Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Q3 2012 Earnings Presentation
38 slides from Ing Groep's earnings presentation, Nov 7, 2012
Slide 1: Third Quarter 2012 Results
Third Quarter 2012 Results ING posts 3Q12 underlying net profit EUR 719 mln Jan Hommen CEO Amsterdam - 7 November 2012 www.ing.com
Slide 2: Key points
Key points • ING is maintaining momentum in restructuring despite challenging markets • ING Group posted an underlying net profit of EUR 719 mln in 3Q 2012 • ING Bank underlying profit before tax increased to EUR 1,021 mln, supported by EUR 323 mln gain on sale of Capital One equity stake, which lar
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 0.4 0.6 • Separation Bank/Insurance 2.0 • Sell ING Direct USA 5.0 10.0 • Sell Insurance Latin America 1.0 7.0 • Insurance/IM Asia Underway 2.0 • Insurance/IM US S-1 to be fi
Slide 4: Sale of Asia Insurance & IM making progress
Sale of Asia Insurance & IM making progress • In October, ING reached agreements on the sale of its insurance units in Hong Kong, Macau and Thailand, its insurance operations in Malaysia, and its 33.3% stake in China Merchants Fund (CMF) • The process for the remaining businesses is ongoing and furt
Slide 5: Closing of Asian transactions may trigger a charge related to Japanese closed block VA
Closing of Asian transactions may trigger a charge related to Japanese closed block VA • ING continues to discuss various options for Key figures Japan ING Life Japan including its closed block VA 3Q12 (in EUR bln) • The closing of sales of ING’s other Asian Reserve insurance units may trigger a cha
Slide 6: ING U.S. takes another step towards planned IPO
ING U.S. takes another step towards planned IPO 2011 2012 2013 US Management VA balance USD 5.0 bln USD 850 mln Team sheet credit facility Debt issued strengthened improved Registration US GAAP Statement to be financials published Filed ING U.S. registration statement to be filed with the SEC in con
Slide 7: ING U.S. has made progress to a standalone capital structure
ING U.S. has made progress to a standalone capital structure US capitalisation has improved US has made progress towards standalone Estimated RBC ratio in % capital position 516 Debt to capital ratio 488 426 449 US GAAP – 3Q12 (USD bln) 362 Total Debt 3.9 Shareholders’ Equity excluding AOCI and NCI
Slide 8: ING Insurance/IM Europe preparing for base case IPO
ING Insurance/IM Europe preparing for base case IPO 2011 2012 2013 EurAsia management Separate and legal structure divestment of Asia aligned announced Announcements Management Board EurAsia Operational disentanglement of EurAsia and US Stepping up efforts to Streamlining organisation Insurance/IM o
Slide 9: Accelerating transformation of Nationale-Nederlanden
Accelerating transformation of Nationale-Nederlanden Insurance Benelux has taken steps to improve Accelerated plan NN will reduce costs and efficiency streamline organisation Insurance Benelux Total Administrative Expenses • Launch new Defined Contribution (DC) (Life + Non-Life, in EUR mln) pension
Slide 10: Transformation to reduce costs by EUR 200 mln
Transformation to reduce costs by EUR 200 mln Financial impact (in EUR) Cost measures Headcount reduction (2013-14): • In addition to the transformation programme at • NN transformation programme 1,075 FTE NN, Insurance Europe will delayer support functions to reduce overlap and streamline the • Del
Slide 11: ING Bank delivering on strategic priorities
ING Bank delivering on strategic priorities • Focus on markets where we have a long-term sustainable position Sharpen EUR 2.4 bln • Sale of ING Direct Canada and ING Direct UK focus capital release • Sale of Capital One stake • EUR 4.9 bln of bonds sold in 9M2012 at a loss of EUR 475 mln, but EUR 6
Slide 12: Commercial Banking streamlining organisation
