Building the Bank of the FutureGrowing the Franchise without Growing the Balance SheetING Investor DayJan HommenCEO ING Gr...
Agenda  1        Update on Group Restructuring  2        ING Bank Strategy Update  3         Ambition 2015ING Investor Day...
ING is making good progress on EC restructuringProgress 2011                                         Restructuring Plans 2...
Next priorities: State Repayment & Group LeverageProgress 2011                                   State Repayment Sale of ...
Core tier 1 target of ≥10% to be reached in 2013                     1.0%            -0.3%                                ...
The current environment is uncertain…                                     • Ongoing crisis in the Eurozone                ...
Strategy for the coming years is based on two phases2012                                     End 2013                     ...
ING Bank                                     Strategy UpdateING Investor Day - 13 January 2012          8
European banks are facing far-reaching changes                                     • Higher capital requirements   Regulat...
Which banks will succeed in this environment?                                     Banks with ability to generate capital a...
ING has key strengths to support our success…Strong capital generation                                           Strong re...
We have strong positions in attractive northernEuropean home markets                                                      ...
We are used to operating in lean, competitive marketsAverage price of current account provided to consumers per country (E...
Which has made us leaders in innovative distribution…NL is a leader in online banking                           Which ING ...
…and a cost leader among European BanksCost / Income                                                                      ...
…while championing fair, transparent pricing for ourcustomersCustomer proposition                                         ...
…and with a strongly performing CommercialBanking franchiseUnderlying income* (EUR mln)                                   ...
But we can do more to improve further….                          The rules of the game have changed.                   Tod...
Customer           We are converging to one model: Easy andCentricity                   fair, with low cost Converging mod...
OperationalExcellence          Efficiency will be a competitive imperative                                                ...
OperationalExcellence        We can offset part of these rising costs…. Underlying operating expenses (in EUR bln)        ...
OperationalExcellence          We are moving towards operational excellence                             • Simplified produ...
Operational         We are making progress towards simplifyingExcellence                    our product offering and impro...
OperationalExcellence          And we are rationalising our IT landscape Evolution of IT applications towards a shared and...
Balance           We are working to manage our balance sheet   Sheet            more efficiently as One Bank…             ...
Balance           As Basel III will put pressure on margins in Sheet            the short term until assets re-priceLonger...
Balance           We have attractive businesses that Sheet            complement each otherCommercial Banking• Originators...
Balance            We are aligning our internal organisation to Sheet             facilitate balance sheet optimisation   ...
Ambition 2015ING Investor Day - 13 January 2012         29
ING will be a strong European Bank with growthpotential beyond Europe Leading Commercial Bank in                          ...
…with a low-risk balance sheet                                           Ambition 2015Evolve investment portfolio into    ...
…Allowing us to grow customer lending withoutgrowing the balance sheetProportion customer loans increasing                ...
…producing a competitive ROE through low costsand low riskING produces a Return on Equity in line                         ...
An optimised balance sheet should result in an attractive ROE of 10-13% under Basel III                         Balance Sh...
Wrap-Up   Manage                            The first priority is managing through the current crisis in the through the  ...
DisclaimerING Group’s Annual Accounts are prepared in accordance with International Financial Reporting Standardsas adopte...
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ING Investor Day: Building the Bank of the Future

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by Jan Hommen, CEO ING Group.

