Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Investor Day (October 2016)
40 slides from Ing Groep's investor day presentation, Oct 3, 2016
Slide 1: Accelerating Think Forward
Accelerating Think Forward ING Group Investor Day 2016 Ralph Hamers, CEO and chairman Executive Board ING Group Amsterdam, 3 October 2016
Slide 2: Key points
Key points • ING has delivered on its Think Forward strategy since 2014 • 3.3 mln new customers on the back of improved customer experience • Strong earnings growth, robust capital position and an attractive dividend • We now announce the acceleration of our Think Forward strategy • EUR 800 mln to b
Slide 3: Progress on Think Forward strategy
Progress on Think Forward strategy 3
Slide 4: Think Forward continues to drive customer growth
Think Forward continues to drive customer growth Our Think Forward strategy on a page 3.3 mln new individual customers since 2013 (in mln) 33.1 34.5 35.1 31.8 2013 2014 2015 1H16 Targeting > 14 mln primary customers by 2020 (in mln) >14 9.3 >10 8.4 8.9 7.9 Net Promoter Scores (NPS) #1 in 7 of 13 cou
Slide 5: We have delivered strong results
We have delivered strong results Customer lending Net interest income Risk costs (in EUR bln) (in EUR bln) (in EUR bln and bps of RWA) 551 83 533 12.6 74 525 12.4 514 499 11.8 55 11.7 44 2.3 36 2.1 1.6 1.3 0.6 2012 2013 2014 2015 1H16 2012 2013 2014 2015 2012 2013 2014 2015 1H16 Underlying result be
Slide 6: We have a well-diversified portfolio with strong profitability
We have a well-diversified portfolio with strong profitability Retail Banking Market Leaders Wholesale Banking Netherlands, • We use technology to offer • Our business model is the Belgium / Luxembourg a differentiating experience same throughout our global to our customers WB franchise of more than
Slide 7: Consistent profitable growth in Germany and Spain…
Consistent profitable growth in Germany and Spain… Customer balances Germany (in EUR bln) and customer numbers (in mln) ~8.0 mln 241 Savings 220 Mortgages 204 187 154 170 Investment Products 3.6 mln 138 113 118 Payment Accounts 99 82 Consumer Loans 61 45 WB Lending* # Retail clients 2003 2004 2005 2
Slide 8: … reflecting our innovative solutions for customers
… reflecting our innovative solutions for customers Digital Financial Advisor Digital services for SMEs Digital platforms Payments Instant Lending 8
Slide 9: Sustainability is embedded throughout our business
Sustainability is embedded throughout our business Sustainability Direction focuses on two themes Progress in executing the Sustainability Direction • Reducing our own environmental impact versus 2014 Result 2015 6% 86% Reduction of CO2 Ambition 2020 20% 100% Renewable energy Accelerating To Financi
Slide 10: We are well-placed to generate profitable growth
We are well-placed to generate profitable growth Restructured to a pure bank Accelerating Think Forward • Insurance divestments • Move to Omnichannel in all completed markets • Fully repaid the Dutch State • 14 mln primary customers by on 7 November 2014 2020 and increase cross-buy • Included in b
Slide 11: Ambition 2020 - Financial Targets
Ambition 2020 - Financial Targets Ambition 2017 - Bank Ambition 2020 – Group* • CET1 ratio (%) > 10% > Prevailing fully-loaded requirements** Capital • Leverage ratio (%) ~ 4% > 4% • Underlying C/I ratio (%) 50-53% 50-52% Profitability • Underlying ROE (%) 10-13% Awaiting regulatory clarity (IFRS-EU
Slide 12: Digitalisation is accelerating
Digitalisation is accelerating 12
Slide 13: Trends in the banking landscape continue to evolve
Trends in the banking landscape continue to evolve Products have become commoditised; the only way to differentiate is through the experience Competitive Landscape Ability to leverage new People’s time is precious; technologies will define they don’t want to spend it Customer Technology future compe
Slide 14: Technology and digitalisation trends are moving even faster…
Technology and digitalisation trends are moving even faster… Share of mobile contacts growing fast Use of digital channels is consistent across our markets Based on all ING retail contacts per channel % customers using assisted channels (2Q16) 45% 57% 50% 47% POL ROM 40% 40% 48% 51% 35% 4Q14 4Q15 2Q
