e6vk
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
Commission File Number 1-14642
ING Groep N.V.
Amstelveenseweg 500
1081 KL Amsterdam
The Netherlands
Indicate by check mark whether the registrant files or will file annual reports under cover of
Form 20-F or Form 40-F.
Form 20-F þ Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T rule 101(b) (1): o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T rule 101(b) (7): o
Indicate by check mark whether the registrant by furnishing the information contained in this
Form is also thereby furnishing the information to the Commission pursuant to rule 12g3-2(b) under
the Securities Exchange Act of 1934.
Yes o No þ
If Yes is marked, indicate below the file number assigned to the registrant in connection with
Rule 12g3-2(b).
THIS REPORT ON FORM 6-K
TOGETHER WITH OUR REPORT ON FORM 6-K SUBMITTED ON SEPTEMBER 8, 2009
(EXCEPT IN EACH CASE FOR REFERENCES THEREIN TO UNDERLYING RESULT BEFORE TAX AND ANY
OTHER NON-GAAP FINANCIAL MEASURE AS SUCH TERM IS DEFINED IN REGULATION G UNDER THE SECURTIES
EXCHANGE ACT OF 1934, AS AMENDED) SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE
REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 333-155937) OF ING GROEP N.V. AND TO BE A PART THEREOF
FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR
REPORTS SUBSEQUENTLY FILED OR FURNISHED. FOR THE AVOIDANCE OF DOUBT, THE DISCLOSURE CONTAINING
REFERENCES TO UNDERLYING RESULT BEFORE TAX AND ANY OTHER NON-GAAP FINANCIAL MEASURE CONTAINED IN
THE ATTACHED REPORT IS NOT INCORPORATED BY REFERENCE INTO THE ABOVE-MENTIONED REGISTRATION
STATEMENT OF ING GROEP N.V.
This
Form 6-K provides Consolidated Financial Statements and related Form 20-F disclosures revised to
include amounts in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board, consistent with the presentation set forth in the
Companys Form 6-K submitted on September 8, 2009 in respect of the period ending June 30,
2009.
TABLE OF CONTENTS
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Page |
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1. Presentation of Information |
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3 |
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2. Item 3: Key Information |
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4 |
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3. Item 5: Operating and Financial Review and Prospects |
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8 |
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3.1 Introduction |
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3.2 Consolidated results of operations |
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12 |
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4. Additional Information Selected Statistical Information on Banking Operations |
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48 |
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5. Item 18: ING Group Consolidated Financial Statements (IFRS-IASB) |
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F-1 |
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5.1 Condensed consolidated balance sheet |
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F-3 |
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5.2 Condensed consolidated profit and loss account |
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F-4 |
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5.3 Condensed consolidated statement of cash flows |
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F-5 |
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5.4 Condensed consolidated statement of changes in equity |
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F-6 |
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5.5 Notes to the condensed consolidated interim accounts |
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F-8 |
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6.
Consents of Independent Registered Accounting Firms |
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6.1 Consent of Ernst & Young Accountants |
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A-1 |
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6.2 Consent of KPMG Accountants |
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A-2 |
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6.3 Consent of Ernst & Young Reviseurs dEnterprises SCCRL |
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A-3 |
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PRESENTATION OF INFORMATION
In this Annual Report, and unless otherwise stated or the context otherwise dictates, references to
ING Groep N.V., ING Groep and ING Group refer to ING Groep N.V. and references to ING,
the Company, the Group, we and us refer to ING Groep N.V. and its consolidated
subsidiaries. ING Groep N.V.s primary insurance and banking subsidiaries are ING Verzekeringen
N.V. (together with its consolidated subsidiaries, ING Insurance) and ING Bank N.V. (together
with its consolidated subsidiaries, ING Bank), respectively. References to Executive Board or
Supervisory Board refer to the Executive Board or Supervisory Board of ING Groep N.V.
ING presents its consolidated financial statements in euros, the currency of the European Economic
and Monetary Union. Unless otherwise specified or the context otherwise requires, references to
US$ and Dollars are to the United States dollars and references to EUR are to euros.
Solely for the convenience of the reader, this Annual Report contains translations of certain euro
amounts into U.S. dollars at specified rates. These translations should not be construed as
representations that the translated amounts actually represent such dollar or euro amounts, as the
case may be, or could be converted into U.S. dollars or euros, as the case may be, at the rates
indicated or at any other rate. Therefore, unless otherwise stated, the translations of euros into
U.S. dollars have been made at the rate of euro 1.00 = $ 1.2674, the noon buying rate in New York
City for cable transfers in euros as certified for customs purposes by the Federal Reserve Bank of
New York (the Noon Buying Rate) on March 6, 2009.
The
financial information contained herein is prepared under International Financial Reporting
Standards as issued by the International Accounting Standards Board (IASB). International
Financial Reporting Standards as issued by the IASB provide several options in accounting policies.
ING Groups accounting policies under International Financial Reporting Standards, as issued by the
IASB and its decision on the options available, are set out in the section Principles of valuation
and determination of results below. In this document the term IFRS-IASB is used to refer to
International Financial Reporting Standards as issued by the IASB, including the decisions ING
Group made with regard to the options available under International Financial Reporting Standards
as adopted by the IASB.
IFRS-EU refers to International Financial Reporting Standards as adopted by the European Union
(EU), including the decisions ING Group made with regard to the options available under IFRS as
adopted by the EU. The published 2008 Consolidated Annual Accounts of ING Group are presented in
accordance with IFRS-EU. The Annual Accounts of ING Group will remain to be prepared under IFRS-EU.
IFRS-EU differs from IFRS-IASB in respect of certain paragraphs in IAS 39 Financial Instruments:
Recognition and Measurement regarding hedge accounting for portfolio hedges of interest rate risk.
Under IFRS-EU, ING Group applies fair value hedge accounting for portfolio hedges of interest rate
risk (fair value macro hedges) in accordance with the EU carve out version of IAS 39. Under the
EU IAS 39 carve-out, hedge accounting may be applied, in respect of fair value macro hedges, to
core deposits and hedge ineffectiveness is only recognized when the revised estimate of the amount
of cash flows in scheduled time buckets falls below the original designated amount of that bucket
and is not recognized when the revised amount of cash flows in scheduled time buckets is more than
the original designated amount. Under IFRS-IASB, hedge accounting for fair value macro hedges can
not be applied to core deposits and ineffectiveness arises whenever the revised estimate of the
amount of cash flows in scheduled time buckets is either more or less than the original designated
amount of that bucket.
The financial information contained herein is prepared under IFRS-IASB. This information is
prepared by reversing the hedge accounting impacts that are applied under the EU carve out
version of IAS 39. Financial information under IFRS-IASB accordingly does not take account of the
fact that had ING Group applied IFRS-IASB as its primary accounting framework it may have applied
alternative hedge strategies where those alternative hedge strategies could have qualified for
IFRS-IASB compliant hedge accounting, which could have resulted in different shareholders equity
and net result amounts compared to those disclosed herein.
A reconciliation between IFRS-EU and IFRS-IASB is included in Note 2.1 Basis of preparation.
Effective March 4, 2008, amendments to Form 20-F permit Foreign Private Issuers to include
financial statements prepared in accordance with IFRS-IASB without reconciliation to US GAAP.
Unless otherwise indicated, gross premiums, gross premiums written and gross written premiums as
referred to in this Annual Report include premiums (whether or not earned) for insurance policies
written during a specified period, without deduction for premiums ceded, and net premiums, net
premiums written and net written premiums include premiums (whether or not earned) for insurance
policies written during a specified period, after deduction for premiums ceded. Certain amounts set
forth herein may not sum due to rounding.
Although certain references are made to information available on INGs website, no materials from
INGs website or any other source are incorporated by reference into this Annual Report, except as
specifically stated herein.
References herein to Items are, to the extent such items are not included herein, to the relevant item in our Annual
Report on Form 20-F for the year ended December 31, 2008.
3
Item 3. Key Information
The selected consolidated financial information data set forth below is derived from the
consolidated financial statements of ING Group. ING Group adopted
IFRS as of 2005.
The following information should be read in conjunction with, and is qualified by reference to the
Groups consolidated financial statements and other financial information included elsewhere
herein.
4
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Year ended December 31, |
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2008 |
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2008 |
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2007(2) |
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2006(2) |
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2005(2) |
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2004(2) |
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USD(1) |
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EUR |
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EUR |
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EUR |
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EUR |
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EUR |
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(in millions, except amounts per share and ratios) |
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IFRS-IASB Consolidated Income Statement Data |
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Income from insurance operations: |
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Gross premiums written: |
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Life |
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49,261 |
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38,868 |
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40,732 |
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40,501 |
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39,144 |
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36,975 |
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Non-life |
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6,266 |
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4,944 |
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6,086 |
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6,333 |
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6,614 |
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6,642 |
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Total |
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55,527 |
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43,812 |
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46,818 |
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46,834 |
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45,758 |
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43,617 |
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Commission income |
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2,624 |
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2,070 |
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1,901 |
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1,636 |
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1,346 |
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1,198 |
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Investment and Other income |
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11,369 |
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8,970 |
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13,488 |
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11,172 |
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10,299 |
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10,787 |
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Total income from insurance operations |
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69,519 |
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54,851 |
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62,208 |
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59,642 |
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57,403 |
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55,602 |
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Income from banking operations: |
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Interest income |
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124,460 |
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98,201 |
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76,859 |
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59,262 |
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48,342 |
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25,471 |
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Interest expense |
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110,410 |
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87,115 |
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67,823 |
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49,927 |
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39,180 |
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16,772 |
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Net interest result |
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14,050 |
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11,085 |
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9,036 |
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9,335 |
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9,162 |
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8,699 |
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Investment income |
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(3,117 |
) |
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(2,459 |
) |
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1,969 |
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|
849 |
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937 |
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|
363 |
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Commission income |
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3,669 |
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2,895 |
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2,926 |
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2,681 |
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2,401 |
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2,581 |
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Other income |
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(4,436 |
) |
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(3,500 |
) |
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1,182 |
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1,513 |
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1,348 |
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1,035 |
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Total income from banking operations |
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10,167 |
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8,022 |
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15,113 |
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14,378 |
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13,848 |
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12,678 |
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Total income (3) |
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79,316 |
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62,582 |
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77,097 |
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73,804 |
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71,120 |
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68,159 |
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Expenditure from insurance operations: |
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Life |
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65,426 |
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51,622 |
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49,526 |
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49,106 |
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47,156 |
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44,988 |
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Non-life |
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6,165 |
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4,864 |
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6,149 |
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5,601 |
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6,269 |
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6,292 |
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Total
expenditure from insurance
operations |
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71,590 |
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56,486 |
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55,675 |
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54,707 |
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53,425 |
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51,280 |
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Total expenditure from banking operations |
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14,680 |
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11,583 |
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10,092 |
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9,190 |
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8,932 |
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9,260 |
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Total
expenditure(3)(4) |
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85,902 |
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67,778 |
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65,543 |
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63,681 |
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62,226 |
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60,419 |
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Result before tax from insurance operations: |
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Life |
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(2,720 |
) |
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(2,146 |
) |
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5,314 |
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3,436 |
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2,666 |
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2,647 |
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Non-life |
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|
648 |
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|
511 |
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1,219 |
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|
1,499 |
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|
|
1,312 |
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|
1,675 |
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Total |
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(2,072 |
) |
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(1,635 |
) |
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6,533 |
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|
4,935 |
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|
3,978 |
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|
4,322 |
|
Result before tax from banking operations |
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(4,513 |
) |
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|
(3,561 |
) |
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|
5,021 |
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|
5,188 |
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|
4,916 |
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|
3,418 |
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Result before tax |
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(6,585 |
) |
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|
(5,196 |
) |
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|
11,554 |
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|
10,123 |
|
|
|
8,894 |
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|
|
7,440 |
|
Taxation |
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|
(2,113 |
) |
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|
(1,667 |
) |
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|
1,665 |
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|
1,961 |
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|
|
1,379 |
|
|
|
1,709 |
|
Minority interests |
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|
(47 |
) |
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|
(37 |
) |
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|
267 |
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|
341 |
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|
305 |
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|
|
276 |
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|
|
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|
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|
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|
Net result |
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|
(4,426 |
) |
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|
(3,492 |
) |
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|
9,622 |
|
|
|
7,821 |
|
|
|
7,210 |
|
|
|
5,755 |
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|
|
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|
|
Dividend on Ordinary shares |
|
|
1,901 |
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|
|
1,500 |
|
|
|
3,180 |
|
|
|
2,865 |
|
|
|
2,588 |
|
|
|
2,359 |
|
Addition to shareholders equity |
|
|
(5,788 |
) |
|
|
(4,567 |
) |
|
|
6,442 |
|
|
|
4,956 |
|
|
|
4,622 |
|
|
|
3,396 |
|
Payable on non-voting equity securities (7) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(539 |
) |
|
|
(425 |
) |
Net result attributable to equity holders of the Company |
|
|
(924 |
) |
|
|
(729 |
) |
|
|
9,241 |
|
|
|
7,692 |
|
|
|
7,210 |
|
|
|
5,755 |
|
Basic
earnings per share(5) |
|
|
(2.17 |
) |
|
|
(1.71 |
) |
|
|
4.49 |
|
|
|
3.62 |
|
|
|
3.32 |
|
|
|
2.71 |
|
Diluted earnings per share(5) |
|
|
(2.17 |
) |
|
|
(1.71 |
) |
|
|
4.46 |
|
|
|
3.59 |
|
|
|
3.32 |
|
|
|
2.71 |
|
Dividend per Ordinary share (5) |
|
|
0.94 |
|
|
|
0.74 |
|
|
|
1.48 |
|
|
|
1.32 |
|
|
|
1.18 |
|
|
|
1.07 |
|
Interim Dividend |
|
|
0.94 |
|
|
|
0.74 |
|
|
|
0.66 |
|
|
|
0.59 |
|
|
|
0.54 |
|
|
|
0.49 |
|
Final Dividend |
|
|
|
|
|
|
|
|
|
|
0.82 |
|
|
|
0.73 |
|
|
|
0.64 |
|
|
|
0.58 |
|
Number of Ordinary shares outstanding (in millions) |
|
|
2,063.1 |
|
|
|
2,063.1 |
|
|
|
2,226.4 |
|
|
|
2,205.1 |
|
|
|
2,204.9 |
|
|
|
2,204.7 |
|
Dividend pay-out ratio (6) |
|
|
n.a. |
|
|
|
n.a. |
|
|
|
34.3 |
% |
|
|
37.0 |
% |
|
|
35.5 |
% |
|
|
39.5 |
% |
5
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|
|
|
|
|
|
|
Year ended December 31, |
|
|
2008 |
|
|
2008 |
|
|
20072) |
|
|
2006(2) |
|
|
2005(2) |
|
|
2004(2) |
|
|
|
USD(2) |
|
|
EUR |
|
|
EUR |
|
|
EUR |
|
|
EUR |
|
|
EUR |
|
|
|
|
|
|
|
(in billions, except amounts per share and ratios) |
|
|
|
|
|
IFRS-IASB Consolidated Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
1,683.9 |
|
|
|
1,328.6 |
|
|
|
1,313.2 |
|
|
|
1,226.5 |
|
|
|
1,158.6 |
|
|
|
876.4 |
|
Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
138.8 |
|
|
|
109.5 |
|
|
|
132.3 |
|
|
|
140.5 |
|
|
|
144.5 |
|
|
|
112.1 |
|
Banking |
|
|
188.6 |
|
|
|
148.8 |
|
|
|
160.4 |
|
|
|
171.1 |
|
|
|
180.1 |
|
|
|
164.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
327.4 |
|
|
|
258.3 |
|
|
|
292.6 |
|
|
|
311.6 |
|
|
|
324.6 |
|
|
|
276.3 |
|
Loans and advances to customers |
|
|
781.7 |
|
|
|
616.8 |
|
|
|
553.7 |
|
|
|
474.6 |
|
|
|
439.2 |
|
|
|
330.5 |
|
Insurance and investment contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life |
|
|
270.0 |
|
|
|
213.0 |
|
|
|
232.4 |
|
|
|
237.9 |
|
|
|
232.1 |
|
|
|
205.5 |
|
Non-life |
|
|
8.6 |
|
|
|
6.8 |
|
|
|
9.6 |
|
|
|
10.1 |
|
|
|
12.8 |
|
|
|
11.4 |
|
Investment contracts |
|
|
26.7 |
|
|
|
21.1 |
|
|
|
23.7 |
|
|
|
20.7 |
|
|
|
18.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
305.3 |
|
|
|
240.8 |
|
|
|
265.7 |
|
|
|
268.7 |
|
|
|
263.5 |
|
|
|
216.9 |
|
Customer deposits and other funds on deposit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings accounts of the banking operations |
|
|
347.6 |
|
|
|
274.3 |
|
|
|
275.1 |
|
|
|
283.1 |
|
|
|
269.4 |
|
|
|
219.4 |
|
Other deposits and bank funds |
|
|
314.9 |
|
|
|
248.5 |
|
|
|
250.1 |
|
|
|
213.6 |
|
|
|
196.3 |
|
|
|
129.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
662.6 |
|
|
|
522.8 |
|
|
|
525.2 |
|
|
|
496.7 |
|
|
|
465.7 |
|
|
|
349.2 |
|
Amounts due to banks |
|
|
193.0 |
|
|
|
152.3 |
|
|
|
167.0 |
|
|
|
120.8 |
|
|
|
122.2 |
|
|
|
95.9 |
|
Share capital (in millions) |
|
|
|
|
|
|
2,063.1 |
|
|
|
2,242.4 |
|
|
|
2,268.1 |
|
|
|
2,292.0 |
|
|
|
2,291.8 |
|
Shareholders equity |
|
|
19.1 |
|
|
|
15.1 |
|
|
|
37.7 |
|
|
|
38.4 |
|
|
|
36.7 |
|
|
|
24.1 |
|
Non-voting equity securities |
|
|
12.8 |
|
|
|
10.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders equity per Ordinary share 5) |
|
|
9.43 |
|
|
|
7.44 |
|
|
|
17.73 |
|
|
|
17.78 |
|
|
|
16.96 |
|
|
|
12.95 |
|
|
|
|
(1) |
|
Euro amounts have been translated into U.S. dollars at the exchange rate of $ 1.2674 to
EUR 1.00, the noon buying rate in New York City on March 6, 2009 for cable transfers in euros as
certified for customs purposes by the Federal Reserve Bank of New York. |
|
(2) |
|
For the impact of divestments see Item 5. Operating and Financial Review and Prospects . |
|
(3) |
|
After elimination of certain intercompany transactions between the insurance operations
and the banking operations. See Note 2.1. to the consolidated financial statements. |
6
|
|
|
(4) |
|
Includes all non-interest expenses, including additions to the provision for loan losses.
See Item 5, Operating and Financial Review and Prospects Liquidity and Capital Resources. |
|
(5) |
|
Net result per share amounts have been calculated based on the weighted average number of
Ordinary shares outstanding and equity per share amounts have been calculated based on the number
of Ordinary shares outstanding at the end of the respective periods. For purposes of this
calculation ING Groep N.V. shares held by Group companies are deducted from the total number of
Ordinary shares in issue. Shareholders equity per share is based on Ordinary shares outstanding
at end of period. In 2008, amounts include coupon to Dutch State payable on the non-voting equity
securities. |
|
(6) |
|
The dividend pay-out ratio is based on net result attributed to equity holders of the Company. |
|
(7) |
|
For details of the agreements with the Dutch State see Note 12 of Note 2.1 to the consolidated
financial statements. |
EXCHANGE RATES
Fluctuations in the exchange rate between the euro and the U.S. dollar will affect the U.S. dollar
amounts received by owners of shares or ADSs on conversion of dividends, if any, paid in euros on
the shares and will affect the U.S. dollar price of the ADSs on the New York Stock Exchange.
The following table sets forth, for the periods and dates indicated, certain information concerning
the exchange rate for U.S. dollars into euros based on the Noon Buying Rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. dollars per euro |
|
|
Period |
|
Average |
|
|
|
|
Calendar Period |
|
End(1) |
|
Rate(2) |
|
High |
|
Low |
|
|
|
2004 |
|
|
1.3538 |
|
|
|
1.2478 |
|
|
|
1.3625 |
|
|
|
1.1801 |
|
2005 |
|
|
1.1842 |
|
|
|
1.2397 |
|
|
|
1.3476 |
|
|
|
1.1670 |
|
2006 |
|
|
1.3197 |
|
|
|
1.2661 |
|
|
|
1.3327 |
|
|
|
1.1860 |
|
2007 |
|
|
1.4603 |
|
|
|
1.3794 |
|
|
|
1.4862 |
|
|
|
1.2904 |
|
2008 |
|
|
1.3919 |
|
|
|
1.4695 |
|
|
|
1.6010 |
|
|
|
1.2446 |
|
2009 (through March 6, 2009) (2) |
|
|
1.2674 |
|
|
|
1.2710 |
|
|
|
1.3718 |
|
|
|
1.2549 |
|
|
|
|
(1) |
|
The Noon Buying Rate at such dates differ from the rates used in the preparation of INGs
consolidated financial statements as of such date. See Note 2.1 to the consolidated
financial statements. |
|
(2) |
|
The average of the Noon Buying Rates on the last business day of each full calendar month
during the period. |
The table below shows the high and low exchange rate of the U.S. dollar per euro for the last six
months.
|
|
|
|
|
|
|
|
|
|
|
High |
|
Low |
September 2008 |
|
|
1.4737 |
|
|
|
1.3939 |
|
October 2008 |
|
|
1.4058 |
|
|
|
1.2446 |
|
November 2008 |
|
|
1.3039 |
|
|
|
1.2525 |
|
December 2008 |
|
|
1.4358 |
|
|
|
1.2634 |
|
January 2009 |
|
|
1.3718 |
|
|
|
1.2804 |
|
February 2009 |
|
|
1.3064 |
|
|
|
1.2547 |
|
March 2009 (through March 6, 2009) |
|
|
1.2674 |
|
|
|
1.2549 |
|
The Noon Buying Rate for euros on December 31, 2008 was EUR 1.00 = $ 1.3919 and the Noon Buying
Rate for euros on March 6, 2009 was EUR 1.00 = $ 1.2674.
7
Item 5. Operating and financial review and prospects
The following review and prospects should be read in conjunction with the consolidated financial
statements and the related Notes thereto included elsewhere herein. The consolidated financial
statements have been prepared in accordance with IFRS-IASB. Unless
otherwise indicated, financial information for ING Group included herein is presented on a
consolidated basis under IFRS-IASB.
FACTORS AFFECTING RESULTS OF OPERATIONS
ING Groups results of operations are affected by demographics (particularly with respect to life
insurance) and by a variety of market conditions, including economic cycles, insurance industry
cycles (particularly with respect to non-life insurance), banking industry cycles and fluctuations
in stock markets, interest and foreign exchange rates. See Item 3. Risk Factors for more factors
that can impact ING Groups results of operations.
General market conditions
Demographic studies suggest that over the next decade there will be growth in the number of
individuals who enter the age group that management believes is most likely to purchase
retirement-oriented life insurance products in INGs principal life insurance markets in the
Netherlands, the Rest of Europe, the United States, Asia and Australia. In addition, in a number of
its European markets, including the Netherlands, retirement, medical and other social benefits
previously provided by the government have been, or in the coming years are expected to be,
curtailed. Management believes this will increase opportunities for private sector providers of
life insurance, health, pension and other social benefits-related insurance products. Management
believes that ING Insurances distribution networks, the quality and diversity of its products and
its investment management expertise in each of these markets, positions ING Insurance to benefit
from these developments. In addition, the emerging markets in Central and Eastern Europe, Asia and
Latin America, in which ING Insurance has insurance operations, generally have lower gross domestic
products per capita and gross insurance premiums per capita than the countries in Western Europe
and North America in which ING Insurance has insurance operations. Management believes that
insurance operations in these emerging markets provide ING Insurance with the market presence which
will allow it to take advantage of anticipated growth in these regions. In addition, conditions in
the non-life insurance markets in which ING Insurance operates are cyclical, and characterized by
periods of price competition, fluctuations in underwriting results, and the occurrence of
unpredictable weather-related and other losses.
Fluctuations in equity markets
Our insurance and asset management operations are exposed to fluctuations in equity markets.
Our overall investment return and fee income from equity-linked products are influenced by equity
markets. The fees we charge for managing portfolios are often based on performance and value of
the portfolio. In addition, fluctuations in equity markets may affect sales of life and pension
products, unit-linked products, including variable business and may increase the amount of
withdrawals which will reduce related management fees. In addition, our direct shareholdings that
are classified as investments are exposed to fluctuations in equity markets. The securities we
hold may become impaired in the case of a significant or prolonged decline in the fair value of
the security below its cost. Our banking operations are also exposed to fluctuations in equity
markets. ING Bank maintains an internationally diversified and mainly client-related trading
portfolio. Accordingly, market downturns are likely to lead to declines in securities trading and
brokerage activities which we execute for customers and therefore to a decline in related
commissions and trading results. In addition to this, ING Bank also maintains equity investments
in its own non-trading books. Fluctuations in equity markets may affect the value of these
investments.
Fluctuations in interest rates
Our insurance operations are exposed to fluctuations in interest rates through impacts on sales and
surrenders of life insurance and annuity products. Declining interest rates may increase sales, but
may impact profitability as a result of a reduced spread between the guaranteed interest rates to
policyholders and the investment returns on fixed interest investments. Declining interest rates
may also affect the results of our reserve adequacy testing which may in turn result in reserve
strengthening. Rising interest rates may increase the surrender of policies which may require
liquidation of fixed interest investments at unfavorable market prices. This could result in
realized investment losses. Our banking operations are exposed to fluctuations in interest
8
rates.
Our management of interest rate sensitivity affects the results of our banking operations. Interest
rate
sensitivity refers to the relationship between changes in market interest rates on the one hand and
on the other hand to changes in both net interest income and the results of our trading activities
for our own account. Both the composition of our banking assets and liabilities and the fact that
interest rate changes may affect client behavior in a different way than assumed in our internal
models result in a mismatch which causes the banking operations net interest income and trading
results to be affected by changes in interest rates
Market developments in 2008
Like other financial institutions, ING has not been immune to the financial crisis. The financial
crisis started in the US subprime mortgage market in early 2007 and intensified over 2008 as prices
fell across most major asset classes throughout the world. Equity markets lost significant ground
and real estate prices were generally under pressure. Credit spreads widened significantly, both in
the US and Europe. As liquidity became tight, central banks around the world were quick to provide
funding to prevent the interbank market from drying up. There were also a number of significant
financial institutions that failed during the year. As the financial crisis spread beyond the
financial sector it also affected consumer confidence, other sectors and economic growth. All of
these factors placed major strains on risk management departments in financial services companies,
including ING, and emphasized the importance of having a robust risk management organisation in
place that can take forceful measures to reduce risk. For details regarding the impact of the
credit and liquidity crisis on INGs assets and results, see Note 2.1 Risk Management to the
consolidated financial statements.
Impact of financial crisis
Impact on pressurised asset classes
As a result of the deteriorating market conditions throughout 2008 ING Group incurred negative
revaluations on its investment portfolio, which impacted shareholders equity. Furthermore, ING
Group incurred impairments, fair value changes and trading losses, which impacted its profit and
loss account (P&L).
The table below shows the exposures and negative revaluations and losses taken on US sub-prime and
US Alt-A residential mortgage backed securities (RMBS), Collateralised Debt Obligations (CDOs) and
Collateralised Loan Obligations (CLOs) during 2008.
US Subprime RMBS, US Alt-A RMBS and CDOs/CLOs exposures, revaluations and losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2008 |
|
|
|
|
|
|
|
|
|
December 31, 2007 |
|
|
|
|
|
|
Revaluations |
|
Change in 2008 |
|
|
|
|
|
Revaluations |
|
|
|
|
|
|
through Equity |
|
Write-downs through |
|
|
|
|
|
|
|
|
|
through Equity |
(EUR millions) |
|
Market value |
|
(pre-tax) |
|
P&L (pre-tax) |
|
Other changes |
|
Market value |
|
(pre-tax) |
US Subprime RMBS |
|
|
1,778 |
|
|
|
(839 |
) |
|
|
(120 |
) |
|
|
(52 |
) |
|
|
2,789 |
|
|
|
(307 |
) |
US Alt-A RMBS |
|
|
18,847 |
|
|
|
(6,538 |
) |
|
|
(2,064 |
) |
|
|
(33 |
) |
|
|
27,482 |
|
|
|
(936 |
) |
CDOs/CLOs |
|
|
3,469 |
|
|
|
(218 |
) |
|
|
(394 |
) |
|
|
2,186 |
|
|
|
1,895 |
|
|
|
(134 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
24,094 |
|
|
|
(7,595 |
) |
|
|
(2,578 |
) |
|
|
2,101 |
|
|
|
32,166 |
|
|
|
(1,377 |
) |
- |
|
ING Groups total EUR 1.8 billion exposure to US sub-prime assets relates to non originated
loans acquired as investments in RMBS and represents 0.1% of total assets. At December 31, 2008
approximately 77% of INGs US sub-prime portfolio was rated AA or higher. ING Group does not
originate sub-prime mortgages. The vast majority of the total mortgage backed securitisations (MBS)
are (residential) mortgages that are not classified as sub-prime. |
|
- |
|
ING Groups total US Alt-A RMBS exposure at December 31, 2008 was EUR 18.8 billion. About 65% of
this portfolio was AAA rated. The majority of the exposure (EUR 16.3 billion) was held by ING
Direct. INGs Available-for-Sale Alt-A investments are measured at fair value in the balance sheet.
The substantial amount of negative pre-tax revaluation and impairments on this portfolio are mainly
caused by the illiquid market. |
|
- |
|
Net investments in CDOs/CLOs at December 31, 2008 were 0.3% of total assets. The vast majority
of the CDOs/CLOs has investment grade corporate credit as underlying assets, only EUR 1 million has
US subprime mortgages underlying. |
EUR 23.7 billion of the EUR 24.1 billion exposure on US Subprime RMBS, US Alt-A RMBS and CDOs/CLOs
is booked at fair value. An analysis of the method applied in determining the fair values of
financial assets and
9
liabilities is provided in Note 33 of Note 2.1 to the consolidated financial
statements. At December 31, 2008 the fair value of US Subprime RMBS, US Alt-A RMBS and CDOs/CLOs
was as follows:
Fair value of US Subprime RMBS, US Alt-A RMBS and CDOs/CLOs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reference to |
|
|
|
|
|
|
|
|
published price |
|
Valuation technique |
|
Valuation technique |
|
|
|
|
quotations in |
|
supported by market |
|
not supported by |
|
|
(EUR millions) |
|
active markets |
|
inputs |
|
market inputs |
|
Total |
2008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US Subprime RMBS |
|
|
20 |
|
|
|
26 |
|
|
|
1,732 |
|
|
|
1,778 |
|
US Alt-A RMBS |
|
|
|
|
|
|
244 |
|
|
|
18,244 |
|
|
|
18,488 |
|
CDOs/CLOs |
|
|
3,273 |
|
|
|
162 |
|
|
|
34 |
|
|
|
3,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
3,293 |
|
|
|
432 |
|
|
|
20,010 |
|
|
|
23,735 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US Subprime RMBS |
|
|
2,636 |
|
|
|
153 |
|
|
|
|
|
|
|
2,789 |
|
US Alt-A RMBS |
|
|
23,312 |
|
|
|
4,170 |
|
|
|
|
|
|
|
27,482 |
|
CDOs/CLOs |
|
|
281 |
|
|
|
1,597 |
|
|
|
17 |
|
|
|
1,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
26,229 |
|
|
|
5,920 |
|
|
|
17 |
|
|
|
32,168 |
|
Assets classified in Valuation technique not supported by market inputs consist mainly
(approximately 87 %) of investments in asset backed securities in the United States. These assets
are valued using external price sources that are obtained from third party pricing services and
brokers. As at December 31, 2007, these assets were classified in Reference to published price
quotations in active markets as valuation is based on independent quotes and trading in the
relevant markets was active at that time. During 2008, the trading volumes in the relevant markets
reduced significantly and these have now become inactive. The dispersion between prices for the
same security from different price sources increased significantly. As a result, an amount of EUR
25 billion of mortgage backed securities in the United States was reclassified from Reference to
published price quotations in active markets to Valuation technique not supported by market inputs
in the third quarter of 2008.
Impact on Real Estate
By the end of 2008 ING Groups total exposure to real estate was EUR 15.5 billion of which EUR 9.8
billion was subject to revaluation through the profit and loss account. In 2008, ING recorded EUR
1,184 million pre-tax negative revaluations and impairments. INGs real estate portfolio has high
occupancy rates and is diversified over sectors and regions, but is clearly affected by the
negative real estate markets throughout the world.
Impact on Equity securities available-for-sale
Direct equity exposure at December 31, 2008 in this caption was EUR 5.8 billion (public) and EUR
0,4 billion (private). During 2008 ING booked EUR 1,707 million of pre-tax impairments on this
direct public equity exposure. ING generally decides to impair a listed equity security based on
two broad guidelines: when the fair value of the security is below 75% of the cost price or when
the market price of the security is below the cost price for longer than six months.
Impact on other asset classes
Negative impact on results 2008 (pre-tax) from private equity and alternative assets amounted to
EUR 399 million. Negative impact on results 2008 (pre-tax) from debt securities other than
mentioned above amounted to EUR 292 million.
