Focused for Growth
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Transcript of Focused for Growth
Introduction
ING Group• Listed on Amsterdam, Brussels and New York Stock exchanges
• Involved in financial services
• Group holding company with two subholdings:
• ING Bank NV
• ING Verzekeringen NV
• Organised by business lines
• Governed by a two-tier Board structure
• Executive Committee
• Supervisory Board
• Voting principle: one share, one vote
Key Points
Key consumer trends are driving strong growth in savings as well as convergence of financial products
ING is fundamentally well positioned to capitalise on changes in the industry
ING’s strategy, focusing on banking, investments, life insurance and retirement services, offers strong long-term growth potential
Working on new key performance indicators to reflect the essence of our business and delivery on our strategy
Plays an important role in implementing the Group strategy
Trends
Strategy
KPIs
Well positioned
ING Belgium
2000 2050
%
05
1015202530354045
World US Japan Germany Italy NL Poland China
Source: United Nations, 2007
Populations are aging around the globe:(Percentage population age 60+)
• Demographics are driving growth in global savings worldwide
• Government pension funds no longer sustainable
• People need to take control of their financial future
74
76
68
2007 2008 2009 2010 2011 2012 2013 2014
78
72
70
2015
64
80
2016
66Retirement age
Life expectancy
62
People are living longer(Retirement age versus life expectancy in US)
People are living longer and need to take more responsibility for their own retirement
Total global savings pool is growing at 7.3% per year, and seen accelerating with growth led by developing markets
0
25
50
75
100
125
150
175
2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E
Global retail financial balances* (in EUR trillion)
Source: McKinseyCAGR 2007E-2016E
Asia Pacific (Excl Japan / Australia)
Central & Eastern Europe
Latin America
* Includes current accounts, savings, investments, mutual funds, consumer finance, mortgages, pensions and life insurance
7.3%
13%
11%
16%
Technology is transforming the distribution of financial services
0
300
600
900
1,200
1,500
1997 1999 2001 2003 2005 2007
36147
361
598
817
1,320
Source: www.internetworldstats.com
Shift to bank technology/online:Global internet usage growth (millions of users)
0
100
200
300
400
500
1980 1985 1990 1995 2000 2005 2010
Total number of clients
Direct contacts
Bank visits
Number of client contacts in the Netherlands (mln)
• Technology is transforming the distribution of financial services, improving convenience for customers and cost efficiency for banks
• In this more flexible environment customer service, value for money, trust and a strong brand are crucial to keeping the customer relationship
Source: McKinsey
(Share of life premium by product group)
The life insurance industry is undergoing a paradigm shift
Shift to investment-linked: Shift to bank distribution:(Percentage of life insurance products sold through bank channel)
• Life insurance is undergoing a paradigm shift from traditional life to investment products
• These products are moving more into the domain of banking• Life insurance is being distributed more and more through bank channels,
which are more cost-effective
• Banks own the customer relationship, and insurers will become increasingly dependent on banks for distribution
United States
Traditional LifeInvestment-linked
South Korea
1986 2006 2002 2007E
Hungary
12
48
88
52
4048
6052
65
4235
58
2002 2006
Hunga
ry
Poland
20002005
1821
0
10
20
30
40
50
60
70
80
Czech
Rep
23
17
2
China
22
1
India
50
S. Kor
ea
47
0
NL
1311
Spain
6965
Belgium
5650
Mature Europe AsiaCentral and Eastern Europe
Source: McKinsey Source: McKinsey
Current accounts
Saving accounts
Mortgages
Life insurance
Mutual funds
Unit-linked investments
AnnuitiesPersonalequity
Pensions
Time
These trends are driving growth and changes in the financial services industry
Customers can save in many different ways: the distinction between banking and insurance products is no longer relevant
Inc
rea
se
sa
vin
gs
Longer retirement
Accumulation phase Retirement income phase
Roll-over into retirement income stream
There is one customer savings pool
Retirement Services
Key Points
