Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Debt Investor Presentation (February 2023)
54 slides from Ing Groep's debt investor presentation, Feb 2, 2023
Slide 1: ING Credit Update 4Q2022
ING Credit Update 4Q2022 ING Investor Relations 2 February 2023
Slide 2: Delivering value in 2022
Delivering value in 2022 Primary customer growth % mobile-only active customers1) Digi index score2) +585,000 58% 64% versus +507,000 in 2021 versus 51% YE2021 versus 60% YE2021 Volume mobilised3) Net interest income4) Distribution to shareholders5) in transition finance €101 bln +€1.1 bln €4.8 bln
Slide 3: We are executing our strategy
We are executing our strategy Our purpose Empower people to stay a step ahead in life and in business Our strategic priorities Superior customer experience Sustainability #1 Net Promoter Primary customer Volume mobilised1) in Intermediate 2030 ✓ Score in base transition finance 2022 realised targets
Slide 4: Our strategy enablers
Our strategy enablers 2022 2025 targets 52% of workload on (private) cloud >70% Seamless digital experience 61% of customer online traffic using Touchpoint >90% 48% adoption of shared engineering platform >90% Scalable Tech & Operations 1) 64% Digi index score >75% Safe & secure bank 12% inbound cal
Slide 5: On track for our 2025 targets, improved target on income growth
On track for our 2025 targets, improved target on income growth Financial target 2022 actuals 2025 target Drivers ▪ Primary customer growth 5-10% ▪ Increasing package, service and behavioral fees in daily banking to better reflect cost of service Fees +2% annual ▪ Strong base in investment products,
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 Empower 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: ▪ Steer our lending portfolio towards net zero by 2050 ▪ Financial inclusion by making bank products accessible ▪ Co-dev
Slide 10: FY2022 results
FY2022 results 10
Slide 11: Clear benefit from our funding profile with rising rates and income diversification
Clear benefit from our funding profile with rising rates and our focus on income diversification Own funds & liabilities (total in € bln) Rate environment impact on margins Total income2) (in € bln) 970 18.3 19.0 18.1 17.6 18.0 1.2 22% 1.4 1.4 1.0 1.4 152 145 2.8 2.9 3.6 3.0 3.5 12% 135 129 127 10%
Slide 12: NII up, continued fee growth in 2022
NII up, continued fee growth in 2022 Net interest income (in € mln) Net fee & commission income per product category (in € mln) 13.9 14.1 13.6 13.6 13.8 3,517 3,586 0.5 3,011 489 405 2,803 2,868 343 403 430 887 1,040 14.2 678 670 881 13.1 1,008 924 1,021 963 850 1,064 1,286 761 832 850 -0.4 1) 2018
Slide 13: Containing expenses while investing for the future
Containing expenses while investing for the future Regulatory expenses (in € bln) ▪ FY2022 expenses were flat YoY and included slightly lower 1.3 regulatory costs and €325 mln of incidental items, primarily 1.2 1.1 restructuring costs 1.0 0.9 0.4 0.4 ▪ Excluding regulatory costs and these incidental
Slide 14: FY2022 risk costs reflected geopolitics and macro uncertainty
FY2022 risk costs reflected geopolitics and macro uncertainty Risk costs (in € mln and in bps over customer lending) Stage 3 ratio 2,675 1,861 1.7% 1.5% 1.5% 43 1.4% 1.4% 1,120 29 656 516 18 11 8 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 ▪ 2022 risk costs were €1,861 mln, or 29 bps over aver
Slide 15: Our 12% return on equity target
Our 12% return on equity target CET1 ratio and return on equity ▪ Our RoE target is 12% by 2025 15.9% ▪ 2022 RoE mainly reflected higher risk costs, as well as a 15.5% significant equity position. Adjusted for incidental costs, our 14.5% through-the-cycle average risk costs and at 12.5% CET1, our 14
Slide 16: Continued attractive shareholder return
Continued attractive shareholder return Strong capital generation Attractive shareholder return Average 2018-2022 Based on payment date 12.5% 9.9% 8.4% 9.4% 1.28 6.7% 5.4% 1.01 0.70 0.67 0.68 0.41 Dividend ban 0.60 0.58 Reported return on equity Return on equity 2018 2019 2020 2021 2022 (average 15.
