Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Debt Investor Presentation (August 2022)
43 slides from Ing Groep's debt investor presentation, Aug 4, 2022
Slide 1: ING Credit Update 2Q2022
ING Credit Update 2Q2022 ING Investor Relations 4 August 2022
Slide 2: Key points
Key points ▪ In line with our strategic priorities, we continued our efforts to offer a superior customer experience, with a focus on the digital customer journey, and to contribute to a sustainable future ▪ Pre-provision profit remained strong, despite increasingly challenging operating conditions
Slide 3: Continuously improving the customer experience
Continuously improving the customer experience Mobile-only active customers* ▪ To further strengthen customer experience and drive value, we have improved several propositions in 2Q2022 53% ▪ In Romania, we were the first bank to make the start of our mortgage application process fully digital with
Slide 4: Sustainability at the heart of what we do
Sustainability at the heart of what we do ▪ We joined forces with industry players to form the Sustainability deals 1H2022* (#) Aluminium Climate-Aligned Finance Working Group, as the latest initiative to support the transition to net zero emissions 205 deals ▪ We have set intermediate 2030 targets
Slide 5: Strong pre-provision profit
Strong pre-provision profit Pre-provision profit excl. volatile items* and regulatory costs ▪ 2Q2022 pre-provision profit excluding volatile items and (in € mln) regulatory costs increased on both comparable quarters ▪ NII was strong, reflecting the positive effect of rising interest 2,405 rates on
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: 2Q2022 results
2Q2022 results 8
Slide 9: Strong NII; 4-quarter rolling average NIM at 137 bps
Strong NII; 4-quarter rolling average NIM at 137 bps Net interest income (in € mln) Net interest margin (in bps) 3,340 3,388 3,374 3,415 3,465 83 84 84 82 76 140 140 139 3,257 3,304 3,290 3,333 3,389 137 137 138 137 137 136 136 2Q2021 3Q2021 4Q2021 1Q2022 2Q2022 2Q2021 3Q2021 4Q2021 1Q2022 2Q2022 TL
Slide 10: Loan growth across all segments
Loan growth across all segments Customer lending 2Q2022 (in € bln) Core lending growth €10.1 bln 1.8 -0.3 -0.3 0.3 -1.0 1.4 642.9 1.8 2.0 1.9 1.4 633.9 1Q2022 Retail Retail Retail Retail Other WB Lending WB DB&TF* WB Other* Run-off Treasury FX / Other *** 2Q2022 Netherlands Belgium Germany C&GM* por
Slide 11: Sustained fee growth year-on-year
Sustained fee growth year-on-year Net fee & commission income per business line (in € mln) Net fee & commission income per product category (in € mln) 882 925 933 888 882 925 933 888 855 855 105 140 112 92 322 324 280 130 302 295 267 226 248 247 261 232 247 269 275 253 247 253 232 265 220 322 338 33
Slide 12: 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 1.4% higher YoY, well below inflation levels. This was 2,947 2,945 mainly due to higher staff costs reflecting CLA increases and 2,685 385 2,738 salary i
Slide 13: Modest risk costs on a high quality loan book
Modest risk costs on a high quality loan book Risk costs per business line (in € mln) Stage 2 ratio Stage 3 ratio 987 7.2% 6.7% 6.6% 6.0% 6.0% 5.8% 5.6% 939 5.3% 5.2% 5.3% 346 1.8% 1.7% 1.7% 202 5.2% 1.6% 1.5% 216 4.9% 4.7% 39 88 4.6% 4.5% 1.4% 58 19 130 113 1.5% 1.5% 1.5% 1.4% 48 -149 20 1.1% 1.1%
Slide 14: We actively reduce our Russia-related exposure
We actively reduce our Russia-related exposure Total Russia-related exposure* Onshore exposure* and equity Offshore exposure* (in € bln) (in € bln) (in € bln) 6.7 4.6 5.3 3.6 1.3 0.9 0.2 0.2 28 February** 30 June 28 February** 30 June 28 February** 30 June Equity-at-risk Russian subsidiary ▪ Since t
