ING Groep N.V. · EURONEXT:INGA
ING Groep — Debt Investor Presentation (November 2018)
39 slides from ING Groep's debt investor presentation, Nov 1, 2018
Slide 1: ING Credit Update 3Q18
ING Credit Update 3Q18 Amsterdam • 1 November 2018
Slide 2: Key points
Key points • ING posted 3Q18 net profit of €776 mln, down 43.6% on 3Q17 due to settlement impact of €775 mln • ING has been working on various initiatives to strengthen the management of compliance risks • 3Q18 underlying result before tax of €2,124 mln, which marks a 6.5% improvement versus 3Q17, o
Slide 3: Business profile and strategy
Business profile and strategy 3
Slide 4: ING is strengthening management of compliance risks
ING is strengthening management of compliance risks Settlement agreement with Dutch Public ING is implementing structural solutions to strengthen Prosecution Service (DPPS) announced on management of compliance risks and its role in the fight 4 September 2018 against financial economic crime • ING a
Slide 5: 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 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 of more Chal
Slide 7: Primary customer focus drives commercial momentum in Retail
Primary customer focus drives commercial momentum in Retail Targeting > 14 mln primary customers* by 2020 (in mln) Core lending Customer deposits 3Q18 net growth 3Q18 net growth >14 11.4 12.2 10.4 9.2 € +6.8 bln € +3.4 bln 2015 2016 2017 3Q18 Ambition Net promoter scores 2020 (NPS) 3Q18 9M18 net gro
Slide 8: Integration of Belgium and Netherlands progressing
Integration of Belgium and Netherlands progressing Belgium is preparing for the next step in its transformation… …which is meeting planned milestones… Customer • Shift in customer behaviour towards • By building on experience of ING NL in large scale IT behaviour digital / mobile projects (integrati
Slide 9: Terra approach to steer loan book towards below 2-degree goal
Terra approach to steer loan book towards below 2-degree goal • Innovative way to measure and steer our lending book towards the 1 Paris Agreement’s well below 2-degree goal using science-based What is Terra*? scenarios • Will show if our lending as a whole is adding up to climate resilience • Focus
Slide 10: ING Group financial ambitions
ING Group financial ambitions Actual 2017 Actual 3Q18 Ambition 2020 ~13.5%** • CET1 ratio (%) 14.7%* 14.0% (Basel IV) Capital • Leverage ratio (%) 4.7% 4.2% >4% • Underlying C/I ratio (%)*** 55.5% 55.5% 50-52% (by 2020) Profitability • Underlying ROE (%)*** 10.2% 10.7% 10-12% (IFRS-EU Equity) Divide
Slide 11: 3Q18 results
3Q18 results 11
Slide 12: Underlying pre-tax result up vs. both comparable quarters
Underlying pre-tax result up vs. both comparable quarters Underlying pre-tax result (in € mln) Underlying income (in € mln) +6.5% +5.4% 1,995 2,022 2,124 4,408 4,457 4,484 4,646 4,368 1,686 1,560 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 • Underlying result before tax was €2,124 mln, up 6.5%
Slide 13: Strong NII result due to lending growth at improved margins
Strong NII result due to lending growth at improved margins Net interest income excl. Financial Markets (in € mln) Net interest margin held up well in the quarter (in bps) +5.4% 91 8 157 158 154 154 152 3,469 153 154 152 153 3,292 3,332 3,334 3,364 151 -35 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q1
Slide 14: Core lending growth largely in mortgages and General Lending
Core lending growth largely in mortgages and General Lending Customer lending ING Group 3Q18 (in € bln) Core lending businesses: €6.8 bln 6.7 -1.8 603.7 1.9 0.1 -0.4 2.7 0.9 0.8 -0.9 1.5 592.4 30-06-18 Retail Retail Retail Retail WB Industry WB General WB Other** Lease run- Bank FX / 30-09-18 NL Bel
Slide 15: Stable fee income vs. 2Q18; FM impacted by low client activity
Stable fee income vs. 2Q18; FM impacted by low client activity Net fee and commission income Underlying income Financial Markets excl. CVA/DVA (in € mln) (in € mln) +7.8%* 717 720 257 674 661 251 238 643 27 227 224 279 282 298 283 55 252 144 153 160 151 157 149 157 156 193 172 240 238 250 271 257 10
Slide 16: Focus on strict cost discipline across the bank
Focus on strict cost discipline across the bank Underlying operating expenses (in € mln) Regulatory costs (in € mln) 474 493 264 2,354 2,249 2,216 2,195 2,193 98 94 91 69 3Q17 4Q17 1Q18 2Q18 3Q18 1Q 2Q 3Q 4Q Expenses excl. regulatory costs Regulatory costs 2017 2018 • Compared to 2Q18, expenses excl
Slide 17: Asset quality
Asset quality 17
Slide 18: 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 2.3% 190 2.1% 115 108 124 2.0% 68 1.9% 59 1.9% 1.8% 46 85 1.8% 1.7% 62 82 1.7% 1.6% 90 72 71 1.8% 1.8% 1.8% 1.6% 1.6% 47 46 1.7% 28 27 32 1.6% 1.6% 5 -4 -22 -20 -47 -21 3Q17 4Q17 1 Jan 2018 1Q18 2
Slide 19: Turkish risks well-controlled; intra-group funding reduced
Turkish risks well-controlled; intra-group funding reduced Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 3Q18 4Q17 Change 1% 17% Lending Credit O/S Retail Banking 5,756 8,290 -30.6% USD EUR Residential mortgages 530 925 -42.7% 39% TRY Consumer lending 1,262 1,930 -34.6% Oth
