Ing Groep N.v. · EURONEXT:INGA
Ing Groep — ING Group — Q3 2016 Earnings Presentation
34 slides from Ing Groep's earnings presentation, Nov 3, 2016
Slide 1: Third quarter 2016 Results
Third quarter 2016 Results ING posts 3Q16 underlying net profit of EUR 1,336 million Ralph Hamers, CEO ING Group Amsterdam • 3 November 2016
Slide 2: Key points
Key points • ING Bank recorded underlying 3Q16 net profit of EUR 1,336 million • Strong results boosted by steady growth in primary customers (> 400,000 year-to-date), higher net interest income and a relatively low level of risk costs • ING Group fully-loaded CET1 ratio rose to 13.5%; interim profi
Slide 3: Strong results deliver > 11% Bank ROE over first nine months
Strong results deliver > 11% Bank ROE over first nine months Underlying net result ING Bank (in EUR mln) Underlying ROE ING Bank within target range +5.8% 11.3% 4,219 10.8% 10-13% 3,595 9.9% 3,424 3,397 9.0% 3,155 2,450 7.0% 12.6% 11.4% 11.6% 10.0% 10% 2012 2013 2014 2015 9M15 9M16 2012 2013 2014 20
Slide 4: Healthy income progression on higher NII and commissions…
Healthy income progression on higher NII and commissions… Underlying income excl. CVA/DVA Underlying income split by type Core lending growth (in EUR bln) (in EUR mln) (in EUR bln) 9M15 9M16 YoY % CAGR +3.0% +6.7% 16.3 Interest 15.6 9,418 9,899 +5.1% 15.0 15.2 result 25.6 13.1 21.7 12.3 Commission
Slide 5: …as well as stable expense base and low risk costs
…as well as stable expense base and low risk costs Underlying operating expenses Risk costs (in EUR bln) (in EUR bln and bps of average RWA) Underlying cost/income ratio** 57.8% 83 56.2% 55.9% 74 55.1% 54.2% 55 55.5% 8.3 8.2 8.2 8.5 44 53.8% 6.4 6.5 2.3 35 52.5% 2.1 52.1% 1.6 1.3 0.8 49.3% 2012 2013
Slide 6: Challengers & Growth Markets drive income; Benelux flat
Challengers & Growth Markets drive income; Benelux flat 2016-2020 roadmap Underlying income split by segment (in EUR mln) 9M15 9M16 YoY % Retail Benelux 5,258 5,233 -0.5% Retail Challengers 3,207 3,592 +12.0% & Growth Markets Wholesale Banking 4,084 4,214 +3.2% excl. CVA/DVA • The persistent low in
Slide 7: ING to invest EUR 800 mln in digital transformation…
ING to invest EUR 800 mln in digital transformation… 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 investment will a
Slide 8: …which will bring further efficiency gains
…which will bring further efficiency gains Estimated impact of digital transformation programmes (in EUR mln) Cost/income ratio to fall towards 50-52% by 2020** 900 57.8% 56.2% 55.9% 55.1% Cost/income ratio 700 target range 550 55.5% 50-52% 53.8% 52.5% 52.1% 300 100 2012 2013 2014 2015 Ambition 2020
Slide 9: 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: >14 • Generate 2.5x more value >10 • Are 8x more loyal 9.0 9.4 7.9 8.4 • Have 2x more cross-buy • Increase their value by 3x during their first years at ING 2013 2014 201
Slide 10: New innovations developed internally and with fintechs
New innovations developed internally and with fintechs Yolt Money Management - UK Twyp Cash – Spain We are working with > 65 fintechs • In-house accelerators in the Netherlands and Belgium • Fintech partnerships ING Virtual Cash Management mPOS – Romania • ING is one of the main sponsors of a new fi
Slide 11: Sustainability is embedded throughout our business
Sustainability is embedded throughout our business Sustainable Transitions Financed* Main Sustainability Themes (in EUR bln) Recognition • Energy Transition 35.0 Ranked 1st and • Circular Economy 27.8 Industry Leader of • Water 23.8 395 listed banks by 19.5 Sustainalytics in August 2016 Sustainable
