read the 2015 Annual review
Industry Lending teams provide financing to clients in selected markets based on specialist industry knowledge. Within Industry Lending, our activities are grouped into Structured Finance and Real Estate Finance.
Structured Finance is a traditional lending business, built up over more than 20 years and based on specialist industry knowledge. ING is a top-10 player globally. The loan portfolio is well diversified across geographies and sectors, which are split into three segments: the Energy, Transport and Infrastructure Group (ETIG), International Trade and Export Finance (ITEF) and the Specialised Financing Group (SFG).
ETIG specialises in capital-intensive industry sectors such as offshore services, shipping, aviation, utilities and power, infrastructure, mining, and oil and gas. ETIG showed strong growth in assets and income in 2015 – most notably in transportation, natural resources and infrastructure – while increasing profitability.
ITEF supports international trade in basic commodities such as oil, oil products, metals, grain, sugar and cotton. In 2015, we extended our activity by creating a sector team to cover the food and agriculture sector. We also finance the export of capital goods.
Both asset and income growth were positive in 2015, but the decrease in commodity prices slowed ITEF’s asset growth. Nevertheless, volumes grew, and this is expected to continue thanks to a number of new business initiatives.
SFG coordinates global teams that primarily arrange, underwrite and lend against business cash flows. They are active in sectors such as telecommunications, media and technology, and healthcare, and provide specialist support for the insurance industry. In 2015, SFG continued its growth path in terms of assets and income, while maintaining profitability at high levels.
Real Estate Finance
Real Estate Finance (REF) primarily lends to investors in income-producing real estate backed by first mortgages. In 2015 REF benefited from a continued recovery in the markets, with increased income, profitability and asset growth. In the Europe, Middle East and Africa region, we are a leading bookrunner in syndicated real estate finance loans.
General Lending and Transaction Services
Many of our relationships with corporate clients are anchored through our General Lending capabilities. The challenge in this area is maintaining margins and volumes within our established risk appetite while competition intensifies. Margins have been under continued pressure in 2015 as a result of excess liquidity in loan markets, especially with regard to our corporate clients. Nevertheless, ING is a market leader in the Benelux, holds the number one bookrunner position in the syndicated loan market in Central Eastern Europe and a top-10 position in the overall European syndicated loan market.
Transaction Services (TS) is made up of International Payments & Cash Management (PCM), Trade Finance Services (TFS), Working Capital Solutions (WCS) and Bank Mendes Gans (BMG). We seek to support our clients’ core processes and daily financial operations through tailor- made, integrated solutions and advice. These activities require a strong focus on operational processing. We are developing our business platforms by deploying new technologies and through increased standardisation across borders, products and services.
TFS finances, settles and mitigates the risk of international trade for clients in all markets globally, but primarily in Asia, Central and Eastern Europe, Latin America, Africa and the Middle East.
WCS combines ING’s Supply Chain Finance and Trade Receivables activities. WCS is a growth area for Wholesale Banking, as it offers substantial opportunities for our clients to achieve efficiency benefits. We believe the underlying short-term and capital-efficient nature of this asset class makes it an attractive area to expand our activities.
BMG is a market-leading provider of specialist liquidity management solutions, including global notional cash- pooling and netting to multinational corporations.
TS income remained relatively stable in 2015, although financials were under pressure following a strong performance in the previous year. Trade financing volumes decreased and income headwinds were expected due to pressure on margins, in particular from clients in China. WCS continued to grow and to focus on innovation and product development.
Meanwhile in PCM, the roll-out of our common payments platform in Ireland was a major milestone. We expect our investments and efforts to capture flow business to help us improve our position in the market. And the exit of a major global competitor from TS services in Europe offers a unique opportunity to accelerate this growth ambition.
Financial Markets (FM) is a well-diversified business targeting developed markets and fast-growing economies, focusing on rates and currencies in addition to credit products. FM is a client-driven business franchise. It aims to service ING’s institutional, corporate and retail clients with relevant financial markets products.
Through FM we also provide our clients with a gateway to global institutional markets. We offer a full range of services, across four main business lines: Emerging Markets, Developed Markets, Global Equity Products and Global Capital Markets.
In 2015, FM began implementing initiatives embedded in its new strategic plan. This will influence all three drivers of return on equity: revenue, cost and capital deployed.
Real Estate & Other
Real Estate & Other (RE&O) focuses on a smooth divestment of the remaining real estate portfolio of the former Real Estate Development and Real Estate Investment Management operations. RE&O also includes General Lease activities outside the Benelux and Poland which have been discontinued. RE&O continued to successfully complete the divestments of various large real estate exposures, for example in the US and the Netherlands.