Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Debt Investor Presentation (November 2022)
45 slides from Ing Groep's debt investor presentation, Nov 3, 2022
Slide 1: ING Credit Update 3Q2022
ING Credit Update 3Q2022 ING Investor Relations 3 November 2022
Slide 2: Key points
Key points ▪ We continue to have confidence in our strengths in a changing economic environment, with the right strategy and a good financial performance ▪ We execute our strategy by creating a superior customer experience and supporting the transition to a more sustainable society ▪ Pre-provision p
Slide 3: The changing world around us
The changing world around us Expected interest rates more than Significantly higher and prolonged Forecasting a modest economic doubled inflation in the eurozone contraction for the eurozone Implied year-avg euro short-term rate in bps Eurozone CPI (% YoY) Eurozone GDP (% YoY) 299 302 297 8.4% 5.6%
Slide 4: We are executing our strategy
We are executing our strategy Strengthening our customer experience Supporting clients and society on sustainability ▪ In Spain, we launched an account, co-created with ▪ Following the Netherlands and Poland, we now offer eco- customers, that offers an instant online onboarding process mortgages in
Slide 5: Well-positioned to benefit from higher rates
Well-positioned to benefit from higher rates Sensitivity of our €461 bln Retail eurozone replicating book NII tailwind from higher rates including illustrative pass-through scenario* Implied year-average euro short-term rate in bps Delta in NII versus 2021 replicating result in € bln 299 302 297 +2.
Slide 6: We manage our expenses and asset quality
We manage our expenses and asset quality Containing expenses while investing for the future Proven track record on managing credit risk ▪ Expenses are impacted by the significant increase in inflation ▪ We have confidence in our asset quality with risk costs and rates, partially absorbed by the savi
Slide 7: Continued attractive shareholder return
Continued attractive shareholder return Strong capital generation Attractive shareholder return Average 2018-2021 Based on payment date ~14.0% 10.3% 8.7% 9.4% 1.36 6.7% 5.4% 1.01 0.78 0.67 0.68 0.41 Dividend ban 0.60 0.58 Reported return on equity Return on equity 2018 2019 2020 2021 2022 (15.1% CET
Slide 8: Business profile
Business profile 8
Slide 9: Well-diversified business mix with many profitable growth drivers
Well-diversified business mix with many profitable growth drivers Retail Banking Market Leaders Wholesale Banking Netherlands, ▪ Focus on earning the Belgium, Luxembourg ▪ Our business model is primary relationship similar throughout our ▪ We use technology to offer global WB franchise a differentia
Slide 10: 3Q2022 results
3Q2022 results 10
Slide 11: Pre-provision profit up YoY and QoQ
Pre-provision profit up YoY and QoQ Pre-provision profit excl. volatile items* and regulatory costs ▪ 3Q2022 pre-provision profit excluding volatile items and (in € mln) regulatory costs increased on both comparable quarters ▪ Good NII development, reflecting the positive effect of rising 2,632 inte
Slide 12: Good NII momentum and higher NIM
Good NII momentum and higher NIM Net interest income (in € mln) Net interest margin (in bps) 3,415 3,465 3,332 3,388 3,374 84 84 82 76 71 142 140 139 3,305 3,290 3,333 3,389 3,604 137 137 138 137 137 136 135 -343 128 3Q2021 4Q2021 1Q2022 2Q2022 3Q2022 3Q2021 4Q2021 1Q2022 2Q2022 3Q2022 TLTRO Polish
