Ing Groep N.v. · EURONEXT:INGA

Ing Groep — Debt Investor Presentation (November 2020)

52 slides from Ing Groep's debt investor presentation, Nov 5, 2020

  1. Slide 1: ING Credit Update 3Q2020

    ING Credit Update 3Q2020 ING Investor Relations 5 November 2020

  2. Slide 2: Key points

    Key points  In line with our purpose, we continue to take actions to support our customers, employees and society in coping with the effects of the Covid-19 pandemic. At the same time, countering financial and economic crime remains a priority  The current environment underscores the strength of o

  3. Slide 3: The pandemic underscores our digital success and requires increased focus

    The pandemic underscores our digital success and requires increased focus Primary customer* base (in mln)  Our primary customer base has increased by 3.3 million since we accelerated our Think Forward strategy in 2016. 29.2% 30.5% 32.8% 34.3% 35.0% 16.5 213,000 new primary customers were added in 3

  4. Slide 4: Building on our data-driven digital leadership

    Building on our data-driven digital leadership  Standardisation  One App / One Web already Client  Digitalisation services retail customers in the Customer Engagement Platform Netherlands and Germany. By interactions  Reusability  Scalability 3Q2020 nearly all active private customers of ING Be

  5. Slide 5: Diversifying income in a low rate environment

    Diversifying income in a low rate environment Net interest income (€ bln)  The negative rate environment since 2016 has put pressure on NII, which we counter using various levers 13.7 13.9 14.1 13.7 13.2  Loan growth has been an important lever and we aim to continue to grow, however within our ri

  6. Slide 6: Focus on maintaining good asset quality in our loan book

    Focus on maintaining good asset quality in our loan book Loan loss provisions (in € mln)  Updated macro-economic indicators driven by IFRS 9 resulted in a €380 million release. As cases and lockdown 1,336 measures are again increasing and uncertainty remains, the effect of the release was compensat

  7. Slide 7: Strengthening our management of compliance risks since 2017

    Strengthening our management of compliance risks since 2017 One common global approach Digital solutions Collaboration with 3rd parties  Global KYC organization in place to  A model using machine learning to  In the Netherlands, the oversee end-to-end KYC capabilities detect instances of fraudule

  8. Slide 8: Business profile

    Business profile 8

  9. Slide 9: 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

  10. Slide 10: 3Q2020 results

    3Q2020 results 10

  11. Slide 11: Resilient pre-provision result despite pressure on liability income

    Resilient pre-provision result despite pressure on liability income Pre-provision result excl. volatile items* and regulatory costs Income (in € mln) (in € mln) 4,626 4,439 4,511 4,671 4,286 12 2,281 2,214 2,329 2,143 2,014 -147 -125 -128 -230 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 3Q2019 4Q2019 1Q2020

  12. Slide 12: NII slightly lower with Covid-19 impact on supporting levers

    NII slightly lower with Covid-19 impact on supporting levers; 4-quarter rolling average NIM at 148 bps Net interest income excl. Financial Markets (FM) (in € mln) Net Interest Margin (in bps) 3,435 3,478 157 3,399 3,339 154 154 152 148 3,243 154 154 151 144 138 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 3Q2

  13. Slide 13: 3Q2020 net core lending reflects further decline of demand

    3Q2020 net core lending reflects further decline of demand Customer lending ING Group 3Q2020 (in € bln) Core lending businesses: €-6.9 bln 622.7 -1.1 0.2 1.4 0.5 -6.4 -1.8 0.1 -0.3 -3.0 -4.9 607.6 30-6-2020 Retail NL Retail Retail Retail Other WB Lending WB Daily WB Other* Lease run- Treasury FX / O

  14. Slide 14: Good fee growth in Retail Banking

    Good fee growth in Retail Banking Net fee and commission income per business line* (in € mln) Fee & commission income per product category (in € mln) 747 783 783 735 723 734 747 735 723 734 14 210 297 253 222 198 184 211 280 303 264 231 199 210 206 241 259 221 180 176 198 165 176 227 218 203 274 256

  15. Slide 15: Operating expenses remain under control

    Operating expenses remain under control Expenses (in € mln) Cost/income ratio** 137 134 62.8% 61.0% 303 526 111 60.3% 59.8% 106 127 151 138 310 140 130 55.7% 60.9% 52.7% 58.9% 56.6% 57.0% 54.9% 2,207 2,221 2,169 2,212 2,232 53.0% 50.3% 51.0% 51.3% 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 3Q2019 4Q2019 1Q2

