The CET1 ratio improved strongly from 12.7% in 2015, due to an increase in CET1 capital combined with lower RWA supported by positive risk migration. CET1 capital mainly increased due to strong capital generation from net profit (partly offset by the proposed dividend payment) and the completion of the NN Group divestment in 2016.
ING Bank’s loan-to-deposit ratio rose to 1.05 compared to 1.04 at the end of 2015, mostly due to growth of the loan book.
In Wholesale Banking, we continued with our transformation programme, Wholesale Target Operating Model (Wholesale TOM), further driving simplification, business growth and innovation across the network
1. Simplify & streamline Simplify and streamline refers to ING’s aim to become a more effective, cost-efficient and agile organisation with the flexibility to respond to fast-changing customer needs and low-cost competitors. In the Netherlands we have introduced agile working based on end-toend, multidisciplinary teams. These teams are focused on delivering customer improvements from design to product delivery at lower cost and with shorter time to market than previously required. We have also introduced targeted operating models (TOMs) to streamline our Finance, HR, Procurement and Risk functions.
3. Performance culture A strong performance culture is key to achieving the bank’s ambitions and deliver on our Customer Promise. Following the introduction in 2015 of the Orange Code – a new set of values and behaviours that sets out our way of working – we are taking a number of steps to strengthen performance culture. These include a Think Forward leadership programme designed to develop the leadership behaviours we need to achieve the strategy. It is currently being rolled out to top managers and will later be offered to over 6800 managers. We are working to improve performance management for all employees through the Step Up Performance
We are increasingly innovating in pursuit of a better customer experience. A significant number of customers are self-directed. They expect to be able to choose from clear and easy products and services that are available to them when and where they want them.
Following post-summit sessions, it was agreed to develop practical solutions and present the first results at the 2017 Think Forward Summit.
While some European banks have downsized operations in Central and Eastern Europe, ING sees opportunities for growth and deepening of customer relationships in becoming a full-service bank in Austria.
Retail Germany’s underlying result before tax increased 4.2 percent to EUR 1,055 million, compared with EUR 1,012 million in 2015. This increase was supported by a net release in risk costs, partly offset higher expenses.
Underlying income rose 0.7 percent to EUR 1,923 million, from EUR 1,910 million in 2015, supported by a gain on the sale of Visa shares. The interest result increased 3.4 percent following continued business growth, partly offset by lower margins on most products. Net inflow in customer deposits (excluding Bank Treasury) was EUR 9 billion in 2016. The net production in customer
ING also earned top prizes at The Banker’s 2016 Best Bank Awards in London winning the Global Bank of the Year and best bank awards in the Netherlands, Belgium and Western Europe.
Read more on our ESR framework in the “Risk and capital management” chapter.
International Trade and Export Finance (ITEF) supports international trade in commodities such as oil, oil products, metals and grains. The largest part of ITEF is the Trade and Commodity Finance Group (TCF). Most business is short term, self-liquidating trade-related finance, often collateralised, with comprehensive credit risk mitigations. Commodity prices have been low and at times volatile. ING’s TCF clients are not speculators and largely avoid or hedge commodity price risk: their business model primarily depends on trading and logistics to deliver commodities when and where their clients require, not on profit from price volatility. Consequently the commodity price movements have had limited effect on TCF clients, and our risk costs remained low. ING has carried on supporting its clients, and has continued to build primary relationships. Our ability to innovate has underpinned our continued success.
In the current low interest rate environment deposits placed at the ECB are earning negative interest. This makes it important to sustain lending returns and develop client propositions that generate fee income. For some time, we have been charging a negative interest rate to both financial institutions and corporate clients who maintain high cash balances in their euro current accounts. We may need to consider further action and expand the scope of clients that will be charged should the low interest environment and negative rates continue.
Country portfolios Geo-political unrest continued in Ukraine in 2016. The non-performing loan ratio of our Ukrainian lending book was 45 percent at year-end 2016. ING continued to carefully monitor the developments in Turkey, where the non-performing loan ratio at year-end 2016 was 3.1 percent (including Retail Banking activities).
• Tracking and analysing the number of female appointments, promotions and leavers to gain more insight into problems and potential solutions.
We also see enormous potential in using robotics and artificial intelligence to improve accuracy, cycle time and productivity. Creating systems that can autonomously learn to perceive the world will allow us to address key challenges and provide personal assistance on a large scale.
