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

For June 30, 2005

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): _______

    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): _______

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 SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 333-84226) OF ING GROEP N.V. AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.

 

 

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Introduction

PRESENTATION OF INFORMATION

In this Report on Form 6-K (“Form 6-K”), “ING Groep N.V.” refers to the ING holding company incorporated under the laws of the Netherlands, and references to “ING”, “ING Group”, the “Company” and the “Group” refer to ING Groep N.V. and its consolidated subsidiaries. ING Groep N.V.’s primary insurance and banking subholdings 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.

Unless otherwise specified or the context otherwise requires, references to “US$” and “Dollars” are to United States dollars and references to “EUR” are to euros.

CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS

Certain of the statements contained in this Form 6-K that are not historical facts are statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation,

•		changes in general economic conditions, including in particular economic conditions in ING’s core markets,
•		changes in performance of financial markets, including emerging markets,
•		the frequency and severity of insured loss events,
•		changes affecting mortality and morbidity levels and trends,
•		changes affecting persistency levels,
•		changes affecting interest rate levels,
•		changes affecting currency exchange rates, including the euro/U.S. dollar exchange rate,
•		increasing levels of competition in the Netherlands, Belgium, the Rest of Europe, the United States and other markets in which we do business, including emerging markets,
•		changes in laws and regulations,
•		regulatory changes relating to the banking or insurance industries,
•		changes in the policies of central banks and/or foreign governments,
•		general competitive factors, in each case on a global, regional and/or national basis.

ING is under no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason.

CHANGES IN PRESENTATION

ING Group applies International Financial Reporting Standards as endorsed by the European Union (“EU”). IFRS as endorsed by the EU differs from full IFRS as promulgated by the International Accounting Standards Board only in respect of IAS 39 (Financial instruments) in the following areas:

	—		elimination of the option to measure non-trading financial liabilities at fair value;
	—		elimination of certain restrictions concerning hedge accounting for portfolio hedges of core deposits.

ING Group adopted IFRS as endorsed by the EU (“IFRS”) as of 2005. The six months 2004 figures have been restated to comply with IFRS. However, as permitted under IFRS 1, First-time Adoption of International Financial Reporting Standards (“IFRS 1”), the 2004 comparatives exclude the impact of IAS 32, Financial Instruments: Disclosure and Presentation (“IAS 32”), IAS 39, Financial Instruments: Recognition and Measurement (“IAS 39”) and IFRS 4, Insurance Contracts (“IFRS 4”), which were implemented starting from January 1, 2005. In the first half of 2005, IAS 32, 39 and IFRS 4 had a total positive impact of approximately EUR 80 million on the reported net profit. For the insurance operations,

the standards had a positive net impact of approximately EUR 10 million, mainly due to the revaluation of non-trading derivatives, as well as prepayment penalties on mortgages and realized gains on bonds, which are no longer amortized. In the banking operations, the impact of IAS 32 and 39 was approximately EUR 70 million after tax, mainly due to unrealized results on voluntary trade assets, realized gains on the sale of bonds and higher prepayment penalties on mortgages. That was partially offset by the negative revaluation of non-trading derivatives and the asymmetrical accounting for market-making in ING bonds.

Subsequent to announcing six months 2004 results and filing of the related press release with the Dutch regulators (which press release was subsequently furnished to the SEC in a Form 6-K on August 5, 2004), but prior to the filing with the SEC of unaudited condensed consolidated financial statements at and for the six months ended June 30, 2004 in a Form 6-K on November 5, 2004, ING finalized an actuarial study of the mortality experience of ING’s individual reinsurance business in the U.S. that indicated a deficiency in reserves for such business. Accordingly, ING recognized a charge of EUR 164 million in its unaudited condensed consolidated financial statements at and for the six months ended June 30, 2004 to reflect this new information. For purposes of local reporting in the Netherlands, this charge was reported in the third quarter 2004 results as announced in a press release dated November 4, 2004. For purposes of consistency, the six months figures 2004 included in this Form 6-K are consistent with the June 30, 2004 amounts reported in the unaudited condensed consolidated financial statements included in the Form 6-K filed on November 5, 2004.

RECENT DEVELOPMENTS

On July 14, 2005 ING Group announced that ING Comercial América, the insurance company of ING in Mexico, has been notified by a local court in Mexico City about a ruling in the judicial process with regard to a civil claim involving the Mexican company Grupo Fertinal S.A. and certain affiliates. According to this ruling, regardless of the actual damage sustained that resulted in the underlying claim, Grupo Fertinal has been awarded approximately US$275 million under the policy, plus consequential damages of US$25 million. ING Comercial América is studying the ruling and intends to appeal. ING Group expects that, after the final outcome of this judicial procedure, the risk in the policy will be adequately covered by provisions taken as well as reinsurance coverage.

On April 26, 2005 the Annual General Meeting of Shareholders appointed Mr. Jan Hommen (per June 1, 2005) and Ms. Christine Lagarde (per April 27, 2005) as new members of the Supervisory Board. Mrs. Luella Gross Goldberg and Mr. Godfried van der Lugt were reappointed as members of the Supervisory Board of ING Group. Mr. Jan Timmer stepped down as a Supervisory Board member having reached the end of his third term. On June 15, 2005 ING Group announced that Ms. Christine Lagarde resigned from the Supervisory Board of ING Group, after she accepted an invitation to become Minister for Foreign Trade in the Government of France.

On March 25, 2005 ING Bank announced an agreement with the bank of Beijing to acquire up to a 19.9% holding for a consideration of approximately EUR 166 million as part of a broader strategic alliance. Subject to final regulatory approvals, ING Bank will take two seats to join the current 15-person board of directors of the Bank of Beijing as part of the strategic alliance.

On 28 February, 2005 ING announced it would reduce its current stake of 87.77% in Bank Slaski to 75% by the end of March 2005. The transaction involved an offering of 1,661,141 common shares of ING Bank Slaski held by ING Bank N.V., which was completed at the end of March 2005. By reducing its stake in Bank Slaski, ING Group fulfills requirements set by the Polish regulator in 2001. As a result of this transaction a gain of EUR 92 million after tax was booked in the first quarter of 2005.

On January 13, 2005 ING Canada announced that the underwriters of its initial public offering had exercised their over-allotment option in full and purchased an additional 5,232,000 common shares of ING Canada at the offering price of CDN$26 for gross proceeds of CDN$136 million. The total proceeds of the IPO of CDN$1,043 million resulted in a net gain for ING Group of about EUR 285 million after tax in 2004, EUR 19 million after tax was booked in the first quarter of 2005. Following the offering ING Group held approximately 70% of the common shares of ING Canada.

CHANGES IN COMPOSITION OF THE GROUP

On June 17, 2005 ING and GE Commercial Finance completed the restructuring of the companies’ working capital finance joint venture, NMB Heller as announced on December 22, 2004. The restructuring has led to a capital gain of EUR 47 million after tax, booked in the second quarter of 2005.

On June 6, 2005 ING Group reached agreement with TBIH Financial Services Group N.V. on the acquisition of VSP Tatry Sympatia, the management company of the leading private pension fund in the Slovak Republic. The value of the transaction is approximately EUR 35 million and is subject to regulatory approvals.

