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ING Groep N.V. — Earnings Release 2021
May 6, 2021
3854_iss_2021-05-06_d1e26a7c-ca7f-4141-81b8-600e229ceab2.pdf
Earnings Release
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Press release
ING Corporate Communications Amsterdam, 6 May 2021
ING posts 1Q2021 net result of €1,005 million
1Q2021 result before tax of €1,463 million; capital position remains strong at 15.5%
- Net interest income up on 4Q2020, supported by the benefi t from TLTRO III, which more than off set liability margin pressure.
- Robust growth in fee income of 9.1% year-on-year, especially on investment products.
- 1Q2021 had a low level of risk costs. Expenses were under control, but included some incidental costs due to restructuring.
Lending and customer deposits increase
- Net core lending growth of €17.8 billion in 1Q2021 as TLTRO funds were applied to support the economy; net customer deposits grew by €8.1 billion, refl ecting ongoing impacts of Covid-19 pandemic and lockdowns.
- Primary customer base was stable at 13.8 million in 1Q2021, refl ecting impacts of the pandemic.
CEO Statement
"ING delivered a strong performance in the fi rst quarter of 2021. The sharp rebound in net profi t compared to the year-earlier period was driven by a good increase in fee income and lower risk costs," said ING CEO Steven van Rijswijk.
"Our fee-generating business was boosted by the growth of investment products, particularly in Germany and Belgium. ING's lending franchise demonstrated its strength in the fi rst quarter, including through our success in converting European Central Bank TLTRO fi nancing into lending to benefi t our customers as they continue to deal with the eff ects of the Covid-19 pandemic, thereby supporting the recovery. On risk costs, we remain cautious and are taking into account expected delays in credit losses.
"We continued to adapt our business to serve customers better and to ensure we're focusing on the best growth opportunities for the future. We're advancing our digital and mobile-fi rst strategy in response to the strong rise in the use of digital channels by our customers. In the Netherlands, this is resulting in a reduction in the number of branches and an increase in the number of service points, for which we've taken a restructuring provision. We also announced that we'll discontinue retail banking activities in Austria and the Czech Republic in order to focus on markets where we can achieve better scale and profi tability.
"During the quarter, ING closed a record of more than 50 green deals in a growing number of sectors as clients increasingly focus on making their businesses sustainable and linking their eff orts in this area to their fi nancing. With our strong ESG profi le, we're well positioned to support them in these endeavours. This is exemplifi ed by the €10.1 billion revolving credit facility we helped to arrange for AB InBev, the largest-ever sustainability-linked loan.
"Also, to strengthen our focus on becoming a data-driven digital leader in banking, we separated the technology and operations roles at the management board level, appointing a chief technology offi cer. We also recently welcomed our new ING Group chief risk offi cer (CRO) and new head of Wholesale Banking (WB) who bring fresh perspectives and diverse backgrounds to our executive and management boards.
"I'd particularly like to thank our employees for their continued commitment, fl exibility and hard work to support our customers in these challenging times."
Investor enquiries
T: +31 (0)20 576 6396 E: [email protected]
Press enquiries
T: +31 (0)20 576 5000 E: [email protected]
Analyst call
6 May 2021 at 9:00 am CET +31 (0)20 341 8221 (NL) +44 203 365 3209 (UK) +1 866 349 6092 (US) Live audio webcast at www.ing.com
Media call
6 May 2021 at 11:00 am CET +31 (0)20 531 5855 (NL) +44 203 365 3210 (UK) Live audio webcast at www.ing.com
Consolidated Results Business Highlights
Primary customers
13.8 mln in 1Q2021
Mobile interactions 90% in % of total interactions
Customer experience
NPS score: ranked #1 or #2 in 9 out of 14 Retail markets
Sustainability
54 green deals supported by ING
Net result €1,005 mln +50% vs 1Q2020
Cost of risk
15 bps of average customer lending vs 42 bps in 1Q2020
CET1 ratio 15.5% unchanged vs YE2020
Reserved profi t for future distribution €3,301 mln
ING now off ers fully digital end-to-end onboarding for new clients via their mobile phones in the Netherlands and Italy, following earlier introduction in the Philippines, Poland and Romania.
In the Netherlands, over half a million Business Banking customers were successfully migrated to our OneWeb digital banking platform in 1Q2021. Remaining Business Banking customers will be migrated to the platform in 2Q2021, establishing OneWeb as the single web interface for all retail customers in the Netherlands.
ING acted as joint sustainability coordinator in the €10.1 billion revolving credit facility for Belgianbased multinational AB InBev, the largest sustainability-linked loan ever issued. AB InBev pledged improvements in the areas of water effi ciency, recycled packaging, renewable energy and greenhouse gas emissions.
The OneView subscription manager is now available to Belgian customers through the banking app and online, giving them easier control of their fi nances by allowing them to manage all subscriptions paid for via their ING account, such as electricity, telephone, internet, streaming services and gym memberships. Through the service they can stop a subscription, choose a cheaper option or even switch providers without having to deal with the service providers themselves.
ING acted as joint sustainability coordinator for the \$374 million sustainability-linked loan (SLL) for Singapore-based tanker company Hafnia. The SLL is among the biggest in the sector and ING's fi rst in the sector.
GLP, the global logistics property company, closed a \$658 million sustainability-linked loan, the largest in the logistic sector in APAC (ex-Japan). ING acted as lead sustainability structurer.
Non-fi nancial risk
KYC: continuous adverse media screening
Keeping ING safe, secure and compliant is a top priority. As a gatekeeper to the fi nancial system, banks have an important role in the collective fi ght against fi nancial and economic crimes, such as money laundering and terrorist fi nancing. ING takes this responsibility very seriously, for the safety and security of our customers and society.
Over 4,000 colleagues globally are continuously working hard to strengthen our execution of KYC and AML processes in a sustainable manner.
In 1Q2021, we rolled out our enhanced adverse media screening tool across ING to help the business better identify customers involved in potential criminal activity. We're on track to fi nalise implementation in all countries in the fi rst half of the year.
Consolidated Results
| Consolidated results | |||||
|---|---|---|---|---|---|
| 1Q2021 | 1Q2020 | Change | 4Q2020 | Change | |
| Profit or loss (in € million) | |||||
| Net interest income | 3,513 | 3,501 | 0.3% | 3,344 | 5.1% |
| Net fee and commission income | 854 | 783 | 9.1% | 771 | 10.8% |
| Investment income | 39 | 21 | 85.7% | 6 | 550.0% |
| Other income | 296 | 205 | 44.4% | 48 | 516.7% |
| Total income | 4,702 | 4,511 | 4.2% | 4,169 | 12.8% |
| Expenses excl. regulatory costs | 2,429 | 2,307 | 5.3% | 2,583 | -6.0% |
| Regulatory costs1) | 587 | 526 | 11.6% | 331 | 77.3% |
| Operating expenses | 3,016 | 2,833 | 6.5% | 2,914 | 3.5% |
| Gross result | 1,686 | 1,678 | 0.5% | 1,255 | 34.3% |
| Addition to loan loss provisions2) | 223 | 661 | -66.3% | 208 | 7.2% |
| Result before tax | 1,463 | 1,017 | 43.9% | 1,046 | 39.9% |
| Taxation | 439 | 329 | 33.4% | 304 | 44.4% |
| Non-controlling interests | 18 | 17 | 5.9% | 15 | 20.0% |
| Net result | 1,005 | 670 | 50.0% | 727 | 38.2% |
| Profitability and efficiency | |||||
| Interest margin | 1.46% | 1.51% | 1.41% | ||
| Cost/income ratio | 64.1% | 62.8% | 69.9% | ||
| Risk costs in bps of average customer lending | 15 | 42 | 14 | ||
| Return on equity based on IFRS-EU equity3) | 7.8% | 5.1% | 5.6% | ||
| ING Group common equity Tier 1 ratio | 15.5% | 14.0% | 15.5% | ||
| Risk-weighted assets (end of period, in € billion) | 311.0 | 335.4 | -7.3% | 306.3 | 1.5% |
| Customer balances (in € billion) | |||||
| Customer lending | 623.5 | 631.6 | -1.3% | 604.0 | 3.2% |
| Customer deposits | 628.2 | 586.2 | 7.2% | 609.6 | 3.0% |
| Net core lending growth (in € billion)4) | 17.8 | 12.3 | -0.9 | ||
| Net customer deposits growth (in € billion)4) | 8.1 | 9.2 | 7.8 |
1) Regulatory costs comprise bank taxes and contributions to the deposit guarantee schemes ('DGS') and to the (European) single resolution fund ('SRF'). 2) The amount presented in 'Addition to loan loss provisions' is equivalent to risk costs.
