Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Debt Investor Presentation (August 2019)
42 slides from Ing Groep's debt investor presentation, Aug 1, 2019
Slide 1: ING Credit Update 2Q19
ING Credit Update 2Q19 Amsterdam • 1 August 2019
Slide 2: Key points
Key points • ING posted 2Q19 net profit of €1,438 mln, on par with 2Q18 despite the continued low interest rate environment • Well-diversified primary customer growth of more than 300,000 with the total primary customer base reaching 12.9 mln. Primary customers now represent one-third of our Retail
Slide 3: Well-diversified primary customer growth underpins commercial momentum
Well-diversified primary customer growth underpins commercial momentum Target to reach >16.5 mln primary customers* by 2022 2Q19 net primary customer growth across Retail segments 29.2% 30.5% 32.8% 33.5% Benelux >16.5 12.5 12.9 +75k 10.4 11.4 Challengers +167k 2016 2017 2018 2Q19 Ambition Growth Mar
Slide 4: We further strengthened our commitment to sustainability
We further strengthened our commitment to sustainability Co-founding the Poseidon Principles Strong sustainability deal activity in 2Q19 • ING is one of 11 major banks that launched the Poseidon • In 2Q19, ING has supported the issuance of 26 sustainable Principles, which aim to support the shipping
Slide 5: Record quarter for Interhyp exceeding €6 bln in contracted volumes
Record quarter for Interhyp exceeding €6 bln in contracted volumes Contracted volume and market share 8.6% 8.8% 9.0% 8.9% 9.2%* 5.6 5.6 6.2 5.5 5.5 #1 mortgage broker Awarded in Germany “Top Mortgage Provider” 2Q18 3Q18 4Q18 1Q19 2Q19 (part of ING Group by €uro magazine Contracted volume (in € bln)
Slide 6: Continuing to improve our management of non-financial risks
Continuing to improve our management of non-financial risks Continuing focus on KYC-related activities Including developing promising tools to increase accuracy and efficiency of our KYC operations • The number of FTE working globally on know your customer (KYC) related activities has increased to >
Slide 7: Business profile and strategy
Business profile and strategy 7
Slide 8: 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 8
Slide 9: 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 Customers • Mature, established • Explorers, change-oriented scalability are advantages Products • Owned • Open architecture where relevant Strategy • Defensive, cos
Slide 10: 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 11: 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 12: 2Q19 results
2Q19 results 12
Slide 13: Pre-tax result reflects solid income and relatively low risk costs
Pre-tax result reflects solid income and relatively low risk costs Underlying pre-tax result (in € mln) Total underlying income (in € mln) 2,022 2,124 2,005 4,484 4,646 4,501 4,576 4,665 1,692 1,582 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 • 2Q19 underlying result before tax was €2,005 mln,
Slide 14: NII improved year-on-year; 4-quarter rolling NIM at 154 bps
NII improved year-on-year; 4-quarter rolling NIM at 154 bps Net interest income excl. Financial Markets (FM) Net interest margin slightly lower in 2Q19 (in € mln) (in bps) 3,470 3,459 3,364 3,391 3,391 156 154 153 155 154 152 153 154 152 151 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 NIM NIM
Slide 15: 2Q19 net core lending growth primarily in Retail
2Q19 net core lending growth primarily in Retail Customer lending ING Group 2Q19 (in € bln) Core lending businesses: €7.4 bln 1.6 1.0 0.7 0.5 -0.3 -0.2 -1.9 615.2 1.7 1.0 610.3 0.8 31-03-19 Retail Retail Retail Retail WB Lending WB Daily WB Other* Lease run- Treasury FX / 30-06-19 NL Belgium Germany
Slide 16: Fee income stable YoY; first digital insurance products launched