Commercial Banking streamlining organisation • Commercial Banking conducted a strategic review of its business portfolio against the backdrop of increasing regulatory requirements and challenging operating conditions • As a result, ING has decided to accelerate the implementation of certain strategi
Slide 13: Third quarter 2012 results
Third quarter 2012 results Third Quarter 2012 Results 13
Slide 14: ING Group posted underlying net result of EUR 719 mln
ING Group posted underlying net result of EUR 719 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) 1,126 1,099 1,045 995 1,021 878 392 682 349 719 258 304 238 543 469 229 44 -234 -1,513 -773 3Q11 4Q11 1Q12 2
Slide 15: ING Bank
ING Bank Third Quarter 2012 Results 15
Slide 16: ING Bank posted solid results
ING Bank posted solid results Bank results (in EUR mln) Addition to Underlying result Gross result + loan loss provisions = before tax 1,567 1,535 1,576 1,126 1,226 1,129 995 1,021 878 682 -348 -447 -441 -541 -555 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12 • Gross res
Slide 17: Adjusted gross result up 12.2% year-on-year
Adjusted gross result up 12.2% year-on-year Gross result (in EUR mln) 3Q2012 3Q2011 % Change 2Q2012 % Change Reported gross result 1,576 1,226 28.5% 1,535 2.7% Impairments Impairments on Greek government bonds 0 -267 0 Other impairments on debt / equity securities -10 -44 -16 RED development project
Slide 18: Net interest margin increased to 133 bps
Net interest margin increased to 133 bps Interest margin by quarter (in bps) Financial markets impact on NIM Q-on-Q (in bps) 3,114 4 Financial Markets 2,995 3,052 2,953 3,060 2 contribution to 136 1 NIM can be 133 132 volatile 126 133 -3 -4 3Q11 4Q11 1Q12 2Q12 3Q13 3Q11 4Q11 1Q12 2Q12 3Q12 Net inter
Slide 19: Operating expenses increased marginally by 0.5%
Operating expenses increased marginally by 0.5% Operating expenses (in EUR mln) Underlying cost/income ratio (%) 0.5% 70% 65% 38 58.7% 60% 2,269 2,235 2,237 55% 56.9% 2,225 2,154 50% 45% 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12 Reimbursement old DGS Belgium Cost/income ratio Cost/income rat
Slide 20: 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) 555 541 555 541 63 105 447 441 35 29 21 348 72 75 65 120 61 59 102 49 102 40 127 153 19 17 53 44 3Q11 4Q11 1Q12 2Q12 3Q12 2Q12
Slide 21: NPL ratio flat at 2.3%
NPL ratio flat at 2.3% ING Bank’s loan book (in %) NPL ratio 3Q12 2Q12 Residential mortgages 3%2% 6% - Netherlands 1.3 1.2 28% - Other 0.9 1.0 10% Commercial lending - Corporate loans 3.9 3.6 - Mid-corps/SMEs 4.6 4.5 13% - Structured Finance 2.2 2.4 - RE Finance 8.0 7.3 - Leasing 7.8 6.8 6% - Other
Slide 22: Risk costs Real Estate Finance remain elevated
Risk costs Real Estate Finance remain elevated Risk costs (in EUR mln) Real Estate Finance portfolio by country of residence 120 15% Netherlands 102 Americas 3% 4% Spain 48 45 EUR 52% Italy 40 5% 31 bln UK 8% Australia/Asia 13% Other 3Q11 4Q11 1Q12 2Q12 3Q12 Non-performing loans ratio (%) Risk costs
Slide 23: NPL ratio for Dutch mortgages increased slightly to 1.3%
NPL ratio for Dutch mortgages increased slightly to 1.3% Non-performing loans ratio (%) Risk costs (in EUR mln) 1.8 8 65 1.4 1.3 6 53 5.4 44 44 1.0 4 37 25 0.6 2 21 17 14 0.2 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 10 10 10 10 11 11 11 11 12 12 12 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 NPL Dutch Mo
Slide 24: Total Spanish exposure has further decreased as a result of de-risking
Total Spanish exposure has further decreased as a result of de-risking Spanish exposure reduced Reduction Spanish covered bonds due to bonds maturing (in EUR bln) (in EUR bln) 41.1 11.7 11.6 3.2 36.4 0.7 34.6 3.6 9.0 3.8 0.3 4.0 3.1 2.8 0.1 15.1 6.6 13.0 11.7 4.7 3.3 18.5 16.2 16.0 0.9 1Q12 2Q12 3Q1
Slide 25: ING has further strengthened its core Tier 1 ratio