3) Annualised net result divided by average IFRS-EU shareholders' equity excluding reserved profi ts not included in CET1 capital. 4) Net core lending growth represents the development in loans and advances to customers excluding provisions for loan losses, adjusted for currency impacts, Treasury and run-off portfolios. Net customer deposits growth represents customer deposits adjusted for currency impacts and Treasury.
Total income
Total income was strong at €4,702 million in 1Q2021, supported by the inclusion of the TLTRO III benefi t on net interest income combined with robust growth in fee income. Other income benefi ted from positive valuation adjustments.
Net interest income, at €3,513 million, included a €233 million ECB funding rate benefi t from the TLTRO III programme, which was conditional, as the eligible loan growth target of 0% for the fi rst special reference period defi ned under TLTRO III was met. The eligible loan growth at the end of March was €13.5 billion. The retroactive adjustment in the funding rate for the period 24 June 2020 until 31 March 2021 led to a €233 million contribution to ING's net interest income in 1Q2021. The remaining benefi t over the special interest period (approximately €77 million) will be recognised in 2Q2021.
Excluding the TLTRO III benefi t, net interest income would have declined by €221 million compared with 1Q2020, mainly due to lower margins on liabilities, while average liability volumes continued to increase. Although lending margins were stable, net interest income on lending also declined due to lower average volumes. Higher treasury-related interest results more than compensated for lower results from foreign currency ratio hedging (refl ecting lower interest rate diff erentials). Sequentially, net interest income excluding the
TLTRO III benefi t would have declined by €63 million, primarily due to continued liability margin pressure and day-count impacts.
The net interest margin increased by fi ve basis points to 1.46% compared with 4Q2020. The realisation of the conditional benefi t had a positive eff ect of 10 basis points on the 1Q2021 net interest margin. This compensated for a decline of two basis points due to an increase in the average balance sheet, mainly refl ecting higher cash and balances with central banks and an increase in fi nancial assets at fair value through P&L. The impact of the eligible asset growth on average customer lending was limited as most of the related deals were closed in March 2021. The remaining decline in net interest margin was primarily caused by continued margin pressure on savings and current accounts, as well as lower margins on lending.
Net interest margin
Net interest margin 4-quarter rolling average
Consolidated Results
Net core lending increased by €17.8 billion in 1Q2021, of which €15.1 billion was in Wholesale Banking. Net core lending growth in Retail Banking was €2.7 billion, and consisted of €2.8 billion of growth in residential mortgages (primarily in Germany, Poland and Spain) and €-0.1 billion in other retail lending. Net customer deposits grew by €8.1 billion, of which €3.3 billion was in Wholesale Banking. Net customer deposits in Retail Banking increased by €4.8 billion, driven by lower consumer spending as a result of the lockdowns.
Net fee and commission income amounted to €854 million. Retail Banking benefi ted from continued higher fee income on investment products in all countries, with the strongest growth in Germany. Fee income on daily banking products was supported by higher fees for payment packages, while the number of payment transactions remained subdued as a result of the Covid-19 pandemic. In Wholesale Banking, yearon-year fee income increased in Financial Markets and Daily Banking & Trade Finance, but this was more than off set by lower syndicated deal activity and currency impacts. Sequentially, Wholesale Banking fee income benefi ted from higher fees in Financial Markets.
Investment income was higher than in both comparable quarters, rising to €39 million. The increase was supported by higher realised gains on the disposal of debt instruments.
Other income was €296 million, supported by positive valuation adjustments and improved results from most trading desks, whereas 1Q2020 had been aff ected by market volatility due to uncertainty caused by the Covid-19 pandemic. In 4Q2020, other income included negative hedge ineff ectiveness and a €58 million decrease of the indemnity receivable from NN Group (which was compensated by the same amount in the tax line).
Operating expenses
Total operating expenses were €3,016 million, including €587 million of regulatory costs, which are always high in the fi rst quarter of the year. This refl ects the requirement to recognise certain annual charges in full in the fi rst quarter, such as the contributions to the European single resolution fund (SRF) and the Belgian deposit guarantee scheme, as well as the Belgian bank tax (while the annual Dutch bank tax is always recorded in the fourth quarter). The €61 million increase compared to 1Q2020 is almost fully related to higher SRF contributions. Furthermore, 1Q2021 total operating expenses included €84 million of incidental items, which refl ect redundancy and restructuring costs taken in Retail Banking following the announced restructuring of the branch network and the retail advice organisation in the Netherlands (€73 million) and the announcement to leave the Czech retail banking market (€11 million). In 4Q2020, operating expenses included €223 million of incidental costs.
Excluding regulatory costs and the aforementioned incidental items, expenses increased 1.6% compared with 1Q2020. This primarily refl ects higher IT expenses, some litigation provisions, and CLA-related increases. These impacts were largely off set by lower expenses for third-party staff , other cost savings (including lower expenses due to the Covid-19 restrictions) and currency impacts, whereas the year-ago quarter had included a VAT refund in the Corporate Line.
Compared with 4Q2020, which also included a VAT refund in the Corporate Line, expenses excluding regulatory costs and incidental items declined 0.7%. The decline was mainly attributable to lower expenses for IT, advisory and marketing.
Addition to loan loss provisions
Net additions to loan loss provisions amounted to €223 million.
Risk costs in bps of average customer lending (annualised)
During the fi rst quarter, lockdown restrictions were still in place and uncertainty concerning the ongoing pandemic remained. The update of the macroeconomic model resulted in a €537 million overall release of collective provisions, predominantly in Stage 1 and Stage 2. The eff ect of the release was off set by applying a €593 million management overlay to refl ect an expected delay in credit losses, including those related to payment holidays granted to our clients. The combined impact of releases and management overlays was a €56 million net addition (versus €-209 million in 4Q2020).
Total net additions to Stage 3 provisions in 1Q2021 were €189 million, down from €428 million in the previous quarter, which had included €59 million of provisioning related to CHFindexed mortgages in Poland. Net additions to Stage 1 & 2 provisions (including off -balance sheet) were €34 million in 1Q2021 versus a net release of €219 million in 4Q2020.
100 150
Consolidated Results
Net result
ING's 1Q2021 net result was €1,005 million, up 50.0% yearon-year, primarily due to lower risk costs, and 38.2% higher than in 4Q2020 due to a strong rebound in income (partly supported by the TLTRO III benefi t) that more than off set the higher regulatory costs. The eff ective tax rate was 30.0% compared with 32.4% in 1Q2020 and 29.0% in 4Q2020.
Return on equity ING Group (in %)
In 1Q2021, ING's return on average IFRS-EU equity improved to 7.8%. On a four-quarter rolling average basis, the return on ING's average IFRS-EU equity increased to 5.4% from 4.8% in the previous four-quarter rolling period. The increase was caused by a higher four-quarter rolling net result, combined with a slight decline in average equity. ING's return on equity is calculated using IFRS-EU shareholders' equity after excluding 'reserved profi t not included in CET1 capital', which currently amounts to €3.3 billion. This fi gure refl ects the total of the following: the amount originally reserved for the 2019 fi nal dividend, the amount for the remaining €0.27 per share over the year 2020, as well as 50% of the 1Q2021 resilient net profi t, which has been reserved for distribution in line with our policy. For 1Q2021, resilient net profi t (which is defi ned as net profi t adjusted for signifi cant items not linked to the normal course of business) is equal to net profi t.
