Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Q2 2012 Earnings Presentation
35 slides from Ing Groep's earnings presentation, Aug 8, 2012
Slide 1: Second Quarter 2012 Results
Second Quarter 2012 Results ING posts 2Q12 underlying net profit of EUR 1,045 million Jan Hommen CEO Amsterdam - 8 August 2012 www.ing.com
Slide 2: Key points
Key points • ING is maintaining strong momentum on restructuring • ING Bank is making good progress on balance sheet integration, and ING accelerated de-risking efforts given deterioration in the eurozone in 2Q12 • ING Group posted an underlying net profit of EUR 1,045 mln in a challenging economic
Slide 3: ING is maintaining momentum in restructuring
ING is maintaining momentum in restructuring Delivering on EC restructuring EUR 9 bln paid to the Dutch State Action 10 0.4 0.6 • Separation Bank/Insurance 2.0 5.0 • Sell ING Direct USA 5 10.0 • Sell Insurance Latin America 1.0 7.0 2.0 • Insurance/IM Asia Exploring sale 0 • Insurance/IM US Bas
Slide 4: Divestment of Asian Insurance & IM on track
Divestment of Asian Insurance & IM on track • The sales process for the Asian Insurance/IM businesses is on track and they are now classified as Held For Sale/Discontinued Operations under IFRS • Interest received for all units and divestment may take place through multiple transactions Continued st
Slide 5: ING US progressing towards planned IPO
ING US progressing towards planned IPO 2010 2011 2012 2013 Base case of a separate New US VA balance USD 5.0 bln USD 850 mln senior US IPO announced Management sheet credit facility unsecured debt issued Team strengthened GMWB interest Operational Outsourcing US GAAP financials rate risk hedged dise
Slide 6: Reviewing options for ING Direct Canada & UK
Reviewing options for ING Direct Canada & UK • As announced on 2 August, ING is reviewing strategic options for ING Direct Canada and ING Direct UK • ING Direct in Australia, Austria, France, Germany, Italy and Spain are not affected Canada In EUR bln 30 June # Customers (31/12/11) 1,798K UK Residen
Slide 7: Bank B/S reduced to EUR 900 bln through optimisation
Bank B/S reduced to EUR 900 bln through optimisation Change versus 1Q12 ~ EUR 900 bln Total Balance Sheet reduced to Other EUR 900 bln target level Other Cash and balances at Banks Banks Amount due to Banks central banks reduced by Assets Liabilities declined by EUR 10 bln EUR 30 bln at FV at FV Equ
Slide 8: EUR 31.0 bln Balance Sheet integration completed
EUR 31.0 bln Balance Sheet integration completed Balance Sheet integration progressing Recent initiatives • EUR 2.4 bln achieved in 2Q12 through transfer of 3.0 EUR 1.7 bln of Real Estate Finance assets and EUR 3.5 0.7 bln of Commercial 2.4 Banking lending assets from NL legal entity to funding 1.4
Slide 9: Spanish Bank exposure reduced by EUR 6.2 bln
Spanish Bank exposure reduced by EUR 6.2 bln in the four months period ended July Spanish exposure reduced (in EUR bln) Funding mismatch reduced to EUR 12.3 bln Spain: total assets outstanding minus local funding 41.1 3.2 36.4 27.5 0.7 34.9 23.3 3.6 3.8 3.7 19.6 0.3 3.1 0.2 2.9 13.8 12.3 15.1 13.0 1
Slide 10: Second quarter 2012 results
Second quarter 2012 results Second Quarter 2012 Results 10
Slide 11: ING Group posted underlying net result of EUR 1,045 mln
ING Group posted underlying net result of EUR 1,045 mln Bank underlying pre-tax result Insurance underlying pre-tax result ING Group underlying net result (in EUR mln) (in EUR mln) (in EUR mln) 565 1,271 1,145 1,126 1,099 995 1,045 878 392 349 304 682 258 543 472 469 229 -234 -1,514 -773 2Q11 3Q11 4
Slide 12: ING Bank