Impact on counterparty risk
In the third quarter a number of financial institutions were no longer expected to fulfil their
obligations. ING incurred EUR 483 million pre-tax losses (excluding loan losses) on Lehman
Brothers, Washington Mutual and the Icelandic banks. The loss included impairments of debt
securities, trading losses and derivative positions, including the costs to replace derivatives on
which the banks were counterparty.
Impact on Liquidity profile
Due to the financial crisis liquidity became scarce and central banks around the world provided
funding to prevent the interbank market drying up. INGs liquidity position remained sound. ING
Bank has a favourable funding profile as the majority of the funding stems from client deposits.
10
Fluctuations in exchange rates
ING Group is exposed to fluctuations in exchange rates. Our management of exchange rate sensitivity
affects the results of our operations both through the trading activities for our own account and
because of the fact that we publish our consolidated financial statements in euros. Because a
substantial portion of our income and expenses are denominated in currencies other than euros,
fluctuations in the exchange rates used to translate foreign currencies, particularly the U.S.
dollar, the Australian dollar, the Canadian dollar, the Turkish lira, the Japanese yen, the Korean
won, the Pound sterling and the Polish zloty into euros will impact our reported results of
operations and cash flows from year to year. This exposure is mitigated by the fact that realized
results in non-Euro currencies are translated into euro by monthly hedging. See Note 23 of Note 2.1
to the consolidated financial statements for a description of our hedging activities with respect
to foreign currencies. Fluctuations in exchange rates will also impact the value (denominated in
euro) of our investments in our non-Euro reporting subsidiaries. The impact of these fluctuations
in exchange rates is mitigated to some extent by the fact that income and related expenses, as well
as assets and liabilities, of each of our non-euro reporting subsidiaries are generally denominated
in the same currencies. For the main foreign currencies, in which INGs income and expenses are
denominated namely the U.S. dollar, Pound sterling, Canadian dollar, Australian dollar, Turkish
lira and Polish zloty, the translation risk is managed taking into account the effect of
translation results on the Tier-1 ratio. For all other currencies the translation risk is managed
within a Value-at-Risk limit.
The weakening of most currencies against the euro during 2008 had a negative impact of EUR 163
million on (underlying) net result. In 2007 and 2006 exchange rates influenced net result,
respectively, by EUR 159 million negatively and EUR 20 million positively.
For the years 2008, 2007 and 2006, the year-end exchange rates (which are the rates ING uses in the
preparation of the consolidated financial statements for balance sheet items not denominated in
euros) and the average quarterly exchange rates (which are the rates ING uses in the preparation of
the consolidated financial statements for income statement items and cash flows not denominated in
euros) were as follows for the currencies specified below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average1) |
|
|
|
|
|
|
|
|
|
|
|
|
4Q 2008 |
|
|
3Q 2008 |
|
|
2Q 2008 |
|
|
1Q 2008 |
|
|
2007 |
|
|
2006 |
|
U.S. dollar |
|
|
1.345 |
|
|
|
1.511 |
|
|
|
1.566 |
|
|
|
1.514 |
|
|
|
1.375 |
|
|
|
1.257 |
|
Australian dollar |
|
|
1.922 |
|
|
|
1.694 |
|
|
|
1.664 |
|
|
|
1.674 |
|
|
|
1.639 |
|
|
|
1.664 |
|
Canadian dollar |
|
|
1.590 |
|
|
|
1.559 |
|
|
|
1.579 |
|
|
|
1.509 |
|
|
|
1.470 |
|
|
|
1.422 |
|
Pound sterling |
|
|
0.844 |
|
|
|
0.796 |
|
|
|
0.792 |
|
|
|
0.761 |
|
|
|
0.686 |
|
|
|
0.682 |
|
Japanese yen |
|
|
130.787 |
|
|
|
161.518 |
|
|
|
162.530 |
|
|
|
159.662 |
|
|
|
161.685 |
|
|
|
146.188 |
|
South Korean won |
|
|
1,748.405 |
|
|
|
1,640.581 |
|
|
|
1,589.017 |
|
|
|
1,438.373 |
|
|
|
1,275.559 |
|
|
|
1,199.328 |
|
Turkish lira |
|
|
1.995 |
|
|
|
1.825 |
|
|
|
1.973 |
|
|
|
1.838 |
|
|
|
1.786 |
|
|
|
1.798 |
|
Polish zloty |
|
|
3.741 |
|
|
|
3.327 |
|
|
|
3.425 |
|
|
|
3.566 |
|
|
|
3.781 |
|
|
|
3.897 |
|
|
|
|
1) |
|
Average exchange rates are calculated on a quarterly basis as from 2008 and on an annual
basis before 2008. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-end |
|
|
2008 |
|
2007 |
|
2006 |
U.S. dollar |
|
|
1.396 |
|
|
|
1.472 |
|
|
|
1.318 |
|
Australian dollar |
|
|
2.026 |
|
|
|
1.676 |
|
|
|
1.669 |
|
Canadian dollar |
|
|
1.710 |
|
|
|
1.444 |
|
|
|
1.528 |
|
Pound sterling |
|
|
0.956 |
|
|
|
0.734 |
|
|
|
0.671 |
|
Japanese yen |
|
|
126.354 |
|
|
|
164.819 |
|
|
|
156.768 |
|
South Korean won |
|
|
1758.273 |
|
|
|
1,378.094 |
|
|
|
1,225.971 |
|
Turkish lira |
|
|
2.143 |
|
|
|
1.718 |
|
|
|
1.865 |
|
Polish zloty |
|
|
4.175 |
|
|
|
3.586 |
|
|
|
3.832 |
|
Critical Accounting Policies
See Note 2.1. to the consolidated financial statements.
11
CONSOLIDATED RESULTS OF OPERATIONS
The following information should be read in conjunction with, and is qualified by reference to the
Groups consolidated financial statements and other financial information included elsewhere
herein. ING Group evaluates the results of its insurance operations and banking operations,
including Insurance Europe, Insurance Americas, Insurance Asia/Pacific, Wholesale Banking, Retail
Banking and ING Direct, using the financial performance measure of underlying result before tax.
Underlying result before tax is defined as result before tax and, excluding, as applicable for each
respective segment, either all or some of the following items: gains/losses from divested units,
realized gains/losses on divestitures and special items such as certain restructuring charges and
other non-operating income/expense.
While these excluded items are significant components in understanding and assessing the Groups
consolidated financial performance, ING Group believes that the presentation of underlying result
before tax enhances the understanding and comparability of its segment performance by highlighting
result before tax attributable to ongoing operations and the underlying profitability of the
segment businesses. For example, we believe that trends in the underlying profitability of our
segments can be more clearly identified without the effects of the realized gains/losses on
divestitures as the timing is largely subject to the Companys discretion, influenced by market
opportunities and ING Group does not believe that they are indicative of future results. Underlying
result before tax is not a substitute for result before tax as determined in accordance with
IFRS-IASB. ING Groups definition of underlying result before tax may differ from those used by other
companies and may change over time. For further information on underlying result before tax as well
as the reconciliation of our segment underlying result before tax to our result before taxation see
Item 5. Operating and Financial Review and Prospects Segment Reporting and Note 49 of Note 2.1
to the consolidated financial statements.
The following table sets forth the consolidated results of the operations of ING Group and its
insurance and banking operations for the years ended December 31, 2008 and 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
Banking |
|
|
Eliminations |
|
|
Total |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
|
|
(EUR millions) |
|
Premium income |
|
|
43,812 |
|
|
|
46,818 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,812 |
|
|
|
46,818 |
|
Interest result banking operations |
|
|
|
|
|
|
|
|
|
|
11,085 |
|
|
|
9,036 |
|
|
|
43 |
|
|
|
60 |
|
|
|
11,042 |
|
|
|
8,976 |
|
Commission income |
|
|
2,070 |
|
|
|
1,901 |
|
|
|
2,895 |
|
|
|
2,926 |
|
|
|
|
|
|
|
|
|
|
|
4,965 |
|
|
|
4,827 |
|
Investment and Other income |
|
|
8,970 |
|
|
|
13,488 |
|
|
|
(5,959 |
) |
|
|
3,151 |
|
|
|
248 |
|
|
|
163 |
|
|
|
2,763 |
|
|
|
16,476 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
54,851 |
|
|
|
62,208 |
|
|
|
8,022 |
|
|
|
15,113 |
|
|
|
291 |
|
|
|
223 |
|
|
|
62,582 |
|
|
|
77,097 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
49,485 |
|
|
|
48,833 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,485 |
|
|
|
48,833 |
|
Other interest expenses |
|
|
1,269 |
|
|
|
1,326 |
|
|
|
|
|
|
|
|
|
|
|
291 |
|
|
|
223 |
|
|
|
978 |
|
|
|
1,103 |
|
Operating expenses |
|
|
5,422 |
|
|
|
5,515 |
|
|
|
10,303 |
|
|
|
9,967 |
|
|
|
|
|
|
|
|
|
|
|
15,725 |
|
|
|
15,481 |
|
Impairments/additions to the provision
for loan losses |
|
|
310 |
|
|
|
1 |
|
|
|
1,280 |
|
|
|
125 |
|
|
|
|
|
|
|
|
|
|
|
1,590 |
|
|
|
126 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
56,486 |
|
|
|
55,675 |
|
|
|
11,583 |
|
|
|
10,092 |
|
|
|
291 |
|
|
|
223 |
|
|
|
67,778 |
|
|
|
65,543 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
(1,635 |
) |
|
|
6,533 |
|
|
|
(3,561 |
) |
|
|
5,021 |
|
|
|
|
|
|
|
|
|
|
|
(5,196 |
) |
|
|
11,554 |
|
Taxation |
|
|
(483 |
) |
|
|
775 |
|
|
|
(1,184 |
) |
|
|
889 |
|
|
|
|
|
|
|
|
|
|
|
(1,667 |
) |
|
|
1,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before minority interests |
|
|
(1,152 |
) |
|
|
5,758 |
|
|
|
(2,377 |
) |
|
|
4,132 |
|
|
|
|
|
|
|
|
|
|
|
(3,529 |
) |
|
|
9,889 |
|
Minority interests |
|
|
31 |
|
|
|
155 |
|
|
|
(69 |
) |
|
|
112 |
|
|
|
|
|
|
|
|
|
|
|
(38 |
) |
|
|
267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net result |
|
|
(1,183 |
) |
|
|
5,603 |
|
|
|
(2,309 |
) |
|
|
4,019 |
|
|
|
|
|
|
|
|
|
|
|
(3,492 |
) |
|
|
9,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
(1,635 |
) |
|
|
6,533 |
|
|
|
(3,561 |
) |
|
|
5,021 |
|
|
|
|
|
|
|
|
|
|
|
(5,196 |
) |
|
|
11,554 |
|
Gains/losses on divestments(1) |
|
|
(8 |
) |
|
|
(382 |
) |
|
|
|
|
|
|
(32 |
) |
|
|
|
|
|
|
|
|
|
|
(8 |
) |
|
|
(414 |
) |
Result/loss divested units |
|
|
88 |
|
|
|
(39 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88 |
|
|
|
(39 |
) |
Special items (2) |
|
|
321 |
|
|
|
|
|
|
|
301 |
|
|
|
489 |
|
|
|
|
|
|
|
|
|
|
|
622 |
|
|
|
489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying result before tax |
|
|
(1,235 |
) |
|
|
6,113 |
|
|
|
(3,260 |
) |
|
|
5,478 |
|
|
|
|
|
|
|
|
|
|
|
(4,495 |
) |
|
|
11,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Divestments Insurance: sale of Chile Health (EUR 55 million, 2008), sale of Mexico (EUR 182
million, 2008), sale NRG (EUR (15) million, 2008),sale Taiwan (EUR (214) million, 2008), sale
of Belgian broker business (EUR 418 million, 2007), sale of NRG (EUR (129) million, 2007), IPO
SulAmerica in Brazil (EUR 93 million, 2007); Divestments Banking : sale of RegioBank (EUR 32
million, 2007); |
|
(2) |
|
Special items Insurance: integration costs CitiStreet (EUR (93) million, 2008),
Nationalization/Annuity business Argentina (EUR (228) million, 2008); Special items Banking:
impairment costs for not launching ING Direct Japan (EUR (30) million, 2008), provision for
combining ING Bank and Postbank (EUR (271) million, 2008 and EUR (299) million, 2007) and
restructuring provisions and hedge on purchase price Oyak Bank acquisition (EUR 190 million,
2007). |
12
The following table sets forth the consolidated results of the operations of ING Group and its
insurance and banking operations for the years ended December 31, 2007 and 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
Banking |
|
|
Eliminations |
|
|
Total |
|
|
|
2007 |
|
2006 |
2007 |
|
|
2006 |
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
|
|
(EUR millions) |
|
Premium income |
|
|
46,818 |
|
|
|
46,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,818 |
|
|
|
46,834 |
|
Interest result banking operations |
|
|
|
|
|
|
|
|
|
|
9,036 |
|
|
|
9,335 |
|
|
|
60 |
|
|
|
143 |
|
|
|
8,976 |
|
|
|
9,192 |
|
Commission income |
|
|
1,901 |
|
|
|
1,636 |
|
|
|
2,926 |
|
|
|
2,681 |
|
|
|
|
|
|
|
|
|
|
|
4,827 |
|
|
|
4,317 |
|
Investment and Other income |
|
|
13,488 |
|
|
|
11,172 |
|
|
|
3,151 |
|
|
|
2,362 |
|
|
|
163 |
|
|
|
73 |
|
|
|
16,476 |
|
|
|
13,461 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
62,208 |
|
|
|
59,642 |
|
|
|
15,113 |
|
|
|
14,378 |
|
|
|
223 |
|
|
|
216 |
|
|
|
77,097 |
|
|
|
73,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
48,833 |
|
|
|
48,188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,833 |
|
|
|
48,188 |
|
Other interest expenses |
|
|
1,326 |
|
|
|
1,233 |
|
|
|
|
|
|
|
|
|
|
|
223 |
|
|
|
216 |
|
|
|
1,103 |
|
|
|
1,017 |
|
Operating expenses |
|
|
5,515 |
|
|
|
5,275 |
|
|
|
9,967 |
|
|
|
9,087 |
|
|
|
|
|
|
|
|
|
|
|
15,481 |
|
|
|
14,362 |
|
Impairments/additions to the provision
for loan losses |
|
|
1 |
|
|
|
11 |
|
|
|
125 |
|
|
|
103 |
|
|
|
|
|
|
|
|
|
|
|
126 |
|
|
|
114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
55,675 |
|
|
|
54,707 |
|
|
|
10,092 |
|
|
|
9,190 |
|
|
|
223 |
|
|
|
216 |
|
|
|
65,544 |
|
|
|
63,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
6,533 |
|
|
|
4,935 |
|
|
|
5,021 |
|
|
|
5,188 |
|
|
|
|
|
|
|
|
|
|
|
11,554 |
|
|
|
10,123 |
|
Taxation |
|
|
775 |
|
|
|
702 |
|
|
|
889 |
|
|
|
1,259 |
|
|
|
|
|
|
|
|
|
|
|
1,665 |
|
|
|
1,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before minority interests |
|
|
5,758 |
|
|
|
4,233 |
|
|
|
4,132 |
|
|
|
3,929 |
|
|
|
|
|
|
|
|
|
|
|
9,889 |
|
|
|
8,162 |
|
Minority interests |
|
|
155 |
|
|
|
281 |
|
|
|
112 |
|
|
|
60 |
|
|
|
|
|
|
|
|
|
|
|
267 |
|
|
|
341 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net result |
|
|
5,603 |
|
|
|
3,952 |
|
|
|
4,019 |
|
|
|
3,869 |
|
|
|
|
|
|
|
|
|
|
|
9,622 |
|
|
|
7,821 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
6,533 |
|
|
|
4,935 |
|
|
|
5,021 |
|
|
|
5,188 |
|
|
|
|
|
|
|
|
|
|
|
11,554 |
|
|
|
10,123 |
|
Gains/losses on divestments(1) |
|
|
(382 |
) |
|
|
(49 |
) |
|
|
(32 |
) |
|
|
112 |
|
|
|
|
|
|
|
|
|
|
|
(414 |
) |
|
|
63 |
|
Result divested units |
|
|
(39 |
) |
|
|
(79 |
) |
|
|
|
|
|
|
(65 |
) |
|
|
|
|
|
|
|
|
|
|
(39 |
) |
|
|
(144 |
) |
Special items |
|
|
|
|
|
|
|
|
|
|
489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying result before tax |
|
|
6,113 |
|
|
|
4,807 |
|
|
|
5,478 |
|
|
|
5,235 |
|
|
|
|
|
|
|
|
|
|
|
11,591 |
|
|
|
10,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Divestments Insurance: sale of Belgian broker business (EUR 418 million, 2007), sale of NRG
(EUR (129) million, 2007), IPO SulAmerica in Brazil (EUR 93 million, 2007), unwinding Piraeus
(EUR 34 million, 2006), sale of Australia non-life (EUR 15 million, 2006);. Divestments
Banking: sale of RegioBank (EUR 32 million, 2007), sale of Willams de Broë (EUR (9) million,
2006), sale of Deutsche Hypothekenbank (EUR (80) million, 2006), sale of Degussa Bank (EUR
(23) million, 2006). |
13
GROUP OVERVIEW
Year ended December 31, 2008 compared to year ended December 31, 2007
Total result before tax decreased by EUR 16,750 million, or 145.0%,
from EUR 11,554 million in 2007 to EUR (5,196) million in 2008 and total underlying result before tax
decreased by EUR 16,086 million or 138.8% from EUR 11,591 million in 2007 to EUR (4,495) million in 2008. The worldwide
financial crisis led to extreme market volatility and sharp declines in asset prices, especially in
the third and fourth quarters of 2008 which led to losses in the insurance operations and a decline
in result of the banking operations in 2008. The decrease in total result before tax is also
impacted by divestments which resulted in a gain of EUR 8 million and EUR 414 million for 2008 and
2007, respectively, and special items in 2008 and 2007 influenced result before tax negatively by
EUR 622 million and EUR 489 million, respectively.
Net result
decreased by EUR 13,114 million, or 136.3%, from EUR
9,622 million in 2007 to EUR (3,492)
million in 2008. This lower loss compared with the decrease in result before tax was due to a
conversion from a large profit into a loss, which resulted in a
change in taxation from EUR 1,665
million in 2007 to EUR (1,667) million in 2008. Underlying net
result decreased from EUR 9,589
million in 2007 to EUR (2,934) million in 2008.
Basic
earnings per share decreased to EUR (1.71) in 2008 from EUR 4.49 in 2007.
Currency impact
Exchange rate differences had a negative impact of EUR 163 million on net result and EUR 229
million on result before tax, mainly due to the weakening of the US dollar, the Australian dollar
and the South Korea won, partly offset by a strengthening of the Polish zloty and Pound sterling.
In 2007 currency rate differences had a negative impact of EUR 159 million on net result and EUR
211 million on result before tax.
Capital Ratios
ING calculates certain capital ratios on the basis of adjusted capital (see the discussion under
Item 5. Operating and Financial Review and Prospects Liquidity and Capital Resources ING Group
Consolidated Cash Flows), which differs from total equity attributable to equity holders of the
Company in that it excludes unrealized gains and losses on debt securities, the cash flow hedge
reserve and goodwill and includes hybrid capital. On this basis, the debt/equity ratio of ING Group
increased to 13.5% in 2008 compared with 9.5% in 2007, partly due to the buyback of INGs own
shares, dividend payments and the recorded loss, partly offset by the issuance of Core Tier-1
Securities. The capital coverage ratio of ING Verzekeringen N.V. increased to 256% of E.U.
regulatory requirements at the end of December 2008, compared with 244% at the end of December
2007, as the decrease in available capital was more than offset by the decline in required capital.
The tier-1 ratio of ING Bank N.V. stood at 9.32% (based on Basel II risk weighted assets) at the
end of 2008, up from 7.39% (based on Basel I risk weighted assets) at the end of 2007, well above
the 7.20% target. Tier-1 capital increased from EUR 29.8 billion to EUR 32.0 billion, mainly thanks
to net capital injections of EUR 3.0 billion by ING Group. Following the introduction of Basel II
in 2008, risk weighted assets dropped from EUR 402.7 billion on December 31, 2007 to EUR 293.0
billion on January 1, 2008. During the year risk weighted assets increased to EUR 343.4 billion at
year-end 2008.
INSURANCE OPERATIONS
Income
Total premium income decreased 6.4%, or EUR 3,006 million from EUR 46,818 million in 2007 to
EUR 43,812 million in 2008. Underlying life premiums decreased 3.7%, or EUR 1,506 million from EUR
40,254 million in 2007 to EUR 38,748 million in 2008. Excluding Taiwan and currency impacts,
underlying life premiums increased 3.3%, mainly driven by the US, Australia, and most countries in
Asia. Underlying non-life premiums decreased 8.1%, or EUR 388 million from EUR 4,790 million in
2007 to EUR 4,402 million in 2008.
Investment and Other income decreased 33.5%, or EUR 4,518 million from EUR 13,488 million in 2007
to EUR 8,970 million in 2008, reflecting the market turmoil in the second half of 2008. Moreover,
in 2007 capital gains on ABN AMRO and Numico shares of EUR 2,087 million were recorded. Commission
income increased 8.9%, or EUR 169 million from EUR 1,901 million in 2007 to EUR 2,070 million in
2008, driven by the US and Latin America.
Underwriting Expenditure
Underwriting expenditure increased by EUR 652 million, or 1.3% from EUR 48,833 million in 2007 to
EUR 49,485 million in 2008. The underwriting expenditure of the life insurance operations increased
by EUR 1,657 million, or 3.8%. The underwriting expenditure of the non-life insurance operations
decreased by EUR 1,005 million, or 21.2%.
14
Expenses
Operating expenses from the insurance operations decreased 1.7%, or EUR 93 million to EUR 5,422
million in 2008, from EUR 5,515 million in 2007, as ongoing cost reduction helped to offset most of
the costs to support growth of the business in Asia/Pacific and Central and Rest of Europe. The
expense ratios for the life insurance operations reflected the change in product mix as clients
preferred traditional business over investment-linked business in the course of the year. Expenses
as a percentage of assets under management for investment products deteriorated to 0.86% in 2008
compared with 0.76% in 2007. Expenses as a percentage of premiums for life products decreased to
14.0% in 2008 from 14.3% in 2007. The cost ratio for the non-life operations went up slightly to
32.2% in 2008 from 31.8% in 2007.
Result before tax and net result
Total result before tax from Insurance decreased 125.0%, or EUR 8,168 million, to a loss of
EUR 1,635 million in 2008 from a profit of EUR 6,533 million in 2007, mainly due to the
deterioration of the financial markets in the second half of 2008, as well as EUR 2,087 million
gains on the sale of INGs stakes in ABN AMRO and Numico in 2007. The impact of divestments
amounted to EUR 8 million in 2008 and EUR 382 million in 2007. Divested units contributed a loss of
EUR 88 million before tax in 2008 and a profit of EUR 40 million to result before tax in 2007.
Special items had a negative impact of EUR 321 million in 2008 compared to no impact in 2007. The
net result from insurance deteriorated by 121.1%, or EUR 6,786 million to a loss of EUR 1,183
million in 2008 from a profit of EUR 5,603 million in 2007.
Underlying result before tax
The underlying result before tax (excluding the impact of divestments and special items) decreased
to a loss of EUR 1,235 million in 2008 from a profit of EUR 6,113 in 2007. The sharp decline in
results was mainly due to
the deterioration of the financial markets in the second half of 2008, as well as EUR 2,087 million
gains on the sale of INGs stakes in ABN AMRO and Numico in 2007. The underlying result from life
insurance decreased by EUR 6,575 million to a loss of EUR 1,744 million from a profit of EUR 4,831
in 2007. Investment income was negatively impacted by capital losses and impairments on equity and
debt securities, as well as negative fair value changes on real estate and private equity
investments. Further, the result was negatively impacted by deferred acquisition cost (DAC)
unlocking in the U.S. as well as losses on the SPVA business in Japan due to hedge losses.
Underlying profit before tax from non-life insurance declined 60.3% to EUR 509 million from EUR
1,282 million in 2007, due primarily to capital losses and impairments on equities, as well as
unfavourable underwriting results in Canada.
BANKING OPERATIONS
Income
Total
income from banking decreased 46.9%, or EUR 7,091 million, to
EUR 8,022 million in 2008 from
EUR 15,113 million in 2007. This decrease was experienced despite an increase in the interest
result, which was primarily attributable to a sharp increase in margins. The sharp increase in
margins was more than offset, however, by decreases in investment income and other income.
The net interest result increased by EUR 2,049 million, or 22.7%, to EUR 11,085 million in 2008
from EUR 9,036 million in 2007, driven by higher interest results in all business lines, but
especially in Wholesale Banking. The interest margin in 2008 was 1.07%, an increase from 0.94% in
2007, due to higher margins in Wholesale Banking (especially Financial Markets and General Lending)
and in ING Direct (particularly influenced by the more favorable interest rate environment in the
US).
Commission income decreased 1.1%, or EUR 31 million to EUR 2,895 million in 2008 from EUR 2,926
million in 2007. The decrease in commission income was primarily due to the strong decline of
management fees by EUR 145 million (especially ING Belgium, ING Real Estate and Retail
Netherlands). Fees from securities business decreased by EUR 56 million (especially ING Belgium and
Retail Netherlands), but funds transfer fees increased by EUR 102 million (mainly Wholesale Banking
and Retail Central Europe) and brokerage and advisory fees increased by EUR 23 million.
Investment
income decreased by EUR 7,625 million to a loss of EUR 6,168 million in 2008 from a
profit of EUR 1,457 million in 2007. The decrease was partly entirely due to results on securities
(including impairments) and fair value changes on real estate investments, changing from a profit
of EUR 487 million in 2007 to a loss of EUR 2,739 million in 2008. Of this loss, EUR 2,087 million
relates to debt securities (mainly impairments on the Alt-A portfolio at ING Direct), EUR 302
million relates to equity securities and EUR 350 million is attributable to real estate
investments. Furthermore, rental income decreased by EUR 46 million and other investment income
decreased by EUR 78 million. In addition, the decrease was partly due to negative
fair value changes on derivatives for which no hedge accounting is applied under IFRS-IASB.
15
Other income decreased by EUR 1,484 million, or 87.7%, to EUR 209 million in 2008 from EUR 1,693
million in 2007. Net trading income declined EUR 1,154 million from a profit of EUR 749 million in
2007 to a loss of EUR 405 million in 2008. The share of profit from associates decreased by EUR 448
million from EUR 238 million in 2007 to a loss of EUR 210 million in 2008, mainly due to the
downward valuation of listed funds at ING Real Estate. Other revenues, including income from
operating lease, were EUR 88 million lower. These
developments were partly offset by an increase of EUR 206 million in valuation results from
non-trading derivatives, for which hedge accounting is not applied.
Expenses
Total operating expenses increased by EUR 336 million, or 3.4%, to EUR 10,303 million in 2008 from
EUR 9,967 million in 2007. In 2008, special items were EUR 271 million in provisions and costs
related to the Retail Netherlands strategy (combining ING Bank and Postbank) and EUR 30 million
impairment costs of not launching ING Direct Japan. In 2007, special items were EUR 295 million in
provisions and costs related to the Retail Netherlands Strategy, EUR 94 million in restructuring
provision for Wholesale Banking and EUR 56 million in restructuring provision for Retail Banking.
Excluding these special items, total operating expenses increased by EUR 480 million, or 5.0%,
mainly at Retail Banking, due to the inclusion of ING Bank Turkey and investments to support
activities in developing markets, and at ING Direct to support the growth of the business.
The addition to the provision for loan losses
The total addition to the provision for loan losses in 2008 was EUR 1,280 million compared to EUR
125 million in 2007, an increase of EUR 1,155 million reflecting the worsening of economic
conditions. Retail Banking showed an increase by EUR 203 million, from EUR 198 million in 2007 to
EUR 401 million in 2008 and ING Direct showed an increase by EUR 215 million, from EUR 68 million
in 2007 to EUR 283 million in 2008. The net release in Wholesale Banking of EUR 142 million in 2007
turned into an addition to the loan loss provision of EUR 596 million in 2008. As a percentage of
average credit-risk weighted assets (based on Basel II), the addition to the provision for loan
losses in 2008 was 48 basis points.
Result before tax and net result
Total
result before tax decreased 170.9%, or EUR 8,582 million, to EUR
(3,561) million in 2008 from EUR
5,021 million in 2007. Special items (mostly provision for the merger of Postbank and ING Bank
Netherlands) had a negative impact of EUR 301 million on result before tax in 2008. In 2007,
divestments and special items had a negative impact of EUR 458 million on result before tax,
including EUR 489 million in special items, partly offset by EUR 32 million realized gains on
divestments.
Net result
from banking declined 157.5%, or EUR 6,328 million, from EUR
4,019 million in 2007 to EUR
(2,309) million in 2008. The decrease in net result is smaller than the decrease in result before tax
due to the tax rebate of EUR 1,184 million for 2008, which was supported by the revision of tax
returns from previous years, compared with the taxation of EUR 889 million for 2007 (effective tax
rate 17.7%).
Underlying result before tax
Excluding the effects of divestments and excluding special items, INGs banking operations showed a
decrease in underlying result before tax of EUR 8,738 million,
or 159.5%, from EUR 5,478 million in
2007 to EUR (3,260) million in 2008. Underlying net result
decreased by EUR 6,404 million, or 146.8%,
from EUR 4,363 million in 2007 to EUR (2,041) million in 2008, due to the tax rebate.
GROUP OVERVIEW
Year ended December 31, 2007 compared to year ended December 31, 2006
Total
result before tax increased by EUR 1,431 million, or 14.1% from
EUR 11,554 million in 2006 to
EUR 11,553 million in 2007 and total underlying result before
tax increased by EUR 1,549 million or
15.4% from EUR 10,042 million in 2006 to EUR 11,591 million in 2007. The increase in result before
tax was supported by EUR 2,087 million in gains on the sale of stakes in ABN AMRO and Numico.
However, the result before tax of ING Direct decreased by 23.3% due to losses related to
repositioning the UK business as well as an impairment on asset-backed commercial paper in Canada
in the fourth quarter 2007. The increase in total result before tax is also impacted by divestments
which resulted in a gain of EUR 414 million and a loss of EUR 63 million for 2007 and 2006,
respectively. Special items in 2007 influenced result before tax negatively by EUR 489 million, in
2006 there were no special items.
16
Net result
rose by EUR 1,801 million, or 23.0% from EUR 7,821 million
in 2006 to EUR 9,622 million
in 2007. This higher growth compared with the increase in result before tax was due to a lower
effective tax rate in 2007. The effective tax rate decreased to 14.4%
in 2007 from 19.4% in 2006
mainly due to high tax-exempt gains on equity investments (ABN AMRO and Numico) in 2007 compared to
2006. Underlying net result increased from EUR 7,810 million in
2006 to EUR 9,589 million in 2007.
Earnings
per share attributable to equity holders of the Company increased to
EUR 4.49 in 2007 from
EUR 3.62 in 2006.
Currency impact
Currency rate differences had a negative impact of EUR 159 million on net result and EUR 211
million on result before tax, mainly due to the weakening of the US dollar, the Canadian dollar and
the South Korea won. In 2006 currency rate differences had a positive impact of EUR 20 million on
net result and EUR 48 million on result before tax.
Capital Ratios
ING calculates certain capital ratios on the basis of adjusted capital (see the discussion under
Item 5. Operating and Financial Review and Prospects Liquidity and Capital Resources ING Group
Consolidated Cash Flows), which differs from total equity attributable to equity holders of the
Company in that it excludes unrealized gains and losses on debt securities, the cash flow hedge
reserve and goodwill and includes hybrid capital. On this basis, the debt/equity ratio of ING Group
increased to 9.5% in 2007 compared with 9.0% in 2006, partly due to the buyback of own shares. The
capital coverage ratio of ING Verzekeringen N.V. decreased to 244% of E.U. regulatory requirements
at the end of December 2007, compared with 274% at the end of December 2006, due to the decrease in
available capital. The tier-1 ratio of ING Bank N.V. stood at 7.39% at the end of 2007, down from
7.63% at the end of 2006, but remained above the 7.20% target. This decrease was caused by strong
growth in risk-weighted assets and the deduction of EUR 1.2 billion in goodwill and other
intangibles related to the purchase of Oyak Bank, partly compensated by a capital injection of EUR
2.2 billion from ING Group to ING Bank in the fourth quarter. Total risk-weighted assets of the
banking operations increased by EUR 64.8 billion, or 19.2%, to EUR 402.7 billion as of December 31,
2007 from EUR 337.9 billion as of December 31, 2006, driven by growth in Wholesale Banking and
Retail Banking.
INSURANCE OPERATIONS
Income
Total premium income decreased EUR 16 million from EUR 46,834 million in 2006 to EUR 46,818 million
in 2007. Life premiums increased 0.6%, or EUR 231 million to EUR 40,732 million in 2007 from EUR
40,501 million in 2006, primarily due to growth in the United States, Asia, all countries with the
exception of Japan, and Central Europe and the Rest of Europe partly offset by a decline in premium
income in the Netherlands. Non-life premiums decreased 3.9%, or EUR 247 million, from EUR 6,333
million in 2006 to EUR 6,086 million in 2007, as lower premiums in Europe and Latin America were
only partly offset by higher premiums in Canada.
