ING Groep N.V. · EURONEXT:INGA
ING Groep — ING Group — Debt Investor Presentation (May 2017)
38 slides from ING Groep's debt investor presentation, May 10, 2017
Slide 1: ING Group Credit Update 1Q17
ING Group Credit Update 1Q17 Amsterdam • 10 May 2017
Slide 2: Key points
Key points • ING recorded 1Q17 net profit of EUR 1,143 mln; underlying pre-tax result up 39.3% from 1Q16 to EUR 1,652 mln • Strong results reflect continued loan growth, good cost control and low risk costs • Wholesale Banking results were particularly strong, led by higher income from Financial Mar
Slide 3: Ambition 2020 – ING Group Financial Targets
Ambition 2020 – ING Group Financial Targets Actual 2016 Actual 1Q17 Ambition 2020* • CET1 ratio (%) 14.2% 14.5% > Prevailing fully-loaded requirements** Capital • Leverage ratio (%) 4.8% 4.5% > 4% • Underlying C/I ratio (%)*** 54.2% 53.1% 50-52% Profitability • Underlying ROE (%)*** 10.1% 10.8% Awai
Slide 4: Business profile and strategy
Business profile and strategy 4
Slide 5: We have a well-diversified portfolio with strong profitability
We have a well-diversified portfolio with strong profitability Retail Banking Market Leaders Wholesale Banking • We use technology to offer Netherlands, • Our business model is the a differentiating experience Belgium / Luxembourg same throughout our global to our customers WB franchise of more than
Slide 6: Our focus on primary customer relationships drives value
Our focus on primary customer relationships drives value 1Q17 net customer growth 1Q17 core lending growth 1Q17 Net Promoter Scores (NPS) +300k total customers +150k #1 in 8 of primary customers EUR +5.7 bln 13 retail countries Consumer lending Assets under management Commission income Retail C&GM R
Slide 7: Transformation programmes on track
Transformation programmes on track Four major digital transformation programmes Estimated impact of digital transformation programmes (in EUR mln) Orange Bridge* • Agreement on a Social Plan with trade union partners in Belgium • Transformation governance in place Model Bank • Ramp up of central IT
Slide 8: Update 1Q17 results
Update 1Q17 results 8
Slide 9: Robust NII result supported by margin resilience
Robust NII result supported by margin resilience Net interest income excl. Financial Markets (in EUR mln) Net interest margin remains stable (in bps) +4.4% 3,247 3,263 155 3,191 3,235 151 150 152 152 3,124 150 152 152 147 148 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 NIM NIM (4-quarter rolli
Slide 10: Our core lending franchises grew by EUR 5.7 bln in 1Q17
Our core lending franchises grew by EUR 5.7 bln in 1Q17 Customer lending ING Group 1Q17 (in EUR bln) Core lending businesses: EUR 5.7 bln 3.5 -0.2 -0.9 1.0 -0.4 566.7 2.1 -0.3 561.4 -0.8 0.8 0.6 31/12/16 Retail Retail Retail Retail WB Industry WB General WB Other* Lease run- Bank FX / 31/03/17 NL Be
Slide 11: Operating expenses stable; seasonally high regulatory costs
Operating expenses stable; seasonally high regulatory costs Underlying operating expenses (in EUR mln) Regulatory costs experience seasonality (in EUR mln) 496 474 209 2,140 2,157 2,155 2,159 2,137 75 65 1Q16 2Q16 3Q16 4Q16 1Q17 1Q 2Q 3Q 4Q Expenses Regulatory costs 2016 2017 • Underlying expenses r
Slide 12: Asset quality
Asset quality 12
Slide 13: Risk environment remains benign; NPLs trending down
Risk environment remains benign; NPLs trending down Risk costs (in EUR mln) NPL ratio 307 2.6% 2.5% 265 265 2.4% 2.4% 123 2.3% 2.3% 2.3% 97 2.2% 117 2.1% 138 2.2% 2.2% 2.0% 77 133 74 31 2.1% 67 35 2.0% 57 42 45 1.9% 32 51 36 36 49 50 43 29 17 1Q16 2Q16 3Q16 4Q16 1Q17 1Q16 2Q16 3Q16 4Q16 1Q17 Wholesa
Slide 14: Lending credit outstandings are well-diversified