Capital, Liquidity and Funding Consolidated Balance Sheet
Consolidated balance sheet
| in € million | 31 Mar. 21 | 31 Dec. 20 | 31 Mar. 21 31 Dec. 20 | ||
|---|---|---|---|---|---|
| Assets | Liabilities | ||||
| Cash and balances with central banks | 112,703 | 111,087 | Deposits from banks | 85,095 | 78,098 |
| Loans and advances to banks | 31,033 | 25,364 | Customer deposits | 628,233 | 609,642 |
| Financial assets at fair value through profi t or loss | 120,602 | 103,370 | - savings accounts | 337,785 | 336,517 |
| - trading assets | 50,453 | 51,356 | - credit balances on customer accounts | 262,631 | 256,636 |
| - non-trading derivatives | 2,442 | 3,583 | - corporate deposits | 25,716 | 15,941 |
| - designated as at fair value through profi t or loss | 5,030 | 4,126 | - other | 2,101 | 548 |
| - mandatorily at fair value through profi t or loss | 62,677 | 44,305 | Financial liabilities at fair value through profi t or loss | 91,990 | 82,781 |
| Financial assets at fair value through OCI | 33,738 | 35,895 | - trading liabilities | 29,700 | 32,709 |
| - equity securities fair value through OCI | 1,924 | 1,862 | - non-trading derivatives | 2,853 | 1,629 |
| - debt securities fair value through OCI | 30,851 | 32,977 | - designated as at fair value through profi t or loss | 59,437 | 48,444 |
| - loans and advances fair value through OCI | 963 | 1,056 | Other liabilities | 15,042 | 13,226 |
| Securities at amortised cost | 49,893 | 50,587 | Debt securities in issue | 90,033 | 82,065 |
| Loans and advances to customers | 617,703 | 598,176 | Subordinated loans | 14,494 | 15,805 |
| - customer lending | 623,488 | 603,956 | Total liabilities | 924,887 | 881,616 |
| - provision for loan losses | -5,785 | -5,779 | |||
| Investments in associates and joint ventures | 1,502 | 1,475 | Equity | ||
| Property and equipment | 2,724 | 2,841 | Shareholders' equity | 55,041 | 54,637 |
| Intangible assets | 1,362 | 1,394 | Non-controlling interests | 941 | 1,022 |
| Other assets | 9,091 | 7,085 | Total equity | 55,982 | 55,659 |
| Assets held for sale | 518 | ||||
| Total assets | 980,870 | 937,275 | Total liabilities and equity | 980,870 | 937,275 |
Balance sheet
ING's total balance sheet increased in 1Q2021 by €43.6 billion to €980.9 billion, including €5.6 billion of positive currency impacts. The increase was mainly due to higher customer lending and increased fi nancial assets at fair value through profi t or loss (notably reverse repos after the low year-end position, which was largely caused by balancesheet optimisation by clients). Assets held for sale consisted of a bond portfolio following the decision to discontinue the Czech retail banking activities.
On the liability side of the balance sheet, the main growth was in customer deposits, refl ecting lower spending by customers due to the Covid-19 pandemic. The increase in deposits from banks mainly relates to an additional €6.0 billion TLTRO III participation in March 2021.
| Consolidated balance sheet | |||||
|---|---|---|---|---|---|
| in € million | 31 Mar. 21 | 31 Dec. 20 | 31 Mar. 21 31 Dec. 20 | ||
| Assets | Liabilities | ||||
| Cash and balances with central banks | 112,703 | 111,087 | Deposits from banks | 85,095 | 78,098 |
| Loans and advances to banks | 31,033 | 25,364 | Customer deposits | 628,233 | 609,642 |
| Financial assets at fair value through profi t or loss | 120,602 | 103,370 | - savings accounts | 337,785 | 336,517 |
| - trading assets | 50,453 | 51,356 | - credit balances on customer accounts | 262,631 | 256,636 |
| - non-trading derivatives | 2,442 | 3,583 | - corporate deposits | 25,716 | 15,941 |
| - designated as at fair value through profi t or loss | 5,030 | 4,126 | - other | 2,101 | 548 |
| - mandatorily at fair value through profi t or loss | 62,677 | 44,305 | Financial liabilities at fair value through profi t or loss | 91,990 | 82,781 |
| Financial assets at fair value through OCI | 33,738 | 35,895 | - trading liabilities | 29,700 | 32,709 |
| - equity securities fair value through OCI | 1,924 | 1,862 | - non-trading derivatives | 2,853 | 1,629 |
| - debt securities fair value through OCI | 30,851 | 32,977 | - designated as at fair value through profi t or loss | 59,437 | 48,444 |
| - loans and advances fair value through OCI | 963 | 1,056 | Other liabilities | 15,042 | 13,226 |
| Securities at amortised cost | 49,893 | 50,587 | Debt securities in issue | 90,033 | 82,065 |
| Loans and advances to customers | 617,703 | 598,176 | Subordinated loans | 14,494 | 15,805 |
| - customer lending | 623,488 | 603,956 | Total liabilities | 924,887 | 881,616 |
| - provision for loan losses | -5,785 | -5,779 | |||
| Investments in associates and joint ventures | 1,502 | 1,475 | Equity | ||
| Property and equipment | 2,724 | 2,841 | Shareholders' equity | 55,041 | 54,637 |
| Intangible assets | 1,362 | 1,394 | Non-controlling interests | 941 | 1,022 |
| Other assets | 9,091 | 7,085 | Total equity | 55,982 | 55,659 |
| Assets held for sale | 518 | ||||
| Total assets | 980,870 | 937,275 | Total liabilities and equity | 980,870 | 937,275 |
Shareholders' equity
| 1Q2021 |
|---|
| 54,637 |
| 1,005 |
| -40 |
| -2 |
| -441 |
| 17 |
| 23 |
| 300 |
| -2 |
| 8 |
| -468 |
| 5 |
| 404 |
| 55,041 |
The increase in shareholders' equity mainly refl ected the 1Q2021 net result of €1,005 million and a €300 million increase of the currency translation reserve (as the euro depreciated against the USD, GBP and other currencies). These increases were partly off set by the €468 million dividend payment in February 2021 and a €441 million negative change in the cashfl ow hedge reserve as a result of interest rate movements in 1Q2021 on part of our hedge portfolio. Shareholders' equity per share increased to €14.10 on 31 March 2021 from €14.01 on 31 December 2020.
Capital, Liquidity and Funding
| ING Group: Capital position | ||
|---|---|---|
| in € million | 31 Mar. 2021 | 31 Dec. 2020 |
| Shareholders' equity (parent) | 55,041 | 54,637 |
| - Reserved profi t not included in CET1 capital1) | -3,301 | -3,266 |
| - Other regulatory adjustments | -3,622 | -4,037 |
| Regulatory adjustments | -6,923 | -7,303 |
| Available common equity Tier 1 capital | 48,118 | 47,333 |
| Additional Tier 1 securities2) | 5,801 | 5,643 |
| Regulatory adjustments additional Tier 1 | 49 | 48 |
| Available Tier 1 capital | 53,968 | 53,024 |
| Supplementary capital - Tier 2 bonds3) | 7,896 | 9,359 |
| Regulatory adjustments Tier 2 | -181 | -846 |
| Available BIS capital | 61,682 | 61,537 |
| Risk-weighted assets | 311,014 | 306,324 |
| Common equity Tier 1 ratio | 15.5% | 15.5% |
| Tier 1 ratio | 17.4% | 17.3% |
| Total capital ratio | 19.8% | 20.1% |
| Leverage Ratio | 4.6% | 4.8% |
1) The reserved profi t not included in CET1 capital as per 31 March 2021 was €3,301 million, of which €503 million relates to the 1Q2021 result, €1,044 million to the
result of 2020 and €1,754 million to the result of 2019. 2) Including €4,878 million, which is CRR/CRD IV-compliant (4Q2020: €4,660 million), and €922 million to be replaced as capital recognition is subject to CRR/CRD IV grandfathering rules (4Q2020: €983 million). 3) Including €7,743 million, which is CRR/CRD IV-compliant (4Q2020: €9,206 million), and €153 million to be replaced as capital recognition is subject to CRR/CRD IV grandfathering rules (4Q2020: €153 million).
Capital ratios
ING Group's CET1 ratio remained stable at 15.5% compared to the previous quarter, as higher CET1 capital was fully off set by higher RWA. ING's CET1 capital increased mainly due to the inclusion of €0.5 billion of interim profi ts and €0.3 billion of positive FX impacts.