Investment and Other income increased 20.7%, or EUR 2,316 million to EUR 13,488 million in 2007
from EUR 11,172 million in 2006, reflecting higher dividend income and capital gains on equities
(ABN AMRO and Numico). Commission income increased 16.2%, or EUR 265 million to EUR 1,901 million
in 2007 from EUR 1,636 million in 2006 supported by robust net inflows and growth in assets under
management across all lines of business.
Underwriting Expenditure
Underwriting expenditure increased by EUR 645 million, or 1.3% from EUR 48,188 million in 2006 to
EUR 48,833 million in 2007. The underwriting expenditure of the life insurance operations increased
by EUR 440 million, or 1.0%. The underwriting expenditure of the non-life insurance operations
increased by EUR 205 million, or 4.5%, resulting in an overall higher non-life claims ratio of
65.2% in 2007 compared with 58.7% in 2006, primarily attributable to a higher claims ratio in the
Netherlands and Canada.
Expenses
Operating expenses from the insurance operations increased 4.5%, or EUR 240 million to EUR 5,515
million in 2007, from EUR 5,275 million in 2006, mainly due to ongoing cost reduction initiatives
offset by higher start-up costs in 2007 to support our growth in Central Europe and the Rest of
Europe and Asia. The efficiency ratios for the life insurance operations deteriorated mainly
reflecting the investments in growth areas. Expenses as a percentage of assets under management for
investment products deteriorated slightly to 0.76% in 2007 compared with 0.75% in 2006. Expenses as
a percentage of premiums for life products decreased to 14.3% in 2007 from 13.3% in 2006. The cost
ratio for the non-life operations was flat at 31.8%.
17
Result before tax and net result
Total result before tax from insurance increased 32.4%, or EUR 1,598 million, to EUR 6,533 million
in 2007 from EUR 4,935 million in 2006, mainly due to the gains on equities. This increase was also
impacted by divestments which resulted in a profit of EUR 382 million in 2007 and a gain of EUR 49
million in 2006. Divested units contributed EUR 79 million result before tax in 2006 and EUR 42
million to result before tax in 2007. Net result from insurance increased by 41.8%, or EUR 1,651
million to EUR 5,603 million in 2007 from EUR 3,952 million in 2006 due to a decrease in minority
interests to EUR 155 million in 2007 from EUR 281 million in 2006, but especially the high tax
exempt gains on equity investments caused a reduction of the effective tax rate from 14.2% in 2006
to 11.9% in 2007.
Underlying result before tax
Underlying result before tax from the insurance operations increased by 27.2%, or EUR 1,306 million
to EUR 6,113 million in 2007 from EUR 4,807 million in 2006, primarily due to the gains on the sale
of INGs stakes in ABN AMRO and Numico. Underlying result before tax from life insurance increased
43.4%, or EUR 1,461 million from EUR 3,370 million in 2006 to EUR 4,831 million in 2007. The life
insurance activities in the US, Central Europe, the Rest of Europe and Latin America showed strong
profit growth, supported by increased sales, growth in assets under management and investment
gains. The non-life operations decreased by 10.8%, or EUR 155 million from EUR 1,437 million in
2006 to EUR 1,282 million in 2007. In the Netherlands, the deterioration was mainly caused by rate
pressure as well as high one-off claims provisions related to last year. Canada results declined
due to lower underwriting results and a decrease in investment gains.
BANKING OPERATIONS
Income
Total
income from banking increased 5.1%, or EUR 735 million, to EUR
15,113 million in 2007 from
EUR 14,378 million in 2006. This increase was experienced despite a decrease in the interest
result, which was primarily attributable to a sharp decline in margins, but which was more than
offset by increases in commission income and investment income.
The net interest result decreased by EUR 299 million, or 3.2%, to EUR 9,036 million in 2007 from
EUR 9,335 million in 2006, driven by lower interest results in Wholesale Banking and ING Direct,
which were only partially offset by higher interest results in Retail Banking. The interest margin
in 2007 was 0.94%, a decrease from 1.06% in 2006, due to the flattening or even inverse yield
curves, pressure on client margins and intensified competition for savings and deposits.
Commission income increased 9.1%, or EUR 245 million to EUR 2,926 million in 2007 from EUR 2,681
million in 2006. The increase in commission income was primarily due to the strong growth of
management fees (mainly from ING Real Estate) by EUR 169 million. Fees from funds transfer and
brokerage and advisory fees also increased, but fees from securities business decreased slightly by
EUR 38 million.
Investment
income increased by EUR 791 million, or 118.9%, to EUR
1,457 million in 2007 from EUR 666
million in 2006. The increase was partly due to EUR 56 million in gains recognized on divestments
in 2007 and losses of EUR 78 million on divestments in 2006. Furthermore, rental income increased
EUR 113 million and realized gains on equities grew EUR 181 million compared to 2006, mainly due to
the substantial capital gains following the sale of shares in the stock exchange and the
derivatives market in Sao Paulo and a sizeable gain from the sale of an equity stake at Wholesale
Banking.
Other income decreased by EUR 3 million, or 0.2%, to EUR 1,693 million in 2007 from EUR 1,696
million in 2006. Net trading income declined EUR 151 million and valuation results from non-trading
derivatives, for which hedge accounting is not applied, were EUR 11 million lower. This was largely
offset by an increase of EUR 104 million in other revenues, including higher income from operating
lease. The share of profit from associates increased by EUR 55 million from EUR 183 million in 2006
to EUR 238 million in 2007, mainly due to associates at ING Real Estate.
Expenses
Total operating expenses increased by EUR 880 million, or 9.7%, to EUR 9,967 million in 2007 from
EUR 9,087 million in 2006. The increase is for EUR 445 million attributable to special items in
2007, comprising EUR 295 million in provisions and costs related to the Retail Netherlands Strategy
(combining ING Bank and Postbank), EUR 94 million in restructuring provision for Wholesale Banking
and EUR 56 million in restructuring provision
18
for Retail Banking. Divestments in 2006 had a
mitigating impact of EUR 111 million on expense growth, but an additional increase of EUR 546
million or 6.1%, was experienced in 2007 due, in part, to investments to support the growth of the
business, notably at ING Direct, ING Real Estate and the Retail Banking activities in developing
markets.
The addition to the provision for loan losses
The total addition to the provision for loan losses in 2007 was EUR 125 million compared to EUR 103
million in 2006, an increase of 21.4% or EUR 22 million. Retail Banking showed an increase by EUR
22 million, from EUR 176 million in 2006 to EUR 198 million in 2007 and ING Direct showed an
increase by EUR 8 million, from EUR 60 million in 2006 to EUR 68 million in 2007. The net release
in Wholesale Banking increased by EUR 10 million to EUR 142 million in 2007. As a percentage of
average credit-risk weighted assets, the addition to the provision for loan losses in 2007 was 4
basis points, up slightly from 3 basis points in 2006.
Result before tax and net result
Total
result before tax decreased 3.2%, or EUR 167 million, to EUR
5,021 million in 2007 from EUR
5,188 million in 2006. Divestments and special items had a negative impact of EUR 458 million on
result before tax in 2007, including EUR 489 million in special items, partly offset by EUR 32
million realized gains on divestments. In 2006, divestments resulted in a realized loss of EUR 112
million. The divested units contributed EUR 65 million to result before tax in 2006.
Net result
from banking increased 3.9%, or EUR 150 million from EUR 3,869 million in 2006 to EUR
4,019 million in 2007. This decrease is moderated due to the effective tax rate for INGs banking
operations which decreased from 24.3% (EUR 1,259 million) for
2006 to 17.7% (EUR 889 million) for
2007, caused by high tax-exempted gains, the release of some tax liabilities, a lower corporate tax
rate in the Netherlands and the impact of a tax asset in Germany.
Underlying result before tax
Excluding
the effects of divestments and excluding special items, INGs banking operations showed an
increase in underlying result before tax of EUR 243 million, or
4.6%, from EUR 5,235 million in 2006
to EUR 5,478 million in 2007. Underlying net result increased by
EUR 418 million, or 10.6%, from EUR
3,945 million in 2006 to EUR 4,363 million in 2007, due to the low effective tax rate.
19
CONSOLIDATED ASSETS AND LIABILITIES
The following table sets forth ING Groups consolidated assets and liabilities for the years ended
December 31, 2008, 2007 and 2006:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
2007 |
|
2006 |
|
|
(EUR billions, except amounts per share) |
Investments |
|
|
258.3 |
|
|
|
292.7 |
|
|
|
311.6 |
|
Financial assets at fair value through the profit and loss
account |
|
|
280.5 |
|
|
|
327.1 |
|
|
|
317.5 |
|
Loans and advances to customers |
|
|
616.8 |
|
|
|
553.7 |
|
|
|
474.6 |
|
Total assets |
|
|
1,328.6 |
|
|
|
1,313.2 |
|
|
|
1,226.5 |
|
Insurance and investment contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
Life |
|
|
213.0 |
|
|
|
232.4 |
|
|
|
237.9 |
|
Non-life |
|
|
6.7 |
|
|
|
9.6 |
|
|
|
10.1 |
|
Investment contracts |
|
|
21.1 |
|
|
|
23.7 |
|
|
|
20.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total insurance and investment contracts |
|
|
240.8 |
|
|
|
265.7 |
|
|
|
268.7 |
|
Customer deposits and other funds on deposits (1) |
|
|
522.8 |
|
|
|
525.2 |
|
|
|
496.7 |
|
Debt securities in issue/other borrowed funds |
|
|
127.7 |
|
|
|
94.1 |
|
|
|
107.8 |
|
Total liabilities (including minority interests) |
|
|
1,301.9 |
|
|
|
1,273.2 |
|
|
|
1,188.1 |
|
Non-voting equity securities |
|
|
10.0 |
|
|
|
|
|
|
|
|
|
Shareholders equity |
|
|
15.1 |
|
|
|
37.7 |
|
|
|
38.4 |
|
Shareholders equity per Ordinary share (in EUR) |
|
|
7.44 |
|
|
|
17.73 |
|
|
|
17.78 |
|
|
|
|
(1) |
|
Customer deposits and other funds on deposits consists of savings accounts, other deposits,
bank funds and debt securities privately
issued by the banking operations of ING. |
Year ended December 31, 2008 compared to year ended December 31, 2007
Total assets increased by 1.2% in 2008 to EUR 1,328.6 billion, mainly due to increased loans and
advances to customers, partly offset by decreased investments and financial assets at fair value
through the profit and loss account. Investments decreased by EUR 34.4 billion, or 11.7%, to EUR
258.3 billion in 2008 from EUR 292.7 billion in 2007, representing a decrease of EUR 22.8 billion
in insurance investments and a decrease of EUR 11.6 billion in banking investments.
Loans and advances to customers increased by EUR 63.1 billion, or 11.4%, rising to EUR 616.8
billion at the end of December 2008 from EUR 553.7 billion at the end of December 2007. Loans and
advances to customers of the insurance operations decreased EUR 1.9 billion. Loans and advances of
the banking operations increased by EUR 70.1 billion. The Netherlands operations increased by EUR
34.9 billion and the international operations by EUR 33.3 billion.
Shareholders equity decreased by 60.0% or EUR 22,638 million to EUR 15,080 million at December 31,
2008 compared to EUR 37,718 million at December 31, 2007. The decrease is mainly due to the negative
net result from the year 2008 (EUR (3,492) million), unrealized revaluation equity and debt
securities (EUR (18,971) million), changes in treasury shares (EUR (2,030) million) and the cash
dividend to shareholders/coupon on the Core Tier-1 Securities (EUR (3,600) million), partially
offset by realized gains equity securities released to profit and loss (EUR 2,596 million) and the
change in cashflow hedge reserve (EUR 746 million).
Year ended December 31, 2007 compared to year ended December 31, 2006
Total assets increased by 7.1% in 2007 to EUR 1,313.2 billion, mainly due to increased loans and
advances to customers and financial assets at fair value through the profit and loss account.
Investments decreased by EUR 18.9 billion, or 6.1%, to EUR 292.7 billion in 2007 from EUR 311.6
billion in 2006, representing a decrease of EUR 8.2 billion in insurance investments and a decrease
of EUR 10.7 billion in banking investments.
Loans and advances to customers increased by EUR 79.1 billion, or 16.7%, rising to EUR 553.7
billion at the end of December 2007 from EUR 474.6 billion at the end of December 2006. Loans and
advances to customers of the insurance operations decreased EUR 10.0 billion. Loans and advances of
the banking operations increased
20
by EUR 89.1 billion. The Netherlands operations increased by EUR
30.7 billion and the international operations by EUR 58.4 billion. The impact of the inclusion of
Oyak Bank was EUR 4.8 billion. ING Direct contributed EUR 25.1 billion to the increase, of which
EUR 28.0 billion was due to personal lending.
Shareholders equity decreased by 1.8% or EUR 677 million to EUR 37,718 million at December 31,
2007 compared to EUR 38,395 million at December 31, 2006. Net result from the year 2007 added EUR
9,622 million to equity and unrealized revaluation shares added EUR 2,997 million, partially offset
by unrealized revaluations debt securities of EUR 4,725 billion, realized gains equity securities
released to profit and loss of EUR 3,044 million, change due to treasury shares of EUR 2,304
million and a cash dividend of EUR 2,999 million.
ING does not have any significant non-consolidated SPEs or other off-balance sheet arrangements for
which it is reasonably likely that these may have to be consolidated in future periods, and/or
could have a significant impact on our income from operations, liquidity and capital resources.
Reference is made to Note 27 of the Consolidated Financial Statements.
21
SEGMENT REPORTING
ING Groups segments are based on the management structure of the Group, which is different from
its legal structure. The following table sets forth the contribution of our six business lines to
our underlying result before tax for each of the years 2008, 2007 and 2006 See Note 49 of Note
2.1 to the consolidated financial statements for further disclosure of our segment reporting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
Insurance |
|
|
Insurance |
|
|
Insurance |
|
|
Wholesale |
|
|
Retail |
|
|
|
|
|
|
|
|
|
|
Total |
|
(EUR millions) |
|
Europe |
|
|
Americas |
|
|
Asia/Pacific |
|
|
Banking(3) |
|
|
Banking (3) |
|
|
ING Direct |
|
|
Other(1) |
|
|
Group |
|
Total income |
|
|
14,489 |
|
|
|
27,738 |
|
|
|
14,159 |
|
|
|
398 |
|
|
|
7,399 |
|
|
|
878 |
|
|
|
(2,479 |
) |
|
|
62,852 |
|
|
Total expenditure |
|
|
13,838 |
|
|
|
28,327 |
|
|
|
14,372 |
|
|
|
3,498 |
|
|
|
5,979 |
|
|
|
2,033 |
|
|
|
(269 |
) |
|
|
67,778 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
651 |
|
|
|
(589 |
) |
|
|
(213 |
) |
|
|
(3,100 |
) |
|
|
1,420 |
|
|
|
(1,155 |
) |
|
|
(2,210 |
) |
|
|
(5,196 |
) |
Gains/losses on divestments |
|
|
|
|
|
|
(237 |
) |
|
|
214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15 |
|
|
|
(8 |
) |
Result before tax from divested units |
|
|
|
|
|
|
(28 |
) |
|
|
115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
88 |
|
Special items |
|
|
|
|
|
|
321 |
|
|
|
|
|
|
|
|
|
|
|
271 |
|
|
|
30 |
|
|
|
|
|
|
|
622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying result before tax |
|
|
651 |
|
|
|
(534 |
) |
|
|
116 |
|
|
|
(3,100 |
) |
|
|
1,691 |
|
|
|
(1,125 |
) |
|
|
(2,194 |
) |
|
|
(4,495 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
Insurance |
|
|
Insurance |
|
|
Insurance |
|
|
Wholesale |
|
|
Retail |
|
|
|
|
|
|
|
|
|
|
Total |
|
(EUR millions) |
|
Europe |
|
|
Americas |
|
|
Asia/Pacific |
|
|
Banking |
|
|
Banking |
|
|
ING Direct |
|
|
Other 1) 2) |
|
|
Group |
|
Total income |
|
|
16,262 |
|
|
|
29,681 |
|
|
|
14,383 |
|
|
|
5,312 |
|
|
|
7,483 |
|
|
|
2,196 |
|
|
|
1,781 |
|
|
|
77,097 |
|
Total expenditure |
|
|
13,962 |
|
|
|
27,529 |
|
|
|
13,807 |
|
|
|
2,836 |
|
|
|
5,405 |
|
|
|
1,667 |
|
|
|
338 |
|
|
|
65,544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
2,300 |
|
|
|
2,152 |
|
|
|
576 |
|
|
|
2,476 |
|
|
|
2,079 |
|
|
|
530 |
|
|
|
1,443 |
|
|
|
11,554 |
|
Gains/losses on divestments |
|
|
(418 |
) |
|
|
(93 |
) |
|
|
|
|
|
|
|
|
|
|
(32 |
) |
|
|
|
|
|
|
129 |
|
|
|
(414 |
) |
Result before tax from divested units |
|
|
(42 |
) |
|
|
3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(39 |
) |
Special items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94 |
|
|
|
355 |
|
|
|
|
|
|
|
40 |
|
|
|
489 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying result before tax |
|
|
1,840 |
|
|
|
2,062 |
|
|
|
576 |
|
|
|
2,570 |
|
|
|
2,402 |
|
|
|
530 |
|
|
|
1,611 |
|
|
|
11,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006 |
|
Insurance |
|
|
Insurance |
|
|
Insurance |
|
|
Wholesale |
|
|
Retail |
|
|
|
|
|
|
|
|
|
|
Total |
|
(EUR millions) |
|
Europe |
|
|
Americas |
|
|
Asia/Pacific |
|
|
Banking |
|
|
Banking |
|
|
ING Direct |
|
|
Other 1) |
|
|
Group |
|
Total income |
|
|
16,170 |
|
|
|
29,779 |
|
|
|
13,378 |
|
|
|
4,921 |
|
|
|
7,166 |
|
|
|
2,289 |
|
|
|
101 |
|
|
|
73,804 |
|
Total expenditure |
|
|
13,808 |
|
|
|
27,787 |
|
|
|
12,742 |
|
|
|
2,686 |
|
|
|
4,803 |
|
|
|
1,598 |
|
|
|
258 |
|
|
|
63,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
2,362 |
|
|
|
1,992 |
|
|
|
636 |
|
|
|
2,235 |
|
|
|
2,363 |
|
|
|
691 |
|
|
|
(157 |
) |
|
|
10,123 |
|
Gains/losses on divestments |
|
|
(34 |
) |
|
|
|
|
|
|
(15 |
) |
|
|
89 |
|
|
|
|
|
|
|
23 |
|
|
|
|
|
|
|
63 |
|
Result before tax from divested units |
|
|
(79 |
) |
|
|
|
|
|
|
|
|
|
|
(45 |
) |
|
|
|
|
|
|
(20 |
) |
|
|
|
|
|
|
(144 |
) |
Special items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying result before tax |
|
|
2,249 |
|
|
|
1,992 |
|
|
|
621 |
|
|
|
2,279 |
|
|
|
2,363 |
|
|
|
694 |
|
|
|
(157 |
) |
|
|
10,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Other mainly includes items not directly attributable to the business lines and intercompany
relations. See Note 49 of Note 2.1 to the consolidated financial statements for further disclosure
of our segment reporting. |
|
(2) |
|
Includes the gains on the sale of stakes in ABN AMRO and Numico |
|
(3) |
|
Mid-corporate clients in the home markets Netherlands, Belgium, Poland and Romania have been
transferred retroactively from Wholesale Banking to Retail Banking. Figures for 2007 and 2006
have been restated accordingly. |
22
The business lines are analyzed on a total basis for Income, Expenses and Result before tax, the
geographical analyses are based on underlying figures.
INSURANCE EUROPE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance Europe |
|
|
2008 |
|
2007 |
|
2006 |
|
|
(EUR millions) |
Premium income |
|
|
10,194 |
|
|
|
10,616 |
|
|
|
10,552 |
|
Commission income |
|
|
491 |
|
|
|
477 |
|
|
|
348 |
|
Investment and Other income |
|
|
3,804 |
|
|
|
5,169 |
|
|
|
5,270 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
14,489 |
|
|
|
16,262 |
|
|
|
16,170 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
11,559 |
|
|
|
11,595 |
|
|
|
11,458 |
|
Other interest expenses |
|
|
513 |
|
|
|
591 |
|
|
|
544 |
|
Operating expenses |
|
|
1,764 |
|
|
|
1,774 |
|
|
|
1,805 |
|
Other impairments |
|
|
2 |
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
13,838 |
|
|
|
13,962 |
|
|
|
13,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
651 |
|
|
|
2,300 |
|
|
|
2,362 |
|
Gains/losses on divestments |
|
|
|
|
|
|
(418 |
) |
|
|
(34 |
) |
Result before tax from divested
units |
|
|
|
|
|
|
(42 |
) |
|
|
(79 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying result before tax |
|
|
651 |
|
|
|
1,840 |
|
|
|
2,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008 compared to year ended December 31, 2007
Income
Total premium income decreased by EUR 422 million to EUR 10,194 million in 2008 from EUR 10,616
million in 2007, primarily due to the impact from the divestment of the Belgian broker and employee
benefits business in September 2007 (EUR 363 million). Excluding this impact, premium income
decreased EUR 59 million as sales from investment products suffered across Europe due to volatile
equity markets and increased competition from bank deposits. Non-life premium income was flat
despite fierce competition as market share was maintained. In Central and Rest of Europe, premium
income increased to EUR 2,486 million from EUR 2,436 million, mainly due to growth in Poland as a
result of higher sales of traditional products.
Expenses
Operating expenses decreased by EUR 10 million to EUR 1,764 million in 2008 from EUR 1,774 million
in 2007. Excluding the divestment of the Belgian broker and employee benefits business, operating
expenses increased by EUR 38 million, of which EUR 23 million came from Belgium and Luxembourg and
EUR 29 million came from Central and Rest of Europe, offset by the Netherlands where operating
expenses decreased by EUR 15 million due to lower reorganization expenses. In Belgium and
Luxembourg, the expense increase was partly related to the legal transfer of INGs investment
management operations in Brussels from ING Bank to ING Insurance. The increase in operating
expenses in Central and Rest of Europe reflected business growth as well as investments for a
multi-year operational efficiency program that started in 2008.
Result before tax
Result before tax decreased by EUR 1,649 million to EUR 651 million in 2008 from EUR 2,300 million
in 2007, primarily due to lower investment income across most asset classes. There were no material
divestments in 2008. However, the sale of the of Belgian broker and employee benefits business led
to a gain of EUR 418 million in 2007.
Underlying result before tax
Underlying result before tax for Insurance Europe declined by EUR 1,189 million to EUR 651 million
in 2008 from EUR 1,840 million in 2007 due to lower investment income across most asset classes.
Income from real
23
estate of EUR (278) million decreased from EUR 371 million a year ago due to
negative revaluations of properties in the United Kingdom and continental Europe. Income from
private equity of EUR (296) million compares to EUR 160 million in 2007. Financial market distress
also led to EUR 80 million impairment on fixed income funds. In Central and Rest of Europe,
underlying profit declined marginally to EUR 329 million in 2008 from EUR 332 million in 2007.
Despite market turmoil, Poland, which accounts for about half the regions result, was able to
increase its profit by EUR 23 million. However, this was offset by lower profit contributions by
Spain (EUR (10) million) and Hungary (EUR (11) million).
The Netherlands
Underlying result before tax in the Netherlands decreased to EUR 242 million in 2008 from EUR 1,444
million in 2007 due to investment losses across most asset classes. Income from real estate dropped
to EUR (278) million from EUR 371 million in 2007 due to negative revaluations of properties in the
United Kingdom and continental Europe. Negative revaluations and impairments on private equity
investments resulted in income of EUR (296) million in 2008, down from EUR 160 million in 2007.
Furthermore, the capital upstream of EUR 5.0 billion to the Corporate Line Insurance in 2007
contributed to lower investment income in 2008.
The underlying result before tax for life insurance decreased to EUR (49) million in 2008 from EUR
1,029 million in 2007. Income from real estate dropped to EUR (258) million from EUR 345 million in
2007 due to negative revaluations of properties in the United Kingdom and continental Europe. In
November, INGs Dutch insurance subsidiaries reached an agreement in principle with consumer
organizations regarding individual unit-linked life policies that were sold in the Netherlands.
This agreement is non-binding for individual policyholders. There was no material P&L impact as
adequate provisions had already been established. Capital gains on debt securities and fixed income
funds decreased to EUR (79) million in 2008 compared to EUR 20 million in 2007. Life premium income life
stayed flat at EUR 1,590 in 2008 versus EUR 1,587 million in 2007 despite the weak investment
climate. Termination of low-return group contracts and cessation of the sale of traditional
unit-linked products were offset by higher sales of group life products through indexation, as
well as higher sales due to single premium fixed annuities in the Netherlands.
Underlying result before tax for non-life insurance decreased to EUR 292 million in 2008 from EUR
415 million in 2007 primarily due to negative revaluations of real estate and private equity
investments. The combined investment income from real estate and private equity declined EUR 111
million year over year. Furthermore, higher releases of technical provisions in 2007 than in 2008
contributed to lower results in 2008. Non-life premium income was flat at EUR 1,590 million in 2008
versus EUR 1,587 million in 2007 as market share was maintained despite fierce competition due to new entrants and an increasing number of insurers offering their services
through the internet.
Belgium
Underlying result before tax in Belgium increased to EUR 77 million in 2008 from EUR 54 million in
2007 due to lower profit-sharing for the Optima product which added EUR 10 million to the
underlying result, as well as a higher release of EUR 10 million in technical provisions in 2008.
Premium income from life insurance decreased to EUR 1,064 million in 2008 from EUR 1,160 million in
2007 due to the weak investment climate and competition from banks for retail savings.
Central and Rest of Europe
Underlying result before tax declined marginally to EUR 329 million in 2008 from EUR 332 million in
2007. Underlying pre-tax profit was down in Spain to EUR 35 million from EUR 44 million in 2007,
and in Hungary to EUR 68 million from EUR 79 million in 2007, which was offset by Poland where
pre-tax profit increased to EUR 158 million in 2008 from EUR 135 million in 2007. Results in
Hungary and Spain were impacted by impairments on fixed income securities and equity hedge losses.
Life premium income increased to EUR 2,446 million from EUR 2,394 as higher premiums in Poland were
partially offset by lower premiums in Hungary and Spain. Premium income in Spain
and Hungary was impacted by lower sales of unit linked products and variable annuities amidst
unfavorable market conditions. The successful introduction of a single premium investment product
in Poland generated EUR 542 million in sales, which were not reflected in gross premiums.
Year ended December 31, 2007 compared to year ended December 31, 2006
Income
Total premium income increased by 0.6%, or EUR 64 million to EUR 10,616 million in 2007 from EUR
10,552 million in 2006, as continued strong life premium growth in Central and Rest of Europe was
largely offset by lower life premiums in the Netherlands and Belgium, including the impact of the
divestment of the Belgian broker and employee benefits business in September 2007. Life production
slowed down in the second half of 2007 due to faltering stock markets and less intensive marketing
for investment products in Belgium. Unit-linked volumes in the Netherlands were impacted by
negative media attention concerning cost loads. Non-life premium
24
income declined by 6.8%, or EUR
135 million to EUR 1,839 million from EUR 1,974 million in 2006, due to lower premiums in all
regions after rate reductions in the Benelux as well as the disposition of bond insurer Nationale
Borg in the Netherlands and the broker and employee benefits business in Belgium.
Commission income advanced by 37.1%, or EUR 129 million to EUR 477 million in 2007 from EUR 348
million in 2006 fuelled by higher management fees in all regions. Investment and Other income
declined by 1.9%, or EUR 101 million from EUR 5,270 million in 2006 to EUR 5,169 million in 2007,
driven by lower capital gains and fair value changes on real estate and private equity investments.
In the Netherlands direct investment income decreased EUR 136 million, after the deconsolidation of
a real estate mutual fund at year-end 2006 and the
distribution of EUR 5.0 billion in extraordinary dividends to the Corporate Line Insurance during
2007. Direct investment income in Belgium included the EUR 418 million gain on the divestment of
the broker and employee benefits business.
Expenses
Operating expenses declined by 1.7%, or EUR 31 million to EUR 1,774 million in 2007 from EUR 1,805
million in 2006, with the decline concentrated in the Benelux. In the Netherlands, expenses
decreased 1.5%, or EUR 21 million to EUR 1,350 million in 2007 from EUR 1,371 million in 2006, as
regular cost increases related to inflation and merit salary increases were offset by staff
reductions following the completion and implementation of a new insurance administration platform
at Nationale-Nederlanden and EUR 33 million software impairments in 2006. The 2007 release of
provisions for employee benefits in the Netherlands almost matched similar releases in 2006.
Operating expenses in Belgium declined from EUR 150 million in 2006 to EUR 96 million in 2007,
following the disposition of the broker and employee benefits business. Expenses in Central and
Rest of Europe were EUR 44 million higher at EUR 324 million, after EUR 30 million higher
investments in greenfields (business in new country) in Romania and Russia and organic business
growth across the region.
Result before tax
Result before tax in 2007 included a gain of EUR 418 million from the sale of Belgian broker and
employee benefits business, whereas the 2006 pre-tax result reflected a EUR 34 million gain on the
unwinding of a cross-shareholding with Bank Piraeus in Greece. Notwithstanding those gains, total
profit before tax of Insurance Europe declined by 2.6%, or EUR 62 million to EUR 2,300 million in
2007 from EUR 2,362 million in 2006.
Underlying result before tax
Underlying result before tax from Insurance Europe declined by 18.2%, or EUR 409 million from EUR
2,249 million in 2006 to EUR 1,840 million in 2007, driven by lower insurance results in the
Netherlands following lower capital gains and fair value changes on real estate and private equity
investments and significant disability provision releases in 2006. Central Europe continued to show
strong growth of life underwriting results, partly compensated by EUR 26 million higher greenfield
strain in Romania and Russia. Underlying pre-tax profit from life insurance declined by 15.7%, or
EUR 263 million to EUR 1,412 million in 2007 from EUR 1,675 million in 2006, mostly resulting from
a EUR 327 million decrease in life results from the Netherlands partly offset by a EUR 51 million
increase in Central and Rest Europe, primarily in Hungary and Poland as well as the Czech and
Slovakia republics. Underlying result from non-life insurance declined by 25.4%, or EUR 146 million
from EUR 574 million in 2006 to EUR 428 million in 2007, including 2006 releases of actuarial
provisions caused by the introduction of a new long-term disability act in the Netherlands.
Netherlands
In the Netherlands, underlying result before tax decreased by 24.4%, or EUR 466 million to EUR
1,445 million in 2007 from EUR 1,911 million in 2006, as lower investment income and actuarial
provision releases more than offset the slight decline in operating expenses. Results included EUR
217 million lower gains and revaluations from real estate investment declining from EUR 443 million
in 2006 to EUR 226 million in 2007 and EUR 42 million lower gains and revaluations from private
equity investments from EUR 166 million in 2006 to EUR 124 million in 2007, as well as a EUR 98
million release of disability provisions triggered by the introduction of a new long-term
disability act in 2006. In 2007, the increase in the shortfall in investment guarantees on certain
group pension contracts deteriorated EUR 74 million compared to 2006.
Underlying result before tax from the life insurance businesses declined by 24.1%, or EUR 327
million from EUR 1,357 million in 2006 to EUR 1,030 million in 2007 driven by lower investment
income, especially lower gains and revaluations on real estate and private equity investments. Life
premium income declined by 4.2%, or EUR 374 million from EUR 5,230 million in 2006 to EUR 5,008
million in 2007, mainly due to lower single-premium sales due to enhanced pricing discipline to
improve profitability and negative media attention around unit-linked products.
Underlying result before tax from the non-life insurance businesses decreased by 25.1%, or EUR 139
million from EUR 554 million in 2006 to EUR 415 million in 2007, driven by EUR 98 million
disability provision releases
25
in 2006 as well as lower results from real estate and private equity
investments. Non-life premiums declined by 1.2% to EUR 1,587 million, a decrease of EUR 19 million
compared to EUR 1,606 million in 2006 largely attributable to the disposition of guarantee insurer
Nationale Borg in the second quarter of 2006. Increased distribution through the proprietary bank
channel more than compensated for the impact of rate pressure in automobile and group income
insurance.
Belgium
In Belgium, underlying result before tax from insurance rose by 8.8%, or EUR 3 million from EUR 57
million in 2006 to EUR 62 million in 2007, due to higher results from life insurance. Underlying
result from life insurance, including Luxembourg, rose by EUR 12 million, or 25.5% to EUR 59
million in 2007 from EUR 47 million in 2006, driven by higher sales and investment income.
Underlying result before tax from non-life insurance, declined sharply to EUR 3 million in 2007
from EUR 10 million in 2006, partly caused by a strengthening of the claims provisions for
disability based on recent claims experience. Following the divestment of the broker and employee
benefits business in 2007, the insurance activities in Belgium are focused exclusively on the sale
of insurance products through INGs proprietary bank channels (ING Bank and Record Bank). Life
premium income increased by 15.0%, to EUR 1,160 million in 2007 from EUR 1,009 million in 2006, due
to strong sales of investment products with a capital guarantee and high profit participation
potential. Non-life premiums were up 12.5%, mainly due to the compulsory natural disaster cover
introduced in 2007.
