Ing Groep N.v. · EURONEXT:INGA
Ing Groep — ING Group — Q2 2018 Earnings Presentation
27 slides from Ing Groep's earnings presentation, Aug 2, 2018
Slide 1: Second quarter 2018 Results
Second quarter 2018 Results ING 2Q18 net profit of €1,429 million Ralph Hamers, CEO ING Group Amsterdam • 2 August 2018
Slide 2: Key points
Key points • ING posted 2Q18 net profit of €1,429 mln, up 4.2% on 2Q17 • Result reflects well-diversified and disciplined loan growth at stable margins, strong fee income, and low risk costs • Primary customers increased by 400,000 in 2Q18 to 12.0 mln, total retail customers reached 38.2 mln • Impor
Slide 3: Think Forward strategy delivers on commercial growth
Think Forward strategy delivers on commercial growth ING currently serves > 38 mln retail customers* (in mln) Targeting > 14 mln primary customers* by 2020 (in mln) 38.2 >14 35.7 37.4 12.0 34.5 11.4 10.4 9.2 2015 2016 2017 1H18 2015 2016 2017 1H18 Ambition 2020 Core lending Customer deposits Net Pro
Slide 4: Orange Bridge: multiple transformation milestones reached
Orange Bridge: multiple transformation milestones reached Preparing for an integrated banking platform in Belgium and the Netherlands 4Q17 4Q17 1Q18 2Q18 2019- 2021 One New retail Cross-border Record Uniting IT identical distribution & delivery Bank platforms Way of client services organisation inte
Slide 5: Becoming the go-to platform for all financial needs
Becoming the go-to platform for all financial needs Building insurance platform with AXA Yolt expands to France and Italy New funding initiatives for SMEs • ING is partnering with AXA to • Yolt, our money management • We partnered with Funding create personalised, simple and platform in the UK, is e
Slide 6: Playing a pivotal role in the energy transition
Playing a pivotal role in the energy transition Financing linked to company’s own sustainable KPIs Solutions to reduce carbon footprint of real estate • We help clients stay ahead by encouraging sustainable • In the Netherlands, we introduced the Energy Robot for business practices and supporting su
Slide 7: Interhyp revolutionised the mortgage market and fits ING's platform strategy
Interhyp – one of Germany’s first fintechs – revolutionised the mortgage market and fits perfectly in ING’s platform strategy • Operates a proprietary mortgage platform comparing and Contracted volume and market share processing the offers of >400 lenders 19.8 • Independent personal advice to privat
Slide 8: 2Q18 results
2Q18 results 8
Slide 9: Underlying pre-tax result up 1.5% year-on-year
Underlying pre-tax result up 1.5% year-on-year Underlying pre-tax result (in € mln) Underlying income (in € mln) 1,992 1,995 2,022 4,532 4,408 4,368 4,457 4,484 97 1,686 1,560 4,435 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 One-off gain • Underlying result before tax of €2,022 mln was suppor
Slide 10: Healthy net income progression supported by resilient NIM
Healthy net income progression supported by resilient NIM Net interest income excl. Financial Markets (in € mln) Net interest margin holds up well in the quarter (in bps) +2.1% 3,294 3,292 3,383 3,364 3,299 157 158 91 8 154 154 152 153 154 152 151 151 -35 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18
Slide 11: Core lending growth in Retail Banking and Industry Lending
Core lending growth in Retail Banking and Industry Lending Customer lending ING Group 2Q18 (in € bln) Core lending businesses: €14.2 bln 6.3 0.4 -0.6 -0.4 -2.8 3.3 592.4 1.5 2.9 3.4 578.2 0.3 31/03/18 Retail Retail Retail Retail WB Industry WB General WB Other* Lease run- Bank FX / 30/06/18 NL Belgi
Slide 12: Detailed split of net core lending growth
Detailed split of net core lending growth Retail Banking core loan growth split by Wholesale Banking* core loan growth split by product product (in € bln) (in € bln) +€8.1 bln +€6.1 bln 4.5 2.0 1.2 0.2 0.4 -0.6 3.5 1.6 1.3 1Q18 Mortgages Other 2Q18 1Q18 ITEF ETIG SFG REF Other IL GL & TS WB 2Q18 len
Slide 13: Broad-based fee income growth; FM impacted by client activity