ING Bank Second Quarter 2012 Results 12
Slide 13: Bank results robust despite higher provisioning
Bank results robust despite higher provisioning Bank results (in EUR mln) Addition to Underlying result Gross result + loan loss provisions = before tax 1,567 1,535 1,449 1,145 1,126 1,226 1,129 995 878 -304 682 -348 -447 -441 -541 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q1
Slide 14: Second quarter results impacted by de-risking measures
Second quarter results impacted by de-risking measures Gross result (in EUR mln) 2Q2012 2Q2011 % Change 1Q2012 % Change Reported gross result 1,535 1,449 5.9% 1,567 -2.0% Impairments Impairments on Greek government bonds 0 -187 0 Other impairments on debt / equity securities -16 -14 -5 RED developme
Slide 15: Net interest result declined by 3.2% versus 1Q12
Net interest result declined by 3.2% versus 1Q12 Interest margin by quarter (in bps) Funding costs priced through in lending (in bps) 3,054 2,995 3,114 3,052 2,953 EUR FTP above swap per tenor Lending margins remained stable 138 133 136 132 while pricing in higher funding 126 01/10 07/10 01/11 07/11
Slide 16: Operating expenses down on both quarters
Operating expenses down on both quarters Operating expenses (in EUR mln) Underlying cost/income ratio (%) -3.6% 58.4% 2,269 2,214 2,225 2,235 56.2% 2,154 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 Cost/income ratio Cost/income ratio excl. market impacts & CVA/DVA • Cost control stepped up as
Slide 17: Risk costs increased as economy weakened
Risk costs increased as economy weakened Underlying additions to loan loss provisions Underlying additions to loan loss provisions (in EUR mln and bps avg RWA) (in EUR mln) 541 541 63 447 441 441 35 404 409 21 99 348 72 120 331 309 304 32 61 59 55 39 54 242 45 49 102 46 43 41 47 34 127 122 22 19 37
Slide 18: NPL ratio increased slightly to 2.3%
NPL ratio increased slightly to 2.3% ING Bank’s loan book (in %) NPL ratio 2Q12 1Q12 Residential mortgages 3%2% 6% - Netherlands 1.2 1.2 28% - Other 1.0 1.0 10% Commercial lending - Corporate loans 3.6 2.6 - Mid-corps/SMEs 4.5 4.4 13% - Structured Finance 2.4 2.5 - RE Finance 7.3 5.7 - Leasing 6.8 6
Slide 19: Strong increase of risk costs Real Estate Finance
Strong increase of risk costs Real Estate Finance Real Estate Finance portfolio by country of residence Risk costs (in EUR mln) 16% Netherlands 120 Americas 3% Spain 4% 51% Italy 5% 48 48 45 UK 40 8% Australia/Asia Other 13% 2Q11 3Q11 4Q11 1Q12 2Q12 Non-performing loans ratio (%) Risk costs expected
Slide 20: The NPL ratio for Dutch mortgages stable at 1.2%
The NPL ratio for Dutch mortgages stable at 1.2% Non-performing loans ratio (%) Risk costs (in EUR mln) 3.0 65 53 2.0 44 37 1.2 22 25 1.0 21 14 17 0.0 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Mortgage type (new production, 2Q2012) Risk costs expected
Slide 21: Spanish lending portfolio is holding up well
Spanish lending portfolio is holding up well Bank lending to Spain 2Q2012 (in EUR bln) Lending decreased by 12% 1Q12 2Q12 2Q12 Coverage • Lending reduced by EUR 2.3 bln or 12% versus 1Q12, O/S O/S NPL% ratio driven by Financial Institutions Lending, Business Retail mortgages 8.7 8.8 0.7% 19% Lending
Slide 22: Core Tier 1 ratio rose to 11.1% despite higher RWAs
Core Tier 1 ratio rose to 11.1% despite higher RWAs ING Bank core Tier 1 ratio (%) RWA, adjusted for divestments (in EUR bln) 10.9% 11.1% 297.2 299.6 303.4 9.4% 9.6% 9.6% 280.7 284.5 14.1 10.9 12.0 4.2 4.8 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 Total RWA Market RWA Further strengthening o
Slide 23: Pro-forma Basel III Core Tier 1 ratio 10%