Slide 13: Continued loan growth
Continued loan growth Customer lending (in € bln) Net core lending growth €4.7 bln 5.7 -4.8 1.2 1.1 649.7 3.0 -0.3 642.9 0.6 -1.1 1.7 -0.3 2Q2022 Retail Retail Retail Retail Other WB Lending WB DB&TF* WB Other* Run-off Treasury FX / Other *** 3Q2022 Netherlands Belgium Germany C&GM* portfolios** ▪ N
Slide 14: Resilient fees supported by daily banking
Resilient fees supported by daily banking Net fee & commission income per business line (in € mln) Net fee & commission income per product category (in € mln) 882 925 933 888 882 925 933 888 876 876 105 140 112 92 96 295 322 324 280 295 247 261 267 226 194 247 269 275 253 230 247 238 253 232 265 338
Slide 15: Operating expenses well-contained in inflationary environment
Operating expenses well-contained in inflationary environment Expenses (in € mln) ▪ Excluding regulatory costs and incidental items, expenses were 5% higher YoY, well below inflation levels. Around half 2,947 2,945 of the increase was attributable to higher staff costs, due to 2,685 385 2,738 indexa
Slide 16: Risk costs reflecting prudence on a high quality loan book
Risk costs reflecting prudence on a high quality loan book Risk costs per business line (in € mln) Stage 2 ratio Stage 3 ratio 987 8.9% 7.2% 7.0% 6.6% 6.0% 6.0% 1.7% 1.7% 939 403 5.6% 1.6% 346 5.3% 5.2% 5.3% 1.5% 1.4% 128 5.8% 1.4% 216 202 1.5% 1.5% 1.4% 1.3% 88 4.9% 4.7% 4.6% 39 274 4.5% 1.2% 1.2%
Slide 17: Executing towards our financial targets
Executing towards our financial targets 3Q2022 2025 ▪ 3Q2022 resilient net result €1,032 mln, of which 50% reserved outside of CET1 for future distribution CET1 ratio ▪ Total amount reserved for future distribution outside CET1 capital €848 mln CET1 ratio* 14.7% ▪ €1.5 bln (~44 bps) additional distr
Slide 18: Capital
Capital 18
Slide 19: Risk-weighted assets increased in 3Q2022, mainly reflecting FX impact on credit RWA
Risk-weighted assets increased in 3Q2022, mainly reflecting FX impact on credit RWA ING Group risk-weighted assets development (in € bln) Credit RWA €+3.5 bln 3.1 0.3 -2.3 2.7 -0.3 -2.9 2.0 338.6 335.9 2Q2022 FX Volume Overall profile of Models, Other Market Operational 3Q2022 RWA impact development
Slide 20: CET1 ratio remained stable at 14.7%
CET1 ratio remained stable at 14.7%. Pro forma CET1 ratio at 14.3% after additional distribution to shareholders ING Group Total capital ratio development (in %) +3.0% 19.8% +2.1% 14.7% +0.1% +0.0% -0.1% 14.7% ~12.5% 10.5% 2Q2022 Profit added Other capital RWA 3Q2022 AT1 Tier 2 3Q2022 Total Basel IV
Slide 21: Buffer to fully-loaded Maximum Distributable Amount remained strong
Buffer to fully-loaded Maximum Distributable Amount, including announced CCyB increases, remained strong at ~4% ING Group fully-loaded SREP requirements ▪ ING Group’s fully-loaded CET1 requirement is 10.96% ▪ 4.50% Pillar 1 Requirement (P1R) ▪ 0.98% Pillar 2 Requirement (P2R) MDA restriction ▪ 2.50%
Slide 22: Funding & liquidity
Funding & liquidity 22
Slide 23: ING meets its TLAC and MREL requirements
ING meets its TLAC and MREL requirements TLAC as % of RWA (and LR) MREL as % of RWA (and LR) 31.1% 31.1% 27.33% 28.68% 11.3% 23.04% 11.3% 5.04% 5.47% 5.04% 3.0% 3.0% 2.1% 2.1% 22.29% 23.21% 14.7% 18.00% 14.7% 3Q2022 Requirement 1/1/2022 3Q2022 Requirement 1/1/2022 Requirement 1/1/2024 9.2% 6.75% 9.2
