Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Debt Investor Presentation (February 2024)
64 slides from Ing Groep's debt investor presentation, Feb 1, 2024
Slide 1: ING Credit Update 4Q2023
ING Credit Update 4Q2023 ING Investor Relations 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: Business profile
Business profile 5
Slide 6: 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 a differentia
Slide 7: Our strategy, with a focus on execution certainty
Our strategy, with a focus on execution certainty Purpose Empowering people to stay a step ahead in life and in business Strategic priorities A superior customer experience Sustainability at the heart Seamless Scalable Safe Our Enablers digital services Tech & Operations & secure people 7
Slide 8: Our focus SDGs are reflected in our Sustainability Direction
Our focus SDGs1) are reflected in our Sustainability Direction Environment Social Climate action Financial health Empowering our clients2) Empowering our customers3) by focusing on: ▪ We aim to steer the most carbon-intensive parts of our ▪ Financial inclusion by making bank products lending portfol
Slide 9: FY2023 results
FY2023 results 9
Slide 10: 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 11: 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 12: 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 13: 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 14: 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 15: 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 16: 4Q2023 results
4Q2023 results 16
Slide 17: 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 18: 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 19: 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 20: 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 21: 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 22: 2024 outlook
2024 outlook 22
Slide 23: 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 24: 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 25: 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 26: 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 27: Capital
Capital 27
Slide 28: Risk-weighted assets decreased in 4Q2023
Risk-weighted assets decreased in 4Q2023 Risk-weighted assets development (in € bln) Credit RWA €-4.5 bln 320.8 -1.0 2.0 -1.4 -3.2 3.5 319.2 -0.8 -0.7 3Q2023 FX Volume Overall profile of Models, Other Market Operational 4Q2023 RWA impact development the loan book methodology RWA RWA RWA and policy u
Slide 29: CET1 ratio remains strong at 14.7%
CET1 ratio remains strong at 14.7% Total capital ratio development (in %) +2.9% 19.8% 15.2% +2.2% -0.8% 14.5% +0.2% -0.1% +0.1% 14.7% ~12.5% 10.8% 3Q2023 Additional Pro forma Profit added Other capital RWA 4Q2023 AT1 Tier 2 4Q2023 Total Basel IV CET1 CET1 ratio distribution 3Q2023 to CET1 movements
Slide 30: CET1 ratio increased in 2023 driven by strong capital generation
CET1 ratio increased in 2023 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 sh
Slide 31: Buffer to MDA remains strong
Buffer to MDA remains strong ING Group fully loaded SREP requirements ▪ ING Group’s Pillar 2 additional own funds requirement (P2R) has been lowered by 10 bps to 165 bps in 4Q2023, based MDA on the 2023 Supervisory Review and Evaluation Process restriction (SREP) MDA level ▪ Fully loaded CET1 requir
Slide 32: Funding & liquidity
Funding & liquidity 32
Slide 33: Comfortably meeting TLAC and MREL requirements
Comfortably meeting TLAC and MREL requirements TLAC/MREL as percentage of RWA TLAC/MREL as percentage of leverage exposure 32.5% 9.6% 29.02% 12.7% 23.50% 5.51% 3.8% 6.75% 7.27% 5.50% 2.9% 0.9% 2.2% 0.7% 23.51% 14.7% 18.00% 4.4% TLAC/MREL TLAC MREL TLAC/MREL TLAC MREL eligible instruments requirement
Slide 34: Long-term debt maturity ladder and issuance guidance
Long-term debt maturity ladder and issuance guidance Issuance guidance 2024 Currency split of outstandings as per 31 December 2023 ▪ Issuance guidance, subject to balance sheet developments, is: HoldCo Senior Tier 2 AT1 ▪ ~€6 - 8 bln HoldCo Senior issuance 10% 10% 3% ▪ ~€7 - 9 bln of Secured issuanc
Slide 35: Covered bond funding through various programmes
Covered bond funding through various programmes ING Bank N.V. ING Belgium S.A./N.V. ING DiBa AG ING Bank (Australia) Ltd ING Bank Hipoteczny (Poland) Instruments ▪ Secured funding ▪ Secured funding ▪ Secured funding ▪ Secured funding ▪ Secured funding overview ▪ Senior unsecured ▪ Covered bond: ~€18
Slide 36: ING issues Green Bonds in various formats
ING issues Green Bonds in various formats Green Bond issuance objectives External consultants & providers ▪ Support meeting our sustainability objectives ▪ Second party opinion provider ▪ Fund growth in our Eligible Green Loan portfolio ▪ Continue leadership in the Green Bond market ▪ Renewable ener