Fee income stable YoY; first digital insurance products launched Net fee and commission income (in € mln) Making good progress with Yolt and AXA initiatives 717 720 704 711 • Yolt, our smart money app, which provides customers a 27 675 one-stop overview of their accounts, has attracted 295 281 295 2
Slide 17: FM income impacted by negative valuation adjustments
FM income impacted by negative valuation adjustments Underlying income Financial Markets (in € mln) • Financial Markets’ total income was lower year-on-year, fully driven by negative model valuation adjustments and 241 196 183 negative marked-to-market movements on hedges 3 213 • Excluding these val
Slide 18: Stable cost/income ratio despite higher KYC-related expenses
Stable cost/income ratio despite higher KYC-related expenses Underlying operating expenses (in € mln) Regulatory costs* (in € mln) 515 493 515 266 97 98 91 266 2,249 2,216 2,303 2,272 2,354 98 97 91 2Q18 3Q18 4Q18 1Q19 2Q19 1Q 2Q 3Q 4Q Expenses excl. regulatory costs Regulatory costs 2018 2019 • Exp
Slide 19: Risk costs stable QoQ, remaining below through-the-cycle average
Risk costs stable QoQ, remaining below through-the-cycle average Risk costs (in € mln) Stage 3 ratio 215 242 1.7% 207 209 1.6% 50 1.6% 115 107 1.6% 1.6% 1.6% 1.6% 71 91 63 107 1.6% 1.6% 82 84 1.5% 1.5% 1.5% 72 40 80 46 45 42 16 1.4% 1.4% 32 11 22 -21 1.3% -52 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18
Slide 20: ING Group financial ambitions
ING Group financial ambitions Actual 2018 Actual 2Q19 Financial ambitions ~13.5%* • CET1 ratio (%) 14.5% 14.5% (Basel IV) Capital • Leverage ratio (%) 4.4% 4.3% >4% • Underlying ROE (%)** 11.2% 10.8% 10-12% (IFRS-EU Equity) Profitability • Underlying C/I ratio (%)** 54.8% 55.0% 50-52% Dividend • Div
Slide 21: Asset quality
Asset quality 21
Slide 22: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 7% 7% 3% 26% 15% 36% €696 3% €445 €251 27% bln bln bln 64% 63% 10% 17% 9% 13% Retail Banking Mortgages Netherlands Lending Wholesale Banking Other lending Netherlands Daily Banking & Trade Finance
Slide 23: 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 (2Q19)* Lending Credit O/S Wholesale Banking (2Q19)* 1% NL 6% 10% Real Estate, Infra & Construction 7% 19% Belux Com
Slide 24: Detailed Stage 3 disclosure on selected portfolios
Detailed Stage 3 disclosure on selected portfolios Selected portfolios (in € mln) Lending credit Stage 3 ratio Lending credit Stage 3 ratio Lending credit Stage 3 ratio O/S 2Q19 2Q19 O/S 1Q19 1Q19 O/S 2Q18 2Q18 Wholesale Banking 251,034 1.3% 238,992 1.4% 246,961 1.7% Lending 157,162 1.5% 157,262 1.4
Slide 25: Overview Turkey exposure
Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 2Q19 1Q19 Change 2% 16% Lending Credit O/S Retail Banking 4,821 5,189 -7.1% USD Residential mortgages 525 573 -8.4% 35% EUR TRY Consumer lending 1,147 1,243 -7.7% Other 47% SME/Midcorp 3,149 3,373 -6.7%
Slide 26: Group capital, funding & liquidity
Group capital, funding & liquidity 26
Slide 27: ING Group Total capital ratio up at 18.4% at the end of 2Q19
ING Group Total capital ratio up at 18.4% at the end of 2Q19 ING Group Total capital ratio development* 2.2% 18.4% 14.7% -0.3% -0.1% 1.8% +0.2% 14.5% 1Q19 Profit added Operational RWA FX/Other 2Q19 AT1 Tier 2 2Q19 Total capital CET1 ratio to CET1** CET1 ratio ratio CET1 ratio Basel IV & TRIM impacts
Slide 28: Issuance entities under our approach to resolution
Issuance entities under our approach to resolution Issuance entities Eligible instruments for TLAC/MREL Current Future TLAC MREL req. MREL req.* Designated • Own funds (CET1 / AT1 / T2) resolution ING Groep N.V. entity • Senior unsecured debt (> 1 yr)** • Own funds ING Bank N.V. •
Slide 29: Long-term debt maturity ladder and issuance activity in 2019
