Good morning. This is Laura welcoming you to ING's 3Q 2026 conference call. Before handing this conference call over to Steven van Rijswijk, Chief Executive Officer of ING Groep, let me first say that today's comments may include forward-looking statements, such as statements regarding future developments in our business, expectations for our future financial performance, and any statement not involving a historical fact. Actual results may differ materially from those projected in any forward-looking statement.
A discussion of factors that may cause actual results to differ from those in any forward-looking statement is contained in our public filings, including our most recent annual report on Form 20-F, filed with the United States Securities and Exchange Commission, and our earnings press release, as posted on our website today. Furthermore, nothing in today's comments constitutes an offer to sell or a solicitation of an offer to buy any securities. Good morning, Steven. Over to you.
Hi, good morning, and good morning to you all. Welcome to our results call for the third quarter of 2026. I hope that you are doing well. As usual, I am joined by our CFO, Ida Lerner, and our CRO, Andrea Cesaroni. Since launching our Growing the Difference strategy in 2024, we have made significant progress delivering on our strategic priorities and performing well ahead of our financial targets. Today, I will discuss how the disciplined execution of our strategy is driving profitable growth, supported by structural drivers. After that, Ida will walk you through the quarterly financials, and at the end of the call, we will be happy to take your questions. With that, we now move to slide number two. On slide number two, you see that we continue to see strong customer activity across the franchise alongside clear momentum and profitability.
Importantly, these developments go hand in hand. We are growing our customer base, becoming the primary bank for more customers, and we are deepening those relationships through more products and higher volumes. Increasingly, we do this through a scalable operating model, which drives income growth and diversification. It drives positive operating jaws, and it drives higher profitability. That is the engine to our strategy, enabling us to grow, generate capital, and deliver attractive shareholder returns. In the third quarter, we added 259,000 mobile primary customers, taking our growth over the past 12 months to more than 1.1 million, ahead of our Capital Markets Day target that we set in 2024. Growing primary relationships is particularly valuable as it drives deeper engagement, greater cross-selling, higher balances, and ultimately more income per customer.
This momentum is also reflected in strong loan growth of 6% annualized, supported by continued demand across our markets. Customer deposits also grew at an annualized rate of 6%, underlying the strength of our customer franchise and deposit-gathering capabilities. Fee income increased 9% year on year, supported by customer growth and higher engagement across both Retail Banking and Wholesale Banking. The sustainable volume mobilized, that increased with 19% year to date, 19, as we continue to support clients in their sustainable transitions. Overall strong customer activity translated into income growth of 6.6% over the last 12 months, while cost growth remained contained at around 2%.
Positive operating jaws of more than four percentage points demonstrate the increasing scalability of our business, and as a result, we delivered a 16% return on tangible equity in the third quarter, with our four-quarter rolling ROTE improving by two percentage points year on year. Let's now look more closely at what is driving the increase in our return on tangible equity on page three. On that page, you see that we break down the roughly two percentage points year on year increase in ROTE, and more than 80% of that improvement is supported by a number of strategic drivers. When we launched our Growing the Difference strategy, we identified three key levers to structurally improve profitability, and we've made strong progress on each, with further runway ahead.
First of all, we have grown our fee business and diversified our income, and we will continue adding capabilities to further deepen our customer relationships. Secondly, we have strengthened our operating leverage and improved the operating jaws with further upsides as we increasingly support commercial growth with scalable solutions. Thirdly, we have reallocated capital to improve our overall return profile. We will continue to shift capital from Wholesale Banking towards Retail Banking while unlocking additional RWA through ongoing capital discipline. Alongside these strategic levers, margins remain supportive to our overall profitability and we continue to optimize pricing across our customer relationships while benefiting from the tailwinds through our replicating portfolio. Third quarter performance underscores a clear message. The improvement in profitability is predominantly structural, supported by consistent strategy execution with further runway ahead.
In the next three slides, I will further zoom in on each of these three strategic levers, starting with fee income on slide four. If you look at slide four, there we gave the example of Retail Banking. There you see that how our Retail Banking growth strategy is translating into more customers, into deeper relationships and ultimately higher fee income per customer. We continue to grow our customer base, adding 900,000 customers over the past 12 months, reaching more than 41 million in total. More importantly, mobile primary customers even grew faster by more than 1.1 million. As more customers choose ING as their primary bank, engagement deepens and product adoption increases, as reflected in the growing share of customers with three or more products. That's important because primary customers are significantly more valuable, and I've said it before.
They are seven times more loyal, have four times more digital interactions, and are two times more profitable. We also see these deeper relationships translating into a higher share of wallets. Average funds entrusted per customer, and that's on the right-hand side of the page, have increased, driven by both higher deposits and higher AUM as more customers choose ING for their investments. Higher engagement and product adoption also drive fee income expansion, with average fees per private individual customer up 14%. In short, we have a strong business model. We're growing our customer base, converting more of these customers into primary relationships, and deepening those relationships subsequently. This increases our relevance to our customers, drives higher value per customers, and creates an incredible foundation for future growth.
Now, let me take you to slide five to discuss the second lever that we discussed on page two. On slide five, we demonstrate how we increasingly are enabling scalable growth. ING has a strong track record of digitalization with the vast majority of our key customer journeys now fully straight through and requiring no human intervention. That is critical not only to delivering a superior customer experience, but also to achieving true cost efficiency. Alongside our high level of digitalization, we've built strong foundational capabilities that allow us to scale more efficiently. Our global hubs network brings together a substantial part of our operations workforce and tech employees in a fully integrated and scalable organization that drives productivity and strengthens operational resilience.