The increase in ING Group's Tier 1 ratio (including grandfathered securities) mirrors trends in the CET1 ratio. The lower total capital ratio (including grandfathered securities) refl ects a redemption of €1.5 billion on the fi rst call date of a Tier 2 instrument in February 2021.
The leverage ratio of ING Group according to the Delegated Act (including grandfathered securities) takes into account the impact of grossing up the notional cash pool activities. The slight reduction refl ects an increase in the total balance sheet that was only partly off set by higher Tier 1 capital. The leverage ratio is temporarily higher, as the ECB has authorised the exclusion of certain central bank exposures (€91.9 billion) until June 2021. Without the exclusion, the leverage ratio was 4.3% (4Q2020: 4.4%).
Risk-weighted assets (RWA)
The increase in total RWA mainly refl ects €2.3 billion of currency impacts and higher credit RWA.
| ING Group: Composition of RWA | ||
|---|---|---|
| in € billion | 31 Mar. 2021 | 31 Dec. 2020 |
| Credit RWA | 265.2 | 259.6 |
| Operational RWA | 38.0 | 37.8 |
| Market RWA | 7.9 | 8.9 |
| Total RWA | 311.0 | 306.3 |
Excluding currency impacts, credit RWA increased by €3.3 billion, mainly driven by higher lending volumes (€3.7 billion), primarily in Wholesale Banking, and an increase in other onbalance assets (€0.8 billion). The increase was partly off set by a better overall profi le of the loan book (€-1.7 billion). The increase in operational RWA was due to a regular update of the data sources of internal and external losses. The decrease in market RWA was mainly driven by reduced exposure.
Dividend
ING has reserved €503 million of the 1Q2021 interim profi t for dividend, refl ecting our distribution policy of a 50% pay-out ratio on resilient net profi t. Resilient net profi t equalled net result as no P&L adjustments were made.
At the end of 1Q2021, ING reserved €3,301 million for distribution outside of CET1 capital. This includes the amount originally reserved for the fi nal 2019 dividend, the remaining amount originally reserved for the 2020 dividend, as well as the amount reserved for dividend from the 1Q2021 interim profi t.
ING intends to make distributions after 30 September 2021, subject to any ECB recommendation that prevails at that time.
Risk Management Capital, Liquidity and Funding
TLAC and MREL requirements
Total Loss Absorption Capacity (TLAC) requirements apply to ING Group at the consolidated level of the resolution group and are currently set at 21% of RWA and 6% of TLAC Leverage (LR). The available TLAC capacity consists of own funds and senior debt instruments issued by ING Group. As per 31 March 2021, ING Group meets the TLAC requirements.
| ING Group: TLAC requirement | ||
|---|---|---|
| in € million | 31 Mar. 2021 | 31 Dec. 2020 |
| TLAC capacity | 86,010 | 86,527 |
| TLAC (as a percentage of RWA) | 27.7% | 28.2% |
| TLAC (as a percentage of leverage exposure) | 7.4% | 7.9% |
| TLAC surplus (shortage) based on LR | 16,344 | 20,421 |
| TLAC surplus (shortage) based on RWA | 20,604 | 22,107 |
In the course of 2021, European banks will receive a new MREL requirement, including intermediate targets, which will be based on RWA and LR. Of those two, the RWA-based requirement is expected to be most constraining for ING.
Liquidity and funding
ING holds a buff er of High Quality Liquid Assets (HQLA) to ensure suffi cient liquidity in times of stress. The adequacy of this buff er is measured by the Liquidity Coverage Ratio (LCR). In 1Q2021, ING's 12-month moving average LCR increased from 137% to 140%. The increase refl ects continued customer deposits infl ows as well as TLTRO III participation in combination with subdued loan demand in the 12-month measurement period.
| LCR 12-month moving average | ||
|---|---|---|
| in € billion | 31 Mar. 2021 | 31 Dec. 2020 |
| Level 1 | 145.6 | 140.5 |
| Level 2A | 4.9 | 5.0 |
| Level 2B | 3.5 | 3.6 |
| Total HQLA | 153.9 | 149.1 |
| Stressed Outfl ow | 194.4 | 195.8 |
| Stressed Infl ow | 84.6 | 87.1 |
| LCR | 140% | 137% |
The funding mix in the fi rst quarter of 2021 stayed largely the same as in the fourth quarter of 2020. A decrease in the share of retail customer deposits in the funding mix has been observed; however, in absolute terms retail customer deposits increased in 1Q2021, but at a lower rate than CD/ CPs and repos did, which resulted in a diff erent distribution across funding sources. Moreover, in the current quarter ING participated in €6 billion of additional TLTRO III.
ING Group: Loan-to-deposit ratio and funding mix In % 31 Mar. 2021 30 Dec. 2020
| Loan-to-deposit ratio | 0.98 | 0.98 |
|---|---|---|
| Key figures | ||
| Customer deposits (retail) | 50% | 52% |
| Customer deposits (corporate) | 21% | 20% |
| Lending / repurchase agreement | 7% | 6% |
| Interbank | 9% | 9% |
| CD/CP | 3% | 2% |
| Long-term senior debt | 8% | 9% |
| Subordinated debt | 2% | 2% |
| Total1) | 100% | 100% |
1) Liabilities excluding trading securities and IFRS equity.
ING's long-term debt position decreased by €1.6 billion versus 4Q2020. The decrease was mainly caused by €2.7 billion of maturities and the call of a €1.5 billion ING Bank Tier 2 instrument, partly off set by €2.8 billion of debt issuance (of which €1.5 billion is Senior HoldCo and £800 million is Senior HoldCo in Green format, and €0.4 billion is issuance of structured ING Bank notes).
| Long-term debt maturity ladder per currency, 31 March 2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| in € billion | Total | ʹ21 | ʹ22 | ʹ23 | ʹ24 | ʹ25 | ʹ26 | >ʹ26 |
| EUR | 50 | 6 | 7 | 5 | 1 | 4 | 3 | 24 |
| USD | 17 | 2 | 4 | 3 | 1 | 0 | 2 | 5 |
| Other | 9 | 1 | 1 | 1 | 1 | 0 | 1 | 2 |
| Total | 76 | 9 | 12 | 9 | 3 | 4 | 7 | 32 |
Ratings
The ratings and outlooks from S&P, Moody's and Fitch remained unchanged during the quarter.
