Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Debt Investor Presentation (February 2020)
47 slides from Ing Groep's debt investor presentation, Feb 6, 2020
Slide 1: ING Credit Update 4Q2019
ING Credit Update 4Q2019 Amsterdam • 6 February 2020
Slide 2: Key points
Key points • ING posted 2019 net profit of €4,781 mln, up 1.7% on 2018 • Our primary customer base, a driver of future value, increased by more than 830,000, to 13.3 mln in 2019 • We recorded net core lending growth of €17.2 bln in 2019, or 2.9%, primarily in Retail Banking which grew by €16.1 bln w
Slide 3: Commercial momentum remained strong in Retail
Commercial momentum remained strong in Retail Target to reach >16.5 mln primary customers* by 2022 Net promoter scores (NPS) 4Q2019 29.2% 30.5% 32.8% 34.3% >16.5 10.4 11.4 12.5 13.3 #1 in 6 out of 14 retail countries 2016 2017 2018 2019 Ambition 2022 Primary as a % of total retail customers Core len
Slide 4: In Retail our mobile approach is taking off
In Retail our mobile approach is taking off % of mobile-only in channel use among active customers who % mobile in total interactions with Annual mobile non-deposit sales contact us* ING per 1,000 active customers CAGR +56%** CAGR +42%*** CAGR +90% 37% 82% 62 26% 73% 46 19% 63% 28 12% 52% 9 2016 201
Slide 5: Business profile and strategy
Business profile and strategy 5
Slide 6: Think Forward has been accelerated through structural changes
Think Forward has been accelerated through structural changes Think Forward strategy on a page Transformation and platform programmes 6
Slide 7: We are transforming into a dynamic digital player
We are transforming into a dynamic digital player Classic bank Dynamic digital player Digital DNA and experience creating cross-border Customers • Mature, established • Explorers, change-oriented scalability are advantages Products • Owned • Open architecture where relevant Strategy • Defensive, cos
Slide 8: 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 of more Chal
Slide 9: Consistent focus on creating operating leverage
Consistent focus on creating operating leverage Roadmap from current market positions Retail Challengers Retail Benelux & Growth Markets Wholesale Banking Financial ambitions Focus on profitable Income lending and fee income Cost discipline focus; Costs some increases in markets that grow Efficiency
Slide 10: FY2019 results
FY2019 results 10
Slide 11: Income growth supported by higher NII and fees
Income growth supported by higher NII and fees Total underlying income Net interest income excl. FM Net fee and commission income (in € bln) (in € bln) (in € bln) CAGR +1.6% 18.1 18.3 CAGR +2.3% 17.5 17.7 13.3 13.6 13.7 12.8 CAGR +5.6% 2.8 2.9 2.7 2.4 2016 2017 2018 2019 2016 2017 2018 2019 2016 201
Slide 12: Underlying expenses increased driven by higher KYC, staff and regulatory costs
Underlying expenses increased driven by higher KYC, staff and regulatory costs Underlying operating expenses (in € bln) Underlying cost/income ratio CAGR +6.5% CAGR +2.7% 0.9 1.0 0.8 0.9 56.6% 55.5% 54.8% 54.2% 8.9 9.0 9.3 8.6 50.4% 51.0% 49.3% 49.5% 2016 2017 2018 2019 2016 2017 2018 2019 Expenses
Slide 13: Risk costs increased, remaining below through-the-cycle average
Risk costs increased, remaining below through-the-cycle average Risk costs (in € bln and bps of average customer lending) • Risk costs increased to €1,120 mln in 2019, or 18 bps of average customer lending, remaining below the 18 18 through-the-cycle average of ~25 bps 12 11 • The increase was mainl
Slide 14: Underlying result down 11.3% in 2019; ROE at 9.4% for FY2019
Underlying result down 11.3% in 2019; ROE at 9.4% for FY2019 Underlying net result* (in € mln) Underlying return on equity* 5,389 11.2% 4,976 4,957 10.1% 10.2% 4,781 9.4% 2016 2017 2018 2019 2016 2017 2018 2019 €685 mln incl. €-775 mln settlement impact and €90 mln net result from Insurance other •
Slide 15: ING Group financial ambitions
ING Group financial ambitions Actual 2018 Actual 2019 Financial ambitions ~13.5%* • CET1 ratio (%) 14.5% 14.6% (Basel IV) Capital • Leverage ratio (%) 4.4% 4.6% >4% • Underlying ROE (%)** 11.2% 9.4% 10-12% (IFRS-EU Equity) Profitability • Underlying C/I ratio (%)** 54.8% 56.6% 50-52% Dividend • Divi
Slide 16: 4Q2019 results
4Q2019 results 16
Slide 17: We continue our efforts to counter financial and economic crime
