First quarter 2020 results

ING posts 1Q2020 net result of €670 mln

Ralph Hamers, CEO of ING

8 May 2020

Key points

  • In line with our purpose, we take actions to support our customers, employees and society in coping with the impact of the Covid-19 pandemic. In many countries we are working with governments to provide our retail and wholesale banking customers with the necessary financial flexibility, while ensuring we continue to play the vital role banks have in society, providing key banking services throughout our network
  • The strength of our digital business model is proven, with stable NII, accelerating fees, cost control and absorbing the new Definition of Default impact on capital
  • Net core lending growth was €12.3 bln, primarily in Wholesale Banking, which was up by €9.4 bln
  • Pre-provisionresults were solid, supported by disciplined pricing, higher fee income and cost control. This was partly countered by margin pressure on customer deposits and negative marked-to-market results reflecting Covid-19 related market volatility at the end of March
  • Risk costs increased, driven by €247 mln of collective Stage 2 provisioning, reflecting the potential macro-economic impact of the Covid-19 pandemic and low oil prices
  • 1Q2020 CET1 ratio was 14.0%, with capital negatively impacted by market volatility at the end of March (~40 bps) and having fully absorbed €9.9 bln of RWA impact related to the new Definition of Default
  • The Covid-19 pandemic will have further impact in the coming quarters. The level of impact will depend on several factors including how long lockdown measures will remain in place, how effective government support schemes to mitigate the economic impact will be and how quickly the global economy will recover
  • We are in a good position to face a change in the cycle with a robust capital position, a strong funding structure and a very low Stage 3 ratio

2

Our priority is to support employees, customers and society to deal with the impact of the Covid-19 pandemic

Our employees

  • Smooth transition to working from home (WFH), which now applies to around 80% of our employees
  • Providing tools and guidance to enable WFH and support employees with WFH challenges
  • Adjusted opening hours of our branches and precautionary measures to ensure employees can work safely

Support provided year-to-date

Our private customers

  • Part of our branch network remains open to support customers to make the move to digital banking
  • In all countries measures are taken to support private customers impacted by the Covid-19 pandemic with extensions of loan repayments
  • Supporting safe payment behavior by Increasing the limit for contactless payments

Our business customers

  • Pro-activelycontacting our business customers to discuss the potential impact
  • Extensions of loan repayments for SME customers
  • Providing credit facilities under government guarantee schemes
  • Tailored solutions for larger corporate clients

Our society

  • Matching employee donations to charities
  • Working with Unicef to raise funds for medical equipment
  • Donating laptops to enable home schooling
  • Offering building space to be used as a temporary hospital
  • 100,000 payment holidays for customers granted
  • €5.6 bln liquidity provided under credit facilities for large corporate clients

3

Our digital and agile capabilities enabled uninterrupted customer service

% of mobile-only active customers who contact us*

% mobile in interactions with ING

CAGR +41%**

37%

37%

19%

26%

12%

2016

2017

2018

2019

1Q2020

CAGR +36%***

86%

82%

73%

63%

52%

2016

2017

2018

2019

1Q2020

2.5

3.0

3.7

4.5

1.3

Number of total interactions with ING (in bln)

Annual mobile non-deposit sales per 1,000 active customers

CAGR +75%

84

62

28

46

9

2016

2017

2018

2019

1Q2020

annualised

Proofpoints

  • Strong growth of mobile sales
  • 170,000 new Investment accounts opened in March and April
  • Over 100,000 customer requests related to payment holidays and government guarantee schemes processed and approved

* Definition: Retail customers who used the channel at least once in the last quarter

** CAGR for number of mobile-only customers among active customers who contact us; for 1Q2020 based on an annualised number of interactions

4

*** CAGR for number of mobile interactions with ING

We have built a resilient bank through our focus on primary customers and income diversification

Our primary customer base

25.4% 26.7% 29.2% 30.5% 32.8% 34.3%

>16.5

12.5

13.3

10.4

11.4

8.4

9.2

2014

2015

2016

2017

2018

2019 Ambition

2022

Primary as a % of total retail customers

Retail income* increasingly diversified across products

€ CAGR)

9.3

8.2

1.5

+11%

0.9

1.4

+5%

1.1

2.7

3.3

+4%

3.5

3.1

-2%

2014

2019

Net fee and commission income

Diversified

Non-mortgage lending NII

income

Mortgage NII

Liability NII

Total income** geographically more diversified, with growth in C&GM

17.8

€ CAGR)

15.8

13%

+2%

13%

17%

+8%

13%

8%

+7%

6%

+8%

11%

15%

20% 17% -1%

35% 30% -1%

2014 2019

Netherlands

BeLux

Germany

OC&GM - eurozone

OC&GM - non-eurozone WB Rest of World

Note: ING financials are based on reported underlying results; as per 1Q2020, key figures are based on IFRS results as adopted by the European Union (IFRS-EU)

* Excluding SME/mid-corporates, Asian bank stakes and Bank Treasury

5

** Excluding Corporate Line and the Real Estate run-off portfolio; % in 2014 adds up to 98% due to rounding

We have maintained cost discipline, while managing KYC-related expenses, regulatory costs and ATF investments

We managed our underlying costs

Underlying costs (in € bln)

CAGR +20.1%

CAGR +1.7%

0.8

0.9

0.9

1.0

0.4

0.6

8.6

8.6

8.6

8.9

9.0

9.3

2014

2015

2016

2017

2018

2019

Underlying expenses (excl. regulatory costs)

