Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Debt Investor Presentation (August 2020)
51 slides from Ing Groep's debt investor presentation, Aug 6, 2020
Slide 1: ING Credit Update 2Q2020
ING Credit Update 2Q2020 ING Investor Relations 6 August 2020
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
Slide 3: We continue to support our employees, customers and society during Covid-19
We continue to support our employees, our customers and society to deal with the effects of the Covid-19 pandemic Our employees Our private customers Our business customers Our society ▪ Around 75% of our ▪ A large part of our ▪ Continued regular ▪ Matching employee employees are working branch netw
Slide 4: Covid-19 effects on net core lending growth, fees and IFRS 9 provisioning
The Covid-19 effects on net core lending growth, composition of fees and IFRS 9 loan loss provisioning Net core lending growth (in € bln) Fee & commission income (in € mln) Loan loss provisions (in € mln) 12.3 783 1,336 748 735 723 2.9 711 255 210 7.3 211 222 198 184 299 2.0 11.4 5.1 231 661 3.6 2.6
Slide 5: Continued primary customer growth and stable topline results
Continued primary customers growth and stable topline results underscore the strength of our business model Primary customer* base (in mln) Income (in € mln) 29.2% 30.5% 32.8% 34.3% 34.6% 4,665 4,626 4,671 4,436 4,511 16.5 1,274 1,191 961 1,112 1,332 13.3 13.5 12.5 11.4 10.4 3,391 3,435 3,478 3,399
Slide 6: Rapid adoption of our digital, mobile first strategy
Rapid adoption of our digital, mobile first strategy Channel mix among active customers who contact us % of mobile-only active customers* 11% 9% 7% 5% 3% CAGR +38%** 41% 58% 56% 37% 72% 67% 77% 26% 19% 12% 37% 41% 19% 26% 12% 2016 2017 2018 2019 2Q2020 2016 2017 2018 2019 2Q2020 Mobile only Mix Assi
Slide 7: We continue to strengthen our digital customer experience
We continue to strengthen our digital customer experience Continued focus to improve our digital customer experience Supporting our customers doing their business ▪ In Belgium, we are migrating our customers to our new ▪ In the Netherlands and Belgium, we have started migrating digital channels, enh
Slide 8: Business profile and strategy
Business profile and strategy 8
Slide 9: 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 9
Slide 10: 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 scalability are Customers • Mature, established • Explorers, change-oriented advantages Products • Owned • Open architecture where relevant Strategy • Defensive, cos
Slide 11: 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 a di
Slide 12: 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 13: 2Q2020 results
2Q2020 results 13
Slide 14: 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) 4,665 4,626 4,439 4,511 4,671 113 12 2,198 2,281 2,214 2,329 2,143 -147 -125 -128 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 2Q2019 3Q2019 4Q2019 1Q
Slide 15: NII remains stable; 4-quarter rolling NIM at 152 bps
NII remains stable; 4-quarter rolling NIM at 152 bps Net interest income excl. Financial Markets (FM) (in € mln) Net Interest Margin (in bps) 3,435 3,478 3,391 3,399 157 3,339 154 154 154 152 152 154 154 151 144 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 NIM NIM (4-quarter
Slide 16: 2Q2020 net core lending reflecting lower demand
2Q2020 net core lending reflecting lower demand Customer lending ING Group 2Q2020 (in € bln) Core lending businesses: €-7.0 bln 631.6 -0.9 -1.4 0.9 -0.0 -3.6 -1.2 -0.7 -0.3 -3.5 2.0 622.7 31-3-2020 Retail NL Retail Retail Retail Other WB Lending WB Daily WB Other* Lease run- Treasury FX / Other** 30
Slide 17: Fee income up YoY despite lower deal flow in WB
Fee income up YoY despite lower deal flow in WB and reduced payment fees due to lockdowns and less travel Net fee and commission income* (in € mln) ▪ Fees increased by €12 mln compared to 2Q2019. This was due to Retail Banking, as higher fees on investment products were only partially offset by lowe
Slide 18: Strong quarter in FM driven by client business and valuation adjustments