On May 19, 2005 ING Group closed the sale of Life Insurance Company of Georgia to Jackson National Life Insurance Company, as announced on November 18, 2004. The loss from this transaction was EUR 39 million after tax and was booked in the second quarter of 2005.

On March 31, 2005 ING Group finalized the sale of Baring Asset Management, as agreed on November 22, 2004, to MassMutual Financial Group and Northern Trust Corp, with effect from March 31, 2005. As earlier disclosed, the sales resulted in a gain of EUR 269 million after tax and was booked in the first quarter of 2005.

On February 18, 2005 ING Group and KPN (Koninklijke PTT Nederland) finalized the sale of internet provider Freeler to KPN. The signing of the letter of intent regarding the purchase of Freeler by KPN was announced on December 9, 2004. The gain from this transaction was EUR 10 million after tax and was booked in the first quarter of 2005.

EXCHANGE RATES

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 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”).

		U.S. dollars per euro
						Average
Calendar Period		Period End				Rate(1)				High				Low
2000			0.9388				0.9207				1.0335				0.8270
2001			0.8901				0.8909				0.9535				0.8370
2002			1.0485				0.9495				1.0485				0.8594
2003			1.2597				1.2074				1.2597				1.0361
2004			1.3538				1.2478				1.3625				1.1801
2005 through August 31, 2005			1.2330				1.2640				1.3476				1.1917

(1)

The average of the Noon Buying Rates on the last business day of each full calendar month during the period.

The Noon Buying Rate at such dates differed from the rates used in the preparation of ING’s Consolidated Financial Statements. The rate used by ING Group in translating U.S. dollar denominated assets and liabilities as at June 30, 2005 was EUR 1.00 = US$1.2071 (January 1, 2005: EUR 1.00 = US$1.3645). The average rate used by ING Group in translating U.S. dollar denominated income and expenses for the six months ending June 30, 2005 was EUR 1.00 = US$1.2893 (six months ending June 30, 2004: EUR 1.00 = US$1.2277).

CONSOLIDATED RESULTS OF OPERATIONS

The following table sets forth the consolidated results of operations of ING Group for the six months ended June 30, 2005 and 2004:

		Six months ended
		June 30,
		2005				2004
		(EUR millions)
Total income			35,113				33,898
Total expenditure			30,731				30,164
Profit before tax:
Insurance operations			1,816				1,860
Banking operations			2,566				1,874
Profit before tax			4,382				3,734
Taxation			766				962
Third-party interests			124				143
Net profit			3,492				2,629

The following table sets forth the profit before tax of the Group’s consolidated operations by business line for the six months ended June 30, 2005 and 2004:

		Six months ended
		June 30,
		2005				2004
		(EUR millions)
Insurance Europe			1,005				861
Insurance Americas			939				565
Insurance Asia/Pacific			225				537
Wholesale Banking			1,552				1,094
Retail Banking			870				648
ING Direct			254				203
Other (1)			(463	)			(174	)
Profit before tax			4,382				3,734

Total income. Total income of ING Group for the six months ended June 30, 2005 increased by EUR 1,215 million, or 3.6% to EUR 35,113 million, from EUR 33,898 million for the six months ended June 30, 2004, reflecting an increase in income from the Group’s insurance and banking operations of 2.1% and 9.6%, respectively.

Total expenditure. Total expenditure for the six months ended June 30, 2005 increased by EUR 567 million, or 1.9%, to EUR 30,731 million, from EUR 30,164 million for the six months ended June 30, 2004, reflecting an increase in expenditure for the Group’s insurance operations of 2.4% and a decrease in the banking operations of 1.7%.

Profit before tax. The profit before tax of the Group for the six months ended June 30, 2005 increased by EUR 648 million, or 17.4%, to EUR 4,382 million, from EUR 3,734 million for the six months ended June 30, 2004, reflecting a decrease of 2.4% and an increase of 36.9%, respectively, for the Group’s insurance and banking operations. The three banking business lines increased strongly, driven by a sharp decline in risk costs, gains on investments and higher income. The insurance business in Europe and Americas showed good results driven by strong increases in both life insurance (Netherlands, Central Europe and United States) and non-life insurance (Netherlands and Canada). Insurance Asia/Pacific decreased due to a decision to strengthen the reserves in Taiwan as a result of the low interest-rate environment, as discussed below under “Insurance Operations — Reserve-adequacy

testing”, which offset strong growth elsewhere in the region and the sale of the Australian non-life business in 2004. The impact of divestments on profit before tax for the insurance and banking operations is provided below:

Impact of divestments on profit before tax

		Insurance								Banking								Total
		Six months ended								Six months ended								Six months ended
		June 30,								June 30,								June 30,
EUR millions		2005				2004				2005				2004				2005				2004
Gains/losses on divestments			(49	)			(33	)			394				(84	)			345				(117	)
Profit before tax from divested units			12				82				14				98				26				180
Total			(37	)			49				408				14				371				63

Taxation. The Group’s taxes for the six months ended June 30, 2005 decreased to EUR 766 million from EUR 962 million for the six months ended June 30, 2004. This represents a decrease in the overall effective tax rate to 17.5% for the six months ended June 30, 2005, from 25.8% for the six months ended June 30, 2004, mainly due to a lower statutory tax rate in the Netherlands, high tax-exempt gains on divestments and private equity, as well as EUR 135 million in releases from the tax-contingencies reserve due to the favorable resolution of some pending corporate income tax matters.

Net profit. Net profit for the six months ended June 30, 2005 increased by EUR 863 million, or 32.8%, to EUR 3,492 million from EUR 2,629 million for the six months ended June 30, 2004. Net profit from banking increased 65.0% to EUR 2,062 million, mainly as a result of low risk costs, lower taxes, and realized gains on divestments. Net profit from insurance increased 3.7% to EUR 1,430 million mainly due to lower taxes.

Capital ratios. The debt/equity ratio of ING Groep N.V. improved to 9.8% from 10.9% at January 1, 2005. The improvement was caused by a EUR 5.4 billion increase in the Group capital and reserves (excluding third-party interests) due to retained earnings and revaluations. That was partially offset by an increase of EUR 0.1 billion in core debt. The capital coverage ratio for ING’s insurance operations increased to 228% of regulatory requirements at the end of June, compared with 201% at January 1, 2005. The Tier-1 ratio of ING Bank N.V. stood at 7.20% on June 30, 2005, up from 7.00% on January 1, 2005, well above the regulatory required minimum level of 4%.

CONSOLIDATED ASSETS AND LIABILITIES

The following table sets forth ING Group’s consolidated assets and liabilities at June 30, 2005 and January 1, 2005:

		June 30,				Jan. 1,
(amounts in EUR billion, except for amounts per share)		2005				2005
Financial assets marked-to-market			217.7				182.8
Investments			312.8				265.6
Loans and advances to customers			435.8				390.8
Total assets			1,107.1				964.5
Insurance and investment contracts			247.6				218.6
Amounts due to banks			129.3				95.6
Customer deposits and other funds on deposit			445.7				395.7
Debt securities in issue/other borrowed funds			107.0				107.2
Total liabilities			1,070.1				934.1
Capital and reserves			35.3				28.3
Capital and reserves per ordinary share			16.27				13.00

Total assets. Total assets increased by EUR 142.6 billion, or 14.8%, in the first six months of 2005 to EUR 1,107.1 billion from EUR 964.5 billion at January 1, 2005, reflecting, amongst others, increased loans and advances to customers of EUR 45.0 billion and increased investments of EUR 47.2 billion.

