Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Q2 2020 Earnings Presentation
33 slides from Ing Groep's earnings presentation, Aug 6, 2020
Slide 1: Second quarter 2020 results
Second quarter 2020 results ING posts 2Q2020 net result of €299 mln Steven van Rijswijk, CEO of ING 6 August 2020
Slide 2: Key points
Key points ▪ In line with our purpose, we continue to take actions to support our customers, employees and society in coping with the effects of the Covid-19 pandemic. At the same time, countering financial and economic crime remains a priority ▪ The current environment underscores the strength of o
Slide 3: Supporting employees, customers and society through the Covid-19 pandemic
We continue to support our employees, our customers and society to deal with the effects of the Covid-19 pandemic Our employees Our private customers Our business customers Our society ▪ Around 75% of our ▪ A large part of our ▪ Continued regular ▪ Matching employee employees are working branch netw
Slide 4: Covid-19 effects on net core lending growth, fees and IFRS 9 provisioning
The Covid-19 effects on net core lending growth, composition of fees and IFRS 9 loan loss provisioning Net core lending growth (in € bln) Fee & commission income (in € mln) Loan loss provisions (in € mln) 12.3 783 1,336 748 735 723 2.9 711 255 210 7.3 211 222 198 184 299 2.0 11.4 5.1 231 661 3.6 2.6
Slide 5: Continued primary customers growth and stable topline results
Continued primary customers growth and stable topline results underscore the strength of our business model Primary customer* base (in mln) Income (in € mln) 29.2% 30.5% 32.8% 34.3% 34.6% 4,665 4,626 4,671 4,436 4,511 16.5 1,274 1,191 961 1,112 1,332 13.3 13.5 12.5 11.4 10.4 3,391 3,435 3,478 3,399
Slide 6: Rapid adoption of our digital, mobile first strategy
Rapid adoption of our digital, mobile first strategy Channel mix among active customers who contact us % of mobile-only active customers* 11% 9% 7% 5% 3% CAGR +38%** 41% 58% 56% 37% 72% 67% 77% 26% 19% 12% 37% 41% 19% 26% 12% 2016 2017 2018 2019 2Q2020 2016 2017 2018 2019 2Q2020 Mobile only Mix Assi
Slide 7: We continue to strengthen our digital customer experience
We continue to strengthen our digital customer experience Continued focus to improve our digital customer experience Supporting our customers doing their business ▪ In Belgium, we are migrating our customers to our new ▪ In the Netherlands and Belgium, we have started migrating digital channels, enh
Slide 8: 2Q2020 results
2Q2020 results 8
Slide 9: Resilient pre-provision result despite pressure on liability income
Resilient pre-provision result despite pressure on liability income Pre-provision result excl. volatile items* and regulatory costs Income (in € mln) (in € mln) 4,665 4,626 4,439 4,511 4,671 113 12 2,198 2,281 2,214 2,329 2,143 -147 -125 -128 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 2Q2019 3Q2019 4Q2019 1
Slide 10: NII remains stable; 4-quarter rolling NIM at 152 bps
NII remains stable; 4-quarter rolling NIM at 152 bps Net interest income excl. Financial Markets (FM) (in € mln) Net Interest Margin (in bps) 3,435 3,478 3,391 3,399 157 3,339 154 154 154 152 152 154 154 151 144 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 NIM NIM (4-quarter
Slide 11: 2Q2020 net core lending reflecting lower demand
2Q2020 net core lending reflecting lower demand Customer lending ING Group 2Q2020 (in € bln) Core lending businesses: €-7.0 bln 631.6 -0.9 -1.4 0.9 -0.0 -3.6 -1.2 -0.7 -0.3 -3.5 2.0 622.7 31-3-2020 Retail NL Retail Retail Retail Other WB Lending WB Daily WB Other* Lease run- Treasury FX / Other** 30