Long-term debt maturity ladder and issuance activity in 2019 Long-term debt maturity ladder (in € bln)* 25 20 15 10 5 0 Maturity Issuance 2H19 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 >2029 1H19 1H19 TLTRO Covered OpCo HoldCo Tier 2 Issuance activity in 2019 year-to-date • Total issuance YT
Slide 30: ING is on track with its 2019 issuance plan
ING is on track with its 2019 issuance plan ING Group TLAC instruments (in € bln)* Currency split* Group / Bank issuance plan 90.0 81.1 25.5%* HoldCo Senior Senior debt issuance 80.0 70.0 22.4 7.1% 17% • ~€7-9 bln of HoldCo Senior planned for 2019, tenors ≥ 5 yrs, of which €5.1 bln 60.0 6.9 2.2%** h
Slide 31: 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 Instruments • Secured funding • Secured funding • Secured funding • Secured funding overview • Senior unsecured • Covered bond**: ~€21 bln • Covered b
Slide 32: 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 2019: €913 bln • See “Asset Quality” section of the presentation 20 53 Total equity Other 87 Cash
Slide 33: Robust liquidity position
Robust liquidity position Funding mix* ING holds sizeable liquidity buffer 30 June 2019 • ING’s funding consists mainly of retail deposits, corporate 2% deposits and public debt 11% Customer deposits (retail) Customer deposits (corporate)** • ING’s 12-month moving average LCR slightly increased 5% 5
Slide 34: Strong rating profile at both Group and Bank level
Strong rating profile at both Group and Bank level Main credit ratings of ING on 31 July 2019 Latest ING rating actions S&P Moody’s Fitch • Fitch: Feb-2019 ING Bank was upgraded to AA- from A+ with a stable outlook. The upgrade reflects the build-up of Stand-alone rating a baa1 a+ a significant and
Slide 35: Appendix
Appendix 35
Slide 36: Managing our capital position above regulatory requirements
Managing our capital position above regulatory requirements ING Group SREP* 2019 SREP (Supervisory Review and Evaluation Process) • Following the conclusion of the annual SREP process in MDA restriction level February 2019, the European Central Bank has set ING (11.81%) Group’s capital requirements
Slide 37: Additional Tier 1: comfortable buffers to triggers
Additional Tier 1: comfortable buffers to triggers Buffer to MDA 2Q19* Buffer to Conversion Trigger 2Q19 (in € bln) 14.5% 46.2 €8.6 bln 11.8% 2.7% €23.9 bln 7.5%** 7% CET1 equity 22.3 conversion trigger 2Q19 CET1 2019 MDA 2Q19 CET1 AT1 conversion trigger trigger level • MDA restrictions will apply i
Slide 38: 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) Feb-19 Apr-24 6.750% 1,250 1,250 USD (CRR/CRDIV compliant) Nov-16 Apr-22 6.875% 1,000 1,000 USD (CRR/CRDIV compliant)* Apr
Slide 39: Most recent HoldCo Senior transactions
Most recent HoldCo Senior transactions HoldCo Senior Unsecured, EUR issuances ISIN Issue date Maturity Tenor Coupon Currency Issued Spread XS1933820372 Jan-19 Jan-26 7yr 2.125% EUR 1,000 m/s + 170 XS1909186451 Nov-18 Nov-30 12yr 2.500% EUR 1,500 m/s + 135 XS1882544973 Sep-18 Sep-28 10yr 2.000% EUR 1
Slide 40: 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 3% 4% Interest Only • UCITS, CRR and ECBC Label compliant. Rated Aaa/AAA/AAA (Moody’s/S&P/Fitch) 6% Investment • Programme is used for external issuance purposes; separate €15 bln Sof
Slide 41: …benefiting from a continued strong Dutch economy and housing market
…benefiting from a continued strong Dutch economy and housing market Dutch Purchasing Managers Index (PMI) was 50.7 as of June 2019, which indicates positive industrial growth Dutch unemployment rate (%) continues to decline 70 15 60 10 50 5 40 30 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Slide 42: 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