Ing Groep N.v. · EURONEXT:INGA
Ing Groep — ING Group — Q3 2015 Earnings Presentation
34 slides from Ing Groep's earnings presentation, Nov 4, 2015
Slide 1: Third quarter 2015 Results
Third quarter 2015 Results ING Bank posts 3Q15 underlying net profit of EUR 1,092 million Ralph Hamers, CEO ING Group Amsterdam • 4 November 2015
Slide 2: Key points
Key points • ING Bank’s underlying net profit EUR 1,092 mln • 3Q15 results driven by strong performance in Retail Banking, lower risk costs, growth in core lending and improved margins • Risk costs declined on the back of the economic recovery to EUR 261 mln, or 34 bps of average RWA • Underlying re
Slide 3: ING continues to make progress on strategic initiatives
ING continues to make progress on strategic initiatives We launched our Think Forward strategy in March 2014 Creating a differentiating customer experience • To complement our in-house capabilities and maximise the potential of relevant technologies, we are steadily investing in partnerships • In Oc
Slide 4: Strategic partnership with Kabbage and pilot project in Spain
We have launched a strategic partnership with Kabbage and will run a pilot project for instant lending to small businesses in Spain ING is starting a pilot with Kabbage Highlights of ING/Kabbage agreement • The ING/Kabbage partnership is about helping small • Latest machine learning techniques used
Slide 5: Our consistent customer focus led to strong results in 9M15
Our consistent customer focus led to strong results in 9M15… Underlying net result Banking rose 18.1% from 9M14 (in EUR mln) …resulting in underlying RoE of 11.6% in 9M15 CAGR +4.1% +18.1% 11.6% 3,424 3,397 3,155 9.9% 10-13% 3,036 2,876 9.0% 9.0% 2,450 7.0% 10% 2011 2012 2013 2014 9M14 9M15 2011 201
Slide 6: Supported by healthy income growth and lower risk costs
…supported by healthy income growth and lower risk costs Underlying income excl. CVA/DVA Net interest result excl. FM Risk costs (in EUR bln) (in EUR bln) (in EUR bln and bps of RWA) CAGR +3.6% 15.2 15.6 15.0 14.0 +4.5% CAGR +0.8% 12.3 11.7 11.4 11.3 11.6 +5.7% 11.0 8.6 9.1 83 74 55 55 48 46 2.1 2.3
Slide 7: Core lending franchises grew by EUR 17.2 bln in nine months
Our core lending franchises grew by EUR 17.2 bln or 4.5% annualised in the first nine months of 2015 Customer lending, 9M15 (in EUR bln) Core lending businesses grew EUR 17.2 bln, or 4.5% 2.7 -0.3 -2.6 3.9 -0.6 529.0 9.9 -2.5 3.5 513.5 -1.6 3.0 31/12/2014 Netherlands Belgium Germany Other CGM CB Res
Slide 8: Lending increasingly diversified with the proportion of mortgages declining
Lending increasingly diversified with the proportion of mortgages declining ING Bank (in %) Challengers & Growth Markets (in %) 3% 2% 3% 2% 6% 7% 5% 7% 7% 10% 14% 18% 18% 18% 21% 21% 66% 62% 56% 52% 31 December 2013 30 September 2015 31 December 2013 30 September 2015 Other CB lending Other CB lendi
Slide 9: Capital position remains strong
Capital position remains strong ING Bank fully-loaded CET 1 ratio stable at 11.3% ING Group pro-forma fully-loaded CET1 ratio at 12.8% excl. (in %) net profit of EUR 2.2 bln not included in capital (in %) 0.4% -0.3% 12.8% -0.1% 0.3% -0.3% 11.3% 11.3% 12.3% 12.3% 2Q15 Net profit Revaluation RWA** 3Q1
Slide 10: On track to deliver on our Ambition 2017
On track to deliver on our Ambition 2017 Ambition ING Bank 2014 9M15 2017 Guidance • We will maintain a comfortable buffer above the minimum CET1 (CRD IV) 11.4% 11.3% >10% 10% to absorb regulatory changes and potential volatility Leverage* 4.1% 4.3% ~4% • Aim to reach 50-53% cost/income ratio in 201
Slide 11: 3Q15 results
3Q15 results 11
Slide 12: Solid third quarter results, supported by higher net interest income