  16. Slide 16: Risk costs down in all business lines, with sharp reduction in WB

    Risk costs down in all business lines, with sharp reduction in WB Risk costs per business line (in € mln) Stage 2 ratio Stage 3 ratio 1,336 8.6% 8.5% 7.6% 6.2% 6.3% 7.0% 1.8% 1.8% 882 5.7% 1.6% 1.6% 1.7% 661 7.0% 1.7% 5.9% 6.0% 1.5%* 428 469 5.4% 5.3% 1.6% 1.6% 1.6% 373 5.6% 1.4% 1.4% 276 178 145 4.

  17. Slide 17: ING Group financial ambitions

    ING Group financial ambitions Actual 2019 Actual 3Q2020 Financial ambitions ~12.5%*  CET1 ratio (%) 14.6% 15.3% (Basel IV) Capital  Leverage ratio (%) 4.6% 4.7% >4%  ROE (%)** 9.4% 5.1% 10-12% (IFRS-EU Equity) Profitability  C/I ratio (%)** 56.6% 60.9% 50-52% Dividend  Dividend (per share) €0.2

  18. Slide 18: Asset quality

    Asset quality 18

  19. Slide 19: Well-diversified lending credit outstandings by activity

    Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 3Q2020 3Q2020 3Q2020 15% 7% 23% 19% 36% 15% 4% €756 18% €485 6% €485 €272 bln bln bln bln 10% 58% 5% 16% 19% 64% 62% 9% 14% Retail Banking Residential mortgages Mortgages Netherlands Lending Wholes

  20. Slide 20: We remain comfortable with our senior and well-collateralised lending book

    We remain comfortable with our senior and well-collateralised lending book Residential  Average LTV of 59% with low Stage 3 ratio at 1.2% Mortgages  Risk metrics remained strong, also supported by government schemes €302 bln 9% Consumer Lending  Relatively small book, risk metrics slightly deteri

  21. Slide 21: Granular Retail Consumer Lending and Business Lending

    Granular Retail Consumer Lending and Business Lending Consumer Lending – 3Q2020 Lending Credit Outstandings Business Lending – 3Q2020 Lending Credit Outstandings By geography By product By geography By sector 3% 2% 1% 2%2%2% 4%1% 4% 4% 3% 1% 16% 5% 7% 3%2% 5% 11% 4% 36% 4% 6% 8% 51% 6% 14% €26 bln €

  22. Slide 22: Granular Wholesale Banking lending

    Granular Wholesale Banking lending Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S Wholesale Banking (3Q2020)* Lending Credit O/S Wholesale Banking (3Q2020)* 1% NL 1% 12% Real Estate, Infra & Construction 16% 21% Belux 21% Commodities, Food & Agri Germany TMT &

  23. Slide 23: Leveraged finance book managed within a restrictive framework

    Leveraged finance book managed within a restrictive framework Leveraged finance book* focused on developed markets Business overview (as per 3Q2020)  Focus on larger sponsors with an established track record 3% and a history of resolving issues in the event of underperformance by the acquired busin

  24. Slide 24: Well-diversified Commercial Real Estate (CRE) portfolio

    Well-diversified Commercial Real Estate (CRE) portfolio Business overview CRE breakdown by asset type (as per 3Q2020)  CRE portfolio of €50.8 bln, cap at €56 bln, split between: 8%  Real Estate Finance (REF) €36.0 bln 23% Office  Retail Banking €14.8 bln Retail  REF portfolio is managed by Whole

  25. Slide 25: Oil & Gas book: only €3.9 bln directly exposed to oil-price risk

    Oil & Gas book: only €3.9 bln directly exposed to oil-price risk 0.5 0.5 Direct €3.9 bln  Reserve Based Lending: smaller independent oil & gas producers, focus on 2.9 oil-price risk 1st cost quartile producers 5.4  Midstream: typically assets generating revenues from long-term tariff based contrac

  26. Slide 26: Management overlay taken to reflect potential impact of Covid-19

    Management overlay taken to reflect potential impact of Covid-19 Stage 1 provisioning (in € mln) Stage 2 provisioning (in € mln) Stage 3 provisioning (in € mln) 255 299 771 261 61 80 98 309 144 398 422 195 219 285 290 -6 -13 45 -9 25 163 169 200 201 -26 30 463 124 -4 -11 10 52 183 -12 15 -2 -2 -19 -

