ING Groep N.V. · EURONEXT:INGA
ING Groep — ING Group — Goldman Sachs European Financials Conference 2012
36 slides from ING Groep's conference presentation, Jun 14, 2012
Slide 1: ING: good progress on restructuring
ING: good progress on restructuring Well positioned for new regulatory framework Goldman Sachs Conference Jan Hommen CEO ING Group Brussels – 14 June 2012 www.ing.com
Slide 2: Key points
Key points • ING is making good progress on restructuring, despite challenging environment • Regulatory changes are reshaping the Banking industry, but ING is relatively well positioned • ING Bank has a strong capital and funding position, and risks are being mitigated • Balance Sheet optimisation t
Slide 3: ING is making good progress on EC restructuring
ING is making good progress on EC restructuring Delivering on EC restructuring Progress 2012 YTD Action • Liability management transaction pro- • Separation Bank/Insurance actively addressed change of control • Sell ING Direct USA clause in most ING Insurance debt • Sell Insurance Latin America
Slide 4: Own resources Bank being used to repay state aid and Insurance proceeds will be used to reduce leverage
Own resources Bank being used to repay state aid and Insurance proceeds will be used to reduce leverage ING Group 31 March 2012 ING Bank 35 Equity 48 ING Insurance 24 CT1 securities 3 HybridsB 7 Core Debt 8 Insurance Bank retained HybridsI 2 Hybrids 9 proceeds earnings will be 68 68 used to being us
Slide 5: ING remains committed to repay the Dutch State as soon as possible
ING remains committed to repay the Dutch State as soon as possible Core Tier I securities from Dutch State (EUR bln) 10 0.4 0.6 2.0 5.0 5 10.0 1.0 7.0 1.5* 2.0 3.0 0 October Paid May Paid Paid in May Total paid Remaining to 2008 2009 December 2011 May 2011 be paid 2009 Core Tier I securities Premium
Slide 6: Regulatory changes reshaping the industry
Regulatory changes reshaping the industry Goldman Sachs Conference - 14 June 2012 6
Slide 7: European banks are facing far-reaching changes
European banks are facing far-reaching changes • Households and governments need to reduce debt Societal Put pressure Drivers • More customer scrutiny of banks on margins • Increasing demand for transparency • Higher capital requirements Regulatory • Lower balance sheet leverage Limit banks’ Changes
Slide 8: ING is relatively well positioned in this environment
ING is relatively well positioned in this environment Fair value for money, transparent and simple products, easy access, excellent service and appealing brand Societal Drivers Working towards operational excellence, low-cost producer Ability to generate capital and meet Basel III requirements quick
Slide 9: ING Bank is a leader in innovative distribution…
ING Bank is a leader in innovative distribution… NL is a leader in online banking Which ING has exported successfully Online banking usage Percentage*, 2010 ING Direct customers 31 March 2012 (x 1,000) 100 Transformation 7,538 Total to ‘Self-first’ is Self-first 16.9 mln a matter of time 80 Netherla
Slide 10: …and a cost leader among European Banks
…and a cost leader among European Banks Cost / Income Cost / Client Balances FY 2011 bps as per 31 December 2011 Credit Suisse 86 Deutsche Bank 427 Commerzbank 81 Credit Suisse 411 Deutsche Bank 78 Societe Generale 240 Lloyds Banking 78 Barclays 240 ABN AMRO 69 BNP Paribas 211 Societe Generale 66 HS
Slide 11: …while championing fair, transparent pricing for our customers
…while championing fair, transparent pricing for our customers Customer proposition Strong brand position • Limited number of products Total aided brand awareness (2010) • Consistent, transparent, fair pricing 97 98 99 92 84 84 82 91 92 • Customer-centric process management 72 • Break-through simpli
Slide 12: Strong Capital and Funding position
Strong Capital and Funding position Goldman Sachs Conference - 14 June 2012 12
Slide 13: ING Bank has a good starting position to reach Basel III capital targets by 2013
