Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Q4 2020 Earnings Presentation
33 slides from Ing Groep's earnings presentation, Feb 12, 2021
Slide 1: Full year 2020 results
Full year 2020 results ING posts FY2020 net result of €2,485 mln 4Q2020 net result of €727 mln Steven van Rijswijk, CEO of ING 12 February 2021
Slide 2: Key points
Key points ▪ 2020 was a year marked by the Covid-19 pandemic and the unprecedented challenges it presented to our customers, employees and society. We continue to take actions to provide support and with vaccination programmes being rolled out globally, we look forward to return to more normal circu
Slide 3: FY2020 results
FY2020 results 3
Slide 4: We are recognised as an industry leader on ESG topics
We are recognised as an industry leader on ESG topics Environment Social Governance ▪ Second Terra report* published ▪ Support in coping with the effects ▪ Revised remuneration policy for EB ▪ First Climate risk report* published of the Covid-19 pandemic and SB, formulated with ▪ Payment holidays fo
Slide 5: Our digital capabilities have given ING an advantage through the pandemic
Our digital capabilities have given ING an advantage through the pandemic % of mobile-only active customers* % mobile in interactions with ING CAGR +43%** 40% 87% 37% CAGR +38%*** 82% 26% 73% 19% 63% 12% 52% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 2.5 3.0 3.7 4.5 5.3 Number of total intera
Slide 6: Some levers to counter NII pressure were challenged under Covid-19
Some levers to counter NII pressure were challenged under Covid-19 Net core lending and customer deposit growth (in € bln) ▪ Over the past years we have successfully grown NII, countering pressure from the negative rate environment, 41.4 through loan growth and margin discipline, as well as 28.9 ben
Slide 7: Fees grew 5% YoY supported by investment product and package fees
Fees grew 5% YoY supported by investment product and package fees, compensating Covid-19 impact on lending and payment fees Net fee & commission income per business line (in € mln) Net fee & commission income per product category (in € mln) 2,868 3,011 CAGR +5.5% 2,710 2,798 2,433 832 850 1,069 668
Slide 8: Continued focus and measures taken on expenses
Continued focus and measures taken on expenses Expenses* (in € bln) ▪ FY2020 expenses included €0.7 bln of incidental items, mainly reflecting the goodwill impairments in 2Q2020, 1.1 impairments for the Maggie program in 3Q2020 and 1.0 0.7 impairments and redundancy provisions in 4Q2020 related 0.9
Slide 9: Risk costs reflect provisioning related to IFRS 9 and overlays
Risk costs reflect provisioning related to IFRS 9 and overlays Loan loss provisions (in € mln and in bps over customer lending) 85 66 2,675 46 41 40 974 1,120 676 656 43 18 12 11 18 2016 2017 2018 2019 2020 ING (bps) Eurozone peers (bps) ▪ Risk costs for 2020 came in at €2.7 bln, with ~30% Stage 1 a
Slide 10: The quality of our loan book is strong
The quality of our loan book is strong Risk costs compared to peers* (in bps of customer lending) ▪ Asset quality is managed through a prudent risk management framework 263 247 210 ▪ Risk policy framework sets bank wide risk appetite, with 177 focus on senior and collateralised loans 153 158 134 134
Slide 11: Our 10-12% ROE ambition
Our 10-12% ROE ambition Return on Equity and CET1 ratio ▪ We run ING with a long term focus and a through-the- cycle ROE ambition of 10-12%, which historically we have delivered 11.2% ▪ 2020 ROE was affected by several sizeable negative 10.1% 10.2% incidentals in the P&L as well as IFRS 9 provisioni
Slide 12: ING Group financial ambitions
ING Group financial ambitions Actual 2019 Actual 2020 Financial ambitions ~12.5%* ▪ CET1 ratio (%) 14.6% 15.5% (Basel IV) Capital ▪ Leverage ratio (%) 4.6% 4.8% >4% ▪ ROE (%)** 9.4% 4.8% 10-12% (IFRS-EU Equity) Profitability ▪ C/I ratio (%)** 56.6% 63.2% 50-52% Dividend ▪ Dividend (per share) €0.24*
Slide 13: 4Q2020 results
4Q2020 results 13
Slide 14: Income QoQ supported by higher NII and fee income
Income QoQ supported by higher NII and fee income Income (in € mln) ▪ Fees were at a high level in 4Q2020, overall income was lower YoY mainly driven by lower interest results on 4,671 customer deposits, lower results from FX ratio hedging and 4,439 4,511 negative FX impact 4,286 4,169 27 81 205 499
Slide 15: NII stable QoQ; 4-quarter rolling average NIM at 144 bps
NII stable QoQ; 4-quarter rolling average NIM at 144 bps Net interest income excl. Financial Markets (FM) (in € mln) Net Interest Margin (in bps) 3,478 157 3,399 3,339 154 152 148 3,243 3,246 144 154 151 144 141 138 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 NIM NIM (4-qua
Slide 16: Net core lending reflects year-end balance sheet optimisation
Net core lending reflects year-end balance sheet optimisation Customer lending ING Group 4Q2020 (in € bln) Core lending businesses: €-0.9 bln 607.6 -1.2 1.7 0.7 -5.0 0.8 -0.3 -0.6 -1.4 3.6 -1.9 604.0 30/09/2020 Retail NL Retail Retail Retail Other WB Lending WB Daily WB Other* Lease run- Treasury FX