Pro-forma Basel III Core Tier 1 ratio 10% Impact Basel III (excluding IAS 19R) Basel III IR day • The impact of Basel III is manageable (3Q11 data) 2Q12 • On a like-for-like basis, the impact on RWAs Risk-weighted assets (Basel 2.5) 331,200 303,400 is little changed (higher impact in bps in 2013 ref
Slide 24: ING Bank has strong funding position
ING Bank has strong funding position Retail Banking net inflow in funds entrusted Conservative funding mix per 30 June 2012 (%) (in EUR bln) 6 Retail deposits 12 7 2 Corporate deposits Public debt 8 44 22 Subordinated debt Interbank 4 Repo 0 19 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 09 09 09 09 1
Slide 25: ING Insurance
ING Insurance Second Quarter 2012 Results 25
Slide 26: Insurance results improved from the first quarter
Insurance results improved from the first quarter Insurance result (in EUR mln) Operating Non-operating Underlying result result + impact = before tax 565 472 469 392 349 258 304 229 77 -93 -75 -234 -492 -1,863 -1,514 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 • Both
Slide 27: Investment spread remained resilient
Investment spread remained resilient Life general account invested assets (in EUR bln) Investment spread (in bps) Life GA 145 130 133 131 136 142 125 137 134 129 133 129 126 125 119 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 Four-quarter rolling average One quarter stand-alone • Investment sp
Slide 28: Technical margin remains under pressure
Technical margin remains under pressure Fees and premium-based revenues (in EUR mln) Technical margin (in EUR mln) 444 418 421 70 414 391 344 152 333 330 330 372 100 118 82 92 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 Fees on AuM (incl. VA cost of guarantees) Non-recurring Premium-based reve
Slide 29: Administrative expenses flat excluding FX
Administrative expenses flat excluding FX Life & IM administrative expenses (in EUR mln) Life & IM administrative expenses/operating income ratio (%) 625 609 644 624 603 48.7% 46.0% 46.7% 44.2% 576 571 581 633 625 39.4% 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 Historic FX Constant FX • Admi
Slide 30: Operating result in Europe improved from 1Q12
Operating result in Europe improved from 1Q12 Operating result (in EUR mln) Underlying result (in EUR mln) Sales (APE, in EUR mln) 67 106 66 83 87 541 101 57 75 47 282 36 35 29 19 318 37 34 53 6 -42 119 127 111 185 184 -103 -98 -8 -111 88 97 122 140 -93 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2
Slide 31: US benefited from strong investment margin
US benefited from strong investment margin Operating result (in EUR mln) Underlying result (in EUR mln) Sales (APE, in EUR mln) 188 154 168 151 149 82 81 244 548 92 99 113 469 191 411 417 451 67 145 105 79 85 60 39 55 56 -6 -1 -5 0 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q1
Slide 32: US Closed Block VA: Focus on Capital Protection
US Closed Block VA: Focus on Capital Protection Regulatory capital sensitivities (EUR mln) Equity Impact • Regulatory capital is well protected across Market Before Hedge Impact After Return Hedging Result Hedging a broad range of equity market scenarios -25% -2,750 2,500 -250 • The focus on capital
Slide 33: Wrap up
Wrap up Second Quarter 2012 Results 33
Slide 34: Wrap up
Wrap up • ING is maintaining strong momentum on restructuring • ING Bank is making good progress on balance sheet integration, and ING accelerated de-risking efforts given deterioration in the eurozone in 2Q12 • ING Group posted an underlying net profit of EUR 1,045 mln in a challenging economic env
Slide 35: 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