Loans and advances to customers. Loans and advances to customers increased by EUR 45.0 billion, or 11.5%, to EUR 435.8 billion at June 30, 2005. Of this amount EUR 37.8 billion refers to loans and advances to customers insurance operations and EUR 403.4 billion relates to loans and advances to customers banking operations, of which EUR 244.6 billion is related to corporate lending and EUR 162.4 billion to personal lending.

Capital and reserves. Group capital and reserves increased by EUR 7.0 billion, or 24.8%, to EUR 35.3 billion at June 30, 2005 compared to EUR 28.3 billion at January 1, 2005. This increase was mainly due to retained net profit of EUR 3.5 billion, unrealized revaluations on debt securities of EUR 1.8 billion, exchange rate differences of EUR 1.6 billion, unrealized revaluations on equities of EUR 0.8 billion and a change in cash-flow hedge reserve of EUR 0.8 billion, mainly offset by the cash dividend payment of EUR (1.3) billion.

INSURANCE OPERATIONS

Reserve-adequacy testing

For many years ING has applied an annual test to assess whether insurance reserves are adequate to meet the estimated future payments on in-force policies using a prudent 90% confidence level. This 90% standard is more conservative than the U.S. GAAP loss-recognition test, which is based on best-estimate assumptions with no prudently margins. In addition to the insurance reserves, ING also holds capital for unexpected risks so that the reserves plus capital meet a confidence level of 99.95% consistent with a target AA rating by Standard & Poor’s.

Despite the low interest-rate environment in many markets, the reserves for the insurance activities of ING Group as a whole are more than adequate on the basis of the prudent 90% internal standard and all regulatory testing. On a stand-alone basis, the insurance reserves are adequate on the prudent 90% basis for all business units, except Taiwan. Using a 50% confidence level as a best-estimate test, Taiwan’s reserves are still adequate.

Taiwan’s inadequacy at 90% is related entirely to an old block of life insurance contracts with long-term interest-rate guarantees of up to 8% which date back to before 2001. Newer products have much lower embedded guarantees of approximately 2%. Further declines in interest rates in Taiwan in the second quarter, as well as the effect of currency exchange rates, modelling refinements and product experience have caused the earlier-reported inadequacy in Taiwan to widen to the extent that Insurance Asia/Pacific as a region now also has a reserve inadequacy based on the 90% standard.

The magnitude of the inadequacy is highly sensitive to interest rates and other assumptions, such as product persistency and mortality. As a result, the inadequacy can only be reliably estimated within a broad range and is bound to vary significantly from quarter to quarter as interest rates change. At June 30, 2005, the reserve inadequacy range for Taiwan is EUR 2.8 to 3.3 billion based on the 90% standard, representing an estimate of the additional liability that could result over the remaining average life of the old block of business, which is approximately 40 years. For Insurance Asia/Pacific the range of the shortfall is EUR 1.5 to 2.0 billion.

The shortfall in Taiwan is equal to about 1% of the Group’s total insurance reserves, and is more than fully compensated by reserves above the prudent 90% level at other insurance units. Nevertheless, in accordance with ING’s policy under these circumstances to restore reserve adequacy over time, ING has decided to strengthen reserves in Taiwan and consider other structural improvements. A charge of EUR 80 million was accordingly taken to strengthen reserves in the first half of 2005.

The Group’s insurance operations contributed EUR 1,816 million and EUR 1,860 million, respectively to the Group’s profit before tax for the six months ended June 30, 2005 and 2004, and EUR 1,430 million and EUR 1,379 million, respectively to the Group’s net profits in these periods. The following table sets forth selected financial information for the Group’s consolidated insurance operations for the six months ended June 30, 2005 and 2004:

		Six months ended
		June 30,
		2005				2004
		(EUR millions)
Income from insurance operations:
Gross premiums written:
Life			19,047				18,139
Non-life			3,577				3,755
Total			22,624				21,894
Net premiums written:
Life			18,078				17,656
Non-life			3,261				3,329
Total			21,339				20,985
Investment income			4,726				4,718
Commission income			622				587
Other income			176				364
Total income			28,148				27,563
Expenditure from insurance operations:
Underwriting expenditure			23,329				22,866
Other interest expenses			535				541
Operating expenses			2,466				2,272
Impairments/investment losses			2				24
Total expenditure			26,332				25,703
Profit from insurance operations before tax:
Life			1,104				1,013
Non-life			712				847
Profit before tax			1,816				1,860
Taxation			277				429
Third-party interests			109				52
Net profit			1,430				1,379

In the second quarter of 2005, ING completed the sale of Life Insurance Company of Georgia (USA). The pre-tax loss was EUR 78 million and the after tax loss was EUR 39 million. The decision to exit the individual life reinsurance business in the United States affected the profit before tax and the net profit for the six months ended June 30, 2004 negatively by EUR 252 million and EUR 164 million, respectively. A gain on the sale of ING’s non-life joint venture in Australia affected the profit before tax for the six months ended June 30, 2004 by EUR 219 million (after tax by EUR 146 million). In addition, a few smaller acquisitions and divestments affected changes in income and profit (e.g. Freeler, IPO Canada). Furthermore, one-off gains from old reinsurance activities affected income and profit before tax for the six months ended June 30, 2004 by EUR 96 million (after tax EUR 92 million).

The following table sets forth the breakdown of gross premiums written and profit before tax by business line / geographical area for the Group’s consolidated insurance operations for the six months ended June 30, 2005 and 2004:

		Gross premiums written								Profit before tax
		Six months ended								Six months ended
		June 30,								June 30,
		2005				2004				2005				2004
		(EUR millions)								(EUR millions)
The Netherlands			3,920				4,182				796				700
Belgium			876				1,193				81				71
Central Europe (including Spain)			777				671				128				90
Insurance Europe			5,573				6,046				1,005				861
North America			9,900				10,444				818				456
Latin America			972				1,086				121				109
Insurance Americas			10,872				11,530				939				565
Asia			6,103				3,554				130				196
Australia			64				749				95				341
Insurance Asia/Pacific			6,167				4,303				225				537
Other(1)			82				92				(353	)			(103	)
Premiums between geographic areas(2)			(70	)			(77	)
Total			22,624				21,894				1,816				1,860

Total income. Total income from insurance operations for the six months ended June 30, 2005 increased by EUR 585 million, or 2.1% to EUR 28,148 million from EUR 27,563 million for the six months ended June 30, 2004, reflecting increases in gross premiums written of the life insurance operations and in commission income, partly offset by lower gross premiums written of the non-life insurance operations and lower other income. Some life products were reclassified as investment contracts under IFRS 4, and, therefore, considerations received in 2005 on these contracts are not reported as premiums. Excluding reclassifications, divestments and currency effects, income increased by 9.6% on a comparable base.