These key capabilities, in turn, have allowed us to absorb significant commercial growth and to invest further in further expanding our business without requiring additional resources. If you look year on year, we have reduced our headcount by 1.5%, and we are significantly front-running our productivity targets that we had set for 2027. We see more opportunities ahead. In parallel with making the existing bank more digital and efficient, we are also developing new propositions that enhance customer value and create opportunities for future growth. Increasingly, we're building those propositions globally, enabling us to scale efficiently across markets. In that, our global investment platform, for example, is a good example, already live in the Netherlands, in Belgium, Italy, and Romania, and it brings together ING's investment capabilities on a single platform.
That enables faster product development and more consistent customer experience across markets and greater responsiveness to changing customer needs. Together, these capabilities allow us then to capture increasing benefits of scale, supporting sustainable and profitable growth. Now let's go to slide six. That was the third lever I was talking about. On slide six, we see the combined effect of consistently executing all the components of our Growing the Difference strategy, growing our customer base, deepening relationships, and diversifying income at scale is then driving that positive operating leverage and higher profitability. Then we deploy the capital generated towards profitable growth and selective M&A, and then we return structurally excess capital to shareholders. This increasingly converts profitability into EPS growth, and you see it on the left-hand side of the page with EPS up 17% year- on- year.
Now, furthermore, our capital generation is amplified by disciplined RWA management. On a year-on-year basis, we consumed EUR 10 billion of risk-weighted assets for business growth, but that was, however, more than offset by increased capital efficiency. That increased capital efficiency includes the execution of SRTs, where in the third quarter, we were active across both Wholesale and Retail Banking, realizing EUR 3 billion of relief to our risk-weighted assets. If you look at on a year-to-date basis, we have now freed up 16 basis points of our CET1 ratio through our SRT program. Overall, that is a strong demonstration of increased capital generation and disciplined RWA management at the same time. Let us now discuss slide seven, where I will show how this all results in highly attractive shareholder returns.
On that waterfall on slide seven, we now show how disciplined capital management has allowed us to announce a EUR 1.9 billion additional distribution while simultaneously improving our CET1 ratio to 13.3%. Since our previous distribution in the first quarter, we have generated EUR 3.8 billion of net profit, which is equivalent to 1.1 percentage point of CET1. Of that, 50% has been reserved for our regular dividend distribution policy, and the other 50% was also fully reserved outside of CET1, which over the course of two quarters added up to EUR 1.9 billion that we have announced today for distribution. We were able to do this, first of all, on the back of the continued resilience of our business model and asset quality. Secondly, because of our increased capital efficiency as the incremental capital consumption from business growth was more than offset by improved capital velocity.
As a result, we were able to reserve all profit generated over the past six months for distribution while further strengthening our CET1 ratio by 30 basis points to 13.3%. Our distribution policy remains unchanged. Any capital that we consider to be structurally in excess of 13%, or in other words, capital that is not needed for operational, regulatory or inorganic purposes, will be returned to shareholders. We will provide you with the next update on this with our first quarter results of 2027. Now, let us move to slide nine. That is the slide on the outlook, and I will again talk you through the main components of our outlook for 2026 and 2027, as I did in the last quarter. This year, we are again on track to add 1 million mobile primary customers.
In fee income, we are performing well ahead of plan, and we expect to already reach the EUR 5 billion mark this year, one year ahead of our original plan. On the back of strong momentum, both in commercial NII and in fee income, total income is expected to exceed our original target for 2027 by at least EUR 1 billion. While client activity and volumes were significantly stronger than previously expected, our operating expenses are expected to land around EUR 300 million below our original target for 2027. That clearly reflects our substantially stronger operating leverage than previously anticipated with a projected cost-income ratio in 2027 that is several percentage points lower than what we had guided during our previous Capital Markets Day.
Combined with the progress in capital efficiency, we expect our return on tangible equity to exceed our Capital Markets Day target for 2027 by at least 2 percentage points to above the 16%. It is evident that through the consistent execution of our strategy, we are delivering on a broad range of catalysts that will continue to support rising profitability and EPS in the years to come. We go to slide 10, and there we announce the next strategic step in Wholesale Banking. Let me first take a step back. We have a strong franchise in Wholesale Banking, serving more than 4,000 of the world's largest corporates and financial institutions across 36 countries on the ground.
We play an important role as a gateway to Europe for multinational clients in the Americas and Asia Pacific, while supporting the European economy by financing growth, financing innovation, and the transitions that will shape the coming decades. When we look at what we have done in recent years in creating greater value in Wholesale Banking, we have made good progress against our strategic priorities. We are diversifying income, we are growing deposits, we broadened our distribution capabilities, and we increased capital velocity. That gives us a solid foundation from which to take a next step and further develop our Wholesale Banking franchise. As part of our ambition to be the best European bank, we are taking this next step, a strategic step in Wholesale Banking, to simplify and make it easier for our clients to do business with us.
We will create a more streamlined structure which supports closer relationships with clients to serve them with more impact and create better value. As part of that journey, we are also renaming the unit, so the Wholesale Bank into Corporate and Institutional Banking to better reflect our business focus. Due to these changes, a number of roles will change, and we expect around 400 redundancies globally. We will work, of course, with the relevant stakeholders to ensure that we do this in the best possible way and help impacted colleagues find their next role inside or outside of ING. A provision of around EUR 175 million is expected to be booked in the fourth quarter of 2026, leading to an annual cost reduction of around EUR 75 million from 2028 onwards. We are confident that these changes put us in a strong position to deliver on our ambitions.
With that, we move to slide 11. Today, here we go, we are announcing the date of our next strategy update taking place on the 14th of June next year. Since our previous Capital Markets Day in 2024, we have made significant progress on executing our strategy, delivering on our priorities, and we are ahead of our financial target, as I said, having raised our outlook for return on tangible equity by an additional 2 percentage points compared to the original target for 2027. That increased profitability is supported by these structural levers, where we see further runway also in the years ahead, so growing our fee business, improving operational leverage, and shifting capital allocation.