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ING Investor Day: Building the Bank of the Future

  1. 1. Building the Bank of the FutureGrowing the Franchise without Growing the Balance SheetING Investor DayJan HommenCEO ING GroupAmsterdam – 13 January 2012
  2. 2. Agenda 1 Update on Group Restructuring 2 ING Bank Strategy Update 3 Ambition 2015ING Investor Day - 13 January 2012 2
  3. 3. ING is making good progress on EC restructuringProgress 2011 Restructuring Plans 2012 ING Direct USA: Sale agreed for USD 9 bln in • Since November 2010 ING has been preparing cash and shares. Closing expected in 1Q2012 its Insurance/Investment Management businesses for the base case of two IPOs – one for the US business and one for the European Insurance Latin America: Sale completed for and Asian businesses EUR 2.65 bln • However, given the uncertain economic outlook and turbulent financial markets, especially in Insurance US, Europe & Asia: Legal and Europe, ING has decided to explore other operational separation completed end 2011 options for its Asian Insurance and Investment Management businesses State Repayment: EUR 3 bln paid to the State • We will continue preparations for a standalone in 2011. To date EUR 7 bln principal + 2 bln future of the European Insurance/Investment coupons and exit premiums have been paid with Management Business, including the possibility a total return for the State of 17% of an IPO • ING also continues to prepare for the base caseAdditional Portfolio Management Actions: of an IPO for the US Insurance/Investment Management businesses ING Real Estate Investment Management sold for EUR 1 bln • We are committed to conducting these processes with the utmost diligence in the ING Car Lease sold for EUR 700 mln interests of all stakeholders, including our customers, employees and shareholdersING Investor Day - 13 January 2012 3
  4. 4. Next priorities: State Repayment & Group LeverageProgress 2011 State Repayment Sale of Insurance Latin America reduced • Capital priorities for 2012 will be to continue with the leverage in Insurance holding company by State repayment and start to reduce the leverage in EUR 2.8 bln the Group holding company Liability management transaction reduced • ING remains committed to repaying the State as hybrid securities by EUR 3 bln and resulted quickly as possible on terms acceptable to all in EUR 745 mln gain, of which EUR 600 mln stakeholders at Group level, which will reduce double leverage from 4Q and can be used towards • We aim to repay (part of) the remaining CT1 repaying the State securities to the State this year, once we have received the proceeds from the liability management The sales of ING Car Lease and ING Real exercise and the sale of ING Direct USA subject to Estate Investment Management resulted in economic circumstances and availability of capital total gains of EUR 835 mln and released EUR 1,075 mln in capital from the Bank • Ideally we would like to complete the State repayment this year, however given the ongoing The pending sale of ING Direct USA is crisis in the euro zone and increasing regulatory expected to release an additional USD 4 capital requirements, we need to take a cautious billion in capital from the Bank approach and maintain strong capital ratios in the Bank as we build towards Basel IIIING Investor Day - 13 January 2012 4
  5. 5. Core tier 1 target of ≥10% to be reached in 2013 1.0% -0.3% -0.8% 9.6% 9.5% 10.0% 10.0% Sept. 2011 Divest- Basel 2.5 Basel III Capital 2013 2015 ments* GenerationStrong focus on core tier 1• Strong earnings generation should enable ING to grow into Basel III targets before the end of 2013• A further review of non-core assets in the bank may also accelerate repayment of the State• Dividend payments can be resumed post State repayment and restructuring* Divestments include REIM and ING Direct USAING Investor Day - 13 January 2012 5
  6. 6. The current environment is uncertain… • Ongoing crisis in the Eurozone • Longer term solutions require strong Political European leadership • Elections pending in major global economies in 2012 • Ultimate capital targets under Basel Requires a cautious III, including SIFI buffers, not yet approach for 2012 known Regulatory Focus on: • Ultimate rules on liquidity and funding not yet clear • Funding • Additional measures under discussion • Capital • Liquidity • Sovereign debt crisis ongoing Economic • Volatility in financial markets • Very uncertain short-term economic outlook in EU, US and AsiaING Investor Day - 13 January 2012 6
