ING: Revenue and Expense Pressure Combined with Elevated Impairment Charges Affect FY20 Result
ING Groep N.V. (ING or the Group) reported net profit of EUR 727 million in Q4 2020, resulting in a FY20 net profit of EUR 2,485 million, down 48% on FY19. Results were driven by pressure on the revenue side, combined with higher operating expenses, partly due to one-offs, higher regulatory costs, and the continuous impact from COVID-19 related provisions. Overall, the Group's ROE (using average IFRS-EU shareholders' equity and on a 4-quarter rolling average) was 4.8% in FY20, compared to 9.4% in FY19. Management has re-iterated its ROE ambition of 10-12%. While we expect provisioning needs to decline in 2021 compared to 2020, we also believe that the uncertainty surrounding the economic recovery still represents significant downside risk, especially in terms of revenues.
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