of that, driven by continued growth in mortgages and increasing consumer lending portfolio, primarily in Germany, Poland and the Netherlands. Wholesale Banking Lending also posted strong growth as a relatively large number of deals originated early — in earlier quarters were converted in the third quarter. On the liability side, core deposits declined by around EUR 200 million after significant inflows in prior quarters. The decline was largely attributable to outflows in Germany and Belgium after the conclusion of promotional savings campaign.

Wholesale Banking posted a strong inflow, reflecting increased deposit volume in payment and cash management area, financial market and the cash pooling business. On Slide 12, you can see that commercial NII grew quarter-on-quarter. That was — this increase is particularly strong in Retail Germany’s liability NII after the end of the bonus rate for fresh money from a promotional campaign. This was also the main driver behind the 1 basis point improvement in liability margin. Lending NII also in Wholesale Banking Lending, the Lending margin remained stable as the growth in Wholesale Banking Lending offset the impact of continued growth of our residential mortgage portfolio, which deliver higher return on equity but lower average margin. For full year 2025, our outlook liability margin and lending margin is unchanged at around 100 basis points and around 125 basis points, respectively.

We expect commercial NII to come in between EUR 15.2 billion and EUR 15.3 billion. It is worth noting that the higher-than-expected NII growth in the third quarter was partly driven by a large number of transactions in the Wholesale Bank, which has been in the pipeline for an extended period of time. Turning to Slide 13. Fee growth remained strong with a 15% increase year-on-year, driven by structural revenue drivers across both Retail and Wholesale Banking. In Retail Banking, growth was supported by a continued rise in mobile primary customer, which boosted daily banking fees. Investment products had a strong quarter, reflecting an increase in the number of investment accounts and higher asset under management. Wholesale Banking delivered a quarterly record fee income of EUR [ 383 ] million, driven by strong performance in lending, supported by a greater number of lead roles, increased loan underwriting activities and higher lending volume.

Given the strong performance in the first 9 months of this year, we are confident that we can grow our fee income by more than 10% in 2025. On Slide 14, we show the development of all other income. Income from financial market is mostly driven by client activity. We continue to support our clients through volatile market condition, mostly with FX and interest rate management. Income from our financial stakes this quarter included a final dividend from our stake in Bank of Beijing, while other income also benefited from a gain on sale. Now on to Slide 15. Our expenses excluding regulatory costs and incidental items rose less than 3% year-on-year, reflecting our prudent approach. The increase was largely reflecting wage inflation and our ongoing investment in business growth and scalability.

On the growth side, we continue investing in our customer acquisition and product development, including expanding our offer for new customer segments. Another good example is business banking, where we broaden our product suite and make it easier to digitally onboard customer. In terms of scalability, we focus on enhancing and strengthening our tech platform. At the same time, we are seeing benefits from operational efficiencies, which help offset part of the cost increase. We remain committed to digitizing our services to further strengthen our operational leverage going forward. We’re actively integrating generative AI capabilities through our organization. Our GenAI chatbot is now live in 6 markets, providing [indiscernible]. And in consumer finance, we use AI to assist applications and process loan applications automatically.

Incidental expenses mostly related to restructuring provisions booking, which are expected to result in EUR 30 million in annualized cost savings once fully implemented. We still expect total expenses to finish at the lower end of the previously guided range. The outlook includes incidental items recorded in the first 9 months whereby continued focus on operational efficiencies will lead to some incidental costs in the fourth quarter. Now let’s move on to risk costs on the next slide. Total risk costs were EUR 326 million this quarter, equivalent to 19 basis points of average customer lending, which is below our through-the-cycle average and reflect the quality of our loan growth. Net addition to Stage 3 provision amount to EUR 361 million, mainly due to collective provisioning in Retail Banking and a number of newly defaulted files in Wholesale Banking.

