ING Groep N.V. · EURONEXT:INGA
ING Groep — Debt Investor Presentation (February 2016)
43 slides from ING Groep's debt investor presentation, Feb 4, 2016
Slide 1: Credit Update
Credit Update Amsterdam • 4 February 2016
Slide 2: Key points
Key points • Underlying net result ING Bank rose to EUR 4,219 mln in 2015, up 23.2% from 2014 • Our retail customer base grew by 1.4 mln to 34.4 mln in 2015; our core lending franchises grew by EUR 21.7 bln or 4.2% • Underlying return on IFRS-EU equity of 10.8% in 2015, up from 9.9% in 2014, and in
Slide 3: ING Bank results
ING Bank results 3
Slide 4: 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 Empowering people • Innovation helps empower people to make better financial decisions • In Poland, Moje ING, a new banking platform (based on ING Spain’s Genoma), gives customers an overview
Slide 5: Our customer growth continued in 2015…
Our customer growth continued in 2015… We added 1.4 mln new customers in 2015… …and on track to reach 10 mln primary customers by 2017 Individual customers Primary customers* 34.4 >10 33.0 8.9 8.4 31.7 7.8 2013 2014 2015 2013 2014 2015 Ambition 2017 Our relentless focus on innovations to improve the
Slide 6: …resulting in ongoing deposit and loan growth
…resulting in ongoing deposit and loan growth Customer deposits (in EUR bln) Customer lending (in EUR bln) 509 533 489 514 475 499 2013 2014 2015 2013 2014 2015 Customer deposits, breakdown (in%) Attractive funding profile 2% • 61% of the balance sheet is funded by customer deposits 13% • 85% of cus
Slide 7: Core lending franchises grew by EUR 21.7 bln or 4.2% in 2015
Core lending franchises grew by EUR 21.7 bln or 4.2% in 2015 Customer lending 2015 (in EUR bln) Core lending businesses: EUR 21.7 bln 3.8 -1.7 -3.8 10.9 -0.3 2.8 532.7 -3.1 1.5 7.8 513.5 -2.9 2.5 1.7 31/12/14 Retail NL Retail Retail Retail WB IL* WB GL&TS* WB Other* Corporate WUB Lease and Bank FX /
Slide 8: Our consistent customer focus drove our strong results in 2015…
Our consistent customer focus drove our strong results in 2015… Underlying net result increased 23.2% from 2014 (in EUR mln) …resulting in underlying RoE of 10.8% in 2015 CAGR +19.9% 4,219 10.8% 10-13% 9.9% 3,424 9.0% 3,155 7.0% 2,450 10% 2012 2013 2014 2015 2012 2013 2014 2015 Ambition 2017 • Under
Slide 9: …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 +3.0% 16.3 15.2 15.6 15.0 CAGR +3.4% 12.2 11.3 11.6 11.0 83 74 55 44 2.1 2.3 1.6 1.3 2012 2013 2014 2015 2012 20
Slide 10: Strong contribution from both Retail and Wholesale Banking
Strong contribution from both Retail and Wholesale Banking Pre-tax result ING Bank* Pre-tax result Retail Banking Breakdown pre-tax result (in EUR mln) (in EUR mln) Retail Banking 15% +14.8% +17.3% 5,734 3,928 38% 3,349 26% 4,997 Netherlands 21% Belgium Germany 2014 2015 Other Challengers & Growth M
Slide 11: ING Germany's pre-tax profit increased to EUR 1,152 mln in 2015
ING Germany’s pre-tax profit increased to EUR 1,152 mln in 2015, reaching above EUR 1 bln for the first time Pre-tax profit ING Germany above Diversifying our Balance Sheet… …by growing consumer lending and EUR 1 bln for the first time Customer lending (in %) Wholesale Banking lending… (in EUR mln)
Slide 12: ING Bank asset quality
ING Bank asset quality 12
Slide 13: 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 FY15 (in EUR bln) 2.6 5.6 Netherlands 1.7 EUR Belgium 16.6 Germany 1.4 bln* Other Challengers Growth Markets 2.1 WB Rest of World 3.2 Lending portfolio
Slide 14: Lending credit outstandings ING Bank are well diversified
Lending credit outstandings ING Bank are well diversified ING Bank* (in %) Retail Banking* (in %) Wholesale Banking* (in %) 6% 7% 2% 13% 33% 14% 34% 3% 43% EUR EUR EUR 593 bln 66% 393 bln 201 bln 16% 21% 9% 11% 9% 13% Retail Banking Mortgages Netherlands Structured Finance Wholesale Banking Other le
Slide 15: Risk costs and NPL ratio improved to 2.5%
Risk costs amounted to EUR 302 mln or 38 bps of RWA and NPL ratio improved to 2.5% Risk costs (in EUR mln) NPL ratio 432 3.3% 3.3% 400 353 3.1% 173 3.0% 3.0% 152 302 2.9% 111 261 2.8% 2.8% 97 65 59 2.6% 62 97 2.8% 2.8% 2.5% 18 48 80 40 2.6% 66 2.5% 165 153 16 65 2.4% 140 82 59 4Q14 1Q15 2Q15 3Q15 4Q
Slide 16: Lending credit outstandings Wholesale Banking well diversified by geography
