Ing Groep N.v. · EURONEXT:INGA
Ing Groep — FY2017 Earnings Presentation
29 slides from Ing Groep's earnings presentation, Jan 31, 2018
Slide 1: Full Year 2017 Results
Full Year 2017 Results ING posts 2017 net profit of EUR 4,905 million Ralph Hamers, CEO ING Group Amsterdam • 31 January 2018
Slide 2: Key points
Key points • ING recorded 2017 net profit of EUR 4,905 mln, up 5.5% from 2016; underlying return on equity equalled 10.2% • Solid commercial performance on the back of continued primary customer inflow (> 900,000 in 2017), strong commission income growth, and low risk costs, despite a small step up
Slide 3: Think Forward strategy delivers on commercial growth
Think Forward strategy delivers on commercial growth ING currently serves > 37 mln retail customers (in mln) Targeting > 14 mln primary customers by 2020 (in mln) +13% >14 +29% 35.8 37.4 10.8 33.1 34.5 9.9 >10 9.2 8.4 2014 2015 2016 2017 2014 2015 2016 2017 Ambition Ambition 2017 2020 Core lending C
Slide 4: Profitability remains stable despite low interest rate pressures
Profitability remains stable despite low interest rate pressures Underlying net result stable YoY (in EUR mln) Underlying return on equity > 10% CAGR +13.1% 10.1% 10.2% 4,976 4,957 8.6% 4,219 7.2% 3,424 14.2% 14.7% 12.7% 10.5% 2014 2015 2016 2017 2014 2015 2016 2017 Underlying ROE ING Group fully lo
Slide 5: Good income progression on the back of higher NII and fees
Good income progression on the back of higher NII and fees… Underlying income Net interest result excl. FM Commission income (in EUR bln) (in EUR bln) (in EUR bln) CAGR +5.0% CAGR +4.5% CAGR +5.8% 17.5 17.7 16.6 15.3 13.3 12.8 12.2 11.6 2.7 2.3 2.3 2.4 2014 2015 2016 2017 2014 2015 2016 2017 2014 20
Slide 6: Small cost step up and low risk costs
…combined with small cost step up and low risk costs Underlying operating expenses Risk costs (in EUR bln) (in EUR bln and bps of average RWA) Underlying cost/income ratio 58.7% 55 55.9% 55.5% 44 54.2% 8.5 8.9 56.0% 8.2 8.6 31 22 52.1% 1.6 1.3 1.0 50.4% 0.7 49.3% 2014 2015 2016 2017 2014 2015 2016 2
Slide 7: ING Group CET1 ratio 14.7%; ING proposes EUR 0.67 dividend
ING Group CET1 ratio 14.7%; ING proposes EUR 0.67 dividend ING Group fully-loaded CET1 ratio development We propose to pay a full-year dividend of EUR 0.67 per share 14.5% 0.3% -0.1% 14.7% EUR 0.65 EUR 0.66 EUR 0.67 11.8% 10.4% 0.41 0.42 0.43 0.24 0.24 0.24 3Q17 Profit added to RWA & Other 4Q17 2018
Slide 8: Ambition 2020 – ING Group Financial Targets
Ambition 2020 – ING Group Financial Targets Actual 2016 Actual 2017 Ambition 2020* • CET1 ratio (%) 14.2% 14.7% > Prevailing fully loaded requirements** Capital • Leverage ratio (%) 4.8% 4.7% > 4% • Underlying C/I ratio (%) 54.2% 55.5% 50-52% Profitability • Underlying ROE (%)*** 10.1% 10.2% Will pr
Slide 9: Transformation programmes – overview of steps taken
Transformation programmes – overview of steps taken Estimated financial impact of digital Four major digital transformation programmes transformation programmes Orange Bridge • ~5,000 staff have gone through redeployment ~EUR 450 mln still to be invested in process in 2017 our digital transformation
Slide 10: Driving innovation via own initiatives and strategic partnerships
Driving innovation via own initiatives and strategic partnerships Easy phase Next Trading inConnect enters blockchain next stage initiatives Further investment in payments business Following • We the ING-led are joining blockchain forces with initiative other banks andEasy Trading industry • ING agr
Slide 11: ING supports the energy transition to a low carbon society
ING supports the energy transition to a low carbon society Sharpening of coal-financing policy 4Q17 deal highlights • We will reduce funding to coal power generation to close • ING acted as joint bookrunner on the EUR 600 mln green to zero by 2025 to support the transition to a low-carbon bond for T
Slide 12: 4Q17 results
4Q17 results 12
Slide 13: 4Q17 results impacted by higher costs and lower FM results
4Q17 results impacted by higher costs and lower FM results Underlying pre-tax result (in EUR mln) Net interest income excl. Financial Markets (in EUR mln) +3.0%* 1,955 1,992 1,995 3,383 3,340 1,652 3,235 3,263 3,294 91 8 1,560 3,292 3,332 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 Impact endi
Slide 14: Net interest margin impacted by accounting and FM