  27. Slide 27: 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) 882 882 373 373 254 254 116 116 145 145 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 3Q2019 4Q2019 1Q2020 2Q

  28. Slide 28: Overview Turkey exposure

    Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 3Q2020 2Q2020 Change 1% 15% Lending Credit O/S Retail Banking 3,597 4,123 -12.8% 35% Residential mortgages 397 484 -18.0% USD Consumer lending 982 1,148 -14.5% EUR SME/Midcorp 2,218 2,491 -11.0% TRY 49%

  29. Slide 29: Capital

    Capital 29

  30. Slide 30: Total risk-weighted assets decreased significantly in 3Q2020

    Total risk-weighted assets decreased significantly in 3Q2020, mainly impacted by lower credit risk-weighted assets ING Group risk-weighted assets development (in € bln) Credit RWA -€10.5 bln 322.2 -3.2 +2.9 312.3 -2.9 -1.4 -0.9 -0.1 -1.9 -2.3 2Q2020 FX Volume Risk Equity Models, Other Market Operati

  31. Slide 31: Strong ING Group capital ratio at 15.3%

    Strong ING Group capital ratio at 15.3%, excluding €2,541 mln net profits held outside of regulatory capital ING Group Total capital ratio development (in %) +2.8% 20.0% +1.9% 15.0% 0.0% +0.5% 15.3% ~12.5% -0.1% 10.5% 2Q2020 Profit added Other capital RWA 3Q2020 AT1 Tier 2 3Q2020 Total Basel IV CET1

  32. Slide 32: Buffer to Maximum Distributable Amount increased further in 3Q2020

    Buffer to Maximum Distributable Amount increased further in 3Q2020 ING Group fully-loaded SREP  As a result of the measures taken in reaction to the MDA Covid-19 pandemic, ING Group’s fully-loaded CET1 restriction requirement decreased by 1.48%-point to 10.51% in MDA level 1Q2020 (14.78%) restricti

  33. Slide 33: Overview of capital relief measures by regulatory and supervisory authorities

    Overview of capital relief measures by regulatory and supervisory authorities in the context of the Covid-19 pandemic Systemic  The DNB decreased ING Group’s Systemic Risk Buffer (SRB) requirement from 3.00% to 2.50% in 1Q2020 Risk Buffer  The SRB may be replaced by a Dutch Countercyclical Buffer

  34. Slide 34: Announcing new CET1 ratio ambition level, aligning with capital requirements

    Announcing new CET1 ratio ambition level, aligning with capital requirements CET1 ratio ambition compared to ING Group fully-loaded SREP Long-term CET1 ratio ambition level  There is a structural reduction of our capital requirements and increased visibility of the remaining expected 15.30% regulat

  35. Slide 35: New distribution policy to provide a sustainable and attractive return

    New distribution policy to provide a sustainable and attractive return to shareholders Suspended dividend policy New distribution policy consists of  ING aims to offer a sustainable and attractive return to  Pay-out ratio of 50% of resilient net profit* shareholders  To be paid out in cash or a c

  36. Slide 36: Funding & liquidity

    Funding & liquidity 36

  37. Slide 37: Issuance entities under our approach to resolution

    Issuance entities under our approach to resolution Issuance entities Eligible instruments for TLAC/MREL Current Designated TLAC MREL req.* resolution ING Groep N.V. entity  Own funds (CET1 / AT1 / Tier 2)    Senior unsecured debt (> 1 year)**    Own funds***   ING Bank N.V.  Senior unsecur

  38. Slide 38: Long-term debt maturity ladder and issuance activity in 2020

    Long-term debt maturity ladder and issuance activity in 2020 Long-term debt maturity ladder (in € bln)* 25 Repaid: €7.7 bln TLTRO II 20 Drawn: €59.5 bln TLTRO III 15 10 5 0 Maturity Issuance 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 >2029 2020YtD 2020YtD Covered Bank Senior HoldCo Tier 2 AT1

  39. Slide 39: ING's debt issuance programme in 2020

    ING’s debt issuance programme in 2020 ING Group instruments (in € bln)* Currency split Group / Bank issuance plan 86.6 27.7% 7.5% HoldCo Senior Senior debt issuance 24.3 7.8% 2.1% 12%  Up to €3 bln Senior HoldCo debt for the full-year 2020 8.7 2.8% 0.8%  OpCo Senior could be issued for internal ra