We continue our efforts to counter financial and economic crime Continued focus on know your customer (KYC) We keep investing in regulatory compliance • The number of FTE working globally on know your • We announced an investment in US-based regulatory customer (KYC) related activities has increased
Slide 18: Our focus on building an innovative and sustainable bank
Our focus on building an innovative and sustainable bank Important milestones on innovation achieved in 4Q2019 We are recognised as a leader in sustainability • In Poland, ING is the first bank on the Polish market to • ING was recognised as an A-list company for leadership on introduce account aggr
Slide 19: Income reflects discipline in lending margins and fee growth
Income reflects discipline in lending margins and fee growth Underlying pre-tax result (in € mln) Total underlying income (in € mln) 2,005 4,501 4,576 4,665 4,626 4,439 1,911 1,692 1,582 1,337 4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 • 4Q2019 underlying result before tax
Slide 20: NII improved on year-ago and previous quarter; 4-quarter rolling NIM at 154 bps
NII improved on year-ago and previous quarter; 4-quarter rolling NIM at 154 bps Net interest income excl. Financial Markets (FM) (in € mln) Higher NIM partially explained by FM (in bps) 3,459 3,435 3,478 3,391 3,391 156 157 155 154 154 153 154 152 154 154 4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 4Q2018 1Q
Slide 21: 4Q2019 net core lending
4Q2019 net core lending Customer lending ING Group 4Q2019 (in € bln) Core lending businesses: €2.0 bln -0.6 0.5 1.9 -2.0 1.5 -0.1 -0.3 -0.6 -2.1 617.3 0.8 616.4 30-09-2019 Retail Retail Retail Retail WB Lending WB Daily WB Other* Lease run- Treasury FX / Other** 31-12-2019 NL Belgium Germany Other B
Slide 22: Further growth of fee income; FM client business improved YoY
Further growth of fee income; FM client business improved YoY Net fee and commission income* (in € mln) Underlying income Financial Markets (in € mln) +4.4% 747 735 254 255 257 704 711 221 675 14 180 295 262 290 280 303 159 159 176 180 176 249 256 262 274 256 -4 -25 -58 -72 -74 -14 4Q2018 1Q2019 2Q2
Slide 23: Higher expenses driven by elevated KYC costs
Higher expenses driven by elevated KYC costs Underlying operating expenses (in € mln) Regulatory costs* (in € mln) 515 303 493 515 266 97 106 266 303 2,303 2,272 2,354 2,334 2,372 98 97 91 106 4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 1Q 2Q 3Q 4Q Expenses excl. regulatory costs Regulatory costs 2018 2019 •
Slide 24: Risk costs increased sequentially, asset quality remains strong
Risk costs increased sequentially, asset quality remains strong Risk costs (in € mln) Stage 3 ratio 428 242 276 1.6% 1.6% 1.6% 1.6% 1.6% 207 209 254 50 116 71 91 1.5% 1.5% 1.5% 1.5%* 107 73 75 1.4% 1.4% 84 80 1.4% 1.3% 1.3%* 40 44 84 1.2% 45 42 16 43 15 11 22 4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 4Q201
Slide 25: Asset quality
Asset quality 25
Slide 26: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 7% 3% 2% 25% 15% 35% 29% €700 4% €454 €246 bln bln bln 65% 66% 10% 17% 9% 13% Retail Banking Mortgages Netherlands Lending Wholesale Banking Other lending Netherlands Daily Banking & Trade Finance
Slide 27: Granular Wholesale Banking lending credit outstandings by geography and sector
Granular Wholesale Banking lending credit outstandings by geography and sector Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S Wholesale Banking (4Q2019)* Lending Credit O/S Wholesale Banking (4Q2019)* 1% 8% NL 6% 10% Real Estate, Infra & Construction 19% Belux
Slide 28: Breakdown of quarterly risk costs Wholesale Banking 2019 per geography and sector
Breakdown of quarterly risk costs Wholesale Banking 2019 per geography and sector Breakdown of geography which generated risk costs WB Breakdown of sector which generated risk costs WB (in € mln) (in € mln) 254 254 116 116 71 91 71 91 1Q19 2Q19 3Q19 4Q19 1Q19 2Q19 3Q19 4Q19 NL Belux Non-Bank Financi
Slide 29: Detailed Stage 3 disclosure on selected portfolios
Detailed Stage 3 disclosure on selected portfolios Selected portfolios (in € mln) Lending credit Stage 3 ratio Lending credit Stage 3 ratio Lending credit Stage 3 ratio O/S 4Q2019 4Q2019 O/S 3Q2019 3Q2019 O/S 4Q2018 4Q2018 Wholesale Banking 246,223 1.2% 257,082 1.5% 236,248 1.4% Lending 163,051 1.4%
Slide 30: Overview Turkey exposure
Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 4Q2019 3Q2019 Change 2% 16% Lending Credit O/S Retail Banking 4,537 4,817 -5.8% USD Residential mortgages 529 537 -1.5% 36% EUR TRY Consumer lending 1,203 1,225 -1.8% Other 46% SME/Midcorp 2,804 3,054 -8