Regulatory costs

Leading to a best-in-class cost/income ratio in the eurozone

67.9%

66.9%

66.1%

64.0%

64.3%

64.5%

58.7%

55.9% 54.2% 55.5% 54.8% 56.6%

2014

2015

2016

2017

2018

2019

ING

Average eurozone peers

Note: ING financials are based on reported underlying results; as per 1Q2020, key figures are based on IFRS results as adopted by the European Union (IFRS-EU)

6

Low risk costs compared to eurozone peers and a low Stage 3 ratio

Risk costs / average customer lending (in %)

1.4%

1.2%

1.0%

0.8%

0.6%

0.4%

0.2%

0.0%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

ING

Eurozone average

Higher or equally rated peers* ING through-the-cycle average

Stage 3 ratio**

6.1%

5.4%

4.7%

3.9%

3.4%

4.3%

4.0%

3.5%

3.0%

2.9%

2.5%

2.6%

2.1%

1.9%

1.5%

1.4%

2014

2015

2016

2017

2018

2019

ING

Eurozone average

Higher or equally rated peers*

Source: Bloomberg 7 February 2020, Annual disclosures

* Higher or equally rated peers by one or more of the main 3 credit rating agencies

7

** NPL-ratio for the period 2014-2016, Stage 3 ratio from 2017 on; comparable average for 2014 not available as several peers did not report NPL-ratio for 2014

We have a robust capital position with a strong funding structure

Capital development since 2015

5.9%

-3.3%

-1.4%

1.7%

0.5%

14.6%

-1.6%

12.7%

2015

Net

Dividend Model, Volume Risk

FX

2019

result

paid methodo- growth migration impact

logy and

& Other

policy

changes

Balance sheet ING Group (in € bln)

Balance sheet size ING Group 31 December 2019: €892 bln

Other

15

Cash balances

Other

55

Total equity

88

15

Deposits from

with central

35

Financial

96

banks and loans

Wholesale

135

banks

to banks

assets at FVPL

81

Financial assets

funding

78

Financial

at FVOCI /

securities at

liabilities at

amortised cost

FVPL

Loans to

612

Customer

574

customers

deposits

Assets

Own Funds

& Liabilities

8

1Q2020 results

9

Solid pre-provision result reflects discipline in lending margins and fee growth

Income (in € mln)

4,576

4,665

4,626

4,439

4,511

1Q2019 2Q2019 3Q2019 4Q2019 1Q2020

Pre-provision result excl. volatile items and regulatory costs (in € mln)

96

113

12

2,208

2,198

2,281

2,214

2,329

-147

-125

1Q2019

2Q2019

3Q2019

4Q2019

1Q2020

Volatile items

Pre-provision result excl. volatile items and regulatory costs

Income was €65 mln lower compared to 1Q2019 despite higher fee income, increased Treasury-related income and discipline in lending margins. This increase in income was more than offset by negative fair value adjustments, while 1Q2019 included a €119 mln one-off gain from the release of a currency translation reserve

Sequentially, income was €72 mln higher as higher Treasury-related income and increased fee income more than offset lower interest results, which included some one-offs in the previous quarter

1Q2020 pre-provision result excluding volatile items and regulatory costs, was €2,329 mln, up 5.5% from a year ago, driven by higher income (after excluding volatile items)

Compared to the previous quarter, pre-provision result excluding volatile items and regulatory costs, increased by 5.2%, as both income and costs improved

10

Stable NII year-on-year;4-quarter rolling NIM at 154 bps

Net interest income excl. Financial Markets (FM) (in € mln)

3,391

3,391

3,435

3,478

3,399

1Q2019

2Q2019

3Q2019

4Q2019

1Q2020

Net Interest Margin (in bps)

155

154

154

157

154

154

152

154

154

151

1Q2019

2Q2019

3Q2019

4Q2019

1Q2020

NIM

NIM (4-quarter rolling average)

  • Net interest income, excluding Financial Markets, increased 0.2% compared to 1Q2019. NII increased in Retail Banking, driven by higher interest results related to Treasury and customer lending, which was only partly offset by continued pressure on customer deposit margin
  • Sequentially, NII excl. FM decreased 2.3%, driven by lower interest results in Wholesale Banking, which included some one-offs in the previous quarter. In Retail Banking higher interest results on mortgage lending were offset mainly by pressure on customer deposit margin
  • NIM was 151 bps, down six basis points from 4Q2019. This was mainly attributable to an increase in the balance sheet and lower (volatile) interest results in Financial Markets, combined with lower lending margins on non-mortgage lending and customer deposits

11

1Q2020 net core lending driven by Wholesale Banking

Customer lending ING Group 1Q2020 (in € bln)

Core lending businesses: €12.3 bln

11.2

-2.0

0.2

7.6

-4.5

631.6

-0.3

616.4

-0.1

1.1

0.6

1.3

31/12/2019

Retail

Retail

Retail

Retail

WB Lending WB Daily

WB Other* Lease run- Treasury FX / Other** 31/03/2020

NL

Belgium

Germany

Other

Banking &

off / WUB

C&GM

Trade

run-off

Finance

  • Our core lending franchise grew by €12.3 bln in 1Q2020
    • Retail Banking increased by €2.9 bln, of which €0.7 bln in mortgages and €2.2 bln in other lending with growth in most countries
    • Wholesale Banking increased by €9.4 bln, mainly in Lending, driven by increased utilisation of revolving credit facilities to secure liquidity in the context of economic uncertainty due to the Covid-19 pandemic, and decline in Daily Banking & Trade Finance, predominantly in Trade & Commodity Finance, reflecting lower average oil prices
  • Net customer deposits increased by €9.2 bln

