ING Groep NV
AEX:INGA
Earnings Call Analysis
Q3-2023 Analysis
ING Groep NV
The bank's recent financial quarter reflects robust performance, with both Retail and Wholesale Banking segments showing strong interest income. Fee income has been bolstered, particularly due to the performance of Retail Banking, alongside notable trading results within Wholesale Banking. The bank has achieved a notable expansion of its primary customer base, adding 181,000 customers across various retail markets.
Despite positive financials, the bank acknowledges prevailing economic uncertainties, amplified by conflicts in the Middle East and inflationary pressures. However, there's an expectation that inflation will ease in the coming months, although surges in oil prices remain a concern. Amidst these challenges, the bank maintains confidence in its resilience, supported by satisfactory results, low risk costs, and a strong capital position, reinforcing its capability to withstand potential economic shocks.
While aware of criticisms regarding high profitability, the bank emphasizes its substantial scale and its focus on long-term strategies rather than short-term gains. The bank defends its profitability as beneficial for all stakeholders, stressing the importance of consistent and healthy profits for the sustainability of its large customer base of 38 million.
The bank's fresh climate report highlights its collaborative efforts with various industries such as steel, automotive, and shipping to track and measure sustainable progress. With seven out of ten sectors on target to meet their 2030 goals, the bank is progressing towards its ambition of net-zero emissions by 2050. Nevertheless, there is an acknowledgment that more action is required to ensure the health of the planet.
Recognizing that achieving net-zero emissions cannot be shouldered by the bank alone, the bank calls for clear and decisive policies from governments per sector. A concerted effort involving public and private sectors is deemed necessary to accelerate the transition to a more sustainable society.
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Hi, Steven. Few questions about the quarter. I brought a new friend. Two minutes more or less.
Should be enough.
Okay. It's watching you.
What's kind of a quarter was it for the bank?
Yes, the numbers are good. Interest income in both Retail and Wholesale Banking were strong. Fee income went up largely because of Retail Banking and Wholesale Banking, we had good trading results and with our focus on capital optimization, also good returns. And an increase of our primary customer base with 181,000 customers, largely across all retail markets. So not bad, I would say.
So good numbers, but economies are slowing down. What do we feel.
Look, there are a lot of uncertainties. And for sure, the conflict in the Middle East doesn't help with that. Inflation is expected to come down in the next couple of months. But if oil prices surge, that could also have an impact on inflation. Economies in general are uncertain. But in that context, we're doing very well. Good results, low risk costs, strong capital. So I'm confident that we can withstand any shock, and we can also keep our promise to our customers serve them well.
Some people say, we're making too much profit right now. What do you say?
I'll say that the numbers are big, but we're also a big company. Also, we do not steer and manage our bank on a quarter-by-quarter basis. We have to look at the long term. And look, for example, a year ago, then interest rates were negative. And last but not least, a strong and healthy and also profitable bank is also good for all of our stakeholders, including our 38 million customers.
And we have a new climate report. What jumps out for you?
What really jumps out is that we work with sectors; with steel, with automotive, with shipping and we also measure progress. Now to give you a number, in 7 of the 10 sectors that we put in that report, we are on track for our 2030 targets and therefore, on our way to net zero about 2050. We're doing a lot but not yet enough to keep the planet healthy.
And you also want to work with governments and regulators, what's your message to them.
As a society, we want to become more sustainable. We want to get to net zero. In the end, it also means that governments need to give clear direction and clear policies per sector. We cannot do it alone if we want to speed up.
That's all we have time for right now. The penguin has lost its patients.
Thank you very much, penguin.
Well, thank you very much for your answers and good luck.
Good.