ING Groep N.V. · EURONEXT:INGA
ING Groep — Debt Investor Presentation (August 2018)
40 slides from ING Groep's debt investor presentation, Aug 2, 2018
Slide 1: ING Credit Update 2Q18
ING Credit Update 2Q18 Amsterdam • 2 August 2018
Slide 2: Key points
Key points • ING posted 2Q18 net profit of €1,429 mln, up 4.2% on 2Q17 • Result reflects well-diversified and disciplined loan growth at stable margins, strong fee income, and low risk costs • Primary customers increased by 400,000 in 2Q18 to 12.0 mln, total retail customers reached 38.2 mln • Impor
Slide 3: Business profile and strategy
Business profile and strategy 3
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 of more Chal
Slide 5: Think Forward strategy delivers on commercial growth
Think Forward strategy delivers on commercial growth ING currently serves > 38 mln retail customers* (in mln) Targeting > 14 mln primary customers* by 2020 (in mln) 38.2 >14 35.7 37.4 12.0 34.5 11.4 10.4 9.2 2015 2016 2017 1H18 2015 2016 2017 1H18 Ambition 2020 Core lending Customer deposits Net Pro
Slide 6: Orange Bridge: multiple transformation milestones reached
Orange Bridge: multiple transformation milestones reached Preparing for an integrated banking platform in Belgium and the Netherlands 4Q17 4Q17 1Q18 2Q18 2019- 2021 One New retail Cross-border Record Uniting IT identical distribution & delivery Bank platforms Way of client services organisation inte
Slide 7: Becoming the go-to platform for all financial needs
Becoming the go-to platform for all financial needs Building insurance platform with AXA Yolt expands to France and Italy New funding initiatives for SMEs • ING is partnering with AXA to • Yolt, our money management • We partnered with Funding create personalised, simple and platform in the UK, is e
Slide 8: Playing a pivotal role in the energy transition
Playing a pivotal role in the energy transition Financing linked to company’s own sustainable KPIs Solutions to reduce carbon footprint of real estate • We help clients stay ahead by encouraging sustainable • In the Netherlands, we introduced the Energy Robot for business practices and supporting su
Slide 9: 2Q18 results
2Q18 results 9
Slide 10: Underlying pre-tax result up 1.5% year-on-year
Underlying pre-tax result up 1.5% year-on-year Underlying pre-tax result (in € mln) Underlying income (in € mln) 1,992 1,995 2,022 4,532 4,408 4,368 4,457 4,484 97 1,686 1,560 4,435 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 One-off gain • Underlying result before tax of €2,022 mln was suppor
Slide 11: Healthy net income progression supported by resilient NIM
Healthy net income progression supported by resilient NIM Net interest income excl. Financial Markets (in € mln) Net interest margin holds up well in the quarter (in bps) +2.1% 3,294 3,292 3,383 3,364 3,299 157 158 91 8 154 154 152 153 154 152 151 151 -35 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18
Slide 12: Core lending growth in Retail Banking and Industry Lending
Core lending growth in Retail Banking and Industry Lending Customer lending ING Group 2Q18 (in € bln) Core lending businesses: €14.2 bln 6.3 0.4 -0.6 -0.4 -2.8 3.3 592.4 1.5 2.9 3.4 578.2 0.3 31-03-18 Retail Retail Retail Retail WB Industry WB General WB Other* Lease run- Bank FX / 30-06-18 NL Belgi
Slide 13: Detailed split of net core lending growth
Detailed split of net core lending growth Retail Banking core loan growth split by Wholesale Banking* core loan growth split by product product (in € bln) (in € bln) +€8.1 bln +€6.1 bln 4.5 2.0 1.2 0.2 0.4 -0.6 3.5 1.6 1.3 1Q18 Mortgages Other 2Q18 1Q18 ITEF ETIG SFG REF Other IL GL & TS WB 2Q18 len
Slide 14: Broad-based fee income growth; FM impacted by client activity
