Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Investor Day (June 2022)
58 slides from Ing Groep's investor day presentation, Jun 13, 2022
Slide 1: ING Investor Update 2022
ING Investor Update 2022 Chief Executive Officer 13 June 2022
Slide 2: Track record in delivering value
Track record in delivering value Strong fee growth Resilient net interest income (NII) Low cost/income ratio CAGR 2017-2021 CAGR 2017-2021 Average 2017-2021 6.7% -0.2% 58.9% versus 1.2% for eurozone peers versus -0.8% for eurozone peers versus 66.4% for eurozone peers Well-managed credit risk Delive
Slide 3: Focus on scale and value
Focus on scale and value Growing the Retail customer base in an optimised network Serving fewer Wholesale clients while optimising RWA ▪ Focus on scale and profitability ▪ Focus on mutually beneficial relationships through a more ▪ Exited retail activities in countries without short-term focused Who
Slide 4: Superior customer experience drives value
Superior customer experience drives value A superior customer experience And across customer segments Leads to Relevant Private individuals and small SME Net Promotor Score (NPS) Mobile first, in both sales & service Easy Customer base Large SME Digital sales and service model Personal Remote and fa
Slide 5: Innovative digital approach remains our focus
Innovative digital approach remains our focus Building a leading digital bank has proven successful Refocusing to enable a superior customer experience Mobile is Mobile is how Making our processes end-to-end digital, the main channel our customers interact local in Retail and global in Wholesale % m
Slide 6: The challenging world around us
The challenging world around us Changing macro outlook* External trends 5 year EUR swap rate 0.9% 1.0% 1.0% 0.8% Digital is a must-have, 0.3% 0.2% 0.0% customer expectations increasing -0.1% -0.5% 2017 2018 2019 2020 2021 2022 2023 2024 2025 Heightened focus on Environmental, Social and Eurozone inf
Slide 7: Our strategy with focus on execution certainty
Our strategy with focus on execution certainty Purpose Empower people to stay a step ahead in life and in business Strategic priorities Superior customer experience Sustainability Seamless Scalable Safe Our Enablers digital experience Tech & Operations & secure people 7
Slide 8: Sustainability future-proofs our business
Sustainability future-proofs our business Our focus SDGs* steer our Sustainability Direction Our priorities Capturing opportunities Mitigating risks Net zero commitment Climate risk management Environmental and social risk Transition finance (ESR) policy Diversity & inclusion * United Nations Sustai
Slide 9: Our sustainability targets
Our sustainability targets Financing the transition We have committed to aligning with climate goals limiting in Wholesale Banking the rise in global temperatures to 1.5 degrees Celsius, setting sector-specific intermediate goals matching a €125 bln volume mobilised* in 2025 global emissions decreas
Slide 10: Our management team
Our management team Steven van Rijswijk Tanate Phutrakul Ljiljana Čortan Chief Executive Officer Chief Financial Officer Chief Risk Officer Pinar Abay Andrew Bester Aris Bogdaneris Ron van Kemenade Marnix van Stiphout Market Leaders Wholesale Banking Challengers & Chief Technology Chief Operations G
Slide 11: Tech & Operations
ING Investor Update 2022 Tech & Operations 13 June 2022
Slide 12: A leading digital bank
A leading digital bank With a scalable Tech and Operations foundation we grow our business at marginal cost % mobile interactions Customer base on One App in 2021 % of total 2021 customers 91% ~50% Costs under control Tech & Operations costs CAGR 2019-2021 in % of total 2021 costs* +0.3% ~40% * Expe
Slide 13: Scalable Tech & Operations is a key enabler of superior customer experience
Scalable Tech & Operations is a key enabler of superior customer experience Seamless digital experience Reusability Modularity Self service Designing and building Breaking up customer Easier onboarding and once, reuse in countries journeys, facilitating usage of modules locally and segments differen
Slide 14: Benefits of our scalable Tech foundation
Benefits of our scalable Tech foundation Our scalable Tech foundation Used by countries Benefits Proposition A Shorter time-to-market Reusable services and components Consistent high quality Banking Technology Platform (Touchpoint) Proposition B Increased productivity Private and public cloud Lower
Slide 15: Proven Tech capabilities enabling in-country scale