Key consumer trends are driving strong growth in savings as well as convergence of financial products
ING is fundamentally well positioned to capitalise on changes in the industry
ING’s strategy, focusing on banking, investments, life insurance and retirement services, offers strong long-term growth potential
Working on new key performance indicators to reflect the essence of our business and delivery on our strategy
Plays an important role in implementing the Group strategy
Trends
Strategy
KPIs
Well positioned
ING Belgium
Global brand
Distribution
Products & Scale
Presence
Brand
Products for the customer’s life cycle
Strong presence in the most attractive markets
Innovator in distribution
ING is well positioned to capitalise on changes in the industry
Strategic Flexibility Flexibility to capture a larger share of savings pool
Pensions• Second-pillar pension reform is creating
attractive opportunities, particularly in developing markets
• ING is No. 1 pension provider in Central Europe, No. 2 in Latin America
• 1.4 million new customers added in Romania following reforms in 2007
• Purchase of Santander pension business in Latin America brings AuM for the region to EUR 36 billion
ING has the strategic flexibility to enter markets in different ways depending on market circumstances to capture a larger share of the total savings pool and grow from there
• Turkey is a large, fast-growing market• Retail Banking asset pool is much larger than
life insurance pool, and growing faster• Retail Lending is growing at 37% per year,
retail savings at 18%• Strategy to enter Turkey through retail banking
and add products from there
Variable annuities
• Experience developed in US market• Exported to Japan, where ING now ranks No. 3 in
the market for SPVAs with EUR 13 billion in AuM• Beginning rollout in Europe, with Spain and
Hungary launched in 2007
• Built the world’s largest direct bank with EUR 300 billion in balances and 20 million customers
ING has the flexibility to enter markets in different ways to capture a share of the savings pool…
Current accounts
Savings &
Deposits
Mortgages Lifeinsurance
Institutional AM & Mutual Funds
Annuities &
retirement services
All figures per year end*) Includes Wholesale Banking
EUR 82 bln* EUR 344 bln*
Other Lending
EUR 229 blnEUR 207
bln*
• ING offers the full range of products for every stage of the customer’s life cycle
• ING can export product expertise from one market to another (VA, pensions)
• ING has the strategic flexibility to do what works in each market
• ING has global scale, with EUR 1,442 billion in client balances and 75 million customers worldwide
EUR 79 bln EUR 206 bln EUR 295 bln
ING’s strengths
…and has the right products to meet customers’ changing needs, with global scale in core products
13
…including a leading position among the world’s top savings banks
* Excl. UBS, BNP Paribas, ABN AMRO, Credit Suisse (savings data not available)
** Includes also corporates
Source: McKinsey
Japan Post
Mistubishi UFJ Financial Group**
ING
Santander
HSBC
HBOS
Bank Of China
Bank of America
China Construction Bank
Citigroup
Mizuho
Credit Agricole
Intesa
JPMorgan
UCI
Barclays
Resona Holdings
RBS
Deutsche Bank
Lloyds
EUR billion, top 20 global banks, 2006 FYSavings*Retail savings and C/A deposits volume
112
106
129
131
143
154
155
178
203
207
212
217
219
237
242
294
296
302
1,195
685
Traditional branches
• Advice-oriented branches
• Standard transactions by internet
NetherlandsBelgiumPolandTurkeyIndia
mijnpostbank.nl visited by 1 mln retail customers on weekdays; 3rd most visited website in the Netherlands
We have also built a strong agent and broker distribution network in mature and developing markets
ING has a track record for innovation in distribution
Self’Bank branches
• Low-cost franchise formula
• Greenfield used to expand for banking markets in development
RomaniaUkraine (2008)
4% market share achieved in Romania in 3 years
Direct Banking
• Internet-based bank
• Greenfield used to expand for in mature banking markets with high internet penetration
9 Countries
Leading direct bank in the world with 20.3 million customers
0
1
2
3
4
2006 2016E
No. 1 pensions providerNo. 2 life insurer11 million customersEUR 52 bln in retail client balancesRetail banking positions in Poland, Turkey, Romania