The Stage 3 ratio remains stable. Stage 1 and Stage 2 risk cost show a net release of EUR 35 million, mostly reflecting portfolio movements. Overall, we remain confident in the strength and quality of our loan growth. On Slide 17, we show development of our core Tier 1 ratio, which increased compared to last quarter. Core Tier 1 capital increase on the back of strong capital generation, partly offset by dividend reserving and a lower market value of our stake in Bank of Beijing. The total risk-weighted assets broadly stable. Credit risk-weighted assets, excluding FX impact increased by [ EUR 2.2 billion ] mainly due to volume growth. This was partly offset by a change in the profile of the loan book, equity revaluations and various other effects.

Operational risk-weighted assets remained flat while market risk-weighted assets decreased by EUR 1.7 billion. The announced additional distribution of EUR 1.6 billion. We have a pro forma impact of 48 basis points on the Core Tier 1 ratio, bringing it more in line with our updated targets. Now I’ll hand back to Steven to wrap up today’s presentation.

Steven van Rijswijk: Thanks, Tanate. And before we move to Q&A, let me recap the key takeaways from today’s presentation. We delivered another strong quarter, maintaining solid commercial momentum that is fully aligned with our growth strategy and the sustained performance translated into a robust capital generation, enabling attractive shareholder returns while continuing to selectively invest in our business. Today, we announced a EUR 1.6 billion in line with our updated target. Going forward, we remain committed to deploying capital to fuel growth and further enhance returns. And finally, we have improved our outlook for 2025, expecting higher fees, stronger total income and a return on equity above 12.5%. And with that, I would like to open the floor for Q&A. Operator, over to you.

Q&A Session

Operator: We will now take our first question from Delphine Lee.

Delphine Lee: My first one is on [ capital. ] Just wondering, as you highlighted in your slides, your CET1 requirements have been going up quite a bit. Do you think we are entering like a phase of stabilization from here? Or could there be more pressure? And on the other hand, do you expect anything on — is there any hope of that requirement going down maybe on mortgage flow? Is there anything like that, just so we have better visibility on how you run your CET1? And then just on NII and deposits, more generally speaking, the retail deposit options were quite significant this quarter, which there has been some seasonality. Was just wondering a little bit what you’re seeing so far in the quarter. And if the trends that you’ve seen in Q3 in terms of the strength in Wholesale Banking or — and the liability margin, slight improvement, is there anything that has been confirmed for Q4 so far?

Steven van Rijswijk: Thank you very much, Delphine. And on capital, yes, we currently do not see additional pressure [ very strong ] on capital. So all the countercyclical buffers and other elements that we could see that could potentially have come and that we have factored into our capital targets. Of course, we continue to talk to supervisors about avoiding duplication or gold plating between different supervisors in different markets. And of course, we also talk about the mortgage floor that could come in, but only in 2032. So that’s a long time away, but we’ll also talk about that to see if that can be removed, but those discussions are ongoing. Then on deposits, yes, the outflows are — there was an outflow of about EUR 7 billion in Retail and an inflow of about EUR 7 billion in Wholesale.

So our deposits are approximately flat and minus EUR 200 million. What we can see is that these deposit outflows for Retail came from a marketing campaign predominantly in Germany, which ended and that always leads to part of outflows of the marketing campaign money that we got in. So that is that effect. Also, there was a third quarter effect, which is a seasonal effect, which then is the end of the holidays, and during the holidays, people spend more. So typically, with a higher spending pattern at the start of the third quarter, you also see deposits there coming down. So that’s typically for this quarter. That is not a pattern that we would expect in the fourth quarter. And to date, if you look at the total deposits, we have an annualized growth in the first 9 months of 6%.

So we’re happy with our deposit inflows during the year.

Operator: And we will now take our next question from Namita Samtani of Barclays.