Proven Tech capabilities enabling in-country scale Banking Technology Platform ING private cloud OnePipeline (Touchpoint) Consolidating and standardising Developing and running common Rolling out tooling to support all infrastructure application components development, testing and releasing activiti
Slide 16: Benefits of our scalable Operations
Benefits of our scalable Operations Scalable operations driven by digitalisation and capability hubs Benefits Attract and retain talent Digi Index score* Automation and digitalisation End-to-end >75% by 2025 straight-through-processing (STP) versus 60% in 2021 Increased productivity Consistent high
Slide 17: Enabling a superior customer experience at reduced cost-to-serve
Enabling a superior customer experience at reduced cost-to-serve Automating and centralising Straight-through-processing Contact centers KYC activities ▪ Digitalising key customer journeys ▪ Digitalising client contacts ▪ Consolidating in hubs ▪ Measuring impact by NPS and cost ▪ Accelerating remote
Slide 18: Delivering value
Delivering value Seamless digital experience Shorter time-to-market A scalable Tech & Operations foundation Enabling a superior customer experience based on proven capabilities Consistent high quality Lower cost-to-serve We continue investing in our scalable Tech & Operations foundation while largel
Slide 19: Retail Banking
ING Investor Update 2022 Retail Banking 13 June 2022
Slide 20: Serving 37 million customers in 11 countries
Serving 37 million customers in 11 countries A diversified footprint Provides for well-balanced growth Total retail customers* 1Q2022 (in mln) Total customer balances including assets under management and e-brokerage (in € bln) CAGR 0.2 +4.4% 1,198 1,010 197 127 475 553 NPS #1 in 6 2.8 408 448 out o
Slide 21: A track record of delivering value
A track record of delivering value Superior customer experience Digital leadership +2.9 mln primary 91% interactions customers via mobile +5.8% CAGR 2017-2021 in 2021, versus 63% in 2017 Return on equity 15.8% average over 2017-2021 based on 12.5% CET1 Non-liability income* Cost discipline €+2.0 bln
Slide 22: Mastering digital leadership is our bread and butter
Mastering digital leadership is our bread and butter Mobile is the main channel And is becoming more personalised Helping to boost mobile sales Total number of interactions with ING (in bln) % personalised customer interactions Mobile sales* x2.3 x3 x3.5 6.9 26% 97 47% 3.0 of sales 91% 9% 28 is mobi
Slide 23: Providing a superior customer experience is in our DNA
Providing a superior customer experience is in our DNA Leads to a higher NPS and more A superior customer experience Supported by digital capabilities primary customers NPS ambition Personalised interactions Relevant Green products #1 NPS in all countries Primary customers Mobile onboarding Easy Mob
Slide 24: Income diversification strengthens our revenue resilience
Income diversification strengthens our revenue resilience Strong fee growth With additional runway Leading to continued growth Growing primary customers ▪ Primary customers buy 2x more products, including fee-products such as investment products and insurance Growing fee generating products +9.4% ▪
Slide 25: Retail Netherlands – a digitally led universal bank
Retail Netherlands – a digitally led universal bank Digitally led bank Delivering value Focus Sustainability Digital customer base* Fee income ▪ Supporting energy transition of our clients with launch of >80% +7% sustainable products of 4.5 mln primary CAGR 2019-2021 ▪ Improving our impact on financ
Slide 26: Retail Belgium – transforming our franchise to make banking easier
Retail Belgium – transforming our franchise to make banking easier Digital transformation Delivering value Focus Sustainability Digital customer base* Fee income ▪ Supporting energy transition of our clients with launch of >70% +18% sustainable products of 1.1 mln primary CAGR 2019-2021 customers us
Slide 27: Retail Germany – a market leading digital bank with further room to grow
Retail Germany – a market leading digital bank with further room to grow A growth engine Delivering value Focus Sustainability CAGR 2017-2021 Digital customer base* ▪ Scale up green mortgage and investment product offering +23% ~85% fee income of 2.3 mln primary Income customers uses mobile +5% ▪ Le
Slide 28: Retail Other Challengers & Growth Markets – fast growing digital challenger banks
Retail Other Challengers & Growth Markets – fast growing digital challenger banks Fast growing banks The power of diversification Focus Sustainability Digital customer base* Our 3 largest non-eurozone countries ▪ Supporting energy transition of our clients with launch of ~90% sustainable products of
