ING Groep N.V. · EURONEXT:INGA
ING Groep — Debt Investor Presentation (November 2015)
39 slides from ING Groep's debt investor presentation, Nov 4, 2015
Slide 1: ING Bank Credit Update
ING Bank Credit Update Amsterdam • 4 November 2015
Slide 2: Key points
Key points • Strong capital position: ING well placed to absorb regulatory impacts and to deliver attractive capital return • Fully-loaded CET 1 ratios: ING Bank stable at 11.3%; ING Group unchanged at 12.3%, despite EUR 2.2 bln profit not included in capital • Further sell-down of shares in NN Grou
Slide 3: ING Bank results
ING Bank results 3
Slide 4: ING Bank has strong positions in resilient northern European home markets
ING Bank has strong positions in resilient northern European home markets Strong positions in European home markets ING Bank total underlying income 9M15 (in EUR bln) 2.0 4.3 Netherlands 1.3 EUR Belgium 12.5 Germany 1.0 bln* Other Challengers Growth Markets 1.6 CB Rest of World 2.5 Lending portfolio
Slide 5: ING continues to make progress on strategic initiatives
ING continues to make progress on strategic initiatives We launched our Think Forward strategy in March 2014 Creating a differentiating customer experience • To complement our in-house capabilities and maximise the potential of relevant technologies, we are steadily investing in partnerships • In Oc
Slide 6: Our consistent customer focus led to strong results in 9M15
Our consistent customer focus led to strong results in 9M15… Underlying net result Banking rose 18.1% from 9M14 (in EUR mln) …resulting in underlying RoE of 11.6% in 9M15 CAGR +4.1% +18.1% 11.6% 3,424 3,397 3,155 9.9% 10-13% 3,036 2,876 9.0% 9.0% 2,450 7.0% 10% 2011 2012 2013 2014 9M14 9M15 2011 201
Slide 7: Supported by healthy income growth and lower risk costs
…supported by healthy income growth and lower risk costs Underlying income excl. CVA/DVA Net interest result excl. FM Risk costs (in EUR bln) (in EUR bln) (in EUR bln and bps of RWA) CAGR +3.6% 15.2 15.6 15.0 +4.5% 14.0 CAGR +0.8% 12.3 +5.7% 11.7 11.4 11.3 11.6 11.0 8.6 9.1 83 74 55 55 48 46 2.1 2.3
Slide 8: Our core lending franchises grew by EUR 17.2 bln in nine months
Our core lending franchises grew by EUR 17.2 bln or 4.5% annualised in the first nine months of 2015 Customer lending, 9M15 (in EUR bln) Core lending businesses grew EUR 17.2 bln, or 4.5% 2.7 -0.3 -2.6 3.9 -0.6 529.0 9.9 -2.5 3.5 513.5 -1.6 3.0 31/12/2014 Netherlands Belgium Germany Other CGM CB Res
Slide 9: Lending increasingly diversified with the proportion of mortgages declining
Lending increasingly diversified with the proportion of mortgages declining ING Bank (in %) Challengers & Growth Markets (in %) 3% 2% 3% 2% 6% 7% 5% 7% 7% 10% 14% 18% 18% 18% 21% 21% 66% 62% 56% 52% 31 December 2013 30 September 2015 31 December 2013 30 September 2015 Other CB lending Other CB lendi
Slide 10: On track to deliver on our Ambition 2017
On track to deliver on our Ambition 2017 Ambition ING Bank 2014 9M15 2017 Guidance • We will maintain a comfortable buffer above the minimum CET1 (CRD IV) 11.4% 11.3% >10% 10% to absorb regulatory changes and potential volatility Leverage* 4.1% 4.3% ~4% • Aim to reach 50-53% cost/income ratio in 201
Slide 11: ING Bank asset quality
ING Bank asset quality 11
Slide 12: Lending credit outstandings ING Bank are well diversified
Lending credit outstandings ING Bank are well diversified ING Bank* (in %) Retail Banking* (in %) Commercial Banking* (in %) 6% 2% 8% 12% 33% 34% 15% 4% 41% EUR EUR EUR 595 bln 66% 395 bln 200 bln 16% 21% 9% 11% 9% 13% Retail Banking Mortgages Netherlands Structured Finance Commercial Banking Other
Slide 13: Risk costs down to EUR 261 mln and NPL ratio down to 2.6%
Risk costs down to EUR 261 mln or 34 bps of RWA and NPL ratio down to 2.6% Risk costs (in EUR mln) NPL ratio (in %) 2Q15 3Q15 432 400 Retail Netherlands 3.4 3.2 353 Retail Belgium 3.3 3.3 322 173 152 Retail Challengers & Growth Markets 1.4 1.3 35 111 261 63 Commercial Banking 3.1 2.9 65 59 44 62 97
Slide 14: Risk costs and NPL ratio Retail Netherlands continued downward trend
