ING Groep N.V. · EURONEXT:INGA
ING Groep — Morgan Stanley European Financials Conference 2013
32 slides from ING Groep's conference presentation, Mar 20, 2013
Slide 1: Towards Ambition 2015
Towards Ambition 2015 Strong progress to date on Balance Sheet Optimisation Morgan Stanley Conference Koos Timmermans Vice Chairman ING Bank London - 20 March 2013 www.ing.com
Slide 2: Key points
Key points • ING Bank is making good progress on the priorities set out last year • Balance sheet optimisation is on track • ING Bank already meets most Basel III requirements • 2012 results remained solid, but were impacted by higher risk costs and weakening economic environment in the Netherlands
Slide 3: ING Bank is making progress on its three priorities
ING Bank is making progress on its three priorities In terms of what we Restore trust through transparency and fair pricing, Customer offer our customers convenience, excellent service and solutions Centricity Streamlining processes and improving efficiency is In terms of how we Operational an imper
Slide 4: Basel III: catalyst to manage Balance Sheet efficiently
Basel III: catalyst to manage Balance Sheet efficiently ~ EUR 870 bln* Strong capital generation to grow into Basel III Evolve investment portfolio into liquidity Other requirements Other Equity portfolio and de-risk Debt securities LT & ST debt Banks Extend long-term debt profile and reduce Banks r
Slide 5: Grow lending without growing the balance sheet
Grow lending without growing the balance sheet Proportion customer loans increasing Improves the quality of B/S and earnings Total loan book as % of total balance sheet* • Balance sheet optimisation will allow us to continue to support our customers and grow our loan portfolio without ~ EUR ~ EUR gr
Slide 6: 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 974 974 deleveraged, which resulted in a 836 836 EUR 137 bln reduction since September 2011, of which EUR 85 bln was related to the sale of ING Direct USA and Canada • Customer d
Slide 7: 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 b
Slide 8: 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 share in corporate and mid-corporate deposits by deposit growth investing to improve its Pay
Slide 9: ING Bank already meets most Basel III requirements
ING Bank already meets 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 Further s
Slide 10: Pro-forma Basel III core Tier 1 ratio of 10.6%
Pro-forma Basel III core Tier 1 ratio of 10.6% ING Bank core Tier 1 ratio (in %) 11.9% -0.6% 0.2% 11.5% -0.9% 10.6% 4Q12 IAS 19R Divestments Pro-forma Basel 2.5 Basel III Pro-forma fully- incl. IAS 19R loaded Basel III • ING Bank’s Basel 2.5 core Tier 1 ratio remained strong at 11.9% at 31 December
Slide 11: 2012 results impacted by higher risk costs
2012 results impacted by higher risk costs Morgan Stanley Conference - 20 March 2013 11
Slide 12: Full year 2012 underlying net profit declined to EUR 2,147 mln
Full year 2012 underlying net profit declined to EUR 2,147 mln, driven by higher risk costs (Underlying) net result ING Bank (in EUR mln) Additions to loan loss provisions (in EUR mln) 4,553 2,122 2,977 2,967 1,336 2,147 2011 2012 2011 2012 Underlying net result Net result Underlying income (in EUR
Slide 13: 2012 income impacted by de-risking and CVA/DVA
2012 income impacted by de-risking and CVA/DVA 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 • Credit adjustments moved from a positive EUR 275 mln to a Repor
Slide 14: Risk costs increased as economy weakened
Risk costs increased as economy weakened Underlying additions to loan loss provisions Underlying additions to loan loss provisions by product (in EUR mln and bps of avg RWA) (in EUR mln) 2,252 2,122 2,122 116 245 144 75 1,448 1,336 131 1,336 73 55 369 139 1,002 112 49 138 305 48 147 87 33 576 429 12
Slide 15: NPL ratio increased to 2.5%
NPL ratio increased to 2.5% ING Bank’s loan book (in %) NPL ratio (in %) 4Q12 4Q11 3%2% Residential mortgages 6% - Netherlands 1.4 1.1 29% 11% - Other 1.0 1.0 Commercial lending - Corporate loans 3.5 2.3 - Mid-corps/SMEs 5.4 4.4 14% - Structured Finance 2.5 2.1 - RE Finance 7.6 5.6 - Leasing 8.4 5.9