Broad-based fee income growth; FM impacted by client activity Net fee and commission income (in € mln) Underlying income Financial Markets* (in € mln) 714 717 323 643 674 661 251 257 297 290 227 238 252 279 263 257 55 144 153 154 157 160 151 157 149 172 265 240 238 250 271 107 105 66 78 2Q17 3Q17 4Q
Slide 14: Cost control a key priority
Cost control a key priority Underlying operating expenses (in € mln) Regulatory costs (in € mln) 474 493 264 2,242 2,354 2,249 2,195 2,193 98 94 69 2Q17 3Q17 4Q17 1Q18 2Q18 1Q 2Q 3Q 4Q Expenses excl. regulatory costs Regulatory costs 2017 2018 • Compared to 1Q18, which included a release of a legal
Slide 15: Risk costs remained low due to a continued benign credit environment
Risk costs remained low due to a continued benign credit environment in most regions Risk costs (in € mln) Stage 3 ratio* 229 2.4% 2.3% 190 115 2.1% 2.1% 135 124 68 2.0% 46 85 59 1.9% 1.9% 1.8% 90 62 1.8% 1.7% 1.7% 68 71 72 1.9% 1.8% 1.8% 1.8% 1.6% 13 28 27 47 32 1.7% 1.6% 12 5 -4 -22 -20 -47 2Q17 3
Slide 16: ING Group CET1 ratio at 14.1%
ING Group CET1 ratio at 14.1% ING Group fully loaded CET1 ratio development* 14.3% 0.2% -0.3% -0.1% 0.2% -0.2% 14.1% ~13.5% 11.8% 1Q18 Profit added Volume growth & Model updates & Operational & FX & Other 2Q18 Basel IV CET1 CET1 ratio to CET1** risk migration add-ons Market RWA CET1 ratio ambition C
Slide 17: ING Group financial ambitions
ING Group financial ambitions Actual 2017 Actual 2Q18 Ambition 2020* ~13.5%** • CET1 ratio (%) 14.7%* 14.1%* (Basel IV) Capital • Leverage ratio (%) 4.7% 4.3% >4% • Underlying C/I ratio (%)*** 55.5% 56.1% 50-52% (by 2020) Profitability • Underlying ROE (%)*** 10.2% 10.4% 10-12% (IFRS-EU Equity) Divi
Slide 18: Wrap up
Wrap up 18
Slide 19: Wrap up
Wrap up • ING posted 2Q18 net profit of €1,429 mln, up 4.2% on 2Q17 • Result reflects well-diversified and disciplined loan growth at stable margins, strong fee income, and low risk costs • Primary customers increased by 400,000 in 2Q18 to 12.0 mln, total retail customers reached 38.2 mln • Importan
Slide 20: Appendix
Appendix 20
Slide 21: Strong 2Q18 result with smaller impact from volatile items
Strong 2Q18 result with smaller impact from volatile items Underlying pre-tax result Volatile items and regulatory costs Pre-tax result excl. volatile items (in € mln) (in € mln) and regulatory costs (in € mln) 2,022 2Q17 3Q17 4Q17 1Q18 2Q18 2,103 1,992 1,995 2,090 2,087 1,988 97 CVA/DVA -42 -1 -45
Slide 22: Potential for further core savings rate adjustments limited
Potential for further core savings rate adjustments limited Only few savings rate adjustments in 2Q18… …while we have other levers to stabilise NIM • In 2Q18, we reduced core savings rates in Germany from • Continue growth in higher margin lending without 10 bps to 1 bp and in Austria from 15 bps to
Slide 23: Group CET1 ratio at 14.1% and underlying ROE at 10.4%
Group CET1 ratio at 14.1% and underlying ROE at 10.4% Group fully loaded CET1 ratio development during 2Q18 Group underlying ROE calculation in 2Q18 (amounts in € bln and %) (in € mln) Capital RWA Ratio Change As of 30 June 2018 Actuals 31 March 2018 44.6 312.4 14.3% IFRS-EU shareholders’ equity 49,
Slide 24: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 7% 3% 1% 28% 16% 15% 37% €665 3% €418 €247 45% bln bln bln 63% 8% 21% 17% 9% 13% 14% Retail Banking Mortgages Netherlands Project & Asset-based Finance Wholesale Banking Other lending Netherlands R
Slide 25: 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 (2Q18)* Lending Credit O/S Wholesale Banking (2Q18)* 1% NL 7% 3% 3% Builders & Contractors 12% 5% 18% Belux 10% Cent
Slide 26: Detailed Stage 3 / NPL disclosure on selected lending portfolios
Detailed Stage 3 / NPL disclosure on selected lending portfolios Selected lending portfolios (in € mln) Lending credit Stage 3 ratio Lending credit Stage 3 ratio Lending credit NPL ratio O/S 2Q18 2Q18 O/S 1Q18 1Q18 O/S 2Q17 2Q17 Wholesale Banking 246,961 1.7% 234,201 1.8% 225,556 2.4% Industry Lendi
Slide 27: 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