Main credit ratings of ING on 5 May 2021 Standard & Poor's Moody's Fitch
| Rating | Outlook | Rating | Outlook | Rating | Outlook | ||
|---|---|---|---|---|---|---|---|
| ING Groep N.V. | A- Negative | Baa1 | Stable | A+ | Negative | ||
| ING Bank N.V. | A+ | Stable | Aa3 | Stable | AA- | Negative |
Risk Management
| ING Group: Total credit outstandings1) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Credit outstandings | Stage 2 | Stage 2 ratio | Stage 3 | Stage 3 ratio | ||||||
| in € million | 31 Mar. 2021 |
31 Dec. 2020 |
31 Mar. 2021 |
31 Dec. 2020 |
31 Mar. 2021 |
31 Dec. 2020 |
31 Mar. 2021 |
31 Dec. 2020 |
31 Mar. 2021 |
31 Dec. 2020 |
| Residential mortgages | 307,904 | 304,844 | 12,482 | 13,353 | 4.1% | 4.4% | 4,037 | 3,895 | 1.3% | 1.3% |
| of which Netherlands | 112,220 | 112,357 | 6,077 | 6,137 | 5.4% | 5.5% | 790 | 964 | 0.7% | 0.9% |
| of which Belgium | 41,099 | 40,961 | 3,484 | 3,761 | 8.5% | 9.2% | 1,648 | 1,468 | 4.0% | 3.6% |
| of which Germany | 80,561 | 79,360 | 1,546 | 1,576 | 1.9% | 2.0% | 383 | 384 | 0.5% | 0.5% |
| of which Rest of the world | 74,024 | 72,164 | 1,375 | 1,878 | 1.9% | 2.6% | 1,217 | 1,078 | 1.6% | 1.5% |
| Consumer lending | 25,172 | 25,302 | 2,264 | 2,295 | 9.0% | 9.1% | 1,251 | 1,226 | 5.0% | 4.8% |
| Business lending | 96,259 | 96,780 | 16,180 | 16,490 | 16.8% | 17.0% | 3,401 | 3,577 | 3.5% | 3.7% |
| of which Netherlands | 35,894 | 36,190 | 6,289 | 6,222 | 17.5% | 17.2% | 922 | 991 | 2.6% | 2.7% |
| of which Belgium | 44,091 | 44,465 | 8,061 | 8,065 | 18.3% | 18.1% | 1,643 | 1,752 | 3.7% | 3.9% |
| Other retail banking | 66,272 | 61,498 | 774 | 760 | 1.2% | 1.2% | 209 | 216 | 0.3% | 0.4% |
| Retail Banking | 495,608 | 488,424 | 31,701 | 32,898 | 6.4% | 6.7% | 8,898 | 8,914 | 1.8% | 1.8% |
| Lending | 160,801 | 151,039 | 17,214 | 17,608 | 10.7% | 11.7% | 3,390 | 3,283 | 2.1% | 2.2% |
| Daily Banking & Trade Finance | 64,236 | 59,430 | 2,607 | 2,480 | 4.1% | 4.2% | 396 | 369 | 0.6% | 0.6% |
| Financial Markets | 19,667 | 3,323 | 4 | 0.0% | 0.1% | 0.0% | 0.0% | |||
| Treasury & Other | 41,567 | 53,879 | 279 | 308 | 0.7% | 0.6% | 114 | 116 | 0.3% | 0.2% |
| Wholesale Banking | 286,270 | 267,671 | 20,100 | 20,399 | 7.0% | 7.6% | 3,900 | 3,768 | 1.4% | 1.4% |
| Total loan book | 781,878 | 756,095 | 51,801 | 53,297 | 6.6% | 7.0% | 12,799 | 12,681 | 1.6% | 1.7% |
1) Lending and money market credit outstandings, including guarantees and letters of credit but excluding undrawn committed exposures (off balance positions) and Corporate Line.
Covid-19
The fi rst quarter of 2021 was marked by heightened levels of Covid-19 infections, resulting in continued lockdowns, while at the same time vaccination programmes picked up speed. ING continues to closely monitor the ongoing Covid-19 pandemic.
Based on the potential economic and social implications for the countries and sectors where ING is active, ING has implemented mitigating actions and will adapt them as necessary as we continue to support our customers where we can during these challenging times.
Our staff is still largely working from home, supported by the appropriate tools. A central ING team provides guidance on health and safety measures, travel advice and business continuity. As the situation diff ers from country to country, ING is following local government guidelines in its response to the Covid-19 pandemic.
Credit risk management
At the end of March 2021, in line with the European Banking Association (EBA) moratoria guidelines, approximately 171,000 customers were granted payment holidays (down from 196,000 at year-end of 2020 due to reimbursements and prepayments). The total exposure of loans for the 171,000 customers for which a payment holiday was granted amounts to €18.4 billion, of which over 56% are for customers located in the Netherlands and Belgium. At the end of March 2021, the outstanding amount of granted payment holidays not expired corresponded with €1.5 billion. The phasing out of the EBA guidelines on moratoria per 1 April 2021 has no eff ect on ING's credit profi le as we have applied a more conservative approach from the beginning of the payment holiday schemes.
Total credit outstandings rose in the fi rst quarter of 2021, mainly due to an additional €6 billion TLTRO III participation and an increase in cash and balances with central banks. Stage 2 outstandings decreased, mainly within residential mortgages, triggered especially by the updated macroeconomic model. Stage 3 outstandings increased slightly, largely related to individual fi les.
In the fi rst quarter, ING Group's stock of provisions remained stable, as the impact from the updated macroeconomic model was off set by a management overlay. The Stage 3 coverage ratio was stable at 29.4%, compared to 29.9% in the previous quarter. The loan portfolio consists predominantly of asset-based and secured loans, including residential mortgages, project- and asset-based fi nance, and real estate fi nance with generally low loan-to-value ratios.
| ING Group: Stock of provisions1) | |||
|---|---|---|---|
| in € million | 31 Mar. 2021 |
31 Dec. 2020 |
Change |
| Stage 1 - 12-month ECL | 548 | 581 | -33 |
| Stage 2 - Lifetime ECL not credit impaired | 1,550 | 1,476 | 74 |
| Stage 3 - Lifetime ECL credit impaired | 3,765 | 3,794 | -29 |
| Purchased credit impaired | 3 | 3 | -0 |
| Total | 5,866 | 5,854 | 12 |
1) At the end of March 2021, the stock of provisions included provisions for loans and advances to central banks (€5 million), loans and advances to banks (€21 million), fi nancial assets at FVOCI (€15 million), securities at amortised cost (€18 million), provisions for loans and advances to customers (€5,785 million) and provisions for contingent liabilities (credit replacements) recorded under Provisions (€22 million).
Segment Reporting: Retail Banking Risk Management
Market risk
The average Value-at-Risk (VaR) for the trading portfolio decreased to €21 million from €25 million in 4Q2020, mainly due to a further decrease in xVA hedges.
| ING Group: Consolidated VaR trading books | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| in € million | Minimum | Maximum | Average Quarter-end | ||||||
| Foreign exchange | 1 | 3 | 2 | 1 | |||||
| Equities | 2 | 4 | 3 | 4 | |||||
| Interest rate | 7 | 18 | 15 | 7 | |||||
| Credit spread | 4 | 11 | 7 | 4 | |||||
| Diversifi cation | -5 | -8 | |||||||
| Total VaR1) | 8 | 26 | 21 | 8 |
1) The total VaR for the columns Minimum and Maximum cannot be calculated by taking the sum of the individual components since the observations for both the individual markets as well as for total VaR may occur on diff erent dates.
Non-fi nancial risk
As previously disclosed, after our September 2018 settlement with Dutch authorities concerning Anti-Money Laundering (AML) matters, and in the context of signifi cantly increased attention on the prevention of fi nancial economic crime, ING has experienced heightened scrutiny by authorities in various countries. The interactions with such regulatory and judicial authorities have included, and can be expected to continue to include, onsite visits, information requests, investigations and other enquiries. Such interactions, as well as ING's internal assessments in connection with its global enhancement programme, have in some cases resulted in satisfactory outcomes. Some have also resulted in, and may continue to result in, fi ndings, or other conclusions which may require appropriate remedial actions by ING, or may have other consequences, such as the fi nding by the fi nancial regulator in France in March 2021, following its inspection in 2018, reprimanding ING and imposing a fi ne. We intend to continue to work in close cooperation with authorities as we work to improve our management of non-fi nancial risks.
ING is also aware, including as a result of media reports, that other parties may, among other things, seek to commence legal proceedings against ING in connection with the subject matter of the settlement and have fi led or may fi le requests for disciplinary proceedings against ING employees based on the Dutch "Banker's oath". We will continue our eff orts to enhance the management of compliance risks and embed stronger awareness across the whole organisation. These steps are part of the global KYC programme and set of initiatives, which include enhancing KYC fi les and working on various structural improvements in compliance policies, tooling, monitoring, governance, knowledge and behaviour.