Slide 29: Roadmap to 2025 targets
Roadmap to 2025 targets Primary customers Total income Fee income Cost-to-serve ▪ Further improve ▪ Positive interest rates ▪ Primary customer ▪ Increase digitalisation customer experience ▪ Profitable lending growth of key customer ▪ Roll out green growth ▪ Grow investment journeys products ▪ Fee g
Slide 30: Wholesale Banking
ING Investor Update 2022 Wholesale Banking 13 June 2022
Slide 31: Wholesale Banking franchise
Wholesale Banking franchise Unique value proposition Highly engaged High NPS workforce Sustainability leadership Strong brand 2
Slide 32: Track record of delivering value
Track record of delivering value Focus on mutually Decreased RWA density absorbing beneficial client relationships Improved income/average RWA growth and regulatory impact Total income per client RWA/customer lending +20 bps +67% -10% in 2021* versus 2017 in 2021 versus 2017 in 2021 versus 2017 Well
Slide 33: Clients choose us because of our value proposition
Clients choose us because of our value proposition Typical client profile Value proposition Evidenced by Leading to Our global reach with local knowledge 35% of income Banking services in more is cross-border than 40 countries NPS Corporate and We are sector experts institutional clients with Real E
Slide 34: Well-structured client solutions
Well-structured client solutions WB product offering Structured in line with risk appetite Leading role Flow* Top 10 player in euro investment Capital Markets/Advisory Focused on client business grade corporate bonds globally Trade Financial Markets Short-term, self-liquidating The leading global ca
Slide 35: Our priorities to further improve return on equity
Our priorities to further improve return on equity Support the green Increase capital Ensure efficient and transition finance need efficiency seamless digital delivery 6
Slide 36: Support the green transition finance need
Support the green transition finance need ING is well positioned to US$5 tln** annual bank financing opportunity capture the opportunity (IEA report) Targets 0.5 0.8 Pioneer in sustainability Net Zero alignment linked loans since 2017 US$5 0.7 US$5 pathways and 2030 1.7 tln tln targets 0.3 for all T
Slide 37: Increase capital efficiency
Increase capital efficiency Absorbed regulatory add-on and volume growth Further levers to improve How? RWA (€ bln) 14 -46 35 Focus on mutually 146 149 Portfolio optimisation beneficial client relationships Increase Increase distribution RWA Regulatory New Management RWA capital velocity Reduce fina
Slide 38: Ensure efficient and seamless digital delivery
Ensure efficient and seamless digital delivery Key levers to enhance our digital delivery Seamless end-to-end Easy to access omni-channel Growing presence on our customer journeys experience clients’ platforms of choice Digitally enabled Personalised overviews, relationship management increasing ins
Slide 39: Roadmap to a >10% return on equity
Roadmap to a >10% return on equity Total income Costs Capital Risk costs ▪ Grow profitable ▪ Ensure efficient and ▪ Increase capital ▪ Focus on lending seamless digital efficiency diversification ▪ Transaction Services delivery ▪ Decrease RWA density ▪ Be selective at the and Financial Markets ▪ Cen
Slide 40: Chief Risk Officer
ING Investor Update 2022 Chief Risk Officer 13 June 2022
Slide 41: Value protected by a strong credit risk management framework
Value protected by a strong credit risk management framework Focus on diversification Selective at the gate Pro-active management ▪ Caps on exposures to mitigate ▪ Granular cascaded risk appetite ▪ Early warning based monitoring concentration risk boundaries / limits ▪ Structured watch list process
Slide 42: Portfolio view confirms strong credit risk position
Portfolio view confirms strong credit risk position Diversified by geography and product Lower loan-to-value Retail mortgages Well-secured loan book Lending credit outstandings* 2021 Lending credit outstandings* 2021 67% 57% NL €787 bln Belux €787 bln Germany Fully secured Rest of Europe Partially s
Slide 43: Strong track record in managing credit risk through-the-cycle
Strong track record in managing credit risk through-the-cycle Lowest risk costs in eurozone peer group Stage 3 ratio well below eurozone peer average Risk costs in bps over average customer lending 263 247 4.7% 210 3.9% 177 3.4% 3.2% 134 2.7% 108 110 88 1.9% 1.7% 74 68 1.5% 1.5% 58 53 1.4% 43 23 25
Slide 44: Managing Russia-related exposure
