ING's 13th Investor Relations Symposium: Managing Capital Efficiently
- ING will continue to build on the momentum it has established in delivering profitable growth thanks to its excellent portfolio of businesses
- Strong capital management is fundamental to ING, and the Group could create additional free capital of around EUR 4-6 billion in 2007. This creates further opportunities to create value for shareholders, including additional organic growth, fill-in acquisitions or the return of capital to shareholders
- The Wholesale Bank has been transformed into a well focused business centred on generating attractive assets, real estate and financial markets
In introducing the 13th Investor Relations Symposium, Michel Tilmant, Chief Executive Officer of ING Group, says ING's earnings momentum over the past 3 years demonstrates the impact of portfolio management and execution on delivering both returns and growth. While the whole industry has benefited from a generally favourable economic environment, with the exception of flat yield curves, the bulk of ING's underlying net profit growth was driven by core business growth independent of the economic cycle. ING has successfully shifted capital to higher return businesses, with 84 % of economic capital invested in businesses yielding returns above ING's hurdle rate of 12%.
Going forward ING will focus on driving further profitable growth, while helping customers manage their financial future and developing in the wealth accumulation space. As customers live longer, they are becoming increasingly concerned that they will outlive their assets. This creates strong demand for savings, life insurance, mutual funds, mortgages, retirement services, real estate funds, private banking and other wealth accumulation products.
In this changing environment, ING is well positioned with a strong business model to continue to deliver robust profitable growth, benefiting from its strong distribution reach and leading product offerings and skills. ING also increasingly benefits from the strength of its brand and has recently launched its first global brand campaign around Formula One, which is primarily targeting retail customers.
Capital management
Capital management has a pivotal role to support business growth and the successful implementation of managing for value. ING's triangular corporate structure (separate holding companies for Group, Bank and Insurance ) creates capital efficiency and flexibility by leveraging the benefits of diversification.
In the coming years ING stands to benefit from the overall convergence of regulatory and economic capital frameworks. In that context, our policy of managing our business on economic capital will give us increasing flexibility. For instance, given the high quality of ING's credit portfolio including mortgages, the first internal parallel run of Basel II showed a reduction of risk-weighted assets from EUR 338 billion to approximately EUR 240 billion.
ING has more than sufficient capital to fund growth in 2007 and beyond and could create additional free capital of around EUR 4-6 billion this year. This presents further opportunities to create value for shareholders, including additional organic growth, fill-in acquisitions or the return of capital to shareholders.
ING Wholesale Banking
Over the past three years ING Wholesale Banking has been transformed into a well focused business centred on generating attractive assets and cash flow for ING Group. The business has a strong focus on five key product pillars: Structured Finance, Leasing & Factoring, General Lending & Payments and Cash Management, Real Estate and Financial Markets. The business concentrates on the mid-corporate client segment in the Benelux and has a strong presence in Central Europe.
ING Wholesale Banking has increased capital efficiency by reducing economic capital through divestments of underperforming units and a reduction of the risk profile. Risk-weighted assets have been shifted from general lending to higher return specialised products, such as real estate, leasing and structured finance. The international network has been rationalised to focus on value-added products and key client relationships. Capital efficiency has been improved through syndication and securitisation, reducing large exposures and concentrations thereby reducing risk and hence economic capital requirements. As a result Wholesale Banking has reduced its economic capital by EUR 2 billion since the end of 2003 and risk adjusted returns have increased to pre-tax 24.3%. Despite the reduction of economic capital, Wholesale Banking continues to deliver a solid cash flow to ING Group.
Going forward, Wholesale Banking will continue to allocate capital to those product areas that generate attractive returns, while continuing to improve cost efficiency.
The Investor Relations Symposium can be followed live via webcast at www.ing.com starting at 9:00 a.m. CET. The presentations will also be available online from that time.
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Press enquiries: ING Group
Carolien van der Giessen, +31 20 541 6522, carolien.van.der.giessen@ing.com |
ING is a global financial institution of Dutch origin offering banking, insurance and asset management to over 60 million private, corporate and institutional clients in over 50 countries. With a diverse workforce of about 120,000 people, ING comprises a broad spectrum of prominent companies that increasingly serve their clients under the ING brand.
Note to Editors
The programme for the Investor Relations Symposium is as follows:
09:00 am Introduction by Michel Tilmant, CEO of ING Group
10.30 am Wholesale Banking by Eric Boyer de la Giroday (CEO ING Wholesale Banking)
1.00 pm Wholesale Banking Products by Eric Boyer de la Giroday, George Jautze (CEO ING Real Estate) and Diederik van Wassenaer (Global Head of Wholesale Banking Products)
2.00 pm Wrap up Wholesale Banking by Eric Boyer de la Giroday
3.00 pm Capital Management by John Hele (deputy CFO ING Group) and Maarten van Eden (General Manager Capital management)
4.15 pm Wrap up by John Hele
If you are not able to view the webcast, you can also listen in by telephone at the following numbers:
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From the Netherlands/Europe: +31 20 794 8500
From the UK: +44 20 7190 1537
From the USA and Canada: +1 480 293 1749
