Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Debt Investor Presentation (May 2019)
43 slides from Ing Groep's debt investor presentation, May 2, 2019
Slide 1: ING Credit Update 1Q19
ING Credit Update 1Q19 Amsterdam • 2 May 2019
Slide 2: Key points
Key points • ING posted 1Q19 net profit of €1,119 mln • Results were supported by solid income despite challenging market conditions, good cost control, relatively low risk costs, and the release of a currency translation reserve • On a four-quarter rolling average basis, underlying return on equity
Slide 3: Key value accelerators
Key value accelerators Grow primary customers Increase cross-buy Improve cross-border scalability in Retail and Wholesale leveraging own, partners’ and third parties’ products Faster time-to-volume Benefit from attractive Enhance sustainability profile funding and lending mix to increase opportuniti
Slide 4: Our focus on primary customers and digital drives value
Our focus on primary customers and digital drives value New target to reach 16.5 mln primary customers* by 2022 Core lending Customer deposits 1Q19 net growth 1Q19 net growth 29.2% 30.5% 32.8% 32.9% 12.6 >16.5 € +8.7 bln € +4.8 bln 11.4 12.5 10.4 Net promoter scores (NPS) # of digital interactions**
Slide 5: New innovative solutions in the Payments and DLT space
New innovative solutions in the Payments and DLT space Instant payments launched in the Netherlands and Belgium Main DLT* initiatives of ING in the trade space • ING joined a consortium with MineHub to develop a blockchain- instant based platform that would help our clients in the metals and mining
Slide 6: We are recognised as an industry leader in sustainability
We are recognised as an industry leader in sustainability Strong sustainability deal activity in 1Q19 Recognition • In 1Q19, ING has supported the issuance of 12 sustainable bond transactions, leading to a significant improvement in Ranked 9th and In January 2019, our Green Bond league table positio
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: 1Q19 results
1Q19 results 12
Slide 13: Pre-tax result reflects solid income and higher but still relatively low risk costs
Pre-tax result reflects solid income and higher but still relatively low risk costs Underlying pre-tax result (in € mln) Total underlying income (in € mln) 2,022 2,124 4,484 4,646 4,501 4,576 4,457 1,686 1,692 1,582 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 • 1Q19 underlying result before ta
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) (in € mln) Net interest margin remained resilient in 1Q19(in bps) +2.8% 3,470 3,459 3,364 3,391 156 3,300 154 154 153 155 152 152 153 154 151 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19
Slide 15: Well-diversified net core lending growth in 1Q19
Well-diversified net core lending growth in 1Q19 Customer lending ING Group 1Q19 (in € bln) Core lending businesses: €8.7 bln 3.0 610.3 -0.1 2.2 2.5 1.5 -0.3 0.2 2.2 1.0 596.7 1.4 31-12-18 Retail Retail Retail Retail WB Lending WB Daily WB Other* Lease run- Treasury FX / 31-03-19 NL Belgium Germany
Slide 16: Resilient fee income development; challenging quarter for FM
Resilient fee income development; challenging quarter for FM Net fee and commission income (in € mln) Underlying income Financial Markets (in € mln) +2.1% 717 720 704 258 675 241 661 27 213 196 295 281 295 262 176 280 154 164 64 104 149 157 156 159 159 183 252 274 259 249 256 104 112 92 77 30 -19 -8
Slide 17: Retail Benelux cost savings underpin well-controlled cost base
Retail Benelux cost savings underpin well-controlled cost base Underlying operating expenses (in € mln) Regulatory costs* (in € mln) 515 493 515 493 266 98 91 266 2,193 2,249 2,216 2,303 2,272 98 91 1Q18 2Q18 3Q18 4Q18 1Q19 1Q 2Q 3Q 4Q Expenses excl. regulatory costs Regulatory costs 2018 2019 • Exp
Slide 18: Risk costs up YoY, but remain below through-the-cycle average
Risk costs up YoY, but remain below through-the-cycle average Risk costs (in € mln) Stage 3 ratio 215 242 1.8% 207 1.7% 50 1.7% 115 107 1.6% 71 1.7% 1.6% 1.6% 1.6% 1.6% 85 63 107 82 84 1.6% 1.6% 62 72 40 42 1.5% 1.5% 47 32 46 45 -13 11 -21 1.4% 1.4% -10 -52 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q
Slide 19: ING Group financial ambitions
ING Group financial ambitions Actual 2018 Actual 1Q19 Financial ambitions ~13.5%* • CET1 ratio (%) 14.5% 14.7% (Basel IV) Capital • Leverage ratio (%) 4.4% 4.4% >4% • Underlying ROE (%)** 11.2% 11.0% 10-12% (IFRS-EU Equity) Profitability • Underlying C/I ratio (%)** 54.8% 55.0% 50-52% Dividend • Div
