ING Groep N : Analyst presentation 3Q2020

Third quarter 2020 results

ING posts 3Q2020 net result of €788 mln

Steven van Rijswijk, CEO of ING

5 November 2020

Key points

• In line with our purpose, we continue to take actions to support our customers, employees and society in coping with the effects of the Covid-19 pandemic. At the same time, countering financial and economic crime remains a priority
• The current environment underscores the strength of our digital business model. We continued to grow primary customers, as they choose us as their go-to bank, while mobile interactions further increased
• Pre-provisionresult was resilient, supported by disciplined pricing, good fee income and cost control, despite increased margin pressure on customer deposits and impairments
• Risk costs declined sharply, reflecting much lower Stage 3 provisions and a €552 mln management overlay, to compensate for the effect of an IFRS 9 driven release and to increase provisioning related to payment holidays
• A growing number of Covid-19 cases and renewed lockdown measures are increasing uncertainty. We maintain vigilance on margins and asset quality. We are also taking steps to focus our activities, which impacts our geographical footprint, projects and operations
• 3Q2020 CET1 ratio was strong at 15.3%. The full 3Q2020 net profit is kept outside of regulatory capital
• We have adjusted our long-term CET1 ratio ambition to ~12.5% (~200 bps above MDA), reflecting lower capital requirements and more visibility on expected remaining regulatory RWA impact. Given the current uncertainty caused by the Covid-19 pandemic, we will manage our CET1 ratio at a level well above 12.5% until there is more clarity on how the economy will emerge from the Covid-19 pandemic
• We have adjusted our distribution policy to a 50% pay-out ratio of resilient net profit

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The pandemic underscores our digital success and requires increased focus

Primary customer* base (in mln)

29.2%	30.5%	32.8%	34.3%	35.0%
				16.5
		12.5	13.3	13.7

10.4	11.4

2016	2017	2018	2019	3Q2020	Ambition
Primary as a % of total retail customers		2022
% mobile in interactions with ING
		CAGR +37%**	82%	87%
	63%	73%
52%
2016	2017	2018		2019	3Q2020
2.5	3.0	3.7		4.5	5.2

Number of total interactions YTD with ING (in bln)

• Our primary customer base has increased by 3.3 million since we accelerated our Think Forward strategy in 2016. 213,000 new primary customers were added in 3Q2020, while the number of mobile interactions continued to grow
• With the challenging external environment, we are refocusing our activities, leading to some adjustments
• • Focus on core clients and simplification of our geographical footprint in Wholesale Banking
  • Reduced scope of the Maggie programme in Retail Banking
• These measures will result in a combined reduction of ~1,000 FTEs by the end of 2021. A redundancy provision will be taken in 4Q2020
• Going forward, we will continue to monitor developments and critically review our activities and expenses

* Definition: active payment customers with recurring income and at least one extra active product category	3
** CAGR for number of mobile interactions with ING (annualised for 2020)

Building on our data-driven digital leadership

Client interactions

Product & Services

Underlying capabilities

 Standardisation

Customer Engagement Platform Digitalisation

 Reusability

 Scalability

Product Platforms		Local solutions
Insurance					Etc		Efficiency
		Service	Service	Service	Service
Investments		Digitalisation
	Simplification
					Robotisation
Consumer lending	/	/	/	/		ROE Enhancement
Product	Product	Product	Product
	Foundation
Cloud	TPA	Data Lakes	Risk Models		Standardisation
	Consolidation
							Scalability

• One App / One Web already services retail customers in the Netherlands and Germany. By 3Q2020 nearly all active private customers of ING Belgium have been onboarded
• The cross-border integration of local product solutions has been discontinued (programme Maggie)
• Through our foundation, including our Touch Point Architecture (TPA), we focus on building modular elements which can be re-used, using one way of coding as well as standardised data capturing
• This foundation allows for modular solutions for local product and service solutions. It further supports the roll- out of cross border platform initiatives and partnerships, such as our collaboration with
  AXA

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