Slide 15: …so we are creating an ecosystem that extends beyond banking…
…so we are creating an ecosystem that extends beyond banking… Clear & Easy Anytime, Anywhere We reduce complexity in We provide the go-to place for products, processes and all financial needs, and we will services, empowering our be present on other platforms customers so they can spend to be where
Slide 16: …and will be part of the platforms of others
…and will be part of the platforms of others Being there where our customers are so they do not need to spend time looking for our solutions ? ? ? ? 16
Slide 17: But we need to accelerate on our path to convergence
But we need to accelerate on our path to convergence The winners we see in banking share key attributes… …but we need to get closer to our desired end-state ING has important strengths: Own the customer interaction • Strong brand The primary relationship will be all about contact • Pan-European pres
Slide 18: Convergence and standardisation
Convergence and standardisation 18
Slide 19: ING will invest EUR 800 mln in digital transformation to 2021
ING will invest EUR 800 mln in digital transformation to 2021 Converging and optimising operating models… …with a significant investment in digital Direct first EUR 800 mln to be invested in our digital High Cross-Buy with high transformation from 2016 to 2021 “Orange cross-buy Bridge” This investme
Slide 20: We have defined a pragmatic approach for convergence…
We have defined a pragmatic approach for convergence… Degree of standardisation End-state Intermediate state Today Time 2016-2021 20xx? • We strongly believe in converging towards one single model (our desired end-state) to provide the best client experience in all of our countries • However, implem
Slide 21: …and will move towards a globally scalable banking platform
…and will move towards a globally scalable banking platform Empowering people to stay a step ahead in life and in business The ING brand Creating a differentiating customer experience Market Leaders Challengers Germany Wholesale 1 “Orange Bridge” 2 “Model Bank” 3 “Welcome” 4 “WB TOM” (already runnin
Slide 22: We intend to create an integrated banking platform in Belgium and the Netherlands…
1 We intend to create an integrated banking platform in Belgium and the Netherlands… One integrated bank to serve > 11 mln customers… …providing a best-in-class customer experience All of our customers: One Value Proposition • Experience “one ING” across Belgium and the Netherlands • Can perform all
Slide 23: …to deliver a better customer experience at lower cost
…to deliver a better customer experience at lower cost Belgium is ready for the next transformation… …and needs to invest in a digital Omnichannel bank Customer • Shift in customer behaviour towards digital …as we adapt to changing customer interactions (in %) behaviour The Netherlands Belgium IT li
Slide 24: Standardised banking platform for the Challengers
2 Standardised banking platform for the Challengers What is Model Bank? What will Model Bank deliver? • A harmonised Retail strategy and capabilities, fully focused on increasing customer interaction, improving Model Bank customer satisfaction and increasing sales while allowing for local business m
Slide 25: Our Challenger model allows us to reach scale at smaller size
2 Our Challenger model allows us to reach scale at smaller size Cost benefits of realising scale are evident for our retail entities Model Bank offers better platform for our customers… Cost efficiency curve for ING retail entities (2012 – 2015) • All countries will have access to the product engine
Slide 26: Germany will take integrated approach to digital leadership
3 Germany will take integrated approach to digital leadership • Project Welcome digitises Germany’s banking platform and gives ING Germany room for business growth • This is achieved through digital investment and builds scalable growth capacity Innovations (“Wow” the customer) Technical Enablers Op
Slide 27: WB is continuing the TOM journey to deliver one model
