Ing Groep N.v. · EURONEXT:INGA
Ing Groep — ING Group — Q1 2018 Earnings Presentation
33 slides from Ing Groep's earnings presentation, May 9, 2018
Slide 1: First quarter 2018 Results
First quarter 2018 Results ING 1Q18 net profit of €1,225 million Ralph Hamers, CEO ING Group Amsterdam • 9 May 2018
Slide 2: Key points
Key points • ING posted 1Q18 net profit of €1,225 mln, up 7.2% on 1Q17 • Primary customers increased by 170,000 to 11.2 mln with Australia contributing strongly to the quarterly growth • We recorded net core lending growth of €12.3 bln in the quarter; net interest margin at 152 bps • Expenses came d
Slide 3: Our focus on primary customers and digital drives value
Our focus on primary customers and digital drives value Target to reach 14 mln primary customers* by 2020 Core lending Customer deposits 1Q18 net growth 1Q18 net growth CAGR +9.5% >14 9.2 10.1 11.1 11.2 € +12.3 bln € +2.4 bln Net promoter scores (NPS) # of digital interactions** 2015 2016 2017 1Q18
Slide 4: Innovative, clear and easy products and services to create the go-to digital platform
Innovative, clear and easy products and services in order to create the go-to digital platform We innovate ourselves… …and we partner with (fin)techs Yolt passed 250k user mark Blockchain-based trade finance Robo advice partnership Acquisition of leading payment services provider Peer-to-peer paymen
Slide 5: Strong start of the year for sustainable finance
Strong start of the year for sustainable finance Responsible Finance portfolio (year-end 2017) Building our reputation as leading green bond house ING led 8 green bonds for clients in 1Q18 including: € bln % of WB lending • Joint bookrunner on the green bond debut of the Kingdom of Belgium, a Climat
Slide 6: ING Group financial ambitions
ING Group financial ambitions Actual 2017 Actual 1Q18 Financial ambitions ~13.5%** • CET1 ratio (%) 14.5%* 14.3%* (Basel IV) Capital • Leverage ratio (%) 4.7% 4.4% >4% • Underlying C/I ratio (%)*** 55.5% 55.7% 50-52% (by 2020) Profitability • Underlying ROE (%)*** 10.2% 10.3% 10-12% (IFRS-EU Equity)
Slide 7: 1Q18 results
1Q18 results 7
Slide 8: Solid pre-tax result despite seasonally high regulatory costs
Solid pre-tax result despite seasonally high regulatory costs Underlying pre-tax result (in € mln) Net interest income excl. Financial Markets (in € mln) +2.1% +1.1% 1,992 1,995 3,383 3,340 1,686 3,263 3,294 3,299 1,652 1,560 91 8 -35 1Q17 2Q17 3Q17 4Q17 1Q18 1Q17 2Q17 3Q17 4Q17 1Q18 Impact ending s
Slide 9: NIM continues to be at healthy levels
NIM continues to be at healthy levels Net interest margin down quarter-on-quarter… (in bps) …as volatile positive impacts in 4Q17 largely reversed 157 158 158 -3 152 154 -2 152 152 -1 152 153 154 152 151 1Q17 2Q17 3Q17 4Q17 1Q18 4Q17 Financial Impact Other 1Q18 Markets ending hedge NIM NIM (4-quarte
Slide 10: Core lending growth in all franchises
Core lending growth in all franchises Customer lending ING Group 1Q18 (in € bln) Core lending businesses: €12.3 bln 1.6 1.1 -0.7 0.1 -4.3 4.4 578.2 2.0 2.2 0.7 570.7 0.3 01/01/2018* Retail Retail Retail Retail WB Industry WB General WB Other** Lease run- Bank FX / 31/03/18 NL Belgium Germany Other L
Slide 11: Fee income growth in C&G; FM impacted by lower client activity
Fee income growth in C&G; FM impacted by lower client activity Net commission income (in € mln) Underlying income Financial Markets* (in € mln) 682 714 643 674 661 280 297 321 323 252 279 263 251 257 227 138 154 151 157 149 232 257 144 55 153 265 265 240 238 250 172 89 107 105 66 1Q17 2Q17 3Q17 4Q17