Slide 37: We issue Green Bonds to support our sustainability objectives
We issue Green Bonds to support our sustainability objectives ▪ Our Green Bond Framework was updated in 2022 and has been assessed by a Second Party Opinion and is aligned with the ICMA Green Bond Principles 2021. The framework is presented through below four pillars: Use of proceeds Project Evaluat
Slide 38: External recognition of ING's commitment to ESG
External recognition of ING’s commitment to ESG ESG ratings ING Groep N.V. ▪ Evaluation: ING's management of ESG material risk is ‘Strong’ ▪ Rating AA ▪ Position: in the 21st percentile of 339 banks ▪ Updated: July 2023 ▪ Updated: December 2023 Sustainability Index Products ING is regularly included
Slide 39: Strong and conservative balance sheet with customer deposits as the primary source of 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 Assets Liabilities ▪ See “Asset Quality” section of this presentation 1,022 976 1,022 976 25 15 14 53 15 117 17 90 26 52 15 23 Stable f
Slide 40: Robust liquidity position with a 12-month moving average LCR of 143%
Robust liquidity position with a 12-month moving average LCR of 143% Funding mix1) ING maintains a sizeable liquidity buffer 31 December 2023 ▪ ING’s funding consists mainly of retail deposits, corporate deposits and public debt 10% 2% Customer deposits (private individuals) 5% Customer deposits (ot
Slide 41: Strong rating profile at both Group and Bank levels
Strong rating profile at both Group and Bank levels Main credit ratings of ING as of 31 January 2024 Latest rating actions on ING Group and Bank S&P Moody’s Fitch ▪ S&P: upgraded ING Bank to A+ in July 2017. In July Stand-alone rating a baa1 a+ 2023, S&P affirmed ING's rating and outlook, reflecting
Slide 42: Asset quality
Asset quality 42
Slide 43: 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 44: 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 45: 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 46: 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 47: Appendix
Appendix 47
Slide 48: Issuance entities under our approach to resolution
Issuance entities under our approach to resolution Issuance entities Eligible instruments for TLAC/MREL Designated TLAC MREL resolution ING Groep N.V. entity ▪ Own funds (CET1 / AT1 / Tier 2) ✓ ✓ ▪ Senior unsecured debt (> 1 year) ✓ ✓ ▪ Own funds ✓ ✓ ING Bank N.V. ▪ Secured funding & senior unsecure
Slide 49: Comfortable buffer to Additional Tier 1 trigger
Comfortable buffer to Additional Tier 1 trigger Buffer to AT1 trigger (in € bln) ING Group available distributable items (in € mln) 2) 31 December 2023 2023 2022 46.9 Share premium 17,116 17,116 Other reserves 29,167 30,859 Legal and statutory reserves -770 -984 €24.5 bln 7.7pp1) Non-distributable -
Slide 50: Outstanding benchmark capital securities
Outstanding benchmark capital securities (Additional) Tier 1 securities Currency Issue date First call date Coupon Outstanding (mln)2) Reset spread USD Feb-23 May-28 7.500% 1,000 UST + 371bps USD1) Sep-21 May-27 3.875% 1,000 UST + 286bps USD1) Sep-21 May-31 4.250% 1,000 UST + 286bps USD Feb-20 May-2
Slide 51: HoldCo Senior transactions in past 12 months
HoldCo Senior transactions in past 12 months ISIN Issue date First call date Maturity Tenor Coupon Issued (mln)1) Reset spread EUR XS2624976077 May-23 May-28 May-29 6NC5 4.50% 1,500 3mE+160 XS2624977554 May-23 May-33 May-34 11NC10 4.75% 1,500 3mE+190 XS2554746185 Nov-22 Nov-26 Nov-27 5NC4 4.87% 1,25
Slide 52: ING Bank's covered bond programme…
ING Bank’s covered bond programme… ▪ ING Bank NV €30 bln Hard and Soft Bullet Covered Bonds programme Redemption type1) ▪ UCITS, CRR and ECBC Label compliant. Rated Aaa/AAA/AAA (Moody’s/S&P/Fitch) 3%1% Interest Only 3% Investment ▪ This programme is used for external issuance purposes. There is a se
Slide 53: …benefits from a continued strong Dutch housing market
…benefits from a continued strong Dutch housing market, although macro environment remains challenging Dutch Purchasing Managers Index (PMI) indicates industrial Dutch unemployment rate (%) continues to decrease since contraction August 2020 70 15 60 10 50 5 40 30 0 2012 2013 2014 2015 2016 2017 201
Slide 54: 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 55: 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 56: 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 57: 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 58: 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 59: 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 60: 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 61: 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 62: 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 63: 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 64: 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
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