Namita Samtani: My first question is, how do you expect your lending margins to grow from 125 bps today to the 125 to 130 bps [ guidance over ] 2026 to 2027, given there’s a lot of little private credit competition and many banks offering competitive pricing, especially in wholesale. So any thoughts there would be much appreciated. And secondly, I saw an article on Bloomberg that ING estimated that around 950 positions are at risk in the Netherlands by the end of 2026 as artificial intelligence was rolled out. I know it was just a forecast given to the country’s employee insurance agency, but I just wondered why you aren’t doing this AI initiative in other countries. For example, the cost income in the Netherlands looks decent compared to Belgium and Australia Retail, where it’s 60% to 70%, which looks quite poor.

Steven van Rijswijk: Thank you, Namita. I’ll do the question on the 950 positions, and Tanate will talk about the lending margin. As a matter of fact, this is an announcement that we have to do from the collective — with a collective announcement. And so this is an estimate that we then officially post with the labor insurance agency as a current estimate of how many jobs will be affected in this country. Now the jobs that are affected are part of it is in Wholesale Banking, as we announced earlier, and parts, it’s in our processes such as less manual or personnel work in contact centers and or more digitalization in lending and consumer lending processes. By the way, we do this in the Netherlands, we do this everywhere around the world, so the GenAI chatbot has been rolled out or being rolled out in 6 countries already as an example.

But it’s just the announcement that we are compulsory to make in this country. It has led to the announcement that is not because we’re only doing this in this country, but this pertains employees in this country.

Tanate Phutrakul: Namita, just on the margin to share mortgage financing in our mix. We do expect that, that will normalize going forward. Also, that’s a factor that the funding profile of our mortgage-backed book has cost margin compression, which we expect that to subside over the next few periods and that we do expect return to growth in the Wholesale Banking loan growth, which comes with a higher margin. That’s why we do expect that over time, our lending margin will range between 125 and 130 bps.

Operator: And we will now take our next question from Tarik El Mejjad of Bank of America.

Tarik El Mejjad: Two questions from my side. First of all, I would like to come back on the tech investments and AI. I mean, you’ve been one among those banks that had some AI/ML issues a few years ago as you had to ramp up your FTEs in the KYC and client boarding functions. So have you invested in the meantime in AI in that area? And could that actually — I know you’ve already run down a lot of these costs, but is this something you’ve been investing in, in parallel? And also in terms of embedded AI in products, where you are and what’s your thinking is in the future? And then the second question is on capital redeployment. Thanks Steven, you’ve been very clear about the outlook for where the capital generation goes. That’s very, very clear. But in terms of consolidation and M&A, you’ve been very vocal and transparent about it. What’s your — how your thinking evolved in this current rate environment and where your focus will go?

Steven van Rijswijk: Thank you, Tarik. Yes, first of all, tech AI investments. I think there are 5 main areas that we currently are deploying or starting to deploy gen AI, and we already work with AI for the last 10 years, but GenAI, which is, let’s say, AI on steroids, if you will, there was a clear focus that is coding in the technology space that is lending, that is hyper-personalized marketing, that is contact centers and that is KYC. So for sure, we are investing in digitalizing KYC and also get this supported with AI and GenAI. And that will, of course, also have an impact on our processes and could also indeed have an impact on how we work with our staff. So yes, that could be and — it is an interesting part of the business where we can use digitalization much more than we did that in the past.

When it comes to capital deployment and our thinking on M&A, yes, it has not changed. I think that what we want to do is we want to make more impact and be more relevant in the markets in which we operate. That means that we — there are in markets or market by market, looking at market segments that we currently do not have, for example, business banking or consumer lending or private banking, wealth management type of activities or we look to increase in size, which has scale benefits. Those are the areas in which we are looking. But of course, it has to make sense from an ROE point of view.

Operator: And we will now take our next question from Giulia Miotto of Morgan Stanley.

Giulia Miotto: I will start with one on NII. Tanate, I think I heard you saying that the guide for the year is EUR 15.2 billion to EUR 15.3 billion, which somewhat surprised me because I would have thought it was almost a slam dunk that it would be on the EUR 15.3 billion side of things because I thought NII is improving in the second half specifically in Q4, you’ve got the benefit from the end of the Belgian campaign. And so I think a [ EUR 3.9 billion ] sort of NII for Q4 was almost in the bag. And I think you’ll make some comments around seeing some Wholesale Banking transaction closing in Q3. So I don’t know if you can quantify that, if there is any sort of nonrecurring things in Q3 that we should keep in mind. So yes, I would welcome your comments on NII for the rest of the year.