  7. 7. Strategy for the coming years is based on two phases2012 End 2013 2015Bank: Transition to Basel III Bank Standalone• Manage through the crisis • Grow deposits across the bank• Limit B/S and RWA growth  Basel III • Evolve ING Direct units towards• Execute B/S optimisation requirements mature business model using loans from Commercial Banking• Invest where needed to achieve met operational excellence • Grow the franchise without• Further simplify the business  EC growing the balance sheet portfolio and the organisation restructuring • Resume dividend after• Prudent approach to capital and and restructuring and State funding given unstable market Repayment repayment conditions of Dutch StateInsurance: complete• Continue to work to improve the performance of the Insurance operations and optimise returns and valueING Investor Day - 13 January 2012 7
  8. 8. ING Bank Strategy UpdateING Investor Day - 13 January 2012 8
  9. 9. European banks are facing far-reaching changes • Higher capital requirements Regulatory • Lower balance sheet leverage Limit banks’ Changes • More conservative funding & liquidity ability to grow • Focus on size of banks relative to GDP • Households and governments need to reduce debt Societal Put pressure Drivers • More customer scrutiny of banks on margins • Increasing demand for transparency • Weaker economic environment Economic Limit demand • Reticence among companies to invest Drivers • Deleveraging across banking industryING Investor Day - 13 January 2012 9
  10. 10. Which banks will succeed in this environment? Banks with ability to generate capital and meet Basel III requirements quickly Regulatory Changes Banks with ability to attract funding, both through deposits and professional markets Banks that offer fair value for money, transparent and simple products, easy access, excellent service and appealing brand Societal Drivers Banks with operational excellence, low-cost producers Banks with strong funding will be able to lend at better margins while others deleverage Economic Drivers Banks with strong market positions will be able to re-priceING Investor Day - 13 January 2012 10
  11. 11. ING has key strengths to support our success…Strong capital generation Strong retail deposit gathering abilityCore Tier 1 ratio EUR 3 bln paid to State In EUR bln 413 432 444 369 379 9.6% 9.6% 7.3% 7.8% 2008 2009 2010 9M2011 2007 2008 2009 2010 9M2011Conservative funding mix Attractive Loan-to-Deposit Ratio (1H2011)Per 30 September 2011 (%) Nordea 1.8 Rabobank 1.5 11 Lloyds Banking 1.5 3 UniCredit 1.4 44 ABN AMRO 1.3 BBVA 1.2 ING Bank 1.2 Commerzbank 1.221 BNP Paribas 1.2 Retail deposits Barclays 1.2 Corporate deposits Santander 1.2 Societe 1.1 Public debt KBC Bank 1.0 Crédit Agricole 0.8 Subordinated debt HSBC 0.8 21 Interbank Credit Suisse 0.7 • Excludes ING Direct USA. Sources: Public company dataING Investor Day - 13 January 2012 11
  12. 12. We have strong positions in attractive northernEuropean home markets No. 2 Bank in the Leading Commercial Bank in the Benelux and CEE Netherlands Top 10 global player in Structured Finance EUR 204 bln in client balances EUR 383 bln in client of which EUR 93 bln outside the home markets balances No. 4 Bank in Belgium EUR 179 bln in client balances No. 3 Retail Bank in Germany EUR 154 bln in client balances No. 4 Bank in Poland EUR 22 bln in client balances …Plus ING Direct and growth options in CEE and Asia Total Client Balances ING Bank EUR 198 bln in client balances EUR 1,030 blnING Investor Day - 13 January 2012 12
  13. 13. We are used to operating in lean, competitive marketsAverage price of current account provided to consumers per country (EUR)* Italy 269.8 Spain 204.9 Latvia 171.0 France 140.0 Austria 133.3 Finland 99.3 Czech Republic 96.4 Slovenia 94.4 Germany 93.0 Greece 92.5 Slovakia 91.8 Lithuania 86.6 Cyprus 84.2 Increased public Romania 81.1 scrutiny of banks will Hungary 80.6 Ireland 76.3 put pressure on fees United Kingdom 75.0 Sweden 71.0 for basic banking Poland 70.8 services Luxembourg 65.7 Estonia 65.2 Denmark 63.9 Malta 62.9 Portugal 48.9 Belgium 48.7 Netherlands 40.2 Bulgaria 35.9 EU Average* Source: European Commission Directorate-General for Health and Consumers, "Data collection for prices of current accounts provided toconsumers" published 2009. The objective of this survey was to produce statistically reliable data on the prices and tariffs for using the serviceslinked to a current bank account in the EU Member States. ING Investor Day - 13 January 2012 13
  14. 14. Which has made us leaders in innovative distribution…NL is a leader in online banking Which ING has exported successfullyOnline banking usage Percentage¹, 2010 ING Direct customers 30 Sept. 2011 (x 1,000) 7,363100 Transformation Total to ‘Self-first’ is ‘Self-first’ 16 mln 80 a matter of time Netherlands 1,773 2,357 815 1,241 1,452 1,456 ‘Multi Canada 60 channel’ France Belgium France Italy Australia UK Canada Spain Germany Australia UK 40 ‘Online Austria Germany adaptors’ Giving us a structural cost advantage Spain Poland 20 Operating expenses/Retail Balances 2010 (bps) ‘Brick & Italy Mortar’ 113 0 India Turkey Romania 0 20 40 60 80 100 43 Internet access Percentage², 2011¹ Percentage of adults using internet² Percentage of households with internet accessSOURCE: data published by Eurostat, EFMA, comScore. Traditional Banks ING DirectInternet World Stats (Nielsen Online, InternationalTelecommunications Union, Official country reports, andother trustworthy research sources). ING Investor Day - 13 January 2012 14
