ING Groep N.V. · EURONEXT:INGA
ING Groep — Debt Investor Presentation (February 2019)
42 slides from ING Groep's debt investor presentation, Feb 15, 2019
Slide 1: ING Credit Update 4Q18
ING Credit Update 4Q18 Amsterdam • 15 February 2019
Slide 2: Key points
Key points • ING posted 2018 net profit of €4,703 mln, down 4.1% on 2017 due to the settlement impact of €775 mln • On an underlying basis, 2018 net profit was €5,389 mln, while return on equity equalled 11.2% • Regulatory compliance remains the key priority; we are continuing work on the KYC enhanc
Slide 3: Business profile and strategy
Business profile and strategy 3
Slide 4: Our Think Forward Strategy on a page
Our Think Forward Strategy on a page Purpose Empowering people to stay a step ahead in life and in business. Customer Promise • Think Forward Strategy was launched in 2014 Clear and Anytime, Empower Keep Getting • Focus on earning primary Easy Anywhere Better relationship • Creating a differentiatin
Slide 5: 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 6: Think Forward strategy delivers on commercial growth
Think Forward strategy delivers on commercial growth ING currently serves > 38 mln retail customers (in mln) Targeting > 14 mln primary customers by 2020 (in mln) +11% +36% 37.4 38.4 >14 34.5 35.7 12.5 10.4 11.4 9.2 2015 2016 2017 2018 2015 2016 2017 2018 Ambition 2020 Core lending Customer deposits
Slide 7: Transformation programmes – milestones achieved in 4Q18
Transformation programmes – milestones achieved in 4Q18 Four major digital transformation programmes • In 4Q18, we launched a combined IT organisation and IT management team for Belgium and Unite be+nl the Netherlands, which will facilitate further cross-border collaboration • In Belgium, we migrate
Slide 8: Sustainability and innovation highlights in 4Q18
Sustainability and innovation highlights in 4Q18 Key sustainability achievements in the quarter Further investment in our platform strategy for Wholesale • During the climate conference in Katowice, four major European banks joined ING in • ING Ventures invested in Cobase, a multibank pledging to al
Slide 9: FY18 results
FY18 results 9
Slide 10: Underlying result up 8.7% in 2018; ROE at 11.2% for the year
Underlying result up 8.7% in 2018; ROE at 11.2% for the year Underlying net result improved further* (in € mln) Underlying return on equity above 11%* CAGR +8.5% 11.2% 5,389 10.1% 10.2% 4,976 4,957 8.6% 4,219 2015 2016 2017 2018 2015 2016 2017 2018 • ING recorded underlying 2018 net profit of €5,389
Slide 11: Income growth driven by higher NII and fees
Income growth driven by higher NII and fees Total underlying income Net interest result excl. FM Net fee and commission income (in € bln) (in € bln) (in € bln) CAGR +3.0% 17.5 17.7 18.1 CAGR +3.8% 16.6 13.3 13.6 12.8 12.2 CAGR +6.5% 2.7 2.8 2.3 2.4 2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2
Slide 12: Underlying expenses well-controlled despite a further increase in regulatory costs
Underlying expenses well-controlled despite a further increase in regulatory costs, risk costs remained low Underlying operating expenses Risk costs (in € bln) (in € bln and bps of average RWA) Underlying cost/income ratio CAGR +15.2% CAGR +1.3% 0.8 0.9 0.9 0.6 55.9% 55.5% 54.2% 54.8% 44 31 8.6 8.6
Slide 13: ING Group financial ambitions
ING Group financial ambitions Actual 2017 Actual 2018 Financial ambitions ~13.5%** • CET1 ratio (%) 14.7%* 14.5% (Basel IV) Capital • Leverage ratio (%) 4.7% 4.4% >4% • Underlying C/I ratio (%) 55.5% 54.8% 50-52% (by 2020) Profitability • Underlying ROE (%)*** 10.2% 11.2% 10-12% (IFRS-EU Equity) Div
Slide 14: 4Q18 results
4Q18 results 14
Slide 15: Underlying pre-tax result up 8.5% versus 4Q17