And then secondly, there have been quite a few incidentals recently on the cost line. And if I look at the past 5 years, leverage is more or less EUR 200 million a year. Is there something that we should think about as recurring? Or not really — you plan not to do more going forward?

Steven van Rijswijk: All right. I give both questions to Tanate starting with NII.

Tanate Phutrakul: Yes, Giulia. So I think we do have some tailwind coming our way. The ECB rates later today, we’ll see what Christine Lagarde say, but I think we see a bottom to the short rates and a positive view curve. So that’s a good tailwind. And we do expect that, that will have a positive impact on our NII, not only for ’25 but 2026 as well. The reason why we gave a tight guidance of EUR 15.2 billion to EUR 15.3 billion, is the fact that in Q3, we have seen quite a catch-up in the Wholesale Banking NII growth. If you remember in previous quarterly calls, we said that our pipeline in Q1 and Q2 were fairly robust, but customers were not converting them into loans or transactions, and that catch-up has happened in the third quarter in a pretty significant way.

So that’s why we gave this guidance of between EUR 15.2 billion and EUR 15.3 billion. Now on restructuring provision. It’s been our approach that we don’t take big major program restructuring provision over multiple years. But we take provision when we have a clear business case, it is concise and that it can be achieved over 12 to 18 months, and that’s our policy going forward. That’s why we gave a bit of an outlook to the market that we do expect continued efficiency program and that we do expect to take additional restructuring provision for additional efficiencies in Q4.

Operator: And we’ll now take our next question from Benoit Petrarque of Kepler Cheuvreux.

Benoit Petrarque: So first, just as an intro, I just wanted to get your view on the outcome from the Dutch Election. It looks a good — relatively good outcome [indiscernible] right outcome. So I just wanted to get your view on that. Now the first question is actually on the ROE target. You’ve upgraded ’25 several times. Yet you’ve kept ’27 ROE unchanged. So do you share — my view at least that there is more confidence in the 14% and potentially upside to the 14%. And just also wanted to check with you if you see the growth momentum currently. Yes, a bit more pronounced than what you were anticipating back in June ’25 at the CMD. So that’s number one. And number two is on the efficiencies. Again, I think the tech side is looking quite promising.

And you just mentioned that the use of digitalization is also much more than in the past. You’ve put through also restructuring charges in Retail. So I was wondering if all those kind of efficiency gains were embedded in the 3% to 4% OpEx CAGR target back in June ’24. Or do you see things a bit accelerating on the efficiency side and the digitalization side?

Steven van Rijswijk: All right. Thank you for the questions. I will take the question on the elections. Tanate will take the questions on the upside on growth and the efficiency, although I have the feeling that Tanate will say something around we will further update you upon our fourth quarter results 2025, but I’ll leave that to him. Regarding the outcome of the elections, yes, look, I mean — but I’m saying something that you know as well, obviously, is that stability of a government and of a coalition and thereby, a government that can take long-term decisions is good for society, it’s good for the economy. I think that the meeting of minds in the previous coalition was not there. And I think that this is a new opportunity to create a coalition that is more stable.

I can look more long term. And I’m really hoping for that. Secondly, I think also the parties that are a bit bigger, are more pro Europe. And I think that from a business point of view, it helps to foster international ties. And therefore, it’s also good to set it in a European setting, whereby I really think that people should continue to look at continuing and implementing the sales and investment union so that could help here as well. Yes, and I think thirdly, areas around consistency of policy around simplification, but all sustainability would also help. So yes, I think it is good if we get a government that can create longer-term stability.