  15. 15. …and a cost leader among European BanksCost / Income Cost / Client Balances% as per 30 June 2011 bps as per 30 June 2011 Lloyds Banking 89 Credit Suisse 460 Credit Suisse 76 Deutsche Bank 429 Deutsche Bank 70 Barclays 273 Commerzbank 70 Societe Generale 242 Barclays 69 BNP Paribas 214 ABN AMRO 67 Lloyds Banking 195Societe Generale 66 HSBC 181 UniCredit 61 UniCredit 171 Crédit Agricole 61 BBVA 156 Rabobank 60 Erste 153 BNP Paribas 59 Crédit Agricole 149 ING Bank 59 Santander 145 HSBC 58 Commerzbank 143 KBC Bank 54 KBC Bank 128 Nordea 52 Rabobank 115 Erste 50 54% ex. market ABN AMRO 111 BBVA 46 impacts Nordea 101 Santander 44 ING Bank 90Notes:• Cost = Total Operating Expenses; Client Balances = average Customer Loans plus average Customer Deposits• Sources: Public company data, ING company dataING Investor Day - 13 January 2012 15
  16. 16. …while championing fair, transparent pricing for ourcustomersCustomer proposition Strong brand position• Limited number products Total aided Brand Awareness (2010)• Consistent, transparent, fair pricing 97 98 92 91 99 92• Customer-centric process management 84 84 82 72• Break-through simplicity NL Bel Pol Aus Can Fra Ger Ita Spa UKThe lowest fees in most markets And a loyal customer baseCosts for current account Net Promoter Score Italy Can, Spa, Aus, Spain Fra, Ger, UK, France Rom, Pol, Bel Germany NL, Ita Romania Poland 1 3 2 BelgiumNetherlands 0 100 200 300 ING MarketING Investor Day - 13 January 2012 16
  17. 17. …and with a strongly performing CommercialBanking franchiseUnderlying income* (EUR mln) Risk costs* 72 5,350 4,188 4,657 4,059 38 3,777 191 34 33 31 1,207 3,857 594 490 422 316 -144 2007 2008 2009 2010 9M10 9M11 2007 2008 2009 2010 9M10 9M11 Impairments on Greek government bonds Risk costs (EUR mln) Risk costs (bps**)Underlying result before tax* (EUR mln) • Commercial Banking has performed strongly throughout the crisis and continues 2,217 to perform well 1,856 191 1,648 1,042 • Risk costs remained under control 752 1,643 • The result in 2008/2009 was negatively impacted by FV changes and impairments on Real Estate investments and 2007 2008 2009 2010 9M10 9M11 development projects but Real Estate Impairments on Greek government bonds exposure has since been reduced sharply * Adjusted for sale of Car Lease and REIMING Investor Day - 13 January 2012 17
  18. 18. But we can do more to improve further…. The rules of the game have changed. Today’s environment calls for a different kind of bank: Restore trust through transparency and fair In terms of what we Customer pricing, convenience, excellent service and offer our customers Centricity solutions Streamlining processes and improving In terms of how we Operational efficiency is an imperative competitive edge operate as a company Excellence as regulatory costs rise Optimise the balance sheet to maximise And in how we manage Balance Sheet returns and offset higher capital our balance sheet Optimisation requirementsING Investor Day - 13 January 2012 18
  19. 19. Customer We are converging to one model: Easy andCentricity fair, with low cost Converging models For Customers: Easy and fair • Customer centric culture, with care for Broad Product Belgium customers Range Netherlands • Limited number of transparent products, serving all customer needs ING model • Consistent fair pricing Poland Easy and fair,Optimised with low cost • Customer centric process management, with product break-through simplicity range for ING Directcustomers Spain • Direct when possible, advice when needed Italy Germany Australia Canada Underlying economics: Strong low cost Mono France Product UK model, stable business • Superior brand, number one customer choice Mainly branch Direct when Direct • Attractive client segment - prone to be direct, based possible (Low cost) low credit risk • Simplified product range Bubble size = ING Client Retail Balances 3Q 2011 • Focus on direct channels • Process excellence, low cost ING Investor Day - 13 January 2012 19