Slide 16: 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 17: Risk costs for Dutch mid-corporate and SME lending up
Risk costs for Dutch mid-corporate and SME lending up Mid-corp and SME lending portfolio by industry* Risk costs business lending (in EUR mln) 5% 3% Automotive 451 7% 7% Builders & Contractors 408 393 Chemicals, Health and Pharma 14% 16% 320 Food, Beverage & Personal Care General Industries 6% 12% N
Slide 18: 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) 1.8 167 1.4 1.4 121 107 91 1.0 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 19: Dutch mortgage tax reform provides clarity to market
Dutch mortgage tax reform provides clarity to market Reform of tax treatment on Dutch mortgages Dutch mortgage portfolio by product type (%) • Relatively high loan-to-value and high debt-to-income of 2% 3% Dutch mortgage market are driven by full tax deductibility of interest paid on mortgage loans
Slide 20: Dutch economy is expected to start growing again in 2H13
Dutch economy is expected to start growing again in 2H13 GDP (in % YoY) Unemployment rate on Eurostat basis (in %) 3.0 GDP per quarter 8% GDP Full year 6% 1.5 4% 0.0 2% -1.5 0% 2010 2011 2012 2013 2014 2015 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 House prices the Netherlands
Slide 21: Delivering on Ambition 2015
Delivering on Ambition 2015 Morgan Stanley Conference - 20 March 2013 21
Slide 22: ING Bank is making progress on Ambition 2015
ING Bank is making progress on Ambition 2015 FY 2012 / 31 Dec 2012 Assets • Balance sheet to remain stable at ~EUR 870 billion EUR 836 bln Core Tier 1 • At least ≥10% under Basel III 10.6%* Leverage • Leverage to decline below 25 (Basel III) 25 LtD • Loan to Deposit ratio to decline to below 1
Slide 23: An optimised balance sheet should result in an attractive ROE of 10-13%
An optimised balance sheet should result in an attractive ROE of 10-13% under Basel III Balance Sheet x Interest Margin ~ Income C/I Improve NIM - 50-53% Keep Balance through B/S Sheet flat while Risk optimisation and optimising Expenses profile re-pricing - RWA 40-45 Risk Costs bps/RWA Leverage< -
Slide 24: Loan repricing continues but growth is subdued
Loan repricing continues but growth is subdued Higher funding costs are priced in (in bps) Customer lending growth subdued (in EUR bln)* EUR, above swap per tenor 10 13 227 218 Governments 284 294 (Mid)- Corporates, SMEs and other Mortgages 01/10 07/10 01/11 07/11 01/12 07/12 01/13 2011 2012 3 yr 5
Slide 25: Strong deposit growth while tracking lower ECB rate
Strong deposit growth while tracking lower ECB rate ING continued to grow deposits while reducing deposit rates Continued growth in customer deposits (in EUR bln)* • The deposit base continued to increase, primarily driven by Retail Banking +23 • Deposit rates have been lowered in consecutive steps
Slide 26: Continued focus on costs to reach a C/I ratio of 50-53% by 2015
Continued focus on costs to reach a C/I ratio of 50- 53% by 2015, allowing benefits of income growth 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 ot
Slide 27: Restructuring programmes will lead to structural savings of more than EUR 840 mln
Restructuring programmes will lead to structural savings of more than EUR 840 mln 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
Slide 28: 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 29: The Bank's ROE is competitive with a low risk profile
The Bank’s ROE is competitive with a low risk profile ING produces a better Return on Equity than peers… Income/assets (bps) 15 300 …despite lower income and fees to 150 clients 0 10 2008 2009 2010 2011 2012 Cost to assets (bps) 150 …because 5 we are 100 efficient… 50 2008 2009 2010 2011 2012 Risk c
Slide 30: ING Bank is on track to reach targeted 10-13% ROE
ING Bank is on track to reach targeted 10-13% ROE ING Bank Return on IFRS equity (in %) 3.4% 10-13% 0.6% 1.4% 9.0% 1.7% 5.9% FY12 De-risking Normalisation of FY 12 Loan growth Repricing/Other Bank Ambition losses and risk costs normalised income growth 2015 CVA/DVA • The absence of gains on divestme
Slide 31: Q&A
Q&A Morgan Stanley Conference - 20 March 2013 31
Slide 32: 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
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