Head of ING Investor Relations, Mark Milders, Brings the Story Behind the Numbers

Milders now realizes that his broad experience within ING was indispensable for his role. Previously, he was head of corporate clients in Eastern Europe. Milders was also responsible for acquisition financing in the Netherlands, the business market in Germany and Austria for several years. This gave him a good understanding of risk management, the different regions where ING is active, financing and how the capital markets function.
He speaks with Tish Crawford-Jones, Investor Relations Director at capital markets access platform Q4 Inc, about the challenges in his profession, the pitfalls of data and the careful formulation of the right message to investors.

What is your main mission?
‘Providing the markets with sufficient information so that they understand ING’s risks and opportunities. I strive to explain our strategy and the story behind the financial figures.  Figures and quarterly figures in themselves are ‘dead’. Together with the team, I want to explain what they mean, how the figures came about and, above all, where we are heading with our strategy. Which trends we as a bank identify.’

What will it take to realize that ambition?
‘Because ING is a large international organization, new people are recruited mainly internally. New colleagues have at least ten years of experience within the bank. Everyone in the team has their own specialty – in this way we have knowledge of the corporate market, the capital markets, wholesale banking, retail and the financial system. Our department is popular; I have no trouble finding good people. I strongly believe in the power of diverse teams. Employees with different backgrounds complement each other, but it also sometimes leads to differences of opinion. I think it is important that colleagues correct each other and that they can receive feedback. When I write an important document, I want a colleague to go through it with a red pen.
In addition to a professional IR team, it is also important that we have a good informal network within the organization. Our finance department is fantastic, but for the story behind the numbers we speak to local market experts and product specialists. This is where we find out what is going on in the mortgage markets, the competition in Eastern Europe or Australia, for example, or whether the launching of a new product is feasible.’

Can you describe what your role as IRO looks like?
‘I sometimes say: it is five functions in one - the responsibilities vary widely. First of all, my eight-person team maintains contact with the shareholders. That means communication from the inside out. But it also happens the other way around; we collect feedback from shareholders and investors and pass it on to the board and supervisory board. We inform the market about the bonds we issue. We assist the various analysts of investment banks to understand our bank and our strategy as well as possible so that they can provide investors with their independent sell-, buy- or hold advice on ING. We are responsible for providing information to the credit rating agencies Moody’s, S&P and Fitch, who issue a credit score for ING. Finally, as a team, we have the task of properly informing the Executive Board and Supervisory Board about shareholder sentiment and to advise on this in important strategic decisions.’

What is the most difficult to manage?
‘That remains translating the quantitative information into a complete story. Nowadays, a considerable amount of information has to be quantified, there is always a model or spreadsheet in which the figures must be captured. But it is important to on top of that understand what happens within a company. How much is determined by qualitative aspects such as culture, the ease with which the customer transact with ING, and the brand? It is an ongoing challenge to get investors to include this added value in their analyses, which is often difficult to fit into a spreadsheet. Many professional investors are interested in the background, while some still just want the data.’

How do you interact with the board and when does that mainly happen?
‘It happens with important strategic decisions where they want to know the sentiment of the shareholders. But we as IR professionals come into our own particularly in times of crisis. It is precisely then that it is essential to communicate the message to the outside with great care. Management also trusts us to be critical.
I think how we communicate is one of the most important aspects of my role. It matters so much which words you choose and with what intonation you use them. Solid is a word that goes down well in Dutch ears, but ‘solid’ does not always have a positive connotation for an American. There are even parties that have our reports and presentations scanned by artificial intelligence, for example on the amount of negative wording, to see if they can detect a sentiment from it.’

Has the way you inform the market changed in recent years?
‘Partly yes. We try to tell a more personal story. How we function as a bank, our strategy and our vision on certain sectors.
We also explain more than before. The target group is broad. There are many investors in the market that are not always well versed. Therefore, we explain what it means for a bank, for example, if interest rates rise and how the bank deals with this. I am averse to abbreviations and jargon and always ask the question ‘would my mother understand?’

Which brings us to the relationship with investors. As a result of the renewed MiFID, the European investment directive, this group is less easily accessible. Investors now have to pay intermediaries a fee for analyses and access to networks. How does ING manage to still build relationships with investors?
‘The most important tip is: know who you want and need to talk to, do not rely only on intermediaries. It happens that we organize 13 of the 15 meetings with investors ourselves. Not all of them will have a contract with the same broker. It is therefore essential to have a thorough understanding of who your investors are, or who could become investors. Since the renewed MiFID directive, it is more important than ever to actively maintain contact with your target group. I also recommend talking often to investors who are not necessarily supporters. You can get valuable feedback from the critical players in particular.’

