Ing Groep N.v. · EURONEXT:INGA
Ing Groep — ING Group — FY2016 Earnings Presentation
34 slides from Ing Groep's earnings presentation, Feb 2, 2017
Slide 1: Full Year 2016 Results
Full Year 2016 Results ING posts 2016 underlying net profit of EUR 4,976 million Ralph Hamers, CEO ING Group Amsterdam • 2 February 2017
Slide 2: Key points
Key points • ING recorded 2016 underlying net profit of EUR 4,976 mln, up 17.9% from 2015 • Strong commercial momentum on the back of an increase in primary customers (> 700,000 during 2016), robust business growth, and continued decline in risk costs • 4Q16 ING net result (EUR 750 mln) impacted by
Slide 3: Our focus on primary customer relationships drives value
Our focus on primary customer relationships drives value ING currently serves ~36 mln retail customers (in mln) Targeting > 14 mln primary customers by 2020 (in mln) 34.5 35.8 >14 31.8 33.1 9.7 >10 8.4 9.0 7.9 2013 2014 2015 2016 2013 2014 2015 2016 Ambition Ambition 2017 2020 ING Bank core lending
Slide 4: Think Forward strategy delivered strong results in 2016
Think Forward strategy delivered strong results in 2016… Underlying net result ING Bank (in EUR mln) Underlying ROE ING Bank within target range (in %) CAGR +16.4% 4,976 11.6% 10.8% 10-13% 4,219 9.9% 12.6% 9.0% 3,424 11.4% 11.6% 3,155 10.0% 10.0% 2013 2014 2015 2016 2013 2014 2015 2016 ROE Ambition
Slide 5: Supported by a higher net interest result and fee income
…supported by a higher net interest result and fee income… Underlying income excl. CVA/DVA Net interest result excl. FM Underlying income split by type (in EUR bln) (in EUR bln) (in EUR mln) 2015 2016 CAGR +4.8% CAGR +4.2% Net interest 12,590 13,241 +5.2% 17.5 result 16.3 15.2 15.6 12.8 12.2 Commiss
Slide 6: Stable expenses and materially lower risk costs
…as well as stable expenses and materially lower risk costs Underlying operating expenses Underlying cost/income ratio Risk costs (in EUR bln) (in %) (in EUR bln and bps of average RWA) 58.7% 56.8% 83 56.0% 55.9% 54.4% 54.2% 40-45 bps 55 52.1% through-the- cycle 44 8.2 8.2 8.5 8.6 31 2.3 50-52% 1.6
Slide 7: ING Group CET1 ratio 14.2%; ING proposes EUR 0.66 dividend
ING Group CET1 ratio 14.2%; ING proposes EUR 0.66 dividend ING Group fully-loaded CET1 ratio development We propose to pay a full-year dividend of EUR 0.66 per share 0.1% -0.2% 0.1% 14.2% 13.5% 0.7% EUR 0.65 EUR 0.66 11.75% 9.0% 0.41 0.42 0.12 0.24 0.24 3Q16 Interim Equity FX RWA 4Q16 2017 2019 4Q14
Slide 8: Ambition 2020 – ING Group Financial Targets
Ambition 2020 – ING Group Financial Targets Actual 2015 Actual 2016 Ambition 2020* • CET1 ratio (%) 12.7% 14.2% > Prevailing fully-loaded requirements** Capital • Leverage ratio (%) 4.4% 4.8% > 4% • Underlying C/I ratio (%) 55.9% 54.2% 50-52% Profitability • Underlying ROE (%) 8.6% 10.1% Awaiting re
Slide 9: Transformation programmes improving customer experience and bringing further efficiency gains
Transformation programmes improving customer experience and bringing further efficiency gains Four major digital transformation programmes Estimated impact of digital transformation programmes Integrated universal banking platform in (in EUR mln) Belgium and the Netherlands “Orange 900 Bridge” • Dia
Slide 10: Our approach to innovation