Slide 17: Strong fee growth in Retail Banking
Strong fee growth in Retail Banking Net fee and commission income per business line (in € mln) Fee & commission income per product category (in € mln) 783 771 783 771 735 723 734 735 723 734 297 255 210 246 264 253 198 184 211 303 231 199 198 210 206 235 259 221 176 198 176 227 218 203 233 256 277 2
Slide 18: Operating expenses under control
Operating expenses under control Expenses (in € mln) ▪ Expenses excluding regulatory costs were up YoY, driven by €223 mln of incidental items, mainly reflecting restructuring 137 331 provisions and impairments related to several previously 526 111 announced measures 303 310 223 140 ▪ Excluding inci
Slide 19: Risk costs declined in all business lines
Risk costs declined in all business lines Risk costs per business line (in € mln) Stage 2 ratio Stage 3 ratio 1,336 8.6% 8.5% 7.6% 7.6% 6.3% 7.0% 7.0% 1.8% 1.8% 1.8% 882 1.6% 1.7% 661 5.7% 7.0% 6.7% 5.9% 6.0% 1.7% 1.7% 428 469 5.3% 1.6% 1.6% 373 5.6% 1.4% 1.4% 1.6% 1.4% 178 145 208 4.6% 1.2% 1.2% 25
Slide 20: Strong ING Group CET1 ratio at 15.5%
Strong ING Group CET1 ratio at 15.5% ING Group CET1 ratio development (in %) +0.3% 15.5% 15.3% +0.0% -0.2% ~12.5% 10.5% 3Q2020 Profit added Other capital movements RWA 4Q2020 Basel IV CET1 ratio CET1 ratio to CET1 CET1 ratio ambition Capital ratio Reserved outside of CET1 Capital developments 2020 S
Slide 21: ING's distribution plans in 2021 and beyond
ING’s distribution plans in 2021 and beyond ING’s Distribution Policy Distribution in 2021 and beyond ▪ Pay-out ratio of 50% of resilient net profit 1. ING will distribute a delayed interim cash dividend over ▪ Net profit adjusted for significant items not linked to the FY2020 of €0.12 per share** a
Slide 22: Wrap up
Wrap up 22
Slide 23: Wrap up
Wrap up ▪ 2020 was a year marked by the Covid-19 pandemic and the unprecedented challenges it presented to our customers, employees and society. We continue to take actions to provide support and with vaccination programmes being rolled out globally, we look forward to return to more normal circumst
Slide 24: Appendix
Appendix 24
Slide 25: Volatile items 4Q2020
Volatile items 4Q2020 Volatile items and regulatory costs (in € mln) 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 WB/FM – valuation -74 -92 87 91 -13 adjustments Capital gains/losses -8 138 15 6 3 Hedge ineffectiveness -65 -89 40 43 -59 Other items* -82 -270 -370 -223 Total volatile items -147 -125 -128 -230
Slide 26: Challengers & Growth Markets FY2020
Challengers & Growth Markets FY2020* Germany Spain Australia Italy ▪ Total income 2,605 mln ▪ Total income 696 mln ▪ Total income 695 mln ▪ Total income 335 mln ▪ Mortgages 79.7 bln ▪ Mortgages 18.8 bln ▪ Mortgages 32.8 bln ▪ Mortgages 7.6 bln ▪ Other lending 41.2 bln ▪ Other lending 8.5 bln ▪ Other
Slide 27: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 4Q2020 4Q2020 4Q2020 7% 13% 23% 20% 35% 15% 20% 1% €756 €488 7% €488 €268 bln bln bln bln 10% 57% 5% 16% 22% 65% 62% 8% 14% Retail Banking Residential mortgages Mortgages Netherlands Lending Wholes
Slide 28: We remain comfortable with our senior and well-collateralised lending book
We remain comfortable with our senior and well-collateralised lending book Residential ▪ Average LTV of 58% with low Stage 3 ratio at 1.3% Mortgages ▪ Risk metrics remained strong, also supported by government schemes €305 bln 8% Consumer Lending ▪ Relatively small book, risk metrics slightly deteri
Slide 29: Provisioning per Stage
Provisioning per Stage Stage 1 provisioning (in € mln) Stage 2 provisioning (in € mln) Stage 3 provisioning (in € mln) 255 299 771 261 61 80 98 144 309 195 422 428 -13 -26 45 398 25 219 -11 -12 30 -168 163 169 201 290 15 -46 200 300 -2 -14 -95 52 36 463 124 -27 -25 -83 198 221 166 -73 127 4Q2019 1Q2
Slide 30: Granular Retail Consumer Lending and Business Lending
Granular Retail Consumer Lending and Business Lending Consumer Lending – 4Q2020 Lending Credit Outstandings Business Lending – 4Q2020 Lending Credit Outstandings* By geography By product By geography By sector 3% 2% 1% 1%2% 4% 1% 4% 4% 1% 1% 4% 3% 2%2% 5% 7% 10% 3% 25% 4% 6% 36% 8% 44% 5% 7% €25 bln
Slide 31: Granular Wholesale Banking lending
Granular Wholesale Banking lending Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S Wholesale Banking (4Q2020)* Lending Credit O/S Wholesale Banking (4Q2020)* 1% NL 1% 12% Real Estate, Infra & Construction 14% 24% Belux 21% Commodities, Food & Agri 2% Germany TM
Slide 32: Overview Turkey exposure
Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 4Q2020 3Q2020 Change 1% 15% Lending Credit O/S Retail Banking 3,359 3,597 -6.6% 35% Residential mortgages 416 397 4.8% USD Consumer lending 924 982 -5.9% EUR SME/Midcorp 2,020 2,218 -8.9% TRY 49% Other L
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