ING's CFO says net interest income momentum will continue to rise

Summary

In a challenging economic landscape marked by inflation and rising interest rates, the bank reported a strong year, particularly in Q4, with a 17% increase in net interest income and 18 billion euros in core lending growth. While loan demand is slowing due to affordability issues, the bank maintains a low non-performing loan ratio, indicating resilience. The focus on organic growth led to nearly 600,000 new primary customers in 2022. Despite frustrations over the slow pace of banking union reforms, the bank remains committed to its growth strategy without depending on regulatory changes.

Takeaways

• 📈 The past year has been challenging due to geopolitical tensions, inflation, and energy crises, yet the company is pleased with its performance.
• 💰 Net interest income increased by 17% year-on-year, highlighting robust revenue generation.
• 📉 Rising base rates may enhance net interest income but could also lead to reduced loan demand as affordability declines.
• 🏦 Core lending growth reached 18 billion euros, indicating strong lending activity despite slowing loan demand.
• 🔍 The bank maintains a modest non-performing loan ratio, reflecting good loan performance within the Eurozone.
• ⚠️ There are no current signs of increased delinquencies, suggesting a resilient loan portfolio.
• 🚀 The bank's strategy focuses on organic growth, having acquired nearly 600,000 primary customers in 2022.
• 🔄 The banking sector is waiting for more progress on banking union reforms, which has been perceived as slow.
• 🌍 The bank is positioned to benefit from potential banking union legislation due to its presence in several large European economies.
• 📊 The company emphasizes client acquisition through organic means rather than relying on regulatory changes.

Q & A

What were the key factors influencing the financial year discussed in the transcript?

The key factors included the war in Russia, inflation, and the energy crisis.

How did the ECB's base rate changes affect net interest income?

The rising base rate resulted in a 17% year-on-year increase in net interest income.

What trends were observed in loan demand during Q4?

Loan demand was slowing across the board, growing at a lower pace than historically seen.

What does a potential additional 50 basis points in rates imply for the business?

It suggests continued momentum in net interest income, though it may also decrease loan demand due to affordability issues.

What is the current status of the non-performing loan (NPL) ratio?

The NPL ratio remains very modest, indicating strong loan performance.

How is the bank managing the potential increase in delinquencies?

The bank is monitoring delinquencies closely but currently does not see any expected pickup in them.

What frustrations do CEOs and CFOs have regarding banking union progress?

They express frustration over the slow pace of reforms related to the banking union and capital markets.

What is the bank's strategy for client acquisition?

The bank focuses on organic growth, having gained almost 600,000 primary customers in 2022.

How does the bank view its positioning in the event of banking union advancements?

The bank believes it is well-positioned to benefit from a banking union, given its presence in large European economies.

What is the bank's approach if banking union legislation does not progress?

The bank is not relying on banking union progress and will continue to execute its organic growth strategy.