  20. 20. OperationalExcellence Efficiency will be a competitive imperative But regulatory costs and bank taxes are We have reduced our costs… driving costs higher… Operating expenses (in EUR mln) • Deposit Guarantee Scheme Costs and Bank -3 % Taxes added approximately EUR 250 mln to expenses in 9M2011 10,002 9,439 9,685 7,155 7,287 • Excluding those charges and market impacts, the cost/income ratio for 9M2011 would have been 53% • A new Deposit Guarantee Scheme which has 2008 2009 2010 9M2010 9M2011 been proposed in the Netherlands would add And our headcount… costs of approximately EUR 230 mln on an annual basis -5 % • Pending bank taxes in the Netherlands and Belgium are estimated to cost EUR 120 mln per 75,109 year on implementation 71,088 72,343 71,229 2008 2009 2010 9M2011 ING Investor Day - 13 January 2012 20
  21. 21. OperationalExcellence We can offset part of these rising costs…. Underlying operating expenses (in EUR bln) -0.8 0.7 -0.5 -0.2 -0.3 0.3 9.7 8.7 8.9 Reported Sept. Divestments Impairments Sept. 2011 Inflation Procurement + Savings Regulatory Estimate2011 annualised REIM / US / RED normalised + (average ~2%) other programme impacts 2015 Car Lease annualised management in NL actions …but structural improvements needed to reach long-term cost target • We are striving to offset rising costs to reach a cost-income ratio of 50-53% by 2015: • Cost reduction plans recently announced in the Netherlands will deliver EUR 300 mln in annual savings • Procurement initiatives are expected to save EUR 300 mln per year by 2015 • Further structural efficiency improvements in processes and investments in IT will be needed to reach the long-term cost/income ratio target of 50% ING Investor Day - 13 January 2012 21
  22. 22. OperationalExcellence We are moving towards operational excellence • Simplified product offering Service • Standardised, consistent service Convenient, safe • Integrated, multi-channel offering and trusted offering for our customers • Simplified, lean organisation Organisation • Efficient end-to-end processes • Centralised processing Simpler organisation = • Fewer, standardised systems more time to focus Systems • Straight-through processing on serving the customer • Integrated across channels ING Investor Day - 13 January 2012 22
  23. 23. Operational We are making progress towards simplifyingExcellence our product offering and improving service Major strides made with merger in NL Belgium is investing in excellence Ex. Simplification of savings product offering in • EUR 220 mln earmarked for investment over Netherlands the coming three four to improve operational 62 excellence • Mobile app introduced in summer 2011 20 • Improving online service offering for businesses 8 • Faster credit approval processes for retail and business lending Pre Merger Post Merger Today Postbank - ING Variable Fixed Other Retail Direct & International • Product offering has been simplified and made • Global Process Excellence Forum created to more transparent focus on knowledge sharing in operational • Simplification of products made it possible to management, sharing and copying best streamline the client processes and related practices client channels • Dedicated process improvement staff, including • Single customer database across all channels 82 Black Belts worldwide helping local staff across the international retail banking activities • Faster, more reliable service to optimise customer facing and internal • Leading to increased customer satisfaction processes ING Investor Day - 13 January 2012 23
  24. 24. OperationalExcellence And we are rationalising our IT landscape Evolution of IT applications towards a shared and replicated Target Operating Model • Standard framework established to set future direction for our technology landscape -13% • Target Operating Model for IT systems created to -15% standardise and rationalise our applications landscape 75% -25% • 220 projects identified to achieve intermediate 75% targets by 2015, and initiate a long-term journey 55% 20% towards sharing and replicating IT solutions across the bank 40% • Systems to be retired at end of normal ‘life cycle’ to 20% 10% avoid unnecessary replacement costs 10% 15% 25% 40% • During 2009 and 2010, 450 applications were 15% decommissioned. Today ING Bank has IT IT IT IT approximately 3,000 applications worldwide. Landscape Landscape Landscape Landscape Another 450 in 2015 and 750 by 2018 2008 2011 2015 2018 • Moving towards a Shared Service Model for the IT infrastructure across the bank, including Shared Replicated Isolated consolidating more than 20 existing data centres % of applications to be decommissioned into 2 strategic data centres serving all of Europe ING Investor Day - 13 January 2012 24
