Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Q1 2020 Earnings Presentation
35 slides from Ing Groep's earnings presentation, May 8, 2020
Slide 1: First quarter 2020 results
First quarter 2020 results ING posts 1Q2020 net result of €670 mln Ralph Hamers, CEO of ING 8 May 2020
Slide 2: Key points
Key points ▪ In line with our purpose, we take actions to support our customers, employees and society in coping with the impact of the Covid-19 pandemic. In many countries we are working with governments to provide our retail and wholesale banking customers with the necessary financial flexibility,
Slide 3: Our priority is to support employees, customers and society with Covid-19 impact
Our priority is to support employees, customers and society to deal with the impact of the Covid-19 pandemic Our employees Our private customers Our business customers Our society ▪ Smooth transition to ▪ Part of our branch ▪ Pro-actively contacting ▪ Matching employee working from home network rema
Slide 4: Our digital and agile capabilities enabled uninterrupted customer service
Our digital and agile capabilities enabled uninterrupted customer service % of mobile-only active customers who contact us* % mobile in interactions with ING CAGR +41%** CAGR +36%*** 37% 37% 86% 82% 26% 19% 73% 12% 63% 52% 2016 2017 2018 2019 1Q2020 2016 2017 2018 2019 1Q2020 2.5 3.0 3.7 4.5 1.3 Num
Slide 5: A resilient bank through primary customers and income diversification
We have built a resilient bank through our focus on primary customers and income diversification Total income** geographically Retail income* increasingly more diversified, with growth in Our primary customer base diversified across products C&GM 25.4% 26.7% 29.2% 30.5% 32.8% 34.3% Δ € CAGR) Δ € CAG
Slide 6: We have maintained cost discipline
We have maintained cost discipline, while managing KYC-related expenses, regulatory costs and ATF investments We managed our underlying costs Leading to a best-in-class cost/income ratio in the eurozone Underlying costs (in € bln) CAGR +20.1% 67.9% 66.9% 66.1% CAGR +1.7% 64.0% 64.3% 64.5% 1.0 0.9 0.
Slide 7: Low risk costs compared to eurozone peers and a low Stage 3 ratio
Low risk costs compared to eurozone peers and a low Stage 3 ratio Risk costs / average customer lending (in %) Stage 3 ratio** 1.4% 6.1% 1.2% 5.4% 1.0% 4.7% 3.9% 0.8% 3.4% 4.3% 4.0% 0.6% 3.5% 3.0% 2.9% 0.4% 2.5% 2.6% 2.1% 1.9% 0.2% 1.5% 1.4% 0.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 201
Slide 8: Robust capital position with a strong funding structure
We have a robust capital position with a strong funding structure Capital development since 2015 Balance sheet ING Group (in € bln) Balance sheet size ING Group 31 December 2019: €892 bln 5.9% -3.3% Other 15 55 Total equity 88 Cash balances Other 15 -1.4% with central 35 Deposits from 0.5% 14.6% ban
Slide 9: 1Q2020 results
1Q2020 results 9
Slide 10: Solid pre-provision result reflects discipline in lending margins and fee growth
Solid pre-provision result reflects discipline in lending margins and fee growth Pre-provision result excl. volatile items and regulatory costs Income (in € mln) (in € mln) 4,576 4,665 4,626 4,439 4,511 12 96 113 2,208 2,198 2,281 2,214 2,329 -147 -125 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 1Q2019 2Q201
Slide 11: Stable NII year-on-year; 4-quarter rolling NIM at 154 bps
Stable NII year-on-year; 4-quarter rolling NIM at 154 bps Net interest income excl. Financial Markets (FM) (in € mln) Net Interest Margin (in bps) 3,435 3,478 3,391 3,391 3,399 157 155 154 154 154 154 152 154 154 151 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 NIM NIM (4-qu
Slide 12: 1Q2020 net core lending driven by Wholesale Banking