Segment Reporting: Retail Banking
| Retail Benelux: Consolidated profi t or loss account | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Retail Benelux | Netherlands | Belgium | |||||||
| In € million | 1Q2021 | 1Q2020 | 4Q2020 | 1Q2021 | 1Q2020 | 4Q2020 | 1Q2021 | 1Q2020 | 4Q2020 |
| Profit or loss | |||||||||
| Net interest income | 1,300 | 1,356 | 1,307 | 842 | 880 | 877 | 457 | 476 | 430 |
| Net fee and commission income | 295 | 277 | 281 | 173 | 168 | 175 | 121 | 110 | 106 |
| Investment income | 25 | 17 | 1 | 23 | 1 | 2 | 2 | 16 | 0 |
| Other income | 108 | 83 | 66 | 47 | 90 | 29 | 62 | -7 | 36 |
| Total income | 1,728 | 1,734 | 1,655 | 1,086 | 1,139 | 1,083 | 642 | 595 | 572 |
| Expenses excl. regulatory costs | 895 | 851 | 893 | 537 | 480 | 507 | 358 | 370 | 387 |
| Regulatory costs | 323 | 276 | 135 | 114 | 86 | 110 | 209 | 190 | 25 |
| Operating expenses | 1,218 | 1,127 | 1,029 | 651 | 566 | 616 | 567 | 560 | 412 |
| Gross result | 510 | 607 | 627 | 435 | 573 | 466 | 74 | 34 | 160 |
| Addition to loan loss provisions | 107 | 145 | 66 | -10 | 19 | -29 | 117 | 126 | 95 |
| Result before tax | 403 | 462 | 561 | 445 | 554 | 495 | -43 | -92 | 66 |
| Profitability and efficiency | |||||||||
| Net core lending growth (in € billion) | -0.1 | 1.0 | -2.6 | 0.2 | -0.1 | -1.2 | -0.4 | 1.1 | -1.4 |
| Net customer deposits growth (in € billion) | 4.5 | 2.0 | 4.2 | 5.1 | 1.5 | 3.0 | -0.5 | 0.5 | 1.2 |
| Cost/income ratio | 70.5% | 65.0% | 62.1% | 59.9% | 49.7% | 56.9% | 88.4% | 94.2% | 72.0% |
| Risk costs in bps of average customer lending | 17 | 23 | 11 | -3 | 5 | -7 | 52 | 55 | 42 |
| Return on equity based on 12.5% CET11) | 11.4% | 11.8% | 15.9% | 25.0% | 26.2% | 27.2% | -2.7% | -5.5% | 3.9% |
| Risk-weighted assets (end of period, in € billion) | 82.6 | 94.7 | 82.5 | 41.9 | 50.4 | 42.1 | 40.7 | 44.3 | 40.5 |
1) After-tax return divided by average equity based on 12.5% of RWA (annualised).
Retail Netherlands
Net interest income benefi ted from the recognition of a €23 million TLTRO III benefi t. However, this benefi t was more than off set by continued margin pressure on customer deposits combined with lower interest results from lending products, refl ecting some margin pressure and lower business lending volumes. Fee income increased year-on-year, primarily driven by higher fees from investment products.
Net core lending increased by €0.2 billion, fully attributable to higher mortgage volumes, which more than off set a small decline in business lending. Net customer deposits grew by €5.1 billion, almost equally divided over savings and current accounts.
Operating expenses included €73 million of redundancy and restructuring costs related to the announced restructuring of the branch network and the retail advice organisation in the Netherlands, as well as higher regulatory costs due to a higher contribution to the European single resolution fund. Expenses in 4Q2020 had included €29 million of provisions. Adjusted for incidental items and regulatory costs, expenses decreased on both comparable quarters. Year-on-year, the decline was mainly due to lower staff , IT and travel costs. Sequentially, the decline was mainly the result of lower costs for marketing, IT, payment transfers and professional services.
Risk costs showed a net release of €10 million, as releases in the mortgage portfolio more than off set some additions for business lending.
Retail Belgium (including Luxembourg)
Net interest income benefi ted from the recognition of a €38 million TLTRO III benefi t, while margin pressure on customer deposits continued. Compared with 1Q2020, interest results from lending products were impacted by lower volumes and some margin pressure. The growth in fee income was driven by the continued strong performance of investment products. Other income in 1Q2021 was supported by positive treasuryrelated fair value adjustments.
Net core lending decreased by €0.4 billion in 1Q2021, due to a €0.5 billion reduction in business lending. Net customer deposits declined by €0.5 billion, predominantly due to lower current account balances.
Operating expenses included the annual Belgian regulatory costs, which are booked in full in the fi rst quarter of each year. Year-on year, expenses excluding regulatory costs were lower, mainly refl ecting lower staff and marketing expenses. Sequentially, expenses excluding regulatory costs and incidental items (4Q2020 included €40 million of restructuring costs) increased 3.2%. This was mainly related to accelerated depreciation for branches and the change in 4Q2020 in the allocation of group overhead.
Risk costs were €117 million in 1Q2021, and included €75 million of additional collective provisions refl ecting updated provisions on vulnerable sectors and clients aff ected by the Covid-19 pandemic. The remaining risk costs were mainly related to collective Stage 3 provisioning, as well as some individual fi les in business lending.
Segment Reporting: Wholesale Banking Retail Banking
| Retail Challengers & Growth Markets: Consolidated profi t or loss account | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Retail Challengers & Growth Markets |
Germany | Other Challengers & Growth Markets |
|||||||
| In € million | 1Q2021 | 1Q2020 | 4Q2020 | 1Q2021 | 1Q2020 | 4Q2020 | 1Q2021 | 1Q2020 | 4Q2020 |
| Profit or loss | |||||||||
| Net interest income | 1,057 | 1,105 | 1,069 | 378 | 396 | 391 | 679 | 709 | 678 |
| Net fee and commission income | 278 | 210 | 235 | 148 | 106 | 125 | 130 | 103 | 110 |
| Investment income | 6 | 1 | 2 | 6 | 0 | 1 | 0 | 1 | 1 |
| Other income | 62 | 111 | 48 | 15 | 31 | 11 | 47 | 80 | 37 |
| Total income | 1,403 | 1,426 | 1,354 | 548 | 533 | 528 | 855 | 894 | 826 |
| Expenses excl. regulatory costs | 780 | 746 | 810 | 256 | 255 | 250 | 524 | 491 | 560 |
| Regulatory costs | 117 | 120 | 109 | 33 | 40 | 22 | 84 | 80 | 87 |
| Operating expenses | 897 | 866 | 919 | 289 | 295 | 272 | 608 | 571 | 647 |
| Gross result | 505 | 561 | 435 | 259 | 238 | 256 | 247 | 323 | 179 |
| Addition to loan loss provisions | 85 | 140 | 193 | 3 | 6 | 17 | 82 | 134 | 176 |
| Result before tax | 420 | 421 | 243 | 255 | 232 | 239 | 165 | 189 | 3 |
| Profitability and efficiency | |||||||||
| Net core lending growth (in € billion) | 2.8 | 1.9 | 2.4 | 1.3 | 0.6 | 1.7 | 1.5 | 1.3 | 0.7 |
| Net customer deposits growth (in € billion) | 0.2 | 1.2 | 4.5 | 1.7 | -1.2 | 2.9 | -1.5 | 2.3 | 1.7 |
| Cost/income ratio | 64.0% | 60.7% | 67.9% | 52.8% | 55.4% | 51.5% | 71.1% | 63.9% | 78.3% |
| Risk costs in bps of average customer lending | 18 | 30 | 41 | 1 | 3 | 7 | 33 | 55 | 72 |
| Return on equity based on 12.5% CET11) | 11.8% | 12.2% | 5.8% | 18.3% | 19.4% | 16.7% | 7.9% | 8.3% | -0.9% |
| Risk-weighted assets (end of period, in € billion) | 78.5 | 79.9 | 77.5 | 29.8 | 28.5 | 29.5 | 48.7 | 51.4 | 48.1 |
1) After-tax return divided by average equity based on 12.5% of RWA (annualised).
Retail Germany (including Austria)
Net interest income was supported by higher lending margins and volumes compared with the year-ago quarter and the recognition of a €6 million TLTRO III benefi t, which partly off set continued margin pressure on customer deposits. Fee income on investment products increased again strongly, refl ecting higher assets under management, new account openings and a higher number of brokerage trades in volatile markets. Fee income was further supported by higher daily banking fees due to the introduction of account maintenance fees in 2020 and higher mortgage fees on the back of strong production volumes at Interhyp.
Net core lending grew by €1.3 billion, of which €1.2 billion was in residential mortgages. Total net customer deposits grew by €1.7 billion, almost equally divided over current accounts and savings. The growth in net customer deposits was driven by Germany, while Austria reported a net outfl ow.
Operating expenses were lower year-on-year due to lower regulatory costs. Expenses excluding regulatory costs remained fl at, despite continued business growth. Sequentially, operating expenses included higher regulatory costs due to the annual recognition in the fi rst quarter of the contribution to the European single resolution fund. Expenses excluding regulatory costs increased due to higher group overhead expenses after the change in allocation in 4Q2020.
