ING Bank records strong third-quarter performance
ING Bank* posted strong third quarter results. The underlying result before tax was up 34.7% to EUR 1,486 million compared to the third quarter last year, reflecting higher interest results and a decline in risk costs.
Commercial momentum was solid as ING Bank continued to support its customers’ financial needs. Net lending grew by EUR 3.3 billion in the third quarter.
Key Points
Delivering on our customer promise
Commenting on the third quarter results ING Group CEO Ralph Hamers said: “Since launching our Think Forward strategy seven months ago, we have been working harder than ever to deliver on our customer promises and strategic purpose of empowerment. It is encouraging to see our efforts reflected so positively in our strong commercial and financial results for this quarter.”
“Innovation is happening every day at ING. During the third quarter, our drive to keep getting better led to a steady stream of improvements. In the Netherlands, we added voice recognition technology to our mobile banking app – an exciting new feature that is the first of its kind at any European bank. We introduced a digital wallet service in Italy, following the launch of similar services in Poland and Turkey earlier this year. A new digital platform was launched in Spain, which enhances the customer experience – it encourages clients to think about their future by helping them to analyse and manage their personal finances using customisable visuals.”
“In Commercial Banking, we advanced our goals of making banking easier and enabling clients to stay a step ahead by streamlining our on-boarding process, without compromising on due diligence and regulatory requirements.”
“ING Bank posted an excellent set of quarterly results, underpinned by our commitment to serve our customers’ financial needs. We extended EUR 3.3 billion in net lending, primarily in Structured Finance, General Lending and residential mortgages. This was funded by a EUR 4.3 billion net inflow of funds entrusted which was generated across our franchise. The third-quarter underlying result before tax rose 34.7% year-on-year and 16.3% sequentially to EUR 1,486 million, reflecting higher interest results and lower risk costs.
“This robust performance supported an increase in the year-to-date underlying return on IFRS-EU equity to 11.4%, in line with our Ambition 2017 target range. The Bank’s capital position strengthened, with a fully-loaded CET1 ratio of 11.1%, and our liquidity and leverage measures remain sound.”
“We continued to simplify our company, consistent with our repositioning as a leading European bank. In light of our intention to divest our remaining stake in NN Group over time, we changed the classification of NN Group to ‘held for sale’ and ‘discontinued operations’, effective as of 30 September 2014. Our stake in Voya Financial, Inc. was further reduced in September to approximately 32%. The financial impacts of these actions, together with the net results of our Insurance businesses, are reflected in ING Group’s third-quarter net result of EUR 928 million.”
”The current EUR 7.9 billion combined market value of our remaining stakes in NN Group and Voya reflect a healthy capital surplus at Group level, affording ample financial flexibility. Last week, the stability of our financial position was affirmed by the outcome of the ECB’s comprehensive assessment. Today, we are pleased to announce that we have received regulatory approval to bring forward our final payment of state aid, which will be paid in the coming days. We are grateful to the Dutch State, our customers and our shareholders for their support throughout the financial crisis and for the confidence they have placed in ING.”
”I am proud of the hard work and dedication of our employees that made our strong performance in the third quarter possible. The implementation of our strategy is on track and we are well positioned to benefit from the transformation that is taking place in the banking landscape.”
A strong third quarter
ING Bank’s third quarter underlying net result (after tax and minority interests) rose 37.0% to EUR 1,123 million compared to the third quarter last year and up 21.7% on the previous quarter.
Total underlying income rose 4.5% compared to the third quarter last year. Expenses increased slightly on both comparable quarters. The cost/income ratio improved to 54.1% compared to 56.2% in the third quarter last year and 55.5% in the previous quarter.
Risk costs declined in the third quarter. The decline compared to the previous quarter reflected lower risk costs in Commercial Banking, particularly in the area of General Lending. Total risk costs were 44 basis points of average risk-weighted assets compared to 55 basis points in the previous quarter and 80 basis points in the third quarter of 2013.
Cost-saving efforts on track
The current cost-saving programmes at ING Bank are on track and expected to reduce expenses by EUR 955 million by 2017. Of these targeted amounts, EUR 580 million has already been achieved. Total headcount reductions related to these initiatives are estimated at 6,515 FTEs, of which 5,300 FTEs have already left ING Bank since the start of the programmes.
Customer Focus
A core part of ING’s customer promise is to be clear and easy. ING worked towards this goal in the third quarter with several initiatives. ING Bank Slaski introduced Responsive Web Design (RWD), which enables the bank’s website to be viewed clearly on a wide array of devices, ranging from smartphones to wide screens such as televisions.
In September, ING became the first European bank to introduce ‘hands-free’ banking. ING has added a voice control mode to its mobile banking app in the Netherlands as an alternative to using the touchscreen on a smartphone. With the voice mode, customers can read aloud an IBAN number in order to check their balance or give payment orders. This new service responds to the growth in speech-operated devices.
In Germany, new customers at ING-DiBa can now verify their identity when opening a new account through video from home of from another country. Previously new customers first had to
go to a post office to verify their identity by presenting their passport or identity card.
Digital wallets
Digital wallets are a relatively new concept in banking and are designed to make shopping online and on devices simpler by storing customers’ payment card details, meaning people no longer need to remember card numbers to make payments online. ING Direct Italy has teamed up with VISA to offer a digital wallet service to Italians, joining ING in Turkey, Poland and Spain to offer this user-friendly payment service.
ING continued to win awards for its products and services. For the third time in five years, ING Direct Australia was named ‘Best Bank’ in the annual Mozo People’s Choice Awards. Mozo, short for Money Zone, is an online community that aims to help Australians find the best deals in banking and insurance.
ING was awarded Best Social Media Company in the Netherlands for excellence in integrating social media in its day-to-day business. In research conducted by online benchmarking bureau WUA!, ING’s Dutch banking app was found to be the best in terms of customer service compared to other Dutch banking apps tested. In July, ING Netherlands was awarded best bank at the annual Euromoney Awards for Excellence.
ING Bank Slaski in Poland also received several awards. It won a Euromoney Award for Excellence as well as clinching first place in the Mobile Bank category of the ‘Newsweek Friendly Bank’ rankings for the user-friendly navigation of its apps and mobile websites.
In July, Interhyp, Germany’s leading mortgage broker was named “Best Mortgage Provider” by business magazine, €uro.
* In light of ING Group’s intention to divest its remaining stake in NN Group over time, NN Group is classified as held for sale and as discontinued operations, according to IFRS-EU accounting regulations from the third quarter 2014 onwards. This means ING Group’s financial reporting structure has changed.
As NN Group was the last of ING’s major insurance businesses to be divested, there will be no longer be an ING Group underlying result figure reflecting the underlying core banking and insurance businesses of ING Group. ING Group now consists primarily of its banking operations, so therefore the underlying results of ING Bank are effectively also those of ING Group.
For the financial results of NN Group, please go to www.nn-group.com