ING Group Interim financial report on form 6-K for the six month period ended 30 June 2022 - Unaudited
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Operating expenses increased by €122 million, or 2.2%, to €5,682 million. This included €863 million of regulatory
costs, up €104 million on the first half of 2021, due to higher contributions to the (European) single resolution
fund and deposit guarantee schemes. The latter comprised a €92 million one-off contribution to the new
Institutional Protection Scheme in Poland. Expenses in the first six months of 2022 included €159 million of
incidental cost items, of which €97 million restructuring costs in Retail
Belgium, €18 million of restructuring
provisions recorded in Other Challengers and Growth Markets,
and €11 million hyperinflation impact and €32
million for the impairment of the goodwill allocated to Turkey
recorded in the Corporate Line. Incidental items
in
the first six months of 2021 were €123 million, consisting of €90 million of redundancy and restructuring costs in
Retail Netherlands, €11 million of restructuring costs related
to leaving the retail banking market in the Czech
Republic, as well as a €22 million impairment recorded in the Corporate Line. Expenses excluding
regulatory costs
and incidental items slightly declined, as the impact of salary increases was offset by the benefits from earlier
restructurings and our exits from certain retail markets.
The cost/income ratio increased to 61.2% from 60.3% in
the first half of 2021.
Net additions to loan loss provisions were €1,189 million compared with €131 million in the first half of 2021. Out
of the risk costs in the first six months of 2022, €717 million was associated with our Russia-related exposure,
following the Russian invasion in Ukraine. The remainder mainly reflected
more negative macroeconomic
indicators and a net addition to management overlays,
primarily for the potential impact of high inflation and
interest rates, as well as supply chain disruptions. Risk costs in 2021 included releases from
collective provisions
following an update of the macroeconomic indicators
and limited Stage 3 provisioning. Risk costs this year were
annualised 37 basis points of average customer lending compared with 4 basis points in the first
half of 2021.
Retail Netherlands
Retail Netherlands posted a result before
tax of €1,134 million, compared with €1,022 million in the first six
months of 2021. This increase was attributable to lower expenses and higher income, partly offset
by a lower
release in risk costs.
Total
income increased by €6 million, or 0.3%, to €2,144 million, compared with €2,138 million in the first half of
2021. Net interest income declined 9.8%, mainly due to lower margins on mortgages
(for which average volumes
were stable), continued margin pressure
on customer deposits, and a €10 million lower TLTRO
III benefit. Net
core lending growth in the first half of 2022 (which excludes Treasury
products and a €0.5 billion decline in the
WUB run-off portfolio) was €2.0 billion, of which €1.1 billion was in residential mortgages and €0.9 billion in
other lending. Net core deposits growth (excluding Treasury)
was €9.4 billion, of which €5.1 billion was in current
accounts and €4.3 billion in savings and deposits. Net fee and commission income increased by €65 million, or
17.7%, mainly in daily banking. This was supported by an increase in fees for payment packages
per 1 January
2022 (following an increase per 1 April 2021) and higher transaction-related income. Investment
and other
income was €103 million higher,
driven by high income in Treasury.
Operating expenses declined by €166 million, or 14.1%, to €1,015 million from €1,181 million in the first six
months of 2021. The decrease included €12 million lower regulatory costs, while the first half of 2021 had
included €90 million of redundancy and restructuring costs. Expenses excluding regulatory
costs and incidental
cost items declined by €64 million, or 6.9%, mainly due to lower staff expenses and office-space-related
costs.
The addition to loan loss provisions resulted in a net release of €6 million, or -1 basis point of average customer
lending, compared with a net release of €65 million, or -8 basis points, in the first half of 2021. The net release in
the first half of 2022 reflected releases in the mortgage and business lending portfolios.
Retail Belgium
Retail Belgium, which includes Luxembourg, posted a result before
tax of €164 million in the first half of 2022,
compared with €134 million in the same period of 2021. The improvement was the result of lower risk costs,
partly offset by higher expenses (which in 2022 included €97 million of restructuring costs) and lower income.
Total
income decreased by €32 million, or 2.6%, to €1,209 million. Net interest income decreased by €60 million,
or 6.7%, with lower interest results on both lending and on liabilities due to margin pressure, as well
as a €26
million lower benefit from TLTRO
III (€22 million in the first half of 2022 compared with €48 million last year). Net
core lending growth (excluding Treasury)
was €3.0 billion in the first half of 2022, of which €0.6 billion was in
mortgages, and €2.4 billion in other lending. Net core deposits growth (excluding Treasury)
was €-0.4 billion. Net
fee and commission income rose by €10 million, or 4.0%, reflecting higher daily banking fee income driven by
payment-package fee increases during 2021. Investment
and other income increased by €18 million, mainly due
to higher Treasury-related
revenues.
Operating expenses rose by €110 million, or 12.1%, to €1,022 million in the first half of 2022, mainly due to a €97
million restructuring provision related to the optimisation of the branch
network, and €2 million higher
regulatory costs. Expenses excluding regulatory
costs and the aforementioned provision, increased by €11
million, or 1.6%, reflecting higher staff and marketing costs, partly offset
by lower IT costs.