Business context and reporting period
ING Groep N.V. is a Netherlands-incorporated global bank with Retail Banking and Wholesale Banking operations in more than 40 countries. The filing is an Annual Report on Form 20-F for the fiscal year ended 31 December 2023, rather than a standalone 2023 fourth-quarter filing. Financial statements are presented in euros under IFRS as issued by the IASB for SEC reporting; published European financial statements use IFRS-EU, which differs primarily through the EU IAS 39 hedge-accounting carve-out.
Financial performance and key metrics
| Metric | 2023 | 2022 | Change/comment |
|---|---|---|---|
| Total income | €22.575 billion | €18.561 billion | Up 22% |
| Net interest income | €15.976 billion | €13.756 billion | Up 16%; net interest margin 1.56% versus 1.34% |
| Net fee and commission income | €3.595 billion | €3.586 billion | Broadly stable |
| Operating expenses | €11.564 billion | €11.199 billion | Up 3.3%; cost/income ratio improved to 51.2% from 60.3% |
| Loan-loss provisions | €520 million | €1.861 billion | Declined to 8 basis points of average customer lending from 29 basis points |
| Net result, IFRS-EU | €7.287 billion | €3.674 billion | Up 98%; ROE 14.8% versus 7.2% |
| Net result attributable to shareholders, IFRS-IASB | €4.140 billion | €12.126 billion | Down sharply because of the IAS 39 carve-out adjustment |
| Cash and cash equivalents | €93.012 billion | €95.391 billion | Down €2.379 billion |
| Customer deposits | €650.276 billion | €640.799 billion | Up €9.477 billion |
| Loans and advances to customers | €647.313 billion | €644.893 billion | Up €2.420 billion |
| Total assets | €980.299 billion | €976.834 billion | Up €3.465 billion |
Capital, liquidity and credit quality
- At year-end, the CET1 ratio was 14.68%, versus a stated overall SREP requirement of 10.98%; the Tier 1 ratio was 16.89%, total capital ratio 19.76%, and leverage ratio 5.0%.
- ING reported MREL of 32.5% of risk-weighted assets and 9.6% of leverage exposure, exceeding stated requirements. Long-term debt maturity totaled €97.4 billion, including €3.4 billion due in 2024.
- Net cash flow from operating activities was negative €11.340 billion; investing cash flow was negative €8.545 billion and financing cash flow was positive €18.404 billion.
- The credit-risk portfolio declined 0.7% to €931.6 billion. Non-performing loans were €11.7 billion, broadly unchanged, while 76.8% of the portfolio was investment grade.
- Total IFRS 9 eligible gross credit exposure was €1.025 trillion with €5.839 billion of provisions. Management adjustments to expected credit losses increased to €577 million from €453 million, including overlays for inflation, interest rates and mortgage risks.
Material changes versus the prior comparable period
- Results benefited from higher interest rates, stronger liability margins, customer and deposit growth, and higher Treasury and Financial Markets income.
- Wholesale Banking income increased 12% to €7.057 billion and its IFRS-EU result before tax rose 93% to €3.836 billion. Risk costs moved from a €1.220 billion addition in 2022 to a €92 million release in 2023.
- Retail Germany’s result before tax nearly doubled to €1.790 billion, while Retail Netherlands rose 42% to €2.861 billion. Retail Belgium also improved materially to €661 million from €223 million.
- Primary retail customers increased by 750,000 to 15.3 million. Net core lending growth was €8.6 billion and net core deposit growth was €10.6 billion.
- The IFRS-IASB result was distorted by a negative €3.147 billion IAS 39 carve-out adjustment in 2023, compared with a positive €8.451 billion adjustment in 2022. Under IFRS-EU, the reverse effect is included and reported net profit increased.
- ING repaid €30 billion of TLTRO III funding during 2023 and issued additional debt and subordinated capital. It also completed a €1.5 billion share buyback and had repurchased €1.982 billion under a €2.5 billion programme by year-end.
Guidance, outlook, commentary, risks and unusual items
- Management highlighted resilient asset quality, low risk costs, disciplined capital management and continued investment in digitalisation and customer experience. No standalone quarterly guidance was provided in the filing.
- ING targets a CET1 ratio of approximately 12.5% by 2025 and maintains a distribution policy of 50% of resilient net profit, subject to regulatory and capital conditions. A final 2023 dividend of €0.756 per share was proposed, subject to shareholder approval.
- Management expects a weaker 2024 economic environment in several core European markets as the effects of monetary tightening continue. The filing’s baseline scenario assumes global growth of 1.8% in 2024, compared with 2.4% in 2023.
- Russia-related exposure continued to decline. At year-end, remaining exposure included €0.4 billion of local equity, €1.3 billion of credit exposure booked outside Russia and approximately €0.6 billion of exposure to clients in Ukraine.
- Material risks include interest-rate and deposit repricing, credit deterioration from inflation and higher borrowing costs, geopolitical and sanctions risk, cybercrime and third-party technology risk, financial-crime compliance, litigation, climate transition and physical risks, model risk, regulatory capital changes and possible resolution-related bail-in.
- ING disclosed a June 2023 breach at a third-party German account-switching service that affected customer data. No cybersecurity incident on ING infrastructure met the ECB reporting threshold.
- Potentially significant legal matters include investor claims related to historic financial-economic-crime controls, ongoing AML-related investigations, mortgage and consumer-credit claims, Swiss-franc mortgage litigation in Poland, and threatened climate litigation by Friends of the Earth Netherlands. The filing states that no provision was currently recorded for the approximately €500 million investor claim described in the 2024 disclosure.
- The filing reports effective internal control over financial reporting as of 31 December 2023 and unqualified audit opinions from KPMG.
Most important facts an investor should verify
- Reconcile the €7.287 billion IFRS-EU net result with the €4.140 billion IFRS-IASB shareholder result, including the €3.147 billion IAS 39 carve-out adjustment.
- Confirm the final 2023 dividend, the timing and completion of the €2.5 billion buyback, and the resulting share count and CET1 ratio.
- Review the sustainability of net interest margins as deposit repricing, competition for savings and future interest-rate cuts affect liability income.
- Assess the adequacy of the €5.839 billion IFRS 9 provision balance and €577 million of management overlays under downside economic scenarios.
- Monitor Russia, Ukraine, commercial real estate, mortgage affordability and other portfolios exposed to inflation, refinancing and geopolitical risks.
- Review legal proceedings, AML remediation, customer compensation matters and the potential effect of the proposed climate litigation.
- Confirm compliance with future capital, MREL, Basel, DORA, CSRD, EU Taxonomy and other regulatory requirements, including their effect on distributions and operating costs.