For 2024, we are confident that fee growth will improve from the stable level seen in the last two years. And this is because of a couple of factors on which we’ll execute. First of all, in investment products. The trading activity was at a low level in the last two years. In Germany, for example, the total number of standard trades decreased by 35% compared to 2021, despite having 20% more accounts now. And given the continued growth in the number of clients choosing ING for their investment products, we are well positioned to benefit from higher trading activity and generate higher fees. In addition, the banking segments. Next, as indicated in the ECB Euro Area Bank Lending survey, the market is expecting mortgage volumes to recover this year.
And if that happens, we are well positioned to benefit, given our market-leading positions in several geographies and via Interhyp, the largest residential mortgage provider in Germany. Interhyp benefits from higher mortgage volumes. And to illustrate this, the fees we made on mortgages in Germany are almost €60 million lower compared to two years ago, reflecting a decrease in mortgage volumes in Germany, which are more down — which are down more than 30% over the same time period. Thirdly, our strong primary customer base is the foundation of our leading retail franchise. And here, the implementation of strategic pricing actions to better reflect the cost of having an account have already resulted in the structural growth of daily banking fees.
And this is something that we will continue to focus on. And then lastly, loan demand is likely to return in Wholesale Banking — these four levers, we feel very comfortable that fee growth will pick up from the last two years. Then we go over to the outlook on costs in Slide 22. We expect total cost growth of around 3%, excluding potential incidental cost items, driven by a continued delayed effect from the high inflation levels in ’22 and ’23. And this will again mostly be impacting staff expenses. In addition, the implementation of the Danske ruling on VAT in the Netherlands will have an impact of €100 million on the cost while regulatory costs are expected to decrease with a similar amount, primarily driven by a lower contribution to the single resolution fund.
We will also continue to make investments in the business to facilitate both growth and further increase efficiency. For example, investments in marketing will be made to support customer acquisition and commercial growth in selected markets. We will be making investments in the payment infrastructure and — further enhancing differential business and in line with earlier years, we will also be strengthening the core banking operation in several markets to further improve on delivery of a seamless digital experience. A large part of the investments will be offset with structural cost savings. Examples of these cost savings are further branch reductions in several markets and efficiency gains in our KYC processes. ING delivered outstanding financial results in 2023 and Slide 23 shows our achievements and summarizes our perspective on the outlook for 2024.
To recap, 2023 was an exceptional year with strong growth of primary customers, income growing 16% and a low-cost income ratio of 51%, a further strengthening of our CET1 ratio despite announcing €4 billion of share buybacks and a very healthy return on equity of 14.8%. For ’24, we expect total income also to remain strong as we continue to benefit from a normalized interest rate environment, income may however, likely come in somewhat below the level of ’23, driven by an expected normalization of the liability margin, given — recoveries on loan demand and trading activities, we reiterate our 5% to 10% [indiscernible] trading activities. We reiterate our 5% to 10% growth ambition for fees in 2024. And operational efficiency. In 2024, we expect expenses to reflect the elevated inflation levels that we’ve seen in 2023.
We will continue to make selective investments in the business and together with cost discipline and expect to moderate the growth in total expenses. Our CET1 ratio will continue to converge towards our target of around 12.5%, and we have capacity to continue providing an attractive shareholder return. We will update the market with our next quarterly results. We aim for a return on equity of 12%. Going forward, I’m confident that we will continue to deliver robust financial results while successfully executing our strategy. We will take a longer-term view at our Capital Markets Day in June. By then, a more stable rate outlook should help to provide us all with additional — with you in June. And with that, we now move on to Q&A.
Operator: [Operator Instructions]. And first up, we have [indiscernible] Mori from Autonomous.
Unidentified Analyst: Just two questions, if I may, both kind of digging into the outlook statements on Slide 20, if possible. Firstly, you’re indicating that the Eurozone replicating income will increase in 2024. Could I just ask, is that driven by volumes? Because I would have thought the replication yield would actually maybe dip a little bit this year before moving better in ’25. And then secondly, just following on from that. What is driving then the convergence of the liability margin towards 100 bps since if the replication yield is not coming down, I presume the suggestion is that deposit rates will be sticky downwards. So kind of which side is pressuring the margin in ’24?
Steven van Rijswijk: Okay. I’ll get this question to Tanate.
Tanate Phutrakul: I think if you look at our simulation on Page 20, in volume increases. But for the sake of this simulation, we don’t. And in Q4, we also see continued increase in the level of replication income that we have, okay? But a couple of other points to mention, in particular, on Q4 is that we actually increased the deposit for core rate for the Netherlands and Germany, which is two of our biggest books, right? And when you increase the call rate, it priced the whole savings book. So that’s something to take a note of. And I think as for the future, I think it’s not so much that the replicated income will come down. It’s more a reflection of the fact that the ECB curve is expected to reduce next year by 150 to 200 basis points. That’s more the reflection why we have said that liability margin, which is on the high side at the moment, will go to the historical average of 100 basis points.
Operator: Thank you. And our next question now comes from Giulia Miotto from Morgan Stanley.
Giulia Miotto: Two questions from me as well. I mean, I know that you have given the 2024 NII guidance, but I was trying to ask a question about 2025. Essentially, looking forward and assuming an interest rate of 2%, is the direction of [indiscernible] downwards because you think liability margins will go down to 100% or in fact, given that in 2025, you can cut the deposit remuneration, NII can stay stable or even grow. So this is my first question. And then on the second question, in terms of, sorry, actually, let me stick to one. This is my most important question.
Steven van Rijswijk: Tanate?
Tanate Phutrakul: Yes. So I think if you look into 2025, it’s a question of the different levers that would happen. I think, one, if you look at replicated margin — replicated revenue, , given the fact that we have roughly half of our replicated book in the bucket of below one year, okay? But having said that, there are other levels that are at play in our NII line. Number 1 being clearly loan growth, potentially higher spread in terms of lending and deposit growth numbers. So these are also positive impact that would negate to a certain degree. And then the last one, which, of course, we don’t give guidance on is what we do in terms of deposit rates offered to our customers, right? That you would imagine in a lower rate environment, we would start tracking downwards, but that’s something for the future.
Operator: Thank you. And next, we have Tarik El Mejjad from Bank of America.