Slide 15: ING Group financial targets
ING Group financial targets Actual 2021 Actual 2Q2022 Financial targets 2025 ~12.5%* Capital ▪ CET1 ratio (%) 15.9% 14.7% (Basel IV) ▪ Return on equity (%)** 9.2% 7.5% 12% (IFRS-EU equity) Profitability ▪ Cost/Income ratio (%)** 60.5% 61.0% 50-52% * Implies management buffer (incl. Pillar 2 Guidance
Slide 16: Capital
Capital 16
Slide 17: Risk-weighted assets increased in 2Q2022
Risk-weighted assets increased in 2Q2022, reflecting higher lending volumes and Market RWA, largely offset by improved book quality ING Group risk-weighted assets development (in € bln) Credit RWA €-0.1 bln 3.1 -6.3 4.5 -2.0 3.4 -2.2 335.9 334.9 0.5 1Q2022 FX Volume Overall profile of Models, Other
Slide 18: CET1 ratio decreased to 14.7% mainly due to additional distribution of €1.25 bln
CET1 ratio decreased to 14.7% mainly due to the additional distribution of €1.25 bln, partly offset by the inclusion of net profit ING Group Total capital ratio development (in %) +2.7% 19.4% +1.9% 14.9% +0.1% -0.4% +0.1% -0.0% 14.7% ~12.5% 10.5% 1Q2022 Profit added Additional Other capital RWA 2Q20
Slide 19: 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 10.94% ▪ 4.50% Pillar 1 Requirement (P1R) ▪ 0.98% Pillar 2 Requirement (P2R) MDA restriction ▪ 2.50%
Slide 20: Funding & liquidity
Funding & liquidity 20
Slide 21: 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 22: 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) 31.0% 31.2% 0.2% 27.32% 28.67% 11.6% 23.03% 5.46% 11.6% 5.03% 5.03% 2.7% 2.7% 1.9% 1.9% 22.29% 23.31% 14.7% 18.00% 14.7% 2Q2022 Requirement 1/1/2022 2Q2022 Requirement 1/1/2022 Requirement 1/1/2024 9.5% 6.75
Slide 23: Long-term debt maturity ladder and issuance guidance
Long-term debt maturity ladder and issuance guidance Issuance guidance 2022 Currency split of outstandings as at June 2022 ▪ Guidance on HoldCo Senior issuances for 2022 is ~€8-10 bln, HoldCo Senior Tier 2 AT1 subject to balance sheet developments 1% 12% 22% 77% 100% ▪ Covered bonds to be issued fro
Slide 24: 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: ~€15.2 bln ▪
Slide 25: We issue green bonds to support our sustainability objectives
We issue green bonds to support our sustainability objectives ING’s Green Bond Programme Green Covered Bonds ▪ On 6 May ING published an updated Green Bond Framework, ▪ As part of our Green Bond Programme, we aim to issue which is aligned with the ICMA Green Bond Principles and for covered bonds in
Slide 26: 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 increased to €1,020 bln in 2Q2022 ▪ See “Asset Quality” section of this presentation Assets Liabilities 1,008
Slide 27: Robust liquidity position with 12-month moving average LCR of 136%
Robust liquidity position with a 12-month moving average LCR of 136% Funding mix* ING maintains a sizeable liquidity buffer 30 June 2022 ▪ ING’s funding consists mainly of retail deposits, corporate 3% 2% deposits and public debt 8% Customer deposits (retail) Customer deposits (corporate)** ▪ ING’s
Slide 28: 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 3 August 2022 Latest rating actions on ING Group and Bank S&P Moody’s Fitch ▪ Fitch: ING Bank was upgraded to AA- in February 2019. In Stand-alone rating a baa1 a+ November 2021, Fitch affirmed ING Group’s and ING B
Slide 29: Asset quality
Asset quality 29
Slide 30: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group Retail Banking Wholesale Banking Lending credit O/S* 2Q2022 Lending credit O/S* 2Q2022 Lending credit O/S* 2Q2022 10% 7% 22% 19% 39% 16% 20% 6% €831 €506 €506 €325 bln 6% bln bln 9% bln 52% 5% 18% 8% 61% 64% 23% 14% Retail Banking Re