Underlying pre-tax result up 8.5% versus 4Q17 Underlying pre-tax result (in € mln) Total underlying income (in € mln) +8.5% +3.0% 2,022 2,124 4,457 4,484 4,646 4,501 4,368 1,686 1,692 1,560 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 • The 4Q18 underlying result before tax of €1,692 million wa
Slide 16: Year-on-year NII improvement; 4-quarter rolling NIM at 153 bps
Year-on-year NII improvement; 4-quarter rolling NIM at 153 bps Net interest income excl. Financial Markets (FM) 4Q18 NIM increase fully explained by higher NII in FM (in € mln) (in bps) +3.6% 3,469 3,459 3,340 3,364 158 156 3,299 154 154 153 154 152 152 153 151 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q1
Slide 17: 4Q18 core lending growth fully driven by Retail Banking
4Q18 core lending growth fully driven by Retail Banking; less WB growth, partly due to lower TCF volumes Customer lending ING Group 4Q18 (in € bln) Core lending businesses: €3.2 bln 2.0 -2.0 0.2 -2.2 1.5 0.7 0.3 603.7 0.4 -9.7 1.6 596.7 30/09/18 Retail Retail Retail Retail WB Industry WB General WB
Slide 18: Resilient fee income development; lower quarter for FM
Resilient fee income development; lower quarter for FM Net fee and commission income Underlying income Financial Markets excl. CVA/DVA (in € mln) (in € mln) +4.5% 717 720 704 257 674 661 227 238 27 224 212 279 282 298 283 298 55 153 160 99 157 149 157 156 159 193 172 238 250 271 257 247 105 112 78 3
Slide 19: Expenses down year-on-year due to strict cost management
Expenses down year-on-year due to strict cost management Underlying operating expenses (in € mln) Regulatory costs (in € mln) 264 493 266 364 381 375 98 91 341 208 179 2,354 2,193 2,249 2,216 2,303 4Q17 1Q18 2Q18 3Q18 4Q18 DGS* SRF* Bank taxes Expenses excl. regulatory costs Regulatory costs 2017 20
Slide 20: Risk costs up, but remain well below through-the-cycle average
Risk costs up, but remain well below through-the-cycle average Risk costs (in € mln) Stage 3 ratio* 215 242 2.1% 190 54 1.9% 115 108 1.9% 1.8% 68 1.8% 1.7% 59 107 1.7% 1.6% 85 1.8% 1.8% 1.6% 1.6% 1.6% 90 62 82 1.7% 72 40 1.6% 1.6% 1.5% 27 47 32 46 41 1.4% 5 -4 -21 -20 -47 4Q17 1 Jan 2018 1Q18 2Q18 3
Slide 21: Asset quality
Asset quality 21
Slide 22: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 7% 4% 1% 27% 15% 15% 37% €675 4% €428 €248 45% bln bln bln 63% 8% 21% 17% 9% 13% 14% Retail Banking Mortgages Netherlands Project & Asset-based Finance Wholesale Banking Other lending Netherlands R
Slide 23: 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 (4Q18)* Lending Credit O/S Wholesale Banking (4Q18)* 1% NL 9% 3% 3% Builders & Contractors 11% 17% Belux 6% 9% Centr
Slide 24: Detailed Stage 3 / NPL disclosure on selected lending portfolios
Detailed Stage 3 / NPL disclosure on selected lending portfolios Selected lending portfolios (in € mln) Lending credit Stage 3 ratio Lending credit Stage 3 ratio Lending credit NPL ratio O/S 4Q18 4Q18 O/S 3Q18 3Q18 O/S 4Q17 4Q17 Wholesale Banking 247,620 1.4% 252,657 1.6% 232,521 2.1% Industry Lendi
Slide 25: Overview Turkey exposure
Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 4Q18 4Q17 Change 2% 15% Lending Credit O/S Retail Banking 5,709 8,290 -31.1% USD Residential mortgages 595 925 -35.7% 41% EUR TRY Consumer lending 1,355 1,930 -29.8% 42% Other SME/Midcorp 3,760 5,436 -30
Slide 26: Group capital, funding & liquidity
Group capital, funding & liquidity 26
Slide 27: ING Group Total capital ratio at 18.4%
ING Group Total capital ratio at 18.4% ING Group fully loaded Total capital ratio development* 2.3% 18.4% 1.7% 14.0% 0.4% 0.1% 14.5% ~13.5% 11.8% 3Q18 Profit added RWA (excl. FX) 4Q18 Basel IV CET1 AT1 Tier 2 4Q18 Total capital CET1 ratio to CET1** CET1 ratio Ambition ratio Basel IV & TRIM impacts 2
Slide 28: 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.* • Own funds Designated resolution ING Groep N.V. • Subordinated debt (AT1 / T2) entity • Senior unsecured debt (> 1 yr) • Own funds
