ING Groep NV Q4 2018 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kirishanthan Vijayarajah - HSBC, Research Division - Analyst : So firstly, on the Dutch mortgage margins. I think going back to the last quarter, you were standing reasonably constructive there on the front book mortgage margin in the Netherlands. So is that outlook kind of still intact? And could you just give us some color on how the competitive dynamic is shaping up there, going into 2019? And secondly, just on Romania, wonder if you could just give us a feel for where the ROE is before and after the bank tax, just to sort of for us to see -- scope the impact there. Ralph Hamers Thanks Kiri. Well, on margins, I think on a quarterly basis, I'd give you a bit of an insight anyway as to what we see in the market happening. On the Netherlands and in the mortgage business, specifically, we see actually continued improvement of margins. So that's actually confirming what we said last time. So the margins are improving on the mortgage business, on the front book. Business lending is bit under pressure in the Netherlands from a margin perspective. In Belgium, mortgages margins are okay, they're kind of similar. Business lending there, has a bit of margin pressure, not too much. Then in Challengers & Growth, overall, we see improving margins. And then on the Wholesale Banking side, we see a bit on the Industry Lending side, given the change of composition of the production -- the new production, towards a lower risk-weighted asset [dense] assets. You see, actually, the new production coming in at lower margins. But it's just different business, so we can't really come to a conclusion there. And lending and transaction services and BCM is all either similar margins or improving margins, PCM is improving margins. So that's kind of the tour of the world in terms of how we see things happening in the market. Coming back to Romania. Honestly, the whole discussion around the bank tax, there's moving parts there. We'll have to see how we deal with it, how it is exactly kind of -- whether it is going to be introduced, if it is introduced, how is it actually going to affect us? The dividend's going to affect us is never good news, let's face it. I can't give you the return REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2019 / 8:00AM, INGA.AS - Q4 2018 ING Groep NV Earnings Call specifically because we don't disclose those. It is a very healthy return business. And specifically from a loan term perspective, we are very positive about the developments of Romania and how our bank is doing there.

Question: Raul Sinha - JPMorgan Chase & Co, Research Division - Analyst : Just a couple of ones from me to finish off as well. On capital, there's a reasonable reliance on mitigating actions within your capital plan over the next 3 years. And so I was wondering if you can give us some more detail on how you're progressing in terms of the mitigating actions on the main portfolios? And do you have any updated thoughts on how that might impact your business and your P&L as we go forward? That's the first one. The second one is just on this gap between RWA growth and loan growth. Obviously, this quarter was quite stark where your RWAs went down by a couple of billion and leaving aside stuff that we've already discussed on the call, which is TRIM or these migration areas. Are there any other big moving parts that we should be aware of from an RWA perspective? I'm wondering whether you have any models that are pending for approval, whether you're doing any data improvement exercises like you did in operational risk, and whether the impact of these could be meaningful from a positive perspective. J. Timmermans Thank you, Raul. On capital, like we said before, there are a number of elements that we bring to bear, when to decrease the impact. On the one hand, we can look at the rating of our corporates and when we have external ratings for these corporates then you can get a benefit on your capital. When you only have internal ratings, you do not, as was basic to bring external ratings to a number of our corporates to get that benefit. Two, when you look at security, there are a number of covers that you can use for security covers that you can more specifically link to certain assets that will bring that benefit. We're currently linking those covers better to certain assets to make sure that we get that benefit. And three, you can use, originate or distribute, actually optimize your balance sheet versus your RWA and that's the third element. So that when you look at the different input and output factors in the composition of your balance sheet from a Basel IV perspective, that you optimize that, and that's what we're currently doing as well. We will continue to do that and we're comfortable that we will, to the impact that we've said before.

Question: Raul Sinha - JPMorgan Chase & Co, Research Division - Analyst : Okay. So if I can just follow up on the first one, maybe to ask it slightly differently. How much of the mitigating actions that you outlined and talked to us before are already in the bag versus stuff that you have to go out and do over the next 3 years? J. Timmermans I think that is, for this point in time, too early to call. We will look into it, and if we have it, we will come back to you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2019 / 8:00AM, INGA.AS - Q4 2018 ING Groep NV Earnings Call