Gross premiums written in the Group’s life operations increased by 5.0% but gross premiums written in non-life operations decreased by 4.7%. Total gross premiums written increased by 3.3%. Excluding reclassifications resulting from the application of IFRS which negatively affected growth in gross premiums by EUR (1,173) million, the effect of exchange rate movements, which negatively affected growth in gross premium income by EUR (365) million (mainly due to the strengthening of the euro versus the US dollar) and the effect of acquisitions and divestments, which negatively affected growth in gross premium income by EUR (44) million, gross premium income for the Group increased by EUR 2,312 million, or 11.5%, over the first six months of 2004 (life operations 14.8% and non-life operations (3.9)%), led by Belgium, Central Europe and Asia.

Investment income increased by EUR 8 million or 0.2% to EUR 4,726 million in the first six months of 2005 as compared to the first six months of 2004. Higher gains on equities, bonds and real estate were offset by a negative impact from currencies, lower interest rates and divestments.

Commission income increased by EUR 35 million, or 6.0% to EUR 622 million, led by an increase in Australia due to a reclassification of products from life insurance to investment products under IFRS 4.

Other income decreased by EUR 188 million, or 51.6% to EUR 176 million, due to the loss of EUR 78 million on the sale of Life of Georgia in the first six months of 2005 and a one-off gain from discontinued reinsurance activities of EUR 96 million and the gain on a US dollar hedge of EUR 158 million included in the first six months of 2004. In addition, in 2005 other income is impacted by EUR 123 million higher results from minority interests mainly due to the deconsolidation of some real estate funds and EUR 55 million valuation results from non-trading derivatives (IFRS impact, nil in 2004).

Operating expenses. Operating expenses for the Group’s insurance operations over the first six months of 2005 increased by EUR 194 million, or 8.5%, to EUR 2,466 million, from EUR 2,272 million for the first six months 2004. However, excluding investments/divestments and exchange rate differences, operating expenses increased by 10.8%, while gross premiums written increased by

11.5% on a comparable base. All business lines generated higher operating expenses. In the Netherlands, operating expenses rose largely as a result of a new collective labour agreement and investment in operations and IT projects. Operating expenses in Canada rose due to the integration of Allianz Canada, while operating expenses in Asia/Pacific increased to support the continued growth of the business.

Impairments/investment losses. Impairments/investment losses dropped to EUR 2 million, or 1 basis point of total fixed-interest securities, which is far below the normalized level of about 20 basis points. In the first six months of 2004, impairments/investment losses amounted to EUR 24 million, or 4 basis points of total fixed-income securities.

Profit before tax. The profit before tax from the Group’s insurance activities for the six months ended June 30, 2005 decreased by EUR 44 million, or 2.4%, to EUR 1,816 million, from EUR 1,860 million for the six months ended June 30, 2004, reflecting an increase in profits of the life operations by 9.0% and a decrease of the non-life operations by 15.9%. However, excluding investments/divestments and exchange rate differences profit before tax increased by EUR 199 million or 12.0% on a comparable base. The increase in profit of the life operations on a comparable base was 7.8% driven by higher results in the US, Central Europe, the Netherlands and Australia. The profit growth of the non-life operations on a comparable base was 19.9% driven by continued strong underwriting results in Canada as well as higher results in the Netherlands and the US, supported by a lower claims ratio. The combined ratio deteriorated slightly to 90% from 89% due to a higher expense ratio.

Taxation. The effective tax rate for the Group’s insurance operations for the six months ended June 30, 2005 was 15.3%, 7.8%-point lower than the 23.1% rate for the six months ended June 30, 2004. The decrease was due to a lower statutory tax rate in the Netherlands, high tax-exempt gains on divestments and private equity, as well as EUR 100 million in releases from the tax-contingencies reserve due to the favourable resolution of some pending corporate income tax matters.

Third-party interests. The increase in third-party interest with EUR 57 million to EUR 109 million in six months ended June 30, 2005 is mainly due to non-life Canada; ING’s stake in ING Canada declined from 100% on June 30, 2004 to 70% on June 30, 2005.

Net profit. The net profit for the Group’s insurance operations for the six months ended June 30, 2005 increased by EUR 51 million, or 3.7%, to EUR 1,430 million, from EUR 1,379 million for the six months ended June 30, 2004.

Life insurance operations

The following table sets forth the breakdown of gross premiums written and profit before tax by business line/geographical area for the Group’s consolidated life insurance operations for the six months ended June 30, 2005 and 2004:

		Gross premiums written								Profit before tax
		Six months ended								Six months ended
		June 30,								June 30,
		2005				2004				2005				2004
		(EUR millions)								(EUR millions)
The Netherlands			2,781				3,070				619				581
Belgium			698				1,013				58				52
Central Europe (incl. Spain)			752				647				124				85
Insurance Europe			4,231				4,730				801				718
North America			8,384				9,082				418				193
Latin America			280				242				53				43
Insurance Americas			8,664				9,324				471				236
Asia			6,083				3,534				128				194
Australia			64				546				95				68
Insurance Asia/Pacific			6,147				4,080				223				262
Other			7				5				(391	)			(203	)
Premiums between geographic areas			(2	)
Total			19,047				18,139				1,104				1,013

Premium income. Gross premium income of the Group’s life operations for the six months ended June 30, 2005 increased by EUR 908 million, or 5.0%, to EUR 19,047 million, from EUR 18,139 million for the six months ended June 30, 2004. Excluding reclassifications resulting from the application of IFRS which negatively affected growth in gross premiums by EUR (1,173) million, the effect of exchange rate movements, which negatively affected growth in gross premium income by EUR (366) million (mainly due to the strengthening of the euro versus the US dollar) and the effect of acquisitions and divestments, which negatively affected growth in gross premium income by EUR (5) million, gross premium income for the Group’s life operations increased by EUR 2,452 million, or 14.8%, over the first six months of 2004, driven by a strong increase in Asia/Pacific (Japan more than doubled premium income), partially offset by lower premiums in the Netherlands and US.

Profit before tax. The profit before tax from life insurance operations for the six months ended June 30, 2005 increased by EUR 91 million, or 9.0%, to EUR 1,104 million, from EUR 1,013 million for the six months ended June 30, 2004. All regions except Asia and Other showed an increase. On a comparable base the increase was EUR 84 million or 7.8%.

Insurance Europe

In the Netherlands, profit before tax for the six months ended June 30, 2005 increased by EUR 38 million, or 6.5%, to EUR 619 million, from EUR 581 million for the six months ended June 30, 2004, mainly due to higher investment results (private equity and real estate) as well as the impact of IFRS (partially as a result of revaluation of embedded derivatives in guaranteed separate account contracts), partially offset by higher expenses due to higher salaries related to a new collective labour agreement, higher marketing costs as well as investments in operations and IT projects. Life premiums decreased by 9.4% mainly due to lower sales of single-premium products as a result of rate adjustments to improve profitability. However, the internal rate of return on new life business increased significantly to 13.6% from 11.0% in 2004, whereas the value of new business improved from EUR 30 million to EUR 47 million due to improved margins.

