Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Debt Investor Presentation (May 2020)
52 slides from Ing Groep's debt investor presentation, May 8, 2020
Slide 1: ING Credit Update 1Q2020
ING Credit Update 1Q2020 ING Investor Relations 8 May 2020
Slide 2: Key points
Key points ▪ In line with our purpose, we take actions to support our customers, employees and society in coping with the impact of the Covid-19 pandemic. In many countries we are working with governments to provide our retail and wholesale banking customers with the necessary financial flexibility,
Slide 3: Our priority is to support employees, customers and society during Covid-19
Our priority is to support employees, customers and society to deal with the impact of the Covid-19 pandemic Our employees Our private customers Our business customers Our society ▪ Smooth transition to ▪ Part of our branch ▪ Pro-actively contacting ▪ Matching employee working from home network rema
Slide 4: Our digital and agile capabilities enabled uninterrupted customer service
Our digital and agile capabilities enabled uninterrupted customer service % of mobile-only active customers who contact us* % mobile in interactions with ING CAGR +41%** CAGR +36%*** 37% 37% 86% 82% 26% 19% 73% 12% 63% 52% 2016 2017 2018 2019 1Q2020 2016 2017 2018 2019 1Q2020 2.5 3.0 3.7 4.5 1.3 Num
Slide 5: We have built a resilient bank through focus on primary customers and income diversification
We have built a resilient bank through our focus on primary customers and income diversification Total income** geographically Retail income* increasingly more diversified, with growth in Our primary customer base diversified across products C&GM 25.4% 26.7% 29.2% 30.5% 32.8% 34.3% Δ € CAGR) Δ € CAG
Slide 6: We have maintained cost discipline, while managing KYC, regulatory costs and ATF investments
We have maintained cost discipline, while managing KYC-related expenses, regulatory costs and ATF investments We managed our underlying costs Leading to a best-in-class cost/income ratio in the eurozone Underlying costs (in € bln) CAGR +20.1% 67.9% 66.9% 66.1% CAGR +1.7% 64.0% 64.3% 64.5% 1.0 0.9 0.
Slide 7: Low risk costs compared to eurozone peers and a low Stage 3 ratio
Low risk costs compared to eurozone peers and a low Stage 3 ratio Risk costs / average customer lending (in %) Stage 3 ratio** 1.4% 6.1% 1.2% 5.4% 1.0% 4.7% 3.9% 0.8% 3.4% 4.3% 4.0% 0.6% 3.5% 3.0% 2.9% 0.4% 2.5% 2.6% 2.1% 1.9% 0.2% 1.5% 1.4% 0.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 201
Slide 8: We have a robust capital position with a strong funding structure
We have a robust capital position with a strong funding structure Capital development since 2015 Balance sheet ING Group (in € bln) Balance sheet size ING Group 31 December 2019: €892 bln 5.9% -3.3% Other 15 55 Total equity 88 Cash balances Other 15 -1.4% with central 35 Deposits from 0.5% 14.6% ban
Slide 9: Business profile and strategy
Business profile and strategy 9
Slide 10: Think Forward has been accelerated through structural changes
Think Forward has been accelerated through structural changes Think Forward strategy on a page Transformation and platform programmes * Formely Model Bank 10
Slide 11: We are transforming into a dynamic digital player
We are transforming into a dynamic digital player Classic bank Dynamic digital player Digital DNA and experience creating cross-border scalability are Customers • Mature, established • Explorers, change-oriented advantages Products • Owned • Open architecture where relevant Strategy • Defensive, cos
Slide 12: 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 of more a di
Slide 13: Consistent focus on creating operating leverage
Consistent focus on creating operating leverage Roadmap from current market positions Retail Challengers Retail Benelux & Growth Markets Wholesale Banking Financial ambitions Focus on profitable Income lending and fee income Cost discipline focus; Costs some increases in markets that grow Efficiency
Slide 14: 1Q2020 results
1Q2020 results 14