Net interest margin impacted by accounting and FM Net interest margin up quarter-on-quarter… (in bps) …with move largely explained by higher lending margin 157 158 157 -4 +3 +2 158 152 152 152 152 152 153 154 151 4Q16 1Q17 2Q17 3Q17 4Q17 3Q17 Impact Financial Higher 4Q17 ending hedge Markets lending
Slide 15: Core lending grew by EUR 6.8 bln in 4Q17
Core lending grew by EUR 6.8 bln in 4Q17 Customer lending ING Group 4Q17 (in EUR bln) Core lending businesses: EUR 6.8 bln 4.4 -1.4 0.0 -0.9 1.2 -1.6 574.0 2.4 568.3 -1.0 1.8 0.5 30/09/17 Retail Retail Retail Retail WB Industry WB General WB Other* Lease run- Bank FX / 31/12/17 NL Belgium Germany Ot
Slide 16: Fee growth continues; investment product balances up strongly
Fee growth continues; investment product balances up strongly All segments contribute to YoY fee growth (in EUR mln) Strong progress in investment products • Active investment product presence in all 13 ING retail +10.3% countries. EUR 13 bln growth in investment product 714 balances in 2017 of whic
Slide 17: Higher expenses due to investments and regulatory costs
Higher expenses due to investments and regulatory costs Underlying operating expenses (in EUR mln) Regulatory costs (in EUR mln) 496 474 264 2,354 209 2,159 2,137 2,242 2,195 75 69 94 65 4Q16 1Q17 2Q17 3Q17 4Q17 1Q 2Q 3Q 4Q Expenses excl. regulatory costs Regulatory costs 2016 2017 • Underlying expe
Slide 18: Risk costs remained low; NPLs improve further
Risk costs remained low; NPLs improve further Risk costs (in EUR mln) NPL ratio 229 2.4% 2.4% 2.3% 2.3% 190 138 135 124 2.1% 2.1% 2.1% 133 68 2.0% 2.0% 31 35 46 1.9% 42 45 90 2.0% 68 71 1.9% 1.9% 36 36 1.8% 1.8% 29 17 13 28 27 12 5 -22 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 Wholesale Bank
Slide 19: Wrap up
Wrap up 19
Slide 20: Wrap up
Wrap up • ING recorded 2017 net profit of EUR 4,905 mln, up 5.5% from 2016; underlying return on equity equalled 10.2% • Solid commercial performance on the back of continued primary customer inflow (> 900,000 in 2017), strong commission income growth, and low risk costs, despite a small step up in
Slide 21: Appendix
Appendix 21
Slide 22: Solid 4Q17 result; volatile items broadly neutral in the quarter
Solid 4Q17 result; volatile items broadly neutral in the quarter Underlying pre-tax result Volatile items and regulatory costs Pre-tax result excl. volatile items (in EUR mln) (in EUR mln) and regulatory costs (in EUR mln) 1,992 1,995 4Q16 1Q17 2Q17 3Q17 4Q17 2,125 1,955 2,036 2,090 1,988 97 CVA/DVA
Slide 23: ING's total capital position a strong foundation for the future
ING’s total capital position a strong foundation for the future ING Group 4Q17 fully loaded capital ratios* • Capital ratios now include the impact of the interpretation of the EBA Q&A published on 3 November 2017 -0.9% 2.8% • This Q&A relates to externally placed own funds from a subsidiary in conj
Slide 24: Group CET1 ratio at 14.7% and underlying ROE at 10.2%
Group CET1 ratio at 14.7% and underlying ROE at 10.2% Group fully loaded CET1 ratio development during 4Q17 Changes to Group ROE calculation in 4Q17 (amounts in EUR bln and %) (in EUR mln) Capital RWA Ratio Change As of 31 December 2017 Actuals September 2017 45.0 311.0 14.5% IFRS-EU shareholders’ e
Slide 25: Further client savings rate adjustments in our home markets
Further client savings rate adjustments in our home markets Several savings rate adjustments in the quarter… …and we have other levers to stabilise NIM • In 4Q17, we reduced Dutch core savings rates by a further • Continue growth in higher margin lending without 5 bps (1 October). Rates for savings
Slide 26: Well-diversified lending credit outstandings by activity
Well-diversified lending credit outstandings by activity ING Group* Retail Banking* Wholesale Banking* 7% 4% 1% 15% 29% 16% 36% EUR EUR EUR 44% 3% 644 411 233 bln 64% bln bln 17% 8% 22% 9% 12% 13% Retail Banking Mortgages Netherlands Structured Finance Wholesale Banking Other lending Netherlands Rea
Slide 27: 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 (4Q17)* Lending Credit O/S Wholesale Banking (4Q17)* 1% NL 7% 3% 3% Builders & Contractors 12% 5% 18% Belux 10% Cent
Slide 28: 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 4Q17 4Q17 O/S 3Q17 3Q17 O/S 4Q16 4Q16 Wholesale Banking 232,521 2.1% 227,714 2.3% 224,916 2.4% Industry Lending 132,425 2.4% 127,232 2.6%
Slide 29: Important legal information
Important legal information Projects may be subject to regulatory approvals. 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 descri