Slide 12: 3Q16 results
3Q16 results 12
Slide 13: Strong third-quarter results reflecting NII growth
Strong third-quarter results reflecting NII growth Underlying pre-tax result ING Bank (in EUR mln) Net interest income excl. Financial Markets (in EUR mln) 2,009 3,247 1,878 200 3,191 1,495 3,124 3,074 1,202 3,040 3,049 1,186 3,011 3,007 2,932 1,808 3Q15 4Q15 1Q16 2Q16 3Q16 3Q14 4Q14 1Q15 2Q15 3Q15
Slide 14: Net interest margin up from 2Q16
Net interest margin up from 2Q16 Business segment contribution to NIM (in bps) NIM trend reflects volatility in FM interest result (in bps) 153 153 155 +3 155 151 150 +2 150 149 147 150 147 149 151 150 146 146 147 148 147 143 2Q16 Retail Banking Financial 3Q16 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16
Slide 15: Our core lending franchises grew by EUR 3.6 bln in 3Q16
Our core lending franchises grew by EUR 3.6 bln in 3Q16 Customer lending ING Bank 3Q16 (in EUR bln) Core lending businesses: EUR 3.6 bln 1.3 0.1 -0.3 1.6 554.9 -0.9 1.7 -0.5 1.2 551.0 -1.6 1.2 30/06/16 Retail NL Retail Retail Retail WB IL* WB GL&TS* WB Other* Lease run- Bank FX / Other 30/09/16 Belg
Slide 16: Robust commission income driven by C&G countries
Robust commission income driven by C&G countries Commission income* remaining roughly flat Bank-wide initiatives to drive fee income (in EUR mln) • Wholesale Banking growth in Industry Lending and General Lending 607 607 610 605 524 fees • Acceleration of Consumer Lending 251 251 273 244 • Volume gr
Slide 17: Underlying operating expenses remained stable
Underlying operating expenses remained stable Underlying operating expenses Regulatory costs skewed to first and fourth quarters* (in EUR mln) (in EUR mln) 496 279 260 174 2,141 2,139 2,140 2,157 2,155 105 61 75 65 3Q15 4Q15 1Q16 2Q16 3Q16 1Q 2Q 3Q 4Q Expenses Regulatory costs Redundancy costs 2015
Slide 18: Risk environment benign; NPLs keep trending down
Risk environment benign; NPLs keep trending down Risk costs (in EUR mln) NPL ratio 2015: EUR 1,347 mln 9M16: EUR 836 mln 3.3% 432 3.0% 353 2.9% 173 301 307 111 261 265 265 2.6% 2.6% 97 123 2.8% 2.4% 59 62 97 97 117 2.3% 48 40 80 2.5% 2.2% 66 77 74 67 153 16 65 57 2.2% 140 32 51 82 59 49 50 43 2.1% 1
Slide 19: Challengers & Growth Markets show strong results progression
Challengers & Growth Markets show strong results progression Net interest income and net interest margin Commission income (in EUR mln) +11% +34% 1,149 1,140 1,203 1,079 1,096 27 155 163 166 186 139 3Q15 4Q15 1Q16 2Q16 3Q16 3Q15 4Q15 1Q16 2Q16 3Q16 NII (in EUR mln) NIM (in bps) Commission income One
Slide 20: Poland delivering on our Think Forward strategy
Poland delivering on our Think Forward strategy High customer satisfaction aided by Increasingly digital banking market Strong primary customer growth Omnichannel approach Channel usage (individual customers, in thousands) 19% CAGR +10% CAGR +5% #1 NPS Score in Poland 27% 32% 3,279 3,508 3,638 3,089
Slide 21: Capital position strengthened; ING Group to be resolution entity
Capital position strengthened; ING Group to be resolution entity ING Group 3Q16 fully-loaded capital ratios* 3.0% 18.5% 2.0% 13.1% 0.1% 0.3% 13.5% 2Q16 Group CET1 Equity stakes RWA & Other 3Q16 Group CET1 Additional Tier 1 Tier 2 3Q16 Total capital ratio • ING Group’s 3Q16 fully-loaded CET1 ratio ro
Slide 22: Ambition 2020 - Financial Targets
Ambition 2020 - Financial Targets Actual 9M16 - Group Ambition 2020 – Group* • CET1 ratio (%) 13.5% > Prevailing fully-loaded requirements** Capital • Leverage ratio (%) 4.4% > 4% • Underlying C/I ratio (%) 54.5% 50-52% Profitability • Underlying ROE (%) 9.8% Awaiting regulatory clarity (IFRS-EU Equ