Lending credit outstandings Wholesale Banking well diversified by geography Loan portfolio is well diversified across geographies… ...with the majority in developed countries Lending Credit O/S Wholesale Banking (4Q15)* • Our business model is the same throughout our global WB 1% NL franchise 13% Be
Slide 17: Risk costs Wholesale Banking declined to below longer-term average
Risk costs Wholesale Banking declined to below longer-term average Risk costs Wholesale Banking have come down from their Wholesale Banking benefits from well diversified loan peak in 2012… (in EUR mln and in bps) portfolio 71 68 Lending Credit O/S Wholesale Banking (4Q15)* 11% 3% 6% Builders & Cont
Slide 18: Lending to the Oil & Gas Industry is well diversified and oil price risk is manageable
Lending to the Oil & Gas Industry is well diversified and oil price risk is manageable Lending credit O/S In EUR bln In % • Trade-related exposure; short-term self-liquidating trade Trade and finance, generally for major trading companies, either pre- 12.2 42% Commodity Finance sold or price hedged,
Slide 19: Lending to the broader oil & gas industry is largely short-term and Investment Grade
Lending to the broader oil & gas industry is largely short-term and with Investment Grade companies Lending Credit O/S ING Bank to oil & gas industry (in EUR bln) Lending outstanding per currency Change Change 5% 4Q15 4Q14 4Q-4Q 3Q15 4Q-3Q 13% Total Lending Credit O/S 29.1 27.2 1.9 27.6 1.5 USD EUR
Slide 20: Lending to metals & mining industry is well diversified
Lending to metals & mining industry is well diversified Lending Credit O/S ING Bank to metals & mining (in EUR bln) Lending outstanding by segment Change Change 4Q15 4Q14 4Q-4Q 3Q15 4Q-3Q 33% 29% General Lending Transaction Services Total Lending Credit O/S* 14.2 12.7 1.5 13.3 0.9 Trade & Commodity
Slide 21: 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% 4Q15 4Q14 4Q-4Q 3Q15 4Q-3Q Total Lending Credit O/S 5,752 6,189 -437 5,696 56 26% 64% Other* 361 843 -482 487 -126 Total outstanding 6,113 7,032 -919 6,183
Slide 22: 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 12% 4Q15 4Q14 4Q-4Q 3Q15 4Q-3Q 73% 15% Total Lending Credit O/S 1,286 1,214 72 1,168 118 Other* -2 12 -12 0 -2 Total outstandin
Slide 23: Capital, liquidity and funding
Capital, liquidity and funding 23
Slide 24: Capital position strengthens further
Capital position strengthens further ING Bank fully-loaded CET 1 ratio increased to 11.6% ING Group pro-forma fully-loaded CET1 ratio at 13.4% after 2015 final dividend payment 0.2% -0.1% 0.3% 11.6% 13.4% 11.3% -0.1% 0.2% 0.3% 0.1% 12.7% 12.3% 3Q15 Net profit Equity stakes RWA** 4Q15 3Q15 Net Equity
Slide 25: Group CET1 exceeds fully-loaded requirements; proposed full-year dividend EUR 0.65 per share
Group CET 1 exceeds fully-loaded requirements; we propose to pay a full-year dividend of EUR 2,515 mln or EUR 0.65 per share Group CET 1 ratio comfortably in excess of fully-loaded requirement We propose to pay a full-year dividend of EUR 0.65 per share 13.4%* >10.25% >11.0% >11.75% >12.5% EUR 0.12
Slide 26: ING has flexibility to comply with expected TLAC requirements
ING has flexibility to comply with expected TLAC requirements TLAC requirements 1 January 2019 (4Q15, fully loaded, in %) The Financial Stability Board’s TLAC proposals CET1 Management Buffer • The final TLAC proposal was published in Minimum total CET1 SRB: 3.0% requirement November 2015 Additional
Slide 27: ING Bank has generated a significant amount of capital
ING Bank has generated a significant amount of capital A strong profitability track record Net profit (in EUR bln) • ING Bank reported only one small 4.4 4.5 4.5 loss in history 3.6 • Average annual profitability of 3.1 3.0 2.6 EUR 2.9 billion since 2007, including during the years of financial cris
Slide 28: ING Bank has a sizeable capital buffer
ING Bank has a sizeable capital buffer Total capital (EOP, in EUR bln)* ING Bank total Risk Weighted Assets (EOP, in EUR bln) 332 330 318 16.6% 56.8 14.3% 16.5% 283 296 10 13.5% 16.5% 8.7 43 8.7 8.5 8.3 9.5 7.2 10.7 7.2 6.9 5.1 5.7 8.1 40.9 265 31.8 33.1 33.7 36.8 26.0 2009 2011 2013 2014 2015 2015
Slide 29: Deposits are the primary source of funding
Deposits are the primary source of funding Attractive funding profile Total liabilities (31 December 2015, in %) • 61% of the balance sheet is funded by customer deposits 14% 5% • 86% of funds entrusted is retail 8% 12% based • Attractive Loan-to-Deposit ratio of Customer deposits 1.04 as per 31 Dec
