Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Debt Investor Presentation (October 2019)
41 slides from Ing Groep's debt investor presentation, Oct 31, 2019
Slide 1: ING Credit Update 3Q2019
ING Credit Update 3Q2019 Amsterdam • 31 October 2019
Slide 2: Key points
Key points • ING posted 3Q2019 net profit of €1,344 mln • Primary customers increased by 165,000 to 13.1 mln, representing more than one-third of our Retail customer base • Net core lending growth in Retail was €3.6 bln • In Wholesale Banking net core lending decreased by €4.6 bln, with volumes affe
Slide 3: Commercial momentum remained strong in Retail
Commercial momentum remained strong in Retail Target to reach >16.5 mln primary customers* by 2022 Net promoter scores (NPS) 3Q2019 29.2% 30.5% 32.8% 33.9% >16.5 10.4 11.4 12.5 13.1 #1 in 6 out of 13 retail countries 2016 2017 2018 3Q2019 Ambition 2022 Primary as a % of total retail customers Core l
Slide 4: Countering financial and economic crime remains our priority
Countering financial and economic crime remains our priority Continued focus on improving Know Your Customer (KYC) We keep developing tools to increase accuracy and effectiveness in the management of our non-financial risks • We made further progress in strengthening our global KYC organisation and
Slide 5: Strong mortgage growth at improved margins in Spain
Strong mortgage growth at improved margins in Spain We have introduced a new Improved customer experience and market share in 2019 mortgage relationship model… Comparing traditional to new model ytd August 2019 except for market share • A new call center platform, fully # of inbound calls* Conversio
Slide 6: We continue to take action to combat climate change
We continue to take action to combat climate change Important milestones achieved in 3Q2019 Strong sustainability deal activity in 3Q2019 • ING signed the UN-backed Principles for Responsible • We also help our customers reach their sustainability Banking as a founding member – one of 131 banks goal
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 • Our business model is Belgium / Luxembourg 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: 3Q2019 results
3Q2019 results 12
Slide 13: Income reflects robust lending margins and fee growth
Income reflects robust lending margins and fee growth Underlying pre-tax result (in € mln) Total underlying income (in € mln) 2,124 4,646 4,501 4,576 4,665 4,626 2,005 1,911 1,692 1,582 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019 • 3Q2019 underlying result before tax was €1
Slide 14: NII improved quarter-on-quarter; 4-quarter rolling NIM at 154 bps
NII improved quarter-on-quarter; 4-quarter rolling NIM at 154 bps Net interest income excl. Financial Markets (FM) (in € mln) Higher NIM partially explained by FM (in bps) 3,470 3,459 3,435 3,391 3,391 156 153 155 154 154 152 153 154 152 154 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019 3Q2018 4Q2018 1Q2019 2Q
Slide 15: 3Q2019 net core lending
3Q2019 net core lending Customer lending ING Group 3Q2019 (in € bln) Core lending businesses: €-1.0 bln 2.1 -1.4 -3.1 3.9 617.3 615.2 0.5 -0.2 1.2 0.0 -0.3 -0.5 30-06-2019 Retail Retail Retail Retail WB Lending WB Daily WB Other* Lease run- Treasury FX / Other** 30-09-2019 NL Belgium Germany Other B
Slide 16: Good fee income growth; higher FM with lower value adjustments
Good fee income growth; higher FM with lower value adjustments Net fee and commission income (in € mln) Underlying income Financial Markets (in € mln) +3.8% 720 747 704 711 183 232 27 675 14 196 213 281 295 262 290 280 176 226 254 255 257 156 159 159 176 180 180 259 249 256 262 274 -13 -4 -25 -58 -7
Slide 17: Expenses impacted by higher costs related to KYC
Expenses impacted by higher costs related to KYC Underlying operating expenses (in € mln) Regulatory costs* (in € mln) 515 493 515 266 97 106 91 266 2,216 2,303 2,272 2,354 2,334 98 97 91 106 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019 1Q 2Q 3Q 4Q Expenses excl. regulatory costs Regulatory costs 2018 2019 •
Slide 18: Risk costs up QoQ, asset quality remains strong
Risk costs up QoQ, asset quality remains strong Risk costs (in € mln) Stage 3 ratio 276 215 242 1.7% 207 209 1.6% 1.6% 1.6% 1.6% 50 116 107 71 1.6% 1.6% 91 107 1.6% 1.5% 1.5% 1.5% 1.5% 73 1.4% 82 84 1.4% 40 80 44 1.3% 46 45 42 16 43 11 22 -21 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019 3Q2018 4Q2018 1Q2019 2
Slide 19: ING Group financial ambitions
ING Group financial ambitions Actual 2018 Actual 3Q2019 Financial ambitions ~13.5%* • CET1 ratio (%) 14.5% 14.6% (Basel IV) Capital • Leverage ratio (%) 4.4% 4.4% >4% • Underlying ROE (%)** 11.2% 10.3% 10-12% (IFRS-EU Equity) Profitability • Underlying C/I ratio (%)** 54.8% 55.8% 50-52% Dividend • D