* WB Other includes Financial Markets

12

** FX impact was €-4.8 bln and Other €0.3 bln

Strong growth of fee income driven by investment and daily banking products

Net fee and commission income* (in € mln)

+16.0%

675

711

747

735

783

14

297

262

290

280

303

159

176

180

176

210

256

262

274

256

277

-14

1Q2019

2Q2019

3Q2019

4Q2019

1Q2020

Retail Benelux

Retail C&GM

Wholesale Banking

Intra-year FM adjustment*

  • Fees increased by €108 mln compared to 1Q2019, or 16.0%. This was driven by higher fees on investment and daily banking products in Retail Banking, predominantly in Germany and Belgium. Fee income in Wholesale Banking also increased, primarily in Lending and Financial Markets
  • Sequentially, fee income was €48 mln higher, or 6.5%, due to the aforementioned increase in fee income in Retail Banking. In Wholesale Banking fees were slightly lower, due to lower fee income in Trade & Commodity Finance, mainly due to lower average oil prices, and lower deal activity in Corporate Finance

* In 3Q2019, an increase in fees of €14 mln in Wholesale Banking was caused by the reclassification of commissions paid in 2Q2019 to Other Income

13

FM impacted by valuation adjustments reflecting Covid-19 related market volatility

Income Financial Markets (in € mln)

254

255

257

221

246

-58

-72

-25

-74

-92

1Q2019

2Q2019

3Q2019

4Q2019

1Q2020

Client income excl. valuation adjustments

Valuation adjustments

iTraxx main Europe CDS-Bond Basis (in bps)

0

-25

-50

-75

-100

01/01/2020 01/02/2020 01/03/2020 01/04/2020 04/05/2020

  • Excluding valuation adjustments, FM income was €8 mln lower YoY, mainly due to losses in Credit Trading following an abrupt downward market movement. Other FM segments benefitted from market volatility, resulting in €25 mln higher income QoQ
  • Net valuation adjustments in FM were €-92 mln. This was driven by funding valuation adjustments, marked-to-market of our derivatives portfolio and Fair Value Adjustments reflecting increased bid-offer spreads. These negative impacts were partly offset by positive movements, mainly driven by our own hedged positions

* Calculated as: Weekly delta ING -/- Weekly delta Itraxx Banks

14

Cost measures partially absorbed elevated KYC and regulatory costs

Expenses (in € mln)

515

97

106

303

526

74

98

127

151

138

2,198

2,256

2,207

2,221

2,169

1Q2019

2Q2019

3Q2019

4Q2019

1Q2020

Regulatory costs*

KYC related costs

Expenses excl. KYC and regulatory costs

Cost/income ratio**

60.9%

59.0%

60.3%

62.8%

55.7%

59.0%

52.5%

52.7%

56.6%

57.0%

53.7%

53.7%

50.3%

51.0%

51.3%

1Q2019

2Q2019

3Q2019

4Q2019

1Q2020

Cost/income ratio

Cost/income ratio (4-quarter rolling average)

Cost/income ratio excl. regulatory costs (4-quarter rolling average)

  • Expenses excl. KYC and regulatory costs were €29 mln lower YoY, as cost savings and some one-offs, including a VAT refund in the Corporate Line, offset CLA-related salary increases
  • Sequentially, expenses excl. KYC and regulatory costs were €52 mln lower, mainly driven by lower expenses related to staff and marketing in Retail Banking as well as continued cost-efficiency measures
  • Regulatory costs were €11 mln higher YoY and €223 mln QoQ. The sequential increase was driven by annual contributions to the Single Resolution Fund and several local Deposit Guarantee Schemes, which are due in the first quarter of each year. This also applies to the annual Belgian bank tax, while 4Q2019 included the annual Dutch bank tax

* Formal build-up phase of Deposit Guarantee Schemes (DGS) and Single Resolution Fund (SRF) should be completed by 2024

15

** As per 1Q2020, key figures are based on IFRS results as adopted by the European Union (IFRS-EU) and not on underlying anymore. Historical key figures have been adjusted

Risk costs impacted by collective Stage 2 provisioning related to Covid-19 pandemic

Risk costs per stage (in € mln)