How do you involve the board in investor relations?
‘We speak to about 800 investors every year, apart from the shareholders’ meeting. Investors often ask for a meeting with management. That time commitment would be too much. That is why management is often present at conferences; the large number of participants makes it far more efficient. However, digitization makes it easier for a board member to occasionally speak online with a group of investors.
We convey investor feedback to the ING board as standard. We also inform directors after each presentation of the quarterly figures on what analysts wrote. That is important. Board members receive a lot of information through internal channels, but it is just as important to know how ING is written and spoken about outside the company walls.’

Do you also anticipate that?
‘Certainly. We closely monitor how the market picks up and interprets our message. If we experience that it did not come across well, we sharpen the message at the next presentation or at an interim event. Sometimes we also scale back communication. We are constantly fine-tuning.’

How does the IR team use data? The volume of data will only increase. What challenges does the data revolution bring?
‘The volume of data itself has not changed. The number of data analyses and reports, however, grew enormously. The speed with which data enters the organization has also increased. The danger is that you get stuck in the details and people overanalyze. You have to keep focusing on the core message. And also keep realizing that you do not manage an organization on a quarterly basis. Not be overly concerned when a quarterly result is different. You must be able to explain it, but also put it in the larger context.
As organizations become increasingly transparent, there high volumes of data are available. Especially in times of uncertainty, people take published details out of context and make the wrong analyses. This increasingly leads to incorrect interpretations because irrelevant data is used. It is time and energy consuming to bring the actual analysis back to the attention.’

The corona pandemic, the war in Ukraine, the energy crisis and high inflation. The uncertainties are in quick succession. What impact did and does this have on ING?
‘Despite the major consequences for many people, the impact of Covid was not that severe for our service and our organization. The services were already highly digitized, including within retail banking. We were able to show private and business customers the benefits that this entailed. We were also well advanced internally with digital working from home. Flexible working was typically Dutch, which we already rolled out to other countries in the years before Covid.
After years of a barrage of negative attention for banks, especially after the financial crisis in 2008, we were able to make a positive contribution to reducing some of the negative effects of lockdowns. We helped entrepreneurs and individuals who ran into problems improving their cash flow or alleviating mortgage payments.
After Covid, the unrest in markets and for customers became even higher due to the war in Ukraine and the associated energy crisis. The ‘roaring twenties’ of this century have been quite tough this far. It requires flexibility from organizations, and I think we have succeeded in that for our own people and our customers. The uncertain times have, so far, had minor impact on our risk profile. That strength is also recognized by investors.’

There are more and more ESG reports and methodologies. How does ING communicate about ESG?
‘The biggest bottleneck is that the market does not yet have a standard for measuring certain aspects of ESG. Many companies therefore developed their own standard. Rating agencies also have their own models with which they quantify sustainability. And that is where it goes wrong. Because everyone uses different methods, the results cannot be compared. This causes investors to increasingly question it. They then went ahead and questioned banks individually about their sustainability performance. It leads to a lot of extra work. Our people currently spend 30 percent of their time answering lengthy questionnaires on ESG topics. I am not sure that makes sense. Especially as investors do not always receive the sustainability certification well.
There are already quite a number of European reporting obligations for the annual reports, which we of course comply with. But with regard to the other disclosures, we make choices. We publish several reports on ESG themes about the impact on climate, social and governance issues. Our website contains the most important ESG reports, and ING is at the forefront of this.
But again, reporting on the energy transition and on social issues is one thing. Our focus is more on the actions already taken and what else we will do. For example, we recently announced that we will stop funding new fossil drilling because we believe that if sufficient investment is made in renewable energy, new exploration is unnecessary. We started that transition to net-zero some time ago and we report on it on a scientific basis.’

There is a great deal of societal pressure on companies and banks to become more sustainable more quickly. How does ING deal with organizations such as the Dutch Milieudefensie that demand that the pace must be increased?
‘We all realize that there is a lot that needs to be done. But you cannot just throw oil and gas overboard. We have to say phase it out systematically, if only to keep energy affordable. Disinvesting immediately will serve no purpose while by working with the industry we can help fund the research and technology that will enable a cleaner society. Just look at our gigantic plastic use, for that we need alternative raw materials. We certainly feel the social pressure - it is in line with our own convictions. We have sustainability as one of the two pillars of our strategy. We opt for an inclusive approach, and we are discussing energy transition plans with companies, as well as with Milieudefensie and other NGOs. We want the same thing, it is only about the how, and how radical, where we are not aligned. We do make it clear to these organizations and our customers that we will finance fewer and fewer polluting industries.
Within our bank we developed a scientifically based method that demonstrates the degree of sustainability, the Terra methodology. An auditor validates the figures. Together with other banks, we started a lobby to further roll out this method, also within the business community. It does not matter how brown or green you are today, what matters is how quickly you change.
This method will not be the future standard, but for now it works to account for how we are taking steps in the transition. Ultimately, I hope that there will be a standard for the market, with which we can measure companies and banks against the same yardstick. In my opinion that will benefit the speed of the transition.’

Interview by Tish Crawford-Jones, Investor Relations Director at Q4. Published in Management Scope 05 2023.