Broad-based fee income growth; FM impacted by client activity Net fee and commission income (in € mln) Underlying income Financial Markets* (in € mln) 714 717 323 643 674 661 251 257 297 290 227 238 252 279 263 257 55 144 153 154 157 160 151 157 149 172 265 240 238 250 271 107 105 66 78 2Q17 3Q17 4Q
Slide 15: Cost control a key priority
Cost control a key priority Underlying operating expenses (in € mln) Regulatory costs (in € mln) 474 493 264 2,242 2,354 2,249 2,195 2,193 98 94 69 2Q17 3Q17 4Q17 1Q18 2Q18 1Q 2Q 3Q 4Q Expenses excl. regulatory costs Regulatory costs 2017 2018 • Compared to 1Q18, which included a release of a legal
Slide 16: ING Group financial ambitions
ING Group financial ambitions Actual 2017 Actual 2Q18 Ambition 2020* ~13.5%** • CET1 ratio (%) 14.7%* 14.1%* (Basel IV) Capital • Leverage ratio (%) 4.7% 4.3% >4% • Underlying C/I ratio (%)*** 55.5% 56.1% 50-52% (by 2020) Profitability • Underlying ROE (%)*** 10.2% 10.4% 10-12% (IFRS-EU Equity) Divi
Slide 17: Asset quality
Asset quality 17
Slide 18: Risk costs remained low due to a continued benign credit environment
Risk costs remained low due to a continued benign credit environment in most regions Risk costs (in € mln) Stage 3 ratio* 229 2.4% 2.3% 190 115 2.1% 2.1% 135 124 68 2.0% 46 85 59 1.9% 1.9% 1.8% 90 62 1.8% 1.7% 1.7% 68 71 72 1.9% 1.8% 1.8% 1.8% 1.6% 13 28 27 47 32 1.7% 12 5 -4 1.6% -22 -20 -47 2Q17 3
Slide 19: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 7% 3% 1% 28% 16% 15% 37% €665 3% €418 €247 45% bln bln bln 63% 8% 21% 17% 9% 13% 14% Retail Banking Mortgages Netherlands Project & Asset-based Finance Wholesale Banking Other lending Netherlands R
Slide 20: Granular Wholesale Banking lending credit outstandings by geography and sector
Granular Wholesale Banking lending credit outstandings by geography and sector Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S Wholesale Banking (2Q18)* Lending Credit O/S Wholesale Banking (2Q18)* 1% NL 7% 3% 3% Builders & Contractors 12% 5% 18% Belux 10% Cent
Slide 21: Detailed Stage 3 / NPL disclosure on selected lending portfolios
Detailed Stage 3 / NPL disclosure on selected lending portfolios Selected lending portfolios (in € mln) Lending credit Stage 3 ratio Lending credit Stage 3 ratio Lending credit NPL ratio O/S 2Q18 2Q18 O/S 1Q18 1Q18 O/S 2Q17 2Q17 Wholesale Banking 246,961 1.7% 234,201 1.8% 225,556 2.4% Industry Lendi
Slide 22: Group capital
Group capital 22
Slide 23: ING Group Total Capital Ratio at 18.5%
ING Group Total Capital Ratio at 18.5% ING Group fully loaded Total Capital ratio development* 2.7% 18.5% 1.7% 14.3% 0.2% -0.3% -0.1% 0.2% -0.2% 14.1% 1Q18 Profit added Volume growth Model updates Operational & FX & Other 2Q18 AT1 Tier 2 2Q18 total CET1 ratio to CET1** & risk & add-ons Market RWA CE
Slide 24: ING Group's CET1 capital requirements
ING Group’s CET1 capital requirements ING Group SREP* 2017 SREP (Supervisory Review and Evaluation Process) • In the 2017 SREP the European Central Bank has set the capital requirements for 2018 MDA MDA restriction • A 10.4% phased-in CET1 ratio requirement applies for restriction level (11.8%) 2018
Slide 25: Additional Tier 1: comfortable buffers to triggers
Additional Tier 1: comfortable buffers to triggers Buffer to MDA 2Q18* Buffer to Conversion Trigger 2Q18 (in € bln) 14.1% 44.8 €12 bln 11.8% €23 bln 10.4% 3.6% 7.1%*** 22.3 7% CET1 equity conversion trigger 2Q18 phased-in CET1 2018 2019** 2Q18 phased-in 2Q18 phased-in CET1 2Q18 phased-in CET1 2018 M
Slide 26: HoldCo resolution strategy
HoldCo resolution strategy 26
Slide 27: Issuance entities under our approach to resolution
Issuance entities under our approach to resolution Issuance entities Instruments Designated • Capital instruments resolution ING Group • Senior unsecured debt (TLAC / MREL eligible) entity • Covered Bonds / secured funding ING Bank • Senior unsecured debt (TLAC / MREL ineligible) • Covered Bonds / s