During our Capital Markets Day in 2027, we will present the next phase of our strategy, our priorities for future growth, and how we will continue to create value for our customers, shareholders, and other stakeholders. Together with that strategic update or strategy update, we will also provide an updated longer-term financial plan, including targets for 2030. Guided by our strategic pillars, step by step, we are building a scalable universal bank with significant further potential to structurally improve profitability. I am confident that the next phase of our strategy will allow us to further build on the strong progress that we have made. With that, I will now hand over to Ida, and she will walk you through our quarterly results in more detail, starting with slide 13. Ida?
Thank you, Steven. Let me take you through the key drivers of our financial performance in the third quarter. On slide 13, we can see how the accelerated growth in commercial NII and our strong performance in fee income fueled a 6% year-on-year increase in total income. Commercial NII was supported by continued volume growth on both sides of the balance sheet by disciplined commercial pricing and by the prolonged hedging tailwind in our replicated customer deposits. Fee income increased 9% year-on-year, benefiting from our growing customer base and from increased cross-selling. All other income was affected by interest rate volatility, resulting in negative results from hedge ineffectiveness. However, this effect is expected to reverse over time. Overall, total income rose 6% year-on-year, driven by high customer activity across the bank. Let us now take a closer look at our volume growth, turning to slide 14.
Here we show the development of our customer balances as we continue recording strong customer activity across the bank. Net core lending increased by EUR 11 billion. Of this, Retail Banking grew its loan book by EUR 8.5 billion. Demand for mortgages remained solid with good demand in the Netherlands, Germany, Australia, Italy, and Spain. Growth in Retail Banking was further supported by increases in business lending and consumer lending across multiple markets. Wholesale Banking delivered EUR 2.5 billion on net core lending growth, reflecting strong client demand. Net core deposit growth was EUR 12.1 billion, underlying the strength of our customer franchise and deposit gathering capabilities. In Retail Banking, we added EUR 2.7 billion in net core deposits with continued customer inflows that have more than offset seasonal outflows related to holiday spending, the conclusion of several promotional campaigns, and net flows into investment products.
Wholesale Banking contributed EUR 9.4 billion, driven by strong growth in our payments and cash management business across multiple markets. Now on to commercial NII on slide 15. Commercial NII grew by EUR 161 million quarter- on- quarter and was 13% higher than last year. Lending NII rose by EUR 28 million quarter- on- quarter, driven by higher lending volumes.
The lending margin decreased slightly, mainly as a result of growth in lower risk density loans at attractive returns. Liability NII increased by EUR 135 million, supported by higher deposit volumes, as well as a 6 basis points improvement in the liability margin. The higher liability margin reflects disciplined pricing, while the longer maturities of our replicating portfolio continues to roll over and recover from historically low interest rates. For the full year, we expect commercial NII to range between EUR 16.8 billion and EUR 17 billion, with a liability margin of around 110 basis points.
Turning to slide 16. Our customer base growth, and they use us for more services, which is reflected in the 9% year-on-year growth in fee income. In Retail Banking, fee income rose 10% year on year, supported by a growing customer base and improved cross-selling. We see strong performance across a wide and expanding range of products and services. We maintained our growth in investment products, cross-selling our solutions to an additional 100,000 customers during the third quarter. Our success in investment products supports capturing a larger share of customers' overall financial assets, as demonstrated by the EUR 20 billion year-on-year net inflow in AUM. In Wholesale Banking, fee income grew 9% year- on- year, demonstrating the progress on further income diversification with strong support, in particular from daily banking and trade finance.
Quarter- on- quarter, fee income remained broadly stable as reduced customer trading activity was offset by a growing customer base and by increased cross-selling. For the full year, we expect to generate EUR 5 billion of fee income, which is EUR 400 million higher year on year and implies we will reach our EUR 5 billion target one year ahead of plan. With that, let's move to slide 17. On this slide, we show the development of all other income.
The heightened interest rate volatility during the third quarter had a negative effect on hedge ineffectiveness. It's worth remembering, however, that the P&L impact from hedge ineffectiveness is not economic in nature. It is accounting driven and reverses over time, as was also seen in the second quarter of 2026. Treasury income was lower sequentially, including the negative effect from higher interest rates on non-remunerated volumes under the minimum reserve requirement.
Income in financial markets remained at an overall solid level, although slightly down compared to the second quarter due to lower income from trading activities and interest rate products. Overall, we expect all other income for the full year to be between EUR 2.5 billion and EUR 2.7 billion. Next, slide 18, moving to expenses. Expenses excluding regulatory cost and incidental items were up 3.6% year-on-year, reflecting ongoing investments into building future revenue streams. Of the EUR 103 million increase year on year, EUR 98 million was in our retail other countries, where we are expanding into new segments to capture a larger share of the local revenue pools. And EUR 36 million was in Wholesale Banking, where we are investing in our transaction banking capabilities to further enhance income diversification as well as other initiatives.
These investments in revenue growth were partially offset by lower cost in our largest markets, the Netherlands, Belgium, and Germany, supported by ongoing efficiency gains. Expenses excluding regulatory cost and incidental items were broadly stable quarter- on- quarter, absorbing the 3.5% CLA impact of salary increases in the Netherlands through lower headcount and lower marketing expenses. On a year-to-date basis, our cost growth is tracking at 3%, in line with our previously communicated full-year outlook.
As we continue to find new opportunities to improve customer servicing and to unlock further efficiencies, we also continue taking decisive actions to execute on these opportunities. This required EUR 63 million of restructuring cost in the third quarter and will result in EUR 40 million of annual cost savings once fully implemented. As Steven already announced, for the fourth quarter, we expect additional restructuring costs, including the EUR 175 million, as announced today in Wholesale Banking.