Slide 29: Long-term debt maturity ladder and issuance activity in 2018
Long-term debt maturity ladder and issuance activity in 2018 Long-term debt maturity ladder (in € bln)* Issuance activity in 2018 • Total issuance in 2018 was ~€25.3 bln against 30 redemptions and maturities of ~€19 bln 25 • ~€1.8 bln of Tier 2 was issued in 10NC5 and 12NC7 formats • ~€11.5 bln of H
Slide 30: ING's debt issuance programme in 2019
ING’s debt issuance programme in 2019 ING Group instruments* (in € bln) Currency split* Group / Bank issuance plan** 76.8 24.5% HoldCo Senior Senior debt issuance 9% • ~€7-9 bln of HoldCo Senior planned for 2019, tenors ≥ 5 yrs 17.7 5.6% • OpCo Senior with tenors ≤ 4 yrs, for internal ratio manageme
Slide 31: 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-DiBa AG Instruments • Secured funding • Secured funding • Secured funding • Secured funding overview • Senior unsecured • Covered bond**: ~€20 bln • Covered b
Slide 32: 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) High quality customer loan book Balance sheet size ING Group 31 December 2018: €887 bln • See “Asset Quality” section of the presentation Other Total equity 15 Cash b
Slide 33: Robust liquidity position
Robust liquidity position Funding mix* ING holds sizeable liquidity buffer 31 December 2018 • ING’s funding consists mainly of retail deposits, corporate 2% deposits and public debt 11% Customer deposits (retail) 6% Customer deposits (corporate)** • ING’s 12-month moving average LCR increased from 1
Slide 34: Strong rating profile at both Group and Bank level
Strong rating profile at both Group and Bank level Main credit ratings of ING on 15 February 2019 Latest ING Bank 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 signifi
Slide 35: Appendix
Appendix 35
Slide 36: Managing the capital above the regulatory requirement
Managing the capital above the regulatory requirement ING Group SREP* 2018 SREP (Supervisory Review and Evaluation Process) • Following the conclusion of the annual SREP process in February 2019, the European Central Bank has set ING MDA restriction Group’s capital requirements for 2019 MDA restrict
Slide 37: Additional Tier 1: comfortable buffers to triggers
Additional Tier 1: comfortable buffers to triggers Buffer to MDA 4Q18* Buffer to Conversion Trigger 4Q18 (in € bln) 14.5% 45.5 €13 bln 11.8% €24 bln 10.4% 4.1% 7.5%** 22.0 7% CET1 equity conversion trigger 4Q18 phased-in CET1 2018 2019 4Q18 phased-in 4Q18 phased-in CET1 4Q18 phased-in CET1 2018 MDA
Slide 38: Outstanding benchmark capital securities
Outstanding benchmark capital securities (Additional) Tier 1 securities issued by Group Currency Issue date First call date Coupon Issued Outstanding** USD (CRR/CRDIV compliant) Nov-16 Apr-22 6.875% 1,000 1,000 USD (CRR/CRDIV compliant)* Apr-15 Apr-20 6.000% 1,000 1,000 USD (CRR/CRDIV compliant)* Ap
Slide 39: Outstanding HoldCo Senior benchmarks
Outstanding HoldCo Senior benchmarks HoldCo Senior Unsecured, EUR issuances ISIN Issue date Maturity Tenor Coupon Currency Issued Spread XS1909186451 Nov-18 Nov-30 12yr 2.500% EUR 1,500 m/s +135 XS1882544973 Sep-18 Sep-28 10yr 2.000% EUR 1,500 m/s + 110 XS1882544205 Sep-18 Sep-23 5yr 3mE + 85 EUR 1,
Slide 40: 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 2%4% Interest Only • UCITS, CRR and ECBC Label compliant. Rated Aaa/AAA/AAA (Moody’s/S&P/Fitch) 4% Investment 6% • Programme is used for external issuance purposes; separate €15 bln S
Slide 41: …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 57.2 as of Dec-2018, which indicates positive industrial growth Dutch unemployment rate (%) continues to decline 70 15 60 10 50 5 40 30 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2
Slide 42: 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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