ING Groep N.V. — FY2021 Form 20-F Summary
Business context and reporting period
ING Groep N.V. is a Netherlands-based global banking group serving approximately 38 million customers in more than 40 countries through Retail Banking and Wholesale Banking. This Form 20-F covers the fiscal year ended 31 December 2021 and was filed on 7 March 2022. The filing reports under IFRS as issued by the IASB for SEC purposes; management also presents IFRS-EU results, which differ primarily because of the EU IAS 39 hedge-accounting carve-out.
Key financial metrics
| Metric | FY2021 | FY2020 | Change/comment |
|---|---|---|---|
| Total income, IFRS-IASB | €20,093 million | €17,227 million | +16.6% |
| Net interest income | €14,000 million | €13,552 million | +3.3%; included €483 million conditional TLTRO III benefit |
| Net fee and commission income | €3,517 million | €3,011 million | +16.8% |
| Result before tax, IFRS-IASB | €8,385 million | €3,399 million | +146.7% |
| Net result attributable to shareholders, IFRS-IASB | €5,951 million | €2,250 million | +164.5%; EPS increased to €1.53 from €0.58 |
| Net result, IFRS-EU | €4,776 million | €2,485 million | +92.2%; management’s primary segment reporting measure |
| Operating expenses | €11,192 million | €11,153 million | +0.3%; cost/income ratio improved to 60.5% from 63.2% |
| Loan-loss provisions | €516 million | €2,675 million | 8 basis points of average lending versus 43 basis points |
| Total assets | €949.3 billion | €933.9 billion | +1.6% |
| Loans and advances to customers | €625.1 billion | €594.0 billion | +5.2% |
| Customer deposits | €617.4 billion | €609.5 billion | +1.3% |
| Cash and central-bank balances | €106.5 billion | €111.1 billion | Declined year over year |
| Shareholders’ equity, IFRS-IASB | €52.1 billion | €51.6 billion | +0.9% |
| CET1 ratio | 15.89% | 15.45% | Above the 10.51% stated requirement |
Net interest margin for ING Bank declined to 1.39% from 1.43%, reflecting continued pressure on savings and current-account margins. Fee income increased 17% and represented approximately 19% of full-year income, supported by daily banking and investment products.
Net cash flow from operating activities was negative €14.9 billion, compared with positive €101.2 billion in 2020, largely because of increased lending, lower bank inflows and smaller customer-deposit inflows. Investing cash flow was positive €6.2 billion, while financing cash flow was positive €5.4 billion, including higher debt issuance. Cash and cash equivalents ended at €107.7 billion.
Debt securities in issue were €91.8 billion at year-end, up from €82.1 billion. Subordinated loans were €16.7 billion. The funding mix was primarily customer deposits, comprising 51% retail deposits and 21% corporate deposits. The filing states that working capital and liquidity are sufficient for present requirements.
Material changes versus the prior comparable period
- Profitability recovered sharply as loan-loss provisions fell by €2.2 billion and Wholesale Banking income improved.
- Wholesale Banking IFRS-IASB net result increased to €3.318 billion from €278 million, including a positive €1.174 billion IAS 39 carve-out adjustment versus a negative €234 million in 2020.
- Retail Belgium net result rose to €437 million from €71 million, primarily because of lower risk costs. Retail Other increased to €639 million from €39 million, partly reflecting the absence of the €230 million TTB impairment recorded in 2020.
- Retail Netherlands net result declined to €1.437 billion from €1.556 billion, and Retail Germany declined to €529 million from €615 million, mainly because of liability-margin pressure and higher expenses.
- Core lending increased by €30.6 billion and core deposits by €10.3 billion, adjusted for currency effects and specified exclusions. Primary customers increased by 481,000 to 14.3 million.
- ING exited or announced exits from selected retail markets, including Austria, the Czech Republic and France. Payvision was placed into wind-down, and Yolt’s consumer app was discontinued while its business-to-business platform was retained.
- ING launched a €1.744 billion share-buyback programme in October 2021. Approximately 92% was completed by year-end; the programme was fully completed on 28 February 2022 with 139.7 million shares repurchased for €1.742 billion.
Guidance, outlook, commentary, risks and unusual items
The filing does not provide formal quantitative earnings guidance. Management emphasized continued recovery but remained cautious about Covid-19, supply-chain disruption, energy prices, inflation, interest-rate changes and customer credit quality. The strategy focuses on a safe and compliant bank, healthy returns, digitalisation, income diversification and sustainability.
- At 31 December 2021, approximately 137,000 customers had received payment holidays covering €15.3 billion of loans; 99.8% of granted holidays had expired. Fourth-quarter loan-loss provisions included a €346 million net addition, mainly from Stage 3 files, recovery-scenario uncertainty and inflation and interest-rate risks.
- Management retained €632 million of loan-loss management adjustments, including €341 million of sector-based Covid-19 overlays, €124 million for mortgage portfolios and €32 million for payment-holiday risk.
- Operating expenses included €1.265 billion of regulatory costs and €522 million of incidental items, including a €180 million provision for compensation to certain Dutch revolving-credit customers, restructuring costs and impairments.
- ING joined the Net-Zero Banking Alliance and aims to steer its lending portfolio toward net-zero greenhouse-gas emissions by 2050 or sooner. Climate, ESG, cybercrime, data management, financial crime, model risk, litigation and regulatory compliance remain material risks.
- After year-end, ING disclosed approximately €6.7 billion of Russia-related exposure and approximately €500 million of Ukraine exposure as of 28 February 2022. Around €700 million of Russian exposure was affected by new sanctions. ING decided in March 2022 not to conduct new business with Russian companies; the ultimate financial impact was not determinable at filing.
- ING had a €180 million provision for Dutch consumer-credit compensation and a €132 million litigation-provision balance at year-end. The filing states that certain interest-rate-derivative, mortgage-expense, Swiss-franc mortgage and other proceedings could have a material cumulative impact.
Most important facts for investors to verify
- Reconcile IFRS-IASB net profit of €5.951 billion with IFRS-EU net result of €4.776 billion and isolate the €1.174 billion IAS 39 carve-out effect.
- Assess the sustainability of earnings excluding the €483 million conditional TLTRO III benefit, market-driven valuation gains and other unusual items.
- Review loan-loss overlays, Stage 2 and Stage 3 migration, collateral values and sensitivity to inflation, rising rates, property prices and the end of government support.
- Confirm the post-year-end Russia and Ukraine exposure, sanctions impact, recoveries and any subsequent provisioning.
- Verify CET1, leverage, MREL, TLAC and liquidity ratios against fully phased-in regulatory requirements and the effects of future Basel III reforms.
- Monitor legal and regulatory matters, particularly AML/KYC remediation, Dutch consumer-credit compensation, Swiss-franc mortgage claims and interest-rate-derivative litigation.
- Evaluate the financial consequences of the French retail exit, other market exits and the Payvision wind-down.
- Consider dilution and distribution effects from AT1 contingent-convertible securities, the completed share buyback and the proposed €0.41 per-share final dividend.