Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Q2 2019 Earnings Presentation
26 slides from Ing Groep's earnings presentation, Aug 1, 2019
Slide 1: Second quarter 2019 results
Second quarter 2019 results ING posts 2Q19 net result of €1,438 million Ralph Hamers, CEO ING Group Amsterdam • 1 August 2019
Slide 2: Key points
Key points • ING posted 2Q19 net profit of €1,438 mln, on par with 2Q18 despite the continued low interest rate environment • Well-diversified primary customer growth of more than 300,000 with the total primary customer base reaching 12.9 mln. Primary customers now represent one-third of our Retail
Slide 3: Well-diversified primary customer growth underpins commercial momentum
Well-diversified primary customer growth underpins commercial momentum Target to reach >16.5 mln primary customers* by 2022 2Q19 net primary customer growth across Retail segments 29.2% 30.5% 32.8% 33.5% Benelux >16.5 12.5 12.9 +75k 10.4 11.4 Challengers +167k 2016 2017 2018 2Q19 Ambition Growth Mar
Slide 4: We further strengthened our commitment to sustainability
We further strengthened our commitment to sustainability Co-founding the Poseidon Principles Strong sustainability deal activity in 2Q19 • ING is one of 11 major banks that launched the Poseidon • In 2Q19, ING has supported the issuance of 26 sustainable Principles, which aim to support the shipping
Slide 5: Record quarter for Interhyp exceeding €6 bln in contracted volumes
Record quarter for Interhyp exceeding €6 bln in contracted volumes Contracted volume and market share 8.6% 8.8% 9.0% 8.9% 9.2%* 5.6 5.6 6.2 5.5 5.5 #1 mortgage broker Awarded in Germany “Top Mortgage Provider” 2Q18 3Q18 4Q18 1Q19 2Q19 (part of ING Group by €uro magazine Contracted volume (in € bln)
Slide 6: Continuing to improve our management of non-financial risks
Continuing to improve our management of non-financial risks Continuing focus on KYC-related activities Including developing promising tools to increase accuracy and efficiency of our KYC operations • The number of FTE working globally on know your customer (KYC) related activities has increased to >
Slide 7: 2Q19 results
2Q19 results 7
Slide 8: Pre-tax result reflects solid income and relatively low risk costs
Pre-tax result reflects solid income and relatively low risk costs Underlying pre-tax result (in € mln) Total underlying income (in € mln) 2,022 2,124 2,005 4,484 4,646 4,501 4,576 4,665 1,692 1,582 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 • 2Q19 underlying result before tax was €2,005 mln,
Slide 9: NII improved year-on-year; 4-quarter rolling NIM at 154 bps
NII improved year-on-year; 4-quarter rolling NIM at 154 bps Net interest income excl. Financial Markets (FM) Net interest margin slightly lower in 2Q19 (in € mln) (in bps) 3,470 3,459 3,364 3,391 3,391 156 154 153 155 154 152 153 154 152 151 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 NIM NIM
Slide 10: 2Q19 net core lending growth primarily in Retail
2Q19 net core lending growth primarily in Retail Customer lending ING Group 2Q19 (in € bln) Core lending businesses: €7.4 bln 1.6 1.0 0.7 0.5 -0.3 -0.2 -1.9 615.2 1.7 1.0 610.3 0.8 31/03/19 Retail Retail Retail Retail WB Lending WB Daily WB Other* Lease run- Treasury FX / 30/06/19 NL Belgium Germany
Slide 11: Fee income stable YoY; first digital insurance products launched
Fee income stable YoY; first digital insurance products launched Net fee and commission income (in € mln) Making good progress with Yolt and AXA initiatives 717 720 704 711 • Yolt, our smart money app, which provides customers a 27 675 one-stop overview of their accounts, has attracted 295 281 295 2
Slide 12: FM income impacted by negative valuation adjustments
FM income impacted by negative valuation adjustments Underlying income Financial Markets (in € mln) • Financial Markets’ total income was lower year-on-year, fully driven by negative model valuation adjustments and 241 196 183 negative marked-to-market movements on hedges 3 213 • Excluding these val