Central and Rest of Europe
In Central and Rest of Europe, underlying result before tax increased by 17.7%, or EUR 50 million
to EUR 332 million in 2007 from EUR 282 million in 2006, driven by a 18.8% increase in life results
to EUR 323 million. The new life operation in Russia and second-pillar pension fund in Romania
caused a EUR 26 million higher greenfield strain on underlying pre-tax result. The Czech Republic,
Hungary, Poland and Slovakia all showed strong growth in life and pensions, driven by higher
premiums and pension fund inflows. Life premium income rose by 25.6%, or EUR 488 million from EUR
1,906 million in 2006 to EUR 2,394 million in 2007, propelled by high sales of unit-linked products
in Greece and the Czech Republic, group life in Spain as well as the launch of the variable
annuities in Hungary and Spain.
INSURANCE AMERICAS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance Americas |
|
|
2008 |
|
2007 |
|
2006 |
|
|
(EUR millions) |
Premium income |
|
|
22,549 |
|
|
|
23,537 |
|
|
|
24,118 |
|
Commission |
|
|
1,254 |
|
|
|
1,036 |
|
|
|
984 |
|
Investment and Other income |
|
|
3,935 |
|
|
|
5,108 |
|
|
|
4,677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
27,738 |
|
|
|
29,681 |
|
|
|
29,779 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
25,319 |
|
|
|
24,682 |
|
|
|
24,981 |
|
Other interest expenses |
|
|
222 |
|
|
|
328 |
|
|
|
316 |
|
Operating expenses |
|
|
2,574 |
|
|
|
2,519 |
|
|
|
2,490 |
|
Other impairments |
|
|
212 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
28,327 |
|
|
|
27,529 |
|
|
|
27,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
(589 |
) |
|
|
2,152 |
|
|
|
1,992 |
|
Gains/losses on divestments |
|
|
(237 |
) |
|
|
(93 |
) |
|
|
|
|
Result before tax from divested units |
|
|
(28 |
) |
|
|
2 |
|
|
|
|
|
Special items |
|
|
321 |
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying result before tax |
|
|
(534 |
) |
|
|
2,061 |
|
|
|
1,992 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008 compared to year ended December 31, 2007
Income
Total premium income decreased by 4.2%, or EUR 988 million, from EUR 23,537 million in 2007 to EUR
22,549 million in 2008. Underlying life premiums increased by 0.8%, or 8.8% excluding currency
impacts to EUR 19,216 million, primarily attributable to the US (increase of 8.4% in local
currency) driven by variable annuities, retirement services and fixed annuities. Underlying
non-life premium income decreased by 12.6%, mainly due to the sale of the health business in Chile
in the first quarter of 2008. Premium income in Canada decreased by 4.2%, but increased by 1.7%
excluding currency impacts due to an increase in average premiums, while the number of new risks
insured decreased.
26
Commission income increased by 21.0%, or EUR 218 million to EUR 1,254 million in 2008 from EUR
1,036 million in 2007, primarily due to the acquisitions of the annuity and pension business from
Santander in Latin America at the end of 2007. Investment and Other income decreased 23.0% or EUR
1,173 million from EUR 5,108 million in 2007 to EUR 3,935 million in 2008 due to credit related
losses and impairments, unfavorable results on non-trading derivatives and losses from limited
partnerships.
Expenses
Operating expenses increased by 2.2%, or EUR 55 million from EUR 2,519 million in 2007 to EUR 2,574
million in 2008. Underlying expenses increased 10.5% excluding currency impacts, mainly due to
integration and operating expenses triggered by the acquisition of CitiStreet in the US and the
acquisition of pension business from Santander in Latin America. Expenses as a percentage of assets
under management for investment products deteriorated from 0.74% to 0.87%, while expenses as a
percentage of premiums for life products improved to 14.6% in 2008.
Result before tax
Result before tax in 2008 included a gain of EUR 55 million, which resulted from the divestment of
Chile health business in the first quarter of 2008 and a gain of EUR 182 million which resulted
from the divestment of Mexico insurance business in the third quarter of 2008. In addition, the
result before tax in 2008 includes EUR 28 million profit generated by the Mexico divested insurance
businesses. The special items in 2008 related to integration expenses for CitiStreet in the US (EUR
90 million before tax), losses from annuity and pension businesses in Argentina following the
nationalization of the private pension business in the fourth quarter of 2008 (EUR 228 million
before tax), and restructuring charges in several countries in Latin America (EUR 3 million before
tax).
Underlying result before tax
Underlying result before tax from Insurance Americas decreased to a loss of EUR 534 million in 2008
from a profit of EUR 2,062 million in 2007. Underlying result before tax in the US decreased by EUR
2,473 million from a profit of EUR 1,356 million in 2007 to a loss of EUR 1,117 in 2008, primarily
due to net investment losses and negative impact from deferred acquisition costs unlocking. The
Canadian business had a 22.6%, or EUR 106 million decrease in underlying result before tax from EUR
470 million in 2007 to EUR 364 million in 2008 due to lower underwriting income, including higher
catastrophe claims. In Latin America underlying profit before tax decreased by 6.8%, or EUR 16
million to EUR 220 million in 2008 from EUR 236 million in 2007. The underlying profit before tax
in the life businesses decreased by EUR 44 million due to lower investment gains in 2008
(especially in Mexico), and lower investment results on the legally-required capital in the pension
businesses (especially in Chile and Peru). The underlying profit before tax in the non-life
businesses increased EUR 28 million, due to higher non-life results in Brazil, including a tax
reserve release of EUR 24 million.
United States
Premium income increased by 0.3%, or 8.4% excluding currency impact to EUR 18,736 million in 2008
from EUR 18,677 million in 2007. This increase was mainly due to higher sales of retirement
services, variable annuities and fixed annuities. Operating expenses increased 2.3%, or 10.1%
excluding currency impact to EUR 1,531 million due to the acquisition of CitiStreet in the second
quarter of 2008, partly offset by lower personnel-related expenses. Underlying result before tax
decreased to a loss of EUR 1,117 million from a profit of EUR 1,356 million in 2007. The negative
result before tax in 2008 included investment losses (pre-DAC) of EUR 965 million. In addition,
deferred acquisition costs unlocking had a negative impact of EUR 1,180 million in 2008, compared
with a positive impact of EUR 14 million in 2007. The further decrease of underlying result was due
to lower fee income in 2008 from lower assets under management in retirement services, higher cost
of
guaranteed benefits in 2008 in variable annuities, negative limited partnerships result in 2008,
and lower result from private equity investments.
Canada
Premium income decreased by 4.2%, from EUR 2,788 million in 2007 to EUR 2,671 million in 2008, but
increased 1.7% excluding currency impact. The increase was primarily attributable to rate increases
and average premium increases in personal lines which compensated for a lower the number of insured
risks. Operating expenses of EUR 544 million in 2008 decreased by 1.6% compared to 2007, but
increased 4.3% excluding currency impact. Underlying profit before tax decreased by 22.6%, or EUR
106 million from EUR 470 million in 2007 to EUR 364 million in 2008, due to lower underwriting
results, partially offset by higher investment income, including lower impairments of fixed income
securities. Underwriting results decreased in 2008 following higher claims (including higher
catastrophe claims). The claims ratio deteriorated to 69.5% in 2008 from 65.7% in 2007, and the
expense ratio deteriorated from 28.5% to 29.1%. The combined ratio deteriorated to 98.6% in 2008
from 94.2% in 2007.
27
Year ended December 31, 2007 compared to year ended December 31, 2006
Income
Premium income decreased by 2.4%, or EUR 581 million, from EUR 24,118 million in 2006 to EUR 23,537
million in 2007. Excluding unfavorable currency effects of EUR 1,905 million, premium income rose
by 6.0%, due to an increase in Life premium of 6.6%, primarily attributable to the US (increase of
6.7%) driven by variable annuities and retirement services, partly offset by lower fixed annuities;
Latin America (increase of 3.8%) driven by annuities in Chile and Argentina and group life premiums
in Mexico, and an increase in Non-life premium of 3.0%, attributable to Canada (increase of 2.7%)
due to an increase in the number of insured risks and Latin America (increase of 3.4%) through
higher premiums from health business.
Commission income increased by 5.3%, or EUR 52 million to EUR 1,036 million in 2007 from EUR 984
million in 2006, primarily as a result of higher assets under management, which were due to sales,
persistency and positive fund performance. Investment and Other income increased 9.2% or EUR 431
million from EUR 4,677 million in 2006 to EUR 5,108 million in 2007, mainly due to net investment
gains, including the gain on the initial public offering of shares by the Brazilian composite
insurer SulAmérica, in which ING is a major shareholder as well as the disposition of a minority
equity investment in the US, and higher private equity gains, partly offset by credit related
losses and impairments.
Expenses
Operating expenses increased by 1.2%, or EUR 29 million from EUR 2,490 million in 2006 to EUR 2,519
million in 2007. Excluding unfavorable currency impact of EUR 183 million,, operating expenses
increased 9.2%, due to the acquisitions of the annuity and pension business from Santander in Latin
America, marketing and organic business growth, mainly in the US. Expenses as a percentage of
assets under management for investment products deteriorated from 0.72% to 0.74%, while expenses as
a percentage of premiums for life products deteriorated from 14.3% in 2006 to 14.7% in 2007.
Result before tax
Result before tax in 2007 included a gain of EUR 93 million, which resulted from the dilution of
INGs share in Brazils SulAmérica, following an initial public offering.
Underlying result before tax
Underlying result before tax from Insurance Americas increased by 3.4%, or EUR 67 million from EUR
1,992 million in 2006 to EUR 2,059 million in 2007. Underlying result before tax in the US grew by
12.7%, or EUR 153 million from EUR 1,203 million in 2006 to EUR 1,356 million in 2007, due to net
investment gains and commission income, partially offset by increased operating expenses . The
Canadian business had a 22.3%, or EUR 135 million decrease in underlying result before tax from EUR
605 million in 2006 to EUR 470 million in 2007, due to less favorable developments in current and
prior-year reserves and impairments and investment losses. In Latin America underlying result
before tax increased 27.3%, or EUR 50 million to EUR 233 million in 2007 from EUR 183 million in
2006, due to life operations increase, partly offset by non-life operations. Life operations rose
84.6% or EUR 99 with higher results across the region, including investment gains in Mexico.
Non-life operations decreased 74.2% or EUR 49 million, due to higher fire and weather-related
claims and provision strengthening in automobile insurance in Mexico, partly offset by the results
from the health business in Brazil.
United States
Underlying premium income decreased 2.4%, or EUR 453 million to EUR 18,677 million in 2007 from EUR
19,130 million in 2006. The decrease is attributable to the depreciation of the US dollar against
the EUR. Excluding this impact, premium income increased 6.7%, mainly due to higher sales of
variable annuity and retirement services, but was partially offset by lower premiums from fixed
annuities. Operating expenses were almost flat as they increased only by 0.9%, or EUR 14 million.
Excluding unfavorable currency impact of EUR 127 million, operating expenses increased 10.4%, due
to marketing, continued business growth and personnel-related expenses. Underlying result before
tax rose by 12%.7%, or EUR 153 million from EUR 1,203 million in 2006 to EUR 1,356 million in 2007.
Net investment gains, including the EUR 21 million gain on the disposition of a minority equity
investment, contributed EUR 83 million to the underlying result growth in the US. Excluding
investment gains, underlying result before tax increased 5.5% to EUR 1,316, due to higher fee
income from higher assets under management, higher result from private equity investments and
positive impact from equity related deferred acquisition costs and reserves unlocking.
28
Canada
Underlying premium income of EUR 2,788 million EUR in 2007 was almost flat compared with 2006.
Excluding the impact of the depreciation of Canadian dollar against the EUR, premium income
increased 2.7% primarily attributable to the increase in the number of insured risks. Operating
expenses of EUR 553 million in 2007 was almost flat compared with 2006. Excluding unfavorable
currency impact of EUR 18 million, operating expenses rose by 4.3%. Underlying result before tax
decreased 22.3%, or EUR 135 million from EUR 605 million in 2006 to EUR 470 million in 2007, due to
lower underwriting results and investment losses. Underwriting results decreased in 2007 after a
deterioration of the automobile insurance results and higher property insurance losses. The claims
ratio deteriorated to 65.7% in 2007 from 59.2% in 2006, but the expense ratio improved to 28.5%
from 29.9%. The combined ratio deteriorated to 94.2% in 2007 from 89.1% in 2006.
INSURANCE ASIA/PACIFIC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance Asia/Pacific |
|
|
2008 |
|
2007 |
|
2006 |
|
|
(EUR millions) |
Premium income |
|
|
11,040 |
|
|
|
12,632 |
|
|
|
12,136 |
|
Commission |
|
|
319 |
|
|
|
382 |
|
|
|
298 |
|
Investment and Other income |
|
|
2,800 |
|
|
|
1,369 |
|
|
|
944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
14,159 |
|
|
|
14,383 |
|
|
|
13,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
12,611 |
|
|
|
12,517 |
|
|
|
11,745 |
|
Other interest expenses |
|
|
720 |
|
|
|
175 |
|
|
|
22 |
|
Operating expenses |
|
|
1,040 |
|
|
|
1,115 |
|
|
|
965 |
|
Other impairments |
|
|
0 |
|
|
|
0 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
14,372 |
|
|
|
13,807 |
|
|
|
12,742 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
(213 |
) |
|
|
576 |
|
|
|
636 |
|
Gains/losses on divestments |
|
|
214 |
|
|
|
|
|
|
|
(15 |
) |
Result before tax from divested
units |
|
|
115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying result before tax |
|
|
116 |
|
|
|
576 |
|
|
|
621 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008 compared to year ended December 31, 2007
Income
Premium income decreased by 12.6%, or EUR 1,592 million to EUR 11,040 million in 2008 from EUR
12,632 million in 2007. Excluding Taiwan, premiums fell 7.7%. Double digit growth was recorded in
local terms in Australia, Korea and Rest of Asia. However, this was more than offset by a sharp
decline in single premium variable annuity premiums in Japan.
Commission income decreased by 16.5%, or EUR 63 million to EUR 319 million in 2008 from EUR 382
million in 2007, mainly due to negative market performance and currency impact in Australia.
Expenses
Operating expenses decreased by 6.7%, or EUR 75 million to EUR 1,040 million in 2008 from EUR 1,115
million in 2007. Excluding Taiwan and currency effects, operating expenses increased 7.0%, as cost
containment helped to offset most of the increased expenses from a higher in-force base in some
countries and continued investment in greenfield operations, to support the growth in premium
income in these markets.
Result before tax
On October 20, 2008, ING reached an agreement with Fubon Financial Holding Co. Ltd. to sell ING
Life Taiwan for a consideration of USD 600 million (EUR 447 million). The transaction closed on
February 11, 2009, and the total loss before tax of the transaction, comprising of the loss on
divestment (EUR 214 million) and negative results from the divested unit related to impairments
(EUR 115 million), was EUR 329 million (EUR 292 million after tax). As a consequence of the sale,
Taiwan was separately reported from Insurance Asia/Pacifics results beginning with the fourth
quarter of 2008. Including the loss on the divestment and the result from the divested unit, result
before tax decreased by 137.0%, or EUR 789 million to a loss of EUR 213 million in 2008 from a
profit of EUR 576 million in 2007.
29
Underlying result before tax
Underlying result before tax decreased by 79.9%, or EUR 460 million to EUR 116 million in 2008 from
EUR 576 million in 2007. Japan recorded a loss of EUR 167 million in 2008 compared to a profit of
EUR 24 million in 2007, driven by losses on the variable annuity business as a consequence of
extreme market volatility. Turmoil in the global financial markets led to negative revaluations on
credit and equity linked securities, and impairments on fixed income investments, which further
contributed to the decrease in the underlying result. Excluding Japan and currency impacts,
underlying profit before tax declined by 15.5%.
Australia and New Zealand
Underlying result before tax decreased by 41.4%, or EUR 89 million, to EUR 126 million in 2008 from
EUR 215 million in 2007. This was driven by reduced fee income due to a decline in assets under
management and lower investment earnings. New sales in life risk products and favourable in-force
retention drove life premium income up 6.2%, or EUR 17 million, to EUR 292 million in 2008 from
EUR 275 million in 2007. Operating expenses decreased by 5.0%, but were up 1.6% excluding currency
effects, to EUR 211 million in 2008 from EUR 222 in 2007. The increase was driven by a higher
in-force base, investments in select business transformation projects and restructuring costs.
South Korea
In South Korea, underlying result before tax decreased by 45.7%, or 33.3% excluding currency
effects, to EUR 163 million in 2008 from EUR 300 million in 2007. The decline was mainly due to
market related impacts, comprising negative revaluations on an equity derivative fund and credit
linked securities and impairments on fixed income securities. Results in 2007 had also been
supported by the one-off recognition of EUR 10 million in dividend income from the consolidation of
equity funds. Premium income decreased by 8.8%, but was up 13.8% excluding currency effects, to
EUR 3,291 million in 2008 from EUR 3,607 million in 2007 due to favourable retention and stable new
sales. Operating expenses decreased by 9.5%, but were up 13.6%
excluding currency effects, to EUR 229 million in 2008 from EUR 253 million in 2007 to support
business growth.
Taiwan
ING Life Taiwan was sold to Fubon Financial Holding Co. Ltd in February 2009. ING recorded zero
underlying result before tax for Taiwan in 2008, as in 2007, due to strengthening of reserves in a
low interest rate environment.
Japan
In Japan, underlying result before tax decreased by EUR 191 million to a loss of EUR 167 million in
2008 from a profit of EUR 24 million in 2007. The swing was primarily driven by adverse hedge
results on the variable annuities business due to extraordinary market volatility, especially in
the month of October. This was partially offset by an increase in profits on the Corporate Owned
Life Insurance (COLI) business on an increased premium base and improved investment results. The
turbulent financial market environment severely impacted single premium variable annuity (SPVA)
sales. As a result, premium income declined 14.2% to EUR 4,026 million from EUR 4,693 million in
2007. Despite this decrease, ING is a top 3 player in the COLI segment and a top 4 player in the
SPVA segment.
Year ended December 31, 2007 compared to year ended December 31, 2006
Income
Premium income increased by 4.1%, or EUR 496 million to EUR 12,632 million in 2007 from EUR 12,136
million in 2006, due primarily to sales of unit-linked products and high persistency in South
Korea, new sales in life risk and personal investment products, along with favorable in-force
business in Australia and sales of investment-linked products in Taiwan, in part offset by lower
premiums in Japan caused by regulatory changes and economic volatility. Double-digit growth rates
in premium income were recorded in local currency terms in most of Asia/Pacifics other markets.
Commission income increased by 28.2%, or EUR 84 million to EUR 382 million in 2007 from EUR 298
million in 2006, due to higher funds under management arising from strong investment markets and
higher net inflows in Australia and New Zealand as well as the full year consolidation of asset
management business in Taiwan, which was acquired in the fourth quarter of 2006.
Expenses
Operating expenses increased by 15.5%, or EUR 150 million to EUR 1,115 million in 2007 from EUR 965
million in 2006, reflecting the increase of business volumes and the focus in building
organizational capabilities and investing in greenfield operations. Expenses as a percentage of
assets under management for investment products improved from 0.83% in 2006 to 0.81% in 2007, but
expenses as a percentage of premiums for life products deteriorated from 8.2% in 2006 to 9.4% in
2007.
30
Result before tax
Following the sale of Australias non-life business in 2004, provisions were made for claims
experience of several lines of business. As claims experience was favorable, the hold-back
provision was released in 2006 resulting in a result before tax of EUR 15 million. Including the
result from the divested unit, result before tax decreased by 9.4%, or 60 million to EUR 576
million in 2007 from EUR 636 million in 2006.
Underlying result before tax
Underlying result before tax decreased by 7.2%, or EUR 45 million to EUR 576 million in 2007 from
EUR 621 million in 2006. This decrease was primarily due to Japan, which recorded a profit before
tax of EUR 24 million in 2007 from EUR 156 million in 2006 largely due to the impact of market
volatility on its Single Premium Variable Annuity or SPVA business, and a EUR 24 million
Collateralized Debt Obligation or CDO markdown in the Corporate-Owned Life Insurance or COLI
business. Excluding Japan, the underlying result was up 19%, driven by business in South Korea
experiencing growth in investment-linked product sales and in-force premium as well as a one-off
recognition of EUR 10 million from the consolidation of Best Equity Fund and business in
Australia/New Zealand experiencing funds under management growth, investment earnings and release
of provisions.
Australia and New Zealand
Underlying result before tax increased 33.5%, or EUR 54 million to EUR 215 million in 2007 from EUR
161 million in 2006 driven by funds under management growth, investment earnings and release of
provisions. Life premium income rose by 19.6%, or EUR 45 million to EUR 275 million in 2007 from
EUR 230 million in 2006, driven by new sales in life risk and personal investment products, along
with favorable in-force business. Operating expenses increased 14.4% due to higher volume-driven
expenses such as investment management, direct campaign and stamp duty costs.
South Korea
In South Korea, underlying result before tax rose by 14.1%, or EUR 37 million to EUR 300 million in
2007 from EUR 263 million 2007, driven primarily by growth of investment-linked product sales and
in-force premium as well as a one-off recognition of EUR 10 million from the consolidation of Best
Equity Fund. Premium income rose by 11.9%, or EUR 383 million to EUR 3,607 million in 2007 from EUR
3,224 in 2006, driven primarily by sales of unit-linked products as well as continued high
persistency on existing contracts. Operating expenses rose by 29.1%, or EUR 57 million, from EUR
196 million in 2006 to EUR 253 million in 2007 due to the support provided for the growing and
future business.
Taiwan
As in 2006, ING recorded zero profit for Taiwan in 2007 due to measures taken to strengthen
reserves . A total charge of EUR 110 million was taken in 2007 to strengthen reserves, compared
with EUR 182 million in 2006. For the reserve adequacy position please see the discussion under
Risk Management ING Insurance ING Insurance Liquidity Risk Reserve Adequacy of Note 2.1
to the consolidated financial statements.
Japan
In Japan, underlying result before tax decreased by 84.6%, or EUR 132 million to EUR 24 million in
2007 from EUR 156 million in 2006 largely due to the impact of market volatility on its SPVA
business, and a EUR 24 million CDO markdown in the COLI business. Sales momentum slowed down
triggered by regulatory changes and economic volatility. Consequently, premium income declined by
5.0%. Operating expenses increased by 6.6%, mainly due to higher promotional and branding
activities.
31
WHOLESALE BANKING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale Banking |
(EUR millions) |
|
2008 |
|
2007 |
|
2006 |
Interest result |
|
|
3,240 |
|
|
|
1,748 |
|
|
|
1,953 |
|
Commission income |
|
|
1,213 |
|
|
|
1,235 |
|
|
|
1,170 |
|
Investment income |
|
|
(314 |
) |
|
|
780 |
|
|
|
320 |
|
Other income |
|
|
(3,741 |
) |
|
|
1,549 |
|
|
|
1,477 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
398 |
|
|
|
5,312 |
|
|
|
4,921 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
2,902 |
|
|
|
2,978 |
|
|
|
2,818 |
|
Additions to the provision for loan losses |
|
|
596 |
|
|
|
(142 |
) |
|
|
(132 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
3,498 |
|
|
|
2,836 |
|
|
|
2,686 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
(3,100 |
) |
|
|
2,476 |
|
|
|
2,235 |
|
Gains/losses on divestments |
|
|
|
|
|
|
|
|
|
|
89 |
|
Result before tax from divested units |
|
|
|
|
|
|
|
|
|
|
(45 |
) |
Special items |
|
|
|
|
|
|
94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying result before tax |
|
|
(3,100 |
) |
|
|
2,570 |
|
|
|
2,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008 compared to year ended December 31, 2007
Income
Total income decreased by 92.5%, or EUR 4,914 million, to EUR 398 million in 2008 from EUR 5,312
million in 2007. The total interest result increased by 85.4%, or EUR 1,492 million, to EUR 3,240
million in 2008 from EUR 1,748 million in 2007, due to both higher margins and increased volumes.
Commission income declined 1.8%, or EUR 22 million, to EUR 1,213 million in 2008 from EUR 1,235
million in 2007. Investment and other income declined by EUR 6,384 million, to a loss of EUR 4,055
million in 2008 from a profit of EUR 2,329 million in 2007. ING Real Estate contributed EUR 947
million to this decrease, of which EUR 450 million lower fair value changes in the investment
portfolio and EUR 415 million lower result from associates. Investment and other income at
Financial Markets was EUR 797 million lower, of which EUR 298 million investment income and EUR 499
million Other income, but this was more than compensated for by the EUR 901 million increase in
interest result. Further more, Investment and other income decreased due to negative fair value changes on derivatives for which no hedge accounting is applied under IFRS-IASB.
Expenses
Operating expenses decreased by EUR 76 million, or 2.6%, to EUR 2,902 million in 2008 from EUR
2,978 million in 2007. Excluding EUR 94 million in special items in 2007, operating expenses rose
by EUR 18 million or 0.6% from EUR 2,884 million in 2007. This increase can be attributed to ING
Real Estate whose expenses increased by EUR 72 million, or 12.6%, driven by impairments on
development projects. The EUR 94 million in special items related to provisions for initiatives
started in 2007 to stimulate growth and reduce operating expenses, including EUR 45 million for the
reduction of 300 full-time functions across Wholesale Banking and EUR 49 million to reinforce its
Financial Markets business in selected developing markets. The cost/income ratio deteriorated to
70.7% in 2008 compared with 62.0% in 2007. Excluding the impact of special items, the underlying
cost/income ratio in 2008 was 60.1%.
The net addition to the provision for loan losses was EUR 596 million in 2008 compared with a net
release of EUR 142 million in 2007, reflecting the worsening of the economic conditions. The net
addition in 2008 equalled 41 basis points of average credit-risk-weighted assets.
Result before tax
Result before tax decreased by EUR 5,576 million, or -225.2%, to EUR (3,100) million in 2008 from EUR
2,476 million in 2007. Special items in 2007 (provisions for initiatives to stimulate growth and
reduce operating expenses) had a negative impact of EUR 94 million.
32
Underlying result before tax
Underlying result before tax from Wholesale Banking declined by 220.6%, or EUR 5,670 million, to EUR
(3,100) million in 2008 from EUR 2,570 million in 2007. Lower underlying results before tax were
recorded in all product lines except for Financial Markets. The results of General Lending & PCM
and Structured Finance declined despite strong income growth due to higher additions to the
provision for loan losses. Leasing & Factoring was down due to lower results in car leasing and
higher risk costs in general leasing. ING Real Estate turned into a loss driven by negative
revaluations on real estate investments and impairments on development projects.
General Lending & PCM
In General Lending & Payments and Cash Management (PCM), underlying result before tax declined
39.9%, or EUR 201 million, to EUR 303 million in 2008 from EUR 504 million in 2007, fully due to
higher additions to the provision for loan losses. Total income increased by 24.5%, or EUR 214
million, to EUR 1,083 million in 2008 from EUR 870 million in 2007, driven by an increase in
interest margins and growth in volumes. Operating expenses increased by 7.5%, or EUR 41 million, to
EUR 590 million in 2008 from EUR 549 million in 2007. The addition to the provision for loan losses
rose to EUR 190 million in 2008 from a net release of EUR 183 million in 2007.
Structured Finance
In Structured Finance, underlying result before tax declined by 18.2%, or EUR 72 million, to EUR
323 million in 2008 from EUR 395 million in 2007. Income increased by 30.2%, or EUR 222 million, to
EUR 957 million in 2008 from EUR 735 million in 2007, mainly in the product lines Natural Resources
and International Trade & Export Finance. Operating expenses increased by 5.6%, or EUR 19 million,
to EUR 357 million in 2008 from EUR 338 million in 2007. The addition to the loan loss provision
rose from EUR 2 million in 2007 to EUR 277 million in 2008, largely attributable to Leveraged
Finance and Trade & Commodity Finance.
Leasing & Factoring
In Leasing & Factoring, underlying result before tax decreased by 22.2%, or EUR 34 million, to EUR
119 million in 2008 from EUR 153 million in 2007. Total income rose by 2.0%, or EUR 8 million, to
EUR 406 million in 2008 from EUR 398 million in 2007, driven by growth in general leasing and
factoring, partly offset by lower income in car leasing due to deterioration in the used vehicle
market. Operating expenses increased by 8.6%, or EUR 19 million, to EUR 239 million in 2008 from
EUR 220 million in 2007, due to investments to grow the business, including the impact of the
acquisition of Citileasing in Hungary. The addition to the loan loss provisions increased from EUR
25 million in 2007 to EUR 48 million in 2008, mainly related to general leasing.
Financial Markets
Underlying
result before tax from Financial Markets decreased by 513.6%, or EUR
(4,165) million, to EUR
(3,354) million in 2008 from EUR 811 million in 2007, in spite of increased impairments and
credit-related markdowns due to the financial crisis and negative
fair value changes on derivatives for which no hedge accounting is
applied under IFRS-IASB. Total income
decreased by 277.0%, or EUR (4,139)
million, to EUR (2,645) million in 2008 from EUR 1,494 million in 2007, as higher results from Asset &
Liability Management and the client-related business within Financial Markets. This was partially
offset by EUR 400 million of impairments and credit-related markdowns in 2008 compared with EUR 118
million in 2007. Operating expenses increased by 4.1%, or EUR 28 million, to EUR 707 million in
2008 from EUR 679 million in 2007. The addition to the loan loss provisions in 2008 was only EUR 2
million.
Other Wholesale products
Underlying result before tax from the Other Wholesale products turned into a loss of EUR 195
million in 2008 from a profit of EUR 43 million in 2007. The decrease is mainly caused by lower
results from the Asset Management and Equity Markets business as well as lower capital gains not
allocated to the product groups.
ING Real Estate
Underlying result before tax of ING Real Estate decreased by EUR 961 million, to a loss of EUR 297
million in 2008 from a profit of EUR 664 million in 2007. Total income declined by 65.6%, or EUR
810 million, to EUR 425 million in 2008 from EUR 1,235 million in 2007, mainly due to negative
revaluations caused by declining property values. Operating expenses increased by 12.6%, or EUR 72
million, to EUR 642 million from EUR 570 million in 2007, driven by impairments on development
projects and EUR 18 million one-off restructuring costs. Result before tax of the Investment
Management activities decreased by 48.7%, or EUR 76 million to EUR 80 million in 2008, due to lower
fee income and restructuring costs. The result of the Investment Portfolio turned into a loss of
EUR 695 million in 2008 reflecting negative revaluations on investments. Result at the Finance
activities increased by 12.1% to EUR 240 million in 2008, driven by growth in the lending
portfolio. Result from Development increased to EUR 78 million in 2008 from EUR 33 million in 2007,
supported by EUR 60 million of positive fair value changes from a reclassification of some land
positions in Spain from projects under construction to available for sale and higher gains on the
sale of completed projects, which more than offset the impairments on development projects.
33
Year ended December 31, 2007 compared to year ended December 31, 2006
Income
Total income increased 7.9%, or EUR 391 million, to EUR 5,312 million in 2007 from EUR 4,921 million
in 2006. Excluding the impact of the divestment of Williams de Broë and Deutsche Hypothekenbank in
2006, income increased 1.6% or EUR 405 million. The total interest result declined 10.5%, or EUR 205
million, to EUR 1,748 million in 2007 from EUR 1,953 million in 2006, due to divestments and
pressure on margins. Commission, investment and other income rose by 20.1%, or EUR 596 million, to
EUR 3,564 million in 2007 from EUR 2,968 million in 2006. ING Real Estate contributed EUR 169
million to this rise, driven by growth in the investment management activities and by higher
realized gains and fair value changes in the investment portfolio. The remaining increase mainly
includes higher capital gains on equities partly offset by the direct impact of the market and
credit crisis in the second half of 2007.
Expenses
Operating expenses increased by EUR 160 million, or 5.7%, to EUR 2,978 million in 2007 from EUR
2,818 million in 2006. Excluding the impact of divestments in 2006, and excluding EUR 94 million in
special items in 2007, operating expenses rose by EUR 121 million or 4.4% to EUR 2,884 million. Of
this increase 3.4%-point can be attributed to fast growing ING Real Estate. The EUR 94 million in
special items related to provisions for initiatives started in 2007 to stimulate growth and reduce
operating expenses, including EUR 45 million for the reduction of 300 full-time functions across
Wholesale Banking and EUR 49 million to reinforce its Financial Markets business in selected
developing markets. The cost/income ratio deteriorated to 62.0% in 2007 compared with 59.5% in
2006. Excluding the impact of divestments and special items, the underling cost/income ratio
deteriorated to 60.1% from 58.5% in 2006.
The addition to the provision for loan losses was a net release of EUR 142 million in 2007 compared
with a net release of EUR 132 million in 2006. Gross additions remained low, reflecting the strong
quality of the credit portfolio. The net release equalled 10 basis points of average
credit-risk-weighted assets in 2007.