In Belgium, profit before tax increased by EUR 6 million to EUR 58 million due to higher investment income (dividends) and strong results in unit link products. Life premium income was 31.1% lower due to the reclassification of some products to investment contracts under IFRS. Excluding that impact, life insurance premium income increased by 11.9%.

In Central Europe (including Spain), profit before tax for the six months ended June 30, 2005 increased by EUR 39 million to EUR 124 million mainly due to higher profits in Poland, Hungary and Czech Republic. Lower expenses and higher investment and premium income were the main drivers for this development. ING started a private pension fund in Slovakia at the beginning of 2005. Life premiums increased by 16.2%.

Insurance Americas

In North America, i.e. the US, profit before tax for the six months ended June 30, 2005 increased by EUR 225 million to EUR 418 million, from EUR 193 million for the six months ended June 30, 2004, primarily due to the decision in 2004 to exit the individual life reinsurance business, which affected the profit before tax negatively by EUR 252 million in six months ended June 30, 2004. Excluding this charge, the loss on the sale of Life of Georgia (EUR (78) million) and the profit from discontinued business of Life of Georgia (EUR 12 million in six months 2005 as well as in 2004) and of ING Reinsurance (EUR 16 million in six months 2004) profit before tax of life insurance operations in the US increased by 16.1% to EUR 484 million, driven by strong growth in asset levels over the past year, due to improved investment performance, continued sales growth and good persistency, particularly in annuities. The composite margin after credit-related gains and losses increased sharply to 160 basis points from 138 basis points in the second quarter of 2004, propelled by lower credited rates, higher prepayment penalty income on fixed-income securities and low credit losses.

Premium income declined by EUR 698 million or 7.7% to EUR 8,384 million, mainly due to the lower U.S. dollar, which had a negative impact of EUR 398 million. Premiums were also impacted by a change in the accounting for investment contracts under IFRS 4 (impact EUR (298) million) as well as lower single premiums in the life business. Premium income from variable annuities increased, driven by higher sales of products with living-benefit features. The internal rate of return rose to 10.7% for the first half year 2005, compared with 9.5% for the six months ended June 30, 2004, as a result of higher pricing of new products.

In Latin America, profit before tax of EUR 53 million for the six months ended June 30, 2005, of which EUR 28 million was attributable to Mexico, was EUR 10 million higher than in the same period in 2004, mainly due to higher results in Chile of EUR 7 million, driven by higher realized gains on fixed income securities. Mexico generated slightly higher results mainly due to higher commission income.

Insurance Asia/Pacific

In Asia, profit before tax for the six months ended June 30, 2005 decreased by EUR 66 million to EUR 128 million, from EUR 194 million for the six months ended June 30, 2004.

In Taiwan, due to a further decrease in the already low interest rate, a strengthening of the Taiwan dollar, modelling refinements and product experience, reserves have become inadequate according to ING’s 90% requirement. ING Group uses a prudent 90% confidence level for assessing the reserve adequacy of its business units, which is more conservative than the loss-recognition test used under U.S. GAAP. Using a 50% confidence level, reserves in Taiwan remain adequate. Nonetheless, ING has decided to strengthen reserves to prevent the 90% reserve inadequacy, under current assumptions, from increasing further. As a consequence, a charge of EUR 80 million before tax was taken in the second quarter, and the results from Taiwan are nil for the first half of 2005 (pre-tax profit EUR 71 million in first six months 2004, after a charge of EUR 50 million to strengthen the reserves due to the low interest environment). The inadequacy relates to an old block of business with embedded high interest-rate guarantees dating to before 2001, and such high guarantees were discontinued in 2002. New business production in Taiwan contributed EUR 48 million to the value of new life business in the first half of 2005.

In Japan profit before tax declined by 4.3% to EUR 44 million, due entirely to currency effects. Profit growth related to the strong sales of single-premium variable annuities was offset by less favourable claims experience at the corporate-owned life insurance business. Premium income from single-premium variable annuities increased sharply to EUR 2,698 million from EUR 790 million as a result of strong sales through a diversified distribution network of regional and national banks, securities brokers and independent agents.

In South Korea, profit before tax rose 44.2% to EUR 75 million, due to continued strong growth in premium income and an increase in the scale of the in-force business, which was offset in part by higher claims. Premium income rose 43.8%, driven by higher sales through the tied agency network and continued high persistency on existing contracts. Premiums were also boosted by new products introduced by ING Life Korea, new bancassurance distribution agreements, as well as the launch of the bancassurance joint venture with Kookmin Bank, KB Life, in the first quarter of 2005. Profit in the second quarter of 2005 was negatively impacted by a EUR 16 million unrealized loss on cash-flow hedges, which were determined not to qualify for hedge accounting under IFRS.

In the Rest of Asia, profit before tax declined to EUR 9 million from EUR 25 million in the first half of 2004, when results were positively impacted by the release of a EUR 30 million reserve for a wage tax assessment. ING’s 30% owned mutual fund joint venture, China Merchant Funds Management Company Ltd., made a positive contribution to profit before tax by raising more than EUR 1.7 billion in its Cash Enhancement Fund. It now has EUR 3.3 billion of assets under management, and is the largest non-domestic asset manager in the country.

The profit before tax in Australia increased by EUR 27 million to EUR 95 million mainly due to EUR 8 million higher profit from the life insurance and wealth management joint venture. Profit before tax also includes EUR 28 million (EUR 11 million in the first six months of 2004) from ING’s holding company in Australia, including additional interest income from the sales proceeds related to the non-life joint venture. The Australian investment management business posted a profit of EUR 5 million, up 12.9% from the first half last year. Life premium income declined to EUR 64 million from EUR 546 million, due to the reclassification of the majority of products from life insurance to investment products under IFRS.

Other

The profit before tax of Other decreased on balance by EUR 188 million mainly, due to EUR 158 million hedge profit in first six months 2004 (ING decided to stop hedging its US dollar exposure from 2005), and in addition, EUR 28 million higher paid interest on core debt.