661

428

261

209

276

25 18

207

6

3

2

26

398

422

219

245

285

-17

-57

-9

-6

-13

-26

1Q19

2Q19

3Q19

4Q19

1Q20

Stage 3

Stage 2

Stage 1

Off-balance

Stage 2 ratio

Stage 3 ratio

7.5%

6.6%

6.2%

5.7%

6.3%

7.0%

5.9%

6.2%

5.6%

5.4%

1.8%

5.3%

5.6%

1.6%

1.6%

1.6%

1.6%

3.9%

4.1%

4.6%

1.5%

1.5%

1.5%*

1.6%

1.4%

1.4%

1.3%

1.3%*

1.2%

1.2%

1Q19

2Q19

3Q19

4Q19

1Q20

1Q19

2Q19

3Q19

4Q19

1Q20

ING

Wholesale Banking

Retail Banking

  • 1Q2020 risk costs were €661 mln, or 42 bps of average customer lending, above the through-the-cycle average of approx. 25 bps
  • Higher risk costs were driven by €247 mln of collective Stage 2 provisions, reflecting both worsened macro-economic indicators and the potential impact from low oil prices. These factors also resulted in an increase in Stage 2 credit outstandings, mainly within WB, which resulted in a higher Stage 2 ratio of 5.9%
  • Stage 3 provisions included several larger individual additions on both existing and new files for WB, mainly in the Americas and Asia, and mid-corporates in Belgium. In C&GM higher collective provisions were visible, mainly in Poland, Romania, Italy and Australia
  • The Stage 3 ratio increased to 1.6%, with the implementation of the new Definition of Default (DoD) impacting Retail Banking, while the Stage 3 ratio in WB remained low at 1.2%
  • See Appendix section of the presentation for further details on asset quality in selected portfolios

* Stage 3 credit-impaired as per 30 September 2019 adjusted downwards by €548 mln

16

Higher risk costs mainly visible in Stage 2

Retail Banking

Risk costs per stage (in € mln)

285

98

160

174

3

136 8 118

4

136

145

184

200

201

-0

-4

-31

-2 -19-2

-2-27

-16

1Q19

2Q19

3Q19

4Q19

1Q20

Stage 3 Stage 2 Stage 1 Off-balance sheet

Wholesale Banking

Risk costs per stage (in € mln)

373 1

254

15

163

52

71

91

116

8

221

5

18

10

198

100

101

83

-2

-16

-26-2

-4

-11

-13

1Q19

2Q19

3Q19

4Q19

1Q20

Stage 3

Stage 2

Stage 1

Off-balance sheet

  • The increase in risk costs was mainly driven by €247 mln collective Stage 2 provisions:
    • €206 mln in the segments reflecting the worsened macro-economic indicators due to the economic impact of lockdown measures related to the Covid-19 pandemic, allocated to the segments with RB Benelux €45 mln, Retail C&GM €47 mln and WB €114 mln
    • €41 mln in WB reflecting increased risk in the US-basedreserve-based lending book due to the sharp decline in oil prices

17

We remain comfortable with the quality of our book, which is almost fully senior and well-collateralised

Residential

Mortgages

5%

€298 bln

Consumer

Lending

36%

€710

42%

€26 bln

bln

Business

Lending

4%

€91 mln

13%

Residential mortgages

Wholesale

Consumer Lending

Business Lending

Banking

Wholesale Banking

€260 bln

Other*

Commercial

Real Estate

(RB + WB)

  • Average LTV of 60% with low Stage 3 ratio at 1.1%
  • Risk metrics remain strong, also supported by government schemes
  • Relatively small book, mainly related to car loans
  • Risk metrics slightly deteriorated, however primarily due to implementation of new DoD
  • No increased usage of limits observed, limited exposure to sectors most at risk:
    • Agriculture: €5.7 bln (0.8% of loan book), Stage 3 ratio at 6.3%
    • Retail: €4.7 bln (0.7% of loan book), Stage 3 ratio at 6.0%
    • Hospitality: €3.2 bln (0.4% of loan book), Stage 3 ratio at 2.9%
  • Elevated drawings of facilities have normalised, limited exposure to sectors most at risk:
    • Leveraged Finance: €8.4 bln (capped at €9.6 bln), well-diversified over sectors
    • Oil & Gas: €4.6 bln with direct exposure to oil price risk (0.6% of loan book; Reserve based lending (€3.6 bln) and Offshore business (€1.0 bln))
    • Aviation: €2.9 bln (0.4% of loan book), large share ECA cover, low Stage 3% at 0.04%
    • Hospitality: €1.7 bln (0.2% of loan book), low Stage 3% at 0.2%
  • Total €51.6 bln (7.3% of loan book), booked in RB and WB
  • Well-diversifiedcapped loan book with 18% in retail-related real estate
  • LtV at 50% and low Stage 3% at 0.9%

* Other includes €16 billion Bank Treasury and €19 billion Other Lending

18

ING Group CET1 ratio robust at 14.0%

ING Group Total capital ratio development

14.6%

0.2%

-0.4%

14.0%

1.9%

2.2%

18.1%

-0.4%

~13.5%

10.5%**

4Q19

Profit added

Implementation RWA & other

1Q20

AT1

Tier 2

1Q20 Total

Basel IV CET1

CET1 ratio

to CET1*

of DoD

CET1 ratio

capital ratio

ambition

CET1 ratio

Expected RWA impacts

Total Capital ratio

2020 SREP requirement

Management buffer (incl. P2G)

  • The 1Q2020 CET1 ratio came in lower at 14.0%, reflecting both lower CET1 capital (~40 bps) and higher RWAs
    • CET1 capital decreased as adding €670 mln of net profit, following the suspension of dividend in line with the ECB recommendation*, was more than offset by a €0.5 bln decrease in volatility-driven revaluation reserves and €0.6 bln negative FX impact
    • RWAs were up mainly due to the implementation of the new Definition of Default (€9.9 bln) and €5.1 bln lending growth, which more than offset the release of €6.6 bln of expected supervisory RWA impact (mainly TRIM) taken in 4Q2019, reflecting the postponement of some pending TRIM impacts by the ECB
  • The €1,754 mln reserved for the 2019 final dividend was not added back to CET1 capital and remains reserved for dividend
  • With the announced postponement of Basel IV, TRIM and the floor on Dutch mortgages, additional RWA impact coming from banking regulation and model reviews will be partly delayed. The magnitude of total RWA impact remains uncertain, though with impact from DoD and part of TRIM included, we believe further RWA impact is manageable
  • With AT1 and T2 above minimum requirements, we are well positioned to benefit from article 104a of CRDV
  • We maintain our CET1 ratio ambition of around 13.5%, our buffer above MDA level stands at 3.5%

* Following ECB recommendations we have announced dividend payments are suspended until at least 1 October 2020 and no dividend reservations will be made until that date.