Slide 15: Solid pre-provision result reflects discipline in lending margins and fee growth
Solid pre-provision result reflects discipline in lending margins and fee growth Pre-provision result excl. volatile items and regulatory costs Income (in € mln) (in € mln) 4,576 4,665 4,626 4,439 4,511 12 96 113 2,208 2,198 2,281 2,214 2,329 -147 -125 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 1Q2019 2Q201
Slide 16: Stable NII year-on-year; 4-quarter rolling NIM at 154 bps
Stable NII year-on-year; 4-quarter rolling NIM at 154 bps Net interest income excl. Financial Markets (FM) (in € mln) Net Interest Margin (in bps) 3,435 3,478 3,391 3,391 3,399 157 155 154 154 154 154 152 154 154 151 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 NIM NIM (4-qu
Slide 17: 1Q2020 net core lending driven by Wholesale Banking
1Q2020 net core lending driven by Wholesale Banking Customer lending ING Group 1Q2020 (in € bln) Core lending businesses: €12.3 bln 7.6 -4.5 11.2 -2.0 0.2 -0.3 631.6 616.4 -0.1 1.1 0.6 1.3 31/12/2019 Retail Retail Retail Retail WB Lending WB Daily WB Other* Lease run- Treasury FX / Other** 31/03/202
Slide 18: Strong growth of fee income driven by investment and daily banking products
Strong growth of fee income driven by investment and daily banking products Net fee and commission income* (in € mln) ▪ Fees increased by €108 mln compared to 1Q2019, or 16.0%. This was driven by higher fees on investment and daily banking products in Retail Banking, predominantly in +16.0% Germany
Slide 19: FM impacted by valuation adjustments reflecting Covid-19 related market volatility
FM impacted by valuation adjustments reflecting Covid-19 related market volatility Income Financial Markets (in € mln) ▪ Excluding valuation adjustments, FM income was €8 mln lower YoY, mainly due to losses in Credit Trading following an 254 255 257 246 221 abrupt downward market movement. Other FM
Slide 20: Cost measures partially absorbed elevated KYC and regulatory costs
Cost measures partially absorbed elevated KYC and regulatory costs Expenses (in € mln) Cost/income ratio** 515 97 106 303 526 60.9% 62.8% 98 151 59.0% 60.3% 74 127 138 55.7% 59.0% 52.5% 52.7% 56.6% 57.0% 2,198 2,256 2,207 2,221 2,169 53.7% 53.7% 50.3% 51.0% 51.3% 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 1
Slide 21: Risk costs impacted by collective Stage 2 provisioning related to Covid-19
Risk costs impacted by collective Stage 2 provisioning related to Covid-19 pandemic Risk costs per stage (in € mln) Stage 2 ratio Stage 3 ratio 661 7.5% 6.6% 6.3% 261 6.2% 428 7.0% 5.7% 5.9% 25 18 6.2% 1.8% 276 5.6% 5.4% 5.3% 5.6% 1.6% 1.6% 1.6% 1.6% 209 207 6 2 26 4.6% 3 398 422 3.9% 4.1% 1.5% 1.5%
Slide 22: Higher risk costs mainly visible in Stage 2
Higher risk costs mainly visible in Stage 2 Retail Banking Wholesale Banking Risk costs per stage (in € mln) Risk costs per stage (in € mln) 285 373 1 98 254 163 174 160 3 15 136 118 52 4 8 91 116 200 201 184 71 18 10 8 198 221 136 145 5 83 100 101 -0 -4 -2 -16 -26 -2 -4 -11 -13 -31 -2 -19 -2 -2 -27
Slide 23: We remain comfortable with the quality of our book
We remain comfortable with the quality of our book, which is almost fully senior and well-collateralised Residential ▪ Average LTV of 60% with low Stage 3 ratio at 1.1% Mortgages ▪ Risk metrics remain strong, also supported by government schemes €298 bln 5% Consumer ▪ Relatively small book, mainly r
Slide 24: ING Group financial ambitions
ING Group financial ambitions Actual 2019 Actual 1Q2020 Financial ambitions ~13.5%* ▪ CET1 ratio (%) 14.6% 14.0% (Basel IV) Capital ▪ Leverage ratio (%) 4.6% 4.3% >4% ▪ ROE (%)** 9.4% 8.4% 10-12% (IFRS-EU Equity) Profitability ▪ C/I ratio (%)** 56.6% 57.0% 50-52% Dividend payments suspended Dividend
Slide 25: Asset quality
Asset quality 25
Slide 26: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 1Q2020 1Q2020 1Q2020 8% 7% 4% 4% 37% 25% 15% 25% 20% €710 €450 4% €450 €260 bln bln bln bln 6% 10% 17% 63% 66% 9% 67% 13% Retail Banking Residential mortgages Mortgages Netherlands Lending Wholesal
Slide 27: Detailed disclosure on selected countries
