Ing Groep N.v. · EURONEXT:INGA
Ing Groep — ING Group — Q1 2016 Earnings Presentation
37 slides from Ing Groep's earnings presentation, May 10, 2016
Slide 1: First quarter 2016 Results
First quarter 2016 Results ING posts 1Q16 underlying net profit of EUR 842 million Ralph Hamers, CEO ING Group Amsterdam • 10 May 2016
Slide 2: Key points
Key points • Think Forward strategy continues to improve the customer experience and drive commercial growth • Net interest result increases on volume growth and higher margins; commission income stable • Quality of the loan book evident as risk costs and NPLs fall • ING Bank 1Q16 underlying net res
Slide 3: Think Forward strategy continues to improve customer experience and drive commercial growth
Think Forward strategy continues to improve customer experience and drive commercial growth Progress made on Think Forward strategy. Some examples: • Moving to ‘omnichannel’ in the Netherlands • Introduction of agile way of working allowing us to react faster and more effectively to changing client
Slide 4: Omnichannel approach and agile way of working in the Netherlands
In the Netherlands, we have introduced the omnichannel approach and agile way of working to better serve customer needs We are moving from ‘Single Channel’ to ‘Omnichannel’ We have introduced an agile way of working which allows us to react faster and more effectively to the customers’ changing need
Slide 5: Innovations empower our clients to stay a step ahead
Innovations empower our clients to stay a step ahead Fingerprint identification Peer-to-peer payment app Omnichannel platform Moje ING Video identification for client on-boarding InsideBusiness Wholesale Banking platform Mobile payments solution 5
Slide 6: We partner with more than 40 fintechs to make banking easier for our clients
We partner with more than 40 fintechs to make banking easier for our clients Innovation Studio - our accelerator in The Netherlands We work closely with fintech companies to serve changing customer needs • We learn from fintechs’ entrepreneurial spirit, agility as well as technological expertise and
Slide 7: Strong NPS scores and ongoing commercial growth
Our customer focus is reflected in strong NPS scores and ongoing commercial growth Net Promoter Score (NPS) Lending increasingly diversified with the proportion of mortgages declining from 68% to 60% Challengers & Growth Markets (in EUR bln) #1 in 7 of 13 countries 196 164 44 22% CAGR +24.6% 16% 27
Slide 8: 1Q16 results
1Q16 results 8
Slide 9: Solid first-quarter results despite significant increase in regulatory costs
Solid first-quarter results despite significant increase in regulatory costs Underlying pre-tax result ING Bank Volatile items and regulatory costs Pre-tax result excl. volatile items (in EUR mln) (in EUR mln) and regulatory costs (in EUR mln) 1Q15 2Q15 3Q15 4Q15 1Q16 1,661 1,621 1,651 1,600 1,601 1
Slide 10: Net interest income was up from 1Q15 and 4Q15
Net interest income was up from 1Q15 and 4Q15, reflecting the positive momentum in the business Net interest income excl. Financial Markets Net interest margin up from 1Q15 and 4Q15 (in EUR mln) (in bps) 3,124 151 3,074 3,040 3,049 3,007 147 147 146 143 1Q15 2Q15 3Q15 4Q15 1Q16 1Q15 2Q15 3Q15 4Q15 1
Slide 11: Our core lending franchises grew by EUR 7.1 bln in 1Q16
Our core lending franchises grew by EUR 7.1 bln in 1Q16 Customer lending ING Bank 1Q16 (in EUR bln) Core lending businesses: EUR 7.1 bln 1.8 -0.5 -1.0 2.9 -3.3 2.9 538.4 0.5 1.4 532.7 -0.3 1.2 31/12/15 Retail NL Retail Retail Retail WB IL* WB GL&TS* WB Other* Lease run- Bank FX / Other 31/03/16 Belg
Slide 12: Commission income stable; other income impacted by volatile items
Commission income has remained stable; other income impacted by volatile items and lower income from Financial Markets Commission income has remained relatively stable Investment and other income impacted by volatile items (in EUR mln) and lower income from Financial Markets (in EUR mln) 606 584 607