1Q2020 Group net profit of €670 mln was fully added to regulatory capital while €1,754 mln reserved for final dividend 2019 has not been added back

** SREP requirement was reduced to 10.51% from 11.86% 4Q19 or fully-loaded 11.99% at YE2020 following the reduction of countercyclical buffers (fully-loaded-22 bps) and the

19

Systemic Risk buffer (-50 bps) as well as pulling forward CRDV article 104a (-77 bps)

ING Group financial ambitions

Actual 2019

Actual 1Q2020

Financial ambitions

CET1 ratio (%)

14.6%

14.0%

~13.5%*

(Basel IV)

Capital

Leverage ratio (%)

4.6%

4.3%

>4%

ROE (%)**

9.4%

8.4%

10-12%

(IFRS-EU Equity)

Profitability

C/I ratio (%)**

56.6%

57.0%

50-52%

Dividend

Dividend (per share)

€0.24***

Dividend payments suspended

until October 2020

* Implies management buffer (incl. Pillar 2 Guidance) of ~300 bps over prevailing fully-loaded CET1 requirements (10.51% fully loaded, after reduction of several buffers in a response to

the Covis-19 pandemic and the pulling forward of the implementation of article 104a of CRDV)

** Based on 4-quarter rolling average. ING Group ROE is calculated using IFRS-EU shareholders' equity after excluding 'interim profit not included in CET1 capital'. As at 31 March 2020,

interim profit not included in CET1 capital amounts to €1,754 mln, reflecting an initial reservation for the 2019 final dividend payment, which was suspended until at least 1 October 2020

20

*** Interim dividend 2019

Wrap up

21

Wrap up

  • In line with our purpose, we take actions to support our customers, employees and society in coping with the impact of the Covid-19 pandemic. In many countries we are working with governments to provide our retail and wholesale banking customers with the necessary financial flexibility, while ensuring we continue to play the vital role banks have in society, providing key banking services throughout our network
  • The strength of our digital business model is proven, with stable NII, accelerating fees, cost control and absorbing the new Definition of Default impact on capital
  • Net core lending growth was €12.3 bln, primarily in Wholesale Banking, which was up by €9.4 bln
  • Pre-provisionresults were solid, supported by disciplined pricing, higher fee income and cost control. This was partly countered by margin pressure on customer deposits and negative marked-to-market results reflecting Covid-19 related market volatility at the end of March
  • Risk costs increased, driven by €247 mln of collective Stage 2 provisioning, reflecting the potential macro-economic impact of the Covid-19 pandemic and low oil prices
  • 1Q2020 CET1 ratio was 14.0%, with capital negatively impacted by market volatility at the end of March (~40 bps) and having fully absorbed €9.9 bln of RWA impact related to the new Definition of Default
  • The Covid-19 pandemic will have further impact in the coming quarters. The level of impact will depend on several factors including how long lockdown measures will remain in place, how effective government support schemes to mitigate the economic impact will be and how quickly the global economy will recover
  • We are in a good position to face a change in the cycle with a robust capital position, a strong funding structure and a very low Stage 3 ratio

22

Appendix

23

Volatile items and regulatory costs impacted 1Q2020 pre-tax result

Pre-tax result (in € mln)

2,005 1,911

1,582

1,337

1,017

1Q19 2Q19 3Q19 4Q19 1Q20

Volatile items and regulatory costs (in € mln)

1Q19

2Q19

3Q19

4Q19

1Q20

WB/FM - valuation

-58-72-25-74-92

adjustments

Capital

28

21

5

-8

138

gains/losses

Hedge

7

85

32

-65

-89

ineffectiveness

Other items*

119

79

-82

Total

96

113

12

-147

-125

volatile items

Regulatory costs

-515

-97

-106

-303

-526

Pre-tax result excl. volatile items and regulatory costs (in € mln)

2,001 1,989 2,005

1,787 1,668

1Q19 2Q19 3Q19 4Q19 1Q20

  • Excluding volatile items and regulatory costs, 1Q2020 pre-tax result was down 16.6% from 1Q2019, as higher income could not compensate for an increase in risk costs
  • Quarter-on-quarter,the result before tax excluding volatile items and regulatory costs, was 6.7% lower, as improved income and lower expenses were more than offset by higher risk costs

* Other items in 1Q2019 concerns a €119 mln one-off gain on the release of a currency translation reserve related to the sale of ING's stake in Kotak Mahindra Bank; 2Q2019 concerns

the recognition of a €79 mln receivable related to the insolvency of a financial institution; 1Q20 concerns €-82 mln of losses within WB/Lending mainly due to negative marked-to-

24

market adjustments related to syndicated loans and loans at fair value through profit or loss

Group CET1 ratio at 14.0% and ROE at 8.4%

Group CET1 ratio development during 1Q2020 (amounts in € bln and %)