Detailed disclosure on selected countries Selected countries (in € bln) Lending credit Stage 2 ratio Stage 3 ratio Lending credit Stage 2 ratio Stage 3 ratio O/S 1Q2020 1Q2020 1Q2020 O/S 4Q2019 4Q2019 4Q2019 France 9.6 6.1% 0.6% 8.8 3.0% 0.7% Italy 16.0 4.5% 2.8% 16.5 4.1% 2.0% Spain 25.9 1.9% 1.0%
Slide 28: Granular Retail Consumer Lending and Business Lending
Granular Retail Consumer Lending and Business Lending Consumer Lending – 1Q2020 Lending Credit Outstandings Business Lending – 1Q2020 Lending Credit Outstandings By geography By product By geography By sector 3% 2% 1% 4% 5% 5% 4% 1% 2%2% 3% 16% 3% 2% 5% 3% 7% 11% 35% 4% 5% 8% 4% 6% 49% 6% 14% €26 bl
Slide 29: Granular Wholesale Banking lending
Granular Wholesale Banking lending Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S Wholesale Banking (1Q2020)* Lending Credit O/S Wholesale Banking (1Q2020)* 1% NL 6% 10% Real Estate, Infra & Construction 8% Commodities, Food & Agri 19% Belux 12% Germany 22% TM
Slide 30: Leveraged finance book managed within a restrictive framework
Leveraged finance book managed within a restrictive framework Business overview Leveraged finance book* focused on developed markets ▪ Focus on larger sponsors with an established track record (as per 1Q2020) and a history of resolving issues in the event of 2% underperformance by the acquired busin
Slide 31: Well-diversified Commercial Real Estate (CRE) portfolio
Well-diversified Commercial Real Estate (CRE) portfolio Business overview CRE breakdown by asset type (as per 1Q2020) ▪ CRE portfolio of €51.6 bln, cap at €56 bln, split between: ▪ Real Estate Finance (REF) €36.8 bln 3% ▪ Retail Banking €14.8 bln 25% Office 37% Retail ▪ REF portfolio is managed by W
Slide 32: Oil & Gas book: only €4.6 bln directly exposed to oil-price risk
Oil & Gas book: only €4.6 bln directly exposed to oil-price risk 0.5 0.5 €4.6 bln Direct ▪ Smaller independent oil & gas producers, focus on 1st cost quartile 3.6 oil-price risk producers 6.0 ▪ Typically assets generating revenues from long-term tariff based contracts, O&G not affected by oil & gas
Slide 33: Breakdown of quarterly risk costs Wholesale Banking per geography and sector
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) 373 373 254 254 116 116 71 91 71 91 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 1Q2019 2Q2019 3Q2019 4Q2019
Slide 34: Overview Turkey exposure
Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 1Q2020 4Q2019 Change 2% 16% Lending Credit O/S Retail Banking 4,242 4,537 -6.5% USD Residential mortgages 531 529 0.4% 36% EUR TRY Consumer lending 1,157 1,203 -3.8% Other 46% SME/Midcorp 2,554 2,804 -8.
Slide 35: Group capital, funding & liquidity
Group capital, funding & liquidity 35
Slide 36: ING Group Total capital ratio at 18.1% at the end of 1Q2020
ING Group Total capital ratio at 18.1% at the end of 1Q2020 ING Group Total capital ratio development 2.2% 18.1% 14.6% 0.2% -0.4% 1.9% -0.4% 14.0% ~13.5% 10.5% 4Q19 Profit added Implementation RWA & other 1Q20 AT1 Tier 2 1Q20 Total Basel IV CET1 CET1 ratio to CET1* of DoD CET1 ratio capital ratio am
Slide 37: Measures by regulatory authorities provide relief for bank capital requirements
Measures taken by regulatory and supervisory authorities provide relief for bank capital requirements Systemic Risk Buffer ▪ The DNB decreased ING Group’s Systemic Risk Buffer (SRB) requirement from 3.00% to 2.50% ▪ Various competent authorities changed or removed Countercyclical Buffer (CCyB) requi
Slide 38: Distance to Maximum Distributable Amount increased following the measures taken
Distance to Maximum Distributable Amount increased following the measures taken ING Group SREP* ▪ As a result of the measures taken in reaction to the MDA Covid-19 pandemic, ING Group’s fully-loaded CET1 restriction requirement decreased by 1.48pp to 10.51% level MDA ▪ 4.50% Pillar 1 minimum (P1R) (
Slide 39: Issuance entities under our approach to resolution