Slide 12: Fee income up YoY despite lower deal flow in WB
Fee income up YoY despite lower deal flow in WB and reduced payment fees due to lockdowns and less travel Net fee and commission income* (in € mln) ▪ Fees increased by €12 mln compared to 2Q2019. This was due to Retail Banking, as higher fees on investment products were only partially offset by lowe
Slide 13: Strong quarter in FM driven by client business
Strong quarter in FM driven by client business and positive valuation adjustments Income Financial Markets (in € mln) ▪ Excluding valuation adjustments, FM income was €64 mln 319 higher YoY, mainly due to a strong quarter in Rates and Global Capital Markets 255 257 246 221 ▪ QoQ income was €73 mln h
Slide 14: Operating expenses under control
Operating expenses under control Expenses (in € mln) Cost/income ratio** 137 62.8% 303 526 134 59.0% 60.3% 59.8% 97 98 106 151 310 127 138 55.7% 53.7% 52.7% 58.9% 56.6% 57.0% 2,256 2,207 2,221 2,169 2,212 52.5% 53.0% 50.3% 51.0% 51.3% 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 2Q2019 3Q2019 4Q2019 1Q2020 2Q
Slide 15: IFRS 9 provisioning affected by the Covid-19 pandemic
IFRS 9 provisioning affected by the Covid-19 pandemic and related macro-economic indicators Stage 1 provisioning (in € mln) Stage 2 provisioning (in € mln) Stage 3 provisioning (in € mln) 255 299 771 261 61 80 98 309 25 398 422 26 195 219 285 8 -4 -11 10 163 245 201 18 -12 -25 52 200 -2 -2 -19 -27 1
Slide 16: Risk costs impacted by collective provisioning related to Covid-19
Risk costs impacted by collective provisioning related to Covid-19 pandemic Risk costs per business line (in € mln) Stage 2 ratio Stage 3 ratio 1,336 8.5% 1.8% 1.8% 6.6% 6.3% 7.0% 1.6% 1.6% 1.6% 6.2% 882 5.7% 661 1.6% 1.6% 5.6% 5.9% 6.0% 1.5% 1.5%* 5.4% 5.3% 1.4% 428 373 5.6% 1.4% 276 178 4.1% 4.6%
Slide 17: Senior and well-collateralised lending book
We remain comfortable with our senior and well-collateralised lending book Residential ▪ Average LTV of 60% with low Stage 3 ratio at 1.1% Mortgages ▪ Risk metrics remained strong, also supported by government schemes €301 bln 8% Consumer Lending ▪ Relatively small book, risk metrics slightly deteri
Slide 18: Strong ING Group CET1 ratio at 15.0%
Strong ING Group CET1 ratio at 15.0%, excluding the €1,754 mln 2019 dividend reserve ING Group Total capital ratio development 2.7% 1.9% 0.9% 15.5% 0.1% ~13.5% 3.0% 19.6% 14.0% 15.0% 10.5% 1Q20 Profit added RWA & other 2Q20 AT1 Tier 2 2Q20 Total capital Basel IV CET1 CET1 ratio to CET1 CET1 ratio ra
Slide 19: Risk-weighted assets decreased significantly in 2Q2020
Risk-weighted assets decreased significantly in 2Q2020 due to management actions and capital relief measures ING Group risk-weighted assets development Credit RWA -€12.3 bln 335.4 -11.8 -3.1 +6.6 -0.1 +0.5 -0.8 -0.6 322.2 -3.8 1Q20 Capital CRR2.5 Volume TRIM Other Market Operational FX 2Q20 RWA mana
Slide 20: ING Group financial ambitions
ING Group financial ambitions Actual 2019 Actual 2Q2020 Financial ambitions ~13.5%* ▪ CET1 ratio (%) 14.6% 15.0% (Basel IV) Capital ▪ Leverage ratio (%) 4.6% 4.3% >4% ▪ ROE (%)** 9.4% 6.1% 10-12% (IFRS-EU Equity) Profitability ▪ C/I ratio (%)** 56.6% 58.9% 50-52% Dividend payments suspended Dividend
Slide 21: Wrap up
Wrap up 21
Slide 22: Wrap up