Slide 28: ING well positioned for TLAC/MREL issuance plans
ING well positioned for TLAC/MREL issuance plans… Strong current capital position…. …which provides flexibility for TLAC issuance plans • ING maintains a strong CET1 ratio • ING Group fully-loaded CET1 ratio at 14.1% as per 2Q18 • Steady state TLAC needs to be met by 2019/2022 • ING Group has a very
Slide 29: Supported by a recycling strategy of ING Bank instruments
…supported by a recycling strategy of ING Bank instruments Maturity ladder outstanding long-term senior unsecured debt (in € bln)* 12 8 4 0 2H18 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 >2028 ING Bank senior unsecured debt ING Group senior unsecured debt • ING Group has issued approx. €7.2
Slide 30: Liquidity and funding
Liquidity and funding 30
Slide 31: ING balance sheet: strong and conservative with customer deposits as primary funding
ING balance sheet: strong and conservative with customer deposits as the primary source of funding Balance sheet ING Group (in € bln) High quality customer loan book Balance sheet size ING Group 30 June 2018: €906 bln • See “Asset Quality” section of the presentation Other 17 Cash balances 51 Total
Slide 32: Robust liquidity position
Robust liquidity position Funding mix* ING holds sizable liquidity buffer 30 June 2018 • ING’s funding consists mainly of retail deposits, corporate 2% deposits and wholesale funding 9% Customer deposits (retail) 7% Customer deposits (corporate) • ING’s 12-month moving average LCR increased from 115
Slide 33: Funding profile well diversified by currency
Funding profile well diversified by currency Long-term debt maturity ladder per currency (in € bln)* 20 15 10 5 0 2017 1H18 2018 2019 2020 2021 2022 2023 2024 2025 2026 >2026 EUR USD Other Long-term HoldCo debt issuance** • ING Group issued approx. €8.9 bln of long-term debt in 2017 and approx. €2.8
Slide 34: Robust rating profile with strong trend over the last quarters
Robust rating profile with strong trend over the last quarters Main credit ratings of ING on 1 August 2018 Latest ING Bank rating actions S&P Moody’s Fitch • Fitch: Jul-2018 Fitch revised the outlook for ING Bank N.V. to positive from stable Stand-alone rating a baa1 a+ • Moody’s: Sep-2017 ING Bank
Slide 35: Appendix
Appendix 35
Slide 36: Outstanding benchmark capital securities
Outstanding benchmark capital securities (Additional) Tier 1 securities issued by Group Currency Issue date First call date Coupon Issued Outstanding** USD (CRR/CRDIV compliant) Nov-16 Apr-22 6.875% 1,000 1,000 USD (CRR/CRDIV compliant)* Apr-15 Apr-20 6.000% 1,000 1,000 USD (CRR/CRDIV compliant)* Ap
Slide 37: Outstanding HoldCo Senior benchmarks
Outstanding HoldCo Senior benchmarks HoldCo Senior Unsecured* ISIN Issue date Maturity Tenor Coupon Currency Issued Spread XS1771838494 Feb-18 Feb-25 7yr 1.125% EUR 1,000 m/s + 42 XS1730885073 Dec-17 Jan-28 10yr 1.375% EUR 1,000 m/s + 57 US456837AG8 Mar-17 Mar-22 5yr 3.15% USD 1,500 T + 125 US456837
Slide 38: ING Bank's covered bond programme
ING Bank’s covered bond programme… Repayment type • ING Bank NV €30 bln Hard and Soft Bullet Covered Bonds programme 2%4% Interest Only • UCITS, CRR and ECBC Label compliant. Rated Aaa/AAA/AAA (Moody’s/S&P/Fitch) 4% 6% Investment • Programme is used for external issuance purposes; separate €10 bln S
Slide 39: Benefiting from continued improvement of the Dutch economy and housing market
…benefiting from continued improvement of the Dutch economy and housing market Dutch Purchasing Managers Index (PMI) was 60.1 as of June 2018, which indicates positive growth in industry Dutch unemployment rate (%) continues to decline 70 15 60 10 50 5 40 30 0 2009 2010 2011 2012 2013 2014 2015 2016
Slide 40: 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