Ing Groep N.v. · EURONEXT:INGA
Ing Groep — FY2018 Earnings Presentation
30 slides from Ing Groep's earnings presentation, Feb 6, 2019
Slide 1: Full Year 2018 Results
Full Year 2018 Results ING posts 2018 net result of €4,703 million; 4Q18 net result of €1,273 million Ralph Hamers, CEO ING Group Amsterdam • 6 February 2019
Slide 2: Key points
Key points • ING posted 2018 net profit of €4,703 mln, down 4.1% on 2017 due to the settlement impact of €775 mln • On an underlying basis, 2018 net profit was €5,389 mln, while return on equity equalled 11.2% • Regulatory compliance remains the key priority; we are continuing work on the KYC enhanc
Slide 3: Think Forward strategy delivers on commercial growth
Think Forward strategy delivers on commercial growth ING currently serves > 38 mln retail customers (in mln) Targeting > 14 mln primary customers by 2020 (in mln) +11% +36% 37.4 38.4 >14 34.5 35.7 12.5 10.4 11.4 9.2 2015 2016 2017 2018 2015 2016 2017 2018 Ambition 2020 Core lending Customer deposits
Slide 4: Transformation programmes – milestones achieved in 4Q18
Transformation programmes – milestones achieved in 4Q18 Four major digital transformation programmes • In 4Q18, we launched a combined IT organisation and IT management team for Belgium and Unite be+nl the Netherlands, which will facilitate further cross-border collaboration • In Belgium, we migrate
Slide 5: Sustainability and innovation highlights in 4Q18
Sustainability and innovation highlights in 4Q18 Key sustainability achievements in the quarter Further investment in our platform strategy for Wholesale • During the climate conference in Katowice, four major European banks joined ING in • ING Ventures invested in Cobase, a multibank pledging to al
Slide 6: FY18 results
FY18 results 6
Slide 7: Underlying result up 8.7% in 2018; ROE at 11.2% for the year
Underlying result up 8.7% in 2018; ROE at 11.2% for the year Underlying net result improved further* (in € mln) Underlying return on equity above 11%* CAGR +8.5% 11.2% 5,389 10.1% 10.2% 4,976 4,957 8.6% 4,219 2015 2016 2017 2018 2015 2016 2017 2018 • ING recorded underlying 2018 net profit of €5,389
Slide 8: Income growth driven by higher NII and fees
Income growth driven by higher NII and fees Total underlying income Net interest result excl. FM Net fee and commission income (in € bln) (in € bln) (in € bln) CAGR +3.0% 17.5 17.7 18.1 CAGR +3.8% 16.6 13.3 13.6 12.8 12.2 CAGR +6.5% 2.7 2.8 2.3 2.4 2015 2016 2017 2018 2015 2016 2017 2018 2015 2016 2
Slide 9: Underlying expenses well-controlled despite higher regulatory costs, low risk costs
Underlying expenses well-controlled despite a further increase in regulatory costs, risk costs remained low Underlying operating expenses Risk costs (in € bln) (in € bln and bps of average RWA) Underlying cost/income ratio CAGR +15.2% CAGR +1.3% 0.8 0.9 0.9 0.6 55.9% 55.5% 54.2% 54.8% 44 31 8.6 8.6
Slide 10: ING Group financial ambitions
ING Group financial ambitions Actual 2017 Actual 2018 Financial ambitions ~13.5%** • CET1 ratio (%) 14.7%* 14.5% (Basel IV) Capital • Leverage ratio (%) 4.7% 4.4% >4% • Underlying C/I ratio (%) 55.5% 54.8% 50-52% (by 2020) Profitability • Underlying ROE (%)*** 10.2% 11.2% 10-12% (IFRS-EU Equity) Div
Slide 11: 4Q18 results
4Q18 results 11
Slide 12: Underlying pre-tax result up 8.5% versus 4Q17
Underlying pre-tax result up 8.5% versus 4Q17 Underlying pre-tax result (in € mln) Total underlying income (in € mln) +8.5% +3.0% 2,022 2,124 4,457 4,484 4,646 4,501 4,368 1,686 1,692 1,560 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q18 3Q18 4Q18 • The 4Q18 underlying result before tax of €1,692 million wa
Slide 13: Year-on-year NII improvement; 4-quarter rolling NIM at 153 bps
Year-on-year NII improvement; 4-quarter rolling NIM at 153 bps Net interest income excl. Financial Markets (FM) 4Q18 NIM increase fully explained by higher NII in FM (in € mln) (in bps) +3.6% 3,469 3,459 3,340 3,364 158 156 3,299 154 154 153 154 152 152 153 151 4Q17 1Q18 2Q18 3Q18 4Q18 4Q17 1Q18 2Q1
Slide 14: 4Q18 core lending growth fully driven by Retail Banking
