ING Groep N.V. · EURONEXT:INGA
ING Groep — Morgan Stanley European Financials Conference 2012
30 slides from ING Groep's conference presentation, Mar 28, 2012
Slide 1: Building the Bank of the Future
Building the Bank of the Future Growing the Franchise without Growing the Balance Sheet Morgan Stanley Conference Koos Timmermans Vice Chairman ING Bank London – 28 March 2012 www.ing.com
Slide 2: European banks are facing far-reaching changes
European banks are facing far-reaching changes • Higher capital requirements Regulatory • Lower balance sheet leverage Limit banks’ Changes • More conservative funding & liquidity ability to grow • Focus on size of banks relative to GDP • Households and governments need to reduce debt Societal Put p
Slide 3: Which banks will succeed in this environment?
Which banks will succeed in this environment? Banks with ability to generate capital and meet Basel III requirements quickly Regulatory Changes Banks with ability to attract funding, both through deposits and professional markets Banks that offer fair value for money, transparent and simple products
Slide 4: ING has key strengths to support our success…
ING has key strengths to support our success… Strong capital generation Strong retail deposit gathering ability* Core Tier 1 ratio 0.80% In EUR bln 361 374 392 328 7.8% 9.6% 9.6% 10.4% 7.3% 2008 2009 2010 2011 ING 2011 Direct pro- EUR 3 bln paid to State USA forma 2008 2009 2010 2011 Conservative fu
Slide 5: We have strong positions in attractive northern European home markets
We have strong positions in attractive northern European home markets Leading Commercial Bank in the Benelux and CEE No. 2 Bank in the Top 10 global player in Structured Finance Netherlands EUR 204 bln in client balances of which EUR 91 bln outside the home markets EUR 389 bln in client balances No.
Slide 6: We are used to operating in lean, competitive markets
We are used to operating in lean, competitive markets Average price per year of current account provided to consumers per country In EUR* Italy 269.8 Spain 204.9 Latvia 171.0 France 140.0 Austria 133.3 Finland 99.3 Czech Republic 96.4 Slovenia 94.4 Germany 93.0 Greece 92.5 Slovakia 91.8 Lithuania 86
Slide 7: Which has made us leaders in innovative distribution…
Which has made us leaders in innovative distribution… NL is a leader in online banking Which ING has exported successfully Online banking usage Percentage*, 2010 ING Direct customers 31 Dec. 2011 (x 1,000) 100 Transformation 7,446 Total to ‘Self-first’ is Self-first 16.7 mln 80 a matter of time Neth
Slide 8: …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 9: …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 10: …and with a strongly performing Commercial Banking franchise providing attractive returns
…and with a strongly performing Commercial Banking franchise providing attractive returns Underlying income* Risk costs* In EUR mln 72 5,350 225 4,188 4,657 35 3,777 34 33 5,023 1,207 594 490 477 -144 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Impairments on Greek government bonds Risk costs
Slide 11: …and producing a competitive ROE through low costs and low risk
…and producing 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 R
Slide 12: Transition to Basel III
Transition to Basel III Morgan Stanley Conference - 28 March 2012 12
Slide 13: ING has a good starting position to reach Basel III capital targets by 2013
ING has a good starting position to reach Basel III capital targets by 2013 Targets Actions Core Tier 1 • To be reached in 2013 9.6% • Strong continued capital 6.5% ≥10% generation and RWA 3Q08 4Q11 containment Leverage ratio* • To be reached in 2013 57 < 25 • Further reduction via 26 balance sheet
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% -0.8% 9.6% 9.6% 10.0% 10.0% 2011 Divestment Basel III* Capital 2013 2015 ING Direct Generation USA Strong focus on core Tier 1 • Strong earnings generation should enable ING to grow into Basel III targets before the end of 2013 • A further
Slide 15: Basel III is a catalyst to manage our balance sheet more efficiently
Basel III is a catalyst to manage our balance sheet more efficiently 31 December 2011* EUR 900 bln Other** Other** Banks Banks Assets Liabilities Increasing capital requirements will put at FV at FV Liquidity Coverage Ratio requires Debt Equity pressure on returns larger holdings of government bonds