These restructuring costs will support better long-term cost performance and enable continued positive operating jaws for a prolonged period of time. Moving on to risk costs. Total risk costs were EUR 403 million in the third quarter, included EUR 111 million related to an IFRS model update. Excluding this model update and SRT related charges, risk costs were well below our through cycle average of 20 basis points, reflecting our prudent risk management and the quality and strength of our loan book. Net additions to stage three provision amounted to EUR 239 million. This mainly related to collective provisions in consumer lending, reflecting portfolio growth and model refinement. Stage three individual risk cost remained modest. Outside the model update and SRT related charges, stage one and stage two risk costs were insignificant this quarter. Overall, we remain confident in the strength and quality of our loan book.
Finally, let me take you to slide 20 to discuss our core equity tier one development. Capital generation was strong in the third quarter, supported by a combination of rising profitability, continued capital optimization measures. Overall, we generated around 80 basis points of core equity tier one in the quarter. This allowed us to reserve 100% of our net results outside of the core equity tier one, supporting today's announcement of a EUR 1.9 billion additional distribution, while also further strengthening our core equity tier one to 13.3%. Risk-weighted assets decreased by EUR 4.3 billion in the quarter, driven by increased capital efficiency.
This included EUR 3 billion of relief from SRT transactions in Wholesale Banking as well as in Retail Banking. The EUR 1.9 billion distribution announced today consists of a EUR 1.65 billion share buyback commencing today and an amount of EUR 250 million that will paid out in cash in January. Both distributions will be fully funded from net results reserved outside of core equity tier one and therefore will not affect our core equity tier one ratio. With that, let me hand it back to Steven to wrap up today's presentation.
Thank you, Ida. Before we move to Q&A, let me recap the key takeaways from today's presentation. The consistent execution of our Growing the Difference strategy is driving structurally increasing profitability with further runway ahead. Our customers increasingly choose ING as their primary bank, which supports higher fee income per customer and creates an incredible foundation for future growth. Our commercial growth and strengthening profitability are supported by the increased scalability of our operations, enabling higher customer activity without requiring additional resources.
Disciplined capital management has allowed us to announce a EUR 1.9 billion additional distribution while simultaneously improving our CET1 ratio to 13.3%. Overall, we are delivering on our strategic priorities, and we are well ahead of our financial targets. I would like to invite you to our Capital Markets Day in 2027, where we will present the next phase of our strategy and provide a longer-term financial plan. With that, I would like to open the floor for Q&A. Operator, over to you.
Thank you. Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad. In the interest of time, we kindly ask each analyst to limit yourself to two questions only. Thank you. We will now take our first question from Benoit Pétrarque of Kepler Cheuvreux. Your line is open. Please go ahead.
Yes, good morning. The first one is actually on the CMD type of preview. I think you have demonstrated that you are able to grow much faster than peers. Your growth delivery has been very strong. Thinking about this new phase of the strategy, how do you see cost growth going into the 2030 time horizon? I think you are talking a lot about scalable growth. Obviously technology is important and also you have been putting through restructuring. So how do you see the cost going forward and are you going to be able to maintain strict cost control in the new plan? That is question number one.
Number two is on liability margin, so around 110 basis points for the full year. That implies 115 basis points for the fourth quarter, so another strong sequential improvement quarter-on-quarter. I know you cannot guide on pass-through rates, and the competition, but how do you see the competitive pressure on deposit rates? Are you confident that this is under control at this point of time in your main markets? Just wanted to get your view on the competitive pressure on that side. Thank you.
All right, Benoit, thanks very much. Ida Lerner will answer the question on liability margin, but let me start with the 2030 targets that we will not present today, but we will present those during the Capital Markets Day in mid-June 2027. That presentation will continue to be on how do we grow and diversify, how do we do that in a scalable way, and how do we further and continue to move our capital. Those elements, those structural drivers that I also talked about today, those structural drivers will also come back in the presentation. Clearly that comes with cost control, but if you look, for example, at the first nine months and you look at the total cost of the Netherlands, Belgium and Germany, our big three franchises, that stayed flat or even went down a little bit in aggregate.
Then you basically see the cost growth in other retail markets, and that is because we are putting new businesses in place there. Business banking, private banking, the investment platform, deeper payment capabilities, insurance distribution capabilities. We use the money of the strong, bigger franchises and the cash flow that they throw off to grow there. That's one. Two, I also talked in the presentation that we are focusing much more on scalable propositions. We have been able to develop already operational leverage through our foundations, the digitalizations and the hubs. We also are increasingly, and the investment platform is a good example of that, able to launch a product, produce only once, and then consume by all, and that's increasingly something that we are discovering and also that will be a topic for the Capital Markets Day 2027.
Yes, and thank you. On the liability margin, I think it's important to look at the overall development that we've seen in the liability margin. As you said, for the first nine months, we reached 108 basis points, and we're now also saying that we expect to land at around 110 basis points for the full year. Looking ahead, we will continue to benefit from the structure of our replication portfolio with both the short and the long-term part being repriced upwards. You also need to keep in mind that you can see the volatility in the curve of the interest rate. But there, we are confident that we also are continuing to deliver.
Looking at the competitiveness in the market, we see that we continue to gain a good portion of deposit growth also in a seasonally slow quarter, which the third quarter is in the Retail Banking side. Competition continues to be strong, but if you look at the German market, for instance, deposits in Germany and the growth there was higher than what it was the same period last year, which also shows that we have a very competitive and interesting offering that also goes beyond price points and shows the attractiveness of ING overall. Competition remains strong and we expect it to continue to be strong, but we're also confident in our ability to continue generating profitable deposits in the time to come.
Great. Thank you very much for that.
Thank you. We will now take our next question from Namita Samtani of Barclays. Your line is open. Please go ahead.
Morning and thank you for taking my questions. My first question, the Wholesale Banking deposit inflow this quarter is extremely encouraging. I just wondered if it is part of some of the initiatives you have been taking that are starting to work, or is this just one-off in nature? I also see them growing in the rest of the world, so I was just wondering why there. My second question, the lending margin trickled down by one basis point this quarter. I was just wondering if 123 basis points is what we should expect going forward. Thank you.
