Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Debt Investor Presentation (May 2023)
48 slides from Ing Groep's debt investor presentation, May 11, 2023
Slide 1: ING Credit Update 1Q2023
ING Credit Update 1Q2023 ING Investor Relations 11 May 2023
Slide 2: Delivering value in 1Q2023
Delivering value in 1Q2023 Continued primary High share of mobile-only Growing volume mobilised2) customer growth customers1) to finance the transition +106,000 57% €22 bln Strong total income growth3) Increasing return on equity4) Attractive shareholder return 23% 9.7% €1.5 bln year-on-year 4-quart
Slide 3: We are executing our strategy
We are executing our strategy Our purpose Empower people to stay a step ahead in life and in business Our strategic priorities Superior customer experience Sustainability Increase Streamline Smarter straight-through-processing customer interactions KYC processes of customer journeys 2023 focus Incre
Slide 4: Our strong foundation with a large retail deposit base and high liquidity
Our strong foundation with a large retail deposit base and a high level of available liquidity resources A growing base of insured Retail Banking deposits (in € bln) Strong liquidity position (in € bln) Available liquidity resources 660 45 17% 66 435 31% 13% €268 549 bln 83% insured 114 35% insured
Slide 5: Growing shareholder return
Growing shareholder return Strong capital generation Attractive shareholder return Return on equity (4-quarter rolling) Based on (announced) payment date 11.8% 12.5% 9.7% 9.4% 1.28 8.0% 6.7% 5.4% 1.01 0.89 0.70 0.67 0.68 0.41 0.50 Dividend 0.60 0.58 ban 0.39 Return on equity Return on equity 2018 20
Slide 6: Progress towards our 2025 targets
Progress towards our 2025 targets Financial target 1Q2023 2025 target Drivers Primary customer growth 5-10% 1) Increasing package and service fees in daily banking to better reflect cost of service Fee income -4% annual Growing base in investment products, both in number of accounts as well as
Slide 7: Business profile
Business profile 7
Slide 8: 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
Slide 9: Our strategy, with a focus on execution certainty
Our strategy, with a focus on execution certainty Purpose Empower people to stay a step ahead in life and in business Strategic priorities Superior customer experience Sustainability Seamless Scalable Safe Our Enablers digital experience Tech & Operations & secure people 9
Slide 10: Our focus SDGs are reflected in our Sustainability Direction
Our focus SDGs1) are reflected in our Sustainability Direction Environment Social Climate action Financial health Empowering our clients2) Empowering our customers by focusing on: Aim to steer the most carbon-intensive parts of our Financial inclusion by making bank products lending portfolio to
Slide 11: 1Q2023 results
1Q2023 results 11
Slide 12: A robust model delivering value
A robust model delivering value Pre-provision profit excl. volatile items1) and regulatory costs 1Q2023 pre-provision profit, excluding volatile items and (in € mln) regulatory costs, increased on both comparable quarters Strong NII development, driven by the positive effect of 3,055 higher inte
Slide 13: Strong NII momentum and higher NIM
Strong NII momentum and higher NIM Net interest income (in € mln) Lending and deposit margin (in bps) Net interest margin (in bps) 3,545 4,012 159 3,465 3,332 3,415 71 82 76 145 135 129 127 128 148 3,604 3,860 114 137 137 139 136 3,333 3,389 94 140 137 136 135 71 134 52 134 133 45 128 -343 -315 1Q20