Slide 12: Primary customer focus drives value in Retail Other C&G
Primary customer focus drives value in Retail Other C&G Strong customer growth Our value proposition speaks for Double digit growth in NII and fees (in mln) itself... (in € mln) 18.5 +13.0% 668 #1 NPS rank in 5 out 17.2 7.9% 591 of 8 Other C&G countries 4.0 +16.5% 4.6 91 +13.2% 103 Introduced instan
Slide 13: Australia delivering on Think Forward priorities
Australia delivering on Think Forward priorities NPS aided by digital focus and Primary customers 1Q18 customer acquisition by expanded product range (in thousands) product 1,918 1,962 #1 NPS Score in Australia 1,731 1,794 1,860 473 65% 26% 7%2% (+22 points vs. best competitor) 410 368 315 Pay & Sav
Slide 14: Operating expenses excl. regulatory costs normalised in 1Q18
Operating expenses excl. regulatory costs normalised in 1Q18 Underlying operating expenses (in € mln) Regulatory costs (in € mln) 474 493 264 2,242 2,354 2,137 2,195 2,193 69 94 1Q17 2Q17 3Q17 4Q17 1Q18 1Q 2Q 3Q 4Q Expenses excl. regulatory costs Regulatory costs 2017 2018 • Compared to 4Q17, which
Slide 15: Risk costs remained low; new NPL metric introduced under IFRS 9
Risk costs remained low; new NPL metric introduced under IFRS 9 Risk costs (in € mln) Stage 3 ratio* 229 2.4% 2.3% 2.3% 190 124 2.1% 2.1% 133 135 133 68 2.0% 2.0% 46 85 1.9% 1.9% 35 1.8% 45 90 62 1.8% 68 71 1.9% 1.9% 1.7% 36 1.8% 1.8% 1.8% 13 28 27 47 1.7% 17 12 5 -4 -22 -20 1Q17 2Q17 3Q17 4Q17 1 Ja
Slide 16: ING Group CET1 ratio at 14.3% including IFRS 9 impact
ING Group CET1 ratio at 14.3% including IFRS 9 impact ING Group fully loaded CET1 ratio development* 14.7% -0.2% 14.5% 0.1% -0.1% -0.2% -0.1% 14.3% ~13.5% 11.8% 4Q17 IFRS 9 1 Jan. 2018 Profit added Payvision Credit RWA & Operational & 1Q18 Basel IV CET1 CET1 ratio adoption CET1 ratio to CET1** acqui
Slide 17: Wrap up
Wrap up 17
Slide 18: Wrap up
Wrap up • ING posted 1Q18 net profit of €1,225 mln, up 7.2% on 1Q17 • Primary customers increased by 170,000 to 11.2 mln with Australia contributing strongly to the quarterly growth • We recorded net core lending growth of €12.3 bln in the quarter; net interest margin at 152 bps • Expenses came down
Slide 19: Appendix
Appendix 19
Slide 20: Solid 1Q18 result; volatile items swing to positive in the quarter
Solid 1Q18 result; volatile items swing to positive in the quarter Underlying pre-tax result Volatile items and regulatory costs Pre-tax result excl. volatile items (in € mln) (in € mln) and regulatory costs (in € mln) 1Q17 2Q17 3Q17 4Q17 1Q18 2,125 1,992 1,995 2,090 2,087 1,988 97 CVA/DVA 30 -42 -1
Slide 21: Potential for further core savings rate adjustments limited
Potential for further core savings rate adjustments limited Only few savings rate adjustments since year-end… …while we have other levers to stabilise NIM • In 1Q18, we only reduced core savings rates in Australia • Continue growth in higher margin lending without (-20 bps) changing our risk appetit
Slide 22: Group CET1 ratio at 14.3% and underlying ROE at 10.3%
Group CET1 ratio at 14.3% and underlying ROE at 10.3% Group fully loaded CET1 ratio development during 1Q18 Group underlying ROE calculation in 1Q18 (amounts in € bln and %) (in € mln) Capital RWA Ratio Change As of 31 March 2018 Actuals 31 December 2017 45.5 309.9 14.7% IFRS-EU shareholders’ equity