Risk costs totalled €3 million and were mainly related to mortgages.
Retail Other Challengers & Growth Markets
Net interest income was supported by higher volumes and margins in mortgages and business lending, and higher treasury-related revenues, including a €3 million TLTRO III benefi t. This partly off set negative currency impacts, particularly in Turkey, versus the previous year and the impact of continued margin pressure on customer deposits. Fee income increased, mainly refl ecting the growth in investment products and daily banking fees in most of the countries.
Net core lending rose by €1.5 billion in 1Q2021, mainly due to growth in mortgages in Poland and Spain. Net customer deposits decreased by €1.5 billion, mainly in Spain and Australia, consistent with management actions that had been taken to manage savings infl ows, whereas in the Czech Republic customer deposits declined following the announcement to leave the retail banking market.
In 1Q2021, expenses included €11 million of restructuring costs following the announcement on the Czech Republic, as well as a €11 million legal provision in Spain. Sequentially, expenses decreased as the previous quarter had included €49 million of incidental items and a lower capitalisation of costs, mainly related to the decision to stop the Maggie project. Adjusted for the aforementioned items, expenses excluding regulatory costs declined 1.8% compared to 4Q2020.
Risk costs were €82 million, with 1Q2021 additions mainly in Poland, Spain and Romania. In 4Q2020, risk costs had included €59 million for potential losses on CHF-indexed mortgages in Poland.
Segment Reporting: Wholesale Banking
| Wholesale Banking: Consolidated profi t or loss account | |||
|---|---|---|---|
| Total Wholesale Banking | |||
| In € million | 1Q2021 | 1Q2020 | 4Q2020 |
| Profit or loss | |||
| Net interest income | 1,038 | 937 | 945 |
| Net fee and commission income | 278 | 297 | 255 |
| Investment income | 8 | 4 | 3 |
| Other income | 173 | 33 | 40 |
| Total income | 1,497 | 1,270 | 1,242 |
| Expenses excl. regulatory costs | 640 | 669 | 746 |
| Regulatory costs | 148 | 130 | 92 |
| Operating expenses | 787 | 799 | 838 |
| Gross result | 709 | 471 | 405 |
| Addition to loan loss provisions | 30 | 373 | -50 |
| Result before tax | 679 | 98 | 454 |
| of which: | |||
| Lending | 478 | 84 | 510 |
| Daily Banking & Trade Finance | 89 | 46 | 74 |
| Financial Markets | 80 | -78 | -20 |
| Treasury & Other | 32 | 46 | -110 |
| Profitability and efficiency | |||
| Net core lending growth (in € billion) | 15.1 | 9.4 | -0.7 |
| Net customer deposits growth (in € billion) | 3.3 | 6.0 | -0.9 |
| Cost/income ratio | 52.6% | 62.9% | 67.4% |
| Risk costs in bps of average customer lending | 7 | 80 | -12 |
| Return on equity based on 12.5% CET11) | 11.7% | 1.3% | 7.6% |
| Risk-weighted assets (end of period, in € billion) | 147.2 | 158.2 | 143.8 |
1) After-tax return divided by average equity based on 12.5% of RWA (annualised).
Net interest income was supported by a €83 million TLTRO III benefi t, while year-on-year improved lending margins and higher interest results in Treasury & Other more than compensated for a decrease in average customer lending and lower margins on customer deposits.
Fee income decreased year-on-year, refl ecting lower syndicated deal activity in Lending, whereas fee income in Trade & Commodity Finance (TCF) started to recover. This was partly compensated by higher fees on initiatives in Payments & Cash Management (PCM ) and sizeable deals in Global Capital Markets (GCM). Sequentially, fee income increased, mainly due to Financial Markets, refl ecting the aforementioned deals in GCM and higher fees in FM Trading.
Year-on-year other income refl ects higher Financial Markets income and positive valuation adjustments, while the year-ago quarter had included negative valuation adjustments in both Financial Markets and Lending. Sequentially, other income increased across all product groups.
Net core lending grew by €15.1 billion in 1Q2021 (mainly driven by TLTRO III eligible deals), of which €7.5 billion was attributable to Financial Markets, mainly refl ecting short-term funding to clients. Lending increased by €5.8 billion and Daily Banking & Trade Finance by €1.7 billion (primarily in Working Capital Solutions). Net customer deposits increased by €3.3 billion as PCM deposits increased from lower year-end levels.
Regulatory costs refl ected a higher contribution to the single
resolution fund. Expenses in 1Q2021 included €11 million of legal provisions, while 4Q2020 had included €124 million of restructuring provisions and impairments. Expenses excluding regulatory costs, the aforementioned items and currency impacts decreased 3.5%, refl ecting continued cost-effi ciency measures, lower personnel-related expenses and lower travel costs due to the Covid-19 restrictions. Sequentially, adjusted expenses increased 0.8%.
Risk costs amounted to €30 million, refl ecting a low level of individual Stage 3 provisions, primarily attributable to some fi les in the Netherlands and Germany.
The 1Q2021 result before tax of Lending improved signifi cantly year-on-year. This is because 1Q2020 had been aff ected by negative valuation adjustments and higher risk costs, while 1Q2021 included €43 million of the TLTRO III benefi t. Excluding valuation adjustments and the TLTRO III benefi t, income declined slightly, mainly due to lower average outstandings and lower syndicated deal activity. Sequentially, income excluding the TLTRO III benefi t was supported by positive valuation adjustments. Expenses excluding regulatory costs refl ect lower staff -related and travel expenses, as well as favourable currency impacts.
The 1Q2021 result before tax of Daily Banking & Trade Finance benefi ted from lower risk costs. Income was supported by a €7 million TLTRO III benefi t and higher TCF income (higher average oil prices and improved margins), while year-on-year this was off set by central bank rate cuts, which impacted PCM. Expenses
Segment Reporting: Corporate Line Wholesale Banking
excluding regulatory costs decreased year-on-year, primarily due to lower staff -related expenses. Sequentially, expenses excluding regulatory costs were lower as 4Q2020 had included a €29 million impairment.
The result before tax of Financial Markets benefi ted year-onyear from positive valuation adjustments and a €29 million TLTRO III benefi t. Sequentially, income was supported by improved results from most trading desks, especially in Interest Rate and Non-Linear products as well as in Global Securities Finance.
The quarterly result before tax of Treasury & Other declined year-on-year, refl ecting strong hedge results and net capital gains in 1Q2020. Expenses primarily refl ect lower personnelrelated expenses. Sequentially, income increased, mainly in Treasury. Expenses declined as 4Q2020 had been impacted by €95 million of incidental items.
Segment Reporting: Corporate Line
| Corporate Line: Consolidated profi t or loss account | |||
|---|---|---|---|
| In € million | 1Q2021 | 1Q2020 | 4Q2020 |
| Profit or loss | |||
| Net interest income | 118 | 103 | 24 |
| Net fee and commission income | 4 | -1 | 0 |
| Investment income | 0 | 0 | 0 |
| Other income | -47 | -22 | -106 |
| Total income | 75 | 80 | -83 |
| Expenses excl. regulatory costs | 113 | 42 | 134 |
| Regulatory costs | 0 | 0 | -5 |
| Operating expenses | 113 | 42 | 129 |
| Gross result | -39 | 39 | -212 |
| Addition to loan loss provisions | 0 | 3 | 0 |
| Result before tax | -39 | 36 | -212 |
| of which: | |||
| Income on capital surplus | 3 | -20 | -26 |
| Foreign currency ratio hedging | 81 | 120 | 64 |
| Other Group Treasury | -13 | -35 | -82 |
| Group Treasury | 71 | 66 | -44 |
| Other Corporate Line | -109 | -30 | -168 |
Total income in the Corporate Line was €75 million and included a €79 million positive net interest income recognition related to the TLTRO III benefi t. The remaining benefi t from TLTRO III has been fully recognised in the net interest income of the respective business segments and related products in 1Q2021.