Result before tax
Result before tax increased EUR 241 million, or 10.8%, to EUR 2,476 million in 2007 from EUR 2,235
million in 2006. Special items in 2007 (provisions for initiatives to stimulate growth and reduce
operating expenses) had a negative impact of EUR 94 million. The divestment in 2006 of Williams de
Broë and Deutsche Hypothekenbank resulted in a loss of EUR 89 million, while these divested units
contributed EUR 45 million to result before tax in 2006.
Underlying result before tax
Underlying result before tax from Wholesale Banking increased 12.8%, or EUR 291 million, to EUR 2,570
million in 2007 from EUR 2,279 million in 2006. Higher underlying results before tax were recorded
in General Lending & Payments and Cash Management, ING Real Estate and the Other Wholesale
Products. Underlying result from Structured Finance decreased 22.5% to EUR 395 million, including a
markdown of EUR 29 million on the Leveraged Finance book in the third quarter of 2007. Financial
Markets result declined 37.7% to EUR 300 million, mainly due to the sub-prime crisis and related
issues.
General Lending & PCM
In General Lending & Payments and Cash Management (PCM), underlying result before tax rose 47.2%,
or EUR 162 million, to EUR 504 million in 2007 from EUR 343 million in 2006, supported by a lower
cost level and higher releases from the provision for loan losses. Total income increased by 0.7%,
or EUR 6 million, to EUR 870 million in 2007 from EUR 864 million in 2006 and operating expenses
decreased by 14.5%, or EUR 93 million, to EUR 549 million in 2007 from EUR 642 million in 2006. The
decrease of operating expenses is partly due to the reclassification of Trade Finance Services from
General Lending to Structured Finance. The net release from the loan losses provisions increased to
EUR 183 million in 2007 from a net release of EUR 121 million in 2006, supported by the recovery of
a single provision of EUR 115 million in the fourth quarter of 2007.
Structured Finance
In Structured Finance, underlying result before tax declined 22.5%, or EUR 115 million, to EUR 395
million in 2007 from EUR 510 million in 2006. Income decreased 4.0%, or EUR 31 million, to EUR 735
million in 2007 from EUR 767 million in 2006, mainly caused by the disruption in the Leveraged
Finance market, including a EUR 29 million markdown on Leveraged Finance deals in the third quarter
of 2007. Operating expenses increased by 16.2%, or EUR 47 million, to EUR 338 million in 2007 from
EUR 290 million in 2006, caused by the reclassification of Trade Finance Services from General
Lending to Structured Finance and higher personnel and deal-related costs to support growth
initiatives. The addition to the loan loss provisions changed from a net release of EUR 34 million
in 2006 to a net addition of EUR 2 million in 2007.
34
Leasing & Factoring
In Leasing & Factoring, underlying result before tax slightly increased to EUR 153 million from EUR
152 million in 2006. Total income rose by 3.1%, or EUR 12 million, to EUR 398 million in 2007 from
EUR 386 million in 2006, driven by volume growth in general leasing, car leasing and factoring,
partly offset by lower margins. Operating expenses increased by 6.8%, or EUR 14 million, to EUR 220
million in 2007 from EUR 206 million in
2006, mainly due to investments to grow the business. The addition to the loan loss provisions
decreased to EUR 25 million from EUR 28 million in 2006.
Financial Markets
Underlying
result before tax from Financial Markets increased 22.3%, or EUR
148 million, to EUR 811 million from EUR 663 million in 2006, mainly due to the EUR 106 million in losses related to
sub-prime (residential mortgage-backed securities) and monoline insurers in the proprietary trading
and credit markets business in the fourth quarter of 2007. Total
income increased 11.1%, or EUR 149
million, to EUR 1,494 million in 2007 from EUR 1,345 million in 2006, mainly in the proprietary
trading and credit markets business, partly offset by higher income from the client-related
business within Financial Markets. Operating expenses decreased 0.4%, or EUR 3 million, to EUR 679
million in 2007 from EUR 682 million in 2006. The addition to the loan loss provisions in 2007 was
only EUR 4 million or 2 basis points of average credit-risk weighted assets compared with nil in
2006.
Other Wholesale products
Underlying result before tax from the Other Wholesale products turned to a profit of EUR 43 million
in 2007 from a loss of EUR 21 million in 2006, supported by higher results from Corporate Finance &
Equity Markets as well as higher capital gains not allocated to the product groups, including the
gain on the sale of stakes in the stock and derivatives exchanges in Sao Paulo.
ING Real Estate
Underlying result before tax of ING Real Estate increased 5.2%, or EUR 33 million, to EUR 664
million in 2007 from EUR 631 million in 2006. Total income rose 11.7%, or EUR 129 million, to EUR
1,235 million in 2007 from EUR 1,106 million in 2006, while operating expenses increased by 19.7%,
or EUR 94 million, to EUR 570 million from EUR 476 million in 2006. Result before tax of the
Investment Management activities increased 13.9% to EUR 156 million supported by continued growth
of the assets under management. The result of the Investment Portfolio rose 31.2% to EUR 261
million reflecting higher realized gains and fair value changes on investments. Result at the
Finance activities increased 16.9% to EUR 214 million, driven by strong growth in the lending
portfolio. Result from Development declined to EUR 33 million from EUR 112 million in 2006 when
results included exceptionally high gains on the sale of completed projects.
35
RETAIL BANKING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail Banking |
(EUR millions) |
|
2008 |
|
2007 |
|
2006 |
Interest result |
|
|
5,556 |
|
|
|
5,354 |
|
|
|
5,320 |
|
Commission income |
|
|
1,535 |
|
|
|
1,591 |
|
|
|
1,429 |
|
Investment income |
|
|
66 |
|
|
|
122 |
|
|
|
150 |
|
Other income |
|
|
242 |
|
|
|
417 |
|
|
|
267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
7,399 |
|
|
|
7,483 |
|
|
|
7,166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
5,578 |
|
|
|
5,206 |
|
|
|
4,627 |
|
Additions to the provision for loan losses |
|
|
401 |
|
|
|
198 |
|
|
|
176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
5,979 |
|
|
|
5,405 |
|
|
|
4,803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
1,420 |
|
|
|
2,079 |
|
|
|
2,363 |
|
Gains/losses on divestments |
|
|
|
|
|
|
(32 |
) |
|
|
|
|
Special items |
|
|
271 |
|
|
|
355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying result before tax |
|
|
1,691 |
|
|
|
2,402 |
|
|
|
2,363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008 compared to year ended December 31, 2007
Income
Total income decreased by 1.1%, or EUR 84 million, to EUR 7,399 million in 2008 from EUR 7,483
million in 2007 as lower interest margins driven by the intensified competition for savings and a
decline in asset management fees due to deterioration of equity markets offset the impact of the
inclusion of ING Bank Turkey. Excluding the EUR 32 million gain on the divestment of RegioBank in
2007 , underlying income declined 0.8%.
Expenses
Operating expenses increased by 7.1%, or EUR 372 million, to EUR 5,578 million in 2008 from EUR
5,206 million in 2007. In 2008, EUR 271 million of special items is included related to the Retail
Netherlands Strategy (combining ING Bank and Postbank). In 2007, special items amounted to EUR 351
million, of which EUR 295
million results from a provision and costs related to the Retail Netherlands Strategy and EUR 45
million to streamline the lending process in General Lending. Excluding these special items,
operating expenses rose EUR 452 million or 9.3%, of which 6.3%-point can be attributed to the
inclusion of ING Bank Turkey. The cost/income ratio increased to 75.4% in 2008 from 69.6% in 2007.
Excluding divestments and special items, the underlying cost/income ratio rose to 71.7% from 65.1%.
The addition to the provision for loan losses increased by EUR 203 million, to EUR 401 million in
2008 from EUR 198 million in 2007, mainly caused by higher risk costs in the mid-corporate segment
and at Private Banking (as underlying collateral for loans decreased significantly), and by the
inclusion of ING Bank Turkey. The total addition equalled 53 basis points of average
credit-risk-weighted assets in 2008.
Result before tax and underlying result before tax
Result before tax decreased by 31.7%, or EUR 659 million, to EUR 1,420 million in 2008 from EUR
2,079 million in 2007. Excluding divestments and special items, underlying result before tax
decreased by EUR 711 million, or 29.6% to EUR 1,691 million.
Netherlands
In the Netherlands, underlying result before tax declined by 25.4%, or EUR 431 million, to EUR
1,269 million in 2008 from EUR 1,700 million in 2007. Income declined by 7.6% to EUR 4,346 million
in 2008 from EUR 4,705 million in 2007 as margins declined due to the continued competition for
savings combined with lower fee income. Average retail balances were up 5%. Underlying operating
expenses increased by 0.2% to EUR 2,826 million. The addition to the loan loss provisions increased
by EUR 66 million to EUR 251 million in 2008 due to higher risk costs in the mid-corporate segment,
small business lending and the residential mortgage portfolio.
36
Belgium
In Belgium, underlying result before tax declined by 24.8%, or EUR 117 million, to EUR 355 million
in 2008 from EUR 472 million in 2007. Income decreased by 3.6% to EUR 1,842 million. The 7% growth
in average retail balances could not compensate for lower management and securities fees and the
margin pressure on savings products. Operating expenses increased by 3.3% to EUR 1,455 million due
to the inflation effect on salaries and investments in the branch network. The net addition to the
loan loss provisions remained flat at EUR 32 million.
Central Europe
In Central Europe, underlying result before tax decreased by 86.3% to EUR 17 million in 2008 from
EUR 124 million in 2007. Total income rose by 77.4% to EUR 878 million, largely due to the
inclusion of ING Bank Turkey. Excluding ING Bank Turkey, income was up 9.5% to EUR 542 million.
Operating expenses doubled to EUR 795 million in 2008, but excluding ING Bank Turkey they were
23.8% higher due to investments in distribution channels and advertisement campaigns. The addition
to the loan loss provisions in 2008 was EUR 65 million compared with a net release of EUR 24
million in 2007. In Poland, result before tax declined to EUR 75 million from EUR 146 million in
2007, driven by higher expenses and risk costs as a net release of EUR 27 million in 2007 turned
into a EUR 5 million net addition in 2008. ING Bank Turkey reported a loss before tax of EUR 17
million.
Asia
In Asia, underlying result before tax decreased by 53.3% to EUR 50 million in 2008 from EUR 107
million in 2007 driven by a higher addition to the provision for loan losses and lower fee income.
Income declined by 3.2% to EUR 333 million in 2008 as the financial crisis affected asset
management and securities fees at Private Banking Asia. The addition to the provision for loan
losses rose to EUR 52 million from EUR 5 million in 2007. The increase was mainly due to Private
Banking Asia as prices of assets that served as underlying collateral for loans decreased
significantly in the last quarter of 2008.
Year ended December 31, 2007 compared to year ended December 31, 2006
Income
Total income increased by 4.4%, or EUR 317 million, to EUR 7,483 million in 2007 from EUR 7,166
million in 2006 as strong growth in most products helped offset the impact of challenging market
conditions as inverse yield curves persisted and competition intensified for retail savings.
Excluding the EUR 32 million gain on the divestment of RegioBank in 2007 and the EUR (4) million in
special items related to the Retail Netherlands Strategy, underlying income rose 4.0%. The impact
of composition changes in Retail Banking, like the transfer of mortgage portfolios from ING
Insurance, the sale of RegioBank as well as the transfer from a SME portfolio in Poland from
Wholesale to Retail Banking resulted in EUR 117 million additional income, against EUR 45 million
in 2006. Excluding these composition changes and the EUR 44 million gain on the sale of Banksys
shares in Belgium in 2006, income increased 3.7%.
Expenses
Operating expenses increased by 12.5%, or EUR 579 million, to EUR 5,206 million in 2007 from EUR
4,627 million in 2006. The increase is for EUR 351 million attributable to special items in 2007,
of which EUR 295 million results from a provision and costs related to the Retail Netherlands
Strategy (combining ING Bank and Postbank) and EUR 45 million to streamline the lending process in
General Lending. Excluding these special items, operating expenses rose EUR 229 million or 4.9%,
driven by investments to grow the business in Poland, India, Romania and the Private Banking
activities in Asia. The cost/income ratio increased to 69.6% in 2007 from 64.6% in 2006. Excluding
divestments and special items, the underlying cost/income ratio slightly deteriorated to 65.1% from
64.6%.
The addition to the provision for loan losses increased by 12.5%, or EUR 22 million, to EUR 198
million in 2007 from EUR 176 million in 2006. In the Netherlands the addition rose EUR 36 million
to EUR 185 million, mainly due to provisions for an isolated SME lending portfolio. This was partly
offset by decreases in Poland, Asia and Belgium. The total addition equalled 14 basis points of
average credit-risk-weighted assets in 2007, the same as in 2006.
Result before tax and underlying result before tax
Result before tax decreased by 12.0%, or EUR 284 million, to EUR 2,079 million in 2007 from EUR
2,363 million in 2006. Divestments in 2007 contributed EUR 32 million to result before tax,
representing the capital gain from the sale of RegioBank. Special items, mainly the aforementioned
provision and costs related to the Retail Netherlands Strategy, had a negative effect of EUR 355
million on result before tax. Excluding divestments and special items, underlying result before tax
increased by EUR 39 million or 1.7%.
37
Netherlands
In the Netherlands, underlying result before tax rose by 5.9%, or EUR 95 million, to EUR 1,700
million in 2007 from EUR 1,605 million in 2006, as volume growth in almost all products offset the
impact of a flattening and in the second half of 2007 even inverse yield curve combined with the
increasing competition for retail savings. The residential mortgage portfolio in the Netherlands
grew by 16.8% to EUR 116.1 billion, supported by the EUR 11.5 billion transfer of portfolios from
ING Insurance, partly offset by the sale of RegioBank. Also excluding the impact of these portfolio
changes, underlying result before tax rose by 4.5%, with income up 2.6%, while operating expenses
were flat due to efficiency improvements and lower compliance costs. Risk costs increased to 19
basis points of average credit-risk-weighted assets from 17 basis points in 2006, due to a catch-up
in provisions in an isolated SME lending portfolio.
Belgium
In Belgium, underlying result before tax declined 27.8%, or EUR 182 million, to EUR 472 million in
2007 from EUR 654 million in 2006, due to 6.0% lower income and 4.6% higher expenses. The decline
in income was next to a EUR 44 million gain on the sale of Banksys shares in 2006, mainly caused by
margin pressure. Margins came under pressure as competition intensified, while customers shifted
from variable savings to lower margin term deposits. Average retail balances grew by 10%. Operating
expenses increased 4.6% partly caused by the impact of allocation refinements and some one-offs.
Risk costs decreased from a net addition of 12 basis points of average credit-risk-weighted assets
in 2006 to a net addition of 10 basis points in 2007.
Central Europe
In Central Europe, underlying result before tax increased 74.6%, or EUR 53 million, driven by
strong volume growth and partly due to the shift at ING Bank Slaski of SME companies from Wholesale
Banking to Retail Banking. Excluding this shift result before tax rose 54.9%, as income increased
strongly, partly offset by higher expenses due to strong business growth and investments in the
franchise distribution network. Net releases from the loan loss provisions increased to EUR 24
million compared with a net release of EUR 16 million in 2006, reflecting the significant
strengthening of credit risk management, especially in Poland.
Asia
Retail Banking Asia posted an underlying result before tax of EUR 107 million, an increase of EUR
73 million compared with 2006, mainly due to higher results in India and from the Private Banking
activities in Asia as well as the high dividend received from Kookmin Bank.
ING DIRECT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ING Direct |
(EUR millions) |
|
2008 |
|
2007 |
|
2006 |
Interest result |
|
|
2,517 |
|
|
|
1,932 |
|
|
|
2,148 |
|
Commission income |
|
|
150 |
|
|
|
98 |
|
|
|
86 |
|
Investment income |
|
|
(1,853 |
) |
|
|
53 |
|
|
|
20 |
|
Other income |
|
|
63 |
|
|
|
113 |
|
|
|
35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
878 |
|
|
|
2,196 |
|
|
|
2,289 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
1,750 |
|
|
|
1,598 |
|
|
|
1,538 |
|
Additions to the provision for loan losses |
|
|
283 |
|
|
|
68 |
|
|
|
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
2,033 |
|
|
|
1,667 |
|
|
|
1,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
(1,155 |
) |
|
|
530 |
|
|
|
691 |
|
Gains/losses on divestments |
|
|
|
|
|
|
|
|
|
|
23 |
|
Special items |
|
|
(30 |
) |
|
|
|
|
|
|
(20 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying result before tax |
|
|
(1,125 |
) |
|
|
530 |
|
|
|
694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008 compared to year ended December 31, 2007
Income
Total income decreased by 60.0%, or EUR 1,318 million, to EUR 878 million in 2008 from EUR 2,196
million in 2007. The decline was mainly due to EUR 1,906 million lower investment income related to
large impairments on the asset-backed portfolio which could only be partly offset by a EUR 585
million higher interest result. The
38
increase in the interest result is mainly driven by the
widening of the interest margin to 0.94% from 0.75% in 2007 as a result of significant rate cuts by
central banks worldwide and despite the intensified competition for retail funds as a result of the
global liquidity crisis. The total client retail balances in 2008 grew EUR 12.6 billion or 4.1%, to
EUR 322.7 billion at year-end, including the acquired deposits from Kaupthing Edge and Heritable
Bank in October 2008. At comparable exchange rates, total client balances were up EUR 24.4 billion.
Commission income increased supported by the acquisition of Sharebuilder Corporation in the US in
the fourth quarter of 2007 and Interhyp in Germany in the third quarter of 2008. Investment income
was down EUR 1,906 million, due to lower realised gains on the sale of bonds and a sharp increase
in impairments on the investment portfolio mainly driven by a strong deterioration in the US
housing market. Total impairments rose from EUR 29 million in 2007 to EUR 1,891 million in 2008.
The impairments in 2008 consist of EUR 1,776 million for the Alt-A
RMBS portfolio, EUR 30 million on subprime RMBS, EUR 81 million on Washington Mutual and EUR 4
million on asset-backed commercial paper in Canada.
Expenses
Operating expenses rose by 9.5%, or EUR 152 million, to EUR 1,750 million in 2008 from EUR 1,598
million in 2007. Excluding EUR 30 million in special items in 2008, related to impairment costs
following the Groups decision not to launch ING Direct in Japan, operating expenses rose by EUR
122 million, or 7.6%, to EUR 1,720 million. This increase is driven by higher expenses related in
part to retention and win-back campaigns and the acquisitions of Sharebuilder and Interhyp.
Excluding impairments, the underlying cost/income ratio improved to 62.1% in 2008 from 71.8% in
2007. The operational cost to client retail balance ratio, which excludes marketing expenses, rose
to 0.40% compared with 0.37% in 2007. The number of full-time staff increased to 9,980 at the end
of 2008 from 8,883 a year earlier, of which 479 came from Interhyp.
The addition to the provision for loan losses increased to EUR 283 million in 2008 from EUR 68
million in 2007, driven by an increase in the US reflecting higher rate of delinquencies in the
mortgages market and lower recovery.
Result before tax
Result before tax from ING Direct declined by EUR 1,685 million to a loss of EUR 1,155 million in
2008 from a profit of EUR 530 million in 2007. The decrease is fully caused by high impairments on
the asset-backed portfolio, mainly driven by the deterioration of the US housing market.
Underlying result before tax
The loss before tax from ING Direct in 2008 included EUR 30 million in special items related to the
decision not to launch ING Direct Japan. Excluding special items, the underlying loss before tax
was EUR 1,125 million compared with a profit of EUR 530 million in 2007.
Country developments
Excluding impairments, ING Directs underlying result before tax rose by EUR 207 million, or 37.0%,
to EUR 766 million in 2008 from EUR 559 million in 2007. In the US, result before tax (excluding
impairments) increased to EUR 343 million from EUR 78 million in 2007, driven by the improved
interest environment. In Canada (also excluding impairments), result before tax almost doubled to
EUR 59 million from EUR 30 million in 2007. The UK showed good progress by reducing its loss
(excluding impairments) to EUR 72 million in 2008 from a loss of EUR 120 million in 2007. All other
countries reported lower results due to the intensified competition for retail funds and an
increase in risk costs.
Year ended December 31, 2007 compared to year ended December 31, 2006
Income
Total income decreased by 4.0%, or EUR 93 million, to EUR 2,196 million in 2007 from EUR 2,289
million in 2006, as the increases in commission income, investment income (including realized gains
on bonds) and other
income (including realized gains on loans) could only partly offset the EUR 216 million lower
interest result. The decrease in the interest result was mainly driven by the narrowing of the
interest margin to 0.75% from 0.89% in 2006 as a result of higher central bank rates in the Euro,
British pound and Australian currency zones and the intensified competition for retail funds. The
total client retail balance in 2007 grew EUR 27.7 billion or 9.8%, to EUR 310.1 billion at
year-end, including EUR 5.3 billion from add-on acquisitions in the fourth quarter. The EUR 5.3
billion consists of a EUR 3.9 billion mortgage portfolio acquired by ING-DiBa in Germany and EUR
1.4 billion in off-balance sheet funds following the acquisition of Sharebuilder Corporation in the
United States. Commission income increased due to further growth in off-balance sheet funds.
Investment and other income was up EUR 111 million, supported by higher gains on the sale of bonds
and loans and increased net trading income. This was in part offset by an EUR 29 million impairment
on asset-backed commercial paper in Canada in the fourth quarter of 2007. The divestment of Degussa
Bank at the end of 2006 had a negative effect on income of EUR 56 million, including the loss of
EUR 23 million on the sale. Excluding the divestment, underlying income decreased EUR 37 million,
or 1.7%.
39
Expenses
Operating expenses rose by 3.9%, or EUR 60 million, to EUR 1,598 million in 2007 from EUR 1,538
million in 2006. Excluding the EUR 56 million expenses of the divested Degussa Bank in 2006,
underlying operating expenses increased by 7.8%, or EUR 116 million, to EUR 1,598 million,
reflecting higher staff numbers to drive the growth in mortgages and payments accounts,
preparations for the launch of ING Direct in Japan, the consolidation of Sharebuilder in the US, as
well as costs for repositioning the UK business. The underlying cost/income ratio increased to
72.8% in 2007 from 66.4% in 2006. The operational cost to client retail balance ratio, which
excludes marketing expenses, rose to 0.37% compared with 0.36% in 2006. The number of full-time
staff increased to 8,883 at the end of 2007 from 7,565 a year earlier.
The addition to the provision for loan losses increased by 13.3%, or EUR 8 million, to EUR 68
million in 2007 from EUR 60 million in 2006. The addition equalled 9 basis points of average
credit-risk-weighted assets, up from 7 basis points in 2006.
Result before tax
Result before tax from ING Direct declined by 23.3%, or EUR 161 million, to EUR 530 million in 2007
from EUR 691 million in 2006, primarily driven by a narrowing of the interest margin, the outflow
of funds entrusted in the UK and an impairment in Canada.
Underlying result before tax
Result before tax from ING Direct in 2006 included a loss of EUR 23 million on the sale of Degussa
Bank, while the operating profit from Degussa Bank was EUR 20 million. Excluding both the loss and
the profit, ING Directs underlying result before tax declined by 23.6%, or EUR 164 million, to EUR
530 million from EUR 694 million in 2006.
Country developments
ING Directs overall result was driven by the business units in Germany/Austria, Australia, US,
Spain, Italy and France. In the UK, ING Direct posted a pre-tax loss of EUR 120 million compared
with a profit of EUR 19 million in 2006. The decrease is mainly caused by a 39% net outflow of
funds entrusted from rate-sensitive customers as it lagged rate increases by the Bank of England.
Measures have been taken to reposition the business. Savings rates were increased and marketing has
been stepped up to attract less rate-sensitive customers. Result before tax in ING Direct Canada
declined to EUR 30 million (excluding an impairment of EUR 29 million
on asset-backed commercial paper investments) from EUR 60 million in 2006. This was caused by lower
interest results.
LIQUIDITY AND CAPITAL RESOURCES
ING Groep N.V. is a holding company whose principal assets are its investments in the capital stock
of its primary insurance and banking subsidiaries. The liquidity and capital resource
considerations for ING Groep N.V., ING Insurance and ING Bank vary in light of the business
conducted by each, as well as the insurance and bank regulatory requirements applicable to the
Group in the Netherlands and the other countries in which it does business. ING Groep N.V. has no
employees and substantially all of ING Groep N.V.s operating expenses are allocated to and paid by
its operating companies.
As a holding company, ING Groep N.V.s principal sources of funds are funds that may be raised from
time to time from the issuance of debt or equity securities and bank or other borrowings, as well
as cash dividends received from its subsidiaries. ING Groep N.V.s total debt and capital
securities outstanding to third parties at December 31, 2008 was EUR 18,841 million, at December
31, 2007, EUR 14,709 million and at December 31, 2006, EUR 12,376. The EUR 18,840 million of debt
outstanding at December 31, 2008, consisted of EUR 10 million principal amount of 9.000% perpetual
debt securities issued in September 2008, EUR 1,393 million principal amount of 8.500% perpetual
debt securities issued in June 2008, EUR 1,474 million principal amount of 8.000% perpetual debt
securities issued in April 2008, EUR 1,048 million principal amount of 7.375% perpetual debt
securities issued in October 2007, EUR 731 million principal amount of 6.375% perpetual debt
securities issued in June 2007, EUR 1,071 million principal amount of 8.439% perpetual debt
securities issued in December 2000, EUR 563 million principal amount of 7.05% perpetual debt
securities issued in July 2002, EUR 773 million principal amount of 7.20% perpetual debt securities
issued in December 2002, EUR 684 million principal amount perpetual debt securities with a variable
interest rate issued in June 2003, EUR 348 million principal amount of 6.20% perpetual debt
securities issued in October 2003, EUR 939 million principal amount perpetual debt securities with
a variable interest rate issued in 2004, EUR 497 million principal amount of 4.176%
40
perpetual debt
securities issued in 2005, EUR 487 million principal amount of 6.125% perpetual debt securities
issued in 2005 EUR 711 million principal amount of 5.775% perpetual debt securities issued in 2005,
EUR 623 million principal amount of 5.14% perpetual debt securities issued in 2006, and EUR 7,488
million debentures. The details with respect to the debentures are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet |
Interest rate (%) |
|
|
Year of issue |
|
Due date |
|
value |
(EUR millions) |
|
5.625 |
|
|
2008 |
|
September 3, 2013 |
|
|
1,053 |
|
|
4.699 |
|
|
2007 |
|
June 1, 2035 |
|
|
117 |
|
|
4.75 |
|
|
2007 |
|
May 31, 2017 |
|
|
1,830 |
|
|
variable |
|
|
2006 |
|
June 28, 2011 |
|
|
749 |
|
|
variable |
|
|
2006 |
|
April 11, 2016 |
|
|
996 |
|
|
4.125 |
|
|
2006 |
|
April 11, 2016 |
|
|
745 |
|
|
6.125 |
|
|
2000 |
|
January 4, 2011 |
|
|
999 |
|
|
5.5 |
|
|
1999 |
|
September 14, 2009 |
|
|
999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,488 |
|
At December 31, 2008, 2007 and 2006, ING Groep N.V. also owed EUR 1,254 million, EUR 174 million
and EUR 35 million, respectively, to ING Group companies pursuant to intercompany lending
arrangements. Of the EUR 1,254 million owed by ING Groep N.V. to ING Group companies at December
31, 2008, EUR 2 million was owed to ING Insurance companies, EUR 1,252 million was owed to ING Bank companies and EUR 0 million was
owed to direct subsidiaries of ING Group companies, as a result of normal intercompany
transactions.
In
October 2008 ING issued Core Tier-1 Securities to the Dutch State
for a total consideration of EUR 10,000 million. This capital
injection qualifies as Core tier-1 capital for regulatory purposes.
Such securities were not issued in the years before.
At December 31, 2008, 2007 and 2006, ING Groep N.V. had EUR 33 million, EUR 162 million and EUR 103
million of cash, respectively. Dividends paid to the Company by its subsidiaries amounted to EUR
7,050 million, EUR 5,900 million and EUR 3,450 million in 2008, 2007 and 2006, respectively, in
each case representing dividends declared and paid with respect to the reporting calendar year and
the prior calendar year. Of the amounts paid to the Company, EUR 2,800 million, EUR 4,600 million
and EUR 1,650 million were received from ING Insurance in 2008, 2007 and 2006, respectively; EUR
4,250 million, EUR 1,300 million and EUR 1,800 million were received from ING Bank in 2008, 2007 and
2006, respectively, and for 2008 EUR 0 million was received from other ING Group companies.
On the other hand, the
Company injected EUR 12,650 million, EUR 2,200 million and EUR 0
million into its direct subsidiairies during the reporting year 2008,
2007, and 2006, respectively. Of the amounts injected by the Company, EUR 5,450 million,
EUR 0 million and EUR 0 million were injected into ING Insurance in 2008, 2007 and 2006, respectively; EUR 7,200 million, EUR 2,200 million and
EUR 0 million were injected into ING Bank in 2008, 2007 and 2006,
respectively, and for 2008 EUR 0 million was injected into other ING
Group companies. Repayments to ING by its subsidiaries amounted to EUR 0 million, EUR 0 million and EUR 563 million
in 2008, 2007 and 2006, respectively, of the amounts paid to the Company, EUR 0 million and EUR 563
million were received from ING Bank in 2007 and 2006, respectively and EUR 0 million in 2008 from
other ING Group companies. ING and its Dutch subsidiaries are subject to legal restrictions on the
amount of dividends they can pay to their shareholders. The Dutch Civil Code provides that
dividends can only be paid by Dutch companies up to an amount equal to the excess of a companys
shareholders equity over the sum of (1) paid-up capital and (2) shareholders reserves required by
law. Further, certain of the Group companies are subject to restrictions on the amount of funds
they may transfer in the form of cash dividends or otherwise to ING Groep N.V.
In addition to the restrictions in respect of minimum capital and capital base requirements that
are imposed by insurance, banking and other regulators in the countries in which the Groups
subsidiaries operate, other limitations exist in certain countries. For example, the operations of
the Groups insurance company subsidiaries located in the United States are subject to limitations
on the payment of dividends to their parent company under applicable state insurance laws.
Dividends paid in excess of these limitations generally require prior approval of the Insurance
Commissioner of the state of domicile.
ING Group Consolidated Cash Flows
INGs Risk Management, including liquidity, is discussed in Risk Management of Note 2.1 to the
consolidated financial statements.
Year ended December 31, 2008 compared to year ended December 31, 2007
Net cash provided by operating activities amounted to EUR 12,823 million for the year ended
December 31, 2008, an increase of 9.5% compared to EUR 11,708 million for the year ended December
31, 2007. This increase was mainly due to trading assets/trading liabilities and offset by a lower cash flow
from customer deposits and other funds on deposit. The cash flow generated through the customer
deposits and other funds on deposit of the banking operations was EUR 6,831 million, offset by other
financial liabilities/assets at fair value through profit and loss. The cash outflow employed in
lending increased from a cash flow of EUR 75,501 million in 2007 to a cash outflow of EUR 76,215
million in 2008.
41
Net cash used in investment activities in 2008 was EUR 10,003 million, compared to EUR 13,933
million in 2007. The increase was mainly caused by higher disposals and redemptions of
available-for-sale investments.
Net cash flow from financing activities was EUR 45,726 million in 2008, compared to EUR (12,831)
million in 2007. The increase of EUR 58,557 million in net cash flow from financing activities is
mainly due to a higher repayments/proceeds of borrowed funds and debt securities.
The operating, investing and financing activities described above resulted in net cash and cash
equivalents at year-end 2008 of EUR 31,271 million, compared to EUR (16,811) million at year-end
2007, an increase of EUR 48,082 million from 2007 levels
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
2007 |
|
|
(EUR millions) |
Treasury bills and other eligible bills |
|
|
7,009 |
|
|
|
4,130 |
|
Amounts due from/to banks |
|
|
2,217 |
|
|
|
(33,347 |
) |
Cash and balances with central banks |
|
|
22,045 |
|
|
|
12,406 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
|
31,271 |
|
|
|
(16,811 |
) |
|
|
|
|
|
|
|
|
|
Year ended December 31, 2007 compared to year ended December 31, 2006
Net cash provided by operating activities amounted to EUR 11,708 million for the year ended
December 31, 2007, an increase of 22.3% compared to EUR 9,570 million for the year ended December
31, 2006. This increase was mainly due to trading assets/trading liabilities, a lower cash flow
from customer deposits and other funds on deposit due to less funds by large customers as well as,
on balance, from amounts due to/from banks not available on demand. The cash flow generated through
the provisions for insurance and investment contracts of EUR 26,494 million and through the
customer deposits and other funds on deposit of the banking operations of EUR 28,640 million. The
cash outflow employed in lending increased from a cash flow of EUR 59,800 million in 2006 to a cash
outflow of EUR 75,501 million in 2007.
Net cash used in investment activities in 2007 was EUR 13,933 million, compared to EUR 31,320
million in 2006. The increase was mainly caused by higher disposals and redemptions of
available-for-sale investments.
Net cash flow from financing activities was EUR (12,831) million in 2007, compared to EUR 17,005
million in 2006. The decrease of EUR 29,836 million in net cash flow from financing activities is
mainly due to a higher repayments of borrowed funds and debt securities.
The operating, investing and financing activities described above resulted in net cash and cash
equivalents at year-end 2007 of EUR (16,811) million, compared to EUR (1,795) million at year-end
2006, a decrease of EUR 15,016 million from 2006 levels, mainly reflected in a decrease in amounts
due from/to banks, as well as higher balances of borrowed funds and debt securities.
