Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Debt Investor Presentation (August 2023)
48 slides from Ing Groep's debt investor presentation, Aug 3, 2023
Slide 1: ING Credit Update 2Q2023
ING Credit Update 2Q2023 ING Investor Relations 3 August 2023
Slide 2: Delivering strong value in 2Q2023
Delivering strong value in 2Q2023 Continued primary High share of Growing volume mobilised2) customer growth mobile-only customers1) to finance the transition +227,000 60% €25.0 bln versus +106,000 in 1Q2023 versus 57% in 1Q2023 versus €21.9 bln in 1Q2022 Strong total income growth Increasing return
Slide 3: We are executing our strategy
We are executing our strategy Our purpose Empowering people to stay a step ahead in life and in business Our strategic priorities Superior customer experience Sustainability Straight-through-processing of Organised our first internal Retail customer journeys improved to 69%1) Global Sustainability W
Slide 4: ING's strengths are amplified in a positive rate environment
ING’s strengths are amplified in a positive rate environment Total income excluding incidental income items (in € bln)1) Low rate environment Positive rate environment 11.4 10.1 1.2 9.1 9.0 9.1 9.2 9.1 9.5 8.9 8.7 8.8 1.1 0.6 0.7 0.8 0.7 0.7 0.9 0.7 0.9 1.2 0.5 1.8 0.4 0.3 0.3 0.3 0.5 0.6 0.5 0.5 0.
Slide 5: Well on track towards our 2025 targets
Well on track towards our 2025 targets Financial target 2Q2023 2025 target Drivers ▪ Primary customer growth 5-10% ▪ Increasing package and service fees in daily banking to better reflect cost of service Fee income1) 2.7% annual growth ▪ Growing base in investment products, both in number of account
Slide 6: Business profile
Business profile 6
Slide 7: 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 8: Our strategy, with a focus on execution certainty
Our strategy, with a focus on execution certainty Purpose Empowering 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 8
Slide 9: 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 10: 2Q2023 results
2Q2023 results 10
Slide 11: Continued strong NII development
Continued strong NII development Net interest income (in € mln) Lending and deposit margin (in bps) Net interest margin (in bps) 3,545 4,012 4,061 135 3,465 3,332 129 127 128 129 71 159 156 76 121 114 137 135 136 3,604 3,860 4,012 4,061 3,389 94 145 140 136 134 71 128 52 -343 -315 2Q2022 3Q2022 4Q20
Slide 12: Continued loan growth and significant deposit inflow
Continued loan growth and significant deposit inflow Customer lending (in € bln) Net core lending growth €2.8 bln 639.5 2.2 0.3 0.9 643.2 0.7 0.3 0.4 1.9 -2.5 -0.2 -0.2 1Q2023 Retail Retail Retail Retail WB WB WB Treasury FX Other 2) 2Q2023 Netherlands Belgium Germany Other Lending DB&TF 1) Other 1)
Slide 13: Fee income growth supported by Wholesale Banking Lending
Fee income growth supported by Wholesale Banking Lending Net fee & commission income per business line (in € mln)1) Net fee & commission income per product category (in € mln) 888 876 888 896 912 888 876 888 896 912 92 96 105 106 131 280 295 318 323 346 226 194 201 217 206 247 238 258 244 253 610 58
Slide 14: Lower operating expenses despite continued investments
Lower operating expenses despite continued investments Expenses (in € mln) ▪ Expenses excluding regulatory costs and incidental items were 6.9% higher YoY 3,071 2,888 ▪ Main driver was higher staff expenses, reflecting the 2,738 impact of indexation and CLA increases across our markets 2,629 291 525
Slide 15: Low risk costs reflecting high quality and resilience of the loan book