Strong quarter in FM driven by client business and positive valuation adjustments Income Financial Markets (in € mln) ▪ Excluding valuation adjustments, FM income was €64 mln 319 higher YoY, mainly due to a strong quarter in Rates and Global Capital Markets 255 257 246 221 ▪ QoQ income was €73 mln h
Slide 19: Operating expenses under control
Operating expenses under control Expenses (in € mln) Cost/income ratio** 137 62.8% 303 526 134 59.0% 60.3% 59.8% 97 98 106 151 310 127 138 55.7% 53.7% 52.7% 58.9% 56.6% 57.0% 2,256 2,207 2,221 2,169 2,212 52.5% 53.0% 50.3% 51.0% 51.3% 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 2Q2019 3Q2019 4Q2019 1Q2020 2Q
Slide 20: IFRS 9 provisioning affected by the Covid-19 pandemic
IFRS 9 provisioning affected by the Covid-19 pandemic and related macro-economic indicators Stage 1 provisioning (in € mln) Stage 2 provisioning (in € mln) Stage 3 provisioning (in € mln) 255 299 771 261 61 80 98 309 25 398 422 26 195 219 285 8 -4 -11 10 163 245 201 18 -12 -25 52 200 -2 -2 -19 -27 1
Slide 21: Risk costs impacted by collective provisioning related to Covid-19
Risk costs impacted by collective provisioning related to Covid-19 pandemic Risk costs per business line (in € mln) Stage 2 ratio Stage 3 ratio 1,336 8.5% 1.8% 1.8% 6.6% 6.3% 7.0% 1.6% 1.6% 1.6% 6.2% 882 5.7% 661 1.6% 1.6% 5.6% 5.9% 6.0% 1.5% 1.5%* 5.4% 5.3% 1.4% 428 373 5.6% 1.4% 276 178 4.1% 4.6%
Slide 22: 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 60% with low Stage 3 ratio at 1.1% Mortgages ▪ Risk metrics remained strong, also supported by government schemes €301 bln 8% Consumer Lending ▪ Relatively small book, risk metrics slightly deteri
Slide 23: ING Group financial ambitions
ING Group financial ambitions Actual 2019 Actual 2Q2020 Financial ambitions ~13.5%* ▪ CET1 ratio (%) 14.6% 15.0% (Basel IV) Capital ▪ Leverage ratio (%) 4.6% 4.3% >4% ▪ ROE (%)** 9.4% 6.1% 10-12% (IFRS-EU Equity) Profitability ▪ C/I ratio (%)** 56.6% 58.9% 50-52% Dividend payments suspended Dividend
Slide 24: Asset quality
Asset quality 24
Slide 25: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 2Q2020 2Q2020 2Q2020 13% 7% 24% 24% 39% 15% 18% €778 €478 6% €478 1% €300 bln bln bln bln 10% 56% 6% 16% 61% 19% 63% 8% 14% Retail Banking Residential mortgages Mortgages Netherlands Lending Wholes
Slide 26: Granular Retail Consumer Lending and Business Lending
Granular Retail Consumer Lending and Business Lending Consumer Lending – 2Q2020 Lending Credit Outstandings Business Lending – 2Q2020 Lending Credit Outstandings By geography By product By geography By sector 3% 2% 1% 4% 4% 4% 4% 1% 2%2% 3% 15% 3% 5% 7% 2%2% 11% 4% 5% 34% 4% 8% 6% 50% 15% 6% €26 bln
Slide 27: Granular Wholesale Banking lending
Granular Wholesale Banking lending Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S Wholesale Banking (2Q2020)* Lending Credit O/S Wholesale Banking (2Q2020)* 1% NL 6% 11% Real Estate, Infra & Construction 12% Commodities, Food & Agri 28% Belux 2% Germany 20% TM
Slide 28: 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 2Q2020) ▪ 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
Slide 29: Well-diversified Commercial Real Estate (CRE) portfolio
Well-diversified Commercial Real Estate (CRE) portfolio Business overview CRE breakdown by asset type (as per 2Q2020) ▪ CRE portfolio of €51.7 bln, cap at €56 bln, split between: 8% ▪ Real Estate Finance (REF) €36.7 bln 23% Office ▪ Retail Banking €15 bln Retail 35% Residential ▪ REF portfolio is ma
Slide 30: Oil & Gas book: only €4.5 bln directly exposed to oil-price risk
Oil & Gas book: only €4.5 bln directly exposed to oil-price risk 0.6 0.5 Direct €4.5 bln oil-price risk ▪ Reserve Based Lending: smaller independent oil & gas producers, focus on 3.4 1st cost quartile producers 5.7 ▪ Midstream: typically assets generating revenues from long-term tariff based contrac
Slide 31: 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 91 91 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 2Q2019 3Q2019 4Q2019 1Q20
Slide 32: Overview Turkey exposure
Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 2Q2020 1Q2020 Change 1% 15% Lending Credit O/S Retail Banking 4,123 4,242 -2.8% 37% Residential mortgages 484 531 -8.9% USD Consumer lending 1,148 1,157 -0.8% EUR SME/Midcorp 2,491 2,554 -2.5% TRY 47% Ot
Slide 33: Group capital, funding & liquidity
Group capital, funding & liquidity 33
Slide 34: Risk-weighted assets decreased significantly in 2Q2020
Risk-weighted assets decreased significantly in 2Q2020 due to management actions and certain capital relief measures ING Group risk-weighted assets development Credit RWA -€12.3 bln 335.4 -11.8 -3.1 +6.6 -0.1 +0.5 -0.8 -0.6 322.2 -3.8 1Q2020 Capital CRR2.5 Volume TRIM Other Market Operational FX 2Q2
Slide 35: Strong ING Group capital ratio at 15.0%
Strong ING Group capital ratio at 15.0%, excluding the €1,754 mln 2019 dividend reserve ING Group Total capital ratio development 2.7% 19.6% 1.9% 0.9% 15.5% 14.0% 0.1% ~13.5% 3.0% 15.0% 10.5% 1Q2020 Profit added RWA & other 2Q2020 AT1 Tier 2 2Q2020 Total Basel IV CET1 CET1 ratio to CET1 CET1 ratio c
Slide 36: Overview of capital relief measures by regulatory and supervisory authorities
Overview of capital relief measures by regulatory and supervisory authorities Systemic ▪ The DNB decreased ING Group’s Systemic Risk Buffer (SRB) requirement from 3.00% to 2.50% Risk Buffer Countercyclical ▪ Various competent authorities* changed or removed Countercyclical Buffer (CCyB) requirements
Slide 37: Distance to Maximum Distributable Amount increased significantly
Distance to Maximum Distributable Amount increased significantly in 2Q2020 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% level MDA ▪ 4.50% Pillar 1 min
Slide 38: 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 yr)** ✓ ✓ ING Bank N.V. ▪ Own funds*** ✓ ✓ ▪ Senior unsecured
Slide 39: Long-term debt maturity ladder and issuance activity in 2Q2020
Long-term debt maturity ladder and issuance activity in 2Q2020 Long-term debt maturity ladder (in € bln)* 75 1H2020 issuance: ~€4 bln** 50 25 0 Maturity Issuance 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 >2029 2Q2020 2Q20 2Q2020 2Q20 TLTRO Covered Bank Senior HoldCo Tier 2 AT1 Issuance activ
Slide 40: 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 HoldCo Senior Senior debt issuance 86.7 26.9% 6.9% 16% ▪ In light of the impact from the Covid-19 pandemic on the development 23.5 7.3% 1.9% of the balance sheet, we now expect to issue
Slide 41: Other subsidiaries remain active mainly through 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 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 grew to €985 bln in 2Q2020 ▪ See “Asset Quality” section of the presentation 985 985 945 945 Stable funding pro
Slide 43: Robust liquidity position
Robust liquidity position Funding mix* ING maintains a sizeable liquidity buffer 30 June 2020 ▪ ING’s funding consists mainly of retail deposits, corporate 5% 2% deposits and public debt 6% Customer deposits (retail) Customer deposits (corporate)** ▪ ING’s 12-month moving average LCR increased to 13
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 5 August 2020 Latest rating actions on ING entities S&P Moody’s Fitch ▪ Fitch: Feb-2019 ING Bank was upgraded to AA-. In April 2020, Stand-alone rating a baa1 a+ Fitch placed ING Group’s and ING Bank’s rati
Slide 45: Appendix
Appendix 45
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 June 2020 2019 48.2 Share premium 17,078 Other reserves 28,052 Legal and statutory reserves 3,999 €25.7 bln 8.0%** Non-distributable -8,398 22.6 Total 40,732 Accrued interest
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
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,
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 6% Investment ▪ This programme is used for external issuance purposes. There is a sepa
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 2Q2020 Dutch Purchasing Managers Index (PMI) saw the largest Dutch and eurozone unemployment rates (%) increasing decrease ever in April, but has since been rising since start of the Covid-19 pandemic 70 15 60
Slide 51: 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