Managing Russia-related exposure Total Russia-related exposure* Onshore exposure* and equity Offshore exposure* (in € bln) (in € bln) (in € bln) 6.7 6.0 5.8 5.0 5.3 4.8 4.5 3.9 1.3 1.3 1.3 1.1 0.2 0.1 0.1 0.1 28 31 March 30 April 31 May 28 31 March 30 April 31 May 28 31 March 30 April 31 May Februar
Slide 45: Operational resilience and strengthening our gatekeeper role
Operational resilience and strengthening our gatekeeper role Operational resilience Strengthening Know Your Customer (KYC) ▪ Uninterrupted services during the pandemic with high ▪ Global organisation in place channel availability in 2020 and 2021 ▪ Global policy and risk appetite statements rolled o
Slide 46: Focus on effective and efficient risk management
Focus on effective and efficient risk management Effective and efficient Pro-active approach Enabling opportunities ▪ Further developing third-party ▪ Identifying and adapting to new ▪ Enabling opportunities within our cooperation in areas such as and emerging risks, such as risk appetite to support
Slide 47: Chief Financial Officer
ING Investor Update 2022 Chief Financial Officer 13 June 2022
Slide 48: Track record of delivering value
Track record of delivering value Resilient income in a negative rate environment Diversified fee income growth Cost discipline Total income (in € bln) Net fee and commission income (in € bln) Total expenses (in € bln) CAGR +0.9% CAGR +6.7% CAGR +1.3%* 17.7 18.1 18.3 18.5 CAGR 3.5 17.6 11.2 11.2 7% 8
Slide 49: Adapting to the world around us
Adapting to the world around us Impact from negative rate environment on margins Changing macro outlook* Impacting our P&L Lending and deposit margins (in bps) 5 year EUR swap rate 0.9% 1.0% 1.0% 0.8% Less certain outlook on 149 149 150 151 153 0.0% lending demand 85 82 73 -0.5% 56 2020 2021 2022 20
Slide 50: Lending growth to absorb lending margin normalisation
Lending growth to absorb lending margin normalisation Eurozone GDP growth Profitable lending growth ▪ Focus on value through pricing discipline and risk framework Average ~1% Average ~2% ▪ Growth outlook for Retail Banking remains strong. Less 5.4% certain outlook on lending demand in Wholesale Bank
Slide 51: Managing the interest rate risk in our deposit book
Managing the interest rate risk in our deposit book Majority of deposits is related to retail eurozone Replicated in the short term Total Customer deposits 31 December 2021 (in € bln) Replication composition by tenor 617 Average over past 10 years ~25% ~60% 461 ~75% Current accounts Savings ~40% 156
Slide 52: NII sensitivity of the retail eurozone replicating book
NII sensitivity of the retail eurozone replicating book Sensitivity Retail eurozone replicating Sensitivity Retail eurozone replicating book (including illustrative 50% book (without pass-through)* Pass-through and negative charging pass-through scenario)* Delta in NII versus 2021 replicating result
Slide 53: Drivers of future fee growth
Drivers of future fee growth Net fee and commission income (in € bln) Daily banking Investment products ▪ Optimise pricing of payment ▪ Account openings on existing packages products +5-10% ▪ Introduce behavioral fees ▪ Inflow from savings into investment annual growth products ▪ Introduce new value
Slide 54: We will manage our costs below inflation
We will manage our costs below inflation Expenses excluding regulatory costs and volatile items Retail Banking Regulatory costs Annual growth (in %) ▪ Optimise assisted channels ▪ Regulatory costs expected 6.4% ▪ Digitalise key customer journeys approximately €0.4 bln lower in 2025 compared with 202
Slide 55: Cost/income ratio of 50-52% by 2025
Cost/income ratio of 50-52% by 2025 Lending NII Total income (in € bln) ▪ Profitable lending growth to absorb lending margin normalisation +3% CAGR 2021-2025 18.5 Liability NII 0.5 ▪ Positive interest rates 18.0 ▪ (Primary) customer growth 2021 2022 2023 2024 2025 Net fee and commission income Total
Slide 56: CET1 ratio at ~12.5% by 2025
CET1 ratio at ~12.5% by 2025 Our distribution policy Additional distribution of structural excess capital ▪ Annual pay-out ratio of 50% of ▪ CET1 ratio target of ~12.5% by 2025 resilient net profit ▪ Total annual distribution will take into account in capital planning: prevailing ▪ Structural excess
Slide 57: Our financial targets
Our financial targets Total income Fee income Cost/income-ratio CAGR 2021-2025 Annual growth By 2025 +3% 5-10% 50-52% +1% average 2017-2021 +7% average 2017-2021 59% average 2017-2021 CET1 ratio Return on equity* By 2025 By 2025 ~12.5% 12% 14.9% 1Q2022 9% average 2017-2021 * ING Group return on equi
Slide 58: 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