4Q18 core lending growth fully driven by Retail Banking; less WB growth, partly due to lower TCF volumes Customer lending ING Group 4Q18 (in € bln) Core lending businesses: €3.2 bln 2.0 -2.0 0.2 -2.2 1.5 0.7 0.3 603.7 0.4 -9.7 1.6 596.7 30/09/18 Retail Retail Retail Retail WB Industry WB General WB
Slide 15: Resilient fee income development; lower quarter for FM
Resilient fee income development; lower quarter for FM Net fee and commission income Underlying income Financial Markets excl. CVA/DVA (in € mln) (in € mln) +4.5% 717 720 704 257 674 661 227 238 27 224 212 279 282 298 283 298 55 153 160 99 157 149 157 156 159 193 172 238 250 271 257 247 105 112 78 3
Slide 16: Spain, a successful model focused on 3 core drivers
Spain, a successful model focused on 3 core drivers Product diversification delivers Digital positioning allows for rapid Customer centricity drives stable and steadily growing income scaling at low cost recommendation and strong brand Customer balances* (in € bln) and primary 98% of total contacts
Slide 17: Expenses down year-on-year due to strict cost management
Expenses down year-on-year due to strict cost management Underlying operating expenses (in € mln) Regulatory costs (in € mln) 264 493 266 364 381 375 98 91 341 208 179 2,354 2,193 2,249 2,216 2,303 4Q17 1Q18 2Q18 3Q18 4Q18 DGS* SRF* Bank taxes Expenses excl. regulatory costs Regulatory costs 2017 20
Slide 18: 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* 215 242 2.1% 190 54 1.9% 115 108 1.9% 1.8% 68 1.8% 1.7% 59 107 1.7% 1.6% 85 1.8% 1.8% 1.6% 1.6% 1.6% 90 62 82 1.7% 72 40 1.6% 1.6% 1.5% 27 47 32 46 41 1.4% 5 -4 -21 -20 -47 4Q17 1 Jan 2018 1Q18 2Q18 3
Slide 19: ING Group CET1 ratio 14.5%; ING proposes €0.68 FY18 dividend
ING Group CET1 ratio 14.5%; ING proposes €0.68 FY18 dividend ING Group fully-loaded CET1 ratio development We propose to pay a full-year dividend of €0.68 per share 0.4% 0.1% 14.5% 14.0% ~13.5% €0.66 €0.67 €0.68 0.42 0.43 0.44 11.8% 0.24 0.24 0.24 3Q18 Group CET1 Profit added to RWA & Other 4Q18 Gro
Slide 20: ING's debt issuance programme in 2019
ING’s debt issuance programme in 2019 ING Group instruments* (in € bln) Currency split* Group / Bank issuance plan** 76.8 24.5% HoldCo Senior Senior debt issuance 9% • ~€7-9 bln of HoldCo Senior planned for 2019, tenors ≥ 5 yrs 17.7 5.6% • OpCo Senior with tenors ≤ 4 yrs, for internal ratio manageme
Slide 21: Wrap up
Wrap up 21
Slide 22: Wrap up
Wrap up • ING posted 2018 net profit of €4,703 mln, down 4.1% on 2017 due to the settlement impact of €775 mln • On an underlying basis, 2018 net profit was €5,389 mln, while return on equity equalled 11.2% • Regulatory compliance remains the key priority; we are continuing work on the KYC enhanceme
Slide 23: Appendix
Appendix 23
Slide 24: 4Q18 result has limited impact from volatile items
4Q18 result has limited 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) 4Q17 1Q18 2Q18 3Q18 4Q18 2,022 2,124 CVA/DVA -45 23 11 -6 -16 2,087 2,103 2,168 1,966 1,692 1,839
Slide 25: Group CET1 ratio at 14.5% and underlying ROE at 11.2%
Group CET1 ratio at 14.5% and underlying ROE at 11.2% Group fully loaded CET1 ratio development during 4Q18 Group underlying ROE calculation in 4Q18 (amounts in € bln and %) (in € mln) Capital RWA Ratio Change As of 31 December 2018 Actuals 30 September 2018 44.2 316.3 14.0% IFRS-EU shareholders’ eq
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% 27% 15% 15% 37% €675 4% €428 €248 45% bln bln bln 63% 8% 21% 17% 9% 13% 14% Retail Banking Mortgages Netherlands Project & Asset-based Finance Wholesale Banking Other lending Netherlands R
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 (4Q18)* Lending Credit O/S Wholesale Banking (4Q18)* 1% NL 9% 3% 3% Builders & Contractors 11% 17% Belux 6% 9% Centr
Slide 28: 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 4Q18 4Q18 O/S 3Q18 3Q18 O/S 4Q17 4Q17 Wholesale Banking 247,620 1.4% 252,657 1.6% 232,521 2.1% Industry Lendi
Slide 29: Overview Turkey exposure
Overview Turkey exposure Total exposure ING to Turkey* (in € mln) Lending Credit O/S by currency 4Q18 4Q17 Change 2% 15% Lending Credit O/S Retail Banking 5,709 8,290 -31.1% USD Residential mortgages 595 925 -35.7% 41% EUR TRY Consumer lending 1,355 1,930 -29.8% 42% Other SME/Midcorp 3,760 5,436 -30
Slide 30: 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