Risk costs and NPL ratio Retail Netherlands continued their downward trend, reflecting the economic recovery Risk costs Retail NL have come down from the peak in 2013 Risk costs decreased sharply to EUR 82 mln or 55 bps of (in EUR mln) RWA in 3Q15, driven by lower risk costs in all segments 154 14 1
Slide 15: Risk costs Commercial Banking declined to longer-term average
Risk costs Commercial Banking declined to longer-term average, but can remain volatile quarter-on-quarter Risk costs Commercial Banking have come down to 36 bps in 9M15… (in EUR mln and in bps) …supported by a decline in the NPL ratio (in %) 71 68 3.5% 3.3% 3.3% 37 35 36 3.1% 2.9% 952 868 500 348 38
Slide 16: Lending credit outstandings Commercial Banking well diversified by geography
Lending credit outstandings Commercial Banking well diversified by geography and… Loan portfolio is well diversified across geographies… ...with the majority in developed countries Lending Credit O/S Commercial Banking (3Q15)* • Our business model is the same throughout our global CB 1% NL franchise
Slide 17: Well diversified by sector
…well diversified by sector Loan portfolio is well diversified Loan portfolio is well diversified across sectors Lending Credit O/S Commercial Banking (3Q15)* • We concentrate on sectors where we have proven Builders & Contractors expertise, among which (top-end) Financial Institutions, oil 11% 3% 7
Slide 18: The quality of our Russian portfolio remains strong
The quality of our Russian portfolio remains strong Exposure ING Bank to Russia (in EUR mln) Lending outstanding per currency Change Change 10% 3Q15 3Q14 3Q-3Q 2Q15 3Q-2Q 61% Total Lending Credit O/S 5,696 6,851 -1,155 5,842 -146 29% USD Other* 487 947 -460 691 -204 EUR Total outstanding 6,183 7,798
Slide 19: The quality of our Ukraine portfolio continues to be under pressure, but manageable
The quality of our Ukraine portfolio continues to be under pressure, but manageable Exposure ING Bank to Ukraine (in EUR mln) Lending outstanding per currency Change Change 11% 3Q15 3Q14 3Q-3Q 2Q15 3Q-2Q 73% 16% Total Lending Credit O/S 1,168 1,289 -121 1,252 -84 USD Other* 0 20 -20 5 -5 EUR Total o
Slide 20: Exposure ING Bank to Oil & Gas Industry - oil price risk is limited
Exposure ING Bank to Oil & Gas Industry - oil price risk is limited Lending credit O/S Trade and Commodity • Trade-related exposure; short-term self-liquidating trade finance, generally for major trading companies, either pre- 43% Finance sold or price hedged, not exposing the Bank to oil price risk
Slide 21: ING Bank capital, liquidity and funding
ING Bank capital, liquidity and funding 21
Slide 22: We have generated a significant amount of capital
We have generated a significant amount of capital Net profit (in EUR bln) A strong profitability track record 4.4 4.5 • ING Bank reported only one small 3.6 3.7 loss in history 3.1 3.0 2.6 • Average annual profitability of EUR 2.7 billion in period 2007-2014, including during the years of 0.5 financ
Slide 23: Capital position remains strong
Capital position remains strong ING Bank fully-loaded CET 1 ratio stable at 11.3% ING Group pro-forma fully-loaded CET1 ratio at 12.8% excl. (in %) net profit of EUR 2.2 bln not included in capital (in %) 0.4% -0.3% 12.8% -0.1% 0.3% -0.3% 11.3% 11.3% 12.3% 12.3% 2Q15 Net profit Revaluation RWA** 3Q1
Slide 24: ING Bank has a sizeable capital buffer
ING Bank has a sizeable capital buffer Total capital (in EUR bln)* ING Bank total Risk Weighted Assets (in EUR bln) 332 330 16.5% 55.4 310 14.3% 16.5% 283 296 11 13.5% 16.5% 8.9 8.9 42 8.5 8.3 9.5 7.4 10.7 7.4 6.9 5.1 5.7 8.1 39.0 257 31.8 33.1 33.7 35.0 26.0 2009 2011 2013 2014 3Q2015 3Q2015 2009 2
Slide 25: ING has flexibility to comply with expected TLAC requirements
ING has flexibility to comply with expected TLAC requirements* Possible TLAC requirements (3Q15, fully loaded, in %) The Financial Stability Board’s TLAC proposals CET1 Management Buffer • TLAC proposals not yet final. Minimum total CET1 SRB: 3.0% requirement Finalisation expected in November CET1 C
Slide 26: Deposits are the primary source of funding