I will give the lending margin question to Ida, and I will answer on deposits. Yes, it is part of a broader strategy in Wholesale Banking whereby we have also said that we want to increase our TS and financial markets capabilities. That also includes deposit gathering Wholesale Banking, which was not so much a focus area in the past, but increasingly has become one. This is an example of that. You, by the way, also saw that the previous quarter, so not every quarter is the same. Of course, some quarters seasonally will get more inflow than other quarters. But this is an example of an increased focus by our Wholesale Banking colleagues on generating deposits.
You are right. The lending margin moved to 123 basis points in the quarter, and this mainly reflects a mix shift from lower risk density loans at attractive returns. We continue to steer for profitable growth on the basis of new production return on equity. We also continue to see strong growth in mortgages compared with Wholesale Banking lending, resulting in stronger growth in high return on equity assets, but with lower margins and lower risk density as well. Within Wholesale Banking, we also booked more lending to investment-grade clients, which typically comes with a lower margin. For the remainder of the year, we expect lending margin to remain broadly stable at 123 basis points.
That is helpful. Thanks very much.
Thank you. We will now take our next question from Giulia Miotto of Morgan Stanley. Your line is open. Please go ahead.
Hi. Good morning. Thank you for taking my questions. My first question is on restructuring costs. The EUR 175 million coming Q4 is quite a surprise. Looking forward, we got used to having EUR 200 million roughly of restructuring costs per year over the past few years. This year will be higher, will be around EUR 300 million. How should we think about the restructuring costs going forward? Do you still see many actions to take, or are you approaching, basically, is it a front-loading of opportunities that you see next year? So next year probably it should be lower. My second question is on risk-weighted assets and SRT benefits. Clearly, you had some SRTs in Q3.
Could you please update us on how you are thinking about SRT efficiencies over the next few years? Could you increase those given that you are starting from a low starting point? Or actually, given what we have seen at other banks, like Nordea in terms of RWA low density in the corporates, probably you don't have as much space for further capital optimization. Thank you.
Thank you very much, Giulia. I take the question on restructuring costs, and Ida Lerner will talk about RWA and SRT. First of all, when you talk about the Wholesale Banking, that change will be executed in coming quarters. It already comes with efficiency gains in 2027, although yet limited. It does support a better cost trajectory in 2028 and beyond, supporting a further increase of the Wholesale Banking ROE in the years to come. It's part of a series of actions that we have been taking. It will be effectuated as of the 1st of March. Therefore, it greatly trickles through in our results in 2027, but only fuller in 2028. If you look at the total outlook for 2027, we keep it as it currently is.
We always will look for further opportunities to further improve performance as we are doing in Retail Banking or in ops or in technology or in different business lines, and the same we will do in Wholesale Banking. If you look at the restructuring provisions for 2025, for example, they were at around EUR 300 million, and they expect to generate EUR 170 million. Excluding Wholesale Banking for now, we've taken EUR 130 million in provisions year to date. That would lead to annualized savings of about EUR 100 million.
We will continue to look for opportunities. Businesses are changing. We become sometimes more efficient. We become more scalable. We use our hubs better. We become more digital. There will be more instances, as we've seen over the past years, to improve our performance. For now, we will keep the outlook as it is. Every quarter, if there's something to report on where we can improve the efficiency and effectiveness of our operations, we will do so.
On SRTs, this quarter we closed two transactions, a project finance SRT in Wholesale Banking, but also, which I am proud to say that we successfully executed on our first SRT in Retail Banking, in the Dutch business banking exposure. The transactions that we did this quarter contribute 12 basis points to the core equity tier one, bringing the capital relief for 2026 to 16 basis points. If you also add what we did in 2025, we have now a total reliefs of 28 basis points. If you compare that to some of our peers, we are still significantly lower than that. I would also say that that is also why we continue to see opportunities to do more SRTs.
I would then also link that back to our guidance, saying that we are targeting or aiming to do approximately between 15- 20 basis points of core equity tier one benefits for 2026. Going forward, we continue to focus on where it would make sense from a profitability perspective and capital velocity perspective and optimizing our capital position. We will come back in line with our full year numbers with an outlook for 2027.
Thank you.
Thank you. We will now take our next question from Benjamin Goy of Deutsche Bank. The line is open. Please go ahead.
Yes. Good morning. One on loan demand and the other on fee income. First on loan demand, you mentioned there is still strong growth in mortgages. Just wondering how you expect to change, or whether it is not to change with higher rates and whether you are normalized more towards the 5% volume growth you are targeting as a result. Secondly, thank you for slide four. Just interested in terms of the AUM, about EUR 8,000 per customer. Do you roughly know how much of your primary customers still have outside and you see as a wallet share gain opportunity? Thank you.
Yes. Thank you. On the loan demand, look, we have had a 6% annualized growth in lending so to date and a 6% annualized growth in deposits. So that is good. It is also a bit higher than we have seen in the longer-term trajectory, where it was more the 4%- 5%. It is a bit early to say. Clearly, higher interest rates and more uncertainty typically has a dampening effect on loan growth. We have not seen that yet, so we still see, especially on the mortgage side, a significant increase in many markets. But we do also see the first signs, and we would expect the signs coming in of new house mortgages or mortgages for new houses to decline a little bit. So that could well be the case, but it is a bit too early to call.
With regards to fee income, we currently have 5.4 million customers that use our capabilities to invest. That is about 14% of our total. A number of them are primary, a number are not. We do not disclose that figure per se, but clearly if we can do more with our customers and make them more primary, this of course also helps, and that gives that flywheel that I talked about in the presentation. This quarter, we had an additional 107,000 people in addition who trade with us. So every quarter, we see anywhere between 100 and 125, 150,000 people more that use our trading capabilities or our app capabilities, and that is good. But you also see from the number of investors we have compared to our total number of customers, that we still have an enormous runway to go, and that is what we are addressing.