Slide 24: Long-term debt maturity ladder and issuance guidance
Long-term debt maturity ladder and issuance guidance Issuance guidance 2022 Currency split of outstandings as at 30 September 2022 ▪ Guidance on HoldCo Senior issuances for 2022 is ~€8-10 bln, HoldCo Senior Tier 2 AT1 subject to balance sheet developments 1% 12% 22% 77% 100% ▪ Covered bonds to be is
Slide 25: Covered bond funding through various programmes
Covered bond funding through various programmes ING Bank N.V. ING Belgium S.A./N.V. ING DiBa AG ING Bank (Australia) Ltd ING Bank Hipoteczny Instruments ▪ Secured funding ▪ Secured funding ▪ Secured funding ▪ Secured funding ▪ Secured funding overview ▪ Senior unsecured ▪ Covered bond: ~€16.2 bln ▪
Slide 26: We issue green bonds to support our sustainability objectives
We issue green bonds to support our sustainability objectives ING’s Green Bond Programme Green Covered Bonds ▪ On 6 May 2022 ING published an updated Green Bond ▪ As part of our Green Bond Programme, we aim to issue Framework, which is aligned with the ICMA Green Bond covered bonds in green format t
Slide 27: Strong and conservative balance sheet with customer deposits as primary funding
Strong and conservative balance sheet with customer deposits as the primary source of funding Balance sheet ING Group (in € bln) Well-diversified customer loan book ▪ Balance sheet ING Group increased to €1,059 bln in 3Q2022 ▪ See “Asset Quality” section of this presentation Assets Liabilities 1,020
Slide 28: Robust liquidity position with a 12-month moving average LCR of 133%
Robust liquidity position with a 12-month moving average LCR of 133% Funding mix* ING maintains a sizeable liquidity buffer 30 September 2022 ▪ ING’s funding consists mainly of retail deposits, corporate 3% 2% deposits and public debt 8% Customer deposits (retail) Customer deposits (corporate)** ▪ I
Slide 29: Strong rating profile at both Group and Bank levels
Strong rating profile at both Group and Bank levels Main credit ratings of ING as of 2 November 2022 Latest rating actions on ING Group and Bank S&P Moody’s Fitch ▪ S&P: upgraded ING Bank to A+ in July 2017. In Stand-alone rating a baa1 a+ October 2022, S&P affirmed ING's rating and outlook, reflect
Slide 30: Asset quality
Asset quality 30
Slide 31: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group Retail Banking Wholesale Banking Lending credit O/S* 3Q2022 Lending credit O/S* 3Q2022 Lending credit O/S* 3Q2022 11% 7% 22% 27% 40% 16% 20% €846 €510 €510 €337 7% bln bln bln bln 9% 2% 50% 5% 18% 8% 60% 64% 21% 13% Retail Banking Re
Slide 32: Wholesale Banking lending
Wholesale Banking lending Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S* Wholesale Banking Lending Credit O/S* Wholesale Banking excluding Treasury & Other 1% NL 1% 10% Real Estate, Infra & Construction 13% 25% Belux 22% Commodities, Food & Agri 2% Germany 15
Slide 33: We actively reduce our Russia-related exposure
We actively reduce our Russia-related exposure Total Russia-related exposure* Onshore exposure* and equity Offshore exposure* (in € bln) (in € bln) (in € bln) 0.5 5.3 0.0 3.2 6.2 1.3 3.8 0.6 0.4 0.2 28 February** 30 September 28 February** 30 September 28 February** 30 September Central bank deposit
Slide 34: Provisioning per Stage
Provisioning per Stage Stage 1 provisioning (in € mln) Stage 2 provisioning (in € mln) Stage 3 provisioning (in € mln) 844 386 40 34 318 13 165 25 237 230 4 27 837 177 1 11 9 68 7 154 -7 -7 47 161 -21 98 -42 -95 8 7 32 220 101 -78 -51 169 141 -12 -159 -86 -46 53 70 -33 -201 3Q2021 4Q2021 1Q2022 2Q20