Slide 14: Continued deposit inflow and loan growth, albeit at a lower pace
Continued deposit inflow and loan growth, albeit at a lower pace Customer lending (in € bln) Net core lending growth €1.0 bln 1.8 -2.3 1.4 0.3 0.3 -0.7 0.3 -3.1 641.5 0.2 -0.2 639.4 4Q2022 Retail Retail Retail Retail Other WB Lending WB DB&TF1) WB Other1) Treasury FX Other2) 1Q2023 Netherlands Belgi
Slide 15: Fees supported by daily banking, fee base growing
Fees supported by daily banking, fee base growing Net fee & commission income per business line (in € mln) Net fee & commission income per product category (in € mln) 933 888 888 896 933 888 888 896 876 876 112 92 96 105 106 324 280 295 318 323 267 226 194 201 217 275 253 230 214 224 247 238 258 244
Slide 16: Operating expenses include full-year 2022 inflationary impact and investments in growth
Operating expenses include full-year 2022 inflationary impact and investments in growth Expenses (in € mln) Excluding regulatory costs and incidental items, expenses were 10.7% higher YoY 3,070 2,945 2,888 Main driver was higher staff expenses, largely reflecting 2,738 525 the full-year inflatio
Slide 17: Risk costs reflect high quality loan book
Risk costs reflect high quality loan book Risk costs per business line (in € mln) Stage 2 ratio Stage 3 ratio 987 10.2% 9.4% 8.9% 939 7.2% 6.6% 7.0% 7.1% 1.6% 403 6.6% 1.5% 1.4% 1.5% 1.4% 128 269 152 5.6% 5.3% 1.4% 202 65 1.4% 1.4% 1.4% 1.4% 5.8% 5.5% 1.3% 1.4% 88 274 242 5.2% 1.2% 113 203 4.6% 4.5%
Slide 18: Capital
Capital 18
Slide 19: Risk-weighted assets decreased in 1Q2023
Risk-weighted assets decreased in 1Q2023, mainly reflecting improved quality of the loan book and FX impact on credit RWA ING Group risk-weighted assets development (in € bln) Credit RWA €-4.5 bln 331.5 -1.4 -0.6 -1.7 -0.3 -0.5 0.4 0.0 327.4 4Q2022 FX Volume Overall profile of Models, Other Market O
Slide 20: ING Group CET1 ratio improved to 14.8%
ING Group CET1 ratio improved to 14.8%. Pro forma CET1 ratio at 14.4% after additional distribution to shareholders ING Group Total capital ratio development (in %) +2.8% 19.8% +2.2% 14.5% +0.2% -0.0% +0.2% 14.8% ~12.5% 10.7% 4Q2022 Profit added Other capital RWA 1Q2023 AT1 Tier 2 1Q2023 Total Basel
Slide 21: Buffer to fully-loaded Maximum Distributable Amount remained strong at ~4%
Buffer to fully-loaded Maximum Distributable Amount, including announced CCyB increases, remained strong at ~4% ING Group fully loaded SREP requirements ING Group’s fully loaded CET1 requirement is 10.98% 4.50% Pillar 1 Requirement (P1R) 0.98% Pillar 2 Requirement (P2R) MDA restriction 2.50%
Slide 22: Withholding tax mechanics
Withholding tax mechanics Withholding tax mechanics Implications Cash dividend payments in the Netherlands are subject to For ING, the hurdle in 2023 is €~2.8 bln 15% dividend withholding tax Following the cash dividend payments of €0.3 bln in January Additional distributions in the form of
Slide 23: Funding & liquidity
Funding & liquidity 23
Slide 24: ING meets its TLAC and MREL requirements
ING meets its TLAC and MREL requirements TLAC as % of RWA (and LR) MREL as % of RWA (and LR) 30.7% 30.7% 27.53% 29.01% 10.9% 23.24% 5.50% 10.9% 5.24% 5.24% 2.8% 2.8% 2.2% 2.2% 22.29% 23.51% 14.8% 18.00% 14.8% 1Q2023 Current Requirement 1Q2023 Current Requirement Requirement 1/1/2024 8.9% 6.75% 8.9%
Slide 25: Long-term debt maturity ladder and issuance guidance