Thank you.
Thank you. We will now take our next question from Shrey Srivastava of Citi. The line is open. Please go ahead.
Hi, and thank you very much for taking my questions. Two from me, please. The first is on your mobile primary disclosure and the customers with three plus products. Your online numbers, you have about 40% of customers who are mobile primary, therefore have about two extra products. And you now have provided this disclosure that about 20% have three plus . My question is on the capacity to expand this going forward. It would be really helpful if, A, you could provide an idea of where you are in this versus, say, incumbent peers across your core markets. And B, when you say that mobile primary customers must have a transaction account with yourselves, how many of these accounts do your customers have on average with other players, too, just to make sure that these are guys getting their salary paid in?
My second question is on the restructuring cost again. 175 million cost for 75 million run rate cost saves seems like a bit of a lower payoff, versus some of the other types of restructuring costs we have seen from other banks. Could you please just expand into what exactly, which areas you are exactly cutting, and why the payoff is lower versus the cost? Thank you.
All right. On the mobile primary customers, we call a client a mobile primary customer when they have a current account with us whereby a certain amount of their salary sits with us. It could be that they also may use a few other banks, and then on top of it, they need to do one other product with us. It means that we are one of their main banks. It could be, depending on the market, they also have a few other main banks. In some markets, that is cultural, clients use more banks for their daily payments and savings. And in other countries, people typically use only one. But you can safely assume that it means that we are one of the main banks for these customers. And like you have seen, because you said, is there further runway?
Over the past years, we have said that we want to grow those mobile primary customers with one million per annum, and every year we are delivering on that promise. Since we have now 40% of our customers that is a primary customer, it also means that 60% are not. That means that there is quite a bit of runway there as well. On the restructuring costs, 175 million, that was the restructuring. The savings that come in are there as of 2028, at least in full. They trickle in gradually over 2027. But expected provision is a logical outcome of where we are active and the type of roles that we are changing, and therefore we cannot simply compare it with operations or other banks that are different in scope. This is a reflection of the type of people that this affects in the bank.
Thank you very much for that. Just a quick follow-up on your first one. If you were to look by country, where would you see largest scope to expand your mobile primary customer base and product per customer? Thank you.
Well, actually it is the case in most countries, because you would say as a total share of primary customers, the Netherlands has the highest. So there where we are more incumbent in nature, we already have more primary customers. Thereby in the countries which we would call other retail, where we are not an incumbent bank, but that also includes Germany, by the way, there is more rooms because there we came in as a challenger bank or as a neo bank, as these days people would say.
So there is naturally more upside, but we also see that in the countries where we have been a long time, so both Netherlands and Belgium, we also continue to grow our primary customer. So that is good. There is upsides on all, but the most upside sits in the countries where we are now gradually developing more services where we did not have these services in the past. So there is also more opportunity for us to make them our primary mobile customer.
Understood. Thank you very much. Really helpful.
Thank you. We will now take our next question from Delphine Lee of JPMorgan. Your line is open. Please go ahead.
Yes, good morning. Thank you for taking my questions. My first one is, sorry, just to go back to commercial NII. Just wondering, given liability margin is progressing quite well and you have revised the guidance to 110 basis points for the full year, and the curve is also a little bit higher compared to June. I am just wondering why your guidance for commercial NII remains the same. Anything we should read on deposit costs? Also, if you look at 2027 and 2028 from your slide 28, the uplift that we are going to get from the replicating income are quite significant, especially for 2027. Just trying to think about what is your expectation on deposit costs and how much pass-through should we have on those tailwinds. My second question is on capital.
Going back a little bit to this debate around this density and, is there anything in terms of looking at thinking also about your plan and the different movements in your capital. Is there anything that you would highlight in terms of regulatory changes, model updates, or reviews from ECB that we should have in mind as well in that context? Obviously, you are doing well on the SRTs, but I am just wondering if there is anything that we need to watch out for. Thank you very much.
All right, Delphine. Thank you. I will give the first question on commercial NII to Ida, and then the second question on capital, to Andrea.
Yes, and thank you for the question. The NII range is still valid, however, on the basis of what we know today, we are more looking at the upper end of that range of EUR 16.8 billion-EUR 17 billion for 2026. Benefits from continued growth in customer balances and liability margin will of course also further support upside potential, and that is also linked to the comment you made on the slide in the appendix. There you also need to be mindful that we have seen quite a significant volatility in the interest rate outlook over the past months and quarters. Just comparing the outlook today compared to what we saw end of September, you already there see that it is coming down quite a bit from the heightened levels in September.
We are not commenting on our expectational pass-through, but what we also mentioned initially is that it continues to be a strong competition in the market and in our key markets, and we also expect to continue to see that competition from different areas, but also from different competitors. We still believe that we have a very good offering and will continue to also price ourselves in a good and long-term perspective, which will support profitability, but also means that the liability margin will continue to grow, but also maintain the NII overall outlook.
I will take the second one. Based on what we currently see, we do not expect any material adverse capital or risk-weighted asset impact. We have already been through an extensive multi-year review of our regulatory models, with the objective of ensuring that our target model landscape fully meets the relevant regulatory expectations. The program was substantially completed at the end of last year. Of course, individual model updates can generate both positive and negative RWA movements over the quarters. The only material item which we currently see is a EUR 4 billion RWA release from the Dutch mortgage floor in the fourth quarter this year, equivalent to approximately 15 basis points of CET1 ratio.
Great. Thank you very much.
Thank you. We will now take our next question from Tarik El Mejjad of Bank of America. Your line is open. Please go ahead.