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
2006 |
|
|
(EUR millions) |
Treasury bills and other eligible bills |
|
|
4,130 |
|
|
|
4,333 |
|
Amounts due from/to banks |
|
|
(33,859 |
) |
|
|
(20,454 |
) |
Cash and balances with central banks |
|
|
12,918 |
|
|
|
14,326 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
|
(16,811 |
) |
|
|
(1,795 |
) |
|
|
|
|
|
|
|
|
|
ING Insurance Cash Flows
The principal sources of funds for ING Insurance are premiums, net investment income and proceeds
from sales or maturity of investments, while the major uses of these funds are to provide life
policy benefits, pay surrenders and profit sharing for life policyholders, pay non-life claims and
related claims expenses, and pay other operating costs. ING Insurance generates a substantial cash
flow from operations as a result of most premiums being received in advance of the time when claim
payments or policy benefits are required. These positive operating cash flows, along with that
portion of the investment portfolio that is held in cash and highly liquid securities, have historically met the liquidity requirements of ING Insurances operations, as evidenced by the
growth in investments. See Risk Management of Note 2.1 to the consolidated financial statements.
42
Year ended December 31, 2008 compared to year ended December 31, 2007
Premium income and Investment and Other income totaled EUR 43,812 million and EUR 8.970 million in
2008, and EUR 46,818 million and EUR 13,488 million in 2007. Uses of funds by ING Insurance include
underwriting expenditures (reinsurance premiums, benefits, surrenders, claims and profit sharing by
life policyholders) and employee and other operating expenses, as well as interest expense on
outstanding borrowings. Underwriting expenditures, employee and other operating expenses and
interest expense for ING Insurance totaled EUR 49,485 million, EUR 5,422 million and EUR 1,269
million in 2008 and EUR 48,833 million, EUR 5,515 million and EUR 1,326 million in 2007.
ING Insurances liquidity requirements are met on both a short- and long-term basis by funds
provided from insurance premiums collected, investment income and collected reinsurance
receivables, and from the sale and maturity of investments. ING Insurance also has access to
commercial paper, medium-term note and other credit facilities. ING Insurances balance of cash and
cash equivalents was EUR 14,440 million at December 31, 2008 and EUR 3,115 million at December 31,
2007.
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
2007 |
|
|
(EUR millions) |
Cash and bank balances |
|
|
4,389 |
|
|
|
2,648 |
|
Short term deposits |
|
|
10,051 |
|
|
|
467 |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
14,440 |
|
|
|
3,115 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities was EUR 13,129 million in 2008 and EUR 23,118 million in
2007.
Net cash used by ING Insurance in investment activities was EUR 8,034 million in 2008 and EUR
15,072 million in 2007.
Cash provided by ING Insurances financing activities amounted to EUR 6,275 million and EUR (7,941)
million in 2008 and 2007, respectively.
Year ended December 31, 2007 compared to year ended December 31, 2006
Premium income and Investment and Other income totaled EUR 46,818 million and EUR 13,488 million in
2007, and EUR 46,834 million and EUR 11,172 million in 2006. Uses of funds by ING Insurance include
underwriting expenditures (reinsurance premiums, benefits, surrenders, claims and profit sharing by
life policyholders) and employee and other operating expenses, as well as interest expense on
outstanding borrowings. Underwriting expenditures, employee and other operating expenses and
interest expense for ING Insurance totaled EUR 48,833 million, EUR 5,515 million and EUR 1,326
million in 2007 and EUR 48,188 million, EUR 5,275 million and EUR 1,233 million in 2006.
ING Insurances liquidity requirements are met on both a short- and long-term basis by funds
provided from insurance premiums collected, investment income and collected reinsurance
receivables, and from the sale and maturity of investments. ING Insurance also has access to
commercial paper, medium-term note and other credit facilities. ING Insurances balance of cash and
cash equivalents was EUR 3,115 million at December 31, 2007 and EUR 3,017 million at December 31,
2006.
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
2006 |
|
|
(EUR millions) |
Cash and bank balances |
|
|
2,648 |
|
|
|
4,333 |
|
Short term deposits |
|
|
467 |
|
|
|
334 |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
3,115 |
|
|
|
3,017 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities was EUR 23,118 million in 2007 and EUR 13,769 million in
2006.
Net cash used by ING Insurance in investment activities was EUR 15,072 million in 2007 and EUR
12,798 million in 2006.
43
Cash provided by ING Insurances financing activities amounted to EUR (7,941) million and EUR (485)
million in 2007 and 2006, respectively.
Capital Base Margins and Capital Requirements
In the United States, since 1993, insurers, including the companies comprising ING Insurance U.S.
operations, have been subject to risk-based capital (RBC) guidelines. (See Item 4, Information
on the Company Regulation and Supervision Insurance Americas.)
ING Bank Cash Flows
The principal sources of funds for ING Banks operations are growth of the retail funding, which
mainly consists of current accounts, savings and retail deposits, repayments of loans, disposals
and redemptions of investment securities (mainly bonds), sales of trading portfolio securities,
interest income and commission income. The major uses of funds are advances of loans and other
credits, investments, purchases of investment securities, funding of trading portfolios, interest
expense and administrative expenses (see Item 11, Quantitative and Qualitative Disclosure of
Market Risk).
Year ended December 31, 2008 compared to year ended December 31, 2007
At December 31, 2008 and 2007, ING Bank had EUR 27,395 million and EUR (19,389) million,
respectively, of cash and cash equivalents. The increase in Cash and Cash Equivalents is mainly
attributable to the overnight deposit and current account position with Central and Commercial
Banks.
The EUR 21,462 million increase in ING Banks operating activities, consist of EUR 12,255 million
cash inflow for the year ended December 31, 2008, compared to EUR 9,207 million cash outflow for
the year ended December 31, 2007. The improved cash flow from operating activities was largely due
to improved cash flow from Trading (cash inflow in 2008 of EUR 36,836 million compared to cash
inflow in 2007 of EUR 22,673 million), from Amounts due to and from Banks (cash inflow in 2008 of
EUR 20,372 million compared to cash inflow in 2007 of EUR 6,724 million) and offset by a decrease
in cash inflow from Customer deposits (cash inflow in 2008 of EUR 18,750 compared to cash inflow in
2007 of EUR 32,748 million).
Specification of cash position (EUR millions):
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
2007 |
|
|
(EUR millions) |
Cash |
|
|
18,169 |
|
|
|
9,829 |
|
Short dated government paper |
|
|
7,009 |
|
|
|
4,130 |
|
Banks on demand |
|
|
38,639 |
|
|
|
19,655 |
|
|
|
|
|
|
|
|
|
|
Cash balance and cash equivalents |
|
|
63,817 |
|
|
|
33,614 |
|
Overnight deposits |
|
|
1,908 |
|
|
|
(25,871 |
) |
|
Repos/reverse repos |
|
|
(38,330 |
) |
|
|
(27,132 |
) |
|
|
|
|
|
|
|
|
|
|
Cash balance and cash equivalents |
|
|
27,395 |
|
|
|
(19.389 |
) |
|
|
|
|
|
|
|
|
|
Net cash flow for investment activities was EUR 4,101 million cash outflow and EUR 1,526 million
cash inflow in 2008 and 2007, respectively. Investment in interest-earning securities was EUR
95,036 million and EUR 95,546 million in 2008 and 2007, respectively. Dispositions and redemptions
of interest-earning securities was EUR 96,616 million and EUR 101,119 million in 2008 and 2007,
respectively.
Net cash inflow from financing activities in 2008 amounted to EUR 39,048 million compared to a cash
outflow of EUR 7,403 million in 2007, as ING started the Commercial Paper Funding Facility program
in October 2008. The cash outflow of 2007 was related to the buy back program of the own issued
debt securities of Mane, Mont Blanc and Simba Funding Corporation, which was due to the financial
crisis and the implementation of Basel 2 in 2007.
The operating, investment and financing activities described above resulted in a positive net cash
flow of EUR 47,202 million in 2008 and a negative net cash flow of EUR 15,084 million in 2007.
Year ended December 31, 2007 compared to year ended December 31, 2006
At December 31, 2007 and 2006, ING Bank had EUR (19,389) million and EUR (4,352) million,
respectively, of cash and cash equivalents. The decrease in Cash and Cash Equivalents is mainly
attributable to a large change in overnight funding (contracts with a maturity of one day) from non
bank financial institutions to banks.
44
The EUR 6,753 million decrease in ING Banks operating activities, consisting of EUR 9,207 million
cash outflow for the year ended December 31, 2007, compared with a EUR 2,454 million cash outflow
for the year ended December 31, 2006, was largely attributable to the liquidity crisis. Non-bank
financial institutions demanded higher rates for the short term funding. Consequently ING decided
to switch to the cheaper inter-bancaire market to maintain or improve interest margins. This change
has major impact on the Cash position in the Cash Flow Statement because short-term inter-bancaire
funding is deducted from the Cash position while short term funding from non-banks is not deducted.
The negative impact on the Cash position amounts to EUR 10.6 billion. In addition to the overnight
contracts, the repurchase agreements or Repos and Reverse Repos had a negative impact on cash at
the end of the period of respectively EUR 5.8 billion.
Specification of cash position (EUR millions):
|
|
|
|
|
|
|
|
|
|
|
2007 |
|
2006 |
|
|
(EUR millions) |
Cash |
|
|
9,829 |
|
|
|
11,769 |
|
Short dated government paper |
|
|
4,130 |
|
|
|
4,333 |
|
Banks on demand |
|
|
19,655 |
|
|
|
16,164 |
|
|
|
|
|
|
|
|
|
|
Cash balance and cash equivalents |
|
|
33,614 |
|
|
|
32,266 |
|
Overnight deposits |
|
|
(25,871 |
) |
|
|
(15,240 |
) |
|
Repos/reverse repos |
|
|
(27,132 |
) |
|
|
(21,378 |
) |
|
|
|
|
|
|
|
|
|
|
Cash balance and cash equivalents |
|
|
(19,389 |
) |
|
|
(4,352 |
) |
|
|
|
|
|
|
|
|
|
Net cash generated from investment activities was EUR 1,526 million cash inflow and EUR 19,132
million cash outflow in 2007 and 2006, respectively. Investment in interest-earning securities was
EUR 95,546 million and EUR 106,902 million in 2007 and 2006, respectively. Dispositions and
redemptions of interest-earning securities was EUR 101,119 million and EUR 91,247 million in 2007
and 2006, respectively. In 2007 ING acquired the Oyak Bank which led to a cash outflow of EUR 1,830
million.
Net cash outflow from financing activities in 2007 amounted to EUR 7,403 million compared to a cash
inflow of EUR 16,372 million in 2006, as ING ended the securitization programs of SIMBA and Mane.
The operating, investment and financing activities described above resulted in a negative net cash
flow of EUR 15,084 million in 2007 and a negative net cash flow of EUR 5,214 million in 2006.
Capital Adequacy
Capital adequacy and the use of capital are monitored by ING Bank and its subsidiaries, employing
techniques based on the guidelines developed by the Basel Committee on Banking Supervision and
implemented by the EU and the Dutch Central Bank for supervisory purposes. See Item 4, Information
on the Company.
The following table sets forth the risk-weighted capital ratios of ING Bank N.V. as of December 31,
2008, 2007 and 2006.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
|
2008 |
|
2007 |
|
2006 |
|
|
(EUR million, other than percentages) |
Risk-Weighted Assets |
|
|
343,388 |
|
|
|
402,727 |
|
|
|
337,926 |
|
Consolidated group equity: |
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital |
|
|
32,019 |
|
|
|
29,772 |
|
|
|
25,784 |
|
Tier 2 Capital |
|
|
11,870 |
|
|
|
14,199 |
|
|
|
12,367 |
|
Tier 3 Capital |
|
|
|
|
|
|
|
|
|
|
330 |
|
Supervisory deductions |
|
|
|
|
|
|
(2,407 |
) |
|
|
(1,250 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total qualifying capital |
|
|
43,889 |
|
|
|
41,564 |
|
|
|
37,230 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tier 1 Capital Ratio |
|
|
9.32 |
% |
|
|
7.39 |
% |
|
|
7.63 |
% |
Total Capital Ratio (Tier 1, 2 and 3) |
|
|
12.78 |
% |
|
|
10.32 |
% |
|
|
11.02 |
% |
ING Groups management believes that working capital is sufficient to meet the current and
reasonably foreseeable needs of the Company.
45
Adjusted Capital
ING calculates certain capital ratios on the basis of adjusted capital. Adjusted capital differs
from Shareholders equity in the consolidated balance sheet. The main differences are that adjusted
capital excludes unrealized gains and losses on debt securities, goodwill and the cash flow hedge
reserve and includes hybrid capital and the Core Tier-1 Securities. Adjusted capital for 2008 and
2007 is reconciled to shareholders equity as follows:
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
2007 |
|
|
(EUR million) |
Shareholders equity |
|
|
15,080 |
|
|
|
37,718 |
|
Difference between IFRS-IASB and IFRS-EU |
|
|
2,254 |
|
|
|
(510 |
) |
Core Tier-1 Securities |
|
|
10,000 |
|
|
|
|
|
Group hybrid capital |
|
|
11,655 |
|
|
|
8,620 |
|
Revaluation reserves debt securities and other |
|
|
6,769 |
|
|
|
(963 |
) |
|
|
|
|
|
|
|
|
|
Adjusted capital |
|
|
45,758 |
|
|
|
44,865 |
|
|
|
|
|
|
|
|
|
|
Group hybrid capital comprises subordinated loans and preference shares issued by ING Group,
which qualify as (Tier-1) capital for regulatory purposes, but are classified as liabilities in the
consolidated balance sheet.
Revaluation reserves debt securities and other includes unrealized gains and losses on
available-for-sale debt securities and revaluation reserve crediting to policyholders of EUR 11,221
million in 2008, EUR 1,895 million in 2007 and EUR (1,709) million in 2006, the cash flow hedge
reserve of EUR (1,177) million in 2008, EUR (431) million in 2007 and EUR (1,357) million in 2006
and capitalized goodwill of EUR (3,275) million in 2008, EUR (2,420) million in 2007 and EUR (286)
million in 2006.
ING uses adjusted capital in calculating its debt/equity ratio, which is a key measure in INGs
capital management process. The debt/equity ratio based on adjusted capital is used to measure the
leverage of ING Group and ING Insurance. The target and actual debt/equity ratio based on adjusted
capital are communicated internally to key management and externally to investors, analysts and
rating agencies on a quarterly basis. ING uses adjusted capital for these purposes instead of
Shareholders equity presented in the balance sheet principally for the following reasons:
|
|
adjusted capital is calculated based on the criteria in the capital model that is used by
Standard and Poors to measure, compare and analyze capital adequacy and leverage for insurance
groups, and the level of our adjusted capital may thus have an impact on the S&P ratings for the
Company and its operating insurance subsidiaries;
|
|
|
|
ING believes its Standard and Poors financial strength and other ratings are one of the
most significant factors looked at by our clients and brokers, and accordingly are important to the
operations and prospects of our insurance operating subsidiaries, and a major distinguishing factor
vis-à-vis our competitors and peers. |
To the extent our debt/equity ratio (based on adjusted capital) increases or the components thereof
change significantly period over period, we believe that rating agencies and regulators would all
view this as material information relevant to our financial health and solvency. On the basis of
adjusted capital, the debt/equity ratio of ING increased to 13.5% in 2008 from 9.5% in 2007. The
debt/equity ratio of ING Group between December 31, 2002 and December 31, 2006 has been in the
range of 19.9% to 9.0% and has declined consistently during this period as a result of capital
management action and favorable equity markets. Although rating agencies take many factors into
account in the ratings process and any of those factors alone or together with other factors may
affect our rating, we believe that an increase of our debt/equity ratio in a significant way, and
for an extended period of time, could result in actions from rating agencies including a possible
downgrade of the financial strength ratings of our operating subsidiaries. Similarly, although
regulatory authorities do not currently set any explicit leverage requirements for ING Group, such
an increase of our debt/equity ratio could also likely result in greater scrutiny by regulatory
authorities. ING has targeted a 15% debt/equity ratio for ING Group during 2008. This target is
reviewed at least once a year and approved by the Executive Board. During the yearly review
many factors are taken into account to establish this target, such as rating agency guidance,
regulatory guidance, peer review, risk profile and strategic objectives. During the year, the ratio
is managed by regular reporting, forecasting and capital management actions. Management has full
discretion to change the target ratio if circumstances change.
46
Off-Balance-Sheet-Arrangements
See Note 26 of Note 2.1 to the consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less |
|
More |
|
|
|
|
|
Less |
|
More |
|
|
|
|
|
|
than |
|
than |
|
|
|
|
|
than |
|
than |
|
|
Total |
|
one |
|
one |
|
Total |
|
one |
|
one |
|
|
2008 |
|
year |
|
year |
|
2007 |
|
year |
|
year |
|
|
|
|
|
|
|
|
|
|
(EUR millions) |
|
|
|
|
|
|
|
|
Insurance operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments concerning investments in land and buildings |
|
|
10 |
|
|
|
10 |
|
|
|
|
|
|
|
181 |
|
|
|
171 |
|
|
|
10 |
|
Commitments concerning fixed-interest securities |
|
|
2,724 |
|
|
|
2,673 |
|
|
|
51 |
|
|
|
2,436 |
|
|
|
2,189 |
|
|
|
247 |
|
Guarantees |
|
|
2,460 |
|
|
|
|
|
|
|
2,460 |
|
|
|
173 |
|
|
|
|
|
|
|
173 |
|
Other |
|
|
1,486 |
|
|
|
945 |
|
|
|
541 |
|
|
|
1,860 |
|
|
|
1,189 |
|
|
|
671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent liabilities in respect of: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- discounted bills |
|
|
1 |
|
|
|
1 |
|
|
|
|
|
|
|
1 |
|
|
|
1 |
|
|
|
|
|
- guarantees |
|
|
22,391 |
|
|
|
13,344 |
|
|
|
9,047 |
|
|
|
19,018 |
|
|
|
10,862 |
|
|
|
8,156 |
|
- irrevocable letters of credit |
|
|
10,458 |
|
|
|
8,019 |
|
|
|
2,439 |
|
|
|
11,551 |
|
|
|
10,160 |
|
|
|
1,391 |
|
- other |
|
|
453 |
|
|
|
406 |
|
|
|
47 |
|
|
|
350 |
|
|
|
263 |
|
|
|
87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Irrevocable facilities |
|
|
89,081 |
|
|
|
38,568 |
|
|
|
50,513 |
|
|
|
100,707 |
|
|
|
50,337 |
|
|
|
50,370 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
129,064 |
|
|
|
63,966 |
|
|
|
65,098 |
|
|
|
136,277 |
|
|
|
75,172 |
|
|
|
61,105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contractual obligations
The table below shows the cash payment requirements from specified contractual obligations
outstanding as of December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payment due by period |
|
|
|
|
|
|
Less |
|
|
|
|
|
|
|
|
|
More |
|
|
|
|
|
|
than 1 |
|
1-3 |
|
3-5 |
|
than 5 |
|
|
Total |
|
year |
|
years |
|
years |
|
years |
2008 |
|
|
|
|
|
(EUR millions) |
|
|
|
|
Operating lease obligations |
|
|
1,004 |
|
|
|
209 |
|
|
|
348 |
|
|
|
281 |
|
|
|
166 |
|
Subordinated loans of Group companies |
|
|
15,869 |
|
|
|
553 |
|
|
|
2,560 |
|
|
|
2,358 |
|
|
|
10,398 |
|
Preference shares of Group companies |
|
|
1,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,071 |
|
Debenture loans |
|
|
96,488 |
|
|
|
62,852 |
|
|
|
15,372 |
|
|
|
8,212 |
|
|
|
10,052 |
|
Loans contracted |
|
|
8,472 |
|
|
|
5,590 |
|
|
|
1,126 |
|
|
|
|
|
|
|
1,756 |
|
Loans from credit institutions |
|
|
5,786 |
|
|
|
4,580 |
|
|
|
459 |
|
|
|
1 |
|
|
|
746 |
|
Insurance provisions (1) |
|
|
159,163 |
|
|
|
12,352 |
|
|
|
17,719 |
|
|
|
18,336 |
|
|
|
110756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
287,853 |
|
|
|
86,136 |
|
|
|
37,584 |
|
|
|
29,188 |
|
|
|
134,945 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts included in the table reflect best estimates of cash payments to be made to
policyholders. Such best estimate cash outflows reflect mortality, retirement, and other
appropriate factors, but are undiscounted with respect to interest. As a result, the sum of the
cash outflows shown for all years in the table differs from the corresponding liability included in
our consolidated financial statements at December 31, 2008. |
Furthermore, the table does not include insurance or investment contracts for risk of
policyholders, as these are products where the policyholder bears the investment risk.
47
ADDITIONAL INFORMATION
SELECTED STATISTICAL INFORMATION ON BANKING OPERATIONS
The information in this section sets forth selected statistical information regarding the Groups
banking operations. Information for 2008, 2007 and 2006 is set forth
under IFRS-IASB. Unless
otherwise indicated, average balances, when used, are calculated from monthly data and the
distinction between domestic and foreign is based on the location of the office where the assets
and liabilities are booked, as opposed to the domicile of the customer. However, the Company
believes that the presentation of these amounts based upon the domicile of the customer would not
result in material differences in the amounts presented below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
Return on equity of the banking operations |
|
|
1.8 |
% |
|
|
16.7 |
% |
|
|
19.4 |
% |
Return on equity of ING Group |
|
|
(2.1 |
)% |
|
|
24.2 |
% |
|
|
23.5 |
% |
Dividend pay-out ratio of ING Group |
|
|
n.a. |
|
|
|
34.3 |
% |
|
|
37.0 |
% |
Return on assets of ING Group |
|
|
(0.2 |
)% |
|
|
0.7 |
% |
|
|
0.6 |
% |
Equity to assets of ING Group |
|
|
2.0 |
% |
|
|
3.0 |
% |
|
|
3.1 |
% |
Net interest margin of the banking operations |
|
|
1.1 |
% |
|
|
0.9 |
% |
|
|
1.1 |
% |
AVERAGE BALANCES AND INTEREST RATES
The following tables show the banking operations, average interest-earning assets and average
interest-bearing liabilities, together with average rates, for the periods indicated. The interest
income, interest expense and average yield figures do not reflect interest income and expense on
derivatives and other interest income and expense not considered to be directly related to
interest-bearing assets and liabilities. These items are reflected in the corresponding interest
income, interest expense and net interest result figures in the consolidated financial statements.
A reconciliation of the interest income, interest expense and net interest result figures to the
corresponding line items in the consolidated financial statements is provided hereunder.
48
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets |
|
|
2008 |
|
2007 |
|
2006 |
|
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
|
balance |
|
income |
|
yield |
|
balance |
|
income |
|
yield |
|
balance |
|
income |
|
yield |
|
|
(EUR millions) |
|
% |
|
(EUR millions) |
|
% |
|
(EUR millions) |
|
% |
Time deposits with banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
22,685 |
|
|
|
895 |
|
|
|
3.9 |
|
|
|
25,730 |
|
|
|
960 |
|
|
|
3.7 |
|
|
|
13,138 |
|
|
|
522 |
|
|
|
4.0 |
|
foreign |
|
|
40,557 |
|
|
|
1,764 |
|
|
|
4.3 |
|
|
|
61,531 |
|
|
|
2,381 |
|
|
|
3.9 |
|
|
|
51,553 |
|
|
|
1,799 |
|
|
|
3.5 |
|
Loans and advances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
308,796 |
|
|
|
12,926 |
|
|
|
4.2 |
|
|
|
270,588 |
|
|
|
11,290 |
|
|
|
4.2 |
|
|
|
243,398 |
|
|
|
9,566 |
|
|
|
3.9 |
|
foreign |
|
|
339,812 |
|
|
|
17,577 |
|
|
|
5.2 |
|
|
|
296,055 |
|
|
|
17,044 |
|
|
|
5.8 |
|
|
|
273,383 |
|
|
|
13,520 |
|
|
|
4.9 |
|
Interest-earning securities(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
30,398 |
|
|
|
1,234 |
|
|
|
4.1 |
|
|
|
34,993 |
|
|
|
1,295 |
|
|
|
3.7 |
|
|
|
38,310 |
|
|
|
1,248 |
|
|
|
3.3 |
|
foreign |
|
|
158,844 |
|
|
|
8,747 |
|
|
|
5.5 |
|
|
|
173,248 |
|
|
|
8,660 |
|
|
|
5.0 |
|
|
|
185,411 |
|
|
|
8,003 |
|
|
|
4.3 |
|
Other interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
13,713 |
|
|
|
547 |
|
|
|
4.0 |
|
|
|
8,208 |
|
|
|
514 |
|
|
|
6.3 |
|
|
|
5,910 |
|
|
|
165 |
|
|
|
2.8 |
|
foreign |
|
|
14,844 |
|
|
|
540 |
|
|
|
3.6 |
|
|
|
11,520 |
|
|
|
517 |
|
|
|
4.5 |
|
|
|
9,743 |
|
|
|
333 |
|
|
|
3.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
929,649 |
|
|
|
44,230 |
|
|
|
4.8 |
|
|
|
881,873 |
|
|
|
42,661 |
|
|
|
4.8 |
|
|
|
820,846 |
|
|
|
35,156 |
|
|
|
4.3 |
|
Non-interest earning assets |
|
|
73,994 |
|
|
|
|
|
|
|
|
|
|
|
57,980 |
|
|
|
|
|
|
|
|
|
|
|
51,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives assets |
|
|
49,042 |
|
|
|
|
|
|
|
|
|
|
|
33,025 |
|
|
|
|
|
|
|
|
|
|
|
27,212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets(1) |
|
|
1,052,685 |
|
|
|
|
|
|
|
|
|
|
|
972,878 |
|
|
|
|
|
|
|
|
|
|
|
899,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of assets applicable to
foreign operations |
|
|
59.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61.1 |
% |
|
|
|
|
|
|
|
|
|
|
63.6 |
% |
|
|
|
|
Interest income on derivatives |
|
|
|
|
|
|
53,037 |
|
|
|
|
|
|
|
|
|
|
|
33,622 |
|
|
|
|
|
|
|
|
|
|
|
23,521 |
|
|
|
|
|
other |
|
|
|
|
|
|
933 |
|
|
|
|
|
|
|
|
|
|
|
576 |
|
|
|
|
|
|
|
|
|
|
|
585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
|
|
|
|
|
|
98,200 |
|
|
|
|
|
|
|
|
|
|
|
76,858 |
|
|
|
|
|
|
|
|
|
|
|
59,262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Substantially all interest-earning securities held by the banking operations of the Company
are taxable securities. |
49
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities |
|
|
2008 |
|
2007 |
|
2006 |
|
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
Average |
|
Interest |
|
Average |
|
|
balance |
|
expense |
|
yield |
|
balance |
|
expense |
|
yield |
|
balance |
|
expense |
|
yield |
|
|
(EUR millions) |
|
% |
|
(EUR millions) |
|
% |
|
(EUR millions) |
|
% |
Time deposits from banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
49,198 |
|
|
|
2,020 |
|
|
|
4.1 |
|
|
|
40,487 |
|
|
|
1,801 |
|
|
|
4.4 |
|
|
|
46,930 |
|
|
|
1,979 |
|
|
|
4.2 |
|
foreign |
|
|
43,046 |
|
|
|
2,176 |
|
|
|
5.1 |
|
|
|
37,583 |
|
|
|
1,991 |
|
|
|
5.3 |
|
|
|
34,368 |
|
|
|
1,255 |
|
|
|
3.7 |
|
Demand deposits(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
115,827 |
|
|
|
1,574 |
|
|
|
1.4 |
|
|
|
106,597 |
|
|
|
1,682 |
|
|
|
1.6 |
|
|
|
92,488 |
|
|
|
1,293 |
|
|
|
1.4 |
|
foreign |
|
|
46,832 |
|
|
|
766 |
|
|
|
1.6 |
|
|
|
40,173 |
|
|
|
1,060 |
|
|
|
2.6 |
|
|
|
32,533 |
|
|
|
692 |
|
|
|
2.1 |
|
Time deposits(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
35,048 |
|
|
|
1,449 |
|
|
|
4.1 |
|
|
|
28,535 |
|
|
|
1,388 |
|
|
|
4.9 |
|
|
|
27,983 |
|
|
|
1,168 |
|
|
|
4.2 |
|
foreign |
|
|
33,303 |
|
|
|
1,671 |
|
|
|
5.0 |
|
|
|
35,281 |
|
|
|
1,338 |
|
|
|
3.8 |
|
|
|
31,160 |
|
|
|
1,205 |
|
|
|
3.9 |
|
Savings deposits(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
57,537 |
|
|
|
1,630 |
|
|
|
2.8 |
|
|
|
63,109 |
|
|
|
1,475 |
|
|
|
2.3 |
|
|
|
66,845 |
|
|
|
1,562 |
|
|
|
2.3 |
|
foreign |
|
|
229,149 |
|
|
|
9,070 |
|
|
|
3.9 |
|
|
|
228,030 |
|
|
|
8,603 |
|
|
|
3.8 |
|
|
|
228,656 |
|
|
|
7,682 |
|
|
|
3.4 |
|
Short term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
11,511 |
|
|
|
558 |
|
|
|
4.8 |
|
|
|
5,557 |
|
|
|
285 |
|
|
|
5.1 |
|
|
|
4,133 |
|
|
|
165 |
|
|
|
4.0 |
|
foreign |
|
|
40,760 |
|
|
|
1,927 |
|
|
|
4.7 |
|
|
|
46,548 |
|
|
|
2,685 |
|
|
|
5.8 |
|
|
|
35,605 |
|
|
|
1,768 |
|
|
|
5.0 |
|
Long term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
20,379 |
|
|
|
1,110 |
|
|
|
5.4 |
|
|
|
12,903 |
|
|
|
813 |
|
|
|
6.3 |
|
|
|
14,050 |
|
|
|
798 |
|
|
|
5.7 |
|
foreign |
|
|
23,325 |
|
|
|
1,277 |
|
|
|
5.5 |
|
|
|
21,155 |
|
|
|
1,063 |
|
|
|
5.0 |
|
|
|
40,291 |
|
|
|
1,532 |
|
|
|
3.8 |
|
Subordinated liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
20,238 |
|
|
|
1,124 |
|
|
|
5.6 |
|
|
|
18,938 |
|
|
|
1,079 |
|
|
|
5.7 |
|
|
|
18,713 |
|
|
|
1,023 |
|
|
|
5.5 |
|
foreign |
|
|
1,293 |
|
|
|
61 |
|
|
|
4.7 |
|
|
|
1,574 |
|
|
|
82 |
|
|
|
5.2 |
|
|
|
2,229 |
|
|
|
119 |
|
|
|
5.3 |
|
Other interest-bearing
liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
92,042 |
|
|
|
3,174 |
|
|
|
3.4 |
|
|
|
77,426 |
|
|
|
3,220 |
|
|
|
4.2 |
|
|
|
46,096 |
|
|
|
1,260 |
|
|
|
2.7 |
|
foreign |
|
|
100,179 |
|
|
|
3,527 |
|
|
|
3.5 |
|
|
|
90,157 |
|
|
|
5,131 |
|
|
|
5.7 |
|
|
|
72,665 |
|
|
|
2,471 |
|
|
|
3.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
919,667 |
|
|
|
33,114 |
|
|
|
3.6 |
|
|
|
854,053 |
|
|
|
33,696 |
|
|
|
3.9 |
|
|
|
794,745 |
|
|
|
25,972 |
|
|
|
3.3 |
|
Non-interest bearing liabilities |
|
|
62,947 |
|
|
|
|
|
|
|
|
|
|
|
64,768 |
|
|
|
|
|
|
|
|
|
|
|
57,126 |
|
|
|
|
|
|
|
|
|
Derivatives liabilities |
|
|
48,243 |
|
|
|
|
|
|
|
|
|
|
|
30,591 |
|
|
|
|
|
|
|
|
|
|
|
25,706 |
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
1,030,857 |
|
|
|
|
|
|
|
|
|
|
|
949,412 |
|
|
|
|
|
|
|
|
|
|
|
877,577 |
|
|
|
|
|
|
|
|
|
Group Capital |
|
|
21,828 |
|
|
|
|
|
|
|
|
|
|
|
23,466 |
|
|
|
|
|
|
|
|
|
|
|
21,798 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and capital |
|
|
1,052,685 |
|
|
|
|
|
|
|
|
|
|
|
972,878 |
|
|
|
|
|
|
|
|
|
|
|
899,375 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of liabilities
applicable to foreign
operations |
|
|
57.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
59.2 |
% |
|
|
|
|
|
|
|
|
|
|
61.4 |
% |
|
|
|
|
Other interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interest expenses on derivatives |
|
|
|
|
|
|
52,790 |
|
|
|
|
|
|
|
|
|
|
|
33,298 |
|
|
|
|
|
|
|
|
|
|
|
23,243 |
|
|
|
|
|
other |
|
|
|
|
|
|
1,211 |
|
|
|
|
|
|
|
|
|
|
|
828 |
|
|
|
|
|
|
|
|
|
|
|
712 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense |
|
|
|
|
|
|
87,115 |
|
|
|
|
|
|
|
|
|
|
|
67,822 |
|
|
|
|
|
|
|
|
|
|
|
49,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net interest result |
|
|
|
|
|
|
11,085 |
|
|
|
|
|
|
|
|
|
|
|
9,037 |