Slide 17: 4Q2022 results
4Q2022 results 17
Slide 18: Pre-provision profit up YoY and QoQ
Pre-provision profit up YoY and QoQ Pre-provision profit excl. volatile items1) and regulatory costs ▪ 4Q2022 pre-provision profit, excluding volatile items and (in € mln) regulatory costs, increased on both comparable quarters ▪ Strong NII development, reflecting the positive effect of rising 2,745
Slide 19: Strong NII momentum and higher NIM
Strong NII momentum and higher NIM Net interest income (in € mln) Net interest margin (in bps) 3,332 3,545 3,374 3,415 3,465 76 71 84 82 148 139 139 3,604 3,860 137 137 136 3,290 3,333 3,389 135 137 137 136 134 134 134 133 128 -343 -315 4Q2021 1Q2022 2Q2022 3Q2022 4Q2022 4Q2021 1Q2022 2Q2022 3Q2022
Slide 20: Continued loan growth, albeit at a lower pace
Continued loan growth, albeit at a lower pace Customer lending (in € bln) Net core lending growth €3.1 bln 2.4 0.9 -2.4 1.7 0.7 -0.6 -2.4 649.7 0.4 -8.3 0.0 642.0 3Q2022 Retail Retail Retail Retail Other WB Lending WB DB&TF1) WB Other1) Treasury FX Other2) 4Q2022 Netherlands Belgium Germany C&GM1) ▪
Slide 21: Fees supported by daily banking and lending, fee base growing
Fees supported by daily banking and lending, fee base growing Net fee & commission income per business line (in € mln) Net fee & commission income per product category (in € mln) 925 933 888 888 925 933 888 888 876 876 140 112 92 96 105 322 324 280 295 318 261 267 226 194 201 269 275 253 230 214 247
Slide 22: Operating expenses well-contained in inflationary environment
Operating expenses well-contained in inflationary environment Expenses (in € mln) ▪ Excluding regulatory costs and incidental items, expenses were 5% higher YoY, well below inflation levels. This increase 2,947 2,945 2,888 was primarily attributable to higher staff costs, due to 385 2,738 indexation
Slide 23: Risk costs reflecting high quality loan book and prudent provisioning
Risk costs reflecting high quality loan book and prudent provisioning Risk costs per business line (in € mln) Stage 2 ratio Stage 3 ratio 987 10.2% 8.9% 7.2% 7.1% 1.7% 1.6% 939 6.0% 6.6% 7.0% 1.5% 1.5% 403 5.2% 1.4% 346 5.6% 128 269 5.3% 1.5% 1.4% 1.4% 202 5.8% 1.3% 1.4% 216 65 5.5% 1.2% 1.2% 1.4% 8
Slide 24: Capital
Capital 24
Slide 25: Risk-weighted assets decreased in 4Q2022
Risk-weighted assets decreased in 4Q2022, mainly reflecting FX impact on credit RWA and improved quality of the loan book ING Group risk-weighted assets development (in € bln) Credit RWA €-9.3 bln 338.6 -5.7 2.4 -3.1 -2.0 -0.9 -0.1 2.3 331.5 3Q2022 FX Volume Overall profile of Models, Other Market O
Slide 26: ING Group CET1 ratio remained strong at 14.5%
ING Group CET1 ratio remained strong at 14.5% ING Group Total capital ratio development (in %) +3.0% 19.4% +1.9% 14.7% -0.4% 14.3% +0.2% -0.3% +0.3% 14.5% ~12.5% 10.5% 3Q2022 Additional Pro forma Profit added Other capital RWA 4Q2022 AT1 Tier 2 4Q2022 Total Basel IV CET1 CET1 ratio distribution1) 3Q
Slide 27: Buffer to fully-loaded Maximum Distributable Amount remained strong at ~4%
Buffer to fully-loaded Maximum Distributable Amount, including announced CCyB increases, remained strong at ~4% ING Group fully loaded SREP requirements ▪ ING Group’s fully loaded CET1 requirement is 10.98% ▪ 4.50% Pillar 1 Requirement (P1R) ▪ 0.98% Pillar 2 Requirement (P2R) MDA restriction ▪ 2.50%
Slide 28: Funding & liquidity
Funding & liquidity 28
Slide 29: 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) 30.4% 30.4% 27.39% 28.71% 11.0% 23.10% 5.10% 5.50% 11.0% 5.10% 3.0% 3.0% 1.9% 1.9% 22.29% 23.21% 14.5% 18.00% 14.5% 4Q2022 Current Requirement 4Q2022 Current Requirement Requirement 1/1/2024 9.5% 6.75% 9.5%
Slide 30: 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 31 December 2022 ▪ 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 1% 11% to balance she
Slide 31: 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: ~€16.3 bln ▪
Slide 32: 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 33: We issue Green Bonds to support our sustainability objectives
We issue Green Bonds to support our sustainability objectives ▪ Our Green Bond Framework has been assessed by a Second Party Opinion (SPO) and is aligned with the ICMA Green Bond Principles 2021, and where possible with the EU Taxonomy (EUT) Regulation and the EUT Delegated Act as assessed by ISS ES
Slide 34: 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 35: 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 decreased to €968 bln in 4Q2022 ▪ See “Asset Quality” section of this presentation Assets Liabilities 1,059 1