Capital

RWA

Ratio

Change

Actuals 31 December 2019

47.6

326.4

14.6%

Net profit included in CET1*

0.7

-

0.21%

Equity stakes

-0.3

-1.0

0.09%

FX

-0.6

-1.3

-0.13%

RWA & Other**

-0.5

7.0

-0.57%

ORWA

-

-0.2

0.01%

MRWA

-

4.5

-0.21%

Actuals 31 March 2020

46.8

335.4

14.0%

-0.60%

Group ROE calculation in 1Q2020 (in € mln)

As of 31 March 2020

IFRS-EU shareholders' equity

54,334

deduct: Interim profit not included in CET1 capital***

1,754

Adjusted shareholders' equity

52,580

Adjusted shareholders' equity (4Q-rolling average)

51,509

Net result (last four quarters)

4,332

ROE (4Q-rolling average)

8.4 %

* 1Q2020 Group net profit (€670 mln) is included in Group CET1 capital

** RWA and Other includes the impact from volume growth (-23 bps), model, methodology and policy updates (-27 bps) and other (-26 bps), offset by positive risk migration (19 bps)

*** As at 31 March 2020, interim profit not included in CET1 capital amounts to €1,754 mln, reflecting an initial reservation for the 2019 final dividend payment, which was suspended

25

until at least 1 October 2020

Well-diversified lending credit outstandings by activity

ING Group*

Retail Banking*

1Q2020

1Q2020

8%

7%

37%

15%

25%

20%

€710

€450

4%

€450

bln

bln

bln

6%

17%

10%

63%

66%

13%

9%

Retail Banking

Residential mortgages

Mortgages Netherlands

Wholesale Banking

Consumer Lending

Other lending Netherlands

Business Lending

Mortgages Belgium

Other Lending**

Other lending Belgium

Mortgages Germany

Other lending Germany

Mortgages Other C&GM

Other lending Other C&GM

Wholesale Banking*

1Q2020 4% 4%

25%

€260

bln

67%

Lending

Daily Banking & Trade Finance

Financial Markets

Treasury & Other

  • ING has a well-diversified and well-collateralised loan book with a strong focus on own-originated mortgages and senior loans; 63% of the portfolio is retail-based

Note: percentages for Retail (Netherlands) and Wholesale Banking have changed versus 4Q2018 as the Real Estate Finance portfolio related to Dutch domestic mid-corporates was

transferred to Retail Netherlands from Wholesale Banking as per 1Q2019

* 31 March 2020 lending and money market credit outstandings, including guarantees and letters of credit, but excluding undrawn committed exposures (off-balance sheet positions)

26

** Includes €16 bln Bank Treasury and €19 bln of Other Retail lending as per 1Q2020

Detailed disclosure on selected countries

Selected countries (in € bln)

Lending credit

Stage 2 ratio

Stage 3 ratio

Lending credit

Stage 2 ratio

Stage 3 ratio

O/S 1Q2020

1Q2020

1Q2020

O/S 4Q2019

4Q2019

4Q2019

France

9,6

6.1%

0.6%

8,8

3.0%

0.7%

Italy

16,0

4.5%

2.8%

16,5

4.1%

2.0%

Spain

25,9

1.9%

1.0%

25,5

1.6%

1.1%

USA

37,9

13.0%

1.3%

34,9

6.7%

1.3%

27

Granular Retail Consumer Lending and Business Lending

Consumer Lending - 1Q2020 Lending Credit Outstandings

Business Lending - 1Q2020 Lending Credit Outstandings

By geography

4% 5%

5%

5%

6%

€26 bln

7%

8%

12%

Germany

Spain

Belgium

France

Poland

Netherlands

Romania

Italy

Turkey

Other

35%

13%

By product

5% 4%

7%

8%

€26 bln

76%

Term Loan

Revolver

Personal Loan

Overdraft

Other

By geography

3% 2%

3% 1%

11%

€91 bln

31%

Belgium

Netherlands

Poland

Turkey

Australia

Romania

Other

By sector

2% 1%3%

3%2%2% 16%

4%

4%

49%

6%

€91 bln

14%

6%

9%

10%

9%

9%

Real Estate

Services

Food, Beverages & Personal Care

General Industries

Builders & Contractors

Chemicals, Health & Pharmaceuticals

Transportation & Logistics

Lower Public Administration

Retail

Automotive

Central Governments

Natural Resources

Media

Utilities

Non-Bank Financial Institutions 28

Other

Granular Wholesale Banking lending

Loan portfolio is well diversified across geographies…

Lending Credit O/S Wholesale Banking (1Q2020)*

…and sectors

Lending Credit O/S Wholesale Banking (1Q2020)*

1% 8%

19%12%

3%

€260

5%

bln

16%12%

2% 9% 7% 6%

NL

Belux

Germany

Other Challengers

Growth Markets

UK

European network (EEA**)

European network (non-EEA)

North America

Americas (excl. North America)