Solid third quarter results, supported by higher net interest income Underlying pre-tax result ING Bank (in EUR mln) Net interest income excl. Financial Markets (in EUR mln) +0.6% +4.8% 1,661 1,601 3,070 3,038 1,486 1,495 3,009 3,004 2,928 783 3Q14 4Q14 1Q15 2Q15 3Q15 3Q14 4Q14 1Q15 2Q15 3Q15 • ING
Slide 13: Net interest margin up from 2Q15
Net interest margin up from 2Q15 Volatility in net interest margin, largely reflects volatility Net interest margin up from 2Q15 of interest results in Financial Markets (in bps) 3 -1 1 146 153 153 143 150 146 147 146 143 2Q15 Retail Financial Corporate 3Q15 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Bankin
Slide 14: Higher net interest income driven by Retail Germany and Other Challengers
Higher net interest income driven by Retail Germany and Other Challengers & Growth Markets, as well as Commercial Banking Increase in net interest income in Retail Germany, Retail Other Challengers & Growth Markets and Commercial Banking excl. FM supported by higher volumes and margins Retail German
Slide 15: Core lending franchises grew by EUR 1.6 bln in 3Q15
Our core lending franchises grew by EUR 1.6 bln in 3Q15, driven by Retail Germany and Other Challengers & Growth Markets Customer lending 3Q15 (in EUR bln) Core lending businesses: EUR 1.6 bln -0.8 1.2 2.4 0.8 0.4 -1.6 -1.2 -0.3 538.6 -0.7 -5.3 -4.4 529.0 30/06/15 Retail NL Retail Retail Retail CB I
Slide 16: Disciplined on expenses, but regulatory costs weigh on the cost base
We remain disciplined on expenses, but regulatory costs weigh increasingly heavily on the cost base Underlying operating expenses (in EUR mln) Regulatory costs (in EUR mln) 650 150 408 344 374 250 85 159 161 2,157 2,141 158 2,063 2,015 2,068 260 213 249 250 147 11 3Q14 4Q14 1Q15 2Q15 3Q15 2011 2012
Slide 17: Risk costs down to EUR 261 mln and NPL ratio down to 2.6%
Risk costs down to EUR 261 mln or 34 bps of RWA and NPL ratio down to 2.6% Risk costs (in EUR mln) NPL ratio (in %) 2Q15 3Q15 432 400 Retail Netherlands 3.4 3.2 353 Retail Belgium 3.3 3.3 322 173 152 Retail Challengers & Growth Markets 1.4 1.3 35 111 261 63 Commercial Banking 3.1 2.9 65 59 44 62 97
Slide 18: Risk costs and NPL ratio Retail Netherlands continued downward trend
Risk costs and NPL ratio Retail Netherlands continued their downward trend, reflecting the economic recovery Risk costs Retail NL have come down from the peak in 2013 Risk costs decreased sharply to EUR 82 mln or 55 bps of (in EUR mln) RWA in 3Q15, driven by lower risk costs in all segments 154 14 1
Slide 19: Risk costs Commercial Banking declined to longer-term average
Risk costs Commercial Banking declined to longer-term average, but can remain volatile quarter-on-quarter Risk costs Commercial Banking have come down to 36 bps in 9M15… (in EUR mln and in bps) …supported by a decline in the NPL ratio (in %) 71 68 3.5% 3.3% 3.3% 37 35 36 3.1% 2.9% 952 868 500 348 38
Slide 20: Wrap up
Wrap up 20
Slide 21: Wrap up
Wrap up • ING Bank’s underlying net profit EUR 1,092 mln • 3Q15 results driven by strong performance in Retail Banking, lower risk costs, growth in core lending and improved margins • Risk costs declined on the back of the economic recovery to EUR 261 mln, or 34 bps of average RWA • Underlying retur
Slide 22: Appendix
Appendix 22
Slide 23: Group CET1 in excess of Bank
Group CET1 in excess of Bank Fully-loaded common equity Tier 1 capital (in EUR bln and in %) Reported Pro-forma for full divestment NN Group Reported 12.3%* 12.8%* 11.3% 46.0 -1.0 -2.2 -4.1 1.0 39.7 4.8 38.7 35.0 ING Group FI deductions Interim profit Other ING Group CET1 Reversal FI ING Group CET1
Slide 24: Bank CET1 capital negatively impacted in 3Q15 by revaluation reserves