The ESR policy framework applies to all business conduct globally. It is on the Wholesale segment (34.6 percent of ING Bank’s assets) that we focus our assessments and promote active ESR dialogue, as Wholesale clients run a more substantial risk of being involved with environmental and social issues. We have been working with Wholesale clients for more than 15 years to support them in understanding and managing their environmental and social impacts. The ESR policy framework also applies to ING’s retail activities for mid-corporates and SMEs. This follows the framework’s rationale and principles, but usually employs a simplified version of the approach used for Wholesale clients.
Regulation is becoming increasingly more extensive and complex. A recent example is the implementation of the Common Reporting Standard (CRS) in 2016, which like FATCA requires financial institutions to report detailed client-related information to the competent authorities. Customer due diligence (CDD) and transaction monitoring impose obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering (AML), terrorist financing, and fraud.
One element of Basel III is the possible restriction on distributable items (established in the EU in article 141 of the Capital Requirements Regulation). This limits the ability of the bank to pay dividends, hybrid coupons and/ or management remuneration if its capital drops below the sum of its Pillar 1 and Pillar 2 requirements and combined buffer requirements, often referred to as the Maximum Distributable Amount (MDA) trigger. As part of the 2016 Supervisory Review and Evaluation Process (see more on SREP below), the ECB decided to split the Pillar 2 requirement into: • Pillar 2 requirements (P2R), which are binding and thus breaches have direct legal consequences.
In addition to internal stress test scenarios reflecting the outcomes of the annual risk assessment, ING also participates in regulatory stress test exercises. ING was subject to the 2016 EU-wide stress test conducted by the European Banking Authority (EBA) in cooperation with the European Central Bank (ECB), De Nederlandsche Bank (DNB), the European Commission and the European Systemic Risk Board (ESRB). The adverse stress-test scenario was set by the ECB/ESRB and covers a threeyear time horizon (2016-2018). The stress test was carried out applying a static balance sheet assumption as at December 2015, and therefore does not take into account current or future business strategies and management actions.
J.V. (Koos) Timmermans (56) Vice-chairman of the Management Board Banking Koos Timmermans was appointed a member and vice-chairman of the Management Board Banking as of 1 October 2011. He is responsible for, among others, advanced analytics, bank treasury, group research, regulatory and international affairs, and sustainability. Koos Timmermans has also assumed responsibility for the Bank’s operations in the Benelux.
Basis for our conclusion We have performed our review on the Non-financial Information in accordance with Dutch law, including Dutch Standard 3000: “Assurance Engagements other than Audits or Reviews of Historical Financial Information”. This review engagement is aimed to obtain limited assurance. Our responsibilities under this standard are further described in the section ‘Our responsibilities for the review of the Non-financial Information’ below.
We are independent of ING Group in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics).
In 2016 the Committee discussed the agenda for the 2016 Annual General Meeting, including the publication on the application of the Dutch Banking Code 2015.
The Annual General Meeting adopted the proposed amendments of the articles of association which implied the abolition of the depositary receipts structure.
ING Group believes the following to be the significant differences between its corporate governance practices and NYSE corporate governance rules applicable to US companies: • ING Group has a two-tier board structure, in contrast to the one-tier board structure used by most US companies. In the Netherlands, a public limited liability company (“naamloze vennootschap”) with a two-tier board structure has an executive board as its management body and a supervisory board that advises and supervises the executive board. In general, 1 Dutch Bulletin of Acts (Staatsblad) 2009, 154.
In line with market practice, ING Group currently intends to include the following categories of shareholders in such a share offering by way of a rights issue: 1 Qualified investors as well as retail investors in the Netherlands and the US (SEC registered offering).
Transfer of shares and transfer restrictions Shares not included in the Securities Giro Transfer system (“Wet Giraal Effectenverkeer” system) are transferred by means of a deed of transfer between the transferor and the transferee. To become effective, ING Group has to acknowledge the transfer, unless ING Group itself is a party to the transfer. The Articles of Association do not restrict the transfer of ordinary shares.
