Ing Groep N.v. · EURONEXT:INGA
Ing Groep — ING Group — Q3 2018 Earnings Presentation
31 slides from Ing Groep's earnings presentation, Nov 1, 2018
Slide 1: Third quarter 2018 Results
Third quarter 2018 Results ING 3Q18 net profit of €776 million Ralph Hamers, CEO ING Group Amsterdam • 1 November 2018
Slide 2: Key points
Key points • ING posted 3Q18 net profit of €776 mln, down 43.6% on 3Q17 due to settlement impact of €775 mln • ING has been working on various initiatives to strengthen the management of compliance risks • 3Q18 underlying result before tax of €2,124 mln, which marks a 6.5% improvement versus 3Q17, o
Slide 3: ING is strengthening management of compliance risks
ING is strengthening management of compliance risks Settlement agreement with Dutch Public ING is implementing structural solutions to strengthen Prosecution Service (DPPS) announced on management of compliance risks and its role in the fight 4 September 2018 against financial economic crime • ING a
Slide 4: Primary customer focus drives commercial momentum in Retail
Primary customer focus drives commercial momentum in Retail Targeting > 14 mln primary customers* by 2020 (in mln) Core lending Customer deposits 3Q18 net growth 3Q18 net growth >14 11.4 12.2 10.4 9.2 € +6.8 bln € +3.4 bln 2015 2016 2017 3Q18 Ambition Net promoter scores 2020 (NPS) 3Q18 9M18 net gro
Slide 5: Integration of Belgium and Netherlands progressing
Integration of Belgium and Netherlands progressing Belgium is preparing for the next step in its transformation… …which is meeting planned milestones… Customer • Shift in customer behaviour towards • By building on experience of ING NL in large scale IT behaviour digital / mobile projects (integrati
Slide 6: Empowering customers with easier and better banking solutions
Empowering customers with easier and better banking solutions New common contact centre platform and Germany goes agile TransferMate partnership • ING has built a common contact centre • In 3Q18, Germany began platform for customers in our Retail implementing one agile way of countries to give them
Slide 7: Terra approach to steer loan book towards below 2-degree goal
Terra approach to steer loan book towards below 2-degree goal • Innovative way to measure and steer our lending book towards the 1 Paris Agreement’s well below 2-degree goal using science-based What is Terra*? scenarios • Will show if our lending as a whole is adding up to climate resilience • Focus
Slide 8: 3Q18 results
3Q18 results 8
Slide 9: Underlying pre-tax result up vs. both comparable quarters
Underlying pre-tax result up vs. both comparable quarters Underlying pre-tax result (in € mln) Underlying income (in € mln) +6.5% +5.4% 1,995 2,022 2,124 4,408 4,457 4,484 4,646 4,368 1,686 1,560 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 • Underlying result before tax was €2,124 mln, up 6.5%
Slide 10: Strong NII result due to lending growth at improved margins
Strong NII result due to lending growth at improved margins Net interest income excl. Financial Markets (in € mln) Net interest margin held up well in the quarter (in bps) +5.4% 91 8 157 158 154 154 152 3,469 153 154 152 153 3,292 3,332 3,334 3,364 151 -35 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q1
Slide 11: Core lending growth largely in mortgages and General Lending
Core lending growth largely in mortgages and General Lending Customer lending ING Group 3Q18 (in € bln) Core lending businesses: €6.8 bln 6.7 -1.8 603.7 1.9 0.1 -0.4 2.7 0.9 0.8 -0.9 1.5 592.4 30/06/18 Retail Retail Retail Retail WB Industry WB General WB Other** Lease run- Bank FX / 30/09/18 NL Bel
Slide 12: Stable fee income vs. 2Q18; FM impacted by low client activity
Stable fee income vs. 2Q18; FM impacted by low client activity Net fee and commission income Underlying income Financial Markets excl. CVA/DVA (in € mln) (in € mln) +7.8%* 717 720 257 674 661 251 238 643 27 227 224 279 282 298 283 55 252 144 153 160 151 157 149 157 156 193 172 240 238 250 271 257 10
Slide 13: Focus on strict cost discipline across the bank
Focus on strict cost discipline across the bank Underlying operating expenses (in € mln) Regulatory costs (in € mln) 474 493 264 2,354 2,249 2,216 2,195 2,193 98 94 91 69 3Q17 4Q17 1Q18 2Q18 3Q18 1Q 2Q 3Q 4Q Expenses excl. regulatory costs Regulatory costs 2017 2018 • Compared to 2Q18, expenses excl
Slide 14: Risk costs up, but remain well below through-the-cycle average