Tanate Phutrakul: From CMD, I think we are more confident about our [ 2025 CMD. ] Volumes are better than we planned. Fee growth we have basically upgraded in the last 2, 3 quarters, our ROE guidance for 2025. But I think I’ll leave it to February to give you more formal guidance for the coming period. And then on cost reduction program, yes, these are plans which we have an ambition to deliver, and it’s in line with our Capital Markets Day guidance.

Operator: [Operator Instructions] We’ll now move on to our next question from Benjamin Goy of Deutsche Bank.

Benjamin Goy: Two questions also from my side. One is a follow-up on the net interest income, particularly implied for Q4. In Q2, you — when you gave the guidance, you assumed one more rate cut, which hasn’t materialized and might not also not happen today. So wondering whether there is a bit more upside baked into your guidance now as compared to August? And then secondly, on the Wholesale Bank, maybe can you give more color, one, on the loan growth, where is it coming from, countries, which type of product? And then also the newly defaulted files in Wholesale Banking, any trends you can see or industries? Any background would be appreciated.

Steven van Rijswijk: All right. I will talk about the Wholesale Banking growth. Ljiljana will talk about the risks or risk cost in Wholesale Banking. And Tanate will talk about NII. So on the growth in Wholesale Banking, these are 2 areas. First of all, these are larger underwritings and syndicated loans. So large investments that companies are doing for that they have larger transactions and underwritings that we have been doing with them. We already told you in the previous quarters that the pipelines were strong in Wholesale Banking. So we saw the pipeline is growing, but the conversion into real business was not there, undoubtedly, that had something to do with the certainty in the market. So at least it’s a good signal that companies are now investing.

Do we — is that a trend or not? That goes a bit too far for today, but at least it’s good that companies are starting to invest and that has led to a larger underwriting business and related lending fees, and that you also see in the fees coming through. And the second area in that economic activity, you see that also in trade financial services. So those have been the areas of growth in Wholesale Banking, leading to around EUR 5.5 billion growth in the Wholesale Banking next to the around EUR 6.5 billion, EUR 7 billion growth in Retail Banking and mortgages. Then we go to risk, yes.

Ljiljana Cortan: Yes, you’ve seen the third quarter risk cost in general. We’re at slightly below the cycle or at the cycle with 19 bps, let me say, and the same is also valued for the Wholesale Bank specifically. So if you’re looking at Wholesale Bank, they’re slightly below through the cycle average and the majority of provisions correctly comes from the S3 provisions or Stage 3 provisions. However, they are higher than previous quarter, but they are lower and significantly lower if you’re looking at the third quarter ’24. So if we are looking at the newly defaulted cases, I cannot say I see a specific sector-wide pattern. What we’ve observed are actually more a result of idiosyncratic events at certain clients rather than systemic observations.

Needless to say, we remain vigilant because despite the global economy doing a bit better than we expect, there are still uncertainty around how the economic policy, specifically tariffs and regulation deflux will impact it going forward. So far, so good, I would say.

Tanate Phutrakul: And then on rates, Ben, I think the reduction in rates has no material impact on our 2025 financials. And I would refer you to the replication impact of the forward curve that we provided on Page 24 that you see that it has a positive impact in ’26 and ’27, but immaterial for ’25.

Operator: And we’ll now take our next question from Shrey of Citi.

Shrey Srivastava: Just on your 13% CET1 ratio target, you’re obviously at 12.9% this quarter, pro forma for the distributions you announced. Looking forward, did you look to ask below this number on an interim results basis? And sort of what’s the leeway within that circa 13% number?

Steven van Rijswijk: Good spot. So indeed, we are comfortable with dipping into it a little bit. So this is what it shows today. So it is indeed around target, and I don’t want to mathematically, every day of the week, be at 13%. It will be around that number. And you can see now that now it is 12.9%, so it’s a bit below it. And what we then say is that what we say is that we have a structural capital excess over 13%, then we call it an excess, and then we will look at distribution.

Operator: And we’ll now take our next question from Chris Hallam of Goldman Sachs.