ING Group participates in several industry conferences and generally hosts one Investor Relations Day every two to three years. These events are announced in advance on ING Group’s website, and presentation materials are made available in real time on the website. This is in accordance with the applicable regulatory requirements intended to ensure that all shareholders and other market participants have equal and simultaneous access to information that could potentially influence the price of the company’s securities. ING Group’s Investor Relations Days can be accessed by means of live webcasts. Investor Relations Days or conferences in which ING Group participates will not take place during the period immediately prior to the publication of quarterly financial results.
Main powers of the General Meeting The main powers of the General Meeting are to decide on: • The appointment, suspension and dismissal of members of the Executive Board and members of the Supervisory Board, subject to a binding nomination or a proposal of the Supervisory Board as set forth in the Articles of Association.
• refrain from supporting one interest without regard to the other interests involved.
Transactions involving actual or potential conflicts of interest In accordance with the Corporate Governance Code, transactions involving members of the Supervisory Board in which there are material conflicting interests are disclosed in the Annual Report. In a departure from the Corporate Governance Code this however does not apply if (i) such disclosure would be against the law; (ii) the confidential, share-price sensitive or competitionsensitive character of the transaction prevents such disclosure; and/or (iii) the information is so competitionsensitive that disclosure could damage the competitive position of ING Group.
These regulations require that the Chief Executive Officer and the Chief Financial Officer of ING Group report and certify on an annual basis on the effectiveness of ING Group’s internal controls over financial reporting. Furthermore, the external auditors are required to provide an opinion on the effectiveness of ING Group’s internal controls over financial reporting.
Remuneration report - continued 2016 Executive Board variable remuneration The performance of the Executive Board is evaluated against financial and non-financial performance indicators. Variable remuneration in 2016 of the CFO and CRO was based for more than 75% on non-financial performance indicators. The variable remuneration in 2016 for the CEO was based for more than 50% on non-financial performance indicators. As evidenced by the table on the previous page, the collective performance of the Executive Board members was broadly ahead of target. There were minor differences in achievement of personal targets, this explains why variable remuneration for the CEO was set at 19%, for the CFO at 18% and for the CRO at 18%.
Authorisation of the Consolidated annual accounts The ING Group Consolidated annual accounts, for the year ended 31 December 2016, were authorised for issue in accordance with a resolution of the Executive Board on 13 March 2017. The Executive Board may decide to amend the annual accounts as long as these are not adopted by the General Meeting of Shareholders. The General Meeting of Shareholders may decide not to adopt the annual accounts, but may not amend these.
Financial liabilities at amortised cost Financial liabilities at amortised cost include the following sub-categories: preference shares classified as debt, debt securities in issue, subordinated loans, and deposits from banks and customer deposits.
Gross carrying amount as at 31 December 903 985 1,756 1,706 29 29 2,688 2,720
In 2016, ING participated in the new targeted longer-term refinancing operations (TLTRO II) of EUR 10.7 billion and early redeemed the old TLTRO I tranches for EUR 8.7 billion.
Credit balances on customer accounts1 173,230 316,717 1 The comparative amounts, as at 31 December 2015, are adjusted as a result of a change in accounting policies. Total Customer deposits, as at 31 December 2015, increased by EUR 163.5 billion from EUR 500.8 billion to EUR 664.2 billion as a result of an increase in Credit balances on customer accounts. Reference is made to Note 1 ‘Accounting policies’ – Change in accounting policies and presentation in 2016.
In 2016, ING Group recognised an additional reorganisation provision of EUR 1,032 million, for the intended workforce reductions per the intended digital transformation programmes as announced on ING’s Investor Day on 3 October. The intended initiatives are expected to result in a reduction of ING’s workforce mainly in Belgium and the Netherlands during 2016 to 2021.
In 2016, the increase in total average assets (with the cash pool balances still calculated on a net basis in order to provide consistent information), combined with an improvement of the net interest margin, lead to an increase of EUR 680 million in net interest income. The increase in total average assets was mainly attributable to an increase in customer lending, partly offset by a decline in financial assets at fair value through profit or loss.
The weighted average share price at the date of exercise for options exercised during 2016 is EUR 10.43 (2015: 13.62; 2014: EUR 10.60).
The fair value of options granted is recognised as an expense under staff expenses and is allocated over the vesting period of the options. The fair values of the option awards have been determined using a European Black Scholes formula. This model takes the risk free interest rate into account (2.02% to 4.62%), as well as the lifetime of the options granted (5 to 9 years), the exercise price, the current share price (EUR 2.90 – EUR 25.42), the expected volatility of the certificates of ING Groep N.V. shares (25% – 84%) and the expected dividend yield (0.94% to 8.99%). The source for implied volatilities used for the valuation of the stock options is ING’s trading system. The implied volatilities in this system are determined by ING’s traders and are based on market data implied volatilities not on historical volatilities.