Asia Africa

6%

10%

Real Estate, Infra & Construction

Commodities, Food & Agri

22%

14%

TMT & Healthcare

Transportation & Logistics

€260

Energy

bln

Diversified Corporates****

8%

Financial Institutions*****

17%

10%

Other

13%

Lending Credit O/S Wholesale Banking Asia (1Q2020)*

17%

22%

Japan

2%

China***

Hong Kong

4%

€51

Singapore

7%

bln

12%

South Korea

Taiwan

20%

16%

India

Rest of Asia

Lending Credit O/S Wholesale Banking Americas (1Q2020)*

13%

United States

2%

Brazil

4%

Canada

5%

€50

Mexico

bln

76%

Other

* Data is based on country/region of residence; Lending and money market credit O/S, including guarantees and letters of credit but excluding undrawn committed exposures (off-

balance sheet positions); ** Member countries of the European Economic Area (EEA); *** Excluding our stake in Bank of Beijing (€1.7 bln at 31 March 2020); **** Large corporate clients

29

active across multiple sectors; ***** Including Financial sponsors

Leveraged finance book managed within a restrictive framework

Business overview

  • Focus on larger sponsors with an established track record and a history of resolving issues in the event of underperformance by the acquired business
  • Granular book of €8.4 bln as per 1Q2020
  • Number of underwritten transactions in 2019 declined by 28% YoY, as a result of reduced market volume and our conservative stance on leverage
  • There were supportive market conditions in the beginning of the year, evidenced by a substantial increase in the number of transactions. At the end of 1Q2020, we were able to syndicate the vast majority of the underwritten amount, and only 2 new transactions remained on our B/S for the full amount on 31 March 2020

Main actions taken

  • Global cap of €9.6 bln
  • Maximum final take for a single transaction €25 mln
  • Maximum total leverage 6.5x
  • No single underwrites

Leveraged finance book* focused on developed markets (as per 1Q2020)

2%

39%

€8.4 bln

59%

Americas

Asia

EMEA

Leveraged finance book* highly diversified by industry (as per 1Q2020)

14%

21%

Services

1%

General Industries

4%

Chemicals, Health & Pharmaceuticals

5%

€8.4 bln

Food, Beverages & Personal Care

5%

Retail

5%

18%

Automotive

Builders & Contractors

11%

16%

Transportation & Logistics

Non-Bank Financial Institutions

Other

* Leveraged finance is defined as Private Equity driven leveraged finance with higher than 4x leverage. Leveraged finance book is total commitments (i.e. including undrawn)

30

Well-diversified Commercial Real Estate (CRE) portfolio

Business overview

  • CRE portfolio of €51.6 bln, cap at €56 bln, split between:
    • Real Estate Finance (REF) €36.8 bln
    • Retail Banking €14.8 bln
  • REF portfolio is managed by Wholesale Banking, booked in WB (€25.6 bln) and RB (€11.2 bln) based on client type
  • Retail Banking portfolio mainly in RB Benelux to companies in the mid-corporates segment, generally professional investors with real estate portfolios rented to third parties (mainly residential) and part construction finance to professional parties within a strict risk appetite (>90% residential development, minimum % of pre-sold units, recourse on shareholders with stable cash flows)
  • Overall well diversified portfolio both in terms of geography and asset type, with LtV of 50% and low Stage 3 ratio of 0.9%
  • Portfolio is managed within risk appetite of global CRE policy which includes focus on diversified portfolios (in principle no single tenants or objects), no hotels (only exception if small part of quality real estate portfolio)
  • In the current market most scrutiny on asset type Retail, which is 18% of the total CRE book. We have a restrictive policy in place, with focus on supermarkets or smaller malls which include at least one supermarket

CRE breakdown by asset type (as per 1Q2020)

3%

25%

Office

37%

Retail

€52 bln

Residential

Industrial

18%

Unclassified

Other

5%

12%

CRE breakdown by geography* (as per 1Q2020)

1% 8%

Netherlands

Belgium

3%

3%

36%

Luxembourg

France

4%

Australia

US

5%

Italy

Spain

6%

€52 bln

Germany

UK

6%

Other

8%

20%

* Geographical split based on country of residence

31

Oil & Gas book: only €4.6 bln directly exposed to oil-price risk

0.5

0.5

Direct

3.6

€4.6 bln

oil-price risk

O&G6.0 companies

€14.4 bln

6.1

2.3

No direct

oil-price risk

Trade

15.7

€15.7 bln

companies

Asset type

Trade Finance

Export Finance

Corporate Lending

Midstream

Reserve Based Lending

Offshore Drilling

Other Offshore Services

  • Smaller independent oil & gas producers, focus on 1st cost quartile producers
  • Typically assets generating revenues from long-term tariff based contracts, not affected by oil & gas price movements
  • Predominantly loans to investment grade large integrated oil & gas companies
  • ECA-coveredloans in oil & gas sector: typically 95%-100% credit insured
  • Short term self-liquidating trade finance, generally for major trading companies, typically pre-sold or price-hedged

Overall Stage 3 ratio at 2.4%

32

Breakdown of quarterly risk costs Wholesale Banking per geography and sector

Breakdown of geography which generated risk costs WB (in € mln)

373

254

116

7191

1Q2019

2Q2019

3Q2019

4Q2019

1Q2020

NL

Belux

Germany/Austria

UK

Nordics + CH

Rest of Europe

USA

Latam

Asia

RE & Other

Breakdown of sector which generated risk costs WB (in € mln)

373

254

116

7191

1Q2019

2Q2019

3Q2019

4Q2019

1Q2020

Collective Stage 2 provisions

Non-Bank Financial Institutions

Technology

Telecom

Media

Utilities

Retail

General Industries

Real Estate

Chemicals, Health & Pharmaceuticals

Transportation & Logistics

Automotive

Services

Builders & Contractors

Natural Resources

Food, Beverages & Personal Care

33

Overview Turkey exposure

Total exposure ING to Turkey* (in € mln)