Chris Hallam: Just to begin with some Q4 housekeeping. The EUR 30 million of annualized cost savings you flag on Slide 15, when do you expect those to be fully implemented? And then are there any reasons why fees would be down year-over-year in the fourth quarter? Just even if I assume flat, then I’m going to get to a full year number result of 4.6% and 4.4% on fees. And then second, on the strategy, there’s a link obviously between deposit campaigns, the customer retention and then fee growth. Do you get a sense of that connection is that the strategy is becoming more predictable or more lucrative? And maybe on the other hand, if you look at what’s coming in Germany, the more demand for borrowing, maybe a greater need across the banking sector for funding and liquidity in that market to kind of react to that borrowing demand, maybe a more competitive deposit landscape. Does that change at all the economics for ING of the deposit campaign pipe strategy in Germany?

Steven van Rijswijk: All right. On the EUR 30 million cost savings, that will feed through in 2026 per annum. Then is there any reason for the fees to go down in the fourth quarter? Now that depends on economic activity. So you’ve seen the growth in our fees has been 75% alpha. Of course, we saw a very strong lending fee in Wholesale Banking because of the — let’s say, the execution or the conversion of the pipeline. So yes, there we need to see what is the level of activity, but we remain confident on our fee growth. And that’s why we said the fee growth for the year will be higher than 10% rather than at the higher end of the 5% to 10% range. And then yes, just correct me if I understood your question in the wrong way, but you are wondering if there’s a connection between growth in lending and in fees, and if there’s more competition deposits, that’s how I translate your question. Was that your question?

Chris Hallam: Basically. If you think about your deposit has a loss-leading product to generate fee growth in the future. So you’ve got to think about the deposit cost as the investment of the ROI. So just this deposit costs do climb up. At what point do you think about revisiting the size and the scale of that [indiscernible] campaign?

Steven van Rijswijk: Yes. Well, I mean — look, I mean, we see deposits as a — not as a loss leader. Deposits, in general, make money for us. And that’s why you’ve seen that we started many years ago as ING direct in many countries as a savings and deposit bank. Now if you talk specifically about the deposits that we are doing in Germany or elsewhere, a campaign can either be aimed at fresh money and that should show a positive payback of in between 6 and 12 months, so that’s to existing customers and new money for existing customers. And if you look at campaigns that are aimed at new-to-bank customers, those typically have a payback period of 2 to 3 years. Now we have these — done these type of actions and campaigns for decades.

They’re highly data-driven, which means we can really monitor who do we target at, how much money will stay in the bank, how much business do they do with us afterwards. And we apply continuously these learnings going forward. And of course, these campaigns, with all the data that we have now, will become much more targeted and much more specific, but it’s one of the success factors of ING, and we will continue to do so.

Operator: And we will now take our next question from Anke Reingen of RBC.

Anke Reingen: Just very small questions. Given that — do you think you have more potential for cutting your deposit rates given that it seems rates have sort like plateaued? And just on the lending margin, is it basically fair to assume it will decline in Q4, given your comment about the Q3 benefit in Wholesale Banking? And I’m sorry, just a small follow-up question. In terms of your capital update, you said next update is in Q1. But just to confirm, we should assume you keep the same cadence as Q1 or Q3 updates.

Steven van Rijswijk: Yes. So let me confirm that indeed what I indeed meant in my presentation that in terms of capital distribution or how we look at our capital, that will be the 6 months update intervals that we have. So end of Q1 figures, end of Q3 figures as we have done today. Tanate, lending margins and deposit rates?

Tanate Phutrakul: Yes. Deposit rates. I think it’s a balance, right? We don’t give forward statement on rate cuts or commercial action, but it’s a balance between volume growth, competition and profitability. And I think we give our continued outlook that liability margin will remain at around 100 basis points for this year and rise to between 100 to 110 in 2026 and onwards. So that’s on rate cuts. And sorry, your second question?

Anke Reingen: It was just fair to assume the lending margin declined in Q4 given your [indiscernible] comment.