Reference is made to Note 46 ‘Consolidated companies and businesses acquired and divested’ and Note 51 ‘Other events’.
In 2014, the potential conversion of the non-voting equity securities had an anti-dilutive effect on the earnings per share calculation (the diluted earnings per share becoming higher or less negative than the basic earnings per share). Therefore, the potential conversion was not taken into account in the calculation of diluted earnings per share.
Included in cash and cash equivalents: – deposits from banks –9,809 –10,312 –11,825
Mexico ING Consulting, S.A. de C.V. Wholesale banking 7 1 2 –1 –
Australia Australia ING Bank (Australia) Ltd. Retail banking 1,053 505 36,691 309 90
No plan assets are expected to be returned to ING Group during 2017.
Effect of curtailment or settlement –2 –3 871 –9 –52 –2 –64 871
Total income tax related to components of other comprehensive income 2 115 –1,799
Financial assets designated as at fair value through profit or loss –55 –55
ING Group Annual Report 2016 222 month1 1–3 months 3–12 months 1–5 years Over 5 years
Impact on profit (+) or 1 Deconsolidation of Voya; remaining investment in Voya accounted for as an Investment in associate held for sale at fair value of EUR 2,914 million. 2 Loss of significant influence over Voya; remaining investment accounted for as an available-for-sale equity investment held for sale.
Process The RAF is focused on setting the risk appetite at the consolidated level and across the different risk categories, and provides the principles for cascading this risk appetite down into the organisation. The RAF is approved by the SB on an annual basis, or more frequently if necessary based on their quarterly review in the MBB and SB. It is therefore essentially a top-down process, which bases itself on the ambition of the bank in terms of its risk profile and is a function of the capital and liquidity levels and ambitions, the regulatory environment and the economic context. The process is set up according to the following steps: Step 1. Identify & assess ING’s key risks Setting the RAF starts with a multi-dimensional step to identify & assess the risks ING is facing when executing its strategy. This step includes the following actions that are performed on an annual basis: • detect unidentified risks that are not yet controlled within ING Bank’s risk management function & assess their potential impact; • benchmark current risk framework versus regulatory developments; • re-assess known risks to confirm risk level or detect potential changes; and • reflect on the current set of Risk Appetite Statements.
The snapshot of ING’s ESR Framework is as follows: The ESR policy framework is fully embedded in ING mainstream approval processes and requires involvement of the following areas globally:
Lending Investment Money Market Pre-settlement Total ING Bank Rating class 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 1 Based on credit risk measurement contained in lending, pre-settlement, money market and investment activities. The ratings reflect probabilities of default and do not take collateral into consideration.
Total Business Lending 295,987 119,583 16,736 81,729 90,158 130,344 36.8% 4.8% 4.7% 7.7% 10.3% 35.7% of which Non-performing 9,841 5,171 287 2,993 3,521 4,180 24.2% 2.9% 8.1% 15.8% 16.2% 32.8% 1 Including loans to ING Group. 2 Excluding intercompany positions.
Accounting provisioning IBNR IBNR IBNR/INSFA/ISFA INSFA/ISFA 1 More information on the Restructuring and Non-performing categories can be found in the Credit restructuring section.
ING Bank as Sponsor In the normal course of business, ING Bank structures financing transactions for its clients by assisting them in obtaining sources of liquidity by selling the clients’ receivables or other financial assets to a special purpose vehicle (SPV). Senior positions in these transactions are often funded by the ING Bank administered multi-seller asset backed commercial paper (ABCP) conduit Mont Blanc Capital Corp. (rated A-1/P-1). Mont Blanc Capital Corp. funds itself externally in the ABCP markets. In its role as administrative agent, ING Bank facilitates these transactions by providing structuring, accounting, funding and operations services. ING Bank also provides support facilities (liquidity facilities) backing the transactions funded by the conduit. Mont Blanc is fully consolidated into the ING Bank financial accounts.