Slide 31: Wholesale Banking lending
Wholesale Banking lending Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S* Wholesale Banking Lending Credit O/S Wholesale Banking excluding Treasury & Other 1% NL 0% 9% Real Estate, Infra & Construction 17% 22% Belux Commodities, Food & Agri 29% TMT & Healthcar
Slide 32: Updated overview exposure related to Russia and Ukraine
Updated overview exposure related to Russia and Ukraine Lending credit outstandings* (in € bln) 31 March 2022 30 June 2022 Lending credit outstandings related to Russia Russian borrower with Russian ownership 4.2 3.3 Russian borrower with non-Russian ownership 0.4 0.5 Non-Russian borrower with Russi
Slide 33: Provisioning per Stage
Provisioning per Stage Stage 1 provisioning (in € mln) Stage 2 provisioning (in € mln) Stage 3 provisioning (in € mln) 844 34 386 25 4 1 837 165 3 7 11 9 237 230 -7 -7 173 68 -21 154 -42 8 32 161 -43 220 101 -12 -110 -95 7 -78 178 169 -159 70 -33 -125 -86 -46 53 -40 -235 -201 -4 2Q2021 3Q2021 4Q2021
Slide 34: Appendix
Appendix 34
Slide 35: Comfortable buffer to Additional Tier 1 trigger
Comfortable buffer to Additional Tier 1 trigger Buffer to AT1 trigger (in € bln) ING Group available distributable items (in € mln)** 30 June 2022 2021 49.4 Share premium 17,105 Other reserves 31,940 Legal and statutory reserves 1,069 €25.9 bln 7.7%* Non-distributable -8,205 23.5 Total 41,909 Accrue
Slide 36: Outstanding benchmark capital securities
Outstanding benchmark capital securities (Additional) Tier 1 securities issued by Group Currency Issue date First call date Coupon Outstanding (mln)** Reset spread USD* Sep-21 May-27 3.875% 1,000 UST + 286bps USD* Sep-21 May-31 4.250% 1,000 UST + 286bps USD Feb-20 May-29 4.875% 750 UST + 351bps USD*
Slide 37: HoldCo Senior transactions in past 12 months
HoldCo Senior transactions in past 12 months HoldCo Senior Unsecured, EUR issuances ISIN Issue date First call date Maturity Tenor Coupon Issued (€ mln) Reset spread XS2483607474 May-22 May-25 May-26 4NC3 2.125% 1,500 3mE+110 XS2443920249 Feb-22 Feb-26 Feb-27 5NC4 1.25% 1,500 3mE + 85 XS2443920751 F
Slide 38: 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 type* ▪ UCITS, CRR and ECBC Label compliant. Rated Aaa/AAA/AAA (Moody’s/S&P/Fitch) 2%2% Interest Only 4% ▪ This programme is used for external issuance purposes. There is a separate €15 b
Slide 39: 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) indicating industrial Dutch unemployment rates (%) continue to decrease since growth, but decreased to 55.9 after the invasion in Ukraine August 2020 7
Slide 40: Profit or loss 2Q2022
Profit or loss 2Q2022 Profit or loss (in € mln) Reported P&L Volatile items P&L excluding volatile items Net interest income 3,465 91 3,375 Net fee and commission income 888 1 887 Investment income 31 8 23 Other income 297 -189 486 Total income 4,682 -89 4,771 Expenses excl. regulatory costs 2,524 1
Slide 41: Volatile items 2Q2022
Volatile items 2Q2022 Volatile items (in € mln) 2Q2021 3Q2021 4Q2021 1Q2022 2Q2022 WB/FM – valuation adjustments 11 38 3 -70 90 Capital gains/losses -2 6 5 26 8 Hedge ineffectiveness 11 7 -24 81 -31 Other items income* 155 50 92 -68 -155 Total volatile items – income 175 101 76 -31 -89 Incidental it
Slide 42: Hyperinflation accounting and goodwill impairment in Turkey
Hyperinflation accounting and goodwill impairment in Turkey Application of IAS 29 to consolidation of Combined impact on 2Q2022 results (in € mln) ING Turkey Combined IAS 29 B/S IAS 29 P&L Goodwill ▪ We applied IAS 29 (‘Financial Reporting in impact 2Q2022 indexation indexation impairment Hyperinfla
Slide 43: 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