ING Bank has a good starting position to reach Basel III capital targets by 2013 Targets Actions Core Tier 1 • To be reached in 2013 • Strong continued capital generation and RWA 10.9% ≥10% containment 6.5% 3Q08 1Q12 Leverage ratio* • To be reached in 2013 • Further reduction via balance sheet optim
Slide 14: Core Tier 1 ratio target of >10% to be reached in 2013
Core Tier 1 ratio target of >10% to be reached in 2013 -0.8% 10.9% 10.1% 10.0% 10.0% 1Q12 Basel III* Capital 2013 2015 Generation Available for State repayment Strong focus on core Tier 1 • Earnings generation should enable ING to grow into Basel III targets before the end of 2013 • A further review
Slide 15: In a Basel III world, access to funding will determine a Bank's ability to grow
In a Basel III world, access to funding will determine a Bank’s ability to grow Large deposit base (31 March 2012, EUR bln) Funds Entrusted (31 Mar 2012) HSBC 962 13% Santander 595 24% Deutsche Bank 588 BNP Paribas 548 Credit Agricole 531 RBS 519 28% Lloyds 495 ING Bank 485 Barclays* 438 16% Unicred
Slide 16: ING's strong retail franchise consistently attracts retail deposit inflows
ING’s strong retail franchise consistently attracts retail deposit inflows ING Retail Banking net inflow in funds entrusted Funds entrusted total (in EUR bln)* Bank (in EUR bln) 12 500 400 8 300 404 322 200 4 100 67 61 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 4Q08 1Q12 09 09 09 09 10 10 10 10 11 1
Slide 17: ING Bank has a favourable funding mix and long-term funding is increasing
ING Bank has a favourable funding mix and long-term funding is increasing Favourable funding mix Maintaining a diversified funding mix (31 March 2012) and conservative maturity ladder 7% 2% • Loan-to-deposit ratio of 1.14 8% • 62% of funding comes from client 42% deposits • In 2012 YTD, ING Bank has
Slide 18: Balance sheet optimisation should support competitive returns
Balance sheet optimisation should support competitive returns Goldman Sachs Conference - 14 June 2012 18
Slide 19: Basel III is a catalyst to manage Balance Sheet more efficiently
Basel 3 is a catalyst to manage Balance Sheet more efficiently Ambition 2015 Evolve investment portfolio into Strong capital generation to grow into ~ EUR 900 bln liquidity portfolio and continue to Other Basel III requirements Other de-risk Debt Equity securities LT & ST Banks debt Extend long-term
Slide 20: Balance sheet can be optimised geographically to improve efficiency
Balance sheet can be optimised geographically to improve efficiency Netherlands Belgium Germany ING Direct* Funding gap due in part to international Funding Funding surplus Funding surplus Funding surplus assets being booked in Dutch NV Long liquidity in domestic bank Liquidity compensating for Long
Slide 21: Balance sheet integration initiatives have delivered EUR 25 bln and a further EUR 30 bln targeted
Balance sheet integration initiatives have delivered EUR 25 bln and a further EUR 30 bln targeted 2011 2015 2011 1Q12 2Q12-4Q12 2013 - 2015 • REF France • DiBa • REF Italy • CB Germany • CB NL • REF Spain • CB NL • L&F • ING Direct France • L&F Holding • Diba • Belgium • REF Germany • CB NL Integrat
Slide 22: Transforming the investment book into a liquidity portfolio
Transforming the investment book into a liquidity portfolio Investment portfolio to be maintained for Transformation delivers liquidity and cash liquidity purposes* • Investment portfolio being actively de-risked EUR 117 bln ~ EUR100 bln • Non liquid assets to be reduced, creating room on balance sh
Slide 23: Balance Sheet integration will allow us to grow our loan book without growing the balance sheet
Balance Sheet integration will allow us to grow our loan book without growing the balance sheet Proportion customer lending increasing Selective shift to higher-yielding assets ~ EUR ~ EUR • Balance sheet optimisation will allow us to 921 bln 900 bln continue to support our customers and grow our lo
Slide 24: Own originated loans performed well through the crisis
Own originated loans performed well through the crisis Risk cost to RWA – lower than peers Additions to loan loss provisions (in bps)* (bps average RWA) 91 84 73 77 80 80 49 47 73 74 34 65 63 2008 2009 2010 2011 61 59 54 55 ING Peers 49 46 43 41 Risk cost to Customer loans – lower than 34 peers (in