Year-on-year variance analysis In line with previous year, the earnings with a one year horizon as per 2016 year end are relatively insensitive to rate changes, if compared to the net interest income. The earnings sensitivity for an upward shock has a positive impact. Positive earnings sensitivity implies that when rates increase, the positive impact on interest received on assets including hedging derivatives is larger than the negative impact of interest paid on liabilities. The change of the Earnings sensitivity for Retail Banking Benelux is mainly driven by changes to the savings model parameters as a result from changing customer behaviour. The Earnings sensitivity of the +100 bps scenario within Wholesale Banking is mainly the result of investments done by the Bank Treasury function, which is reported under Wholesale Banking. The change of the Earnings sensitivity within Corporate Line Banking is mainly driven by the investments of own funds which were not all re-invested long term.
Main exposure arises from office buildings in own use located in Netherlands and Belgium (EUR 0.7 billion), as well as retail and residential exposures in Europe (EUR 0.1 billion).
All valuation models used are subject to a model governance framework. Model governance refers to a set of policies and procedures that have to be strictly followed and that cover the complete lifecycle of a model, i.e. its development, validation, approval, implementation and maintenance. The pillars of model governance are independent validation and periodic review. Such a review aims to determine whether a model is still appropriate for its intended use. Where models are used for valuation, there can be uncertainty on the assumptions of the underlying models and/or parameters. In those cases where significant uncertainty on assumptions arises, a model risk valuation adjustment is applied.
Funding and Liquidity profile Funding sources In 2016, ING Bank had readily access to a large variety of funding sources, both short term and long term. In the table below, the various funding sources are presented in the funding mix: 2016 2015 Funding type Retail deposits 51% 48% Corporate & other deposits 21% 22% Interbank (incl. central bank) 5% 5% Lending/repurchase agreement 5% 5% Public debt 16% 18% Subordinated debt 2% 2% Total 100% 100%
Main developments in 2016 Internal and external fraud The risk of clients and ING Bank staff being targeted by fraudsters using social engineering techniques to execute payments is still increasing and CxO impersonation fraud (criminals investigate the senior management structure of an organisation and target key positions) remains a significant threat. Efforts are undertaken to mitigate the risk such as creating awareness for customers and staff. ING Bank stringently monitors both this type of fraud and new emerging fraud methodologies.
To support orderly resolution, the BRRD requires banks to meet minimum requirements for own funds and eligible liabilities (MREL). In addition, ING as a Global Systemically Important Bank (G-SIB) needs to comply with the total loss absorption capacity (TLAC) proposal published by the Financial Stability Board (FSB) in November 2015.
We agreed with the Audit Committee of the Supervisory Board that misstatements in excess of EUR 10 million which are identified during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
These assumptions are impacted by local circumstances and the estimation uncertainty of the projected costs. Due to the significance of this restructuring and the difficulty in assessing and measuring the amount from any resulting provision, we consider the measurement of the restructuring provision a key audit matter.
In February 2017, the U.S. Secretary of Treasury was directed by executive order to consult with other financial regulatory agencies to evaluate the current financial regulatory framework against core principles set out by the new U.S. administration. Such review may result in the revision, amendment or repeal, in all or in part, of Dodd-Frank and related rules and regulations. There can be no assurance that these or any other future reforms will not significantly impact our business, financial condition and results of operations.
As of 1 October 2012, banks that are active in the Netherlands are subject to a bank tax pursuant to a tax regulation that also includes measures to moderate bonuses awarded to executives at such banks. Increased bank taxes in countries where the Group is active result in increased taxes on ING’s banking operations, which could negatively impact our operations, financial condition and liquidity. For information regarding historical regulatory costs incurred by ING, please refer inter alia to Note 27 ‘Other operating expenses’ to the consolidated financial statements.
We may also be subject to claims made by third parties for (1) patent, trademark or copyright infringement, (2) breach of copyright, trademark or licence usage rights, or (3) misappropriation of trade secrets. Any such claims and any resulting litigation could result in significant expense and liability for damages. If we were found to have infringed or misappropriated a third-party patent or other intellectual property right, we could in some circumstances be enjoined from providing certain products or services to our customers or from utilizing and benefiting from certain methods, processes, copyrights, trademarks, trade secrets or licences. Alternatively, we could be required to enter into costly licensing arrangements with third parties or to implement a costly workaround. Any of these scenarios could have a material adverse effect on our business and results of operations.