17.5%
Central & Eastern Europe
ING has a strong presence in the most attractive developing markets
Developing Markets savings and investment pools (EUR trillion), CAGR
0
1
2
3
4
2006 2016E
11.9%
Latin America
No. 2 pension providerActive in 7 countries15 million customersEUR 36 bln in pension AuM
Asia Pacific (excl Japan/Australia)
No. 2 foreign life insurerNo. 2 fund managerActive in 10 countriesEUR 53 bln in AuM
05
1015202530
2006 2016E
13.0%
• Leading positions in pensions and life in Asia, Central Europe and Latin America
• Retail banking presence in the most important markets of Central Europe & Asia
Source: McKinsey
0102030405060
2006 2016E
…and strong positions in today’s largest markets
0102030405060
2006 2016E
5.6%
Leading US annuity and retirement services playerEUR 176 bln in AuM8 million ING Direct customers
Leading life insurer and retail bank in BeneluxEUR 106 bln in AuM11 mln ING Direct customers
6.2%
Western Europe
North America
0
1
2
3
2006 2016E
05
101520
2006 2016E
EUR 18 bln in AuMNo. 1 in COLINo. 3 in SPVA
4.6%
Japan
No. 3 life insurerNo. 4 superannuation and fund managementEUR 17.7 bln in AuM1.3 mln ING Direct customers
8.8%
Australia
North America, Western Europe, Japan and Australia account for more than 90% of all personal finance balances
Large Markets savings and investment pools (EUR trillion), CAGRSource: McKinsey
* ING Survey
ING has one of the world’s leading retail financial brands
• ING has created a leading global brand, No. 81 on Interbrand league table
• One of only 12 financial services brands in global top 100
• Global television coverage of F1 sponsorship helped increase brand awareness around the world, especially Central and Eastern Europe and Asian markets – key regions for ING’s growth strategy
• Total brand awareness rose from 69% to 74%*
• Sponsorship is generating many fruitful business leads and significant new business
Key Points
Key consumer trends are driving strong growth in savings as well as convergence of financial products
ING is fundamentally well positioned to capitalise on changes in the industry
ING’s strategy, focusing on banking, investments, life insurance and retirement services, offers strong long-term growth potential
Working on new key performance indicators to reflect the essence of our business and delivery on our strategy
Plays an important role in implementing the Group strategy
Trends
Strategy
KPIs
Well positioned
ING Belgium
It’s all about savings
ING has chosen to focus on the areas that offer the fastest growth potential:
The retail financial services industry is simply about attracting savings and putting that to work for our customers to earn an attractive return
Asset gathering
Focus on growth
potential
• Focus on banking, investments, life insurance and retirement services
• Emphasis on mass-affluent customers
• Increase retail banking distribution
• More in developing markets
• Supported by two core competencies: asset management and asset generation
Focus on the most attractive segments: Banking, investments, life insurance and retirement services
Global Retail Financial Pools(EUR billions)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E
Current Accounts Savings Investments Mutual Funds
Consumer Finance Mortgages Pensions Life Insurance
7.9%
6.5%
7.7%
8.1%
7.1%
7.8%
7.3%
5.8%
CAGR
Source: McKinsey
7.3%
Retail banking and wealth accumulation products account for two-thirds of total retail financial balances, growing at 7% to 8% per year
Emphasis on mass-affluent customers
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2003 2004 2005 2006 2007E 2008E 2009E 2010E 2011E
Mass segment Affluent segment High net worth segment
6.8%
Retail financial balances (EUR bln) and CAGR
Source: McKinsey
The mass and affluent market represents 2/3
of global financial balances
Increase retail banking distribution
SwitzerlandSwedenBelgium
TurkeyNetherlands
MexicoAustralia
KoreaIndia
RussiaBrazil
CanadaSpain
ItalyFrance
UKChina
GermanyJapan*
USA
The World's 20 biggest economies (in USD billion)
13,7944,346
3,2593,249
2,756
2,0681,4151,406
1,2951,224
1,090950890886
755482443432414
2,515
ING Direct StakeRetail Banking
• ING has a retail banking footprint in the nine largest economies of the world and in 75% of the top 20 countries.
