Ing Groep N.v. · EURONEXT:INGA

Ing Groep — Debt Investor Presentation (February 2021)

50 slides from Ing Groep's debt investor presentation, Feb 12, 2021

  1. Slide 1: ING Credit Update 4Q2020

    ING Credit Update 4Q2020 ING Investor Relations 12 February 2021

  2. 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

  3. Slide 3: Business profile

    Business profile 3

  4. Slide 4: 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

  5. Slide 5: FY2020 results

    FY2020 results 5

  6. Slide 6: 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

  7. Slide 7: 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

  8. Slide 8: 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

  9. Slide 9: 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

  10. Slide 10: 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

  11. Slide 11: 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

  12. Slide 12: 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

  13. Slide 13: 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

  14. Slide 14: 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*

  15. Slide 15: 4Q2020 results

    4Q2020 results 15

  16. Slide 16: 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

  17. Slide 17: 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

  18. Slide 18: 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

  19. Slide 19: 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

  20. Slide 20: 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

  21. Slide 21: 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

  22. Slide 22: Capital

    Capital 22

  23. Slide 23: Total risk-weighted assets decreased further in 4Q2020

    Total risk-weighted assets decreased further in 4Q2020, mainly reflecting lower credit and operational risk-weighted assets ING Group risk-weighted assets development (in € bln) Credit RWA -€4.5 bln 312.3 -1.7 -2.7 3.4 -1.0 0.7 -2.1 -3.1 306.3 0.6 3Q2020 FX Volume Duration and Equity Models, Other M

  24. Slide 24: Strong ING Group capital ratio at 15.5%

    Strong ING Group capital ratio at 15.5%, excluding €3,266 mln net profits held outside of regulatory capital ING Group Total capital ratio development (in %) +2.8% 20.1% +1.9% 15.3% +0.0% -0.2% +0.3% 15.5% ~12.5% 10.5% 3Q2020 Profit added Other capital RWA 4Q2020 AT1 Tier 2 4Q2020 Total Basel IV CET

  25. Slide 25: Buffer to Maximum Distributable Amount increased further in 4Q2020

    Buffer to Maximum Distributable Amount increased further in 4Q2020 ING Group fully-loaded SREP  ING Group’s fully-loaded CET1 requirement decreased by 1.48%-point to 10.51% in 1Q2020 MDA  In 4Q2020, the Systemic Risk Buffer (SRB) was reduced from restriction 2.5% to 0%, while the O–SII Buffer was

  26. Slide 26: 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

  27. Slide 27: Funding & liquidity

    Funding & liquidity 27

  28. Slide 28: Issuance entities under our approach to resolution

    Issuance entities under our approach to resolution Issuance entities Eligible instruments for TLAC/MREL Current Designated TLAC MREL req.* resolution ING Groep N.V. entity  Own funds (CET1 / AT1 / Tier 2)    Senior unsecured debt (> 1 year)**    Own funds***   ING Bank N.V.  Senior unsecur

  29. Slide 29: Long-term debt maturity ladder and issuance activity in 2020

    Long-term debt maturity ladder and issuance activity in 2020 Long-term debt maturity ladder (in € bln)* 20 15 10 5 0 Maturity Issuance 2021 2022 2023 2024 2025 2026 2027 2028 2029 >2029 2020 2020 Covered Bank Senior HoldCo Tier 2 AT1 Issuance activity in 2020  Total issuance in 2020 was ~€6.8 bln w

  30. Slide 30: ING's debt issuance programme in 2021

    ING’s debt issuance programme in 2021 ING Group instruments (in € bln) Currency split Group / Bank issuance plan 86.5 28.2% 7.9% HoldCo Senior Senior debt issuance 25.0 8.2% 2.3% 20%  ~€6-8 bln of Senior HoldCo in the remainder of 2021, subject to balance sheet developments and Covid-19 related imp

  31. Slide 31: Other subsidiaries remain active mainly through 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

  32. Slide 32: We aim to meet green funding needs to support sustainable finance portfolio

    We aim to meet green funding needs to support the growth of our sustainable finance portfolio ING’s Green Bond Programme Green Covered Bonds  ING’s Green Bond Framework is aligned with the ICMA Green  As part of our Green Bond Programme, we aim to issue Bond Principles and a Second Party Opinion (

  33. Slide 33: 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 reduced to €937 bln in 4Q2020  See “Asset Quality” section of this presentation Assets Liabilities Stable fu

  34. Slide 34: Robust liquidity position

    Robust liquidity position Funding mix* ING maintains a sizeable liquidity buffer 31 December 2020  ING’s funding consists mainly of retail deposits, corporate 2%2% deposits and public debt 6% Customer deposits (retail) 9% Customer deposits (corporate)**  ING’s 12-month moving average LCR increased

  35. Slide 35: Strong rating profile at both Group and Bank levels

    Strong rating profile at both Group and Bank levels Main credit ratings of ING entities as of 11 February 2021 Latest rating actions on ING entities S&P Moody’s Fitch  Fitch: ING Bank was upgraded to AA- in February 2019. In Stand-alone rating a baa1 a+ October 2020, Fitch affirmed ING Group’s and

  36. Slide 36: Asset quality

    Asset quality 36

  37. Slide 37: 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

  38. Slide 38: 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

  39. Slide 39: 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

  40. Slide 40: 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% 3% 1% 1% 4% 2%2% 5% 7% 10% 3% 25% 4% 6% 36% 8% 44% 5% 7% €25 bln

  41. Slide 41: 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

  42. Slide 42: 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

  43. Slide 43: Appendix

    Appendix 43

  44. Slide 44: 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)* 31 December 2020 2019 47.3 Share premium 17,078 Other reserves 28,052 Legal and statutory reserves 3,999 €25.9 bln 8.5%** Non-distributable -8,398 Total 40,732 21.4 Ac

  45. Slide 45: 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

  46. Slide 46: Most recent HoldCo Senior transactions

    Most recent HoldCo Senior transactions HoldCo Senior Unsecured, EUR issuances ISIN Issue date Maturity Tenor Coupon Currency Issued Spread XS2281155254* Jan-21 Feb-30 9yr 0.25% EUR 1,500 m/s + 70 XS2258452478* Nov-20 Feb-29 8yr 0.25% EUR 1,250 m/s + 68 XS2049154078* Sep-19 Sep-25 6yr 0.100% EUR 1,00

  47. Slide 47: 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% 3% Interest Only 6% Investment  This programme is used for external issuance purposes. There is a se

  48. Slide 48: Benefits from a continued strong Dutch housing market

    …benefits from a continued strong Dutch housing market, despite the hit to the economy in 2020 In December 2020, Dutch Purchasing Managers Index (PMI) Dutch and eurozone unemployment rates (%) decreased saw the strongest growth in years and is now above 58 since August 2020 70 15 60 10 50 5 40 30 0

  49. Slide 49: 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

  50. Slide 50: 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

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