Ing Groep N.v. · EURONEXT:INGA
Ing Groep — FY2023 Earnings Presentation
40 slides from Ing Groep's earnings presentation, Feb 1, 2024
Slide 1: ING posts FY2023 net result of €7,287 mln
ING posts FY2023 net result of €7,287 mln 4Q2023 net result of €1,558 mln Steven van Rijswijk, CEO of ING 1 February 2024
Slide 2: The world around us continues to be volatile
The world around us continues to be volatile Macro developments Interest rates 5% Ongoing geopolitical tensions 4% 3% 2% 1% Inflation coming down from elevated level 0% -1% Jan ‘22 Apr ‘22 Jul ‘22 Oct ‘22 Jan ‘23 Apr ‘23 Jul ‘23 Oct ‘23 Strongly increased interest rates ECB deposit facility rate 5-y
Slide 3: ING is well positioned to deliver value through the cycle
ING is well positioned to deliver value through the cycle Strong business positioning… …with healthy fundamentals Growing pan-European Retail Bank, primarily Stable and highly insured retail funding base and exposed to mortgages in strong economies strong liquidity ratios1) Well-diversified Wholesal
Slide 4: Evidenced by the exceptional results in 2023
Evidenced by the exceptional results in 2023 Strong business positioning… …with healthy fundamentals Continued primary customer growth Strong retail funding base +750,000 64% Versus +585,000 in 2022 Of our balance sheet funded by customer deposits3) Leading WB NPS Continued low risk costs 72 8 bps V
Slide 5: FY2023 results
FY2023 results 5
Slide 6: Total income structurally higher in a positive rate environment
Total income structurally higher in a positive rate environment Total income excluding incidental income items (in € bln)1) Key developments in 2023 ▪ Total income structurally higher ▪ Liability NII increased, driven by 22.8 positive interest rates and 19.6 2.4 continued deposit growth 18.1 1.1 18.
Slide 7: Liability margin exceptionally high, while lending margin stabilised
Liability margin exceptionally high, while lending margin stabilised Net core deposit growth (in € bln) Liability margin (in bps) Key developments in 2023 41 ▪ Our diversified customer deposit 4 base was resilient 119 23 25 ▪ Growth in core deposits, mostly 19 11 82 3 10 6 73 66 reflecting a strong
Slide 8: Resilient fee and commission income despite macro headwinds
Resilient fee and commission income despite macro headwinds Net fee & commission income per product category (in € bln) Key developments in 2023 3.5 3.6 3.6 ▪ Fee income has grown >5% on 2.8 2.9 3.0 0.5 0.4 0.5 average since 2018 and is at a 0.4 0.4 0.9 0.8 materially higher level 0.3 1.0 0.7 0.7 0.
Slide 9: Total expenses contained, despite inflationary pressure
Total expenses contained, despite inflationary pressure Expenses excluding regulatory costs (in € bln) Key developments in 2023 ▪ Positive jaws, resulting in a 51% 10.0 9.9 9.9 10.5 cost/income ratio 9.0 9.3 0.2 0.7 0.5 0.3 ▪ Inflationary pressure, mostly reflected in CLA increases and 9.0 9.3 9.4 9
Slide 10: Strong asset quality reflected in continued low risk costs
Strong asset quality reflected in continued low risk costs Risk cost (in € mln and in bps of average customer lending) Key developments in 2023 43 ▪ Continued strong asset quality with limited new defaults and effective 29 recoveries resulting in low risk costs and stable, low Stage 3 ratio 18 2,675
Slide 11: CET1 ratio increased to 14.7% driven by strong capital generation
CET1 ratio increased to 14.7% driven by strong capital generation CET1 ratio (in %) Key developments in 2023 ▪ CET1 ratio increased by 21 bps due 14.5 +1.1 +0.6 14.7 to strong recurring capital -0.2 generation and lower RWA -1.2 ▪ CET1 capital decreased by €1.1 bln, driven by €4.0 bln of announced s
Slide 12: Continued attractive shareholder return and increasing EPS
Continued attractive shareholder return and increasing EPS Attractive shareholder return (in € bln and %)1) Key developments in 2023 15.0% ▪ Distribution of €6.4 bln of cash, 12.5% resulting in an attractive 15% 9.4% return to shareholders 6.7% ▪ €4 bln of announced share 5.4% 6.4 3.9 4.8 buybacks,
Slide 13: 4Q2023 results
4Q2023 results 13
Slide 14: Total income strong at a slightly lower level