Deposits are the primary source of funding Attractive funding profile Total liabilities (30 September 2015, in %) • 59% of the balance sheet is funded by customer deposits 15% 5% • 85% of customer deposits is retail 9% based 12% • Attractive Loan-to-Deposit ratio of Customer deposits 1.03 as per 30
Slide 27: Long-term debt issuance has increased over time
Long-term debt issuance has increased over time Long-term funding increased (in EUR bln) Short-term professional funding reduced (in EUR bln) 65 52 79 86 86 85 44 37 84 37 35 72 21 30 42 18 15 17 16 27 2009 2011 2013 2014 3Q2015 2009 2011 2013 2014 3Q2015 Subordinated loans Long-term debt Interbank
Slide 28: ING Bank has modest long-term funding needs
ING Bank has modest long-term funding needs Maturity ladder outstanding long-term debt (in EUR million) Issued Maturing 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2013 2014 2015 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 >2025 remaining ING Bank senior debt ING Bank covered bond I
Slide 29: ING Bank has a sizeable liquidity buffer
ING Bank has a sizeable liquidity buffer ING Bank liquidity buffer 30 September 2015 (in EUR bln) 81 191 89 21 Cash and holdings at central banks Securities issued or guaranteed by Liquid assets eligible at central Total sovereigns, central banks and banks (not included in above) multilateral develo
Slide 30: Wrap up
Wrap up 30
Slide 31: Key points
Key points • Strong capital position: ING well placed to absorb regulatory impacts and to deliver attractive capital return • Fully-loaded CET 1 ratios: ING Bank stable at 11.3%; ING Group unchanged at 12.3%, despite EUR 2.2 bln profit not included in capital • Further sell-down of shares in NN Grou
Slide 32: Appendix
Appendix 32
Slide 33: Group CET1 in excess of Bank
Group CET1 in excess of Bank Fully-loaded common equity Tier 1 capital (in EUR bln and in %) Reported Pro-forma for full divestment NN Group Reported 12.3%* 12.8%* 11.3% 46.0 -1.0 -2.2 -4.1 1.0 39.7 4.8 38.7 35.0 ING Group FI deductions Interim profit Other ING Group CET1 Reversal FI ING Group CET1
Slide 34: Bank CET1 capital negatively impacted in 3Q15 by a reduction in revaluation reserves
Bank CET1 capital negatively impacted in 3Q15 by a reduction in the revaluation reserves and FX Bank CET1 fully loaded ratio development during 3Q15 (amounts in EUR bln) Capital RWA Ratio Change Actuals June 2015 35.2 309.8 11.3% Net profit 1.1 0.36% Revaluation reserves* -0.8 -1.9 -0.18% FX** -0.5
Slide 35: Solid third quarter results
Solid third quarter results Underlying pre-tax result ING Bank Volatile items (in EUR mln) Pre-tax result excl. volatile items (in EUR mln) 3Q14 4Q14 1Q15 2Q15 3Q15 (in EUR mln) +0.6% CVA/DVA -69 -80 -1 208 40 +0.7% 1,661 Capital 1,623 1,635 1,601 13 21 112 17 -64 1,577 1,557 1,486 1,495 gains/losse
Slide 36: We further reduced client savings rates in 3Q15 and 4Q15
We further reduced client savings rates in 3Q15 and 4Q15 to align with record low interest rates Retail customer deposits, breakdown by business segment Further scope to protect NIM in most countries (in %, 3Q15) • In the third quarter, we reduced savings rates in the 23% 31% Netherlands, Belgium an
Slide 37: Net interest margin up from 2Q15
Net interest margin up from 2Q15 Volatility in net interest margin, largely reflects volatility Net interest margin up from 2Q15 of interest results in Financial Markets (in bps) 3 -1 1 146 153 153 143 150 146 147 146 143 2Q15 Retail Financial Corporate 3Q15 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Bankin
Slide 38: We remain disciplined on expenses, but regulatory costs weigh heavily
We remain disciplined on expenses, but regulatory costs weigh increasingly heavily on the cost base Underlying operating expenses (in EUR mln) Regulatory costs (in EUR mln) 650 150 408 344 374 250 85 159 161 2,157 2,141 158 2,063 2,015 2,068 260 213 249 250 147 11 3Q14 4Q14 1Q15 2Q15 3Q15 2011 2012
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, the same accounting principles are applied as in the 2014 ING Gro
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