Low risk costs reflecting high quality and resilience of the loan book Risk costs per business line (in € mln)1) Stage 2 ratio2) Stage 3 ratio 403 11.2% 1.5% 10.2% 10.8% 1.5% 1.5% 1.4% 128 269 8.9% 1.4% 152 202 65 6.6% 7.1% 7.2% 6.9% 1.4% 98 7.0% 1.4% 88 274 1.4% 1.4% 203 242 5.3% 1.3% 1.4% 1.3% 1.3
Slide 16: Capital
Capital 16
Slide 17: Risk-weighted assets decreased in 2Q2023
Risk-weighted assets decreased in 2Q2023, mainly reflecting a better overall profile of the loan book and model impacts ING Group risk-weighted assets development (in € bln) Credit RWA €-5.4 bln 327.4 0.2 -1.3 -1.7 -2.5 -0.1 1.0 0.0 322.9 1Q2023 FX Volume Overall profile of Models, Other Market Oper
Slide 18: CET1 ratio improved to 14.9%
CET1 ratio improved to 14.9% Total capital ratio development (in %) +2.8% 20.0% +2.2% 14.8% -0.5% 14.4% +0.3% -0.0% +0.2% 14.9% ~12.5% 10.7% 1Q2023 Additional Pro forma Profit added Other capital RWA 2Q2023 AT1 Tier 2 2Q2023 Total Basel IV CET1 CET1 ratio distribution 1) 1Q2023 to CET1 movements CET
Slide 19: Fully loaded SREP requirement decreased due to lower O-SII buffer
Fully loaded SREP requirement decreased due to lower O-SII buffer ING Group fully loaded SREP requirements ▪ ING Group’s fully loaded CET1 requirement in 2Q2023 decreased to 10.70% (1Q2023: 10.98%) MDA ▪ This reflects a 0.50% lower O-SII (Other Systemically restriction Important Institutions) buffer
Slide 20: Funding & liquidity
Funding & liquidity 20
Slide 21: 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) 31.7% 31.7% 27.74% 29.03% 11.7% 23.45% 11.7% 5.52% 5.45% 5.45% 2.8% 2.8% 2.2% 2.2% 22.29% 23.51% 14.9% 18.00% 14.9% 2Q2023 Current Requirement 2Q2023 Current Requirement Requirement 1/1/2024 9.0% 6.75% 9.0%
Slide 22: 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 30 June 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 10% 10% to balance sheet
Slide 23: 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: ~€18.5 bln ▪
Slide 24: 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 25: 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 26: 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 27: 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 €1,029 bln in 2Q2023 ▪ See “Asset Quality” section of this presentation Assets Liabilities 1,022
Slide 28: Robust liquidity position with a 12-month moving average LCR of 137%
Robust liquidity position with a 12-month moving average LCR of 137% Funding mix1) ING maintains a sizeable liquidity buffer 30 June 2023 ▪ ING’s funding consists mainly of retail deposits, corporate deposits and public debt 9% 2% Customer deposits (private individuals) 5% Customer deposits (other)
Slide 29: 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 2 August 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, reflectin
Slide 30: Asset quality
Asset quality 30
Slide 31: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity 1) ING Group Retail Banking Wholesale Banking 5% 12% 17% 32% 21% 2% 14% €810 €550 6% €550 €259 bln 19% bln bln bln 16% 22% 60% 17% 65% 4% 8% 68% 12% Retail Banking Residential mortgages Mortgages Netherlands Lending Wholesale Banking Consumer
Slide 32: 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% 13% NL 2% 9% Real Estate, Infra & Construction 13% Belux Commodities, Food & Agri 2% Germany 30% 11% TMT & Healthcare 10% Other Challengers Tran
Slide 33: 2Q2023 provisioning per Stage
2Q2023 provisioning per Stage Stage 1 provisioning (in € mln)1) Stage 2 provisioning (in € mln) 1,2) Stage 3 provisioning (in € mln) 2) 52 407 48 37 21 318 2 98 86 23 33 4 239 16 -9 230 -78 -50 -39 177 197 35 31 17 -117 6 -48 11 -194 43 1 6 -45 161 124 -31 8 -15 167 141 155 116 -14 -190 70 2Q2022 3Q