Lending credit outstandings are well-diversified ING Group* Retail Banking* Wholesale Banking* 6% 6% 1% 15% 30% 15% 36% EUR 4% EUR EUR 44% 646 411 234 64% bln bln bln 16% 21% 8% 12% 9% 13% Retail Banking Mortgages Netherlands Structured Finance Wholesale Banking Other lending Netherlands Real Estate
Slide 15: Lending credit outstandings Wholesale Banking well-diversified by geography and sector
Lending credit outstandings Wholesale Banking well-diversified by geography and sector Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S Wholesale Banking (1Q17)* Lending Credit O/S Wholesale Banking (1Q17)* 1% NL 3% Builders & Contractors 12% 5% 7% 5% 19% Belux
Slide 16: Detailed NPL disclosure on selected lending portfolios
Detailed NPL disclosure on selected lending portfolios Selected lending portfolios Lending credit NPL ratio Lending credit NPL ratio Lending credit NPL ratio O/S 1Q17 1Q17 O/S 4Q16 4Q16 O/S 1Q16 1Q16 Wholesale Banking 234,175 2.3% 224,916 2.4% 204,240 2.6% Industry Lending 131,979 2.4% 131,221 2.4%
Slide 17: Group capital
Group capital 17
Slide 18: ING Group CET1 ratio at 14.5%; interim profits partly reserved
ING Group CET1 ratio at 14.5%; interim profits partly reserved ING Group fully-loaded CET1 ratio development 14.2% 0.1% 0.2% 14.5% 11.77% 9.02% 4Q16 Group CET1 Net profit included in RWA & Other 1Q17 Group CET1 2017 SREP** 2019 SREP** CET1* • ING Group’s 1Q17 fully-loaded CET1 ratio rose to 14.5% ma
Slide 19: ING Group's 2016 SREP process completed
ING Group’s 2016 SREP process completed ING Group SREP and Ambition* 2016 SREP (Supervisory Review and Evaluation Process) MDA • ING Group has been notified of the European Central restriction Bank (ECB) decision on the 2016 SREP which will set the level capital requirements for 2017 (11.77%) • A 9.
Slide 20: Additional Tier 1: comfortable buffers to triggers
Additional Tier 1: comfortable buffers to triggers Buffer to MDA 1Q17* Buffer to Conversion Trigger 1Q17 (in EUR bln) EUR 17.0 bln 44.9 5.5% 14.50% EUR 23.2 bln 11.77% 7.5%*** 21.7 9.02% 10.40% 7% CET1 equity conversion trigger 1Q17 phased-in 2017 2018** 2019** 1Q17 phased-in 1Q17 phased-in CET1 CET
Slide 21: HoldCo resolution strategy
HoldCo resolution strategy 21
Slide 22: ING well positioned for TLAC issuance plans
ING well positioned for TLAC issuance plans Strong current capital position…. …which provides flexibility for TLAC issuance plans • ING maintains strong CET1 ratio • ING Group fully-loaded CET1 ratio at 14.5% • Steady state TLAC needs to be met by 2019/2022 • ING Group currently has a very manageabl
Slide 23: New legislation focuses on loss absorbing capacity
New legislation focuses on loss absorbing capacity Loss absorbing capacity • Regulators have added total loss-absorbing capacity (TLAC) and (in the EU) minimum requirement for own funds and eligible liabilities (MREL) to the post-crisis regulatory reform aimed at ending too-big-to-fail • Regulators
Slide 24: Loss absorption and recapitalisation overview
Loss absorption and recapitalisation overview Pre-resolution tools Resolution tools Insolvency tools Going concern Recovery PONV Resolution Liquidation • Dividend payments • Dividends, AT1 • Capital instruments • Remaining • Liquidation • AT1 coupon coupons and instruments, through normal • Conversi
Slide 25: Simplified indicative transition and end-state issuance structures
Simplified indicative transition and end-state issuance structures Transition structure End-state structure HoldCo issuance strategy • Earlier this year, the SRB informed Senior unsecured Senior unsecured us that it supports the designation ING Group creditor ING Group creditor (to be issued over ti
Slide 26: TLAC requirements are manageable…
TLAC requirements are manageable… ING Group 1Q17 capital position* EUR 62 bln 1.6% 3.4% 20.0% EUR 45 bln 2.1% 14.5% 1Q17 Group CET1 Group Additional Tier 1** Bank Tier 2** 1Q17 Total Capital Ratio Eligible Senior HoldCo • ING had a successful start to its TLAC issuance strategy in 1Q17 with EUR 5.3
