Company: INGVF
Filing Date: 2025-07-31
Form Type: 6-K
Source: 0001628280-25-036812
Chunk: 27

Company: ING GROEP NV
Filing Date: 2025-07-31
Form: 6-K
Chunk 27
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 governance. The scenarios applied are reviewed and challenged by ING experts. Alternative scenarios and probability weights (*) Two alternative scenarios are taken into account: an upside and a downside scenario. The alternative scenarios have statistical characteristics as they are based on the forecast deviations of the leading third-party service provider. To understand the baseline level of uncertainty around any forecast, the leading third-party service provider keeps track of all its deviations (so-called forecast errors) of the past 20 years. The distribution of forecast errors for GDP, unemployment, house prices and share prices is applied to the baseline forecast creating a broad range of alternative outcomes. In addition, to understand the balance of risks facing the economy in an unbiased way, the leading third-party service provider runs a survey with respondents from around the world and across a broad range of industries. In this survey, respondents put forward their views of key risks. Following the survey results, the distribution of forecast errors (that is being used for determining the scenarios) may be skewed. For the downside scenario, ING has chosen the 90th percentile of that distribution because this corresponds with the way risk management earnings-at-risk is defined within the Group. The upside scenario is represented by the 10th percentile of the distribution. The applicable percentiles of the distribution imply a 20 percent probability for each alternative scenario. Consequently, the baseline scenario has a 60 percent probability weighting. Please note that, given their technical nature, the downside and upside scenarios are not based on an explicit specific narrative. Macroeconomic scenarios applied (*) The macroeconomic scenarios applied in the calculation of loan loss provisions are based on the consensus forecasts. Baseline assumptions (*) The general picture that the consensus conveys is that global economic growth is expected to slow sharply in 2025 on the back of global economic uncertainty. This is expected to outweigh fiscal expansion in many advanced markets. Inflation is expected to remain near target for most advanced economies, although it is expected to remain above target for the United States on the back of new economic policies. With interest rates moderating, although some uncertainty about this path for the US exists at this point, monetary conditions should turn more favourable for growth. For the housing market, continued price growth is expected for almost all main markets. The June 2025 consensus expects global output (as measured by the weighted average GDP growth rate of ING’s 25 main markets) to marginally increase from 2.0percent in 2025 to 2.1percent in 2026. For 2027 economic growth is expected