Slide 36: Robust liquidity position with a 12-month moving average LCR of 134%
Robust liquidity position with a 12-month moving average LCR of 134% Funding mix1) ING maintains a sizeable liquidity buffer 31 December 2022 ▪ ING’s funding consists mainly of retail deposits, corporate 3% 2% deposits and public debt 6% Customer deposits (retail) 8% 2) Customer deposits (corporate)
Slide 37: 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 1 February 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, reflect
Slide 38: Asset quality
Asset quality 38
Slide 39: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity 1) ING Group Retail Banking Wholesale Banking 6% 10% 13% 34% 22% 2% 15% €785 19% €521 6% €521 €263 bln bln bln bln 13% 26% 5% 62% 63% 17% 8% 66% 13% Retail Banking Residential mortgages Mortgages Netherlands Lending Wholesale Banking Consumer
Slide 40: Our lending book is senior and well-collateralised
Our lending book is senior and well-collateralised Residential ▪ Average LTV of 57% with low Stage 3 ratio at 0.9% Mortgages ▪ Risk metrics remained strong €327 bln 8% Consumer ▪ Relatively small book, largely home improvement and car related term loans Lending ▪ Stage 3 ratio at 4.2% €26 bln 42% 34
Slide 41: Wholesale Banking lending credit outstandings
Wholesale Banking lending credit outstandings 1) Loan portfolio is well diversified across geographies… …and sectors Wholesale Banking Wholesale Banking excluding Treasury & Other 1% 13% NL 1% 9% Real Estate, Infra & Construction 15% Belux Commodities, Food & Agri 30% 12% TMT & Healthcare 2% 10% Ger
Slide 42: Provisioning per Stage
Provisioning per Stage Stage 1 provisioning (in € mln) Stage 2 provisioning (in € mln) Stage 3 provisioning (in € mln) 844 56 407 40 18 386 34 13 318 837 165 4 25 37 240 27 230 11 9 177 47 -7 154 -21 8 7 32 97 161 -95 -78 -51 220 101 -194 167 -12 -86 -46 -8 141 -33 -202 53 70 4Q2021 1Q2022 2Q2022 3Q
Slide 43: Appendix
Appendix 43
Slide 44: 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 45: Comfortable buffer to Additional Tier 1 trigger
Comfortable buffer to Additional Tier 1 trigger Buffer to AT1 trigger (in € bln) 31 December 2022 48.0 €24.8 bln 7.5pp1) 23.2 4Q2022 7% CET1 CET1 capital AT1 conversion trigger ▪ ING Group capital buffer to conversion trigger (7% CET1) is high at €24.8 bln, or 7.5% of RWA 1) Difference between 14.5%
Slide 46: 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 USD1) Sep-21 May-27 3.875% 1,000 UST + 286bps USD1) Sep-21 May-31 4.250% 1,000 UST + 286bps USD Feb-20 May-29 4.875% 750 UST + 351bps US
Slide 47: 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)2) Reset spread EUR XS2554746185 Nov-22 Nov-26 Nov-27 5NC4 4.874% 1.250 3ME+185 XS2554745708 Nov-22 Nov-32 Nov-33 11NC10 5.25% 1.000 3ME+215 XS2483607474 May-22 May-25 May-26 4NC3 2.125% 1,
Slide 48: 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% 2% Interest Only 3% ▪ This programme is used for external issuance purposes. There is a separate €15
Slide 49: 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 48.6 August 2020 70 15 60 10 50 5 40 30 0 2
Slide 50: Our 4Q2022 results overview
Our 4Q2022 results overview In € mln Reported P&L Volatile items P&L excluding volatile items Net interest income 3,545 -301 3,846 Net fee and commission income 888 1 886 Investment income 15 0 15 Other income 420 -92 512 Total income 4,868 -392 5,259 Expenses excl. regulatory costs 2,596 82 2,515 R
Slide 51: Volatile income and expense items
Volatile income and expense items Volatile items (in € mln) 4Q2021 1Q2022 2Q2022 3Q2022 4Q2022 WB/FM – valuation adjustments 3 -70 90 -15 -2 Capital gains/losses 5 26 8 -3 0 Hedge ineffectiveness1) -24 81 -31 -431 -71 Other items income2) 92 -68 -155 -218 -319 Total volatile items – income 76 -31 -8
Slide 52: Hyperinflation accounting in Turkey
Hyperinflation accounting in Turkey Application of IAS 29 to consolidation of ING Turkey Impact on results (in € mln) ▪ We applied IAS 29 (‘Financial Reporting in Hyperinflationary 4Q2022 FY2022 Economies’) to the consolidation of our subsidiary in Turkey, Profit or loss effective as of 1 January 20
Slide 53: Challengers & Growth Markets FY2022
Challengers & Growth Markets FY2022 1) Germany Australia Spain Italy Total income 2,714 mln Total income 895 mln Total income 883 mln Total income 338 mln Mortgages 91.3 bln Mortgages 35.2 bln Mortgages 21.8 bln Mortgages 7.8 bln Other lending 35.6 bln Other lending 9.2 bln Other lending 9.4 bln Oth
Slide 54: 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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