Long-term debt maturity ladder and issuance guidance Issuance guidance 2023 Currency split of outstandings as at 31 March 2023 Guidance for 2023 issuance is ~€7-9 bln in HoldCo Senior and HoldCo Senior Tier 2 AT1 ~€4-7 bln in Secured issuance from various entities, subject 11% 9% to balance sheet
Slide 26: Covered bond funding through various programmes
Covered bond funding through various programmes ING Bank N.V. ING Belgium S.A./N.V. ING DiBa AG ING Bank (Australia) Ltd ING Bank Hipoteczny Instruments Secured funding Secured funding Secured funding Secured funding Secured funding overview Senior unsecured Covered bond: ~€19.9 bln
Slide 27: ING is an active issuer of Green Bonds
ING is an active issuer of Green Bonds Green Bond issuance objectives External consultants & providers Support meeting our sustainability objectives Second party opinion provider Fund growth in our Eligible Green Loan portfolio Continued leadership in the Green Bond market Renewable energy
Slide 28: We issue Green Bonds to support our sustainability objectives
We issue Green Bonds to support our sustainability objectives Our Green Bond Framework was updated in 2022 and has been assessed by a Second Party Opinion (SPO) and is aligned with the ICMA Green Bond Principles 2021. The framework is presented through below four pillars: Use of proceeds Project E
Slide 29: External recognition of ING's commitment to ESG
External recognition of ING’s commitment to ESG ESG ratings ING Groep N.V. Evaluation: ING's management of ESG Rating AA ESG evaluation ‘Strong’ (score 84/100) material risk is ‘Strong’ Updated: September 2022 Updated: June 2022 Position: in the 22nd percentile of 406 banks Updated: Au
Slide 30: 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 increased to €1,022 bln in 1Q2023 See “Asset Quality” section of this presentation Assets Liabilities 1,022
Slide 31: Growing base of mainly sticky insured retail deposits
Growing base of mainly sticky insured retail deposits Growing base of insured deposits from private individuals as Customer deposits excluding Group Treasury (in € bln) main source of funding €435 bln deposits representing ~70% of total customer 600 deposits (excl. GT) and ~43% % of our balance sh
Slide 32: Robust liquidity position with a 12-month moving average LCR of 134%
Robust liquidity position with a 12-month moving average LCR of 134% Funding mix1) ING maintains a sizeable liquidity buffer 31 March 2023 ING’s funding consists mainly of retail deposits, corporate deposits and public debt 9% 2% Customer deposits (private individuals) 4% Customer deposits (other)
Slide 33: Strong rating profile at both Group and Bank levels
Strong rating profile at both Group and Bank levels Main credit ratings of ING as of 10 May 2023 Latest rating actions on ING Group and Bank S&P Moody’s Fitch S&P: upgraded ING Bank to A+ in July 2017. In Stand-alone rating a baa1 a+ October 2022, S&P affirmed ING's rating and outlook, reflecting
Slide 34: Asset quality
Asset quality 34
Slide 35: Wholesale Banking lending credit outstandings
Wholesale Banking lending credit outstandings 1) Loan portfolio is well diversified across geographies… …and sectors Wholesale Banking Wholesale Banking 1% 12% NL 1% 9% Real Estate, Infra & Construction 17% Belux Commodities, Food & Agri Germany 33% 11% TMT & Healthcare 2% 10% Other Challengers Tran
Slide 36: Well-diversified Commercial Real Estate (CRE) portfolio
Well-diversified Commercial Real Estate (CRE) portfolio Portfolio overview CRE by asset type (as per 1Q2023) CRE portfolio of €47.9 bln (5.9% of loan book) vs €56 bln 7% cap, with a low Stage 3 ratio of 1.0% and average 47% LtV 8% Office 23% 5% Residential Retail €47.9 bln Industrial Strict underw
