Benjamin Goy

Benjamin Goy from Deutsche Bank requested more specifics on the volume growth assumptions behind the implied Q4 NII increase. He also asked about the success of the digital business banking strategy, especially in markets without branches, following the end of the Amazon partnership in Germany.

Answer

CEO Steven van Rijswijk explained that the digital business banking strategy involves different models for different segments, from fully digital for the self-employed to relationship-led for mid-corporates. He noted that while business banking in Germany is still small, the focus is now on direct customer acquisition. CFO Tanate Phutrakul stated the NII guidance considers strong H1 volume growth, another expected ECB rate cut, and actions to maintain a 1% margin.

Benjamin Goy of Deutsche Bank asked for more detail on the Wholesale Banking loan growth pipeline and the confidence in its outlook. He also questioned the strategic reasoning for taking a minority stake in Van Lanschot Kempen.

Answer

CEO Steven van Rijswijk described the Wholesale pipeline as healthy but noted conversion depends on market certainty. He explained the Van Lanschot stake aligns with the strategy to reallocate capital towards the higher-return retail segment, diversifying away from wholesale banking.

Benjamin Goy of Deutsche Bank asked what would be required for more drastic cost efficiencies and why ING's corporate default rates remain low in key markets despite systemic increases.

Answer

Executive Steven van Rijswijk stated that positive operating leverage should return in 2026 as operational scalability increases. CRO Ljiljana Cortan attributed the strong asset quality performance to a stable portfolio, with no negative trends in Business Banking and only isolated, non-related cases in Wholesale Banking, despite broader economic trends.

Benjamin Goy inquired about the trajectory of the cost compound annual growth rate (CAGR) given recent collective labor agreements (CLAs) in key markets. He also asked for color on the drivers behind the quarter-on-quarter growth in current accounts.

Answer

CFO Tanate Phutrakul confirmed that cost increases are expected to be 'sticky' in 2024-2025 due to wage inflation, with normalization anticipated in 2026-2027, implying a front-loaded increase. Executive Steven van Rijswijk attributed the growth in current accounts to new customer acquisition and seasonal inflows from holiday allowances, which he noted typically boosts transaction fee income in the third quarter.

Benjamin Goy asked for insight into the cost CAGR outlook, considering recent collective labor agreements (CLAs) in key markets. He also questioned the drivers behind the quarter-on-quarter growth in current accounts.

Answer

CEO Steven van Rijswijk explained that current account growth was driven by new customer inflows and seasonal holiday allowances in the Netherlands, Belgium, and Spain, which typically leads to higher transaction fees in Q3. CFO Tanate Phutrakul addressed costs, stating that wage inflation is expected to remain sticky in 2024-2025 due to the delayed impact of CLAs, with normalization anticipated in 2026-2027.

Benjamin Goy inquired about the outlook for the underlying cost base in the second half of the year and asked if the stable guidance for Global Wealth Management's net interest income (NII) represents a trough.

Answer

CFO Todd Tuckner stated that of the remaining $4 billion in gross cost saves, a significant portion is tied to tech decommissioning that will accelerate in 2026, reaffirming the sub-70% cost/income ratio target. On GWM NII, he noted the flat outlook already incorporates two Fed rate cuts and reflects a balance of higher loan volumes against lower deposit rates, making it too early to definitively call a trough.

Benjamin Goy inquired about the strategy behind the India partnership and expected onshore/offshore dynamics. He also asked about the potential impact of negative interest rates in Switzerland on the Personal & Corporate Banking business's cost-to-income target.

Answer

Sergio Ermotti, Group Chief Executive Officer, detailed the India strategy, which involves partnering with 360 ONE to capture domestic growth. Todd Tuckner, Group Chief Financial Officer, addressed the rates question, stating that a move into negative territory would be accretive to P&C net interest income due to convexity, and the division's cost/income target remains unchanged.

Benjamin Goy asked if there was upside to the GWM Americas cost/income ratio target given revenue mix shifts and whether the FRTB implementation in Switzerland was the final piece of the puzzle for higher capital requirements.

Answer

Executive Todd Tuckner explained that GWM is a key focus of the group's cost-saving plan, with upcoming platform migrations expected to significantly improve its cost/income ratio. Executive Sergio Ermotti noted that while the 14% CET1 guidance stands, the early FRTB adoption could become a competitive issue if other jurisdictions delay implementation, but it's too early to know the final outcome.