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% 1% 4% 26% 15% 35% 29% €681 3% €442 €239 bln bln bln 65% 66% 17% 10% 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 (1Q19)* Lending Credit O/S Wholesale Banking (1Q19)* 1% NL 4% 14% Real Estate, Infra & Construction 7% 18% Belux 17%
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 1Q19 1Q19 O/S 4Q18 4Q18 O/S 1Q18 1Q18 Wholesale Banking 238,992 1.4% 236,248 1.4% 221,882 1.8% Lending 157,262 1.4% 153,260 1.5
Slide 24: Overview Turkey exposure
Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 1Q19 4Q18 Change 2% 16% Lending Credit O/S Retail Banking 5,189 5,709 -9.1% USD Residential mortgages 573 595 -3.7% 37% EUR TRY Consumer lending 1,243 1,355 -8.3% Other 45% SME/Midcorp 3,373 3,760 -10.3%
Slide 25: Group capital, funding & liquidity
Group capital, funding & liquidity 25
Slide 26: ING Group Total capital ratio up at 19.1% at the end of 1Q19
ING Group Total capital ratio up at 19.1% at the end of 1Q19 ING Group Total capital ratio development* 2.2% 19.1% 14.7% 2.1% 14.5% +0.1% +0.2% 0.0% 4Q18 Profit added Kotak Mahindra RWA & Other (excl. 1Q19 AT1 Tier 2 1Q19 Total capital CET1 ratio to CET1** Bank sale Kotak impact) CET1 ratio ratio Ba
Slide 27: Basel IV and other RWA impacts are being actively managed
Basel IV and other RWA impacts are being actively managed Pro-forma RWA impact from Basel IV and model changes Limited amount of CET1 capital build required until 2027 15%-18% 14.7% ~-2.0% ~0.7% ~13.4% ~13.5% ~80% of total ~20% of total impacts impacts 11.81% 1Q19 Possible Management Pro-forma ING G
Slide 28: Management actions to partly mitigate RWA impacts
Management actions to partly mitigate RWA impacts Product Features, Data Disintermediation and Income Enhancement Portfolio mix Quality and Regulations Capital Relief • We see opportunities to • Some pricing • ING developed its • All businesses will need adjust certain product opportunities exist in
Slide 29: 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.* • Own funds Designated resolution ING Groep N.V. • Subordinated debt (AT1 / T2) entity • Senior unsecured debt (> 1 yr) • Own funds
Slide 30: 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 1Q19 2019 YTD TLTRO Covered OpCo HoldCo Tier 2 Issuance activity in 2019 • Total issuance YTD 2019 wa
Slide 31: ING's debt issuance programme in 2019
ING’s debt issuance programme in 2019 ING Group instruments* (in € bln) Currency split* Group / Bank issuance plan*** 82.0 26.3%** HoldCo Senior Senior debt issuance 17% • ~€7-9 bln of HoldCo Senior planned for 2019, tenors ≥ 5 yrs , of which €5.2 bln 21.2 6.8% has been already issued 42% • Maturing
Slide 32: 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-DiBa AG Instruments • Secured funding • Secured funding • Secured funding • Secured funding overview • Senior unsecured • Covered bond**: ~€23 bln • Covered b
Slide 33: 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 31 March 2019: €905 bln • See “Asset Quality” section of the presentation Other 18 54 Total equity 80 Cas
Slide 34: Robust liquidity position
Robust liquidity position Funding mix* ING holds sizeable liquidity buffer 31 March 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 increased from 123% 5%
Slide 35: Strong rating profile at both Group and Bank level
Strong rating profile at both Group and Bank level Main credit ratings of ING on 1 May 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 su
Slide 36: Appendix
Appendix 36
Slide 37: 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 38: Additional Tier 1: comfortable buffers to triggers
Additional Tier 1: comfortable buffers to triggers Buffer to MDA 1Q19* Buffer to Conversion Trigger 1Q19 (in € bln) 14.73% 45.9 €9 bln 11.81% 2.9% €24 bln 7.7%** 7% CET1 equity 21.8 conversion trigger 1Q19 CET1 2019 MDA 1Q19 CET1 AT1 conversion trigger trigger level • MDA restrictions will apply if
Slide 39: 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 40: 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 41: 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) 5% Investment • Programme is used for external issuance purposes; separate €15 bln Sof
Slide 42: …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 52.5 as of March 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 43: 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