Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Q4 2012 Earnings Presentation
43 slides from Ing Groep's earnings presentation, Feb 13, 2013
Slide 1: Fourth Quarter 2012 Results
Fourth Quarter 2012 Results ING posts Full-Year 2012 underlying net profit EUR 2,603 mln Jan Hommen CEO Amsterdam - 13 February 2013 www.ing.com
Slide 2: Key points
Key points • ING Group’s results held up well in 2012 amid weak environment in Europe: underlying net profit declined 5.2% to EUR 2,603 mln • ING continues to take actions to complete its restructuring and de-risk the balance sheet, and we are preparing our businesses for the future • The Group 4Q12
Slide 3: Full year 2012 underlying net profit declined 5.2% to EUR 2,603 mln
Full year 2012 underlying net profit declined 5.2% to EUR 2,603 mln Underlying net result ING Group (in EUR mln) Net result ING Group (in EUR mln) 2,746 -5.2% 5,766 2,603 3,894 2011 2012 2011 2012 Divestments, discontinued operations and special items (after tax, in EUR mln) 2012 Underlying net resu
Slide 4: Restructuring programmes will lead to structural savings of more than EUR 1 bln by 2015
Restructuring programmes will lead to structural savings of more than EUR 1 bln by 2015 Restructuring programmes (in EUR mln) After-tax Cost savings Total cost FTE restructuring Announced by 2015 savings reduction provisioning Retail Banking NL (1) 3Q11 330 330 2,700 232 Retail Banking NL (2) 4Q12 1
Slide 5: ING is maintaining momentum in restructuring
ING is maintaining momentum in restructuring Delivering on EC restructuring in 2012 More than EUR 10 bln paid to the Dutch State (in EUR bln) Sale of ING Direct USA 10.156 3.531 0.375 0.375 Sale of Insurance Malaysia 2.406 0.375 0.750 0.750 0.750 Sale of Insurance Hong Kong and Thailand 10.000
Slide 6: Progressing towards stand-alone balance sheets
Progressing towards stand-alone balance sheets ING Group 31 December 2012 ING Bank 37 Equity 54 • EUR 0.75 bln CT1 securities repaid for a total of ING Insurance 27 CT1 securities 2 EUR 1.125 bln HybridsB 7 Core Debt 7 HybridsI 2 Hybrids 9 • EUR 1.0 bln Group core debt reduced, funded by dividend 73
Slide 7: ING Bank is already meeting most Basel III requirements
ING Bank is already meeting most Basel III requirements Priorities for 2012-2013 set at the IR Day in January 2012 Balance sheet and RWA reduced strongly (in EUR bln) Accelerate transition to Basel III 974 836 Limit balance sheet and RWA growth Execute balance sheet optimisation 320 279 Furt
Slide 8: ING Bank's balance sheet optimisation is on track
ING Bank’s balance sheet optimisation is on track ING Bank (in EUR bln)* • The total balance sheet was Assets Liabilities reduced by EUR 137 bln since 974 974 September 2011, of which EUR 85 836 836 bln was related to the sale of ING Direct USA and Canada • Customer deposits increased by EUR 30 bln
Slide 9: Short-term funding reduced while growing deposits
Short-term funding reduced while growing deposits 430 460 • ING continued to grow its deposit base, primarily driven by Retail Banking units Strong • ING will continuously focus on increasing market customer deposit share in corporate and mid-corporate deposits by growth investing to improve its Pay
Slide 10: Quality of debt securities portfolio improved significantly
Quality of debt securities portfolio improved significantly ING Bank: Debt securities portfolio (in EUR bln) • ING Bank has been transforming the debt securities 111 portfolio into a liquidity book as part of the overall strategy 102 to optimise the balance sheet 16 • In 2012, ING Bank sold EUR 6 bl