Non-life insurance operations

The following table sets forth the breakdown of gross premiums written and profit before tax by business line / geographical area for the Group’s consolidated non-life insurance operations for the six months ended June 30, 2005 and 2004:

		Gross premiums written								Profit before tax
		Six months ended								Six months ended
		June 30,								June 30,
		2005				2004				2005				2004
		(EUR millions)								(EUR millions)
The Netherlands			1,139				1,112				177				119
Belgium			178				180				23				19
Central Europe (incl. Spain)			24				25				4				5
Insurance Europe			1,341				1,317				204				143
North America			1,516				1,362				400				263
Latin America			692				844				68				66
Insurance Americas			2,208				2,206				468				329
Asia			20				20				2				2
Australia							203								273
Insurance Asia/Pacific			20				223				2				275
Other			76				86				38				100
Premiums between geographic areas(1)			(68	)			(77	)
Total			3,577				3,755				712				847

Premium income. Gross premium income of the Group’s non-life operations for the six months ended June 30, 2005 decreased by EUR 178 million, or 4.7%, to EUR 3,577 million, from EUR 3,755 million for the six months ended June 30, 2004. Excluding the effect of exchange rate movements, which positively affected the growth of gross premium income by EUR 1 million, and the effect of acquisitions and divestments, which negatively affected the growth of gross premium income by EUR 39 million, gross premium income for the Group decreased by EUR 140 million, or 3.9%, over the first six months of 2004. The Netherlands showed an increase of premium of 2.4% to EUR 1,139 million, but excluding acquisitions and divestments (sale of Dutch health insurance business in the second quarter 2004) the increase was 2.5%. At constant exchange rates and excluding EUR 164 million resulting from the acquisition of Allianz Canada, premium income in Canada decreased by 2.1% to EUR 1,091 million due to the decrease in premium rates as a result of regulatory changes. Mexico showed a decrease by 18.1%, at constant exchange rates, to EUR 570 million due to a strategic decision to move away from large case property and casualty commercial business. In 2004 ING sold Australia Non-life.

The following table sets forth the breakdown of operating profit before tax by line of business for the Group’s consolidated non-life insurance operations for the six months ended June 30, 2005 and 2004:

		Six months ended
		June 30,
		2005				2004
		(EUR millions)
Line of business
Fire			110				116
Motor			318				215
Health			56				26
Loss of income/Accident			98				109
Other (1)			107				281
Reinsurance assumed			23				100
Total			712				847

Profit before tax. The profit before tax from non-life insurance operations for the six months ended June 30, 2005 decreased by EUR 135 million, or 15.9%, to EUR 712 million, from EUR 847 million for the six months ended June 30, 2004. But excluding investments/divestments (mainly gain on sale Australia non-life in 2004) and exchange rate differences, there was an increase of EUR 115 million, or 19.9%, boosted by strong underwriting results in Canada as well as higher results in the Netherlands, Belgium and the U.S., supported by a lower claims ratio, partly offset by lower gains from old reinsurance business. The combined ratio deteriorated slightly to 90% from 89% in the first half of 2004 due to a higher expense ratio.

Insurance Europe

In the Netherlands, the profit before tax increased by EUR 58 million, or 48.7%, to EUR 177 million, driven by higher investment income as well as favorable claims experience, particularly in fire, motor and personal liability insurance.

In Belgium, the profit before tax increased by EUR 4 million to EUR 23 million, due to higher results from fire and loss of income/accident insurance.

Insurance America

In North America, the profit before tax increased by EUR 137 million to EUR 400 million. Canada showed an increase of EUR 115 million to EUR 350 million. Excluding the gain of EUR 19 million resulting from the exercise of the over-allotment option by the underwriters in connection with the IPO of ING Canada, the increase was EUR 96 million, driven by strong underwriting results and the purchase of Allianz Canada in the fourth quarter of 2004. The business continued to benefit from lower claims frequency and severity, particularly in personal motor insurance. The loss ratio improved to 55%, compared with 58% in the first half of 2004. The expense ratio deteriorated as a result of higher operating expenses related to the integration of the Allianz Canada business, and a lower level of net written premiums in the first half of 2004 due to the termination of an assumed reinsurance treaty. The combined ratio deteriorated to 85% from 83% in the first half of 2004. The U.S. result improved by EUR 22 million to EUR 50 million due to higher health results caused by an improved claims ratio.

In Latin America, the non-life profit increased by EUR 2 million from EUR 66 million to EUR 68 million. Profit before tax in Mexico increased by EUR 6 million (at constant exchange rates by EUR 7 million) mainly due to higher income from investments and mortgage/leasing subsidiaries, partly offset by an unfavorable claims experience in motor. In Chile profit before tax decreased by EUR 5 million mainly caused by lower health results (very high in first half 2004) and expenses related to the sale of Chile’s property and casualty business in April 2005.

Insurance Asia/Pacific

In Australia, the non-life insurance joint venture was sold in the second quarter of 2004, generating a pre-tax gain of EUR 219 million. The profit from this discontinued operation in the first half of 2004 amounted to EUR 54 million.

Other

The profit in Other, decreased from EUR 100 million in the first six months of 2004 to EUR 38 million due to gains from discontinued old reinsurance business in the first six months of 2004.

BANKING OPERATIONS

The following table sets forth selected financial information for the Group’s consolidated banking operations for the six months ended June 30, 2005 and 2004:

		Six months ended
		June 30,
		2005				2004
		(EUR millions)
Interest income			19,431				12,316
Interest expense			15,134				7,984
Net interest result			4,297				4,332
Investment income			840				149
Commission			1,136				1,352
Other income			747				570
Total income			7,020				6,403
Operating expenses			4,408				4,264
Gross result			2,612				2,139
Addition to the provision for loan losses			46				265
Total profit before tax			2,566				1,874
Taxation			489				533
Third party interests			15				91
Net profit			2,062				1,250

Overview. The net profit from ING’s banking operations for the six months ended June 30, 2005 increased by EUR 812 million, or 65.0%, to EUR 2,062 million, from EUR 1,250 million for the six months ended June 30, 2004. The increase was mainly driven by higher income, a sharp decline in the addition to the provision for loan losses, gains on divestments and lower taxes. Currency fluctuations had a negative impact of EUR 15 million on net profit. Total profit before tax rose EUR 692 million, or 36.9%, to EUR 2,566 million. Divestments had a positive impact on profit in the first six months of 2005, including EUR 394 million in gains from the sale of Baring Asset Management and a 12.77% stake in ING Bank Slaski as well as the NMB-Heller transaction. In the first six months of 2004, there was a EUR 84 million loss on the sale of the Asian cash equities business. Excluding those items and the profit from divested units in both periods, profit before tax increased by 16.0% to EUR 2,158 million.

Net interest result for the six months ended June 30, 2005 declined by EUR 35 million, or 0.8%, to EUR 4,297 million, from EUR 4,332 million for the six months ended June 30, 2004. The average balance sheet total increased by EUR 87 billion. The interest margin deteriorated by 9 basis points to 1.15%, mainly caused by a narrowing of the yield curve.

Investment income for the six months ended June 30, 2005 increased by EUR 691 million, or 463.8%, to EUR 840 million, from EUR 149 million for the six months ended June 30, 2004. The increase in investment income was primarily due to the gains on the sale of Baring Asset Management, the ING Bank Slaski shares and the NMB-Heller transaction.

Commission for the six months ended June 30, 2005 decreased by EUR 216 million, or 16.0%, to EUR 1,136 million, from EUR 1,352 million for the six months ended June 30, 2004. The decrease in commission was primarily due to divestments.

Other income for the six months ended June 30, 2005 increased by EUR 177 million, or 31.1%, to EUR 747 million, from EUR 570 million for the six months ended June 30, 2004. The increase is in large part due to a higher result of the trading portfolio and the proportional 50% consolidation of Postkantoren BV, the Dutch joint-venture of TPG Post B.V. and Postbank N.V., as from 2005. Under Dutch GAAP, Postkantoren B.V. was not consolidated but treated as an associate.