ING has further strengthened its core Tier 1 ratio ING Bank core Tier 1 ratio (%) 0.5% 12.6% -0.5% 12.1% 12.1% 10.9% 11.1% 9.6% 4Q11 1Q12 2Q12 3Q12 ING Direct Pro-forma IAS 19R Pro-forma Canada and Basel 2.5 Basel 2.5 incl. UK IAS 19R IAS 19R will be implemented on 1 January 2013 • IAS 19R on pensio
Slide 26: Pro-forma Basel III Core Tier 1 ratio 10.9%
Pro-forma Basel III Core Tier 1 ratio 10.9% Impact Basel III (including IAS 19R) Basel III 3Q2012 (pro-forma*) • Timing of CRD IV implementation and In EUR bln Core Tier CT1 final form are uncertain 1 capital RWAs ratio • DNB consultative Paper indicates that 30 Sept. 2012 (including IAS 19R) 34.0 2
Slide 27: ING Insurance
ING Insurance Third Quarter 2012 Results 27
Slide 28: Insurance results under pressure
Insurance results under pressure Insurance result (in EUR mln) Operating Non-operating Underlying result result + impact = before tax 469 392 349 258 304 238 229 77 44 -75 -193 -234 -491 -1,863 -1,513 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12 • The operating result f
Slide 29: Investment margin down on de-risking and seasonality
Investment margin down on de-risking and seasonality Investment Margin (in EUR mln) Investment spread (in bps) Life GA 475 142 435 425 413 410 137 134 129 130 133 129 126 125 122 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12 Four-quarter rolling average One quarter stand-alone • The investment m
Slide 30: Technical margin significantly improved
Technical margin significantly improved Fees and premium-based revenues (in EUR mln) Technical margin (in EUR mln) 423 426 447 419 396 118 122 100 92 82 330 330 372 344 337 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12 Fees on AuM (incl. VA cost of guarantees) Premium-based revenues • Fees and p
Slide 31: Administrative expenses up slightly
Administrative expenses up slightly Life & IM administrative expenses (in EUR mln) Life & IM administrative expenses/operating income ratio (%) 658 638 627 612 608 48.9% 46.9% 47.6% 46.2% 44.4% 576 586 639 630 628 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12 Historic FX Constant FX • Life & IM
Slide 32: Europe impacted by de-risking and non-life results
Europe impacted by de-risking and non-life results Operating result (in EUR mln) Underlying result (in EUR mln) Sales (APE, in EUR mln) 57 47 106 36 541 101 87 35 29 34 75 37 6 48 85 10 19 53 43 185 184 20 127 122 140 -103 -98 -8 -111 97 111 108 88 68 -93 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12
Slide 33: Insurance US results up versus both 3Q11 and 2Q12
Insurance US results up versus both 3Q11 and 2Q12 Operating result (in EUR mln) Underlying result (in EUR mln) Sales (APE, in EUR mln) 195 188 168 151 149 398 82 131 113 548 92 99 469 474 417 451 67 191 145 60 55 56 60 85 105 39 -1 -5 0 4 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1
Slide 34: US Closed Block VA: Improved Reserve Adequacy
US Closed Block VA: Improved Reserve Adequacy Underlying result (in EUR mln) Estimated IFRS earnings sensitivities Equity Market Return 3Q12 2Q12 216 -25% 800 200 -27 -15% 450 150 -384 -348 -5% 50 50 +5% -350 -400 -1,368 +15% -750 -800 3Q11 4Q11 1Q12 2Q12 3Q12 +25% -1,050 -1,200 • 3Q12 results mainl
Slide 35: Insurance Asia continued to show strong results despite sales process
Insurance Asia continued to show strong results despite sales process Operating result (in EUR mln) Underlying result (in EUR mln) Sales (APE, in EUR mln) 520 431 392 356 364 248 216 156 168 154 160 170 133 134 116 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12 3Q11 4Q11 1Q12 2Q12 3Q12 • Operatin
Slide 36: Wrap up
Wrap up Third Quarter 2012 Results 36
Slide 37: Wrap up
Wrap up • ING is maintaining momentum in restructuring despite challenging markets • ING Group posted an underlying net profit of EUR 719 mln in 3Q 2012 • ING Bank underlying profit before tax increased to EUR 1,021 mln, supported by EUR 323 mln gain on sale of Capital One equity stake, which largel
Slide 38: 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