  25. 25. Balance We are working to manage our balance sheet Sheet more efficiently as One Bank… ~ EUR 900 bln Increasing capital requirements will put Other Other pressure on returns Debt Equity securities LT & STLiquidity Coverage Ratio requires Banks debtlarger holdings of government bonds NSFR requires more long-term funding, Assets Banks putting pressure on marginsand other liquid assets at FV Liabilities at FV Customer Customer lending deposits Increasing competition for savings will put pressure on marginsLimits on total asset leverageintroduced Assets Liabilities • Regulatory changes will put pressure on earnings and returns • We can offset part of the impact of Basel III by managing our balance sheet more efficiently* 30 September 2011, excluding announced divestments ING Investor Day - 13 January 2012 25
  26. 26. Balance As Basel III will put pressure on margins in Sheet the short term until assets re-priceLonger term the Net Interest Margin should increase to 140-145 bps 3 bps 140-145 bps 4 bps 137 bps -3 bps 6 bps -4 bps 3Q2011 Direct USA Higher funding Optimilisation & Asset repricing Other Indicative 2015 costs volume growthBalance sheet optimisation and re-pricing to support NIM improvement• In short term, margins are expected to come under pressure as funding costs and deposit rates increase• Over time that should be offset as low-yielding trading assets are replaced by higher-yielding customer lending, and as assets are re-priced to reflect higher capital and funding costsING Investor Day - 13 January 2012 26
  27. 27. Balance We have attractive businesses that Sheet complement each otherCommercial Banking• Originators of high- quality assets with attractive marginsBenelux, Poland• Full-service universal ING Direct banks • Strong liability• Strong capital generators based on generation low-cost model• Attractive RoE … but we need to match own originated assets to liabilities at ING Direct to optimise returns under Basel IIIING Investor Day - 13 January 2012 27
  28. 28. Balance We are aligning our internal organisation to Sheet facilitate balance sheet optimisation • Country CEOs to be appointed in some countries where we have both Retail Banking and Commercial Banking activities Country • Coordinate local regulatory interaction CEOs • Coordinate development of assets and liabilities across different businesses within agreed KPIs • Optimise returns for country as a whole • Single Treasury to be created over the course of 2012 • Centralised management of asset & liability management, funding, liquidity One Bank • Bank Treasurer reporting to Vice Chairman of ING Bank Treasury • ALM results carved out of Financial Markets and reported under ‘Commercial Bank Other’ from 1Q2012 • Structured Finance to establish front-office teams in Germany and Belgium to take Internal participations in new and existing SF transactionsSyndication • Volumes of Structured Finance loans to be guided by the availability of funding Model • Asset participation guided by local credit risk appetite and diversification • Local credit risk supported by global Structured Finance credit officersING Investor Day - 13 January 2012 28
  29. 29. Ambition 2015ING Investor Day - 13 January 2012 29
  30. 30. ING will be a strong European Bank with growthpotential beyond Europe Leading Commercial Bank in Northern Europe: Benelux and CEE, supporting Leading domestic domestic economy. Leaders in banking positions in Specialised Finance & Netherlands, Belgium, Financial Markets Germany, Poland CEE and Asia: Domestic banks provide options for future growth Home markets ING Direct plus ING Direct Canada and Australia Domestic Banks Direct franchises: Selectively evolve CEE over time towards mature model CB presenceING Investor Day - 13 January 2012 30
  31. 31. …with a low-risk balance sheet Ambition 2015Evolve investment portfolio into Strong capital generation to grow into ~ EUR 900 blnliquidity portfolio and continue to Other Basel III requirements Otherde-risk Debt Equity securities LT & ST Banks debt Extend long-term debt profile and reduce Assets Banks at FV Liabilities reliance on short-term professional fundingReduce non-strategic trading assets at FVand redesign products to mitigateCVA impact Customer CustomerGrow customer lending and lending deposits Continue to build on strong depositselectively shift towards higher gathering ability as primary source ofmargin areas; re-price to reflect fundingincreasing cost of capital Assets Liabilities CT1 ≥10% RoE 10-13% LCR >> 100% NSFR > 100% LtD < 1.1 Leverage <25 ING Investor Day - 13 January 2012 31
  32. 32. …Allowing us to grow customer lending withoutgrowing the balance sheetProportion customer loans increasing Improves the quality of B/S and earningsTotal loan book as % of total balance sheet • Balance sheet optimisation will allow us to continue to support our customers and grow our ~ EUR ~ EUR loan portfolio without growing the balance sheet 900 bln 900 bln • Replacing low-yielding trading assets with own originated loans will help increase returns 36% 41% • Loan growth will favour areas with higher returns • Focus on growing key markets and product positions with high return businesses and Replacing attractive risk / reward characteristics such as non-strategic Structured Finance 64% trading assets by • Continue growth in attractive SME and mid- 59% higher yielding corporate markets customer lending • Moderate mortgage growth and focus mainly on our home markets of Benelux and Germany • Apply pricing discipline to reflect increasing costs 3Q2011 Indicative of capital and funding 2015 * IndicativeING Investor Day - 13 January 2012 32