Our approach to innovation Customer experience Culture Connect • Innovation should make banking • Culture is crucial for innovation i.e. • Connect and cooperate in the internal easier, customer experience is the through ING’s own innovation ecosystem to accelerate innovation number one objective met
Slide 11: Sustainability is embedded throughout our business
Sustainability is embedded throughout our business Sustainable Transitions Financed* Sustainability news in 4Q16 Recognition (STF, in EUR bln) • ING launched the Sustainable • ING remains a 34.3 Finance Collective Asia constituent of the FTSE4Good FTSE4Good Index 23.8 • Real Estate Finance will only
Slide 12: Segment reporting
Segment reporting 12
Slide 13: Challengers & Growth Markets drive income growth; Benelux flat
Challengers & Growth Markets drive income growth; Benelux flat 2016-2020 roadmap – 3 October 2016 Investor Day Underlying income split by segment (in EUR mln) 2015 2016 Retail Benelux 6,949 7,009 +0.9% Retail Challengers 4,318 4,782 +10.7% & Growth Markets Wholesale Banking 5,389 5,679 +5.4% excl. C
Slide 14: Retail Benelux: cost containment focus due to margin pressure
Retail Benelux: cost containment focus due to margin pressure NII and fee income (in EUR mln) Net interest margin* (in bps) 137 138 138 2,203 2,374 2,350 2,321 128 135 4,070 4,242 4,198 4,199 127 121 122 2013 2014 2015 2016 2013 2014 2015 2016 Netherlands Belgium Netherlands Belgium • In 2016, we ha
Slide 15: Retail C&GM: Strong progression on net interest and fee income
Retail C&GM: Strong progression on net interest and fee income NII and fee income (in EUR mln) Underlying cost/income ratio (in %) Retail C&GM Retail C&GM CAGR +8.1% CAGR +9.2% 60.7% 503 57.3% 56.4% 459 451 54.5% 398 3,279 3,569 3,796 2,917 2013 2014 2015 2016 2013 2014 2015 2016 Net interest income
Slide 16: C&GM: Think Forward priorities deliver tangible results
C&GM: Think Forward priorities deliver tangible results Primary customer growth (in mln) Headcount flat (FTEs) Pre-tax result up strongly (in EUR mln) +15.4% +0.3% +23.2% 4.6 24,664 24,741 2,674 4.0 2,170 2015 2016 2015 2016 2015 2016 LtD ratio improving (in %) Consumer & SME lending* (in EUR bln) A
Slide 17: Wholesale Banking: Well-balanced and risk-conscious growth
Wholesale Banking: Well-balanced and risk-conscious growth Underlying income and expenses (in EUR mln) Underlying cost/income ratio* (in %) CAGR +3.5% 47.5% 47.0% CAGR +1.9% 45.9% 5,679 45.3% 5,124 5,086 5,389 2,240 2,296 2,417 2,370 2013 2014 2015 2016 2013 2014 2015 2016 Underlying income (excl. C
Slide 18: 4Q16 results
4Q16 results 18
Slide 19: Strong fourth-quarter results reflecting resilient NII
Strong fourth-quarter results reflecting resilient NII Underlying pre-tax result ING Bank (in EUR mln) Net interest income excl. Financial Markets (in EUR mln) +62.6% +6.1% 2,009 1,955 3,124 3,191 3,247 3,235 1,878 3,049 200 1,202 1,186 1,808 4Q15 1Q16 2Q16 3Q16 4Q16 4Q15 1Q16 2Q16 3Q16 4Q16 Underly
Slide 20: Our core lending franchises grew by EUR 9.2 bln in 4Q16
Our core lending franchises grew by EUR 9.2 bln in 4Q16 Customer lending ING Bank 4Q16 (in EUR bln) Core lending businesses: EUR 9.2 bln 2.6 0.3 -1.1 -2.8 4.2 0.3 560.6 2.5 554.9 -1.8 0.9 0.6 30/09/16 Retail NL Retail Retail Retail WB IL* WB GL&TS* WB Other* Lease run- Bank FX / 31/12/16 Belgium Ger
Slide 21: Underlying operating expenses remained stable