Slide 16: Balance sheet can be optimised geographically to improve efficiency
Balance sheet can be optimised geographically to improve efficiency Netherlands NV 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 L
Slide 17: Optimisation will allow us to grow lending without growing the balance sheet
Optimisation will allow us to grow lending without growing the balance sheet 31 December 20111 Indicative 2015 Optimisation ~ EUR 900 bln ~ EUR 900 bln Liabilities Other Other Other • Continue strong deposit Other Banks Banks Banks Banks Liabilities growth Assets Liabilities Assets at FV at FV at FV
Slide 18: Key priorities for balance sheet optimisation
Key priorities for balance sheet optimisation • Continue strong deposit growth at ING Direct and Retail Banking units Continue strong deposit • Increase market share in corporate and mid-corporate deposits by investing to growth improve Payments & Cash Management offering • Structurally reduce use o
Slide 19: Reduction of short-term funding
Reduction of short-term funding Reduce short-term professional funding Short-term debt in issue In EUR bln • Short-term funding partly opportunistically used for short-term assets • Reliance on short-term funding is modest in relation to size and duration of total balance sheet (~5%) and versus EUR
Slide 20: …and increase long-term funding as market conditions permit
…and increase long-term funding as market conditions permit Long-term funding increase reflects Maintaining a diversified funding mix and conservative approach conservative maturity ladder EUR 97 bln ~ EUR 105 bln • ING Bank partly pre-financed 2012 funding needs 15 by issuing EUR 23 bln in 2011 ver
Slide 21: Reduce non-strategic assets
Reduce non-strategic assets Assets at fair value Reduce repo exposure • Focus on client-driven business EUR 136 bln • Lowering exposure to professional markets by reducing repo intermediation 13 • Impacts both assets and liabilities ~ EUR 100 bln 41 10 Reduce derivative exposure 30 • Regulatory chan
Slide 22: Transforming the investment book into a liquidity portfolio
Transforming the investment book into a liquidity portfolio Investment portfolio to be maintained for NIM not significantly affected while liquidity purposes only liquidity values improve • NIM preserved due to low historical credit spread EUR • EUR 68 bln will mature before 2016 111 bln ~ EUR 100 b
Slide 23: Grow customer lending
Grow customer lending Proportion customer lending increasing Selective shift to higher-yielding assets ~ EUR ~ EUR • Balance sheet optimisation will allow us to 900 bln 900 bln continue to support our customers and grow our loan portfolio without growing the 36% balance sheet 39% • Targeting growth
Slide 24: Balance sheet integration to result in higher return
Balance sheet integration to result in higher return Balance sheet integration Eliminate cross-border inefficiencies • Align capital, assets and liabilities • Asset and liability generation to create locally • Reducing low-yielding investments with own- sustainable balance sheets originated assets t
Slide 25: Ambition 2015
Ambition 2015 Morgan Stanley Conference - 28 March 2012 25
Slide 26: 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 - 50-53% Keep Improve NIM 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 27: Repricing and deleveraging are supportive for NIM
Repricing and deleveraging are supportive for NIM Replacing low yielding trading assets Re-pricing mostly in business lending with higher yielding customer lending • Pricing discipline (centralised pricing • Historically, repos and derivatives are model) for new production and existing generating 2-
Slide 28: …and will continue to focus on costs to reach a cost/income ratio of 50-53%
…and will continue to focus on costs to reach a cost/income ratio of 50-53% by 2015 Underlying operating expenses In EUR bln -0.5 -0.5 0.7 -0.2 -0.3 0.3 9.5 8.7 8.9 Reported Divestment Impairments 2011 Inflation Procurement Savings Regulatory Estimate 2011 ING Direct RED (average + other programme i
Slide 29: 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 to 140-145 bps 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 b
Slide 30: Disclaimer
Disclaimer Certain of the statements contained in this document are not historical facts, including, without limitation, certain statements made of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risk
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