Slide 23: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 6% 3% 1% 15% 28% 17% 36% 43% €646 4% €412 €234 bln bln bln 64% 17% 8% 22% 9% 13% 14% Retail Banking Mortgages Netherlands Structured Finance Wholesale Banking Other lending Netherlands Real Estate
Slide 24: Granular Wholesale Banking lending credit outstandings by geography and sector
Granular Wholesale Banking lending credit outstandings by geography and sector Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S Wholesale Banking (1Q18)* Lending Credit O/S Wholesale Banking (1Q18)* 1% NL 8% 3% 2% Builders & Contractors 12% 6% 19% Belux 10% Cent
Slide 25: Detailed stage 3 / NPL disclosure on selected lending portfolios
Detailed stage 3 / NPL disclosure on selected lending portfolios Selected lending portfolios (in € mln) Lending credit Stage 3 ratio Lending credit NPL ratio Lending credit NPL ratio O/S 1Q18 1Q18 O/S 4Q17 4Q17 O/S 1Q17 1Q17 Wholesale Banking 234,201 1.8% 232,521 2.1% 234,175 2.3% Industry Lending 1
Slide 26: IFRS 9
IFRS 9 26
Slide 27: Change in impairment methodology due to IFRS 9
Change in impairment methodology due to IFRS 9 • ING’s Expected Credit Loss (ECL) model, which is probability-weighted, reflects three macroeconomic scenarios via a baseline, an up and a down scenario • In the baseline scenario, the use of external consensus forecasts for economic variables (unemplo
Slide 28: Key macro-economic parameters
Key macro-economic parameters Main macro-economic forecasts (averages 2018-2020) Baseline (60%) Up (20%) Down (20%) GDP (YoY %-change) Netherlands 2.0 3.6 0.4 Belgium 1.6 2.4 0.5 Germany 1.9 3.4 0.2 US 2.3 4.0 0.5 Unemployment (%) Netherlands 4.2 2.9 6.2 Belgium 6.8 5.6 8.1 Germany 3.6 2.3 4.9 US 3.
Slide 29: Three-stage approach to measure expected credit losses
Three-stage approach to measure expected credit losses Lending credit outstandings* (in € bln) Loan loss provisions** (in € bln) 1 January 31 March QoQ 1 January 31 March QoQ 2018 2018 change 2018 2018 change Total 643.7 646.1 0.4% Total 5.4 5.2 -4.4% Of which Stage 2 44.3 43.7 -1.4% Of which Stage
Slide 30: Major macroeconomic outlook change will cause P&L volatility
Major macroeconomic outlook change will cause P&L volatility Change in outlook Portfolio effects Dutch GDP: Consensus forecast vs. observed • The current benign macroeconomic • The impact will differ per portfolio, outlook leads to below average depending on e.g. observed / 5% expectations for PDs a
Slide 31: Classification & measurement
Classification & measurement Is the financial asset held to Is the objective of ING’s No No achieve an objective by both Business business model to hold the collecting contractual cash Model financial assets to collect flows and selling financial contractual cash flows? assets? Yes Yes No Fair Value
Slide 32: Financial impact on capital at transition
Financial impact on capital at transition Impact (net of tax) of adopting IFRS 9 on 1 January 2018 IFRS 9 impact on capital on Impact on shareholders’ Impact on FL CET1 ratio 1 January 2018 equity (in € bln) (in %-point) • IFRS 9 impacts capital as a result Loan loss provisions1 -0.6 of the transiti
Slide 33: Important legal information
Important legal information Projects related to the integration of Record Bank in Belgium are still subject to regulatory approval. 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 f