Slide 23: Wrap up
Wrap up 23
Slide 24: Wrap up
Wrap up • ING Bank recorded underlying 3Q16 net profit of EUR 1,336 million • Strong results boosted by steady growth in primary customers (> 400,000 year-to-date), higher net interest income and a relatively low level of risk costs • ING Group fully-loaded CET1 ratio rose to 13.5%; interim profits
Slide 25: Appendix
Appendix 25
Slide 26: Solid third-quarter results with fewer one-off and volatile items
Solid third-quarter results with fewer one-off and volatile items Underlying pre-tax result ING Bank Volatile items and regulatory costs Pre-tax result excl. volatile items (in EUR mln) (in EUR mln) and regulatory costs (in EUR mln) 3Q15 4Q15 1Q16 2Q16 3Q16 2,009 1,878 1,897 1,919 CVA/DVA 40 -22 35
Slide 27: Robust quarterly results for both Retail and Wholesale Banking
Robust quarterly results for both Retail and Wholesale Banking Underlying pre-tax result Retail Banking (in EUR mln) Underlying pre-tax result Wholesale Banking excl. CVA/DVA (in EUR mln) 72 67 85 144 394 2 1,275 1,288 1,104 20 100 102 907 815 766 680 501 454 501 -2 3Q15 4Q15 1Q16 2Q16 3Q16 3Q15 4Q1
Slide 28: Group capital position strengthened further
Group capital position strengthened further Bank fully-loaded CET1 ratio development during 3Q16 (amounts in EUR bln and %) Capital RWA Ratio Change Actuals June 2016 38.8 317.0 12.2% Interim profit included in CET1* - - Equity stakes** 0.1 -1.0 +0.05% FX -0.1 -0.9 +0.02% RWA & Other*** 0.2 -4.6 +0.
Slide 29: We further reduced client savings rates to align with record low interest rates
We further reduced client savings rates to align with record low interest rates 3Q16 retail customer deposits, breakdown by segment* We further reduced savings rates in 3Q16 24% 30% • In September, we reduced savings rates by another 10 bps in the Netherlands following an earlier 10 bps reduction at
Slide 30: Lending credit outstandings ING Bank are well diversified
Lending credit outstandings ING Bank are well diversified ING Bank* Retail Banking* Wholesale Banking* 6% 7% 2% 14% 31% 13% 35% EUR 3% EUR EUR 43% 620 404 216 65% bln bln bln 16% 22% 9% 12% 9% 13% Retail Banking Mortgages Netherlands Structured Finance Wholesale Banking Other lending Netherlands Rea
Slide 31: Lending credit outstandings Wholesale Banking well diversified by geography and sector
Lending credit outstandings Wholesale Banking well diversified by geography and sector Loan portfolio is well diversified across geographies… …and sectors Lending Credit O/S Wholesale Banking (3Q16)* Lending Credit O/S Wholesale Banking (3Q16)* 1% NL 13% 3% Builders & Contractors 18% Belux 5% 7% 6%
Slide 32: Wholesale Banking NPL ratio continued to improve in 3Q16
Wholesale Banking NPL ratio continued to improve in 3Q16 Selected lending portfolios Lending credit NPL ratio Lending credit NPL ratio Lending credit NPL ratio O/S 3Q16 3Q16 O/S 2Q16 2Q16 O/S 3Q15 3Q15 Wholesale Banking 215,779 2.4% 214,059 2.5% 199,807 2.9% Industry Lending 121,257 2.4% 119,120 2.5
Slide 33: Lending to the Oil & Gas industry is well diversified
Lending to the Oil & Gas industry is well diversified Lending credit O/S In EUR bln In % • Trade-related exposure; short-term self-liquidating trade Trade and finance, generally for major trading companies, either pre- 13.2 42% Commodity Finance sold or price hedged, not exposing the Bank to oil pri
Slide 34: 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