4 WB is continuing the TOM journey to deliver one model WB TOM* is our overarching transformation programme… …which drives further cost savings by 2021 (in EUR mln) • Creating InsideBusiness, ING’s digital platform 350 375 405 415 415 empowering clients to do business throughout 203 260 20 50 60 60
Slide 28: Support Function TOMs lay the foundation for convergence
Support Function TOMs lay the foundation for convergence Laying the foundation for further convergence Global Data Global Process ING Modular Bank-wide Management Management Private Cloud Architecture Shared Services Support Function TOMs*: Finance, Risk, HR, Procurement, IT Estimated financial impa
Slide 29: Maintaining our business momentum
Maintaining our business momentum 29
Slide 30: Our focus on primary customer relationships drives value
Our focus on primary customer relationships drives value Targeting > 14 mln primary customers by 2020 (in mln) Primary customers …are 8x more >14 generate 2.5x loyal… 9.3 >10 more value… 8.4 8.9 7.9 …and increase …have 2x more their value by 3x cross-buy… during their first years at ING 2013 2014 20
Slide 31: Bank-wide initiatives will drive fee income and asset growth
Bank-wide initiatives will drive fee income and asset growth Distribution • Higher conversion of mobile traffic to increase cross-buy model • Wholesale Banking growth in General and Industry Lending Asset growth / • Acceleration of Consumer Lending re-pricing • Volume and margin growth for SME/MidCo
Slide 32: We also continue growth in higher margin lending
We also continue growth in higher margin lending Concentration in mortgages steadily reducing More diversified lending mix by geography EUR EUR EUR 551 bln EUR 551 bln 494 bln 9% 494 bln 11% +11.6% 10% +11.6% 11% 8% 10% 19% 21% 9% 15% 5% 6% 20% 22% 30% 35% 19% 28% 56% 51% 48% 58% 53% 46% 2013 1H16 A
Slide 33: Industry Lending, a strong engine for profitable growth
Industry Lending, a strong engine for profitable growth Lending growth in Industry Lending (in EUR bln) Industry Lending by segment (customer lending 1H16) 22% CAGR +11% 99 106 26% 82 74 72 EUR International Trade & Export Finance 106 bln Energy, Transport & Infrastructure Group 17% Specialised Fina
Slide 34: Consumer and SME Lending are making good progress
Consumer and SME Lending are making good progress Growth is broad-based… …while SME/Consumer is still fairly …and risk costs remain well within Split of Consumer & SME Lending small compared to overall book... our appetite (in EUR bln) 99 3% Consumer & SME lending risk costs 86 (in EUR mln) +15% 15%
Slide 35: Diversified lending policy is reflected in manageable risk costs
Diversified lending policy is reflected in manageable risk costs Lending credit outstandings as of 1H16 Wholesale Banking split Wholesale Banking split by region as of 1H16* by sector as of 1H16* 4% 1% 3% 9% Wholesale Banking 13% 12% 6% 2% Mortgages Netherlands 19% 5% 9% 35% Other lending Netherland
Slide 36: Digital transformation will bring further efficiency gains
Digital transformation will bring further efficiency gains Estimated impact of digital transformation programmes* C/I ratio to steadily fall towards 50-52% by 2020*** (in EUR mln) 57.8 56.2 55.1 55.9 900 C/I ratio target range 50-52% 55.5 700 53.8 52.5 52.1 550 2012 2013 2014 2015 2020 300 C/I ratio
Slide 37: Ambition 2020
Ambition 2020 37
Slide 38: Roadmap from current market positions
Roadmap from current market positions 2016 – 2020 roadmap Market Leaders Challengers & Growth Markets Wholesale Banking Ambition 2020 Focus on higher margin Income - lending and fees Up in countries where we Costs - grow, supported by efficiency programmes C/I ratio 50-52% Awaiting re
Slide 39: Ambition 2020 - Financial Targets
Ambition 2020 - Financial Targets Ambition 2017 - Bank Ambition 2020 – Group* • CET1 ratio (%) > 10% > Prevailing fully-loaded requirements** Capital • Leverage ratio (%) ~ 4% > 4% • Underlying C/I ratio (%) 50-53% 50-52% Profitability • Underlying ROE (%) 10-13% Awaiting regulatory clarity (IFRS-EU
Slide 40: 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