Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Q3 2020 Earnings Presentation
33 slides from Ing Groep's earnings presentation, Nov 5, 2020
Slide 1: Third quarter 2020 results
Third quarter 2020 results ING posts 3Q2020 net result of €788 mln Steven van Rijswijk, CEO of ING 5 November 2020
Slide 2: Key points
Key points In line with our purpose, we continue to take actions to support our customers, employees and society in coping with the effects of the Covid-19 pandemic. At the same time, countering financial and economic crime remains a priority The current environment underscores the strength of o
Slide 3: The pandemic underscores our digital success and requires increased focus
The pandemic underscores our digital success and requires increased focus Primary customer* base (in mln) Our primary customer base has increased by 3.3 million since we accelerated our Think Forward strategy in 2016. 29.2% 30.5% 32.8% 34.3% 35.0% 16.5 213,000 new primary customers were added in 3
Slide 4: Building on our data-driven digital leadership
Building on our data-driven digital leadership Standardisation One App / One Web already Client Digitalisation services retail customers in the Customer Engagement Platform Netherlands and Germany. By interactions Reusability Scalability 3Q2020 nearly all active private customers of ING Be
Slide 5: Diversifying income in a low rate environment
Diversifying income in a low rate environment Net interest income (€ bln) The negative rate environment since 2016 has put pressure on NII, which we counter using various levers 13.7 13.9 14.1 13.7 13.2 Loan growth has been an important lever and we aim to continue to grow, however within our ri
Slide 6: Focus on maintaining good asset quality in our loan book
Focus on maintaining good asset quality in our loan book Loan loss provisions (in € mln) Updated macro-economic indicators driven by IFRS 9 resulted in a €380 million release. As cases and lockdown 1,336 measures are again increasing and uncertainty remains, the effect of the release was compensat
Slide 7: Strengthening our management of compliance risks since 2017
Strengthening our management of compliance risks since 2017 One common global approach Digital solutions Collaboration with 3rd parties Global KYC organization in place to A model using machine learning to In the Netherlands, the oversee end-to-end KYC capabilities detect instances of fraudule
Slide 8: 3Q2020 results
3Q2020 results 8
Slide 9: Resilient pre-provision result despite pressure on liability income
Resilient pre-provision result despite pressure on liability income Pre-provision result excl. volatile items* and regulatory costs Income (in € mln) (in € mln) 4,626 4,439 4,511 4,671 4,286 12 2,281 2,214 2,329 2,143 2,014 -147 -125 -128 -230 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 3Q2019 4Q2019 1Q2020
Slide 10: NII slightly lower with Covid-19 impact; 4-quarter rolling average NIM at 148 bps
NII slightly lower with Covid-19 impact on supporting levers; 4-quarter rolling average NIM at 148 bps Net interest income excl. Financial Markets (FM) (in € mln) Net Interest Margin (in bps) 3,435 3,478 157 3,399 3,339 154 154 152 148 3,243 154 154 151 144 138 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 3Q2
Slide 11: 3Q2020 net core lending reflects further decline of demand
3Q2020 net core lending reflects further decline of demand Customer lending ING Group 3Q2020 (in € bln) Core lending businesses: €-6.9 bln 622.7 -1.1 0.2 1.4 0.5 -6.4 -1.8 0.1 -0.3 -3.0 -4.9 607.6 30-6-2020 Retail NL Retail Retail Retail Other WB Lending WB Daily WB Other* Lease run- Treasury FX / O
Slide 12: Good fee growth in Retail Banking
Good fee growth in Retail Banking Net fee and commission income per business line* (in € mln) Fee & commission income per product category (in € mln) 747 783 783 735 723 734 747 735 723 734 14 210 297 253 222 198 184 211 280 303 264 231 199 210 206 241 259 221 180 176 198 165 176 227 218 203 274 256
Slide 13: Operating expenses remain under control
Operating expenses remain under control Expenses (in € mln) Cost/income ratio** 137 134 62.8% 61.0% 303 526 111 60.3% 59.8% 106 127 151 138 310 140 130 55.7% 60.9% 52.7% 58.9% 56.6% 57.0% 54.9% 2,207 2,221 2,169 2,212 2,232 53.0% 50.3% 51.0% 51.3% 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 3Q2019 4Q2019 1Q2
Slide 14: Risk costs down in all business lines, with sharp reduction in WB
Risk costs down in all business lines, with sharp reduction in WB Risk costs per business line (in € mln) Stage 2 ratio Stage 3 ratio 1,336 8.6% 8.5% 7.6% 6.2% 6.3% 7.0% 1.8% 1.8% 882 5.7% 1.6% 1.6% 1.7% 661 7.0% 1.7% 5.9% 6.0% 1.5%* 428 469 5.4% 5.3% 1.6% 1.6% 1.6% 373 5.6% 1.4% 1.4% 276 178 145 4.