1Q2020

4Q2019

Change

Lending Credit O/S Retail Banking

4,242

4,537

-6.5%

Residential mortgages

531

529

0.4%

Consumer lending

1,157

1,203

-3.8%

SME/Midcorp

2,554

2,804

-8.9%

Lending Credit O/S Wholesale Banking

6,019

6,079

-1.0%

Total Lending Credit O/S*

10,261

10,616

-3.3%

  • Intra-groupfunding reduced from €2.1 bln at end-4Q2019 to €1.8 bln at end-1Q2020
  • Reduction of outstandings in 1Q2020 is partly due to Turkish lira depreciation
  • ING only provides FX lending to corporate customers with proven FX revenues; only limited rolling-over of FX lending facilities
  • ECA-insuredlending (Export Credit Agencies) is approx. €1.7 bln; approx. €0.4 bln of SME/Midcorp lending benefits from KGF cover (Turkish Credit Guarantee Fund)
  • Quality of the portfolio remains relatively strong with a Stage 3 ratio of 4.1%

Lending Credit O/S by currency

2% 16%

36%

USD

EUR

TRY

46%

Other

Lending Credit O/S by remaining maturity

TRY**

~1 year

FX

~2 years

Stage 3 ratio and coverage ratio

1Q2020

4Q2019

Stage 3 ratio

4.1%

4.3%

Coverage ratio

53%

51%

* Data based on country of residence. Lending credit outstandings, including guarantees and letters of credit, but excluding undrawn committed exposures (off-balance sheet positions)

34

** Excludes residential mortgages, which have an average remaining maturity of ~6 years

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 applied as in the 2019 ING Group consolidated annual accounts. All figures in this document are unaudited. Small differences are possible in the tables due to rounding.

Certain of the statements contained herein are not historical facts, including, without limitation, certain statements made of future expectations and other forward-looking

statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results,

performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such

statements due to a number of factors, including, without limitation: (1) changes in general economic conditions, in particular economic conditions in ING's core markets,

including changes affecting currency exchange rates, (2) the effects of the Covid-19 pandemic and related response measures, including lockdowns and travel restrictions, on

economic conditions in countries in which ING operates, on ING's business and operations and on ING's employees, customers and counterparties, (3) changes affecting

interest rate levels, (4) any default of a major market participant and related market disruption, (5) changes in performance of financial markets, including in Europe and

developing markets, (6) changes in the fiscal position and the future economic performance of the United States, including potential consequences of a downgrade of the

sovereign credit rating of the US government, (7) consequences of the United Kingdom's withdrawal from the European Union, (8) changes in or discontinuation of

'benchmark' indices, (9) inflation and deflation in our principal markets, (10) changes in conditions in the credit and capital markets generally, including changes in borrower

and counterparty creditworthiness, (11) failures of banks falling under the scope of state compensation schemes, (12) non-compliance with or changes in laws and

regulations, including those financial services and tax laws, and the interpretation and application thereof, (13) geopolitical risks, political instabilities and policies and actions

of governmental and regulatory authorities, (14) ING's ability to meet minimum capital and other prudential regulatory requirements, (15) outcome of current and future

litigation, enforcement proceedings, investigations or other regulatory actions, including claims by customers, (16) operational risks, such as system disruptions or failures,

breaches of security, cyber-attacks, human error, changes in operational practices or inadequate controls including in respect of third parties with which we do business, (17)

risks and challenges related to cybercrime including the effects of cyber-attacks and changes in legislation and regulation related to cybersecurity and data privacy, (18)

changes in general competitive factors, (19) the inability to protect our intellectual property and infringement claims by third parties, (20) changes in credit ratings, (21)

business, operational, regulatory, reputation and other risks and challenges in connection with climate change, (22) inability to attract and retain key personnel, (23) future

liabilities under defined benefit retirement plans, (24) failure to manage business risks, including in connection with use of models, use of derivatives, or maintaining

appropriate policies and guidelines, (25) changes in capital and credit markets, including interbank funding, as well as customer deposits, which provide the liquidity and

capital required to fund our operations, (26) the other risks and uncertainties detailed in the most recent annual report of ING Groep N.V. (including the Risk Factors contained

therein) and ING's more recent disclosures, including press releases, which are available on www.ING.com.

This document may contain inactive textual addresses to internet websites operated by us and third parties. Reference to such websites is made for information purposes

only, and information found at such websites is not incorporated by reference into this document. ING does not make any representation or warranty with respect to the

accuracy or completeness of, or take any responsibility for, any information found at any websites operated by third parties. ING specifically disclaims any liability with

respect to any information found at websites operated by third parties. ING cannot guarantee that websites operated by third parties remain available following the

publication of this document, or that any information found at such websites will not change following the filing of this document. Many of those factors are beyond ING's

control.

Any forward looking statements made by or on behalf of ING speak only as of the date they are made, and ING assumes no obligation to publicly update or revise any

forward-looking statements, whether as a result of new information or for any other reason.

This document does not constitute an offer to sell, or a solicitation of an offer to purchase, any securities in the United States or any other jurisdiction.

35

Attachments

  • Original document
  • Permalink

Disclaimer

ING Groep NV published this content on 08 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2020 05:08:09 UTC