Total income strong at a slightly lower level Total income development (in € mln) 5,842 5,408 -178 -69 -67 -98 -22 Income Financial Lower interest income Liability 3Q2023 dividend Other Income 3Q2023 Markets on MRR placed at the NII Bank of Beijing 4Q2023 ECB ▪ Total income was again strong and incr
Slide 15: Continued high liability margin and stable lending margin
Continued high liability margin and stable lending margin Net interest income (in € mln) Lending and liability margin (in bps) Net interest margin (in bps) 4,012 4,061 4,028 3,875 3,545 127 128 129 130 130 159 156 157 156 121 121 118 114 136 154 3,860 4,012 4,061 4,028 3,875 152 94 145 140 134 -315
Slide 16: Initial signs of loan demand returning
Initial signs of loan demand returning Customer lending (in € bln) Net core lending €+7.2 bln +0.6 +0.2 +3.5 648.0 637.3 +1.1 +0.3 +1.6 +1.2 +1.7 +0.7 -0.2 3Q2023 Retail Retail Retail Retail WB WB WB Treasury FX Other 2) 4Q2023 Netherlands Belgium Germany Other Lending DB&TF 1) Other 1) ▪ Core lendi
Slide 17: Continued inflationary impact on operating expenses
Continued inflationary impact on operating expenses Expenses (in € mln) ▪ Expenses excluding regulatory costs and incidental items were 5.1% higher YoY 3,071 3,075 2,888 ▪ Primarily attributable to the impact of high inflation on 2,793 317 525 2,626 staff expenses 291 109 114 91 6 122 ▪ We continued
Slide 18: Low risk costs reflecting high quality and resilience of the loan book
Low risk costs reflecting high quality and resilience of the loan book Risk costs per business line (in € mln)1) Stage 2 ratio Stage 3 ratio 11.2% 10.8% 10.2% 9.8% 8.9% 269 152 8.0% 1.6% 65 183 7.2% 1.5% 1.5% 1.5% 7.1% 6.9% 6.8% 1.4% 98 15 1.5% 242 86 203 7.5% 113 166 1.4% 1.5% 86 1.4% 1.4% 1.4% -15
Slide 19: 2024 outlook
2024 outlook 19
Slide 20: Income development may be affected by interest rates
Income development may be affected by interest rates NII illustrative scenario (in € bln) Illustrative scenario based on assumptions listed below +3.4 16.0 +0.2 15.0-15.5 13.8 -0.3 -0.8 -0.6 -0.3 2022 NII Liability Lending Other 2023 NII Liability margin Lending Other 2024 NII NII NII normalisation
Slide 21: Aim to increase fee and commission income by 5-10% in 2024
Aim to increase fee and commission income by 5-10% in 2024 Levers of fee income growth Increased income from ▪ Stronger focus on growing AUM with affluent and private banking segments Investment Products ▪ Recovery of trading activity anticipated Recovery of mortgage volumes in ▪ Mortgage demand exp
Slide 22: Sustained focus on costs, while making investments in the business
Sustained focus on costs, while making investments in the business Outlook operating expenses (in € bln)1) ~3% ~6% 11.6 0.2 1.0 +1% +3% ~11 0.9 ~12 10.3 +4% -2% Total operating Incidental Regulatory Operating costs Inflationary Additional Continued Operational Operating costs Regulatory Total operat
Slide 23: 2024 outlook
2024 outlook 2023 achievements 2024 outlook2) ▪ Total income to remain Total income1) +16.1% strong in a positive rate environment, however somewhat below the level of 2023 Fee income +0.3% ▪ Fee growth of 5-10% ▪ Total cost growth of ~3%3) ▪ CET1 ratio to converge ING Capital Markets Day Cost/incom
Slide 24: Q&A
Q&A 24
Slide 25: Appendix
Appendix 25
Slide 26: 4Q2023 results overview
4Q2023 results overview In € mln Reported P&L Volatile items P&L excluding volatile items Net interest income 3,875 8 3,867 Net fee and commission income 879 2 877 Investment income -24 -25 1 Other income 679 -28 707 Total income 5,408 -44 5,452 Expenses excl. regulatory costs 2,758 114 2,644 Regula
Slide 27: Volatile income and expense items
Volatile income and expense items Volatile items (in € mln) 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 WB/FM – valuation adjustments -2 -10 33 15 -52 Capital gains/losses 0 15 -0 0 -25 Hedge ineffectiveness -71 35 -46 102 49 Other items income1) -319 -69 -6 -88 -16 Total volatile items – income -392 -29 -21
Slide 28: 2023 results per country
2023 results per country Overview per country Netherlands Germany Belgium Poland Spain Australia RomaniaLuxembourg Italy Türkiye Total income (€ mln) 6,639 3,694 3,002 2,136 1,091 917 622 570 423 75 Total lending (€ bln) 179.0 133.3 103.5 35.7 32.7 44.8 7.7 7.2 14.0 2.8 o.w. mortgages 110.5 90.0 38.