Slide 35: Appendix
Appendix 35
Slide 36: Issuance entities under our approach to resolution
Issuance entities under our approach to resolution Issuance entities Eligible instruments for TLAC/MREL Designated TLAC MREL resolution ING Groep N.V. entity ▪ Own funds (CET1 / AT1 / Tier 2) ✓ ✓ ▪ Senior unsecured debt (> 1 year) ✓ ✓ ▪ Own funds ✓ ✓ ING Bank N.V. ▪ Secured funding & senior unsecure
Slide 37: Comfortable buffer to Additional Tier 1 trigger
Comfortable buffer to Additional Tier 1 trigger Buffer to AT1 trigger (in € bln) ING Group available distributable items (in € mln)** 30 September 2022 2021 49.9 Share premium 17,105 Other reserves 31,940 Legal and statutory reserves 1,069 €26.2 bln 7.7pp* Non-distributable -8,205 23.7 Total 41,909
Slide 38: Outstanding benchmark capital securities
Outstanding benchmark capital securities (Additional) Tier 1 securities issued by Group Currency Issue date First call date Coupon Outstanding (mln)** Reset spread USD* Sep-21 May-27 3.875% 1,000 UST + 286bps USD* Sep-21 May-31 4.250% 1,000 UST + 286bps USD Feb-20 May-29 4.875% 750 UST + 351bps USD*
Slide 39: HoldCo Senior transactions in past 12 months
HoldCo Senior transactions in past 12 months ISIN Issue date First call date Maturity Tenor Coupon Issued (mln)** Reset spread EUR XS2483607474 May-22 May-25 May-26 4NC3 2.125% 1,500 3mE+110 XS2443920249 Feb-22 Feb-26 Feb-27 5NC4 1.25% 1,500 3mE + 85 XS2443920751 Feb-22 Feb-30 Feb-31 9NC8 1.75% 1,50
Slide 40: ING Bank's covered bond programme…
ING Bank’s covered bond programme… ▪ ING Bank NV €30 bln Hard and Soft Bullet Covered Bonds programme Redemption type* ▪ UCITS, CRR and ECBC Label compliant. Rated Aaa/AAA/AAA (Moody’s/S&P/Fitch) 3% 2% Interest Only 3% ▪ This programme is used for external issuance purposes. There is a separate €15
Slide 41: …benefits from a continued strong Dutch housing market
…benefits from a continued strong Dutch housing market, although macro environment is increasingly challenging Dutch Purchasing Managers Index (PMI) indicating industrial Dutch unemployment rates (%) continue to decrease since contraction as it decreased to 49.0 August 2020 70 15 60 10 50 5 40 30 0
Slide 42: Profit or loss
Profit or loss Profit or loss 3Q2022 (in € mln) Reported P&L Volatile items P&L excluding volatile items Net interest income 3,332 -262 3,594 Net fee and commission income 876 1 875 Investment income 111 -3 114 Other income 93 -404 497 Total income 4,412 -668 5,080 Expenses excl. regulatory costs 2,
Slide 43: Volatile items
Volatile items Volatile items (in € mln) 3Q2021 4Q2021 1Q2022 2Q2022 3Q2022 WB/FM – valuation adjustments 38 3 -70 90 -15 Capital gains/losses 6 5 26 8 -3 Hedge ineffectiveness* 7 -24 81 -31 -431 Other items income** 50 92 -68 -155 -218 Total volatile items – income 101 76 -31 -89 -668 Incidental it
Slide 44: Hyperinflation accounting in Turkey
Hyperinflation accounting in Turkey Application of IAS 29 to consolidation of ING Turkey Impact on results (in € mln) ▪ We applied IAS 29 (‘Financial Reporting in Hyperinflationary 3Q2022 2Q2022 Economies’) to the consolidation of our subsidiary in Turkey, Profit or loss effective as of 1 January 20
Slide 45: 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
ING Groep — Debt Investor Presentation (November 2022) on 6ix