Slide 25: Risk costs are expected to remain elevated
Risk costs are expected to remain elevated ING Bank’s loan book (in %)* NPL ratio** NPL% NPL% 4% 1% 1Q12 4Q11 6% Residential mortgages 28% - Netherlands 1.2 1.1 11% - Other 1.0 1.0 Commercial lending - Corporate loans 2.6 2.3 13% - Mid-corps/SMEs 4.4 4.4 - Structured Finance 2.5 2.1 - RE Finance 5.7
Slide 26: The NPL ratio of the Dutch mortgage portfolio has increased slightly to 1.2%
The NPL ratio of the Dutch mortgage portfolio has increased slightly to 1.2% Non-performing loans ratio (%) Risk costs (EUR mln) 3.0 65 2.0 44 37 1.2 21 22 25 21 1.0 14 17 0.0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 10 10 10 10 11 11 11 11 12 10 10 10 10 11 11 11 11 12 Breakdown by mor
Slide 27: Risk costs ING Real Estate Finance are expected to remain elevated
Risk costs ING Real Estate Finance are expected to remain elevated Real Estate Finance portfolio by country of residence Risk costs and write-offs (EUR mln) 239 12% Netherlands 4% Americas 147 4% Spain 53% 102 6% Italy 80 UK 39 48 45 17 26 8% Australia/Asia 0 8 0 Other 2008 2009 2010 2011 4Q11 1Q12
Slide 28: Own originated loans in Spain are sizable, but manageable
Own originated loans in Spain are sizable, but manageable Bank lending exposure to Spain 1Q2012 Residential mortgages (EUR bln) • NPL of 0.7% is relatively low compared with 4Q11 1Q12 1Q12 Coverage the market average (2.98%). Average LTV of O/S O/S NPL% ratio* 60% Residential mortgages 9.2 9.2 1% 42
Slide 29: Spanish covered bond portfolio being reduced
Spanish covered bond portfolio being reduced ING Bank: Spanish covered bonds run-off (in EUR bln) 16.2 15.1 13.4 9.9 6.5 4.6 3.0 0.5 0.5 0.0 4Q11 1Q12 2012 2013 2014 2015 2016 2017 2018 2019 • Spanish covered bond portfolio decreased by EUR 1.1 bln in 1Q12 Rating distribution Q1 2012 to EUR 15.1 bln
Slide 30: Ambition 2015
Ambition 2015 Goldman Sachs Conference - 14 June 2012 30
Slide 31: ING produces a competitive ROE through low costs and low risk
ING produces a competitive ROE through low costs and low risk ING Bank produces a better Return Income/assets (bps) on Equity than peers… …despite 300 lower 15 income 150 and fees to clients 0 2008 2009 2010 2011 10 Cost to assets (bps) 150 …because we are 100 5 efficient… 50 2008 2009 2010 2011 Ris
Slide 32: An optimised balance sheet should result in an attractive ROE of 10-13% under Basel III
An optimised balance sheet should result in an attractive ROE of 10-13% under Basel III Balance Sheet X Interest Margin ~ Income C/I - Keep Improve NIM 50-53% Balance Risk through B/S Sheet flat optimisation and Expenses profile while re-pricing optimising - 40-45 RWA Risk Costs bps/RWA Leverage - C
Slide 33: …and will continue to focus on costs to reach a cost/income ratio of 50-53% by 2015
…and will continue to focus on costs to reach a cost/income ratio of 50-53% by 2015 Underlying operating expenses In EUR bln 0.7 -0.5 -0.2 -0.3 0.4 9.0 8.8 9.0 Reported Impairments 2011 Inflation Procurement Savings Regulatory Estimate 2011 RED (average + other programme impacts* 2015 ~2%) managemen
Slide 34: Retail Netherlands cost program on track
Retail Netherlands cost program on track Implementation of DGS systems Financial impact cost program (in EUR) and/or Bank tax Headcount reduction (2012-2013): • In the Netherlands, the new Deposit Guarantee Scheme Internal 2,000 FTE (DGS), initially expected to start in External 700 FTE July 2012, i
Slide 35: An optimised balance sheet would have higher earnings and less leverage
An optimised balance sheet would have higher earnings and less leverage Assets • Balance sheet to remain stable NIM/assets • Re-pricing and deleveraging to support NIM C/I • Cost/income ratio to decline to 50-53% in 2015 Core Tier 1 • At least ≥10% in 2013 RoE* • Return on Equity to be in the range
Slide 36: Disclaimer
Disclaimer 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 2011 ING Group Annual Account
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