1Q2020 net core lending driven by Wholesale Banking Customer lending ING Group 1Q2020 (in € bln) Core lending businesses: €12.3 bln 7.6 -4.5 11.2 -2.0 0.2 631.6 -0.3 616.4 -0.1 1.1 0.6 1.3 31/12/2019 Retail Retail Retail Retail WB Lending WB Daily WB Other* Lease run- Treasury FX / Other** 31/03/202
Slide 13: Strong growth of fee income driven by investment and daily banking products
Strong growth of fee income driven by investment and daily banking products Net fee and commission income* (in € mln) ▪ Fees increased by €108 mln compared to 1Q2019, or 16.0%. This was driven by higher fees on investment and daily banking products in Retail Banking, predominantly in +16.0% Germany
Slide 14: FM impacted by valuation adjustments reflecting Covid-19 volatility
FM impacted by valuation adjustments reflecting Covid-19 related market volatility Income Financial Markets (in € mln) ▪ Excluding valuation adjustments, FM income was €8 mln lower YoY, mainly due to losses in Credit Trading following an 254 255 257 246 221 abrupt downward market movement. Other FM
Slide 15: Cost measures partially absorbed elevated KYC and regulatory costs
Cost measures partially absorbed elevated KYC and regulatory costs Expenses (in € mln) Cost/income ratio** 515 97 106 303 526 60.9% 62.8% 98 151 59.0% 60.3% 74 127 138 55.7% 59.0% 52.5% 52.7% 56.6% 57.0% 2,198 2,256 2,207 2,221 2,169 53.7% 53.7% 50.3% 51.0% 51.3% 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 1
Slide 16: Risk costs impacted by collective Stage 2 provisioning
Risk costs impacted by collective Stage 2 provisioning related to Covid-19 pandemic Risk costs per stage (in € mln) Stage 2 ratio Stage 3 ratio 661 7.5% 6.6% 6.3% 261 6.2% 428 7.0% 5.7% 5.9% 25 18 6.2% 1.8% 276 5.6% 5.4% 5.3% 5.6% 1.6% 1.6% 1.6% 1.6% 209 207 6 2 26 4.6% 3 398 422 3.9% 4.1% 1.5% 1.5%
Slide 17: Higher risk costs mainly visible in Stage 2
Higher risk costs mainly visible in Stage 2 Retail Banking Wholesale Banking Risk costs per stage (in € mln) Risk costs per stage (in € mln) 285 373 1 98 254 163 174 160 3 15 136 118 52 4 8 91 116 200 201 184 71 18 10 8 198 221 136 145 5 83 100 101 -0 -4 -2 -16 -26 -2 -4 -11 -13 -31 -2 -19 -2 -2 -27
Slide 18: Comfortable with quality of our book, almost fully senior and well-collateralised
We remain comfortable with the quality of our book, which is almost fully senior and well-collateralised Residential ▪ Average LTV of 60% with low Stage 3 ratio at 1.1% Mortgages ▪ Risk metrics remain strong, also supported by government schemes €298 bln 5% Consumer ▪ Relatively small book, mainly r
Slide 19: ING Group CET1 ratio robust at 14.0%
ING Group CET1 ratio robust at 14.0% ING Group Total capital ratio development 2.2% 18.1% 0.2% -0.4% 14.0% 1.9% 14.6% -0.4% ~13.5% 10.5%** 4Q19 Profit added Implementation RWA & other 1Q20 AT1 Tier 2 1Q20 Total Basel IV CET1 CET1 ratio to CET1* of DoD CET1 ratio capital ratio ambition CET1 ratio Exp
Slide 20: ING Group financial ambitions
ING Group financial ambitions Actual 2019 Actual 1Q2020 Financial ambitions ~13.5%* ▪ CET1 ratio (%) 14.6% 14.0% (Basel IV) Capital ▪ Leverage ratio (%) 4.6% 4.3% >4% ▪ ROE (%)** 9.4% 8.4% 10-12% (IFRS-EU Equity) Profitability ▪ C/I ratio (%)** 56.6% 57.0% 50-52% Dividend payments suspended Dividend
Slide 21: Wrap up
Wrap up 21
Slide 22: Wrap up
Wrap up ▪ In line with our purpose, we take actions to support our customers, employees and society in coping with the impact of the Covid-19 pandemic. In many countries we are working with governments to provide our retail and wholesale banking customers with the necessary financial flexibility, wh
Slide 23: Appendix
Appendix 23
Slide 24: Volatile items and regulatory costs impacted 1Q2020 pre-tax result