Slide 37: 1Q2023 provisioning per Stage
1Q2023 provisioning per Stage Stage 1 provisioning (in € mln) Stage 2 provisioning (in € mln) Stage 3 provisioning (in € mln) 844 56 407 40 18 34 13 318 837 25 37 240 27 230 9 177 197 1 47 -6 154 43 -21 -5 32 97 40 161 7 -78 -51 -194 -117 101 -12 -46 141 167 155 -8 -77 -33 -202 53 70 1Q2022 2Q2022 3
Slide 38: Appendix
Appendix 38
Slide 39: Issuance entities under our approach to resolution
Issuance entities under our approach to resolution Issuance entities Eligible instruments for TLAC/MREL Designated TLAC MREL resolution ING Groep N.V. entity Own funds (CET1 / AT1 / Tier 2) Senior unsecured debt (> 1 year) Own funds ING Bank N.V. Secured funding & senior unsecure
Slide 40: Comfortable buffer to Additional Tier 1 trigger
Comfortable buffer to Additional Tier 1 trigger Buffer to AT1 trigger (in € bln) 31 March 2023 48.6 €25.7 bln 7.8pp1) 22.9 1Q2023 7% CET1 CET1 capital AT1 conversion trigger ING Group capital buffer to conversion trigger (7% CET1) is high at €25.7 bln, or 7.8% of RWA 1) Difference between 14.8% IN
Slide 41: Outstanding benchmark capital securities
Outstanding benchmark capital securities (Additional) Tier 1 securities issued by Group Currency Issue date First call date Coupon Outstanding (mln)2) Reset spread USD Feb-23 May-28 7.500% 1,000 UST + 371bps USD1) Sep-21 May-27 3.875% 1,000 UST + 286bps USD1) Sep-21 May-31 4.250% 1,000 UST + 286bps
Slide 42: HoldCo Senior transactions in past 12 months
HoldCo Senior transactions in past 12 months ISIN Issue date First call date Maturity Tenor Coupon Issued (mln)1) Reset spread EUR XS2554746185 Nov-22 Nov-26 Nov-27 5NC4 4.874% 1.250 3ME+185 XS2554745708 Nov-22 Nov-32 Nov-33 11NC10 5.25% 1.000 3ME+215 XS2483607474 May-22 May-25 May-26 4NC3 2.125% 1,
Slide 43: 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 type1) UCITS, CRR and ECBC Label compliant. Rated Aaa/AAA/AAA (Moody’s/S&P/Fitch) 3%1% Interest Only 3% This programme is used for external issuance purposes. There is a separate €15
Slide 44: Benefits from a continued strong Dutch housing market
…benefits from a continued strong Dutch housing market, although macro environment is increasingly challenging Dutch Purchasing Managers Index (PMI) indicates industrial Dutch unemployment rates (%) continue to decrease since contraction as it decreased to 46.4 August 2020 70 15 60 10 50 5 40 30 0 2
Slide 45: 1Q2023 results overview
1Q2023 results overview In € mln Reported P&L Volatile items P&L excluding volatile items Net interest income 4,012 1 4,010 Net fee and commission income 896 0 895 Investment income 15 15 1 Other income 644 -45 690 Total income 5,567 -29 5,596 Expenses excl. regulatory costs 2,546 4 2,541 Regulatory
Slide 46: Volatile income and expense items
Volatile income and expense items Volatile items (in € mln) 1Q2022 2Q2022 3Q2022 4Q2022 1Q2023 WB/FM – valuation adjustments -70 90 -15 -2 -10 Capital gains/losses 26 8 -3 0 15 Hedge ineffectiveness1) 81 -31 -431 -71 35 Other items income2) -68 -155 -218 -319 -69 Total volatile items – income -31 -8
Slide 47: Hyperinflation accounting in Turkey
Hyperinflation accounting in Turkey Application of IAS 29 to consolidation of ING Turkey Impact on results (in € mln) We applied IAS 29 (‘Financial Reporting in Hyperinflationary 4Q2022 1Q2023 Economies’) to the consolidation of our subsidiary in Turkey, Profit or loss effective as of 1 January 20
Slide 48: 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