(ii) an inclusion of disclosure requirement resulting from other BCBS proposals, including addition of TLAC disclosure (via TLAC RWA and Leverage Ratio requirement and eligible instruments) to the regulatory capital disclosure requirements, revisions of operational risk disclosures to reflect the Standardised Measurement Approach (SMA), once finalised, revisions of market risk disclosures resulting from the Fundamental Review of the Trading Book (FRTB) and disclosure requirement described in the Interest Rate Risk in Banking Book (IRRBB) proposal.
EU-6a (Adjustment for intragroup exposures excluded from the leverage ratio exposure measure in accordance with Article 429 (7) of Regulation (EU) No 575/2013)
EU-19a (Exemption of intragroup exposures (solo basis) in accordance with Article 429(7) of Regulation (EU) No 575/2013 (on and off balance sheet))
The change in leverage ratio was mainly due to the increase of qualifying Tier 1 capital as result of (a) the profit for 2016 that was included in CET1 capital, (b) AT1 issuance, (c) the divestment of both Voya Financial and NN Group leading to less deductions for significant investments in financial institutions and (d) changes in the revaluations reserves.
EC is defined as the amount of capital that a transaction or business unit requires in order to support the economic risks it takes. In general, EC is measured as the unexpected loss above the expected loss at a given confidence level. This economic capital definition is in line with the net market value (or surplus) definition. The EC calculation is used as part of the CRR/CRD IV Pillar II Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP) that is performed regularly by the supervisor.
Unless stated otherwise, the tables included in this section are based on the measurement of Regulatory Exposure at Default (READ) and Credit Risk Weighted Assets (RWA) under the CRR/CRD IV definitions. READ is the sum of the on-balance and off-balance sheet: Lending, Investment, Money Market and Counterparty activities plus an estimated portion of the unused credit facilities extended to the obligor. The amounts associated with Investment and Lending activities are based on the original amount invested less repayments. Multiplying RWA by 8% will result in the level of Regulatory Capital (RC) for these portfolios (for the Credit Risk portion of the activities). This excludes all additional buffers. Figures for Derivatives and Securities Financing are based on the current exposure method, which generally is equal to the marked-to-market value of the underlying trades plus a (regulatory defined) ‘add-on’ which represents estimated potential future exposure(PFE). The amounts are then further modified by an adjustment that is related to the underlying collateral (market) values (after a haircut is applied) and any legal netting or compensation that may be permitted under various master agreement arrangements such as International Swaps and Derivatives Association (ISDA master agreements and Credit Support Annexes (CSAs).
ING Group Annual Report 2016 379 will only apply to sovereigns that are part of the EU. Before the EU equivalence implementation ING did not take custormer type into account. From now on, EU equivalence and the resulting exposure class and correlation will be based on the combination of country and customer type. Due to this implementation, certain banks will be treated as Corporates, rather than Institutions.
Sovereigns LGD Bands 104,368 117,789 -11% 7,879 8,297 -5% <10% 1,519 1,107 37% 69 41 70% 10% to 20% 628 715 -12% 72 42 73% 20% to 30% 3,708 3,436 8% 8 15 -49% 30% to 40% 95,038 106,644 -11% 5,794 5,241 11% 40% to 50% 3,200 5,689 -44% 1,325 2,443 -46% 50% to 60% - - - - - - more than 60% 274 197 39% 611 515 19% Includes both AIRB and SA portfolios; excludes equities, CVA RWA and ONCOA.
ducted Central governments or central banks 216 419 1,949 2,584 Regional governments or local authorities 5 71 76 Institutions 2,537 0 10 25 2 2,574 Corporates 7 6,704 43 6,754 Retail 9,989 9,989 Secured by mortgages on Real immovable property 6,968 3,436 3,675 14,079 Exposure in default 20 255 191 466 Total 216 2,542 6,968 3,963 9,989 12,608 236 36,522 Excludes Counterparty Credit Risk exposures.