Compared with 1Q2020, income in the Corporate Line declined slightly, mainly due to lower interest results from foreign currency ratio hedging (refl ecting lower interest rate diff erentials) and negative unwinding results, which off set the TLTRO III benefi t. Other income in 4Q2020 included €-58 million related to the decrease of the NN Group indemnity receivable following the fi nal settlement of a tax dispute in Australia (recorded under other income and off set by the same amount in the tax line) and the negative impact of the buy-back of unsecured notes and the call of a Tier 2 instrument.
Operating expenses in 1Q2021 included a lower VAT refund compared with both comparable quarters. The decrease versus 4Q2020 expenses was due to a change in the allocation of group overhead expenses in the fourth quarter of last year. The change was made for the full-year 2020 and increased Corporate Line expenses in the fourth quarter by approximately €52 million; this was off set by a lower allocation of group overhead expenses in the business lines.
| Share information | |||||||
|---|---|---|---|---|---|---|---|
| 1Q2021 4Q2020 3Q2020 2Q2020 1Q2020 | |||||||
| Shares (in millions, end of period) | |||||||
| Total number of shares | 3,904.0 3,900.7 3,900.6 3,900.6 3,900.5 | ||||||
| - Treasury shares | 0.7 | 0.6 | 1.5 | 0.5 | 1.3 | ||
| - Shares outstanding | 3,903.4 3,900.1 3,899.2 3,900.1 3,899.2 | ||||||
| Average number of shares | 3,900.4 3,899.8 3,900.0 3,899.5 3,896.3 | ||||||
| Share price (in euros) | |||||||
| End of period | 10.43 | 7.64 | 6.06 | 6.20 | 4.78 | ||
| High | 10.61 | 8.60 | 7.17 | 7.27 | 11.08 | ||
| Low | 7.30 | 5.76 | 5.87 | 4.53 | 4.30 | ||
| Net result per share (in euros) | 0.26 | 0.19 | 0.20 | 0.08 | 0.17 | ||
| Shareholders' equity per share (end of period in euros) |
14.10 | 14.01 | 13.90 | 13.92 | 13.93 | ||
| Dividend per share (in euros) | - | 0.12 | - | - | - | ||
| Price/earnings ratio1) | 14.4 | 12.0 | 9.0 | 7.6 | 4.3 | ||
| Price/book ratio | 0.74 | 0.55 | 0.44 | 0.45 | 0.34 | ||
| 1) Four-quarter rolling average |
Financial calendar
Publication results 2Q2021: Friday, 6 August 2021
Publication results 3Q2021: Thursday, 4 November 2021 All dates are provisional
ING profi le
ING is a global fi nancial institution with a strong European base, off ering banking services through its operating company ING Bank. The purpose of ING Bank is empowering people to stay a step ahead in life and in business. ING Bank's more than 57,000 employees off er retail and wholesale banking services to customers in over 40 countries.
ING Group shares are listed on the exchanges of Amsterdam (INGA NA, INGA.AS), Brussels and on the New York Stock Exchange (ADRs: ING US, ING.N).
Sustainability forms an integral part of ING's strategy, evidenced by ING's leading position in sector benchmarks by Sustainalytics and MSCI. ING ranks fi rst in our marketcap group by Sustainalytics as of July 2020. ING's ESG rating by MSCI was upgraded to 'AA' in December 2020. ING Group shares are included in major sustainability and Environmental, Social and Governance (ESG) index products of leading providers STOXX, Morningstar and FTSE Russell. In January 2021, ING received an ESG evaluation score of 83 ('strong') from S&P Global Ratings.
Further information
All publications related to ING's 1Q2021 results can be found at www.ing.com/1q2021, including a video with CEO Steven van Rijswijk. The 'Steven on Air' video is also available on YouTube.
Additional fi nancial information is available at www.ing.com/qr:
- ING Group historical trend data
- ING Group analyst presentation (also available via SlideShare)
For further information on ING, please visit www.ing.com. Frequent news updates can be found in the Newsroom or via the @ING_news Twitter feed. Photos, videos of ING operations, buildings and its executives are available for download at Flickr. ING presentations are available at SlideShare.
Important legal information
Elements of this press release contain or may contain information about ING Groep N.V. and/ or ING Bank N.V. within the meaning of Article 7(1) to (4) of EU Regulation No 596/2014.
ING Group's annual accounts are prepared in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRS-EU'). In preparing the fi nancial information in this document, except as described otherwise, the same accounting principles are applied as in the 2020 ING Group consolidated annual accounts. All fi gures in this document are unaudited. Small diff erences are possible in the tables due to rounding.
Certain of the statements contained herein are not historical facts, including, without limitation, certain statements made of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to diff er materially from those expressed or implied in such statements. Actual results, performance or events may diff er materially from those in such statements due to a number of factors, including, without limitation: (1) changes in general economic conditions and customer behaviour, in particular economic conditions in ING's core markets, including changes aff ecting currency exchange rates (2) the eff ects of the Covid-19 pandemic and related response measures, including lockdowns and travel restrictions, on economic conditions in countries in which ING operates, on ING's business and operations and on ING's employees, customers and counterparties (3) changes aff ecting interest rate levels (4) any default of a major market participant and related market disruption (5) changes in performance of fi nancial markets, including in Europe and developing markets (6) political instability and fi scal uncertainty in Europe and the United States (7) discontinuation of or changes in 'benchmark' indices (8) infl ation and defl ation in our principal markets (9) changes in conditions in the credit and capital markets generally, including changes in borrower and counterparty creditworthiness (10) failures of banks falling under the scope of state compensation schemes (11) non-compliance with or changes in laws and regulations, including those concerning fi nancial services, fi nancial economic crimes and tax laws, and the interpretation and application thereof (12) geopolitical risks, political instabilities and policies and actions of governmental and regulatory authorities (13) legal and regulatory risks in certain countries with less developed legal and regulatory frameworks (14) prudential supervision and regulations, including in relation to stress tests and regulatory restrictions on dividends and distributions, (also among members of the group) (15) regulatory consequences of the United Kingdom's withdrawal from the European Union, including authorizations and equivalence decisions (16) ING's ability to meet minimum capital and other prudential regulatory requirements (17) changes in regulation of US commodities and derivatives businesses of ING and its customers (18) application of bank recovery and resolution regimes, including write-down and conversion powers in relation to our securities (19) outcome of current and future litigation, enforcement proceedings, investigations or other regulatory actions, including claims by customers who feel mislead and other conduct issues (20) changes in tax laws and regulations and risks of non-compliance or investigation in connection with tax laws, including FATCA (21) operational risks, such as system disruptions or failures, breaches of security, cyber-attacks, human error, changes in operational practices or inadequate controls including in respect of third parties with which we do business (22) risks and challenges related to cybercrime including the eff ects of cyber-attacks and changes in legislation and regulation related to cybersecurity and data privacy (23) changes in general competitive factors, including ability to increase or maintain market share (24) the inability to protect our intellectual property and infringement claims by third parties (25) inability of counterparties to meet fi nancial obligations or ability to enforce rights against such counterparties (26) changes in credit ratings (27) business, operational, regulatory, reputation and other risks and challenges in connection with climate change (28) inability to attract and retain key personnel (29) future liabilities under defi ned benefi t retirement plans (30) failure to manage business risks, including in connection with use of models, use of derivatives, or maintaining appropriate policies and guidelines (31) changes in capital and credit markets, including interbank funding, as well as customer deposits, which provide the liquidity and capital required to fund our operations, and (32) the other risks and uncertainties detailed in the most recent annual report of ING Groep N.V. (including the Risk Factors contained therein) and ING's more recent disclosures, including press releases, which are available on www.ING.com.
This document may contain inactive textual addresses to internet websites operated by us and third parties. Reference to such websites is made for information purposes only, and information found at such websites is not incorporated by reference into this document. ING does not make any representation or warranty with respect to the accuracy or completeness of, or take any responsibility for, any information found at any websites operated by third parties. ING specifi cally disclaims any liability with respect to any information found at websites operated by third parties. ING cannot guarantee that websites operated by third parties remain available following the publication of this document, or that any information found at such websites will not change following the fi ling of this document. Many of those factors are beyond ING's control.
Any forward looking statements made by or on behalf of ING speak only as of the date they are made, and ING assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason.
This document does not constitute an off er to sell, or a solicitation of an off er to purchase, any securities in the United States or any other jurisdiction.