Wrap up ▪ In line with our purpose, we continue to take actions to support our customers, employees and society in coping with the effects of the Covid-19 pandemic. At the same time, countering financial and economic crime remains a priority ▪ The current environment underscores the strength of our
Slide 23: Appendix
Appendix 23
Slide 24: Volatile items 2Q2020
Volatile items 2Q2020 Volatile items and regulatory costs (in € mln) 2Q19 3Q19 4Q19 1Q20 2Q20 WB/FM – valuation -72 -25 -74 -92 87 adjustments Capital gains/losses 21 5 -8 138 15 Hedge ineffectiveness 85 32 -65 -89 40 Other items* 79 -82 -270 Total volatile items 113 12 -147 -125 -128 Regulatory cos
Slide 25: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 2Q2020 2Q2020 2Q2020 13% 7% 24% 24% 39% 15% 18% €778 €478 6% €478 1% €300 bln bln bln bln 10% 56% 6% 16% 61% 19% 63% 8% 14% Retail Banking Residential mortgages Mortgages Netherlands Lending Wholes
Slide 26: Granular Retail Consumer Lending and Business Lending
Granular Retail Consumer Lending and Business Lending Consumer Lending – 2Q2020 Lending Credit Outstandings Business Lending – 2Q2020 Lending Credit Outstandings By geography By product By geography By sector 3% 2% 1% 4% 4% 4% 4% 1% 2%2% 3% 15% 3% 5% 7% 2%2% 11% 4% 5% 34% 4% 8% 6% 50% 15% 6% €26 bln
Slide 27: Granular Wholesale Banking lending
Granular Wholesale Banking lending Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S Wholesale Banking (2Q2020)* Lending Credit O/S Wholesale Banking (2Q2020)* 1% NL 6% 11% Real Estate, Infra & Construction 12% Commodities, Food & Agri 28% Belux 2% Germany 20% TM
Slide 28: Leveraged finance book managed within a restrictive framework
Leveraged finance book managed within a restrictive framework Leveraged finance book* focused on developed markets Business overview (as per 2Q2020) ▪ Focus on larger sponsors with an established track record 3% and a history of resolving issues in the event of underperformance by the acquired busin
Slide 29: Well-diversified Commercial Real Estate portfolio
Well-diversified Commercial Real Estate (CRE) portfolio Business overview CRE breakdown by asset type (as per 2Q2020) ▪ CRE portfolio of €51.7 bln, cap at €56 bln, split between: 8% ▪ Real Estate Finance (REF) €36.7 bln 23% Office ▪ Retail Banking €15 bln Retail 35% Residential ▪ REF portfolio is ma
Slide 30: Oil & Gas book: only €4.5 bln directly exposed to oil-price risk
Oil & Gas book: only €4.5 bln directly exposed to oil-price risk 0.6 0.5 Direct €4.5 bln oil-price risk ▪ Reserve Based Lending: smaller independent oil & gas producers, focus on 3.4 1st cost quartile producers 5.7 ▪ Midstream: typically assets generating revenues from long-term tariff based contrac
Slide 31: Breakdown of quarterly risk costs Wholesale Banking
Breakdown of quarterly risk costs Wholesale Banking per geography and sector Breakdown of geography which generated risk costs WB Breakdown of sector which generated risk costs WB (in € mln) (in € mln) 882 882 373 373 254 254 116 116 91 91 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 2Q2019 3Q2019 4Q2019 1Q20
Slide 32: Overview Turkey exposure
Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 2Q2020 1Q2020 Change 1% 15% Lending Credit O/S Retail Banking 4,123 4,242 -2.8% 37% Residential mortgages 484 531 -8.9% USD Consumer lending 1,148 1,157 -0.8% EUR SME/Midcorp 2,491 2,554 -2.5% TRY 47% Ot
Slide 33: Important legal information
Important legal information ING Group’s annual accounts are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (‘IFRS-EU’). In preparing the financial information in this document, except as described otherwise, the same accounting principles are