Slide 30: ING Bank long-term debt issuance has increased over time
ING Bank 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 87 44 37 35 31 84 72 21 18 15 17 16 27 30 34 2009 2011 2013 2014 2015 2009 2011 2013 2014 2015 Subordinated loans Long-term debt Inter
Slide 31: 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 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 >2026 ING Bank senior debt ING Bank covered bond ING Bank RM
Slide 32: ING Bank has a sizeable liquidity buffer
ING Bank has a sizeable liquidity buffer ING Bank liquidity buffer 31 December 2015 (in EUR bln) 76 2 183 92 14 Cash and holdings at central Securities issued or Liquid assets eligible at Other liquid assets Total banks guaranteed by sovereigns, central banks (not included in central banks and above
Slide 33: Wrap up
Wrap up 33
Slide 34: On track to deliver on our Ambition 2017
On track to deliver on our Ambition 2017 ING Group 2014 2015 Ambition 2017 Guidance • We will grow into a comfortable buffer over time above the prevailing CET1 (CRD IV) 10.5% 12.7% >12.5% fully-loaded requirements • We are committed to maintaining a healthy Group CET1 ratio in excess of prevailing
Slide 35: Key points
Key points • Underlying net result ING Bank rose to EUR 4,219 mln in 2015, up 23.2% from 2014 • Our retail customer base grew by 1.4 mln to 34.4 mln in 2015; our core lending franchises grew by EUR 21.7 bln or 4.2% • Underlying return on IFRS-EU equity of 10.8% in 2015, up from 9.9% in 2014, and in
Slide 36: Appendix
Appendix 36
Slide 37: Pro-forma Group CET1 already exceeds regulatory requirement on a fully-loaded basis
Pro-forma Group CET1 already exceeds regulatory requirement on a fully-loaded basis Fully-loaded common equity Tier 1 capital (in EUR bln and %) Actual 31 December 2015 Reduction stake NN Group to 14.1% in January 2016 12.7%* 13.0%* 47.8 -1.4 -1.6 -4.1 0.6 41.8 40.8 0.5 ING Group FI deductions Inter
Slide 38: Solid fourth-quarter results, with net interest income holding up well
Solid fourth-quarter results, with net interest income holding up well Underlying pre-tax result ING Bank (in EUR mln) Net interest income excl. Financial Markets (in EUR mln) 1,661 1,601 3,070 3,038 3,046 1,495 3,009 3,004 1,202 783 4Q14 1Q15 2Q15 3Q15 4Q15 4Q14 1Q15 2Q15 3Q15 4Q15 • ING Bank recor
Slide 39: Net interest margin remains steady from 3Q15
Net interest margin remains steady from 3Q15 Net interest margin up from 3Q15 (in bps) Volatility in net interest margin largely reflects volatility of interest results in Financial Markets (in bps) 153 151 147 146 147 146 143 142 4Q14 1Q15 2Q15 3Q15 4Q15 2013 2014 2015 Net interest margin up from 3
Slide 40: We further reduced client savings rates to align with record low interest rates
We further reduced client savings rates in December 2015 and January 2016 to align with record low interest rates Retail customer deposits, breakdown by business segment* We further reduced savings rates in 4Q15 and 1Q16 (in %, 4Q15) • In the December 2015, we reduced savings rates in the 24% 30% Ne
Slide 41: Our core lending franchises grew by EUR 4.5 bln in 4Q15
Our core lending franchises grew by EUR 4.5 bln in 4Q15, driven by Wholesale Banking Customer lending 4Q15 (in EUR bln) Core lending businesses: EUR 4.5 bln 3.9 0.4 -0.5 -1.2 -0.6 -2.4 3.4 532.7 529.0 -1.6 1.2 1.6 -0.6 30/09/15 Retail NL Retail Retail Retail WB IL* WB GL&TS* WB Other* WUB run- Lease
Slide 42: Operating expenses heavily impacted by regulatory costs
Operating expenses heavily impacted by regulatory costs Underlying operating expenses (in EUR mln) Regulatory costs (in EUR mln) 620 143 408 374 344 233 85 159 161 2,157 2,141 2,139 158 2,015 2,068 260 213 249 244 147 11 4Q14 1Q15 2Q15 3Q15 4Q15 2011 2012 2013 2014 2015 Expenses Regulatory costs Red
Slide 43: ING accelerates sustainable transitions through its strong lending capabilities
ING accelerates sustainable transitions through its strong lending capabilities and reduces own environmental footprint Sustainable transitions financed (in EUR bln) Reducing ING’s own environmental footprint Lending credits outstanding • We published our ambitions to reduce our carbon dioxide 23.8
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