Central governments or central banks 0 225,837 -11 225,826 Institutions 336 100,631 -13 100,954 Corporates 8,179 404,726 -3,395 409,510 of which: specialised lending 2,559 141,166 -971 142,754 of which: SMEs 1,657 32,950 -546 34,060 Retail 4,647 322,450 -1,360 325,737 secured by real estate property 3,893 292,942 -751 296,084 SMEs 611 10,476 -171 10,916 Non-SMEs 3,281 282,466 -580 285,168 Qualifying revolving Other retail 754 29,507 -609 29,653 SMEs 303 5,839 -235 5,907 Non-SMEs 451 23,669 -374 23,745 Total IRB Approach 13,161 1,053,643 -4,778 1,062,027
Past due loans ING Bank considers past due loans to be those loans where any payment of interest of principal is more than one day past due. The methodology is principally applied to loans to private individuals, such as residential mortgage loans, car loans and other consumer loans. For business loans (Sovereigns, Institutions, Corporates), ING Bank has adopted a policy to classify the obligor as a nonperforming loan as quickly as possible upon the occurrence of a payment default.
Netherlands 945 2 947 1,073 Belgium 901 542 1,443 1,719 Germany 223 28 251 276 Other Europe 346 438 784 768 Americas 2 - 2 2 Asia / Pacific 542 0 542 490 ROW 1 0 1 0 Total 2,960 1,010 3,970 4,328
<= 30 days >30 days <60 days > 60 days <90 days >90 days <180 days >180 days < 1year > 1year
Central Governments and Central Banks sub-total 2,450 0.09% 150 27% 3.6 277 11% Corporates 0.00 to < 0.15 7,311 0.08% 1,318 28% 1.9 1,154 16% Corporates 0.15 to < 0.25 1,232 0.21% 820 39% 2.9 567 46% Corporates 0.25 to < 0.50 3,037 0.36% 2,891 37% 2.4 1,582 52% Corporates 0.50 to < 0.75 2 0.62% 186 52% 1.8 2 78% Corporates 0.75 to < 2.50 2,154 1.13% 2,717 43% 2.4 1,920 89% Corporates 2.50 to < 10.00 192 5.34% 520 40% 3.5 283 147% Corporates 10.00 to < 100.00 79 26.90% 522 37% 2.9 180 228% Corporates default 19 100.00% 147 46% 2.8 108 581%
Funding & liquidity risk Funding and liquidity risk is the risk that ING Group or one of its subsidiaries cannot meet its financial liabilities when they come due, at reasonable cost and in a timely manner.
At the end of 2016, sustainable assets under management (SAuM) for customers were EUR 3,306 million, up from EUR 2,573 million in 2015
For the 2015 materiality assessment, ING reached out to senior management and six stakeholder groups (business and retail customers, investors, NGOs, regulators and employees) in five countries. In total, over 1,500 respondents from the Netherlands, Poland, Germany, Spain and Turkey provided us with insights into the topics that matter most to them.
We offset 100% of our remaining carbon emissions in 2016 through the purchase of Voluntary Carbon Units (VCUs) from various projects in India including a VCS solar energy access project providing lighting and hot water to bottom of the pyramid households, a Gold Standard solar water heating project replacing fossil fuel-powered heaters in households, schools and enterprises as well as large scale wind energy projects.
Total travel 227 29 215 29 193 27 Total travel carbon per FTE in tonne – 0.5 – 0.5 – 0.5
At ING our procurement policies and procedures require us to take into account the social and environmental aspects of the products we procure as well as the attitude of the supplier towards sustainability. We have implemented, globally, a supplier qualification (SQ) process that helps us determine the levels of social, environmental and financial risks associated with a supplier, specifically related to Human Rights including forced and child labour, fair labour standards, environmental protection, and anti-corruption.3 Once suppliers pass the SQ process, they are qualified to become ING suppliers and the ING Procurement Sustainability Standards (IPSS) apply. Compliance is then monitored via our partnership with EcoVadis Sustainability Monitoring. For more information on our Sustainable Procurement Program, please see our Environmental Approach. In 2016, we made the following commitments: • We will have global supplier coverage of the IPSS of 95% by 2020. • We will procure 100% green electricity for all ING buildings worldwide by 2020. • We will pilot 20 circular purchasing projects. • We will assess 450 suppliers for sustainability performance assessments in 2016.
In the meanwhile we have and continue to exert our influence by engaging with our customer. The lenders to the pipeline have commissioned additional research to be conducted by an external independent human rights expert and will continue to monitor developments closely. Another way is by engaging with the Standing Rock Sioux Tribe. ING met its leaders in mid-February 2017.
Forward contracts Commitments to exchange currencies or to buy or sell other financial instruments at specified future dates.