Morningstar DBRS Confirms ING Bank's LT Issuer Rating at AA (low), Stable Trend

DBRS Ratings GmbH (Morningstar DBRS) confirmed the Long-Term and Short-Term Issuer Ratings of ING Bank N.V. (ING Bank or the Bank) at AA (low) / R-1 (middle), and the Long-Term and Short-Term Issuer Ratings of the holding company, ING Group N.V. (ING or the Group), at A (high) / R-1 (middle). The Group's A (high) Long-Term Issuer Rating is one notch below that of the operating bank, in line with Morningstar DBRS's approach to rating bank holding companies. The trend on all credit ratings remains Stable. The Group's support assessment is SA3, because timely systemic support is not expected. The Bank's Intrinsic Assessment (IA) is AA (low) and the Support Assessment is SA1, implying Morningstar DBRS's expected support from ING Group. See the full list of credit ratings at the end of this press release.

KEY CREDIT RATING CONSIDERATIONS
The confirmation of ING's credit ratings reflects the Group's well-established retail and wholesale banking franchise in the Netherlands and Belgium, along with its growing presence in selected European countries, particularly in Germany, as well as its strong liquidity and funding position. The ratings also take into account the Group's solid earnings capacity, supported by a high degree of business diversification and generally disciplined cost management and contained cost of risk. In Morningstar DBRS's view, solid earnings generation provide ING with flexibility to absorb a potential deterioration in the cost of risk which could materialise in the current environment, marked by geopolitical uncertainty and trade tensions. Morningstar DBRS considers profitability has already peaked and expects pressure on margins going forward against a backdrop of lower interest rates, albeit offset by ING's fee income generation capacity owing to its high degree of diversification, as well as savings rate cuts and volume growth.

The credit ratings also reflect that ING has maintained strong asset quality thanks to its diversified and conservative risk profile and that exposure to Russia has materially reduced. The group has announced the planned sale of its remaining exposure to Russia. The ratings also consider that the capital ratios are expected to be lower from the current levels as the Group continues to return significant levels of capital to shareholders. However, Morningstar DBRS continues to view regulatory capital cushions as sound.

ING Bank's IA of AA (low) has been assigned at the midpoint of the Intrinsic Assessment Range, as Morningstar DBRS views ING Bank's credit fundamentals and performance as commensurate with those of similarly rated peers.

CREDIT RATING DRIVERS
Morningstar DBRS would upgrade the credit ratings with a sustained improvement in profitability, while maintaining a conservative risk profile and sound capital ratios.

Morningstar DBRS would downgrade the credit ratings in the event of material downward pressure on revenues, a material deterioration in asset quality and/or a significant reduction in capital.

CREDIT RATING RATIONALE
Franchise Combined Building Block Assessment: Very Strong/Strong
ING, through its main operating entity ING Bank N.V. (the Bank), is a large and global systemically important bank with total assets of EUR 1,079 billion at end-Q1 2025, serving 40 million customers in more than 36 countries at end-2024. The Group maintains a leading universal banking franchise in the Benelux (Netherlands, Belgium, Luxembourg) together with a growing meaningful market position in several countries primarily located in Europe, including a significant presence in Germany. In addition, the Group has a solid wholesale banking franchise in Asia, the Americas and Central & Eastern Europe. Morningstar DBRS considers that the Group's strong online banking capabilities and customer orientation have helped ING grow and achieve solid profitability even in mature and competitive banking markets.

Earnings Combined Building Block Assessment: Strong/Good
Morningstar DBRS considers ING has historically reported sound profitability metrics underpinned by a loan book well diversified by geography and economic sectors, increasing fee revenues, and disciplined cost management. In 2024, the Bank reported a net profit of EUR 6.4 billion, down 12% year on year (YOY), due to growth in loan loss provisions and operating expenses compared to flat revenues against a backdrop of margin normalisation. Nevertheless, the return on equity (ROE) remained sound at 13% in 2024 compared with 14.8% a year earlier. In Q1 2025, ROE was 12.8%, still above the group's target of 12% for 2025, but confirming that profits did peak in 2023.