Slide 13: Stable cost/income ratio despite higher KYC-related expenses
Stable cost/income ratio despite higher KYC-related expenses Underlying operating expenses (in € mln) Regulatory costs* (in € mln) 515 493 515 266 97 98 91 266 2,249 2,216 2,303 2,272 2,354 98 97 91 2Q18 3Q18 4Q18 1Q19 2Q19 1Q 2Q 3Q 4Q Expenses excl. regulatory costs Regulatory costs 2018 2019 • Exp
Slide 14: Risk costs stable QoQ, remaining below through-the-cycle average
Risk costs stable QoQ, remaining below through-the-cycle average Risk costs (in € mln) Stage 3 ratio 215 242 207 209 1.7% 50 1.6% 115 107 1.6% 71 91 1.6% 1.6% 1.6% 1.6% 63 107 1.6% 1.6% 82 84 72 40 80 1.5% 1.5% 1.5% 46 45 42 16 1.4% 1.4% 32 11 22 -21 1.3% -52 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18
Slide 15: ING Group CET1 ratio remains robust at 14.5%
ING Group CET1 ratio remains robust at 14.5% ING Group CET1 ratio development* 14.7% +0.2% -0.3% -0.1% 14.5% ~13.5% 11.81%*** 1Q19 Group CET1 Profit added to CET1** Operational RWA FX/Other 2Q19 Group CET1 Basel IV CET1 ambition CET1 ratio Basel IV & TRIM impacts 2019 SREP requirement Management buf
Slide 16: ING Group financial ambitions
ING Group financial ambitions Actual 2018 Actual 2Q19 Financial ambitions ~13.5%* • CET1 ratio (%) 14.5% 14.5% (Basel IV) Capital • Leverage ratio (%) 4.4% 4.3% >4% • Underlying ROE (%)** 11.2% 10.8% 10-12% (IFRS-EU Equity) Profitability • Underlying C/I ratio (%)** 54.8% 55.0% 50-52% Dividend • Div
Slide 17: Wrap up
Wrap up 17
Slide 18: Wrap up
Wrap up • ING posted 2Q19 net profit of €1,438 mln, on par with 2Q18 despite the continued low interest rate environment • Well-diversified primary customer growth of more than 300,000 with the total primary customer base reaching 12.9 mln. Primary customers now represent one-third of our Retail cus
Slide 19: Appendix
Appendix 19
Slide 20: 2Q19 pre-tax result positively impacted by volatile items
2Q19 pre-tax result positively impacted by volatile items Underlying pre-tax result Volatile items and regulatory costs Pre-tax result excl. volatile items (in € mln) (in € mln) and regulatory costs (in € mln) 2Q18 3Q18 4Q18 1Q19 2Q19 WB/FM – valuation 2,022 2,124 2,005 adjustments 3 -13 -4 -58 -72
Slide 21: Group CET1 ratio at 14.5% and underlying ROE at 10.8%
Group CET1 ratio at 14.5% and underlying ROE at 10.8% Group CET1 ratio development during 2Q19 Group underlying ROE calculation in 2Q19 (amounts in € bln and %) (in € mln) Capital RWA Ratio Change As of 30 June 2019 Actuals 31 March 2019 45.9 311.9 14.7% IFRS-EU shareholders’ equity 52,598 Net profi
Slide 22: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 7% 7% 3% 26% 15% 36% €696 3% €445 €251 27% bln bln bln 64% 63% 10% 17% 9% 13% Retail Banking Mortgages Netherlands Lending Wholesale Banking Other lending Netherlands Daily Banking & Trade Finance
Slide 23: Granular Wholesale Banking lending credit outstandings by geography and sector
Granular Wholesale Banking lending credit outstandings by geography and sector Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S Wholesale Banking (2Q19)* Lending Credit O/S Wholesale Banking (2Q19)* 1% NL 6% 10% Real Estate, Infra & Construction 7% 19% Belux Com
Slide 24: Detailed Stage 3 disclosure on selected portfolios
Detailed Stage 3 disclosure on selected portfolios Selected portfolios (in € mln) Lending credit Stage 3 ratio Lending credit Stage 3 ratio Lending credit Stage 3 ratio O/S 2Q19 2Q19 O/S 1Q19 1Q19 O/S 2Q18 2Q18 Wholesale Banking 251,034 1.3% 238,992 1.4% 246,961 1.7% Lending 157,162 1.5% 157,262 1.4
Slide 25: Overview Turkey exposure
Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 2Q19 1Q19 Change 2% 16% Lending Credit O/S Retail Banking 4,821 5,189 -7.1% USD Residential mortgages 525 573 -8.4% 35% EUR TRY Consumer lending 1,147 1,243 -7.7% Other 47% SME/Midcorp 3,149 3,373 -6.7%
Slide 26: 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