Tanate Phutrakul: Got it. I think that really depends on Wholesale Banking and Retail Banking activity, mortgage mix, Wholesale Banking loans. But I think our outlook is that margin on lending will remain flat at around 125 basis points.

Operator: And we’ll now take our next question from Farquhar Murray of Autonomous.

Farquhar Murray: I had 2 questions, if I may. Firstly, on the recent Board appointments. So I just wondered if you might flesh out the reasonings behind those, [indiscernible] and Ida Lerner and the actual term. Strategically, I’d expect probably a lot of continuity. But I just wondered if there might be any nuances we should read into those appointments in terms of skill sets for the future. I’m sure Ljiljana might actually have views to express of her own. And then secondly, on the increased CET1 target. Could I ask how those will be cascaded down into the businesses? And in particular, will that be incrementally priced into lending rates?

Steven van Rijswijk: Thank you. Very good. Nice question about the change of the Board positions. And yes, Ljiljana is sitting next to me. So I will not say anything else than nice words, obviously. But joking aside, I mean, Ljiljana has done and is doing a fantastic job in the risk domain and has not only good experience in risk, but also good experience in wholesale banking from — in her previous life and knows organization because she has now been with us for 5 years. And I think that with Andrew moving on to the nonexecutive phase of his life, I think I’m very happy with Ljiljana in that post to continuously drive the strategy that we have in Wholesale Banking and also further increase the capital efficiency and the ROE improvements that we wanted to make in.

When it comes to Ida, Ida is a very experienced CFO in a European — a large European bank with also end risk and wholesale banking experience. So very broad-based. And I think she will be an excellent fit also giving external — outside perspectives to ING to further improve and focus on our cost discipline that we have here in the bank and help me with potential M&A if we come across it. So that’s the background of those candidates.

Tanate Phutrakul: Now on the capital targets, you would have noticed that even in our third quarter results, the divisional ROE is now based on 13% of risk-weighted assets, so that will be communicated more widely to our teams. But I think we also look when we adjust to 13% at many of our Wholesale Banking peers also operate at around 13%. So we don’t expect a competitive disadvantage of this new target materially in the Wholesale Bank.

Operator: And we’ll now take our next question from Matthew Clark of Mediobanca.

Jonathan Matthew Clark: A couple of questions on — well, one question on the 2 deposit campaigns and your retention rates there. So it looks from the German campaign that you retained less than your normal 2/3 rule of thumb. Could you confirm that? And then also on the Belgium campaign, can you just confirm whether — with both of them, you’ve got the return on investment that you expected that the — whether there’s anything to learn from those campaigns?

Steven van Rijswijk: On the retention rates where it was lower, we have sometimes said that we typically retain about 2/3 of the money, and that is not different this time around. So — and that goes for both campaigns, actually. Also in Belgium, we expect a strong return on investment. We — there’s a good retention and now a number of these customers are turning into primary customers. So actually, that was a very successful campaign.

Operator: And we’ll now take our next question from Cyril of BNP Paribas.

Cyril Toutounji: I have 2, if I may. So one on fee growth. So the second upgrade in guidance we have for this year. So it does look like the momentum is quite strong and resilient. And I’m just wondering what elements of that momentum that we can take and extrapolate maybe into next year? And the second would be on SRTs. I know we have a transaction planned for Q4. And do we have any visibility on any other transaction maybe for 2026?

Steven van Rijswijk: All right. On fee growth. Well, it starts with growth in customers. So if we have more primary mobile customers, then we have more customers that do more with us because primary customers typically are customers that choose ING as their main or one of their main banks. And so we have been growing our customer base, again, with about 200,000 new primary customers. If you — it was 1.1 million, we aim for about 1 million per year. So we’re well on track to do this year as well. That’s one. Two, we are increasing the activities with our customers. So you have seen that on investment products that more and more customers taking a trade account with ING that is currently around 4.6 million people who trade with ING.