• ING takes a pragmatic approach to bank distribution
Source: IMF, September 2007* = planned
• Own bank channels: full service retail bank
• Self’banks: Entry strategy for developing markets
• ING Direct: Entry strategy for mature markets
• Strategic Stakes: Bank of Beijing, TMB
• Exclusive distribution agreements and joint ventures
• Open architecture
More expansion in developing markets for long-term growth
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2007E 2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E
Central & Eastern Europe Asia/Pacific (excl Japan/Australia) Latin America
16.4%
12.6%
11.4%
CAGR
12.8%
Retail financial balances in developing markets (EUR bln) and CAGR
Source: McKinsey
Developing markets showing strong growth in retail balances as economies develop and middle classes grow
Loans and advances to customersFinancial assets at fair value through P&LCash and amounts due from banksOtherInvestments
…. Supported by 2 core capabilities: asset management and asset generation
• ING has the asset management skills to generate attractive returns for our clients
• Top 25 global asset manager, active in 30 countries
• World’s leading real estate investment manager
Strong growth in total Assets under Management(in EUR bln)
0100200300400500600700
2002 2003 2004 2005 2006 2007
7.2%
• ING also has the ability to generate its own assets to manage its balance sheet effectively
• Wholesale Banking generates high-quality assets, including corporate lending, leasing, structured finance
• ING controls origination and credit quality
Total assets: EUR 1,312 bn
78 bn
293 bn
553 bn
327 bn
61 bn
Corporate Lending 265
Personal Lending 261
Insurance 28
Mission
Products
Distribution
Brand
Setting the standard in helping our customers manage
their financial
future
ING is sharpening its strategic focus to:
• Banking
• Investments
• Life insurance
• Retirement services
Supported by two core capabilities:
• Asset management
• Asset gathering
Trends Strategy
People are living longer and need to take more responsibility for own retirement
People are becoming richer
Technology is transforming distribution of financial services
Customers are demanding value for money and simplicity.
Life insurance paradigm shift – from traditional to investment products
Priorities
Bank distribution
Retail (mass affluent) clients
Developing markets
Strengths
Existing presence in developing
markets
Trust is key
ING’s mission and strategic priorities
In Summary
ING is well positioned to capture a larger share of the total savings pool
• Strategic flexibility to enter markets in the way that works and grow from there
• Right products to meet customers’ needs through life cycle
• Strong presence in the most attractive developing markets
• Strong positions in today’s large markets
• Strong global brand
ING is focused on the fastest growing segments of this market
• Mass affluent
• Banking, investments, life insurance, retirement services
• Retail banking distribution
• Developing markets
• The life insurance industry is undergoing a paradigm shift to investment products
• Differences between banking and insurance are becoming irrelevant. There is one savings and investment pool
It’s all about savings
Focused on growth
Well-positioned
Key Points
Key consumer trends are driving strong growth in savings as well as convergence of financial products
ING is fundamentally well positioned to capitalise on changes in the industry
ING’s strategy, focusing on banking, investments, life insurance and retirement services, offers strong long-term growth potential
Working on new key performance indicators to reflect the essence of our business and delivery on our strategy
Plays an important role in implementing the Group strategy
Trends
Strategy
KPIs
Well positioned
ING Belgium
The KPIs: 4 Group-wide metrics:
Client Balances
Expenses (and efficiency)
Profit (and margin)
Required Capital (and return)
• Measuring our underlying business volume
• IFRS Operating Expenses and margin over client balances
• Measuring our operating efficiency
• Underlying Profit Before Tax
• Disclosure will include a margin based on profit to client balances measuring our profitabiltiy
• Economic Capital and Return on Economic Capital, measuring the return on capital employed
Measuring the delivery on our strategy
ING Belgium, an important part of ING Group
WHOLESALE
27%
73%
• With shares of 16% and 27% of the Retail and Wholesale banking activities, ING in Belgium accounts for 1/5th of ING Group banking activities and 1/10th of ING Group as a whole
• ING Group employs 120.000 employees servicing more than 75 million customers in over 50 countries
TOTAL BANKING
80%
20%
TOTAL INSURANCE1%
99%
TOTAL GROUP
90%
10%
Rest of ING GroupING Belgium
Net Profit before Tax
RETAIL
84%
16%
• Structures adapted to « Code Lippens »:
• Executive Board
• Audit & Remuneration Committee
• Five external Board members
• Gives input in Group / functional strategy settings
• ING Belgium is responsible for implementing strategy / policy and adapting them to local markets and environment
• In charge of controlling coherence with local rules and regulations
Enjoys a good level of autonomy…
• Strengthening savings gathering:
drive to increase share of savings pool
• Innovation in distribution
Transformation of traditional retail bank into a universal direct bank (“direct when possible, advice when necessary”)
Launch of online products
• Leader in asset gathering
Mortgages /consumer loans
Important lender to the corporate sector
… translating ING strategy locally & coherently
• Comprehensive (« easy ») corporate strategy supported by a strong brand
•ING Belgium: solid positioning and clear role
Conclusion