Slide 20: Asset quality
Asset quality 20
Slide 21: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 7% 5% 2% 26% 15% 37% €703 €446 26% €257 3% bln bln bln 63% 10% 67% 17% 9% 13% Retail Banking Mortgages Netherlands Lending Wholesale Banking Other lending Netherlands Daily Banking & Trade Finance
Slide 22: 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 (3Q2019)* Lending Credit O/S Wholesale Banking (3Q2019)* 1% NL 12% Real Estate, Infra & Construction 9% 9% 17% Belux
Slide 23: 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 3Q2019 3Q2019 O/S 2Q2019 2Q2019 O/S 3Q2018 3Q2018 Wholesale Banking 257,082 1.5% 251,034 1.3% 252,657 1.6% Lending 171,509 1.7%
Slide 24: Overview Turkey exposure
Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 3Q2019 2Q2019 Change 2% 15% Lending Credit O/S Retail Banking 4,817 4,821 -0.1% USD Residential mortgages 537 525 +2.3% 36% EUR TRY Consumer lending 1,225 1,147 +6.8% Other 47% SME/Midcorp 3,054 3,149 -3
Slide 25: Group capital, funding & liquidity
Group capital, funding & liquidity 25
Slide 26: ING Group Total capital ratio up at 19.0% at the end of 3Q2019
ING Group Total capital ratio up at 19.0% at the end of 3Q2019 ING Group Total capital ratio development* 2.2% 19.0% 2.2% 14.5% +0.2% -0.1% 14.6% ~13.5% 11.8%*** 2Q19 Profit added RWA & other 3Q19 AT1 Tier 2 3Q19 Total capital Basel IV CET1 CET1 ratio to CET1** CET1 ratio ratio ambition CET1 ratio R
Slide 27: 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 28: 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 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 >2029 2019YtD 2019YtD TLTRO Covered Bank Senior HoldCo Tier 2 Issuance activity in 2019 year-to-date • Tota
Slide 29: ING is on track with its 2019 issuance plan
ING is on track with its 2019 issuance plan ING Group instruments (in € bln)* Currency split* Group / Bank issuance plan HoldCo Senior Senior debt issuance 90.0 84.7 26.5%* 80.0 7.5% • ~€7-9 bln of HoldCo Senior was planned for 2019, tenors ≥ 5 yrs 70.0 24.0 60.0 2.2%** 16% • 90% of the lower-end gu
Slide 30: 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 ING Bank Hipoteczny Instruments • Secured funding • Secured funding • Secured funding • Secured funding • Secured funding overview • Senior unsecured
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 September 2019: €922 bln • See “Asset Quality” section of the presentation Other 16 Cash balances 54 T
Slide 32: Robust liquidity position
Robust liquidity position Funding mix* ING holds sizeable liquidity buffer 30 September 2019 • ING’s funding consists mainly of retail deposits, corporate 2% deposits and public debt 11% Customer deposits (retail) 4% Customer deposits (corporate)** • ING’s 12-month moving average LCR stable at 126%
Slide 33: Strong rating profile at both Group and Bank level
Strong rating profile at both Group and Bank level Main credit ratings of ING on 30 October 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 a
Slide 34: Appendix
Appendix 34
Slide 35: 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 (11.83%) Group’s capital requirements
Slide 36: Additional Tier 1: comfortable buffers to triggers
Additional Tier 1: comfortable buffers to triggers Buffer to MDA 3Q2019* Buffer to Conversion Trigger 3Q2019 (in € bln) 14.6% 46.7 €8.8 bln 11.8% 2.8% €24.3 bln 7.6%** 7% CET1 equity 22.4 conversion trigger 3Q19 CET1 2019 MDA 3Q19 CET1 AT1 conversion trigger trigger level • MDA restrictions will app
Slide 37: 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) Sep-19 Nov-26 5.750% 1,500 1,500 USD (CRR/CRDIV compliant) Feb-19 Apr-24 6.750% 1,250 1,250 USD (CRR/CRDIV compliant) Nov-
Slide 38: Most recent HoldCo Senior transactions
Most recent HoldCo Senior transactions HoldCo Senior Unsecured, EUR issuances ISIN Issue date Maturity Tenor Coupon Currency Issued Spread XS2049154078 Sep-19 Set-25 6yr 0.100% EUR 1,000 m/s + 60 XS1933820372 Jan-19 Jan-26 7yr 2.125% EUR 1,000 m/s + 170 XS1909186451 Nov-18 Nov-30 12yr 2.500% EUR 1,5
Slide 39: 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% 3% Interest Only • UCITS, CRR and ECBC Label compliant. Rated Aaa/AAA/AAA (Moody’s/S&P/Fitch) 6% Investment 6% • This programme is used for external issuance purposes. There is a s
Slide 40: …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 51.6 as per end 3Q2019, which indicates positive industrial growth Dutch unemployment rate (%) is the lowest since 2007 70 15 60 10 50 5 40 30 0 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 41: 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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