|
|
|
|
|
|
|
|
|
|
|
9,335 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5) |
|
These captions do not include deposits from banks. |
50
ANALYSIS OF CHANGES IN NET INTEREST INCOME
The following table allocates changes in the Groups interest income and expense and net interest
result between changes in average balances and rates for the periods indicated. Changes due to a
combination of volume and rate have been allocated to changes in average volume. The net changes in
interest income, interest expense and net interest result, as calculated in this table, have been
reconciled to the changes in interest income, interest expense and net interest result in the
consolidated financial statements. See introduction to Average Balances and Interest Rates for a
discussion of the differences between interest income, interest expense and net interest result as
calculated in the following table and as set forth in the consolidated financial statements.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 over 2007 |
|
2007 over 2006 |
|
|
Increase (decrease) |
|
Increase (decrease) |
|
|
due to changes in |
|
due to changes in |
|
|
Average |
|
Average |
|
Net |
|
Average |
|
Average |
|
Net |
|
|
volume |
|
rate |
|
change |
|
volume |
|
rate |
|
change |
|
|
(EUR millions) |
|
(EUR millions) |
Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time deposits to banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
(114 |
) |
|
|
49 |
|
|
|
(65 |
) |
|
|
500 |
|
|
|
(62 |
) |
|
|
438 |
|
foreign |
|
|
(812 |
) |
|
|
195 |
|
|
|
(617 |
) |
|
|
348 |
|
|
|
234 |
|
|
|
582 |
|
Loans and advances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
1,664 |
|
|
|
(28 |
) |
|
|
1,636 |
|
|
|
1,055 |
|
|
|
669 |
|
|
|
1,724 |
|
foreign |
|
|
2,519 |
|
|
|
(1,986 |
) |
|
|
533 |
|
|
|
1,121 |
|
|
|
2,403 |
|
|
|
3,524 |
|
Interest-earning securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
|
|
(170 |
) |
|
|
109 |
|
|
|
(61 |
) |
|
|
(108 |
) |
|
|
155 |
|
|
|
47 |
|
foreign |
|
|
(720 |
) |
|
|
807 |
|
|
|
87 |
|
|
|
(525 |
) |
|
|
1,182 |
|
|
|
657 |
|
Other interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
345 |
|
|
|
(312 |
) |
|
|
33 |
|
|
|
64 |
|
|
|
285 |
|
|
|
349 |
|
foreign |
|
|
149 |
|
|
|
(126 |
) |
|
|
23 |
|
|
|
61 |
|
|
|
123 |
|
|
|
184 |
|
Interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
1,725 |
|
|
|
(182 |
) |
|
|
1,543 |
|
|
|
1,511 |
|
|
|
1,047 |
|
|
|
2,558 |
|
foreign |
|
|
1,136 |
|
|
|
(1,110 |
) |
|
|
26 |
|
|
|
1,005 |
|
|
|
3,942 |
|
|
|
4,947 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,861 |
|
|
|
(1,292 |
) |
|
|
1,569 |
|
|
|
2,516 |
|
|
|
4,989 |
|
|
|
7,505 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other interest income |
|
|
|
|
|
|
|
|
|
|
19,773 |
|
|
|
|
|
|
|
|
|
|
|
10,092 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest income |
|
|
|
|
|
|
|
|
|
|
21,342 |
|
|
|
|
|
|
|
|
|
|
|
17,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 over 2007 |
|
2007 over 2006 |
|
|
Increase (decrease) |
|
Increase (decrease) |
|
|
due to changes in |
|
due to changes in |
|
|
Average |
|
Average |
|
Net |
|
Average |
|
Average |
|
Net |
|
|
volume |
|
rate |
|
change |
|
volume |
|
rate |
|
change |
|
|
(EUR millions) |
|
(EUR millions) |
Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time deposits from banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
388 |
|
|
|
(169 |
) |
|
|
219 |
|
|
|
(272 |
) |
|
|
94 |
|
|
|
(178 |
) |
foreign |
|
|
289 |
|
|
|
(104 |
) |
|
|
185 |
|
|
|
117 |
|
|
|
619 |
|
|
|
736 |
|
Demand deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
146 |
|
|
|
(254 |
) |
|
|
(108 |
) |
|
|
197 |
|
|
|
192 |
|
|
|
389 |
|
foreign |
|
|
176 |
|
|
|
(470 |
) |
|
|
(294 |
) |
|
|
163 |
|
|
|
205 |
|
|
|
368 |
|
Time deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
317 |
|
|
|
(256 |
) |
|
|
61 |
|
|
|
23 |
|
|
|
197 |
|
|
|
220 |
|
foreign |
|
|
(75 |
) |
|
|
408 |
|
|
|
333 |
|
|
|
159 |
|
|
|
(26 |
) |
|
|
133 |
|
Savings deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
(130 |
) |
|
|
285 |
|
|
|
155 |
|
|
|
(87 |
) |
|
|
|
|
|
|
(87 |
) |
foreign |
|
|
42 |
|
|
|
425 |
|
|
|
467 |
|
|
|
(21 |
) |
|
|
942 |
|
|
|
921 |
|
Short term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
305 |
|
|
|
(32 |
) |
|
|
273 |
|
|
|
57 |
|
|
|
63 |
|
|
|
120 |
|
foreign |
|
|
(334 |
) |
|
|
(424 |
) |
|
|
(758 |
) |
|
|
543 |
|
|
|
374 |
|
|
|
917 |
|
Long term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
471 |
|
|
|
(174 |
) |
|
|
297 |
|
|
|
(65 |
) |
|
|
80 |
|
|
|
15 |
|
foreign |
|
|
109 |
|
|
|
105 |
|
|
|
214 |
|
|
|
(728 |
) |
|
|
259 |
|
|
|
(469 |
) |
Subordinated liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
74 |
|
|
|
(29 |
) |
|
|
45 |
|
|
|
12 |
|
|
|
44 |
|
|
|
56 |
|
foreign |
|
|
(15 |
) |
|
|
(6 |
) |
|
|
(21 |
) |
|
|
(35 |
) |
|
|
(2 |
) |
|
|
(37 |
) |
Other interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
608 |
|
|
|
(654 |
) |
|
|
(46 |
) |
|
|
856 |
|
|
|
1,103 |
|
|
|
1,959 |
|
foreign |
|
|
570 |
|
|
|
(2,174 |
) |
|
|
(1,604 |
) |
|
|
595 |
|
|
|
2,065 |
|
|
|
2,660 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
2,179 |
|
|
|
(1,283 |
) |
|
|
896 |
|
|
|
721 |
|
|
|
1,773 |
|
|
|
2,494 |
|
foreign |
|
|
762 |
|
|
|
(2,240 |
) |
|
|
(1,478 |
) |
|
|
793 |
|
|
|
4,436 |
|
|
|
5,229 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,941 |
|
|
|
(3,523 |
) |
|
|
(582 |
) |
|
|
1,514 |
|
|
|
6,209 |
|
|
|
7,723 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other interest expense |
|
|
|
|
|
|
|
|
|
|
19,875 |
|
|
|
|
|
|
|
|
|
|
|
10,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total interest expense |
|
|
|
|
|
|
|
|
|
|
19,293 |
|
|
|
|
|
|
|
|
|
|
|
17,894 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
domestic |
|
|
(454 |
) |
|
|
1,101 |
|
|
|
647 |
|
|
|
790 |
|
|
|
(727 |
) |
|
|
63 |
|
Foreign |
|
|
374 |
|
|
|
1,130 |
|
|
|
1,504 |
|
|
|
211 |
|
|
|
(494 |
) |
|
|
(282 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest |
|
|
(80 |
) |
|
|
2,231 |
|
|
|
2,151 |
|
|
|
1001 |
|
|
|
(1,221 |
) |
|
|
(219 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other net interest result |
|
|
|
|
|
|
|
|
|
|
102 |
|
|
|
|
|
|
|
|
|
|
|
(79 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest result |
|
|
|
|
|
|
|
|
|
|
2,049 |
|
|
|
|
|
|
|
|
|
|
|
(298 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52
INVESTMENTS OF THE GROUPS BANKING OPERATIONS
The following table shows the balance sheet value under IFRS-IASB of the investments of the Groups
banking operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31 |
|
|
2008 |
|
2007 |
|
2006 |
|
|
(EUR millions) |
Debt securities available for sale |
|
|
|
|
|
|
|
|
|
|
|
|
Dutch government |
|
|
6,726 |
|
|
|
4,741 |
|
|
|
6,106 |
|
German government |
|
|
5,789 |
|
|
|
5,960 |
|
|
|
8,076 |
|
Central banks |
|
|
219 |
|
|
|
331 |
|
|
|
213 |
|
Belgian government |
|
|
8,198 |
|
|
|
11,017 |
|
|
|
14,225 |
|
Other governments |
|
|
29,435 |
|
|
|
26,090 |
|
|
|
27,959 |
|
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
Banks and financial institutions |
|
|
37,486 |
|
|
|
36,860 |
|
|
|
26,791 |
|
Other corporate debt securities |
|
|
1,417 |
|
|
|
2,145 |
|
|
|
9,900 |
|
U.S. Treasury and other U.S. Government
agencies |
|
|
56 |
|
|
|
163 |
|
|
|
322 |
|
Other debt securities |
|
|
42,176 |
|
|
|
52,699 |
|
|
|
57,941 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities available for sale |
|
|
131,502 |
|
|
|
140,006 |
|
|
|
151,533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities held to maturity |
|
|
|
|
|
|
|
|
|
|
|
|
Dutch government |
|
|
|
|
|
|
|
|
|
|
|
|
German government |
|
|
787 |
|
|
|
789 |
|
|
|
790 |
|
Other governments |
|
|
819 |
|
|
|
969 |
|
|
|
564 |
|
Banks and financial institutions |
|
|
12,929 |
|
|
|
14,249 |
|
|
|
13,970 |
|
Other corporate debt securities |
|
|
39 |
|
|
|
39 |
|
|
|
40 |
|
U.S. Treasury and other U.S. Government
agencies |
|
|
36 |
|
|
|
102 |
|
|
|
233 |
|
Other debt securities |
|
|
830 |
|
|
|
605 |
|
|
|
2,063 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities held to maturity |
|
|
15,440 |
|
|
|
16,753 |
|
|
|
17,660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares and convertible debentures |
|
|
1,863 |
|
|
|
3,626 |
|
|
|
1,898 |
|
Land and buildings (1) |
|
|
4,331 |
|
|
|
4,997 |
|
|
|
5,005 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
153,136 |
|
|
|
165,382 |
|
|
|
176,096 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Including commuted ground rents |
Banking investment strategy
INGs investment strategy for its investment portfolio related to the banking activities is
formulated by the Asset and Liability Committee (ALCO). The exposures of the investments to
market rate movements are managed by modifying the asset and liability mix, either directly or
through the use of derivative financial products including interest rate swaps, futures, forwards
and purchased option positions such as interest rate caps, floors and collars. See Item 11.
Quantative and Qualitative Disclosure of Market Risk.
The investment portfolio related to the banking activities primarily consists of fixed-interest
securities. Approximately 33% of the land and buildings owned by ING Bank are wholly or partially
in use by Group companies.
53
Portfolio maturity description
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 year or less |
|
Between 1 and 5 years |
|
Between 5 and 10 years |
|
|
Book value |
|
Yield(1) |
|
Book value |
|
Yield(1) |
|
Book value |
|
Yield(1) |
|
|
(EUR |
|
% |
|
(EUR |
|
% |
|
(EUR |
|
% |
|
|
millions) |
|
|
|
millions) |
|
|
|
millions) |
|
|
Debt securities available for
sale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dutch government |
|
|
3,022 |
|
|
|
|
|
|
|
2,975 |
|
|
|
|
|
|
|
729 |
|
|
|
|
|
German government |
|
|
1,013 |
|
|
|
|
|
|
|
3,052 |
|
|
|
|
|
|
|
1,724 |
|
|
|
|
|
Belgian government |
|
|
674 |
|
|
|
|
|
|
|
5,208 |
|
|
|
|
|
|
|
2,238 |
|
|
|
|
|
Central banks |
|
|
219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other governments |
|
|
3,115 |
|
|
|
|
|
|
|
14,280 |
|
|
|
|
|
|
|
9,320 |
|
|
|
|
|
Banks and financial institutions |
|
|
9,236 |
|
|
|
|
|
|
|
18,509 |
|
|
|
|
|
|
|
8,137 |
|
|
|
|
|
Corporate debt securities |
|
|
607 |
|
|
|
|
|
|
|
566 |
|
|
|
|
|
|
|
219 |
|
|
|
|
|
U.S. Treasury and other U.S.
Government agencies |
|
|
1 |
|
|
|
|
|
|
|
55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Other debt securities |
|
|
1,419 |
|
|
|
|
|
|
|
11,870 |
|
|
|
|
|
|
|
6,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities available
for sale |
|
|
19,306 |
|
|
|
3.7 |
|
|
|
56,515 |
|
|
|
4.6 |
|
|
|
29,093 |
|
|
|
4.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over 10 years |
|
Total |
|
|
Book |
|
|
|
|
|
Book |
|
|
value |
|
Yield(1) |
|
value |
|
|
(EUR |
|
% |
|
(EUR |
|
|
millions) |
|
|
|
millions) |
Debt securities available for
sale |
|
|
|
|
|
|
|
|
|
|
|
|
Dutch government |
|
|
|
|
|
|
|
|
|
|
6,726 |
|
German government |
|
|
|
|
|
|
|
|
|
|
5,789 |
|
Belgian government |
|
|
78 |
|
|
|
|
|
|
|
8,198 |
|
Central banks |
|
|
|
|
|
|
|
|
|
|
219 |
|
Other governments |
|
|
2,720 |
|
|
|
|
|
|
|
29,435 |
|
Banks and financial institutions |
|
|
1,604 |
|
|
|
|
|
|
|
37,486 |
|
Corporate debt securities |
|
|
25 |
|
|
|
|
|
|
|
1,417 |
|
U.S. Treasury and other U.S.
Government agencies |
|
|
|
|
|
|
|
|
|
|
56 |
|
Other debt securities |
|
|
22,161 |
|
|
|
|
|
|
|
42,176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities available
for sale |
|
|
26,588 |
|
|
|
4.0 |
|
|
|
131,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Since substantially all investment securities held by the banking operations of the Company are
taxable securities, the yields are on a tax-equivalent basis. |
54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 year or less |
|
Between 1 and 5 years |
|
Between 5 and 10 years |
|
|
Book value |
|
Yield(1) |
|
Book value |
|
Yield(1) |
|
Book value |
|
Yield(1) |
|
|
(EUR |
|
% |
|
(EUR |
|
% |
|
(EUR |
|
% |
|
|
millions) |
|
|
|
millions) |
|
|
|
millions) |
|
|
Debt securities held to maturity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dutch government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
German government |
|
|
200 |
|
|
|
|
|
|
|
587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Belgian government |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Central banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other governments |
|
|
116 |
|
|
|
|
|
|
|
653 |
|
|
|
|
|
|
|
50 |
|
|
|
|
|
Banks and financial institutions |
|
|
963 |
|
|
|
|
|
|
|
9,256 |
|
|
|
|
|
|
|
2,610 |
|
|
|
|
|
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury and other U.S.
Government agencies |
|
|
36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other debt securities |
|
|
7 |
|
|
|
|
|
|
|
223 |
|
|
|
|
|
|
|
234 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities held to
maturity |
|
|
1,322 |
|
|
|
3.9 |
|
|
|
10,758 |
|
|
|
3.9 |
|
|
|
2,894 |
|
|
|
3.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over 10 years |
|
Total |
|
|
Book |
|
|
|
|
|
Book |
|
|
value |
|
Yield(1) |
|
value |
|
|
(EUR |
|
% |
|
(EUR |
|
|
millions) |
|
|
|
millions) |
Debt securities held to maturity |
|
|
|
|
|
|
|
|
|
|
|
|
Dutch government |
|
|
|
|
|
|
|
|
|
|
|
|
German government |
|
|
|
|
|
|
|
|
|
|
787 |
|
Belgian government |
|
|
|
|
|
|
|
|
|
|
|
|
Central banks |
|
|
|
|
|
|
|
|
|
|
|
|
Other governments |
|
|
|
|
|
|
|
|
|
|
819 |
|
Banks and financial institutions |
|
|
100 |
|
|
|
|
|
|
|
12,929 |
|
Corporate debt securities |
|
|
|
|
|
|
|
|
|
|
39 |
|
U.S. Treasury and other U.S.
Government agencies |
|
|
|
|
|
|
|
|
|
|
36 |
|
Other debt securities |
|
|
366 |
|
|
|
|
|
|
|
830 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities held to
maturity |
|
|
466 |
|
|
|
3.0 |
|
|
|
15,440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Since substantially all investment securities held by the banking operations of the Company are
taxable securities, the yields are on a tax-equivalent basis. |
On December 31, 2008, ING Group also held the following securities for the banking operations that
exceeded 10% of shareholders equity:
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
|
Book value |
|
Market value |
|
|
(EUR millions) |
Dutch government |
|
|
6,726 |
|
|
|
6,726 |
|
Belgian government |
|
|
8,198 |
|
|
|
8,198 |
|
German government |
|
|
6,576 |
|
|
|
6,693 |
|
55
LOAN PORTFOLIO
Loans and advances to banks and customers
Loans and advances to banks include all receivables from credit institutions, except for cash,
current accounts and deposits with other banks (including central banks). Lending facilities to
corporate and private customers encompass among others, loans, overdrafts and finance lease
receivables. The following table sets forth the gross loans and advances to banks and customers as
of December 31, 2008, 2007, 2006, 2005 and 2004 under IFRS-IASB.
IFRS-IASB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31 |
|
|
2008 |
|
2007 |
|
2006 |
|
2005 |
|
2004 |
|
|
(EUR millions) |
By domestic offices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans guaranteed by public authorities |
|
|
16,288 |
|
|
|
14,679 |
|
|
|
16,450 |
|
|
|
13,907 |
|
|
|
7,296 |
|
Loans secured by mortgages |
|
|
158,861 |
|
|
|
141,314 |
|
|
|
120,753 |
|
|
|
111,257 |
|
|
|
103,594 |
|
Loans to or guaranteed by credit
institutions |
|
|
15,528 |
|
|
|
16,347 |
|
|
|
6,747 |
|
|
|
4,573 |
|
|
|
7,323 |
|
Other private lending |
|
|
7,158 |
|
|
|
6,975 |
|
|
|
6,484 |
|
|
|
9,943 |
|
|
|
6,420 |
|
Other corporate lending |
|
|
123,758 |
|
|
|
105,808 |
|
|
|
90,182 |
|
|
|
80,540 |
|
|
|
35,897 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total domestic offices |
|
|
321,593 |
|
|
|
285,123 |
|
|
|
240,616 |
|
|
|
220,220 |
|
|
|
160,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By foreign offices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans guaranteed by public authorities |
|
|
10,099 |
|
|
|
8,961 |
|
|
|
9,503 |
|
|
|
17,535 |
|
|
|
17,118 |
|
Loans secured by mortgages |
|
|
145,090 |
|
|
|
132,614 |
|
|
|
87,457 |
|
|
|
69,855 |
|
|
|
53,156 |
|
Loans to or guaranteed by credit
institutions |
|
|
25,810 |
|
|
|
31,929 |
|
|
|
32,072 |
|
|
|
23,721 |
|
|
|
26,471 |
|
Other private lending |
|
|
20,389 |
|
|
|
17,784 |
|
|
|
16,422 |
|
|
|
15,200 |
|
|
|
8,474 |
|
Other corporate lending |
|
|
118,958 |
|
|
|
100,601 |
|
|
|
89,547 |
|
|
|
84,355 |
|
|
|
88,639 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total foreign offices |
|
|
320,346 |
|
|
|
291,889 |
|
|
|
235,001 |
|
|
|
210,666 |
|
|
|
193,858 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross loans and advances to banks
and customers |
|
|
641,939 |
|
|
|
577,012 |
|
|
|
475,617 |
|
|
|
430,886 |
|
|
|
354,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturities and sensitivity of loans to changes in interest rates
The following table analyzes loans and advances to banks and customers by time remaining until
maturity as of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 year |
|
1 year |
|
After |
|
|
|
|
or less |
|
to 5 years |
|
5 years |
|
Total |
|
|
(EUR millions) |
By domestic offices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans guaranteed by public authorities |
|
|
4,478 |
|
|
|
1,312 |
|
|
|
10,498 |
|
|
|
16,288 |
|
Loans secured by mortgages |
|
|
10,492 |
|
|
|
16,410 |
|
|
|
131,959 |
|
|
|
158,861 |
|
Loans guaranteed by credit institutions |
|
|
13,984 |
|
|
|
1,405 |
|
|
|
139 |
|
|
|
15,528 |
|
Other private lending |
|
|
5,157 |
|
|
|
533 |
|
|
|
1,468 |
|
|
|
7,158 |
|
Other corporate lending |
|
|
102,795 |
|
|
|
15,398 |
|
|
|
5,563 |
|
|
|
123,756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total domestic offices |
|
|
136,906 |
|
|
|
35,058 |
|
|
|
149,627 |
|
|
|
321,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By foreign offices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans guaranteed by public authorities |
|
|
3,805 |
|
|
|
2,835 |
|
|
|
3,459 |
|
|
|
10,099 |
|
Loans secured by mortgages |
|
|
13,217 |
|
|
|
24,969 |
|
|
|
106,904 |
|
|
|
145,090 |
|
Loans guaranteed by credit institutions |
|
|
19,820 |
|
|
|
4,548 |
|
|
|
1,442 |
|
|
|
25,810 |
|
Other private lending |
|
|
12,244 |
|
|
|
3,602 |
|
|
|
4,543 |
|
|
|
20,389 |
|
Other corporate lending |
|
|
42,527 |
|
|
|
44,183 |
|
|
|
32,250 |
|
|
|
118,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total foreign offices |
|
|
91,613 |
|
|
|
80,137 |
|
|
|
148,598 |
|
|
|
320,348 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross loans and advances to banks
and customers |
|
|
228,519 |
|
|
|
115,195 |
|
|
|
298,225 |
|
|
|
641,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56
The following table analyzes loans and advances to banks and customers by interest rate sensitivity
by maturity as of December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 year or |
|
Over 1 |
|
|
|
|
less |
|
year |
|
Total |
|
|
(EUR millions) |
Non-interest earning |
|
|
4,343 |
|
|
|
408 |
|
|
|
4,751 |
|
Fixed interest rate |
|
|
74,449 |
|
|
|
125,089 |
|
|
|
199,538 |
|
Semi-fixed interest rate(1) |
|
|
5,392 |
|
|
|
170,333 |
|
|
|
175,725 |
|
Variable interest rate |
|
|
144,335 |
|
|
|
117,590 |
|
|
|
261,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
228,519 |
|
|
|
413,420 |
|
|
|
641,939 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Loans that have an interest rate that remains fixed for more than one year and which can
then be changed are classified as semi-fixed |
Loan concentration
The following industry concentrations were in excess of 10% of total loans as of December 31, 2008:
|
|
|
|
|
|
|
Total outstanding |
|
Financial institutions |
|
|
30.9 |
% |
Private individuals |
|
|
34.4 |
% |
Risk elements
Loans Past Due 90 days and Still Accruing Interest
Loans past due 90 days and still accruing interest are loans that are contractually past due 90
days or more as to principal or interest on which we continue to recognize interest income on an
accrual basis in accordance with IFRS-IASB.
Under IFRS-IASB prior to the implementation of IAS 32 and IAS 39 and under Dutch GAAP, loans were
placed on non-accrual status when a loan was in default as to payment of principal and interest for
90 days or more, or when, in the judgment of management, the accrual of interest should cease
before 90 days. Any accrued, but unpaid, interest was reversed against the same periods interest
revenue. Interest payments received on a cash basis during the period were recorded as interest
income.
In 2005 with the implementation of IAS 32 and IAS 39, once a loan has been written down as a result
of an impairment loss, interest income is recognized using the rate of interest used to discount
the future cash flows for the purpose of measuring the impairment loss. As all loans continue to
accrue interest under IFRS-IASB, the non-accrual loan status is no longer used to identify ING
Groups risk elements. Therefore, as from 2005, no loans are reported as non-accrual and there is
an increase in the amount of loans reported as Loans past due 90 days and still accruing interest,
compared to the prior years reported, due to the interest accrual on impaired loans.
The following table sets forth the outstanding balance of the loans past due 90 days and still
accruing interest and non-accrual loans for the years ended December 31, 2008, 2007, 2006, 2005 and
2004 under IFRS-IASB.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31 |
|
|
|
2008 |
|
|
2007 |
|
|
2006 |
|
|
2005 |
|
|
2004 |
|
IFRS-IASB |
|
(EUR millions) |
|
Loans past due 90 days and still accruing interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
|
|
2,799 |
|
|
|
1,159 |
|
|
|
1,317 |
|
|
|
1,664 |
|
|
|
577 |
|
Foreign |
|
|
2,634 |
|
|
|
1,892 |
|
|
|
2,426 |
|
|
|
2,112 |
|
|
|
510 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans past due 90 days and still accruing interest |
|
|
5,433 |
|
|
|
3,051 |
|
|
|
3,743 |
|
|
|
3,776 |
|
|
|
1,087 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-accrual |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,143 |
|
Foreign |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-accruals |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,427 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total loans past due 90 days and still accruing
interest and non-accrual loans |
|
|
5,433 |
|
|
|
3,051 |
|
|
|
3,743 |
|
|
|
3,776 |
|
|
|
4,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57
As of December 31, 2008, EUR 5,433 million of the loans past due 90 days and still accruing
interest have a loan loss provision. Total loans with a loan loss provision, including those loans
classified as past due 90 days and still accruing interest with a provision and troubled debt
restructurings with a provision, amounts to EUR 7,489 million as of December 31, 2008.
Troubled Debt Restructurings
Troubled debt restructurings are loans that we have restructured due to deterioration in the
borrowers financial position and in relation to which, for economic or legal reasons related to
the borrowers deteriorated financial position, we have granted a concession to the borrower that
we would not have otherwise granted.
The following table sets forth the outstanding balances of the troubled debt restructurings as of
December 31, 2008, 2007, 2006, 2005 and 2004 under IFRS-IASB.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31 |
IFRS-IASB |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
|
2004 |
|
|
(EUR millions) |
Troubled debt restructurings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic |
|
|
51 |
|
|
|
45 |
|
|
|
163 |
|
|
|
495 |
|
|
|
197 |
|
Foreign |
|
|
354 |
|
|
|
47 |
|
|
|
199 |
|
|
|
582 |
|
|
|
651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total troubled debt restructurings |
|
|
405 |
|
|
|
92 |
|
|
|
362 |
|
|
|
1,077 |
|
|
|
848 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income on Troubled Debt Restructurings
The following table sets forth the gross interest income that would have been recorded during the
year ended December 31, 2008 on troubled debt restructurings had such loans been current in
accordance with their original contractual terms and interest income on such loans that was
actually included in interest income during the year ended December 31, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008 |
|
|
(EUR millions) |
|
|
Domestic |
|
Foreign |
|
|
|
|
Offices |
|
Offices |
|
Total |
Interest income that would have
been recognized under the
original contractual terms |
|
|
4 |
|
|
|
|
|
|
|
4 |
|
Interest income recognized in
the profit and loss account |
|
|
2 |
|
|
|
|
|
|
|
2 |
|
Potential Problem Loans
Potential problem loans are loans that are not classified as loans past due 90 days and still
accruing interest or troubled debt restructurings and amounted to EUR 4,439 million as of December
31, 2008. Of this total, EUR 3,132 million relates to domestic loans and EUR 1,307 million relates
to foreign loans. These loans are considered potential problem loans as there is known information
about possible credit problems causing us to have serious doubts as to the ability of the borrower
to comply with the present loan repayment terms and which may result in classifying the loans as
loans past due 90 days and still accruing interest or as troubled debt restructurings. Appropriate
provisions, following ING Groups credit risk rating system, have been established for these loans.
Cross-border outstandings
Cross-border outstandings are defined as loans (including accrued interest), acceptances,
interest-earning deposits with other banks, other interest-earning investments and any other
monetary assets that are
58
denominated in euro or other non-local currency. To the extent that material local currency
outstandings are not hedged or are not funded by local currency borrowings, such amounts are
included in cross-border outstandings.
Commitments such as irrevocable letters of credit are not considered as cross border outstanding.
Total outstandings are in line with Dutch Central Bank requirements. On December 31, 2008, there
were no outstandings exceeding 1% of total assets in any country where current conditions give rise
to liquidity problems which are expected to have a material impact on the timely repayment of
interest or principal.
The following tables analyze cross-border outstandings as of the end of December 31, 2008, 2007 and
2006 stating the name of the country and the aggregate amount of cross-border outstandings to
borrowers in each foreign country where such outstandings exceed 1% of total assets, by the
following categories.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2008 |
|
|
|
|
|
|
Banks & |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
& official |
|
financial |
|
Commercial |
|
|
|
|
|
|
|
|
|
Cross-border |
|
|
institutions |
|
Institutions |
|
& industrial |
|
Other |
|
Total |
|
Commitments |
|
|
(EUR millions) |
United Kingdom |
|
|
143 |
|
|
|
12,228 |
|
|
|
29,094 |
|
|
|
1,159 |
|
|
|
42,624 |
|
|
|
4,698 |
|
United States |
|
|
83 |
|
|
|
3,065 |
|
|
|
12,170 |
|
|
|
15,427 |
|
|
|
30,745 |
|
|
|
10,787 |
|
France |
|
|
7,636 |
|
|
|
10,396 |
|
|
|
6,137 |
|
|
|
2,449 |
|
|
|
26,617 |
|
|
|
1,964 |
|
Germany |
|
|
5,671 |
|
|
|
6,338 |
|
|
|
4,298 |
|
|
|
3,327 |
|
|
|
19,634 |
|
|
|
7,882 |
|
Italy |
|
|
8,974 |
|
|
|
5,082 |
|
|
|
3,625 |
|
|
|
1,019 |
|
|
|
18,701 |
|
|
|
1,534 |
|
Spain |
|
|
2,573 |
|
|
|
7,940 |
|
|
|
5,967 |
|
|
|
96 |
|
|
|
16,576 |
|
|
|
3,134 |
|
Belgium |
|
|
1,987 |
|
|
|
7,163 |
|
|
|
7,851 |
|
|
|
2,277 |
|
|
|
19,278 |
|
|
|
17,161 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2007 |
|
|
|
|
|
|
Banks & |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
& official |
|
financial |
|
Commercial |
|
|
|
|
|
|
|
|
|
Cross-border |
|
|
institutions |
|
Institutions |
|
& industrial |
|
Other |
|
Total |
|
Commitments |
|
|
(EUR millions) |
United Kingdom |
|
|
144 |
|
|
|
27,501 |
|
|
|
44,621 |
|
|
|
1,403 |
|
|
|
73,669 |
|
|
|
6,018 |
|
United States |
|
|
33 |
|
|
|
4,035 |
|
|
|
26,821 |
|
|
|
14,852 |
|
|
|
45,741 |
|
|
|
13,050 |
|
France |
|
|
5,777 |
|
|
|
17,811 |
|
|
|
6,864 |
|
|
|
4,474 |
|
|
|
34,926 |
|
|
|
2,295 |
|
Germany |
|
|
4,839 |
|
|
|
10,361 |
|
|
|
4,499 |
|
|
|
4,428 |
|
|
|
24,127 |
|
|
|
9,500 |
|
Italy |
|
|
10,381 |
|
|
|
4,642 |
|
|
|
4,378 |
|
|
|
1,117 |
|
|
|
20,518 |
|
|
|
1,318 |
|
Spain |
|
|
2,375 |
|
|
|
7,749 |
|
|
|
6,183 |
|
|
|
685 |
|
|
|
16,992 |
|
|
|
2,139 |
|
Belgium |
|
|
2,638 |
|
|
|
5,782 |
|
|
|
3,607 |
|
|
|
1,683 |
|
|
|
13,710 |
|
|
|
14,999 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2006 |
|
|
|
|
|
|
Banks & |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
& official |
|
financial |
|
Commercial |
|
|
|
|
|
|
|
|
|
Cross-border |
|
|
institutions |
|
Institutions |
|
& industrial |
|
Other |
|
Total |
|
Commitments |
|
|
(EUR millions) |
United Kingdom |
|
|
60 |
|
|
|
29,787 |
|
|
|
51,344 |
|
|
|
2,437 |
|
|
|
83,628 |
|
|
|
9,840 |
|
United States |
|
|
114 |
|
|
|
7,241 |
|
|
|
33,388 |
|
|
|
4,102 |
|
|
|
44,845 |
|
|
|
11,353 |
|
59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2006 |
|
|
|
|
|
|
Banks & |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government |
|
other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
& official |
|
financial |
|
Commercial |
|
|
|
|
|
|
|
|
|
Cross-border |
|
|
institutions |
|
Institutions |
|
& industrial |
|
Other |
|
Total |
|
Commitments |
|
|
(EUR millions) |
France |
|
|
4,831 |
|
|
|
12,012 |
|
|
|
5,658 |
|
|
|
3,491 |
|
|
|
25,992 |
|
|
|
2,776 |
|
Germany |
|
|
6,855 |
|
|
|
10,233 |
|
|
|
4,244 |
|
|
|
1,906 |
|
|
|
23,238 |
|
|
|
7,898 |
|
Italy |
|
|
11,819 |
|
|
|
4,011 |
|
|
|
5,704 |
|
|
|
1,118 |
|
|
|
22,652 |
|
|
|
1,445 |
|
Spain |
|
|
2,494 |
|
|
|
7,766 |
|
|
|
8,194 |
|
|
|
923 |
|
|
|
19,377 |
|
|
|
2,071 |
|
There were no cross-border outstandings between 0.75% and 1% of total assets, at year-end 2008 and
2007. On December 31, 2006, Ireland and Belgium had EUR 10,049 million and EUR 9,523 million,
respectively, of cross-border outstandings between 0.75% and 1% of total assets.