  33. 33. …producing a competitive ROE through low costsand low riskING produces a Return on Equity in line Income/assets (bps)with peers… 300ROE based on 10% core Tier 1 (%) …despite lower income 15015 and fees to clients 0 2008 2009 2010 1H11 Cost to assets (bps)10 150 …because we have 100 best-in-class efficiency… 50 5 2008 2009 2010 1H11 Risk costs to Customer loans (bps) 150 0 2008 2009 2010 1H2011 …and a low 100 risk profile 50 ING Median peers 0Notes:Peers are BNP Paribas, Santander, Unicredit, KBC and Nordea 2008 2009 2010 1H11Source: Annual reports, Public company dataING Investor Day - 13 January 2012 33
  34. 34. An optimised balance sheet should result in an attractive ROE of 10-13% under Basel III Balance Sheet X Interest Margin ~ IncomeKeep Balance C/ISheet flat while Improve NIM - 50-53% optimising through B/S Risk optimisation and Expenses profile re-pricing - 40-45 RWA Risk Costs bps/RWA Leverage - CT1 <25 Tax ≥10.0% = Capital ROE Result 10-13% ING Investor Day - 13 January 2012 34
  35. 35. Wrap-Up Manage The first priority is managing through the current crisis in the through the eurozone, conserving capital and preserving our strong funding crisis and liquidity position given the ongoing uncertain environment ING is well positioned for Basel III, but we can do more to adaptAdapting to to the changing environment: the new • Customer Centricityenvironment • Operational Excellence • Balance Sheet Optimisation Balance By managing our balance sheet more efficiently we can absorb Sheet much of the impact of Basel III and grow our business withoutOptimisation growing our balance sheetCompetitive ING Bank can generate a competitive ROE of 10-13% under ROE Basel III on a low-risk balance sheet because we are also low costING Investor Day - 13 January 2012 35
  36. 36. DisclaimerING Group’s Annual Accounts are prepared in accordance with International Financial Reporting Standardsas adopted by the European Union (‘IFRS-EU’).In preparing the financial information in this document, the same accounting principles are applied as in the3Q2011 ING Group Interim Accounts. All figures in this document are unaudited. Small differences arepossible in the tables due to rounding.Certain of the statements contained herein are not historical facts, including, without limitation, certainstatements made of future expectations and other forward-looking statements that are based onmanagement’s current views and assumptions and involve known and unknown risks and uncertainties thatcould cause actual results, performance or events to differ materially from those expressed or implied insuch statements. Actual results, performance or events may differ materially from those in such statementsdue to, without limitation: (1) changes in general economic conditions, in particular economic conditions inING’s core markets, (2) changes in performance of financial markets, including developing markets, (3) theimplementation of ING’s restructuring plan to separate banking and insurance operations, (4) changes inthe availability of, and costs associated with, sources of liquidity such as interbank funding, as well asconditions in the credit markets generally, including changes in borrower and counterparty creditworthiness,(5) the frequency and severity of insured loss events, (6) changes affecting mortality and morbidity levelsand trends, (7) changes affecting persistency levels, (8) changes affecting interest rate levels, (9) changesaffecting currency exchange rates, (10) changes in general competitive factors, (11) changes in laws andregulations, (12) changes in the policies of governments and/or regulatory authorities, (13) conclusions withregard to purchase accounting assumptions and methodologies, (14) changes in ownership that couldaffect the future availability to us of net operating loss, net capital and built-in loss carry forwards, and (15)ING’s ability to achieve projected operational synergies. ING assumes no obligation to publicly update orrevise any forward-looking statements, whether as a result of new information or for any other reason. Thisdocument, and any other document or presentation to which it refers, do not constitute an offer to sell, or asolicitation of an offer to buy, any securities.www.ing.comING Investor Day - 13 January 2012 36
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