Issuance entities under our approach to resolution Issuance entities Eligible instruments for TLAC/MREL Current TLAC MREL req.* ▪ Own funds (CET1 / AT1 / T2) ✓ ✓ Designated resolution ING Groep N.V. entity ▪ Senior unsecured debt (> 1 yr)** ✓ ✓ ▪ Own funds ✓ ✓ ING Bank N.V. ▪ Senior unsecured debt (
Slide 40: Long-term debt maturity ladder and issuance activity in 1Q2020
Long-term debt maturity ladder and issuance activity in 1Q2020 Long-term debt maturity ladder (in € bln)* 25 20 15 10 5 - Maturity Issuance 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 >2029 1Q20 1Q20 TLTRO Covered Bank Senior HoldCo Tier 2 AT1 Issuance activity in 1Q2020* ▪ Total issuance in 1
Slide 41: ING's debt issuance programme in 2020
ING’s debt issuance programme in 2020 ING Group instruments (in € bln)* Currency split Group / Bank issuance plan HoldCo Senior Senior debt issuance 84.3 25.1% 6.9% 16% ▪ ~€5-7 bln of HoldCo Senior planned for 2020, subject to balance sheet, 23.7 7.1% 1.9% RWA and regulatory developments and taking
Slide 42: Other subsidiaries remain active mainly through their covered bond programmes
Other subsidiaries remain active mainly through their covered bond programmes ING Bank N.V. ING Belgium S.A./N.V ING Bank (Australia) Ltd ING Germany ING Bank Hipoteczny Instruments ▪ Secured funding ▪ Secured funding ▪ Secured funding ▪ Secured funding ▪ Secured funding overview ▪ Senior unsecured
Slide 43: 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 size ING Group 31 March 2020: €945 bln ▪ See “Asset Quality” section of the presentation Other 17 Cash balances 55 Total
Slide 44: Robust liquidity position
Robust liquidity position Funding mix* ING holds sizeable liquidity buffer 31 March 2020 ▪ ING’s funding consists mainly of retail deposits, corporate 2% deposits and public debt 10% Customer deposits (retail) 6% Customer deposits (corporate)** ▪ ING’s 12-month moving average LCR remained robust at
Slide 45: Strong rating profile at both Group and Bank level
Strong rating profile at both Group and Bank level Main credit ratings of ING on 7 May 2020 Latest ING rating actions S&P Moody’s Fitch ▪ Fitch: Feb-2019 ING Bank was upgraded to AA-. In April 2020, Stand-alone rating a baa1 a+ Fitch placed ING Group’s and ING Bank’s ratings on Rating Watch Negative
Slide 46: Appendix
Appendix 46
Slide 47: Comfortable buffer to Additional Tier 1 trigger
Comfortable buffer to Additional Tier 1 trigger Buffer to AT1 trigger ING Group available distributable items (in € mln)* 31 March 2020 2019 46.8 Share premium 17,078 Other reserves 28,052 €23.3 bln Legal and statutory reserves 3,999 7.0%** Non-distributable -8,398 23.5 Total 40,732 Accrued interest
Slide 48: Outstanding benchmark capital securities
Outstanding benchmark capital securities (Additional) Tier 1 securities issued by Group Currency Issue date First call date Coupon Outstanding** Issued Reset spread USD* Feb-20 May-29 4.875% 750 750 UST + 351bps USD* Sep-19 Nov-26 5.750% 1,500 1,500 UST + 434bps USD Feb-19 Apr-24 6.750% 1,250 1,250
Slide 49: Most recent HoldCo Senior transactions
Most recent HoldCo Senior transactions HoldCo Senior Unsecured, EUR issuances ISIN Issue date Maturity Tenor Coupon Currency Issued Spread XS2049154078* Sep-19 Sep-25 6yr 0.100% EUR 1,000 m/s + 60 XS1933820372 Jan-19 Jan-26 7yr 2.125% EUR 1,000 m/s + 170 XS1909186451 Nov-18 Nov-30 12yr 2.500% EUR 1,
Slide 50: ING Bank's covered bond programme
ING Bank’s covered bond programme… ▪ ING Bank NV €30 bln Hard and Soft Bullet Covered Bonds programme Repayment type ▪ UCITS, CRR and ECBC Label compliant. Rated Aaa/AAA/AAA (Moody’s/S&P/Fitch) 3% 4% Interest Only 6% Investment ▪ This programme is used for external issuance purposes. There is a sepa
Slide 51: Benefiting from a strong Dutch housing market and a solid economy
…benefiting from a strong Dutch housing market and an economy which was still solid at the end of 1Q2020 Dutch Purchasing Managers Index (PMI) was 50.5 as per end Dutch and eurozone unemployment rates (%) at a 1Q2020, indicating slightly positive industrial growth historically low level 70 15 60 10
Slide 52: 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