Slide 11: ING Bank income in 2012 was negatively impacted by EUR 1.2 bln of de-risking
ING Bank income in 2012 was negatively impacted by EUR 1.2 bln of de-risking losses and credit adjustments Underlying income impacted by volatile items (in EUR mln) • 2012 income included EUR 601 275 mln in losses from de-risking of the bond portfolio. This planned programme has been completed • Cre
Slide 12: ING Bank offset most of the pressure on expenses in 2012
ING Bank offset most of the pressure on expenses in 2012 Underlying operating expenses (in EUR bln) 0.2 -0.2 0.2 -0.1 8.9 8.8 2011 Inflation + other cost Regulatory Transformation Market impacts 2012 increases programme Retail NL • Operating expenses increased modestly by EUR 0.1 bln, or 0.9% in FY1
Slide 13: And we will continue to do so
And we will continue to do so Underlying operating expenses (in EUR bln) 8.9 -0.1 -0.1 0.2 8.8 -0.7 0.8 -0.2 -0.2 -0.3 -0.2 2012 ING Direct UK Lower impair- Cost savings Procurement + Inflation + Regulatory Estimate 2015 ments other mgt investments actions CB Retail Netherlands Retail Belgium • Betw
Slide 14: Retail Benelux is adapting to customer preferences
Retail Benelux is adapting to customer preferences, and investing in operational excellence …. • New technologies have been embraced faster than Netherlands: Simplifying products and systems anticipated Mass savings products (#) IT systems (#) • In the Netherlands, internet is the leading channel wi
Slide 15: ...resulting in further cost savings in the Netherlands
...resulting in further cost savings in the Netherlands • In November 2011, we announced measures to Strong reduction in operating expenses (in EUR mln) decrease overhead and improve efficiency resulting in EUR 330 mln of structural cost savings. To date EUR 162 mln has already been realised 2,820 •
Slide 16: ...and EUR 150 mln of cost savings in Belgium
...and EUR 150 mln of cost savings in Belgium • ING Bank Belgium is accelerating strategic projects Structural cost savings of EUR 150 mln by 2015 further aligning its products and services with the new 2013 2014 2015 mobile banking environment FTE 300 700 1,000 • New technologies have been embraced
Slide 17: Fourth quarter 2012 results
Fourth quarter 2012 results Fourth Quarter 2012 Results 17
Slide 18: Fourth quarter results impacted by incidental items
Fourth quarter results impacted by incidental items Bank underlying pre-tax result Insurance underlying pre-tax result ING Group underlying net result (in EUR mln) (in EUR mln) (in EUR mln) 1,101 952 983 1,015 349 692 664 258 305 296 237 524 373 184 272 229 44 -234 -785 -1,513 4Q11 1Q12 2Q12 3Q12 4Q
Slide 19: ING Bank
ING Bank Fourth Quarter 2012 Results 19
Slide 20: Bank adjusted gross result down 2.2% year-on-year
Bank adjusted gross result down 2.2% year-on-year Gross result (in EUR mln) 4Q2012 4Q2011 % Change 3Q2012 % Change Reported gross result 772 1,109 -30.4% 1,537 -49.8% Impairments Impairments on Greek government bonds 0 -133 0 Other impairments on debt / equity securities -7 -32 -10 RED development p
Slide 21: Credit adjustments at Commercial Banking had net negative impact of EUR -131 mln
Credit adjustments at Commercial Banking had net negative impact of EUR - 131 mln in 4Q12 P/L impact credit adjustments* (in EUR mln) Cumulative CVA/DVA (in EUR mln) 200 500 250 0 0 -200 -250 -400 -500 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 Dec 10 Jun 11 Dec 11 Jun 12 Dec 12 Mar 11 Sep 11 Mar 12 Se
Slide 22: Net interest margin held up well at 133 bps