Risk costs up, but remain well below through-the-cycle average Risk costs (in € mln) Stage 3 ratio* 215 2.3% 190 2.1% 115 108 124 2.0% 68 1.9% 59 1.9% 1.8% 46 85 1.8% 1.7% 62 82 1.7% 1.6% 90 72 71 1.8% 1.8% 1.8% 1.6% 1.6% 47 46 1.7% 28 27 32 1.6% 1.6% 5 -4 -22 -20 -47 -21 3Q17 4Q17 1 Jan 2018 1Q18 2
Slide 15: Turkish risks well-controlled; intra-group funding reduced
Turkish risks well-controlled; intra-group funding reduced Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 3Q18 4Q17 Change 1% 17% Lending Credit O/S Retail Banking 5,756 8,290 -30.6% USD EUR Residential mortgages 530 925 -42.7% 39% TRY Consumer lending 1,262 1,930 -34.6% Oth
Slide 16: ING Group CET1 ratio remained strong at 14.0%
ING Group CET1 ratio remained strong at 14.0% ING Group fully loaded CET1 ratio development* 14.1% 0.0% -0.1% -0.1% 0.1% 14.0% 2Q18 CET1 ratio Profit added to CET1** FX Equity stakes RWA (excl. FX) 3Q18 CET1 ratio • Our CET1 ratio declined by -0.1% to 14.0% as we fully set aside 3Q18 net profit for
Slide 17: ING Group financial ambitions
ING Group financial ambitions Actual 2017 Actual 3Q18 Financial ambitions ~13.5%** • CET1 ratio (%) 14.7%* 14.0% (Basel IV) Capital • Leverage ratio (%) 4.7% 4.2% >4% • Underlying C/I ratio (%)*** 55.5% 55.5% 50-52% (by 2020) Profitability • Underlying ROE (%)*** 10.2% 10.7% 10-12% (IFRS-EU Equity)
Slide 18: Wrap up
Wrap up 18
Slide 19: Wrap up
Wrap up • ING posted 3Q18 net profit of €776 mln, down 43.6% on 3Q17 due to settlement impact of €775 mln • ING has been working on various initiatives to strengthen the management of compliance risks • 3Q18 underlying result before tax of €2,124 mln, which marks a 6.5% improvement versus 3Q17, on t
Slide 20: Appendix
Appendix 20
Slide 21: Strong 3Q18 result with some impact from volatile items
Strong 3Q18 result with some impact from volatile items Pre-tax result excl. volatile Underlying pre-tax result Volatile items and regulatory costs items and regulatory costs (in € mln) (in € mln) (in € mln) 3Q17 4Q17 1Q18 2Q18 3Q18 1,995 2,022 2,125 CVA/DVA -1 -45 23 11 -6 2,090 2,087 2,103 2,168 1
Slide 22: Limited potential for further core savings rate adjustments
Limited potential for further core savings rate adjustments Additional savings rate adjustments were made in 3Q18… …while we have other levers to stabilise NIM • On 16 July 2018, core savings rates in the Netherlands • Continue growth in higher margin lending without were further lowered from 5 bps
Slide 23: Group CET1 ratio at 14.0% and underlying ROE at 10.7%
Group CET1 ratio at 14.0% and underlying ROE at 10.7% Group fully loaded CET1 ratio development during 3Q18 Group underlying ROE calculation in 3Q18 (amounts in € bln and %) (in € mln) Capital RWA Ratio Change As of 30 September 2018 Actuals 30 June 2018 44.8 318.7 14.1% IFRS-EU shareholders’ equity
Slide 24: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 7% 5% 1% 15% 28% 15% 38% €671 3% €418 €253 45% bln bln bln 62% 8% 21% 17% 9% 13% 13% Retail Banking Mortgages Netherlands Project & Asset-based Finance Wholesale Banking Other lending Netherlands R
Slide 25: 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 (3Q18)* Lending Credit O/S Wholesale Banking (3Q18)* 1% NL 7% 3% 4% Builders & Contractors 11% 5% 19% Belux 9% Centr
Slide 26: 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 Stage 3 ratio Lending credit NPL ratio O/S 3Q18 3Q18 O/S 2Q18 2Q18 O/S 3Q17 3Q17 Wholesale Banking 252,657 1.6% 246,961 1.7% 227,714 2.3% Industry Lendi
Slide 27: 9M18 results
9M18 results 27
Slide 28: Underlying result up 5% in first nine months of 2018
Underlying result up 5% in first nine months of 2018 Underlying net result improved further (in € mln) Underlying return on equity remained well above 10% CAGR +8.4% 10.7% 10.1% 10.2% +4.9% 4,976 4,957 8.6% 4,219 3,957 4,151 2015 2016 2017 9M17 9M18 2015 2016 2017 9M18* • ING recorded underlying net
Slide 29: Healthy income progression driven by higher NII and fees
Healthy income progression driven by higher NII and fees… Underlying income Net interest result excl. FM Net fee and commission income (in € bln) (in € bln) (in € bln) CAGR +3.4% 17.5 17.7 +1.9% 16.6 CAGR +4.5% 12.8 13.3 +1.9% 13.6 12.2 13.3 9.9 10.1 CAGR +8.2% +2.8% 2.7 2.3 2.4 2.0 2.1 2015 2016 20
Slide 30: As well as a relatively stable expense base and low risk costs
…as well as a relatively stable expense base and low risk costs Underlying operating expenses Risk costs (in € bln) (in € bln and bps of average RWA) Underlying cost/income ratio** 55.9% 55.5% 55.5% 44 54.2% 8.6 8.6 8.9 31 6.6 6.7 22 52.1% 18 1.3 50.4% 1.0 0.7 49.3% 0.4 49.0% 2015 2016 2017 9M17 9M1
Slide 31: 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