Summary of Loan Loss Experience
For further explanation on loan loss provision see Loan Loss Provisions in Note 2.1 to the
consolidated financial statements.
The application of the IFRS-IASB methodology has reduced the amount of the unallocated provision for
loan losses that ING Group provided in prior years to adequately capture various subjective and
judgmental aspects of the credit risk assessment which were not considered on an individual basis.
The following table presents the movements in allocation of the provision for loan losses on loans
accounted for as loans and advances to banks and customers for 2008, 2007, 2006, 2005 and 2004
under IFRS-IASB.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calendar period |
IFRS-IASB |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
|
2004 |
|
|
(EUR millions) |
Balance on January 1 |
|
|
2,001 |
|
|
|
2,642 |
|
|
|
3,313 |
|
|
|
4,262 |
|
|
|
4,671 |
|
Implementation IAS 32 and IAS 39 (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(398 |
) |
|
|
|
|
Change in the composition of the Group |
|
|
1 |
|
|
|
98 |
|
|
|
(101 |
) |
|
|
(4 |
) |
|
|
(38 |
) |
Charge-offs: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans guaranteed by public authorities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
Loans secured by mortgages |
|
|
(34 |
) |
|
|
(22 |
) |
|
|
(32 |
) |
|
|
(8 |
) |
|
|
(3 |
) |
Loans to or guaranteed by credit institutions |
|
|
(36 |
) |
|
|
(11 |
) |
|
|
(11 |
) |
|
|
(12 |
) |
|
|
(22 |
) |
Other private lending |
|
|
(126 |
) |
|
|
(115 |
) |
|
|
(108 |
) |
|
|
(107 |
) |
|
|
(57 |
) |
Other corporate lending |
|
|
(133 |
) |
|
|
(189 |
) |
|
|
(136 |
) |
|
|
(164 |
) |
|
|
(156 |
) |
Foreign: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans guaranteed by public authorities |
|
|
(16 |
) |
|
|
(25 |
) |
|
|
|
|
|
|
(9 |
) |
|
|
(13 |
) |
Loans secured by mortgages |
|
|
(6 |
) |
|
|
(11 |
) |
|
|
(26 |
) |
|
|
(23 |
) |
|
|
(31 |
) |
Loans to or guaranteed by credit institutions |
|
|
|
|
|
|
(2 |
) |
|
|
(5 |
) |
|
|
(4 |
) |
|
|
20 |
|
Other private lending |
|
|
(114 |
) |
|
|
(104 |
) |
|
|
(70 |
) |
|
|
(78 |
) |
|
|
(57 |
) |
Other corporate lending |
|
|
(263 |
) |
|
|
(473 |
) |
|
|
(303 |
) |
|
|
(437 |
) |
|
|
(589 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total charge-offs |
|
|
(728 |
) |
|
|
(952 |
) |
|
|
(691 |
) |
|
|
(842 |
) |
|
|
(909 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recoveries: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans guaranteed by public authorities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6 |
|
Loans secured by mortgages |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 |
|
Loans to or guaranteed by credit institutions |
|
|
|
|
|
|
2 |
|
|
|
4 |
|
|
|
|
|
|
|
|
|
Other private lending |
|
|
36 |
|
|
|
3 |
|
|
|
11 |
|
|
|
6 |
|
|
|
|
|
Other corporate lending |
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
Foreign: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans guaranteed by public authorities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans secured by mortgages |
|
|
|
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
(1 |
) |
Loans to or guaranteed by credit institutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23 |
|
Other private lending |
|
|
27 |
|
|
|
30 |
|
|
|
49 |
|
|
|
39 |
|
|
|
11 |
|
Other corporate lending |
|
|
27 |
|
|
|
23 |
|
|
|
21 |
|
|
|
16 |
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total recoveries |
|
|
90 |
|
|
|
59 |
|
|
|
86 |
|
|
|
61 |
|
|
|
84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs |
|
|
(638 |
) |
|
|
(893 |
) |
|
|
(605 |
) |
|
|
(781 |
) |
|
|
(825 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions and other adjustments (included in
value Adjustments to receivables of the Banking
operations) |
|
|
1,247 |
|
|
|
154 |
|
|
|
35 |
|
|
|
234 |
|
|
|
454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Calendar period |
IFRS-IASB |
|
2008 |
|
2007 |
|
2006 |
|
2005 |
|
2004 |
|
|
(EUR millions) |
Balance on December 31 |
|
|
2,611 |
|
|
|
2,001 |
|
|
|
2,642 |
|
|
|
3,313 |
|
|
|
4,262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio of net charge-offs to average loans and
advances to banks and customers |
|
|
0.10 |
% |
|
|
0.16 |
% |
|
|
0.12 |
% |
|
|
0.17 |
% |
|
|
0.24 |
% |
|
|
|
(1) |
|
Consists of release of unallocated provision for loan losses of EUR (592) million and
reclassification from other assets for provision for interest on impaired loans of EUR 194 million. |
Additions to the provision for loan losses presented in the table above were influenced by
developments in general economic conditions as well as certain individual exposures.
The following table shows the allocation of the provision for loan losses on loans accounted for as
loans and advances to banks and customers for 2008, 2007, 2006, 2005 and 2004 under IFRS-IASB.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31 |
|
|
2008 |
|
2007 |
|
2006 |
|
2005 |
|
2004 |
|
|
EUR |
|
%(1) |
|
EUR |
|
%(1) |
|
EUR |
|
%(1) |
|
|
|
|
|
|
|
|
|
EUR |
|
%(1) |
IFRS-IASB |
|
(EUR millions) |
Domestic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans guaranteed by public authorities |
|
|
|
|
|
|
2.54 |
|
|
|
|
|
|
|
2.56 |
|
|
|
|
|
|
|
3.46 |
|
|
|
1 |
|
|
|
3.23 |
|
|
|
1 |
|
|
|
2.06 |
|
Loans secured by mortgages |
|
|
167 |
|
|
|
24.76 |
|
|
|
96 |
|
|
|
24.62 |
|
|
|
96 |
|
|
|
25.40 |
|
|
|
93 |
|
|
|
25.82 |
|
|
|
198 |
|
|
|
29.23 |
|
Loans to or guaranteed by credit institutions |
|
|
68 |
|
|
|
2.42 |
|
|
|
11 |
|
|
|
2.85 |
|
|
|
|
|
|
|
1.42 |
|
|
|
|
|
|
|
1.06 |
|
|
|
|
|
|
|
2.07 |
|
Other private lending |
|
|
120 |
|
|
|
1.12 |
|
|
|
181 |
|
|
|
1.21 |
|
|
|
357 |
|
|
|
1.36 |
|
|
|
230 |
|
|
|
2.31 |
|
|
|
181 |
|
|
|
1.81 |
|
Other corporate lending |
|
|
474 |
|
|
|
19.24 |
|
|
|
377 |
|
|
|
17.91 |
|
|
|
280 |
|
|
|
18.93 |
|
|
|
594 |
|
|
|
18.69 |
|
|
|
692 |
|
|
|
10.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total domestic |
|
|
829 |
|
|
|
50.08 |
|
|
|
665 |
|
|
|
49.15 |
|
|
|
733 |
|
|
|
50.57 |
|
|
|
918 |
|
|
|
51.11 |
|
|
|
1,072 |
|
|
|
45.30 |
|
Foreign: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans guaranteed by public authorities |
|
|
2 |
|
|
|
1.57 |
|
|
|
1 |
|
|
|
1.56 |
|
|
|
2 |
|
|
|
2.00 |
|
|
|
2 |
|
|
|
4.07 |
|
|
|
36 |
|
|
|
4.83 |
|
Loans secured by mortgages |
|
|
425 |
|
|
|
22.61 |
|
|
|
203 |
|
|
|
23.10 |
|
|
|
177 |
|
|
|
18.40 |
|
|
|
273 |
|
|
|
16.20 |
|
|
|
213 |
|
|
|
15.00 |
|
Loans to or guaranteed by credit institutions |
|
|
17 |
|
|
|
4.02 |
|
|
|
3 |
|
|
|
5.56 |
|
|
|
6 |
|
|
|
6.75 |
|
|
|
13 |
|
|
|
5.51 |
|
|
|
23 |
|
|
|
7.47 |
|
Other private lending |
|
|
533 |
|
|
|
3.18 |
|
|
|
374 |
|
|
|
3.10 |
|
|
|
408 |
|
|
|
3.45 |
|
|
|
408 |
|
|
|
3.53 |
|
|
|
344 |
|
|
|
2.39 |
|
Other corporate lending |
|
|
805 |
|
|
|
18.54 |
|
|
|
755 |
|
|
|
17.53 |
|
|
|
1,316 |
|
|
|
18.83 |
|
|
|
1,699 |
|
|
|
19.58 |
|
|
|
2,574 |
|
|
|
25.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total foreign |
|
|
1,782 |
|
|
|
49.92 |
|
|
|
1,336 |
|
|
|
50.85 |
|
|
|
1,909 |
|
|
|
49.43 |
|
|
|
2,395 |
|
|
|
48.89 |
|
|
|
3,190 |
|
|
|
54.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
2,611 |
|
|
|
100.00 |
|
|
|
2,001 |
|
|
|
100.00 |
|
|
|
2,642 |
|
|
|
100.00 |
|
|
|
3,313 |
|
|
|
100.00 |
|
|
|
4,262 |
|
|
|
100.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The percentages represent the loans in each category as a percentage of the total loan
portfolio for loans and advances to banks and customers. |
DEPOSITS
The aggregate average balance of all the Groups interest-bearing deposits (from banks and customer
accounts) increased by 2.3% to EUR 681,766 million for 2008, compared to 2007. Interest rates paid
reflect market conditions. The effect on net interest income depends upon competitive pricing and
the level of interest income that can be generated through the use of funds.
Deposits by banks are primarily time deposits, the majority of which are raised by the Groups
Amsterdam based money market operations in the worlds major financial markets.
Certificates of deposit represent 44% of the category Debt securities (31% at the end of 2007).
These instruments are issued as part of liquidity management with maturities generally of less than
three months.
61
The following table includes the average deposit balance by category of deposit and the related
average rate.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
2007 |
|
2006 |
|
|
Average |
|
Average |
|
Average |
|
Average |
|
Average |
|
Average |
|
|
deposit |
|
rate |
|
deposit |
|
rate |
|
deposit |
|
rate |
|
|
(EUR millions) |
|
% |
|
(EUR millions) |
|
% |
|
(EUR millions) |
|
% |
Deposits by banks |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In domestic offices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand non-interest bearing |
|
|
9,797 |
|
|
|
|
|
|
|
4,278 |
|
|
|
|
|
|
|
2,404 |
|
|
|
|
|
interest bearing |
|
|
11,821 |
|
|
|
3.8 |
|
|
|
20,909 |
|
|
|
5.3 |
|
|
|
16,118 |
|
|
|
4.5 |
|
Time |
|
|
49,147 |
|
|
|
3.7 |
|
|
|
58,601 |
|
|
|
3.1 |
|
|
|
31,896 |
|
|
|
4.3 |
|
Other |
|
|
12,213 |
|
|
|
3.6 |
|
|
|
1,900 |
|
|
|
4.1 |
|
|
|
1,474 |
|
|
|
4.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total domestic offices |
|
|
82,978 |
|
|
|
|
|
|
|
85,688 |
|
|
|
|
|
|
|
51,892 |
|
|
|
|
|
In foreign offices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand non-interest bearing |
|
|
3,374 |
|
|
|
|
|
|
|
2,149 |
|
|
|
|
|
|
|
1,556 |
|
|
|
|
|
interest bearing |
|
|
12,175 |
|
|
|
3.9 |
|
|
|
7,295 |
|
|
|
5.8 |
|
|
|
4,184 |
|
|
|
3.2 |
|
Time |
|
|
40,425 |
|
|
|
5.1 |
|
|
|
35,679 |
|
|
|
5.3 |
|
|
|
33,802 |
|
|
|
3.4 |
|
Other |
|
|
31,121 |
|
|
|
4.8 |
|
|
|
31,975 |
|
|
|
4.7 |
|
|
|
31,520 |
|
|
|
4.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total foreign offices |
|
|
87,095 |
|
|
|
|
|
|
|
77,098 |
|
|
|
|
|
|
|
71,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deposits by banks |
|
|
170,073 |
|
|
|
|
|
|
|
162,786 |
|
|
|
|
|
|
|
122,954 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In domestic offices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand non-interest bearing |
|
|
15,041 |
|
|
|
|
|
|
|
16,702 |
|
|
|
|
|
|
|
15,804 |
|
|
|
|
|
interest bearing |
|
|
108,589 |
|
|
|
1.7 |
|
|
|
100,618 |
|
|
|
2.1 |
|
|
|
86,748 |
|
|
|
1.8 |
|
Savings |
|
|
57,475 |
|
|
|
2.8 |
|
|
|
63,001 |
|
|
|
2.3 |
|
|
|
66,765 |
|
|
|
2.3 |
|
Time |
|
|
34,856 |
|
|
|
4.1 |
|
|
|
35,767 |
|
|
|
3.9 |
|
|
|
20,062 |
|
|
|
4.6 |
|
Other |
|
|
7,202 |
|
|
|
3.6 |
|
|
|
1,578 |
|
|
|
4.8 |
|
|
|
1,809 |
|
|
|
4.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total domestic offices |
|
|
223,163 |
|
|
|
|
|
|
|
217,666 |
|
|
|
|
|
|
|
191,188 |
|
|
|
|
|
In foreign offices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand non-interest bearing |
|
|
4,581 |
|
|
|
|
|
|
|
4,887 |
|
|
|
|
|
|
|
4,401 |
|
|
|
|
|
interest bearing |
|
|
52,089 |
|
|
|
2.8 |
|
|
|
41,519 |
|
|
|
3.5 |
|
|
|
33,403 |
|
|
|
2.3 |
|
Savings |
|
|
229,149 |
|
|
|
3.9 |
|
|
|
228,030 |
|
|
|
3.8 |
|
|
|
228,636 |
|
|
|
3.4 |
|
Time |
|
|
33,018 |
|
|
|
5.0 |
|
|
|
34,987 |
|
|
|
3.8 |
|
|
|
28,149 |
|
|
|
3.9 |
|
Other |
|
|
2,486 |
|
|
|
4.9 |
|
|
|
4,672 |
|
|
|
3.6 |
|
|
|
9,673 |
|
|
|
1.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total foreign offices |
|
|
321,323 |
|
|
|
|
|
|
|
314,095 |
|
|
|
|
|
|
|
304,262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total customers accounts |
|
|
544,486 |
|
|
|
|
|
|
|
531,761 |
|
|
|
|
|
|
|
495,450 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In domestic offices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures |
|
|
13,379 |
|
|
|
4.8 |
|
|
|
5,054 |
|
|
|
5.0 |
|
|
|
5,481 |
|
|
|
4.4 |
|
Certificates of deposit |
|
|
8,887 |
|
|
|
4.6 |
|
|
|
3,441 |
|
|
|
4.7 |
|
|
|
2,531 |
|
|
|
3.8 |
|
Other |
|
|
2,691 |
|
|
|
5.4 |
|
|
|
2,216 |
|
|
|
5.7 |
|
|
|
1,722 |
|
|
|
4.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total domestic offices |
|
|
24,957 |
|
|
|
|
|
|
|
10,711 |
|
|
|
|
|
|
|
9,734 |
|
|
|
|
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008 |
|
2007 |
|
2006 |
|
|
Average |
|
Average |
|
Average |
|
Average |
|
Average |
|
Average |
|
|
deposit |
|
rate |
|
deposit |
|
rate |
|
deposit |
|
rate |
|
|
(EUR millions) |
|
% |
|
(EUR millions) |
|
% |
|
(EUR millions) |
|
% |
In foreign offices: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debentures |
|
|
8,552 |
|
|
|
6.0 |
|
|
|
8,609 |
|
|
|
5.8 |
|
|
|
23,197 |
|
|
|
3.8 |
|
Certificates of deposit |
|
|
25,665 |
|
|
|
5.4 |
|
|
|
17,815 |
|
|
|
5.9 |
|
|
|
11,027 |
|
|
|
5.0 |
|
Other |
|
|
18,611 |
|
|
|
3.5 |
|
|
|
32,008 |
|
|
|
5.3 |
|
|
|
28,150 |
|
|
|
4.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total foreign offices |
|
|
52.828 |
|
|
|
|
|
|
|
58,432 |
|
|
|
|
|
|
|
62,374 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt securities |
|
|
77,785 |
|
|
|
|
|
|
|
69,143 |
|
|
|
|
|
|
|
72,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2008, 2007 and 2006, the aggregate amount of deposits by foreign
depositors in domestic offices was EUR 77,958 million, EUR 78,227 million and EUR 69,838 million,
respectively.
On December 31, 2008, the maturity of domestic time certificates of deposit and other time
deposits, exceeding EUR 20,000, was:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time certificates of |
|
|
|
|
deposit |
|
Other time deposits |
|
|
(EUR |
|
% |
|
(EUR |
|
% |
|
|
millions) |
|
|
|
|
|
millions) |
|
|
|
|
3 months or less |
|
|
5,374 |
|
|
|
82.8 |
|
|
|
82,307 |
|
|
|
81.4 |
|
6 months or less but over 3 months |
|
|
733 |
|
|
|
11.3 |
|
|
|
8,952 |
|
|
|
8.8 |
|
12 months or less but over 6 months |
|
|
235 |
|
|
|
3.6 |
|
|
|
7,678 |
|
|
|
7.6 |
|
Over 12 months |
|
|
149 |
|
|
|
2.3 |
|
|
|
2,196 |
|
|
|
2.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
6,491 |
|
|
|
100 |
|
|
|
101,133 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows the amount outstanding for time certificates of deposit and other time
deposits exceeding EUR 20,000 issued by foreign offices on December 31, 2008.
|
|
|
|
|
|
|
(EUR millions) |
Time certificates of deposit |
|
|
20,400 |
|
Other time deposits |
|
|
100,784 |
|
Total |
|
|
121,184 |
|
|
|
|
|
|
Short-term Borrowings
Short-term borrowings are borrowings with an original maturity of one year or less. Commercial
paper and securities sold under repurchase agreements are the only significant categories of
short-term borrowings within our banking operations.
The following table sets forth certain information relating to the categories of our short-term
borrowings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31 |
|
|
2008 |
|
2007 |
|
2006 |
|
|
(EUR millions, |
IFRS-IASB |
|
except % data) |
Commercial paper: |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year |
|
|
18,444 |
|
|
|
14,393 |
|
|
|
35,682 |
|
Monthly average balance outstanding during the year |
|
|
17,949 |
|
|
|
30,403 |
|
|
|
26,416 |
|
Maximum balance outstanding at any period end during the year |
|
|
19,319 |
|
|
|
37,304 |
|
|
|
35,682 |
|
Weighted average interest rate during the year |
|
|
3.80 |
% |
|
|
5.80 |
% |
|
|
4.87 |
% |
Weighted average interest rate on balance at the end of the year |
|
|
3.70 |
% |
|
|
6.02 |
% |
|
|
3.60 |
% |
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31 |
|
|
2008 |
|
2007 |
|
2006 |
|
|
(EUR millions, |
IFRS-IASB |
|
except % data) |
Securities sold under repurchase agreements: |
|
|
|
|
|
|
|
|
|
|
|
|
Balance at the end of the year |
|
|
110,202 |
|
|
|
127,111 |
|
|
|
101,239 |
|
Monthly average balance outstanding during the year |
|
|
148,613 |
|
|
|
124,723 |
|
|
|
103,951 |
|
Maximum balance outstanding at any period end during the year |
|
|
178,185 |
|
|
|
142,753 |
|
|
|
122,619 |
|
Weighted average interest rate during the year |
|
|
3.17 |
% |
|
|
4.66 |
% |
|
|
3.03 |
% |
Weighted average interest rate on balance at the end of the year |
|
|
4.27 |
% |
|
|
4.57 |
% |
|
|
3.11 |
% |
64
Item
18: ING Group Consolidated Financial Statements (IFRS-IASB)
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
F 2 |
|
|
|
|
|
F 3 |
|
|
|
|
|
F 4 |
|
|
|
|
|
F 5 |
|
|
|
|
|
F 6 |
|
|
|
|
|
F 8 |
|
|
|
|
|
F 27 |
|
|
|
|
|
F 28 |
|
|
|
|
|
F 63 |
|
|
|
|
|
F 88 |
|
|
|
|
|
F 99 |
|
|
|
|
|
F 104 |
|
|
|
|
|
F 105 |
|
|
|
|
|
F 163 |
|
|
|
|
|
F 169 |
|
|
|
|
|
F 171 |
|
|
|
|
|
F 184 |
|
|
|
|
|
F 185 |
|
|
|
|
|
F 187 |
|
|
|
|
|
F 197 |
|
|
|
|
|
F 198 |
|
|
|
|
|
F 199 |
|
|
|
|
|
F 200 |
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders, the Supervisory Board and the Executive Board of ING Groep N.V.
We have audited the accompanying consolidated balance sheets of ING Groep N.V. (ING Group), as of
December 31, 2008 and 2007, and the related consolidated profit and loss accounts, consolidated
statements of cash flows and consolidated statements of changes in equity for each of the three
years in the period ended December 31, 2008 as included in this
Form 6-K. Our audits also included the financial statement
schedules listed in the Index at Item 18. These financial statements and schedules are the
responsibility of the Companys management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits. We did not audit the consolidated financial
statements of ING Bank N.V., a wholly owned subsidiary, for the years ending December 31, 2007 and
2006. In our position we did not audit capital base, as defined in Note 2.2.2 of the notes to the
consolidated financial statements, constituting 41% in 2007 and net profit constituting 32% in 2007
and 38% in 2006 of the related consolidated totals of ING Groep N.V. These data were reported on by
other auditors whose report has been furnished to us, and our opinion insofar as it relates to data
included for ING Bank N.V. is based solely on the report of the other auditors.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts (including the
conversion of the financial statements of ING Bank N.V. to International Financial Reporting
Standards as issued by the International Accounting Standards Board as of December 31, 2007 and for
each of the two years in the period then ended) and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the consolidated financial
statements referred to above present fairly, in all material respects, the consolidated financial
position of the ING Groep N.V. as of December 31, 2008 and 2007, and the consolidated results of
its operations, and its cash flows for each of the three years in the period ended December 31,
2008, in conformity with International Financial Reporting Standards as issued by the International
Accounting Standards Board. Also, in our opinion, the related financial statement schedules, when
considered in relation to the basic financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the effectiveness of ING Groep N.V.s internal control over financial
reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated March 16, 2009 expressed an unqualified opinion thereon.
Amsterdam, the Netherlands
October 23, 2009
Ernst & Young Accountants LLP
F-2
CONSOLIDATED BALANCE SHEET OF ING GROUP AS AT DECEMBER 31,
Before profit appropriation
|
|
|
|
|
|
|
|
|
amounts in millions of euros |
|
2008 |
|
|
2007 |
|
|
ASSETS |
|
|
|
|
|
|
|
|
Cash and balances with central banks 1) |
|
|
22,045 |
|
|
|
12,406 |
|
Amounts due from banks 2) |
|
|
48,447 |
|
|
|
48,875 |
|
Financial assets at fair value through profit and loss 3) |
|
|
|
|
|
|
|
|
trading assets |
|
|
160,378 |
|
|
|
193,213 |
|
investments for risk of policyholders |
|
|
95,366 |
|
|
|
114,827 |
|
non-trading derivatives |
|
|
16,484 |
|
|
|
7,637 |
|
designated as at fair value through profit and loss |
|
|
8,277 |
|
|
|
11,453 |
|
Investments 4) |
|
|
|
|
|
|
|
|
available-for-sale |
|
|
242,852 |
|
|
|
275,897 |
|
held-to-maturity |
|
|
15,440 |
|
|
|
16,753 |
|
Loans and advances to customers 5) |
|
|
616,776 |
|
|
|
553,658 |
|
Reinsurance contracts 17) |
|
|
5,797 |
|
|
|
5,874 |
|
Investments in associates 6) |
|
|
4,355 |
|
|
|
5,014 |
|
Real estate investments 7) |
|
|
4,300 |
|
|
|
4,829 |
|
Property and equipment 8) |
|
|
6,396 |
|
|
|
6,237 |
|
Intangible assets 9) |
|
|
6,915 |
|
|
|
5,740 |
|
Deferred acquisition costs 10) |
|
|
11,843 |
|
|
|
10,692 |
|
Other assets 11) |
|
|
62,977 |
|
|
|
40,099 |
|
|
|
|
Total assets |
|
|
1,328,648 |
|
|
|
1,313,204 |
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
Shareholders equity (parent) 12) |
|
|
15,080 |
|
|
|
37,718 |
|
Non-voting equity securities 12) |
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
|
25,080 |
|
|
|
37,718 |
|
Minority interests |
|
|
1,594 |
|
|
|
2,323 |
|
|
|
|
Total equity |
|
|
26,674 |
|
|
|
40,041 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
Preference shares 13) |
|
|
|
|
|
|
21 |
|
Subordinated loans 14) |
|
|
10,281 |
|
|
|
7,325 |
|
Debt securities in issue 15) |
|
|
96,488 |
|
|
|
66,995 |
|
Other borrowed funds 16) |
|
|
31,198 |
|
|
|
27,058 |
|
Insurance and investment contracts 17) |
|
|
240,790 |
|
|
|
265,712 |
|
Amounts due to banks 18) |
|
|
152,265 |
|
|
|
166,972 |
|
Customer deposits and other funds on deposit 19) |
|
|
522,783 |
|
|
|
525,216 |
|
Financial liabilities at fair value through profit and loss 20) |
|
|
|
|
|
|
|
|
trading liabilities |
|
|
152,616 |
|
|
|
148,988 |
|
non-trading derivatives |
|
|
21,773 |
|
|
|
6,951 |
|
designated as at fair value through profit and loss |
|
|
14,009 |
|
|
|
13,882 |
|
Other liabilities 21) |
|
|
59,771 |
|
|
|
44,043 |
|
|
|
|
Total liabilities |
|
|
1,301,974 |
|
|
|
1,273,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
|
1,328,648 |
|
|
|
1,313,204 |
|
|
|
|
References
relate to the notes starting on page F-28. These form an integral part of the
consolidated annual accounts.
F-3
CONSOLIDATED PROFIT AND LOSS ACCOUNT OF ING GROUP
For the years ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amounts in millions of euros |
|
2008 |
|
|
2008 |
|
|
2007 |
|
|
2007 |
|
|
2006 |
|
|
2006 |
|
|
Interest income banking operations |
|
|
97,011 |
|
|
|
|
|
|
|
76,749 |
|
|
|
|
|
|
|
59,170 |
|
|
|
|
|
Interest expense banking operations |
|
|
(85,969 |
) |
|
|
|
|
|
|
(67,773 |
) |
|
|
|
|
|
|
(49,978 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest result banking operations 34) |
|
|
|
|
|
|
11,042 |
|
|
|
|
|
|
|
8,976 |
|
|
|
|
|
|
|
9,192 |
|
Gross premium income 35) |
|
|
|
|
|
|
43,812 |
|
|
|
|
|
|
|
46,818 |
|
|
|
|
|
|
|
46,835 |
|
Investment income 36) |
|
|
|
|
|
|
4,664 |
|
|
|
|
|
|
|
13,352 |
|
|
|
|
|
|
|
10,907 |
|
Net gains/losses on disposals of group
companies |
|
|
|
|
|
|
17 |
|
|
|
|
|
|
|
430 |
|
|
|
|
|
|
|
1 |
|
Gross commission income |
|
|
7,504 |
|
|
|
|
|
|
|
7,693 |
|
|
|
|
|
|
|
6,867 |
|
|
|
|
|
Commission expense |
|
|
(2,539 |
) |
|
|
|
|
|
|
(2,866 |
) |
|
|
|
|
|
|
(2,551 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commission income 37) |
|
|
|
|
|
|
4,965 |
|
|
|
|
|
|
|
4,827 |
|
|
|
|
|
|
|
4,316 |
|
Valuation results on non-trading
derivatives 38 |
|
|
|
|
|
|
(1,409 |
) |
|
|
|
|
|
|
(50 |
) |
|
|
|
|
|
|
272 |
|
Net trading income 39) |
|
|
|
|
|
|
(749 |
) |
|
|
|
|
|
|
1,119 |
|
|
|
|
|
|
|
1,172 |
|
Share of profit from associates 6) |
|
|
|
|
|
|
(404 |
) |
|
|
|
|
|
|
740 |
|
|
|
|
|
|
|
638 |
|
Other income 40) |
|
|
|
|
|
|
644 |
|
|
|
|
|
|
|
885 |
|
|
|
|
|
|
|
471 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
|
|
|
|
62,582 |
|
|
|
|
|
|
|
77,097 |
|
|
|
|
|
|
|
73,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross underwriting expenditure 41) |
|
|
18,831 |
|
|
|
|
|
|
|
51,818 |
|
|
|
|
|
|
|
53,065 |
|
|
|
|
|
Investment result for risk of policyholders |
|
|
32,408 |
|
|
|
|
|
|
|
(1,079 |
) |
|
|
|
|
|
|
(2,702 |
) |
|
|
|
|
Reinsurance recoveries |
|
|
(1,754 |
) |
|
|
|
|
|
|
(1,906 |
) |
|
|
|
|
|
|
(2,175 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure 41) |
|
|
|
|
|
|
49,485 |
|
|
|
|
|
|
|
48,833 |
|
|
|
|
|
|
|
48,188 |
|
Addition to loan loss provisions 5) |
|
|
|
|
|
|
1,280 |
|
|
|
|
|
|
|
125 |
|
|
|
|
|
|
|
103 |
|
Intangible amortization and other
impairments 42) |
|
|
|
|
|
|
464 |
|
|
|
|
|
|
|
15 |
|
|
|
|
|
|
|
35 |
|
Staff expenses 43) |
|
|
|
|
|
|
8,764 |
|
|
|
|
|
|
|
8,261 |
|
|
|
|
|
|
|
7,918 |
|
Other interest expenses 44) |
|
|
|
|
|
|
978 |
|
|
|
|
|
|
|
1,102 |
|
|
|
|
|
|
|
1,016 |
|
Other operating expenses 45) |
|
|
|
|
|
|
6,807 |
|
|
|
|
|
|
|
7,207 |
|
|
|
|
|
|
|
6,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
|
|
|
|
67,778 |
|
|
|
|
|
|
|
65,543 |
|
|
|
|
|
|
|
63,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Result before tax |
|
|
|
|
|
|
(5,196 |
) |
|
|
|
|
|
|
11,554 |
|
|
|
|
|
|
|
10,123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation 46) |
|
|
|
|
|
|
(1,667 |
) |
|
|
|
|
|
|
1,665 |
|
|
|
|
|
|
|
1,961 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net result (before minority interests) |
|
|
|
|
|
|
(3,529 |
) |
|
|
|
|
|
|
9,889 |
|
|
|
|
|
|
|
8,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equityholders of the parent |
|
|
|
|
|
|
(3,492 |
) |
|
|
|
|
|
|
9,622 |
|
|
|
|
|
|
|
7,821 |
|
Minority interests |
|
|
|
|
|
|
(37 |
) |
|
|
|
|
|
|
267 |
|
|
|
|
|
|
|
341 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,529 |
) |
|
|
|
|
|
|
9,889 |
|
|
|
|
|
|
|
8,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amounts in euros |
|
2008 |
|
|
2007 |
|
|
2006 |
|
|
Basic earnings per ordinary share 47) |
|
|
(1.71 |
) |
|
|
4.49 |
|
|
|
3.62 |
|
Earnings after attribution to non-voting
equity securities per ordinary share 47) |
|
|
(1.92 |
) |
|
|
4.49 |
|
|
|
3.62 |
|
Diluted earnings per ordinary share 47) |
|
|
(1.71 |
) |
|
|
4.46 |
|
|
|
3.59 |
|
Dividend per ordinary share 48) |
|
|
0.74 |
|
|
|
1.48 |
|
|
|
1.32 |
|
References relate
to the notes starting on page F-88. These form an integral part of the
consolidated annual accounts.
F-4
CONSOLIDATED STATEMENT OF CASH FLOWS OF ING GROUP
For the years ended December 31,