Net interest margin held up well at 133 bps Underlying interest margin by quarter (in bps) FM contribution to NIM can be volatile Financial markets impact on NIM Q-on-Q (in bps) 3,046 2,986 2,981 2,878 2,866 4 138 133 134 133 127 2 1 -1 -4 4Q11 1Q12 2Q12 3Q13 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 NIM suppor
Slide 23: Operating expenses, excluding bank tax, flat y-o-y
Operating expenses, excluding bank tax, flat y-o-y Operating expenses (in EUR mln) Underlying cost/income ratio (in %) 2,400 80% 75.7% 175 2,231 2,195 2,199 70% 2,107 63.4% 2,225 60% 50% 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 Dutch bank tax Cost/income ratio Cost/income ratio excl. market
Slide 24: Risk costs increased as economy weakened
Risk costs increased as economy weakened Underlying additions to loan loss provisions Underlying additions to loan loss provisions (in EUR mln and bps of avg RWA) (in EUR mln) 554 588 588 97 540 554 103 84 34 32 20 445 440 76 73 62 103 62 60 102 116 40 153 174 18 11 44 33 4Q11 1Q12 2Q12 3Q12 4Q12 3Q
Slide 25: NPL ratio increased slightly to 2.5%
NPL ratio increased slightly to 2.5% ING Bank’s loan book (in %) NPL ratio (in %) 3Q12 4Q12 Residential mortgages 3%2% 6% - Netherlands 1.3 1.4 29% - Other 0.9 1.0 11% Commercial lending - Corporate loans 3.9 3.5 - Mid-corps/SMEs 4.6 5.4 - Structured Finance 2.4 2.5 14% - RE Finance 8.0 7.6 - Leasin
Slide 26: Loan book is well collateralised and provisions have historically exceeded write-offs
Loan book is well collateralised and provisions have historically exceeded write-offs Provisions have structurally outweighed write-offs (in EUR bln) 2.9 1.7 -0.8 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Gross additions (avg EUR 1,894 mln) Releases (avg EUR 736 mln) Write offs (av
Slide 27: Risk costs of Real Estate Finance remain elevated
Risk costs of Real Estate Finance remain elevated Risk costs (in EUR mln) Real Estate Finance portfolio by country of residence (Dec 12) 120 11% Netherlands 102 103 5% Americas 6% Spain 48 45 EUR 51% France 7% 30 bln Italy 8% UK Other 4Q11 1Q12 2Q12 3Q12 4Q12 12% Non-performing loans ratio (in %) •
Slide 28: Dutch REF portfolio is well diversified
Dutch REF portfolio is well diversified REF NL Lending Assets by sector (31 Dec 12) Price development NL (ROZ/IPD indices, %) 6% 2% 100 97 100 100 87 13% 74 35% EUR Retail 15 bln Offices 18% Residential Industrial Other Retail indices Office indices Residential indices 26% Unsecured 2007 2008 2009 2
Slide 29: NPL ratio on Dutch mortgages increased slightly to 1.4%
NPL ratio on Dutch mortgages increased slightly to 1.4% Non-performing loans ratio (in %) Risk costs (in EUR mln) 1.8 1.4 167 1.4 121 107 1.0 91 0.7 0.6 0.2 4Q10 2Q11 4Q11 2Q12 4Q12 2009 2010 2011 2012 NPL Dutch Mortgages 90+ days arrears • Risk costs declined to EUR 33 mln in 4Q12, from EUR 44 mln
Slide 30: Core Tier 1 ratio of 11.9% after state repayment
Core Tier 1 ratio of 11.9% after state repayment ING Bank core Tier 1 ratio (in %) 12.1% -0.75% 0.55% 11.9% -0.6% 11.1% 11.3% 10.9% 9.6% 4Q11 1Q12 2Q12 3Q12 State Net profit 4Q12 IAS 19R Pro-forma repayment incl. sale ING Basel 2.5 and double Direct incl. IAS 19R leverage Canada • IAS 19R on pension
Slide 31: Pro-forma Basel III core Tier 1 ratio 10.4%
Pro-forma Basel III core Tier 1 ratio 10.4% Impact Basel III (including IAS 19R) 4Q2012 (pro-forma) (In EUR bln) Basel III core Tier 1 ratio Core Tier CT1 • Timing of CRD IV implementation and 1 capital RWAs ratio final form are uncertain 31 Dec 2012 (including IAS 19R) 31.5 278.7 11.3% • Estimated