Risk Combined Building Block Assessment: Strong/Good
Morningstar DBRS views ING's risk profile as solid, supported by a granular and diversified loan book, including a high proportion of residential mortgages, and conservative risk management. Asset quality metrics remained strong at end-Q1 2025, with the Group reporting a Stage 3 ratio of 1.6%, flat compared to a year ago. The Group's Stage 2 loans were up to 8.3% of the loan book at end-Q1 2025 compared to 7.7% at end-Q1 2024. Going forward, Morningstar DBRS expects some moderate deterioration in asset quality against a backdrop of geopolitical tensions and trade war. The Group has announced the planned sale of its Russian subsidiary, which is pending approval and should negatively impact the profit and loss account for around EUR 0.7 billion post-tax and the CET1 ratio by around 5 bps.

Funding and Liquidity Combined Building Block Assessment: Strong/Good
Morningstar DBRS considers ING has a strong and well-managed funding profile, underpinned by a large retail deposit base reflecting its strong market position in the Netherlands, Belgium and, to lesser extent, in Germany. The Group is mainly funded by customer deposits, which accounted for 74% of the Group's funding at end-Q1 2025. In addition, 85% of household deposits are guaranteed by the Deposit Guarantee Scheme. The Group reported a sound loan-to-deposit (LTD) ratio of 93% at end-March 2025. At end-March 2025, ING's high-quality liquid assets stood at EUR 199 billion. In addition, the 12-month moving average liquidity coverage ratio of 142% and the stable funding ratio were well above the minimum regulatory ratios.

Capitalisation Combined Building Block Assessment: Strong/Good
Morningstar DBRS views ING's capitalisation as sound, supported by good internal capital generation capacity and continued access to capital markets. The Bank's CET1 ratio slightly remained solid at 13.6% at end-March 2025, stable from end-2024 as internal capital generation offset some RWA-driven loan growth. Confirming the trend experienced in recent years of increased shareholder distribution, the Group announced an additional share buyback of EUR 2.0 billion in 2025. This should bring total cash distribution since 2021 to above EUR 28 billion. Pro forma the announced distribution, the CET1 ratio would stand at 13.1% which would remain above the Group's 12.8 - 13.0% outlook for 2025. The total capital ratio stood at 18.4% at end-March 2025, with the AT1 and Tier 2 ratios decreasing following the redemptions of instruments. As a result, the Bank maintained adequate buffers despite increased Supervisory Review and Evaluation Process (SREP) requirements, which now include a CET1 ratio of 10.88% and a total capital ratio of 15.11%. We also note that ING amply meets its Minimum Requirement for own funds and Eligible Liabilities (MREL) and Total Loss Absorbing Capacity (TLAC).

Further details on the Scorecard Indicators and Building Block Assessments can be found at https://dbrs.morningstar.com/research/455138.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS

There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (16 May 2025), https://dbrs.morningstar.com/research/454196.

Notes:
All figures are in euros unless otherwise noted.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (04 June 2024) https://dbrs.morningstar.com/research/433881. In addition Morningstar DBRS uses the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings in its consideration of ESG factors.

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

The sources of information used for these credit ratings include Morningstar Inc. and company documents. Other sources include ING Group 2024 Annual Report, ING Group Q4 2024 and Q1 2025 Presentations, ING Group Q4 2024 and Q1 2025 Press Releases, ING Group Q4 2024 and Q1 2025 Credit Updates, ING Group Q4 2024 and Q1 2025 Historical Data and ING Group 2024 Climate Report. Morningstar DBRS considers the information available to it for the purposes of providing these credit ratings to be of satisfactory quality.

With respect to FCA and ESMA regulations in the United Kingdom and European Union, respectively, these are unsolicited credit ratings. These credit ratings were not initiated at the request of the issuer.

With Rated Entity or Related Third Party Participation: YES
With Access to Internal Documents: NO
With Access to Management: NO

Morningstar DBRS does not audit the information it receives in connection with the credit rating process, and it does not and cannot independently verify that information in every instance.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS's trends and credit ratings are under regular surveillance.

For further information on Morningstar DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://registers.esma.europa.eu/cerep-publication. For further information on Morningstar DBRS historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

The sensitivity analysis of the relevant key credit rating assumptions can be found at: https://dbrs.morningstar.com/research/455136.

These credit ratings are endorsed by DBRS Ratings Limited for use in the United Kingdom.

Lead Analyst: Arnaud Journois, Senior Vice President
Rating Committee Chair: Nicola De Caro, Senior Vice President, Sector Lead
Initial Rating Date: 18 August 2010
Last Rating Date: 29 May 2024

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