Operating expenses for the six months ended June 30, 2005 increased by EUR 144 million, or 3.4%, to EUR 4,408 million, from EUR 4,264 million for the six months ended June 30, 2004. The increase is in large part due to higher expenses to support the growth of the ING Direct activities and to the proportional consolidation of Postkantoren BV.

The addition to the provision for loan losses decreased strongly by EUR 219 million compared with the six months ended June 30, 2004, or 82.6%, to EUR 46 million for the six months ended June 30, 2005.

Net interest result

Net interest result includes interest income, the results from interest arbitrage and results from financial instruments to the extent that these serve to limit interest rate risk, as well as fees connected with lending, net of related interest expense.

The strong increase in both interest income and interest expenses is, next to the growth of the average balance sheet total, mainly caused by a reclassification of the interest related profit and loss components of trading derivatives from trading results to interest and to the limited netting possibilities for non-trading derivatives under IFRS.

The net interest result for the six months ended June 30, 2005 decreased by EUR 35 million, or 0.8%, to EUR 4,297 million, from EUR 4,332 million for the six months ended June 30, 2004. Excluding divestments, the interest result increased by EUR 119 million, or 2.9%, to EUR 4,292 million, driven by higher interest results in Retail Banking and ING Direct, partially offset by lower interest results in Wholesale Banking. The implementation of IAS 32 and 39 from 2005 had a negative impact of approximately EUR 60 million on the interest result in the six months ended June 30, 2005. The total interest margin in the six months ended June 30, 2005 was 1.15%, a decrease of 9 basis points compared with the estimated comparable interest margin (also including IAS 32 and 39) in the six months ended June 30, 2004, due in part to a flattening of the yield curve and a reclassification of on balance interest-related expenses from trading results to interest.

In the Netherlands, the interest margin decreased by 11 basis points from 1.41% for the six months ended June 30, 2004 to 1.30% for the six months ended June 30, 2005. Outside the Netherlands the interest margin decreased by 9 basis points from 0.90% for the six months ended June 30, 2004 to 0.81% for the six months ended June 30, 2005.

Investment income

The following table sets forth the components of investment income for the periods indicated:

		Six months ended
		June 30,
		2005				2004
		(EUR millions)
Income from investments			604				123
Gains and losses from investments			236				26
Investment income			840				149

Income from investments. Income on investments increased by EUR 481 million, or 391.1%, to EUR 604 million for the six months ended June 30, 2005, from EUR 123 million for the six months ended June 30, 2004. The strong increase was mainly attributable to the gains on the sale of Baring Asset Management (gain of EUR 255 million) and a 12.77% stake in ING Bank Slaski (EUR 92 million) as well as the NMB-Heller transaction (EUR 47 million). Excluding divestments, the increase was EUR 60 million, mainly due to higher results on sale of fixed assets and higher rental income.

Gains and losses from investments. Gains and losses from investments increased by EUR 210 million, or 807.7%, to EUR 236 million for the six months ended June 30, 2005, from EUR 26 million for the six months ended June 30, 2004. The increase was mainly due to the positive impact of the implementation of IAS 32 and 39, which consisted of EUR 37 million in realized results on the sale of

bonds and EUR 110 million in fair value changes of assets designated at fair value through profit and loss. Realized gains and losses on equities increased by EUR 63 million, mainly due to the sale of equity investments in Belgium.

Commission

The following table sets forth the components of commission for the periods indicated:

		Six months ended
		June 30,
		2005				2004
		(EUR millions)
Funds transfer			276				293
Securities business			311				390
Insurance broking			70				76
Management fees			329				381
Brokerage and advisory fees			71				49
Other			79				163
Total			1,136				1,352

Commission income for the six months ended June 30, 2005 declined by EUR 216 million, or 16.0%, to EUR 1,136 million, from EUR 1,352 million for the six months ended June 30, 2004. Excluding the impact of divestments the decrease was EUR 55 million or 4.8%.

Funds transfer. Commission from funds transfer decreased by EUR 17 million, or 5.8%, to EUR 276 million for the six months ended June 30, 2005, from EUR 293 million for the six months ended June 30, 2004. The decrease occurred primarily in the Netherlands, where funds transfer commission decreased by EUR 10 million or 5.1%.

Securities business. Commission from securities business decreased by EUR 79 million, or 20.3%, to EUR 311 million for the six months ended June 30, 2005, from EUR 390 million for the six months ended June 30, 2004. Excluding the impact of divestments the decrease was EUR 13 million, or 4.0%, especially lower underwriting fees in Belgium and in the Netherlands.

Insurance broking. Commission from insurance broking decreased by EUR 6 million, or 7.9%, to EUR 70 million for the six months ended June 30, 2005, from EUR 76 million for the six months ended June 30, 2004. The decrease is fully attributable to the Netherlands.

Management fees. Management fees decreased by EUR 52 million, or 13.6%, to EUR 329 million for the six months ended June 30, 2005, from EUR 381 million for the six months ended June 30, 2004. Excluding the impact of divestments there was an increase of EUR 24 million or 9.5%, especially at ING Belgium and ING Real Estate.

Brokerage and advisory fees. Income from brokerage and advisory fees increased by EUR 22 million, or 44.9%, to EUR 71 million for the six months ended June 30, 2005, from EUR 49 million in the six months ended June 30, 2004. The increase was fully attributable to Wholesale International Amsterdam and Wholesale Banking Belgium.

Other commission. Other commission decreased by EUR 84 million, or 51.5%, to EUR 79 million for the six months ended June 30, 2005, from EUR 163 million in the six months ended June 30, 2004. This decrease occurs mainly in the international wholesale banking units and at ING Belgium.

Other income

The following table sets forth the components of other income for the periods indicated:

		Six months ended
		June 30,
		2005				2004
		(EUR millions)
Valuation results non-trading derivatives			(21	)			—
Result of trading portfolio			496				393
Other revenue			272				177
Total			747				570

Valuation results non-trading derivatives. The results in 2005 were fully attributable to the application of IFRS; there are no comparative figures under IFRS for 2004 (see Note 2.3). The result for the six months ended June 30, 2005, is for EUR 110 million negatively influenced by IFRS-consequences; this was fully offset by positive fair value changes of assets designated at fair value through profit and loss, reported under “investment income”.

Result of trading portfolio. Result of trading portfolio for the six months ended June 30, 2005 increased by EUR 103 million, or 26.2%, to EUR 496 million, from EUR 393 million for the six months ended June 30, 2004. Excluding divestments, net trading income increased by EUR 147 million. This increase was mainly caused by a reclassification of on balance interest-related expenses from trading results to interest result, along with the EUR 48 million loss taken on Postbank’s unit-linked mortgage product “MeerWaardehypotheek” in the first six months of 2004.

Other revenue. Income from other revenue for the six months ended June 30, 2005 increased by EUR 95 million, or 53.7%, to EUR 272 million, from EUR 177 million for the six months ended June 30, 2004. This increase was mainly caused by the proportional (50%) consolidation of Postkantoren BV as from 2005 (EUR 78 million) and a higher share of profit from associates, notably at ING Real Estate.

