Ing Groep N.v. · EURONEXT:INGA
Ing Groep — Investor Day (April 2009)
16 slides from Ing Groep's investor day presentation, Apr 9, 2009
Slide 1: Dutch mortgages: Pro-actively managing risk
Dutch mortgages: Pro-actively managing risk ING Investor Day Ron van Kemenade Executive Director Products, ING Retail Rotterdam – 9 April 2009 www.ing.com
Slide 2: Dutch Mortgages: Key Points
Dutch Mortgages: Key Points • Dutch mortgage market: Less risky than perceived as four factors provide structural support • Fiscal system: tax-deductible interest payments • Supply constraint: structural shortage land and houses • Regulation: drives prudent underwriting and fixed-rate products • Soc
Slide 3: Dutch mortgage market: Less risky than perceived - four factors provide structural support
Dutch mortgage market: Less risky than perceived - four factors provide structural support Beneficial fiscal system Relatively high LTVs driven by fiscal system: tax deductible interest payments Balanced price growth and structural shortage Shortage of houses of available housing and land Regulation
Slide 4: Fiscal system drives high LTVs, which does not translate into high LGDs
Fiscal system drives high LTVs, which does not translate into high LGDs Beneficial fiscal treatment main driver high LTVs Average LTV at production • Mortgage application cost and interest payments are 120% deductible from the taxable income for 30 years 100% • Tax benefit: 34% - 52% of interest pay
Slide 5: Dutch housing market: balanced price growth and shortage of available housing
Dutch housing market: balanced price growth and shortage of available housing Supply of houses structurally below Home ownership, New properties per 1000 demand 2008 inhabitants, 2003-2007 • Home ownership is relatively low Spain Spain UK UK • Number of one-person households Belgium France increasin
Slide 6: Regulation drives prudent underwriting and fixed rate products
Regulation drives prudent underwriting and fixed rate products Prudent underwriting criteria • No subprime market: Code of Conduct limits borrowers’ debt/income ratio • National credit register check (Bureau Krediet Registratie) • Law allows lenders to claim income and assets of borrowers in arrears
Slide 7: Social security and personal savings provide buffers in case of loss of income
Social security and personal savings provide buffers in case of loss of income Unemployment does not necessarily Unemployment in 2008 imply loss of ability to pay the mortgage Spain 10.7% • Relatively low unemployment rate compared to other countries France 7.5% • Social security system providing Ge
Slide 8: Stable delinquency rates in ING Retail portfolio: Actual losses still below expected losses
Stable delinquency rates in ING Retail portfolio: Actual losses still below expected losses ING Group: 22% market share in ING Retail NL: 90 day+ delinquencies Dutch mortgages (outstanding) 1.5% 20% 16%: EUR 100 bln 1.0% 6% 0.5% 7% 0.0% Au 7 Au 8 D 07 D 08 O 7 O 8 Ap 7 Ap 8 Ju 7 Ju 8 06 Fe 7 8 0 0 0
Slide 9: Negative economic outlook challenges ING's mortgage business
Negative economic outlook challenges ING’s mortgage business Base case scenario Risk costs will increase GDP Unemployment • Part of the expected higher risk 2008 +2.1% 2008 3.9% has been taken into account in pricing and the increase of loan 2009 -3.3% 2009 6.6% loss provisioning in 2008 2010 +0.0%
Slide 10: Risk strategy concentrates on risk reduction in the portfolio and helping clients to meet mortgage payments
Risk strategy concentrates on risk reduction in the portfolio and helping clients to meet mortgage payments Risk strategy Risk modelling • Monitor economic developments • Identify customers with higher risk 1. Primarily profile concentrate on risk • Stress test the portfolio reduction in the portfol
Slide 11: Risk modelling enables early identification of customers with higher risk profile
Risk modelling enables early identification of customers with higher risk profile • Primary risk is the Portfolio segmentation customer defaulting (PD or subject risk); LTV subsequent risk is that the property is < 90% > 90% not worth what it was valued at (LGD or object risk) Capacity Utilization <
Slide 12: Stress testing the portfolio indicates risks are manageable
Stress testing the portfolio indicates risks are manageable Stress testing ING Bank’s mortgages: risk costs (in EUR mln)* Object risk: LGD** Severe crisis 2010 House prices 10% PD: 5.4% LGD: 7.8% 280-330 mln Unemployment 10.0%, 2009: -15.5% House Prices -17.9% 2010: - 2.4% 8% Base scenario 2010 2009
Slide 13: ING Retail is proactively managing risk
ING Retail is proactively managing risk Reducing inflow customers with higher Integrated program to improve risk profile portfolio management results in: • ING Retail has managed to limit the • Updated information of share of customers with a higher risk customers in portfolio: profile in new mortga
Slide 14: Helping customers to meet mortgage payments to retain customers and avoid losses
Helping customers to meet mortgage payments to retain customers and avoid losses ING Retail helps customers Segmented approach to delinquencies to pay on time • For clients with significant debt-servicing capacity: • Swift and gradually stronger signals to Measures to retain customers in their house
Slide 15: Dutch Mortgages: Key Points
Dutch Mortgages: Key Points • Dutch mortgage market: Less risky than perceived as four factors provide structural support • Fiscal system: tax-deductible interest payments • Supply constraint: structural shortage land and houses • Regulation: drives prudent underwriting and fixed-rate products • Soc
Slide 16: Forward-looking statements disclaimer
Certain of the statements contained herein are statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ ma