Slide 15: Strong ING Group CET1 ratio at 15.3%
Strong ING Group CET1 ratio at 15.3% ING Group Total capital ratio development (in %) +2.8% 20.0% +1.9% 15.0% 0.0% +0.5% 15.3% -0.1% ~12.5% 10.5% 2Q2020 Profit added Other capital RWA 3Q2020 AT1 Tier 2 3Q2020 Total Basel IV CET1 CET1 ratio to CET1 movements CET1 ratio capital ratio ambition Capital
Slide 16: Announcing new CET1 ratio ambition level, aligning with capital requirements
Announcing new CET1 ratio ambition level, aligning with capital requirements CET1 ratio ambition compared to ING Group fully-loaded SREP Long-term CET1 ratio ambition level There is a structural reduction of our capital requirements and increased visibility of the remaining expected 15.30% regulat
Slide 17: New distribution policy to provide a sustainable and attractive return to shareholders
New distribution policy to provide a sustainable and attractive return to shareholders Suspended dividend policy New distribution policy consists of ING aims to offer a sustainable and attractive return to Pay-out ratio of 50% of resilient net profit* shareholders To be paid out in cash or a c
Slide 18: ING Group financial ambitions
ING Group financial ambitions Actual 2019 Actual 3Q2020 Financial ambitions ~12.5%* CET1 ratio (%) 14.6% 15.3% (Basel IV) Capital Leverage ratio (%) 4.6% 4.7% >4% ROE (%)** 9.4% 5.1% 10-12% (IFRS-EU Equity) Profitability C/I ratio (%)** 56.6% 60.9% 50-52% Dividend Dividend (per share) €0.2
Slide 19: Wrap up
Wrap up 19
Slide 20: Wrap up
Wrap up In line with our purpose, we continue to take actions to support our customers, employees and society in coping with the effects of the Covid-19 pandemic. At the same time, countering financial and economic crime remains a priority The current environment underscores the strength of our
Slide 21: Appendix
Appendix 21
Slide 22: Volatile items 3Q2020
Volatile items 3Q2020 Volatile items and regulatory costs (in € mln) 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 WB/FM – valuation -25 -74 -92 87 91 adjustments Capital gains/losses 5 -8 138 15 6 Hedge ineffectiveness 32 -65 -89 40 43 -Other items* -82 -270 -370 Total volatile items 12 -147 -125 -128 -230 Re
Slide 23: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 3Q2020 3Q2020 3Q2020 15% 7% 23% 19% 36% 15% 4% €756 18% €485 6% €485 €272 bln bln bln bln 10% 58% 5% 16% 19% 64% 62% 9% 14% Retail Banking Residential mortgages Mortgages Netherlands Lending Wholes
Slide 24: We remain comfortable with our senior and well-collateralised lending book
We remain comfortable with our senior and well-collateralised lending book Residential Average LTV of 59% with low Stage 3 ratio at 1.2% Mortgages Risk metrics remained strong, also supported by government schemes €302 bln 9% Consumer Lending Relatively small book, risk metrics slightly deteri
Slide 25: Granular Retail Consumer Lending and Business Lending
Granular Retail Consumer Lending and Business Lending Consumer Lending – 3Q2020 Lending Credit Outstandings Business Lending – 3Q2020 Lending Credit Outstandings By geography By product By geography By sector 3% 2% 1% 2%2%2% 4%1% 4% 4% 3% 1% 16% 5% 7% 3%2% 5% 11% 4% 36% 4% 6% 8% 51% 6% 14% €26 bln €
Slide 26: Granular Wholesale Banking lending
Granular Wholesale Banking lending Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S Wholesale Banking (3Q2020)* Lending Credit O/S Wholesale Banking (3Q2020)* 1% NL 1% 12% Real Estate, Infra & Construction 16% 21% Belux 21% Commodities, Food & Agri Germany TMT &
Slide 27: Leveraged finance book managed within a restrictive framework
Leveraged finance book managed within a restrictive framework Leveraged finance book* focused on developed markets Business overview (as per 3Q2020) Focus on larger sponsors with an established track record 3% and a history of resolving issues in the event of underperformance by the acquired busin
Slide 28: Well-diversified Commercial Real Estate (CRE) portfolio
Well-diversified Commercial Real Estate (CRE) portfolio Business overview CRE breakdown by asset type (as per 3Q2020) CRE portfolio of €50.8 bln, cap at €56 bln, split between: 8% Real Estate Finance (REF) €36.0 bln 23% Office Retail Banking €14.8 bln Retail REF portfolio is managed by Whole
Slide 29: Oil & Gas book: only €3.9 bln directly exposed to oil-price risk
Oil & Gas book: only €3.9 bln directly exposed to oil-price risk 0.5 0.5 Direct €3.9 bln Reserve Based Lending: smaller independent oil & gas producers, focus on 2.9 oil-price risk 1st cost quartile producers 5.4 Midstream: typically assets generating revenues from long-term tariff based contrac
Slide 30: Management overlay taken to reflect potential impact of Covid-19
Management overlay taken to reflect potential impact of Covid-19 Stage 1 provisioning (in € mln) Stage 2 provisioning (in € mln) Stage 3 provisioning (in € mln) 255 299 771 261 61 80 98 309 144 398 422 195 219 285 290 -6 -13 45 -9 25 163 169 200 201 -26 30 463 124 -4 -11 10 52 183 -12 15 -2 -2 -19 -
Slide 31: Breakdown of quarterly risk costs Wholesale Banking per geography and sector
Breakdown of quarterly risk costs Wholesale Banking per geography and sector Breakdown of geography which generated risk costs WB Breakdown of sector which generated risk costs WB (in € mln) (in € mln) 882 882 373 373 254 254 116 116 145 145 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 3Q2019 4Q2019 1Q2020 2Q
Slide 32: Overview Turkey exposure
Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 3Q2020 2Q2020 Change 1% 15% Lending Credit O/S Retail Banking 3,597 4,123 -12.8% 35% Residential mortgages 397 484 -18.0% USD Consumer lending 982 1,148 -14.5% EUR SME/Midcorp 2,218 2,491 -11.0% TRY 49%
Slide 33: 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