ING Direct 2015 Annual Report Download - page 13

Contents
Who we are
Report of the
Management
Board
Corporate
Governance
Consolidated
annual accounts
Parent company
annual accounts
Other
information
Additional
information
Report of the Management Board - continued
Who are we?
We are a European wholesale bank with global reach. We
have an extensive international network of offices in more
than 40 countries across Europe, Asia and the Americas. Our
global franchises in Industry Lending, General Lending,
Transaction Services and Financial Markets serve a range of
organisations, including corporates, multinational
corporations, financial institutions, governments and
supranational bodies.
Our purpose is to empower customers to stay a step ahead in
life and in business. In Wholesale Banking we help our
wholesale banking clients meet their ambitions, either in a
specific area of expertise or geography. We aim to provide a
differentiating and seamless client experience through new
technologies and services across the globe.
Our lending capabilities are at the heart of most of our client
relationships. We continue to grow Industry Lending by
supporting clients with sector expertise and in-depth
knowledge of their business. Transaction Services extends our
client offering with international payments and cash
management, trade finance services and working capital
solutions. Financial Markets, as the bank’s gateway to global
professional markets, serves our clients from treasury through
to capital markets, providing risk management and structured
financial products.
As of 2016, our commercial banking activities were renamed
Wholesale Banking. The new name better reflects the mainly
international, large corporate and institutional nature of our
business. It clearly positions ING as a global wholesale bank
and is more aligned with the consistent client experience we
aim for across our markets.
Wholesale Banking plays a key role in the bank’s Think
Forward strategy. The development of our lending
capabilities, in particular in our funding-rich countries, helps
support ING’s sustainable growth ambitions. Our investment
in Transaction Services enhances this effort.
Integral to our Think Forward strategy is driving sustainable
progress. We strongly believe that financial services play a
significant role in creating a sustainable world. As part of our
differentiating client experience, we support and stimulate
clients’ sustainable transitions throughout our wholesale
banking portfolio. We monitor and assess our transactions for
sustainable features that are making these transitions
possible. We also actively engage with our clients to generate
new business opportunities in the field of sustainable
financing. We believe that our focus on clients who adopt
sustainable practices is helping to ensure a healthy and
strong portfolio.
Financial results
Wholesale Banking posted a good set of results on the back of
continued strong Industry Lending performance, good volume
growth and improved Financial Markets results. The latter was
supported by positive credit and debt valuation adjustments
(CVA/DVA), which added EUR 181 million to the pre-tax result
in 2015 compared with EUR -216 million in 2014. The
underlying result before tax was EUR 2,560 million, up 28.9
percent from 2014. Excluding CVA/DVA impacts, the increase
was 8.0 percent.
Industry Lending posted an underlying result before tax of
EUR 1,464 million, up 11.0 percent compared with 2014. This
increase was mainly caused by higher income in Structured
Finance and Real Estate Finance due to strong volume
growth, partly offset by a EUR 92 million impairment on an
equity stake. The underlying result before tax from General
Lending & Transaction Services declined 8.3 percent to EUR
467 million, due to higher expenses and risk costs, while
income growth was limited due to some pressure on margins.
Financial Markets recorded an underlying result before tax of
EUR 483 million, up from EUR 133 million in 2014, mainly
reflecting the aforementioned positive swing in CVA/DVA
impacts. The underlying result of Bank Treasury, Real Estate &
Other was EUR 146 million compared with EUR 25 million in
2014. The increase was mainly attributable to higher Bank
Treasury income, while the results in the run-off businesses
increased due to improved sales results in Real Estate
Development and lower risk costs in Leasing.
Underlying income rose 14.6 percent on 2014, mainly in
Financial Markets and Industry Lending. The net production of
customer lending (excluding Bank Treasury and currency
impacts) was EUR 11.6 billion in 2015. Wholesale Banking
grew the net core lending book, also adjusted for the Lease
run-off, by EUR 13.0 billion in 2015, due to strong growth in
Structured Finance and - to a lesser extent - Real Estate
Finance and Transaction Services. Customer deposits
(excluding currency impacts and Bank Treasury) remained flat
compared with a year ago. Operating expenses increased 6.8
percent to EUR 2,571 million, mainly due to higher FTEs to
support business growth, increased regulatory expenses and
positive currency impacts. The previously announced
restructuring programmes are on track to realise EUR 340
million of annual cost savings by 2017; of this amount EUR
260 million of cost savings had been realised so far.
Risk costs declined to EUR 478 million, or 33 basis points of
average risk-weighted assets (RWA), from EUR 500 million, or
37 basis points, in 2014. Lower risk costs were mainly visible in
Real Estate Finance and the lease run-off business, while risk
costs in Structured Finance and General Lending were up in
absolute terms, but declined as a percentage of average RWA.
Wholesale
Banking
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