Volatile items and regulatory costs impacted 1Q2020 pre-tax result Pre-tax result Volatile items and regulatory costs Pre-tax result excl. volatile items (in € mln) (in € mln) and regulatory costs (in € mln) 1Q19 2Q19 3Q19 4Q19 1Q20 2,005 2,001 1,989 2,005 1,911 WB/FM – valuation -58 -72 -25 -74 -92
Slide 25: Group CET1 ratio at 14.0% and ROE at 8.4%
Group CET1 ratio at 14.0% and ROE at 8.4% Group CET1 ratio development during 1Q2020 Group ROE calculation in 1Q2020 (amounts in € bln and %) (in € mln) Capital RWA Ratio Change As of 31 March 2020 Actuals 31 December 2019 47.6 326.4 14.6% IFRS-EU shareholders’ equity 54,334 Net profit included in C
Slide 26: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 1Q2020 1Q2020 1Q2020 8% 7% 4% 4% 37% 25% 15% 25% 20% €710 €450 4% €450 €260 bln bln bln bln 6% 10% 17% 63% 66% 9% 67% 13% Retail Banking Residential mortgages Mortgages Netherlands Lending Wholesal
Slide 27: Detailed disclosure on selected countries
Detailed disclosure on selected countries Selected countries (in € bln) Lending credit Stage 2 ratio Stage 3 ratio Lending credit Stage 2 ratio Stage 3 ratio O/S 1Q2020 1Q2020 1Q2020 O/S 4Q2019 4Q2019 4Q2019 France 9.6 6.1% 0.6% 8.8 3.0% 0.7% Italy 16.0 4.5% 2.8% 16.5 4.1% 2.0% Spain 25.9 1.9% 1.0%
Slide 28: Granular Retail Consumer Lending and Business Lending
Granular Retail Consumer Lending and Business Lending Consumer Lending – 1Q2020 Lending Credit Outstandings Business Lending – 1Q2020 Lending Credit Outstandings By geography By product By geography By sector 3% 2% 1% 4% 5% 5% 4% 1% 2%2% 3% 16% 3% 2% 5% 3% 7% 11% 35% 4% 5% 8% 4% 6% 49% 6% 14% €26 bl
Slide 29: Granular Wholesale Banking lending
Granular Wholesale Banking lending Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S Wholesale Banking (1Q2020)* Lending Credit O/S Wholesale Banking (1Q2020)* 1% NL 6% 10% Real Estate, Infra & Construction 8% Commodities, Food & Agri 19% Belux 12% Germany 22% TM
Slide 30: Leveraged finance book managed within a restrictive framework
Leveraged finance book managed within a restrictive framework Business overview Leveraged finance book* focused on developed markets ▪ Focus on larger sponsors with an established track record (as per 1Q2020) and a history of resolving issues in the event of 2% underperformance by the acquired busin
Slide 31: Well-diversified Commercial Real Estate (CRE) portfolio
Well-diversified Commercial Real Estate (CRE) portfolio Business overview CRE breakdown by asset type (as per 1Q2020) ▪ CRE portfolio of €51.6 bln, cap at €56 bln, split between: ▪ Real Estate Finance (REF) €36.8 bln 3% ▪ Retail Banking €14.8 bln 25% Office 37% Retail ▪ REF portfolio is managed by W
Slide 32: Oil & Gas book: only €4.6 bln directly exposed to oil-price risk
Oil & Gas book: only €4.6 bln directly exposed to oil-price risk 0.5 0.5 €4.6 bln Direct ▪ Smaller independent oil & gas producers, focus on 1st cost quartile 3.6 oil-price risk producers 6.0 ▪ Typically assets generating revenues from long-term tariff based contracts, O&G not affected by oil & gas
Slide 33: Breakdown of quarterly risk costs Wholesale Banking per geography and sector
Breakdown of quarterly risk costs Wholesale Banking per geography and sector Breakdown of geography which generated risk costs WB Breakdown of sector which generated risk costs WB (in € mln) (in € mln) 373 373 254 254 116 116 71 91 71 91 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 1Q2019 2Q2019 3Q2019 4Q2019
Slide 34: Overview Turkey exposure
Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 1Q2020 4Q2019 Change 2% 16% Lending Credit O/S Retail Banking 4,242 4,537 -6.5% USD Residential mortgages 531 529 0.4% 36% EUR TRY Consumer lending 1,157 1,203 -3.8% Other 46% SME/Midcorp 2,554 2,804 -8.
Slide 35: 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