Slide 29: Key drivers of eurozone liability NII
Key drivers of eurozone liability NII Drivers of liability NII ▪ Liability income is driven by our replicating portfolio, deposit pass-through and volumes ▪ Retail eurozone replicating portfolio of €~480 bln ▪ ~50% matures within 1 year ▪ ~50% matures between 1 and 15 years ▪ Weighted average remain
Slide 30: Granular customer deposit base
Granular customer deposit base Total customer deposits per segment (in € bln) ▪ Highly insured, granular and 678 664 continuously growing customer 641 660 650 45 45 41 26 deposits represent a strong funding 26 65 67 66 61 58 base 113 114 113 116 118 ▪ ~70% of total deposits is from private individua
Slide 31: Accounting asymmetry impacting net interest income
Accounting asymmetry impacting net interest income Treasury interest rate differential (in € mln) WB Financial Markets (in € mln) 359 375 33 36 24 23 349 47 287 197 267 261 273 242 184 385 408 215 327 216 -137 -234 -225 -249 -219 22 41 47 28 50 39 -19 -73 -61 -58 4Q2022 1Q2023 2Q2023 3Q2023 4Q2023 4
Slide 32: Fee income declined in challenging market
Fee income declined in challenging market Net fee & commission income per business line (in € mln)1) Net fee & commission income per product category (in € mln) 888 896 912 909 879 888 896 912 909 879 105 106 131 107 113 318 323 346 294 296 207 201 217 206 208 258 244 253 246 220 573 575 569 608 586
Slide 33: CET1 ratio remained strong at 14.7%
CET1 ratio remained strong at 14.7% CET1 capital ratio development (in %) 15.2% 14.5% +0.2% +0.1% 14.7% ~12.5% -0.8% -0.1% 10.8% 3Q2023 Announced share 3Q2023 Profit added Other capital RWA 4Q2023 Basel IV CET1 ratio buyback pro forma to CET1 movements target CET1 Capital ratio CET1 developments Ful
Slide 34: Hyperinflation accounting in Türkiye
Hyperinflation accounting in Türkiye Application of IAS 29 to consolidation of ING in Türkiye Impact on results (in € mln) ▪ We applied IAS 29 (‘Financial Reporting in Hyperinflationary 3Q2023 4Q2023 Economies’) to the consolidation of our subsidiary in Türkiye, Profit or loss effective as of 1 Janu
Slide 35: Development in our strategy enablers
Development in our strategy enablers 4Q2022 4Q2023 2025 targets Workload on (private) cloud 52% 63% >70% Seamless digital experience Customer online traffic using Touchpoint 61% 64% >90% Adoption of shared engineering platform (OnePipeline) 48% 63% >90% Scalable Tech & Operations 1) Digi index score
Slide 36: Addition to loan loss provisions per Stage
Addition to loan loss provisions per Stage Stage 1 provisioning (in € mln)1) Stage 2 provisioning (in € mln)1,2) Stage 3 provisioning (in € mln)1) 52 407 21 30 23 10 24 31 17 20 86 1 6 47 -15 4 239 238 -9 -4 -23 -39 -81 197 -14 -59 -117 -48 89 156 -194 43 -84 124 -35 -31 8 59 167 155 149 116 97 -94
Slide 37: Our diversified lending book is senior and well-collateralised
Our diversified lending book is senior and well-collateralised Retail Banking Residential ▪ €333 bln. Average LtV of 57% with Stage 3 ratio at 0.9% 8% mortgages Consumer 42% ▪ €24 bln, largely home improvement and car related. Stage 3 ratio 4.6% lending €787 bln Business 34% ▪ €104 bln, mainly in Be
Slide 38: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity 1) ING Group Retail Banking Wholesale Banking 12% 6% 10% 34% 22% 5% 16% 20% €787 €522 5% €522 €265 bln bln bln bln 12% 22% 5% 63% 64% 18% 8% 66% 12% Retail Banking Residential mortgages Mortgages Netherlands Lending Wholesale Banking Consumer
Slide 39: Wholesale Banking lending credit outstandings
Wholesale Banking lending credit outstandings 1) Loan portfolio is well diversified across geographies… …and sectors Wholesale Banking Wholesale Banking 1% 12% NL 2% 9% Real Estate, Infra & Construction 16% Belux Commodities, Food & Agri Germany 32% 11% TMT & Healthcare 2% 9% Other Challengers Trans
Slide 40: 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 ar