Every quarter — I say it was 4.4 million and was 4.2 million. So every quarter, we add about 100,000 to 200,000 new customers who trade with ING. And then that’s very good. But the better thing is even that we have over 40 million clients. So you can only imagine how big the upside is. And we are now focusing on the segment much more than we did that a few years ago. [indiscernible] in the fee bar chart that you see on the pages, that’s also growing steadily, and that’s an annuity type of business. So there are — we broadened up our activities with our customers. And therefore, you see that 75%, if you will, of the fee growth that we see typically is alpha driven, and we are very comfortable with the momentum that we have. That’s also why we updated our fee growth for the year and we are very confident to make the 2027 5% — [ EUR 5 billion ] target for that year.

Tanate Phutrakul: Thank you, Cyril. Just on capital discipline. I think if you look at 2025 Q3, we saw for the Wholesale Bank, despite the volume growth, the capital usage or risk-weighted asset was almost flat, indicating strong capital discipline and capital velocity in the Wholesale Bank. And yes, we are in dialogue with our regulator to get the final approval for our SRT in Q4. We do expect that transaction to be done and it would have a roughly 10% — sorry, 10 basis point positive impact on our core Tier 1.

Operator: And we’ll now take our next question from Seamus Murphy of Carraighill.

Seamus Murphy: Two questions, please. Can you just briefly talk about the expected evolution of full-time employees? Because when I look at the quarterly numbers, I mean, we’re up to 63,000 now, I think, in Q3, that’s kind of up 5,500 since the start of this rate cycle, and we’re up again significantly year-to-date. I think it’s up another 1,500. But I appreciate the question earlier in relation to the savings that could emerge from internal innovation. But should we continue to expect the net growth in FTEs into 2027 because just the pace of FTEs kind of is — continues to surprise, especially with the average salaries around [ EUR 120,000 ]. That would be great. And secondly, just on NII. At your CMD, you spoke about this 4% to 5% growth in total income of EUR 22 billion base, which would have given us about EUR 25.5 billion at the top end in ’27.

And you had guided fee growth, which is obviously stronger and the other income, which we assume could be broadly flat. But when I think about NII, we have a much more beneficial rate curve now versus then. And so I suppose when we think about it, the real kind of issue so far has been the fact that the deposit [ beta ] has risen significantly into 2025 in your retail eurozone area. I think it’s about 44% still. So I’m just kind of wondering what — is there something going on in terms of the dynamic in terms of the deposit pricing that we should think about? I mean, I know you’ve got 110 basis points of deposit margin in — next year, sorry, early into ’27. But certainly, it seems to be relative to CMD with a much more beneficial rate curve that NII should have been an awful lot higher.

And I’m just wondering, does this inflect significantly into ’27 to meet kind of like what you would have expected the CMD? Or how should we think about that?

Steven van Rijswijk: Thank you very much. In terms of the FTEs, yes, what you see, I think, on the press release is the internal number, and so you can never look at in isolation. You have the internal FTEs and you have the external FTEs then you have the work packages. That is how you get to your cost. And so — but to give you a little bit of indication of that, our total internal and external FTEs in this year have been around flattish and we have more internalized FTEs, and that’s why you see that number moving up. In the end, we look at investing in businesses to grow our business and increase our revenue over RWA with the right return. And we want to do that in a scalable manner so make sure that we have positive jaws, and that’s where we are, we want to go to.

So that’s how we look at costs and how doing these actions and efficiency actions that also Tanate talked about. In terms of your growth in fees and the NII levels that could potentially be higher based on the current rate environment and the growth in our lending, so it’s well noted. Thank you for noticing it. We will provide further updates on our outlook as per the fourth quarter figures in early 2026. Thank you. And with that, I would like to thank everybody for joining the call this morning. Good luck and a great day. I wish you, and I hope to speak to you soon again. In any case, we will speak early 2026 on the fourth quarter figures. Thank you very much.

Operator: Thank you. This concludes today’s call. Thank you for your participation. You may now disconnect.