Slide 31: Group capital, funding & liquidity
Group capital, funding & liquidity 31
Slide 32: ING Group Total capital ratio up to 19.1% at the end of 4Q2019
ING Group Total capital ratio up to 19.1% at the end of 4Q2019 ING Group Total capital ratio development 2.4% 19.1% 2.1% 14.6% +0.3% -0.3% 14.6% ~13.5% 11.8%** 3Q19 Profit added RWA & other 4Q19 AT1 Tier 2 4Q19 Total capital Basel IV CET1 CET1 ratio to CET1* CET1 ratio ratio ambition CET1 ratio Expe
Slide 33: Issuance entities under our approach to resolution
Issuance entities under our approach to resolution Issuance entities Eligible instruments for TLAC/MREL Current Future TLAC MREL req. MREL req.* Designated • Own funds (CET1 / AT1 / T2) ✓ ✓ ✓ resolution ING Groep N.V. entity • Senior unsecured debt (> 1 yr)** ✓ ✓ ✓ • Own funds ✓ ✓ ✓ ING Bank N.V. •
Slide 34: Long-term debt maturity ladder and issuance activity in 2019
Long-term debt maturity ladder and issuance activity in 2019 Long-term debt maturity ladder (in € bln)* 25 20 15 10 5 0 Maturity Issuance 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 >2029 2019 2019 TLTRO Covered Bank Senior HoldCo Tier 2 AT1 Issuance activity in 2019* • Total issuance in 2019
Slide 35: 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 85.9 26.3% 7.2% HoldCo Senior Senior debt issuance 23.7 7.3% 2.0% 16% • ~€5-7 bln of HoldCo Senior planned for 2020, subject to new MREL 7.8 2.4% 0.6% requirements including a phase-in
Slide 36: 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
Slide 37: ING balance sheet: strong and conservative with customer deposits as primary funding
ING balance sheet: strong and conservative with customer deposits as the primary source of funding Balance sheet ING Group (in € bln) Well diversified customer loan book Balance sheet size ING Group 31 December 2019: €892 bln • See “Asset Quality” section of the presentation Other Total equity Stabl
Slide 38: Robust liquidity position
Robust liquidity position Funding mix* ING holds sizeable liquidity buffer 31 December 2019 • ING’s funding consists mainly of retail deposits, corporate 2% deposits and public debt 11% Customer deposits (retail) Customer deposits (corporate)** • ING’s 12-month moving average LCR increased slightly
Slide 39: Strong rating profile at both Group and Bank level
Strong rating profile at both Group and Bank level Main credit ratings of ING on 5 February 2020 Latest ING rating actions S&P Moody’s Fitch • Fitch: Feb-2019 ING Bank was upgraded to AA- from A+ with a stable outlook. The upgrade reflects the build-up of Stand-alone rating a baa1 a+ a significant a
Slide 40: Appendix
Appendix 40
Slide 41: Managing our capital position above regulatory requirements
Managing our capital position above regulatory requirements ING Group SREP 2020 SREP (Supervisory Review and Evaluation Process) MDA restriction MDA restriction • Following the conclusion of the annual SREP level (11. 83%) level (11.99%) process in December 2019, the European Central Bank has set IN
Slide 42: Additional Tier 1: comfortable buffers to triggers
Additional Tier 1: comfortable buffers to triggers Buffer to MDA 4Q2019* Buffer to Conversion Trigger 4Q2019 (in € bln) 14.6% 47.6 €8.9 bln 11.8% 2.7% €24.7 bln 7.6%** 7% CET1 equity 22.8 conversion trigger 4Q19 CET1 2019 MDA 4Q19 CET1 AT1 conversion trigger trigger level • MDA restrictions will app
Slide 43: 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* Sep-19 Nov-26 5.750% 1,500 1,500 UST + 434bps USD Feb-19 Apr-24 6.750% 1,250 1,250 USSW + 420bps USD Nov-16 Apr-22 6.875% 1,000 1,
Slide 44: 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,
Slide 45: ING Bank’s covered bond programme…
ING Bank’s covered bond programme… Repayment type • ING Bank NV €30 bln Hard and Soft Bullet Covered Bonds programme 3%3% Interest Only • UCITS, CRR and ECBC Label compliant. Rated Aaa/AAA/AAA (Moody’s/S&P/Fitch) 6% Investment • This programme is used for external issuance purposes. There is a separ
Slide 46: …benefiting from a continued strong Dutch economy and housing market
…benefiting from a continued strong Dutch economy and housing market Dutch Purchasing Managers Index (PMI) was 48.3 as Dutch and eurozone unemployment rates (%) at a per end 4Q2019, indicating slightly negative industrial growth historically low level 70 15 60 10 50 5 40 30 0 2009 2010 2011 2012 201
Slide 47: 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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