Slide 20: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 7% 5% 1% 15% 28% 15% 38% €671 3% €418 €253 45% bln bln bln 62% 8% 21% 17% 9% 13% 13% Retail Banking Mortgages Netherlands Project & Asset-based Finance Wholesale Banking Other lending Netherlands R
Slide 21: 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 (3Q18)* Lending Credit O/S Wholesale Banking (3Q18)* 1% NL 7% 3% 4% Builders & Contractors 11% 5% 19% Belux 9% Centr
Slide 22: 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 3Q18 3Q18 O/S 2Q18 2Q18 O/S 3Q17 3Q17 Wholesale Banking 252,657 1.6% 246,961 1.7% 227,714 2.3% Industry Lendi
Slide 23: Group capital, funding & liquidity
Group capital, funding & liquidity 23
Slide 24: ING Group Total Capital Ratio at 18.4%
ING Group Total Capital Ratio at 18.4% ING Group fully loaded Total Capital ratio development* 2.8% 18.4% 1.7% 14.1% 0.0% -0.1% -0.1% 0.1% 14.0% 13.5% 11.8% 2Q18 Profit added FX Equity RWA (excl.FX) 3Q18 Basel IV CET1 SREP 2019 AT1 Tier 2 3Q18 total CET1 ratio to CET1** stakes CET1 ratio Ambition ca
Slide 25: Issuance entities under our approach to resolution
Issuance entities under our approach to resolution Issuance entities Instruments Designated • Capital instruments resolution ING Group • Senior unsecured debt (TLAC / MREL eligible) entity • Secured funding ING Bank • Senior unsecured debt • Secured funding ING Bank ING Belgium Other ING (Australia)
Slide 26: ING is well positioned for TLAC and MREL developments
ING is well positioned for TLAC and MREL developments ING will have to meet future ING Group TLAC** Currency split** requirements through ING Group Tier 1 instruments only 23.5% 19% 22.6% • Holdco Senior: recycling strategy of 21.5% 2.0% maturing long-term ING Bank debt HoldCo 3.3% of approximately
Slide 27: Maturing ING Bank debt will be recycled from Group
Maturing ING Bank debt will be recycled from Group Long-term debt maturity ladder (in € bln)* 12 8 4 0 4Q18 2019 2020 2021 2022 2023 2024 2025 2026 2027 >2027 ING Bank Senior unsecured ING Bank Covered bond** ING Group Senior unsecured • ING Group has issued approx. €10.7 bln of Senior unsecured fun
Slide 28: 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 bon
Slide 29: 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 30 September 2018: €902 bln • See “Asset Quality” section of the presentation Other 17 Cash balances 50 T
Slide 30: Robust liquidity position
Robust liquidity position Funding mix* ING holds sizeable liquidity buffer 30 September 2018 • ING’s funding consists mainly of retail deposits, corporate 2% deposits and public debt 9% Customer deposits (retail) 7% Customer deposits (corporate) • ING’s 12-month moving average LCR increased from 116
Slide 31: Robust rating profile with strong trend over the last quarters
Robust rating profile with strong trend over the last quarters Main credit ratings of ING on 31 October 2018 Latest ING Bank rating actions S&P Moody’s Fitch • Fitch: Jul-2018 Fitch revised the outlook for ING Bank to positive from stable. The outlook revision follows the Stand-alone rating a baa1 a
Slide 32: Appendix
Appendix 32
Slide 33: Managing the capital above the regulatory requirement
Managing the capital above the regulatory requirement ING Group SREP* 2017 SREP (Supervisory Review and Evaluation Process) • Following the conclusion of the annual SREP process on MDA 19 December 2017, the European Central Bank has set restriction ING Group’s capital requirements for 2018 MDA restr
Slide 34: Additional Tier 1: comfortable buffers to triggers
Additional Tier 1: comfortable buffers to triggers Buffer to MDA 3Q18* Buffer to Conversion Trigger 3Q18 (in € bln) 14.0% 44.3 €11 bln 11.8% €22 bln 10.4% 3.6% 7.0%*** 22.1 7% CET1 equity conversion trigger 3Q18 phased-in CET1 2018 2019** 3Q18 phased-in 3Q18 phased-in CET1 3Q18 phased-in CET1 2018 M
Slide 35: 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 36: Outstanding HoldCo Senior benchmarks
Outstanding HoldCo Senior benchmarks HoldCo Senior Unsecured, EUR issuances ISIN Issue date Maturity Tenor Coupon Currency Issued Spread XS1882544973 Sep-18 Sep-28 10yr 2.000% EUR 1,500 m/s + 110 XS1882544205 Sep-18 Sep-23 5yr 3mE + 85 EUR 1,000 3mE + 85 XS1882544627 Sep-18 Sep-23 5yr 1.000% EUR 1,0
Slide 37: 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% 6% Investment • Programme is used for external issuance purposes; separate €15 bln S
Slide 38: Benefiting from continued improvement of the Dutch economy and housing market
…benefiting from continued improvement of the Dutch economy and housing market Dutch Purchasing Managers Index (PMI) was 59.8 as of Sep-2018, which indicates positive growth in industry Dutch unemployment rate (%) continues to decline 70 15 60 10 50 5 40 30 0 2009 2010 2011 2012 2013 2014 2015 2016
Slide 39: 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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