Bank CET1 capital negatively impacted in 3Q15 by a reduction in the revaluation reserves and FX Bank CET1 fully loaded ratio development during 3Q15 (amounts in EUR bln) Capital RWA Ratio Change Actuals June 2015 35.2 309.8 11.3% Net profit 1.1 0.36% Revaluation reserves* -0.8 -1.9 -0.18% FX** -0.5
Slide 25: Solid third quarter results
Solid third quarter results Underlying pre-tax result ING Bank Volatile items (in EUR mln) Pre-tax result excl. volatile items (in EUR mln) 3Q14 4Q14 1Q15 2Q15 3Q15 (in EUR mln) +0.6% CVA/DVA -69 -80 -1 208 40 +0.7% 1,661 Capital 1,623 1,635 1,601 13 21 112 17 -64 1,577 1,557 1,486 1,495 gains/losse
Slide 26: We further reduced client savings rates in 3Q15 and 4Q15
We further reduced client savings rates in 3Q15 and 4Q15 to align with record low interest rates Retail customer deposits, breakdown by business segment Further scope to protect NIM in most countries (in %, 3Q15) • In the third quarter, we reduced savings rates in the 23% 31% Netherlands, Belgium an
Slide 27: Regulatory costs continue to increase and will weigh on expense base
Regulatory costs continue to increase and will weigh heavily on the expense base Regulatory costs (in EUR mln)* Regulatory costs (in EUR mln) 650 182 174 40 10 150 408 61 105 344 374 250 61 85 161 159 47 142 1 56 158 103 260 213 249 250 39 73 46 147 11 8 -13 4 2011 2012 2013 2014 2015E** 3Q14 4Q14 1
Slide 28: Lending credit outstandings ING Bank are well diversified
Lending credit outstandings ING Bank are well diversified ING Bank* (in %) Retail Banking* (in %) Commercial Banking* (in %) 6% 2% 8% 12% 33% 34% 15% 4% 41% EUR EUR EUR 595 bln 66% 395 bln 200 bln 16% 21% 9% 11% 9% 13% Retail Banking Mortgages Netherlands Structured Finance Commercial Banking Other
Slide 29: Commercial Banking lending well diversified by geography
Lending credit outstandings Commercial Banking well diversified by geography and… Loan portfolio is well diversified across geographies… ...with the majority in developed countries Lending Credit O/S Commercial Banking (3Q15)* • Our business model is the same throughout our global CB 1% NL franchise
Slide 30: Well diversified by sector
…well diversified by sector Loan portfolio is well diversified Loan portfolio is well diversified across sectors Lending Credit O/S Commercial Banking (3Q15)* • We concentrate on sectors where we have proven Builders & Contractors expertise, among which (top-end) Financial Institutions, oil 11% 3% 7
Slide 31: The quality of our Russian portfolio remains strong
The quality of our Russian portfolio remains strong Exposure ING Bank to Russia (in EUR mln) Lending outstanding per currency Change Change 10% 3Q15 3Q14 3Q-3Q 2Q15 3Q-2Q 61% Total Lending Credit O/S 5,696 6,851 -1,155 5,842 -146 29% USD Other* 487 947 -460 691 -204 EUR Total outstanding 6,183 7,798
Slide 32: The quality of our Ukraine portfolio continues to be under pressure
The quality of our Ukraine portfolio continues to be under pressure, but manageable Exposure ING Bank to Ukraine (in EUR mln) Lending outstanding per currency Change Change 11% 3Q15 3Q14 3Q-3Q 2Q15 3Q-2Q 73% 16% Total Lending Credit O/S 1,168 1,289 -121 1,252 -84 USD Other* 0 20 -20 5 -5 EUR Total o
Slide 33: Exposure ING Bank to Oil & Gas Industry
Exposure ING Bank to Oil & Gas Industry - oil price risk is limited Lending credit O/S Trade and Commodity • Trade-related exposure; short-term self-liquidating trade finance, generally for major trading companies, either pre- 43% Finance sold or price hedged, not exposing the Bank to oil price risk
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, the same accounting principles are applied as in the 2014 ING Gro