Slide 34: Appendix
Appendix 34
Slide 35: 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 36: Comfortable buffer to Additional Tier 1 trigger
Comfortable buffer to Additional Tier 1 trigger Buffer to AT1 trigger (in € bln) 30 June 2023 48.1 €25.5 bln 7.9pp1) 22.6 2Q2023 7% CET1 CET1 capital AT1 conversion trigger ▪ ING Group capital buffer to conversion trigger (7% CET1) is high at €25.5 bln, or 7.9% of RWA 1) Difference between 14.9% ING
Slide 37: 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 38: 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 XS2624976077 May-23 May-28 May-29 6NC5 4.5% 1,500 3mE+160 XS2624977554 May-23 May-33 May-34 11NC10 4.75% 1,500 3mE+190 XS2554746185 Nov-22 Nov-26 Nov-27 5NC4 4.874% 1,25
Slide 39: 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 40: 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 43.8 August 2020 70 15 60 10 50 5 40 30 0 2
Slide 41: Attractive and growing shareholder return
Attractive and growing shareholder return Increasing earnings per share Attractive shareholder return Based on (announced) payment date 12.5% 10.7% 15.3% 9.4% YTD 1.28 1.24 11.2% 6.7% 9.4% 9.2% 5.4% 1.01 0.70 0.50 7.2% 2.07 0.67 0.68 0.41 4.8% 1.21 1.23 1.27 1.02 0.74 0.64 Dividend 0.60 0.58 ban 2)
Slide 42: Long-term benefit from replicating portfolio
Long-term benefit from replicating portfolio Drivers of liability NII ▪ Liability income is driven by replicating portfolio, deposit pass-through and volumes ▪ Retail eurozone replicating portfolio of €~480 bln ▪ ~45% is <1 year, which has helped to quickly restore liability margins once interest ra
Slide 43: 2Q2023 results overview
2Q2023 results overview In € mln Reported P&L Volatile items P&L excluding volatile items Net interest income 4,061 2 4,059 Net fee and commission income 912 0 911 Investment income 1 -0 2 Other income 785 -23 807 Total income 5,759 -21 5,779 Expenses excl. regulatory costs 2,534 6 2,528 Regulatory
Slide 44: Volatile income and expense items
Volatile income and expense items Volatile items (in € mln) 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 WB/FM – valuation adjustments 90 -15 -2 -10 33 Capital gains/losses 8 -3 0 15 -0 Hedge ineffectiveness1) -31 -431 -71 35 -46 Other items income2) -155 -218 -319 -69 -6 Total volatile items – income -89 -66
Slide 45: Hyperinflation accounting in Türkiye
Hyperinflation accounting in Türkiye Application of IAS 29 to consolidation of ING in Türkiye Impact on results (in € mln) ▪ We applied IAS 29 (‘Financial Reporting in Hyperinflationary 1Q2023 2Q2023 Economies’) to the consolidation of our subsidiary in Türkiye, Profit or loss effective as of 1 Janu
Slide 46: Accounting asymmetry impacting net interest income
Accounting asymmetry impacting net interest income Treasury interest rate differential (in € mln) WB Financial Markets (in € mln) 33 36 359 47 443 349 18 267 261 282 287 26 184 120 346 452 41 176 215 345 -15 -102 -137 19 27 22 -234 -225 78 78 50 41 47 -37 -141 2Q2022 3Q2022 4Q2022 1Q2023 2Q2023 2Q20
Slide 47: Developments in our strategy enablers
Developments in our strategy enablers 4Q2022 2Q2023 2025 targets Workload on (private) cloud 52% 57% >70% Seamless digital experience Customer online traffic using Touchpoint 61% 61% >90% Adoption of shared engineering platform 48% 55% >90% Scalable Tech & Operations 1) Digi index score 67% 69% >75%
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