Underlying operating expenses remained stable Underlying operating expenses (in EUR mln) Regulatory costs experience seasonality (in EUR mln) 496 279 209 174 2,139 2,140 2,157 2,155 2,159 105 61 75 65 4Q15 1Q16 2Q16 3Q16 4Q16 1Q 2Q 3Q 4Q Expenses Regulatory costs Redundancy costs 2015 2016 Regulator
Slide 22: Risk environment benign; NPLs trending down
Risk environment benign; NPLs trending down Risk costs (in EUR mln) NPL ratio (in %) 2.8% 302 307 2.6% 265 265 2.5% 2.5% 97 123 2.4% 2.4% 117 97 2.3% 2.3% 80 138 2.4% 2.2% 77 2.1% 74 31 67 2.2% 2.2% 65 57 42 32 51 2.1% 36 2.0% 59 49 50 43 29 4Q15 1Q16 2Q16 3Q16 4Q16 4Q15 1Q16 2Q16 3Q16 4Q16 Wholesal
Slide 23: Wrap up
Wrap up 23
Slide 24: Wrap up
Wrap up • ING recorded 2016 underlying net profit of EUR 4,976 mln, up 17.9% from 2015 • Strong commercial momentum on the back of an increase in primary customers (> 700,000 during 2016), robust business growth, and continued decline in risk costs • 4Q16 ING net result (EUR 750 mln) impacted by c.
Slide 25: Appendix
Appendix 25
Slide 26: Solid 4Q16 results with few one-off and volatile items
Solid 4Q16 results with few 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) 2,009 4Q15 1Q16 2Q16 3Q16 4Q16 1,955 2,036 1,878 1,897 1,919 CVA/DVA -22 35 -5
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 67 110 2 99 144 394 100 102 1,275 1,288 1,249 815 742 907 680 766 501 454 -2 4Q15 1Q16 2Q16 3Q16 4Q16 4Q15 1Q
Slide 28: Group CET1 capital position improved to 14.2%
Group CET1 capital position improved to 14.2% Bank fully-loaded CET1 ratio development during 4Q16 (amounts in EUR bln and %) Capital RWA Ratio Change Actuals September 2016 39.0 310.5 12.6% Interim profit included in CET1* - - Equity stakes** 0.2 -0.2 +0.07% FX 3.0 -0.12% RWA & Other*** 0.2 -1.2 +0
Slide 29: No savings rate adjustments in our home markets in 4Q16
No savings rate adjustments in our home markets in 4Q16 4Q16 retail customer deposits, breakdown by segment* Fewer core savings rate reductions in 4Q16 25% 29% • In 4Q16, we have not reduced savings rates in any of our home markets. The core savings rate in the Netherlands EUR was reduced by another
Slide 30: Challengers & Growth Markets show strong results progression
Challengers & Growth Markets show strong results progression Challengers & Growth Markets footprint (full year 2016)* Germany & Austria YoY Spain & Portugal YoY Poland YoY • No. of customers 8.2 4% • No. of customers 3.5 5% • No. of customers 3.7 5% • Lending 101.5 12% • Lending 18.2 7% • Lending 17
Slide 31: Lending credit outstandings are well diversified
Lending credit outstandings are well diversified ING Bank* Retail Banking* Wholesale Banking* 6% 5% 1% 14% 31% 15% 36% EUR 3% EUR EUR 45% 623 399 225 64% bln bln bln 17% 21% 8% 12% 9% 13% Retail Banking Mortgages Netherlands Structured Finance Wholesale Banking Other lending Netherlands Real Estate
Slide 32: 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 (4Q16)* Lending Credit O/S Wholesale Banking (4Q16)* 1% NL 13% 3%4% Builders & Contractors 19% Belux 5% 7% C
Slide 33: Detailed NPL disclosure on selected lending portfolios
Detailed NPL disclosure on selected lending portfolios Selected lending portfolios Lending credit NPL ratio Lending credit NPL ratio Lending credit NPL ratio O/S 4Q16 4Q16 O/S 3Q16 3Q16 O/S 4Q15 4Q15 Wholesale Banking 224,916 2.4% 215,779 2.4% 200,717 2.8% Industry Lending 131,221 2.4% 121,257 2.4%
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