Slide 27: …supported by a recycling strategy of ING Bank instruments
…supported by a recycling strategy of ING Bank instruments Maturity ladder outstanding long-term senior unsecured debt (in EUR bln) 12 8 4 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 >2027 ING Bank senior unsecured debt* ING Group senior unsecured debt • ING Bank has EUR 38.7 billion of
Slide 28: Issuance entities under our approach to resolution
Issuance entities under our approach to resolution Issuance entities Instruments • Capital instruments ING Group • Senior unsecured debt (TLAC / MREL eligible) • Covered Bonds / secured funding ING Bank • Senior unsecured debt (TLAC / MREL ineligible) • Covered Bonds / secured funding Various ING •
Slide 29: Liquidity and funding
Liquidity and funding 29
Slide 30: ING Group balance sheet: strong and conservative with customer deposits as the primary source of funding
ING Group balance sheet: strong and conservative with customer deposits as the primary source of funding Balance sheet ING Group (in EUR bln) High quality customer loan book Balance sheet size ING Group 31 March 2017: EUR 885 bln • See “Asset Quality” section of the presentation Other 21 Attractive
Slide 31: Robust rating profile with strong trend over the last quarters
Robust rating profile with strong trend over the last quarters Credit ratings on 9 May 2017 Latest ING Bank rating actions S&P Moody’s Fitch • S&P: Jun-2015 outlook change from ‘A’ Negative to ‘A’ Stable on strengthening capital Stand-alone rating bbb+ baa1 a+ • Moody’s: May-2015 rating uplift from
Slide 32: Investment portfolio consists of high quality assets
Investment portfolio consists of high quality assets Debt securities by type Debt securities by LCR category Level 1A assets by country 2% 6% 9% 8% Germany 3% 3% Netherlands 3% 4% 25% 53% 4% 13% 6% Belgium EUR 7% EUR EUR Poland 90.8 90.8 6% 69.6 France bln Government bonds bln bln United States 7% S
Slide 33: Appendix
Appendix 33
Slide 34: Outstanding capital securities
Outstanding capital securities (Additional) Tier 1 securities issued by Group Currency Issue date First call date Coupon Issued Outstanding** USD (compliant) Nov-16 Apr-22 6.875% 1,000 1,000 USD (compliant) Apr-15 Apr-20 6.000% 1,000 1,000 USD (compliant) Apr-15 Apr-25 6.500% 1,250 1,250 USD Jun-07
Slide 35: Recent ING HoldCo, OpCo Senior and Covered benchmarks
Recent ING HoldCo, OpCo Senior and Covered benchmarks HoldCo Senior Unsecured* ISIN Issue date Maturity Tenor Coupon Currency Issued Spread US456837AG8 Mar-17 Mar-22 5yr 3.15% USD 1,500 T + 125 US456837AH6 Mar-17 Mar-27 10yr 3.95% USD 1,500 T + 155 US456837AJ28 Mar-17 Mar-22 5yr 3mL + 115 USD 1,000
Slide 36: ING Bank's covered bond programme…
ING Bank’s covered bond programme… • ING Bank NV EUR 30 bln Hard and Soft Bullet Covered Bonds programme Repayment type • UCITS, CRR and ECBC Label compliant. Rated Aaa/AAA/AAA (Moody’s/S&P/Fitch) 2% 4% 3% Interest Only • Programme is used for external issuance purposes; separate EUR 10 bln Soft Bul
Slide 37: …benefiting from continued improvement of the Dutch economy and housing market
…benefiting from continued improvement of the Dutch economy and housing market Dutch Purchasing Managers Index (PMI) was 57.8 in April 2017, which indicates positive growth in industry Unemployment rates (%) continue to decline 70 15 60 10 50 5 40 30 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 20
Slide 38: Important legal information
Important legal information Projects may be subject to regulatory approvals. Insofar as they could have an impact in Belgium, all projects described are proposed intentions of the bank. No formal decisions will be taken until the information and consultation phases with the Work Council have been pr