ING Direct 2013 Annual Report Download - page 279

Risk management continued ING Bank
Due to reduced demand in many markets where ING is active combined with dis-intermediation in the capital markets, the overall
portfolio has reduced. This has had an impact on industry concentrations, as exposures to financial institutions and local and central
governments make a larger portion of the portfolio.
Risk concentration: ING Bank portfolio, by economic sector (1)
Commercial Banking Retail Banking Benelux
Retail Banking
International Corporate Line Total ING Bank
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
Private Individuals 0.0% 74.1% 75.5% 57.1% 58.4% 41.5% 42.9%
Commercial Banks 14.8% 12.8% 0.2% 0.2% 11.2% 12.3% 23.0% 9.2% 9.0% 8.1%
Non-Bank Financial Institutions 13.2% 11.1% 0.8% 0.9% 7.3% 8.3% 17.1% 10.6% 7.4% 6.8%
Central Governments 10.9% 9.7% 1.3% 0.9% 5.0% 4.6% 59.9% 79.5% 6.7% 6.7%
Real Estate 12.0% 14.9% 4.9% 4.6% 0.9% 1.1% 6.2% 7.0%
Natural Resources 14.2% 13.3% 0.4% 0.4% 0.7% 0.7% 5.4% 4.9%
Central Banks 5.5% 6.0% 0.2% 0.1% 3.4% 2.2% 3.0% 2.8%
Lower Public Administration 0.4% 0.5% 1.8% 1.9% 7.3% 5.9% 2.9% 2.6%
Transportation & Logistics 6.5% 6.9% 1.3% 1.2% 0.3% 0.2% 2.8% 2.9%
Services 3.1% 3.4% 3.3% 3.1% 0.5% 0.5% 2.4% 2.4%
General Industries 3.3% 3.4% 1.5% 1.4% 1.5% 1.4% 0.4% 2.1% 2.1%
Food, Beverages & Personal Care 2.9% 3.5% 2.1% 2.1% 1.2% 1.1% 2.1% 2.3%
Other 13.2% 14.5% 8.1% 7.7% 3.6% 3.3% 0.3% 8.5% 8.5%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
(1) Based on the total amount of credit risk in the respective column using ING Bank’s internal credit risk measurement methodologies. Economic sectors below
2% are not shown separately but grouped in Other.
Country risk
There was very little shift in the geography risk exposures as most markets in Europe continued demonstrating weak economic conditions.
Germany, especially its retail organisation, was an exception which also showed growth in the ING portfolio. The Asia/Pacific markets
showed healthier growth than Europe both economically and within ING portfolio; however, some of this growth is negatively impacted
by exchange movements.
Largest economic exposures: ING Bank portfolio, by geographic area (1)
Commercial Banking Retail Banking Benelux
Retail Banking
International Corporate Line Total ING Bank
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
Netherlands 17.4% 15.5% 70.6% 72.5% 0.7% 0.6% 77.9% 76.6% 30.5% 31.1%
Belgium 6.9% 8.0% 27.5% 25.7% 0.3% 0.6% 0.3% 11.6% 11.5%
Germany 4.5% 4.0% 0.2% 0.2% 43.5% 39.2% 2.8% 2.2% 13.9% 12.6%
Rest of Europe (2) 45.4% 45.1% 1.5% 1.3% 34.0% 36.3% 1.5% 10.6% 27.7% 27.7%
Americas 13.1% 15.0% 0.1% 0.2% 1.2% 1.0% 0.7% 10.3% 5.5% 6.2%
Asia/Pacific 12.2% 11.8% 0.1% 0.1% 20.3% 22.3% 17.1% 0.0% 10.6% 10.7%
Rest of World 0.5% 0.6% 0.0% 0.0% 0.0% 0.2% 0.2%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
(1) In 2013, geographic areas are based on the primary country of risk and no longer based on country of residence for private individuals. The 2012 figures in
the above table are treated equally.
(2) The top 5 exposures within Rest of Europe are to United Kingdom, Spain, Italy, Poland and France.
Credit quality
In this section the credit quality of the ING Bank portfolio is described. Outstandings carrying a risk that ING will end up with an actual loss
or with an opportunity loss, if no specific action is taken, are captured in this section. Since the beginning of the crisis, the quantity and
the share of the total ING credit risk portfolio of past due obligations, provisions, non-performing loans in general or any other loan that
requires special risk management attention has increased. Noteworthy is the fact that the average turnaround time of problematic files
seems to have stabilised in 2013, as opposed to the extension experienced each year since the beginning of the crisis. Obviously, the length
and intensity of the crisis require continuous attention for credit quality. In this section the distinction between the Retail and Commercial
Banking approach of past due obligations will be explained. Also the watch list and restructuring status will be introduced and an insight in
the non-performing portfolio is given. After that, an analysis of the loan loss provisions is made and finally, the concept of forbearance will
be discussed. The credit risk management paragraph will be concluded with extended analyses of the strategy of ING Bank to mitigate its
credit risk.
277ING Group Annual Report 2013
1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information