Hi, good morning, and thanks for taking my questions. First one is on the Wholesale Banking. Thanks for sharing some first primary key highlights on what you will be implementing, but can you maybe go through a bit more detail beyond the simplification and the cost-cutting aspect of it? If there is any changes to the product mix, geographies, focus on specific areas of the business. Is there any hint in the name change we are looking more towards a bit more bigger financial markets within a world where CMU or Capital Markets Union will take more space? I am sure it will be discussed lengthily in the CMD, but can you give us already a bit of the big lines on how you see this business?
You gave us the cost, but in terms of if you combine the cost savings and the capital relief to start with for the last few years already, what is the kind of RWA uptick we should be looking at for this division? The second question is on costs and maybe in the same spirit as my first question on the next few years on the outlook. Should we expect as well some ramp-up on costs in terms of investments in AI tech within the next plan? Because I suspect AI will be taking a lion's share of your communication as well in the next CMD. Thank you.
Thank you very much, Tarik. On the Wholesale Bank, maybe a few things to say. First of all, there is an increased focus on value over volume. You have seen that because, for example, we have also been changing the capital use in Wholesale Banking consistently over the past couple of years, and we continue to do so. Two, we are focused on diversifying the product mix. Also given our ZIP code and where we came from, the lion's share of our revenues has been in lending, and we have been investing to also diversify and grow our transaction services and our financial markets business. The deposits example of today is an example of that. But consistently you have seen our fees also in a Wholesale Bank increasing. So we are diversifying our business.
Three, with the announcement of today, we are focusing more on client and location over segments. Therefore, we put our relationship managers more in charge of holistically dealing with a client, which means increasingly becoming even more client-focused than specific product-focused. I think those will, amongst others, be themes that we will also be talking about during the Capital Markets Day 2027. I have previously said, look, and we have said during the previous Capital Markets Day that the target for 2027 was 12%. That is what we have said then. In 2027, in the Capital Markets Day, we will talk about ambition going forward. I have previously also said during one of the conferences that I thought that where we currently are, and even with the 12% targets, that is not enough, and we will continue on improving the performance.
On the cost outlook, we have seen improving cost-income ratio. We are growing the bank, but we are doing that in a scalable way. I have given the example to Benoit earlier in this call about the ability to grow, whereby we were able to keep, in the first 9 months, the cost of Netherlands, Belgium, Germany flat in aggregate, and then moving that with investments to the other Retail countries who require more capabilities to become broad-based, universal banking franchises. The same we do, of course, with investments in TS, transaction services, and financial markets, and Wholesale Banking to change the dial from lending to other areas as well. That will continue. Digitalization, AI, GenAI is, of course, part of that. We are a very digital bank.
By the way, we have been using AI for many years, for over a decade, and that has been effectuated in call centers and in straight-through processing. The lion's share of our processes is straight through without human intervention. GenAI also plays a role in that, not only on the cost side, also on the coding side. So there are three areas that we are focusing on. First of all, how can we create a better customer experience? Because if you create a better customer experience, you can also have more interaction, and you sell more. So, give an example. We recently, as I believe the first bank in Europe, started with agentic mortgages in the Netherlands. As a result of that, the time to yes, so the time to approval for more complicated mortgages decreased from seven days to five days.
If you have a very simple mortgage like we have, the digital mortgage in countries like Germany, we can give approvals in approximately 30 minutes on average. But more complicated mortgages need intervention. That is a non-happy flow. A non-happy flow we are currently attacking with the agentic mortgages in the Netherlands, but we are also going to launch this in other markets. The second area is coding. How can we code quicker and bring things to market quicker at a more efficient pace? The third element is productivity that we have seen in our operations coming through. That is why you also see on one of the pages with our scalable growth in the presentation, that is page five, that we see that we can grow at relatively lower marginal cost. That is what we continue to do.
Yes, AI is part of it, but it is not all of it.
Thank you, Steven.
Thank you. We will now take our next question from Chris Hallam of Goldman Sachs. Your line is open. Please go ahead.
Good morning, everyone. Just first I wanted to dig into this disconnect, I guess, between the direction of travels earnings for this year versus the out years. Because if I take the headline P&L miss today and then your announced Q4 provision, I can see how earnings estimates maybe for this year need to move down by around 4% or so. But the course trends are strong. If I take all those non-core headwinds in turn, they seem quite positive for the out years. So the other income headwind hitting Q3, you're going to earn that back over time. On the provision miss, that's mainly a one-off overlay that should reduce cyclicality to a degree. On the higher incidentals, that's a EUR 63 million restructuring that you're paying for EUR 40 million of earnings. Then you have the Q4 EUR 175 million provision.
My guess is that's mainly severance, so earnings positive in 2028. I think you said EUR 75 million earnings tailwind from 2028 earlier on the call. So have I got that all right? Because on the incidentals and the Wholesale Banking provision, you're basically buying in earnings at 2x PE, which is a bit of a headwind for this year, but obviously a fairly logical thing to do. Then second, the fee momentum is strong this year, but you've also, I think, talked previously about having slightly more selective approach to deposit campaigns all else equal. I just wondered whether there's a risk that that leads to fewer new customer relationships, less cross-sell, and maybe ultimately slower fee growth, i.e. does protecting NII today potentially risk fees tomorrow? Thank you.
You said a lot in the first question, but I think generally you got it right. So in terms of that, we create a bit of short-term pain for long-term benefit. By the way, that is both on the provision that we've taken in the previous quarter and this quarter and the benefit that that brings, and the same goes for Wholesale Banking. Also on the risk cost, this was an IFRS model update, so it has nothing to do with our asset quality, and therefore, it can be considered as a one-off. So that has nothing to do with the assets or the models or the ECB or what have you. So we've also not changed the outlook for 2026. So the returns that we are saying that we would make in 2026, we repeat it today.