Slide 32: ING Insurance
ING Insurance Fourth Quarter 2012 Results 32
Slide 33: Insurance results up both y-o-y and sequentially
Insurance results up both y-o-y and sequentially Insurance result (in EUR mln) Operating Non-operating Underlying result result + impact = before tax 349 305 296 258 237 229 272 44 -76 -24 -193 -234 -491 -1,863 -1,513 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 • Opera
Slide 34: Investment margin improved significantly
Investment margin improved significantly Investment Margin (in EUR mln) Investment spread (in bps) Life GA 475 142 425 447 413 410 134 135 129 130 133 132 129 125 122 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 Four-quarter rolling average One quarter stand-alone • The investment margin rose 8
Slide 35: Fees & premium-based revenues up on both quarters
Fees & premium-based revenues up on both quarters Fees and premium-based revenues (in EUR mln) Technical margin (in EUR mln) 8.3% (or 5.5% at constant FX) 795 770 784 786 726 423 426 447 452 396 118 122 118 82 92 330 372 344 337 334 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 Fees on AuM (incl
Slide 36: Administrative expenses remained under control
Administrative expenses remained under control Life & IM administrative expenses (in EUR mln) Life & IM administrative expenses/operating income ratio (%) 639 630 628 631 586 48.9% 47.6% 46.9% 46.5% 46.2% 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 • Life & Investment Management administrative
Slide 37: Europe posted improved results, driven by a higher investment margin and lower expenses
Europe posted improved results, driven by a higher investment margin and lower expenses Operating result (in EUR mln) Underlying result (in EUR mln) Sales (APE, in EUR mln) 47 106 56 29 101 87 35 38 119 34 37 6 48 85 53 43 55 10 19 184 20 8 127 122 140 149 -98 97 111 108 -8 -111 68 79 -93 4Q11 1Q12
Slide 38: Insurance US continued to show strong results
Insurance US continued to show strong results Operating result (in EUR mln) Underlying result (in EUR mln) Sales (APE, in EUR mln) 195 190 188 168 149 82 131 122 113 398 548 555 99 469 474 451 67 191 195 145 55 56 60 64 105 39 -5 0 4 4 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12 3Q12 4Q12 4Q11 1Q12 2Q12
Slide 39: US Closed Block VA reports improved results
US Closed Block VA reports improved results Underlying result (in EUR mln) Estimated IFRS earnings sensitivities (in EUR mln) RAT 50 216 Equity Market Return 4Q12 Sufficiency 136 -25% 1,150 100 -384 -348 -15% 700 300 -1,368 -5% 250 550 +5% -100 750 +15% -350 850 4Q11 1Q12 2Q12 3Q12 4Q12 +25% -550 1,
Slide 40: ING U.S. progressing on stand-alone capital structure
ING U.S. progressing on stand-alone capital structure US capitalisation has further improved US has made progress towards stand-alone capital position Estimated combined RBC ratio in % Debt to capital ratio 516 531 US GAAP – 4Q12 (USD bln) 488 426 449 Total Debt 3.8 Shareholders’ Equity excluding AO
Slide 41: Wrap up
Wrap up Fourth Quarter 2012 Results 41
Slide 42: Wrap up
Wrap up • ING Group’s results held up well in 2012 amid weak environment in Europe: underlying net profit declined 5.2% to EUR 2,603 mln • ING continues to take actions to complete its restructuring and de-risk the balance sheet, and we are preparing our businesses for the future • The Group 4Q12 re
Slide 43: Disclaimer
Disclaimer 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, the same accounting principles are applied as in the 2011 ING Group Annual Account