Slide 13: Regulatory costs expected to increase to around EUR 960 mln in 2016
Regulatory costs expected to increase to around EUR 960 mln in 2016, of which EUR 496 mln was booked in the first quarter Underlying operating expenses Increase regulatory costs in 2016 skewed to the first (in EUR mln) quarter* (in EUR mln) 496 279 265 174 2,068 2,157 2,141 2,139 2,140 110 105 90 61
Slide 14: The quality of our loan book continues to improve
The quality of our loan book continues to improve Risk costs (in EUR mln) NPL ratio 432 3.3% 353 3.1% 173 302 3.0% 111 261 265 2.9% 2.8% 2.8% 97 59 62 97 2.6% 2.6% 117 2.5% 48 80 2.8% 40 66 67 2.6% 2.3% 16 65 2.5% 153 140 32 2.4% 82 59 49 2.2% 1Q15 2Q15 3Q15 4Q15 1Q16 1Q15 2Q15 3Q15 4Q15 1Q16 Wholes
Slide 15: Retail Banking results resilient despite higher regulatory costs
Retail Banking results resilient despite higher regulatory costs Pre-tax result Retail Netherlands Pre-tax result Retail Germany (in EUR mln) (in EUR mln) 430 280 273 297 401 260 9 274 94 30 20 100 39 101 420 358 416 250 253 288 301 336 220 174 1Q15 2Q15 3Q15 4Q15 1Q16 1Q15 2Q15 3Q15 4Q15 1Q16 Repor
Slide 16: Wholesale Banking results supported by improved lending results
Wholesale Banking results supported by improved results in the lending businesses Pre-tax result Industry Lending Pre-tax result Financial Markets (in EUR mln) excl. CVA/DVA (in EUR mln) 387 391 374 157 358 126 3 25 21 12 5 1 414 385 145 40 31 28 353 366 353 125 1 57 53 38 -26 -25 1Q15 2Q15 3Q15 4Q1
Slide 17: Capital position strengthens further
Capital position strengthens further ING Group pro-forma fully-loaded CET1 ratio at 13.2%; interim profit is not included in capital (in %) 0.1% 0.2% 0.3% 13.2% 0.3% -0.1% 12.9% 12.7% 4Q15 Reduction stake Other 1Q16 Full divestment Pro-forma for full Profit from Net profit ING NN Group* NN Group** d
Slide 18: On track to deliver on our Ambition 2017
On track to deliver on our Ambition 2017 ING Group 2014 2015 1Q16 Guidance • We will grow into a comfortable buffer over time above the CET1 (CRD IV) 10.5% 12.7% 12.9% prevailing fully-loaded requirements Leverage ratio* 3.4% 4.4% 4.3% • We are committed to maintaining a healthy Group CET1 ratio in
Slide 19: Final divestment of NN Group stake completes the restructuring
Final divestment of NN Group stake completes the restructuring required by the EC and the repositioning of ING Bank Insurance and Investment Management Banking Repayment state aid was completed on 7 November 2014 19
Slide 20: Wrap up
Wrap up 20
Slide 21: Wrap up
Wrap up • Think Forward strategy continues to improve the customer experience and drive commercial growth • Net interest result increases on volume growth and higher margins; commission income stable • Quality of the loan book evident as risk costs and NPLs fall • ING Bank 1Q16 underlying net result
Slide 22: Appendix
Appendix 22
Slide 23: Group result supported by gain on divestment of stake in NN
Group result supported by gain on divestment of stake in NN 1Q16 net result ING Group includes net results of divestment of the stake in NN Group in 1Q16 (in EUR mln) 506 -78 1,257 842 -13 829 Underlying net result Special items after tax Net result Banking Net result discontinued Other Insurance Ne
Slide 24: Pro-forma Group CET1 already exceeds regulatory requirement
Pro-forma Group CET1 already exceeds regulatory requirement on a fully-loaded basis Fully-loaded common equity Tier 1 capital (in EUR bln and %) Pro-forma after full divestment of the Actual 31 March 2016 remaining stake NN Group in April 2016 12.9%* 13.2%* >12.5% 48.8 -0.4 -1.6 -1.3 -4.4 41.2 0.5 4
Slide 25: Capital position remains strong
Capital position remains strong Bank fully-loaded CET1 ratio development during 1Q16 (amounts in EUR bln and %) Capital RWA Ratio Change Actuals December 2015 36.8 318.2 11.6% Net profit 0.8 +0.26% Equity stakes* -0.3 -0.9 -0.05% FX -0.2 -2.9 +0.04% RWA** 0.9 -0.03% Actuals March 2016 37.2 315.4 11.