But for sure, all the action that we're taking will give us further tailwinds for the years to come. As always, we give an outlook for the next year with the fourth quarter activities, with the fourth quarter figures, and we will give a further long-term outlook in 2030. I'm not sure I got that second question right, but the question maybe was, if you then take these restructurings and have less people, will it also bite you commercially because you can do that? No, that is absolutely not the case. In Wholesale Banking, we're taking this measure to just simplify and make it easier for our people to deal with customers and be less concerned with all kinds of internal processes.
Other restructuring costs typically have to do with merging, for example, legal entities and therefore merging back offices into one because we do not need that complication anymore. Sometimes it has to do with better digital journeys and digitalization. Sometimes it has to do with the less need for branches. No, it is all focused on how can we make the business with our clients easier and serve them better. As you have seen in the many years that we have been doing that, we have been able to have more activity with customers rather than less, and that is what we will continue to do.
Okay. Thank you.
Thank you. Once again, as a reminder, if you would like to ask a question, please press star one on your telephone keypad. We will now move on to our next question from Juan Pablo López Cobo of Santander. Your line is open. Please go ahead.
Yes. Thank you. Good morning, all. I got two questions. First one is regarding the other retail business. We see an increasing cost of paying expenses. You already explained that you are investing in different regions, in different business. It would be interesting if you could share any KPI. What are you asking to some of these investments? If you are investing, I do not know, EUR 100 million in SME lending in Spain, what is the return that you could expect? Related to this, we saw other banks trying to develop an SME franchise, and it has been challenging. Why do you think this time could be different for you?
Second question, a bit more detail regarding your sovereign and sub-sovereign portfolio. This is around EUR 100 billion portfolio. We see the accounting mix, but it would be interesting to get a bit more color on how you manage this portfolio, duration, if you are comfortable with the country mix. Maybe if you could share some unrealized loss or the amortized cost, that could be also useful. Thank you.
Yeah, thank you very much. On the retail business, clearly we have business cases for all the individual investments that are being made in private banking and in putting countries on the investment platform and in business banking. That is leading to higher returns, as you can also see, by the way, on the ROTE, whereby we now have 16% and have an outlook that is two percentage points higher than they initially anticipated in 2024. Growing the difference wasn't called growing the difference for nothing. It was about more impact and more relevance in the markets in which we're active. Talking about Spain, for example, we have a very good private individual franchise and a good Wholesale Banking franchise. That is now going to be called Corporate and Institutional Banking Franchise, CIB. But we did not have full activities in PI.
We have had no activities in business banking, whether it was self-employed, SME, or business banking. Therefore, there was no private banking. Therefore, you see that banks where we perform very well, look at the Netherlands, for example, are full-fledged universal banks. That's also the direction we're traveling into in other markets as well, step by step. The reason why it would be successful now, I think there's much more focus on specific services that we offer to specific groups. That's why I also said previously, in the past where we came from was much more, but I'm polarizing the point, a one-size-fits-all bank. We offer everything in the same way, to the same type of clients in different markets. But we're becoming with offering more services. We're becoming more bespoke. Who do we offer trading capabilities in terms of investments? Where do we give advice?
How do we deal with affluent? How do we deal with mass affluent? How do we deal with expats? How do we deal with SMEs? So becoming more relevant and impactful also means that you also not only provide a superior customer experience, but you also provide superior customer value, making sure you provide the right service or the right product at the right moment to the right type of clients. That's what we're now doing more and more, and you see the benefits of that already. Let me take an example. We have this investment platform that we launched, getting people to invest on the same platform in different markets. So Netherlands, Belgium, Romania, for example, Poland.
Therefore, what you already see is that also in Romania, which we launched only end of September, there is a quick pickup of the people who want to invest ING, where ING in Romania was not even known for investments in the past. Those things we are also going to do in Spain. On the sovereign bond portfolio, Ida.
Yes. We have a diversified and high-quality investment portfolio of EUR 125 billion. The portfolio is, as I said, highly diversified, and has limited sensitivity to market developments as we economically hedge the interest rate risk, and are therefore only exposed to credit spreads. Historically, we have seen very limited impact on our capital, and also this quarter, there was no material impact on core equity tier one. We are not displaying or announcing the duration or the country mix per se, but I can just give you assurance that it is diversified and is also a high-quality investment portfolio across the board.
Okay. Thank you. Thank you very much. Very useful.
Thank you. We will now take our next question from Hari Sivakumaran of KBW. Your line is open. Please go ahead.
Hi there. I just want to ask a capital allocation specifically between the group level and between the divisions. I mean-
Wholesale to Retail Banking. In Retail Banking, we are expanding also different activities in different markets, as we just talked about in the previous question. In Wholesale Banking, we need to make sure we continue to invest and develop our TS, transaction service and financial markets franchise, and therefore also make sure that we are more curtailed on capital, and that is what you see. So that is how we look at capital, and it is also broad how we look at liquidity, that we do that in a balanced way on a global basis, not country by country or business line by business line. Then on deposit costs.
Yes. Thank you for the question. We are not giving explicit numbers in terms of how much was due to campaigns overall. But as we have said before, deposit competition remained broadly rational in most markets, and our core savings rates hardly changed so far. When looking at this in the context of this quarter, you will also see that it fluctuates depending on which campaigns we do, in which markets we are more active and where we are also seeing the growth coming from.
This quarter, you saw an increase in term deposits, which was driven by successful campaigns to attract new volumes, as well as to optimize retention and value of the overall deposit mix, which is also seen in our numbers this quarter. But again, I think it is also important to look at the seasonality and the difference that we are seeing quarter-over-quarter, but continues to see a good growth overall.
Thank you.
Thank you. There are no further questions in queue. I will now hand it back to Steven van Rijswijk for closing remarks.
Yeah. Thank you very much. Thank you very much for your time. Thank you very much for your good questions. We are looking forward, of course, to speak to you again at the fourth quarter results. Especially, we are looking forward to seeing you on our Capital Markets Day, which is on June 14th in London. Stay tuned, and have a great day.
Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.