  40. Slide 40: Other subsidiaries remain active mainly through their covered bond programmes

    Other subsidiaries remain active mainly through their covered bond programmes ING Bank N.V. ING Belgium S.A./N.V ING Bank (Australia) Ltd ING Germany ING Bank Hipoteczny Instruments  Secured funding  Secured funding  Secured funding  Secured funding  Secured funding overview  Senior unsecured

  41. Slide 41: We aim to meet green funding needs to support sustainable finance portfolio

    We aim to meet green funding needs to support the growth of our sustainable finance portfolio ING’s Green Bond Programme Green Covered Bonds  ING’s Green Bond Framework is aligned with the ICMA Green  As part of our Green Bond Programme, we aim to issue Bond Principles and a Second Party Opinion (

  42. Slide 42: 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 reduced to €956 bln in 3Q2020  See “Asset Quality” section of this presentation Assets Liabilities Stable fu

  43. Slide 43: Robust liquidity position

    Robust liquidity position Funding mix* ING maintains a sizeable liquidity buffer 30 September 2020  ING’s funding consists mainly of retail deposits, corporate 3%2% deposits and public debt 7% Customer deposits (retail) Customer deposits (corporate)**  ING’s 12-month moving average LCR increased t

  44. Slide 44: Strong rating profile at both Group and Bank levels

    Strong rating profile at both Group and Bank levels Main credit ratings of ING entities as of 4 November 2020 Latest rating actions on ING entities S&P Moody’s Fitch  Fitch: ING Bank was upgraded to AA- in Feb-19. In Oct-20, Stand-alone rating a baa1 a+ Fitch affirmed ING Group’s and ING Bank’s rat

  45. Slide 45: Appendix

    Appendix 45

  46. Slide 46: Comfortable buffer to Additional Tier 1 trigger

    Comfortable buffer to Additional Tier 1 trigger Buffer to AT1 trigger ING Group available distributable items (in € mln)* 30 September 2020 2019 47.8 Share premium 17,078 Other reserves 28,052 Legal and statutory reserves 3,999 €25.9 bln 8.3%** Non-distributable -8,398 Total 40,732 21.9 Accrued inte

  47. Slide 47: Outstanding benchmark capital securities

    Outstanding benchmark capital securities (Additional) Tier 1 securities issued by Group Currency Issue date First call date Coupon Outstanding** Issued Reset spread USD* Feb-20 May-29 4.875% 750 750 UST + 351bps USD* Sep-19 Nov-26 5.750% 1,500 1,500 UST + 434bps USD Feb-19 Apr-24 6.750% 1,250 1,250

  48. Slide 48: Most recent HoldCo Senior transactions

    Most recent HoldCo Senior transactions HoldCo Senior Unsecured, EUR issuances ISIN Issue date Maturity Tenor Coupon Currency Issued Spread XS2049154078* Sep-19 Sep-25 6yr 0.100% EUR 1,000 m/s + 60 XS1933820372 Jan-19 Jan-26 7yr 2.125% EUR 1,000 m/s + 170 XS1909186451 Nov-18 Nov-30 12yr 2.500% EUR 1,

  49. Slide 49: ING Bank's covered bond programme…

    ING Bank’s covered bond programme…  ING Bank NV €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) 3%3% Interest Only  This programme is used for external issuance purposes. There is a separate €15 bln S

  50. Slide 50: …benefits from a continued strong Dutch housing market

    …benefits from a continued strong Dutch housing market, despite the hit to the economy in 2020 Dutch Purchasing Managers Index (PMI) saw the largest Dutch and eurozone unemployment rates (%) increasing decrease ever in April, but is back to pre-Covid-19 levels since start of the Covid-19 pandemic 70

  51. Slide 51: Volatile items 3Q2020

    Volatile items 3Q2020 Volatile items and regulatory costs (in € mln) 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 WB/FM – valuation -25 -74 -92 87 91 adjustments Capital gains/losses 5 -8 138 15 6 Hedge ineffectiveness 32 -65 -89 40 43 -Other items* -82 -270 -370 Total volatile items 12 -147 -125 -128 -230 Re

  52. Slide 52: 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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