Slide 26: We further reduced client savings rates
We further reduced client savings rates to align with record low interest rates Retail customer deposits, breakdown by business segment* We further reduced savings rates in 1Q16 (in %, 1Q16) • In 1Q16, we reduced savings rates in the Netherlands, 25% 30% Belgium, Spain, France and Austria • ING furt
Slide 27: Regulatory costs are expected to increase to around EUR 960 mln in 2016
Regulatory costs are expected to increase to around EUR 960 mln in 2016 Regulatory costs (in EUR mln)* Estimated regulatory costs by segment (2016)** 960 0% 205 25% 22% 620 Retail Netherlands EUR Retail Belgium 143 400 408 960 mln Retail Germany 344 374 233 18% Retail Other C&GM 85 161 159 18% Whole
Slide 28: Lending credit outstandings ING Bank are well diversified
Lending credit outstandings ING Bank are well diversified ING Bank* Retail Banking* Wholesale Banking* 6% 9% 2% 13% 34% 32% 13% 3% 41% EUR EUR EUR 603 bln 398 bln 204 bln 66% 16% 22% 9% 12% 9% 13% Retail Banking Mortgages Netherlands Structured Finance Wholesale Banking Other lending Netherlands Rea
Slide 29: Risk costs Wholesale Banking declined to below longer-term average
Risk costs Wholesale Banking declined to below longer-term average Risk costs Wholesale Banking have come down from their Wholesale Banking benefits from well diversified loan peak in 2012… (in EUR mln and in bps) portfolio 71 68 Lending Credit O/S Wholesale Banking (1Q16)* 952 12% 3% 8% Builders &
Slide 30: Lending credit outstandings Wholesale Banking well diversified by geography
Lending credit outstandings Wholesale Banking well diversified by geography Loan portfolio is well diversified across geographies… ...with the majority in developed countries Lending Credit O/S Wholesale Banking (1Q16)* • Our business model is the same throughout our global WB 1% NL franchise 13% Be
Slide 31: The quality of our Russian portfolio remains strong
The quality of our Russian portfolio remains strong Exposure ING Bank to Russia (in EUR mln) Lending outstanding per currency Change Change 14% 1Q16 1Q15 1Q-1Q 4Q15 1Q-4Q Total Lending Credit O/S 5,528 5,927 -399 5,752 -224 21% 65% Other* 438 932 -494 361 77 Total outstanding 5,966 6,859 -893 6,113
Slide 32: The quality of our Ukraine portfolio remains under pressure, but manageable
The quality of our Ukraine portfolio continues to be under pressure, but manageable Exposure ING Bank to Ukraine (in EUR mln) Lending outstanding per currency Change Change 15% 1Q16 1Q15 1Q-1Q 4Q15 1Q-4Q 72% Total Lending Credit O/S 1,236 1,217 19 1,286 -50 13% Other* -2 9 -11 -2 0 Total outstanding
Slide 33: Lending to the broader oil & gas industry is largely short-term
Lending to the broader oil & gas industry is largely short-term Lending Credit O/S ING Bank to oil & gas industry (in EUR bln) Lending outstanding per currency Change Change 5% 1Q16 1Q15 1Q-1Q 4Q15 1Q-4Q 14% Total Lending Credit O/S 28.1 30.1 -2.0 29.1 -1.0 USD EUR NPL ratio and Coverage ratio oil &
Slide 34: Lending to the oil & gas industry is well diversified
Lending to the oil & gas industry is well diversified and oil price risk is manageable Lending credit O/S In EUR bln In % • Trade-related exposure; short-term self-liquidating trade Trade and finance, generally for major trading companies, either pre- 11.4 41% Commodity Finance sold or price hedged,
Slide 35: Our Reserve Based Lending portfolio is senior secured debt
Our Reserve Based Lending portfolio is senior secured debt Priority Ranking Capital Structure & Debt Service Capital structure supports senior lenders • Our Reserve Based Lending portfolio is almost entirely Each priority level must be senior secured and debt service ranks ahead of other debt paid b
Slide 36: Lending to metals & mining industry is well diversified
Lending to metals & mining industry is well diversified Lending Credit O/S ING Bank to metals & mining (in EUR bln) Lending outstanding by segment Change Change 1Q16 1Q15 1Q-1Q 4Q15 1Q-4Q 31% 30% General Lending Transaction Services Total Lending Credit O/S* 14.1 13.5 14.2 -0.1 Trade & Commodity Fin
Slide 37: 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