Operating expenses

The following table sets forth the components of operating expenses for the periods indicated:

		Six months ended
		June 30,
		2005				2004
		(EUR millions)
Personnel expenses			2,431				2,391
Other expenses			1,977				1,873
Operating expenses			4,408				4,264

Total operating expenses for the six months ended June 30, 2005 increased by EUR 144 million, or 3.4%, to EUR 4,408 million, from EUR 4,264 million for the six months ended June 30, 2004. Excluding divestments, operating expenses rose by EUR 477 million, or 12.3%, of which EUR 118 million was due to the continued strong growth of ING Direct and EUR 78 million to the consolidation of Postkantoren BV. The remaining increase was mainly caused by higher IT expenses, provisions at ING Belgium, impairments on development projects of ING Real Estate and higher personnel expenses, including the impact of the new collective labor agreement in the Netherlands.

Personnel expenses. Personnel expenses for the six months ended June 30, 2005 increased by EUR 40 million, or 1.7%, to EUR 2,431 million, from EUR 2,391 million for the six months ended June 30, 2004. Excluding divestments, personnel expenses rose by EUR 194 million, or 8.8%, of which EUR 42 million was due to the growth of ING Direct and EUR 35 million to the consolidation of Postkantoren BV. In the Netherlands the decrease in ING’s own staff was offset by the impact of the collective labor agreement and a strong increase in third party staff. Outside the Netherlands personnel expenses increased mainly due to the strong growth of the ING Direct activities.

Other expenses. Other expenses for the six months ended June 30, 2005 increased by EUR 104 million, or 5.6%, to EUR 1,977 million, from EUR 1,873 million for the six months ended June 30, 2004. Excluding divestments, other expenses rose by EUR 283 million, or 16.9%, of which EUR 76 million was due to the growth of ING Direct and EUR 43 million to the consolidation of Postkantoren BV. The remaining increase was mainly caused by higher IT expenses, provisions at ING Belgium related to reconciliation issues within its London based stockbroking firm Williams de Broë and impairments on development projects of ING Real Estate, especially in Poland.

Addition to the provision for loan losses

The addition to the provision for loan losses amounted to EUR 46 million for the six months ended June 30, 2005, a strong decrease of EUR 219 million compared to the first six months of 2004. The low risk costs were possible due to an improvement of the credit portfolio, the release of provisions previously taken (notably in Wholesale Banking), the absence of new large defaults and improvements in risk management. The addition equaled an annualized 3 basis points of average credit risk weighted assets, compared with 21 basis points in the first six months of 2004 and 18 basis points for the full year 2004.

Taxation

The effective tax rate for ING’s banking operations declined from 28.4% (EUR 533 million) for the six months ended June 30, 2004, to 19.1% (EUR 489 million) for the six months ended June 30, 2005, mainly due to non-taxable gains on divestments, a decrease of the statutory tax rate in the Netherlands, a low effective tax rate in Belgium and a EUR 35 million release of tax reserves.

Risk Adjusted Return on Capital

The Risk Adjusted Return on Capital (RAROC) measures performance on a risk-adjusted basis. RAROC is calculated as the economic return divided by economic capital, which is defined as the amount of capital required to support the economic risks created by the activities employed and at the Company’s desired level of comfort and can be regarded as the capital ING Group should have to comply with all debt obligations. The economic returns of RAROC are based on the principles of valuation and calculation of results applied in the Group annual accounts. Credit risk provisioning is replaced by statistically expected losses reflecting average credit losses over the entire economic cycle. ING Group continues to develop and refine the models, including KMV models, supporting the RAROC calculations. This could result in material adjustments.

The following table sets forth the RAROC (after tax) and the economic capital of the business lines of the banking operations:

		RAROC (after tax)								Economic capital
		Six months ended								Six months ended
		June 30,								June 30,
		2005				2004(1)				2005				2004
		(in %)								(EUR billions)
Wholesale Banking			21.2				15.3				8.7				10.2
Retail Banking			34.8				29.2				3.2				3.1
ING Direct			14.3				12.1				2.9				2.4
Other											0.0				0.2
Total banking operations			20.8				16.9				14.8				15.9

The RAROC after tax of ING’s banking operations improved to 20.8% in the six months ended June 30, 2005, from 16.9% in the first six months of 2004. Excluding the gains and losses on divestments, the after-tax RAROC improved to 18.0% in the first six months of 2005 from 17.5% in the first six months of 2004. All three banking business lines performed above ING’s target of 12.0% after tax. The RAROC of Wholesale Banking, excluding divestments, improved from 16.2% to 17.1%. Retail Banking posted, excluding the gain on the sale of ING Bank Slaski shares, a RAROC of 32.9%, compared with 29.2% in the first six months of 2004. The RAROC after tax of ING Direct improved to 14.3% in the first six months of 2005 from 12.1% in the first six months of 2004. Total economic capital decreased to EUR 14.8 billion from EUR 15.9 billion in the first six months of 2004 as a result of divestments.

Distribution by business line of total income and profit before tax of the banking operations:

		Total income								Profit before tax
		Six months ended								Six months ended
		June 30,								June 30,
		2005				2004				2005				2004
		(EUR millions)								(EUR millions)
Wholesale Banking			3,244				3,102				1,552				1,094
Retail Banking			2,832				2,472				870				648
ING Direct			984				797				254				203
Other			(40	)			32				(110	)			(71	)
Total			7,020				6,403				2,566				1,874

Wholesale Banking

Total income increased by EUR 142 million, or 4.6%, to EUR 3,244 million, including the gains on the sales of Baring Asset Management and the ING Bank Slaski shares, as well as the NMB-Heller transaction. Excluding the impact of divestments, total income rose by EUR 107 million, or 3.9%, to EUR 2,851 million, fuelled by higher income from ING Real Estate and the Wholesale Banking network outside the Benelux, mainly the U.K. and Central & Eastern Europe. This was partially offset by lower Financial Markets results in Belgium, compared with the very strong results in the first six months of 2004.

Operating expenses declined 5.4% to EUR 1,768 million, due entirely to the divestments of the Asian cash equities business, CenE Bankiers and parts of ING BHF-Bank in 2004 as well as Baring Asset Management in 2005. Excluding the impact of divestments, operating expenses increased 13.1% to EUR 1,721 million, mainly due to provisions taken in Belgium as well as impairment losses on development projects at ING Real Estate. Excluding the gains and losses on divestments, the cost/income ratio for Wholesale Banking deteriorated to 60.7% from 58.1% in the first six months of 2004, mainly due to the aforementioned non-recurring costs.

Profit before tax increased by EUR 458 million, or 41.9%, including the gains on the sales of Baring Asset Management and the ING Bank Slaski shares, as well as the NMB-Heller transaction. Excluding the impact of divestments, profit before tax increased by EUR 122 million, or 11.3%, to EUR 1,206 million, driven by the release of loan loss provisions due to a benign credit environment and improved risk management.

Retail Banking

Total income increased by EUR 360 million, or 14.6%, to EUR 2,832 million, including the EUR 62 million gain on the sale of ING Bank Slaski shares. Excluding that gain and the impact of divestments, total income rose by EUR 337 million, or 13.9%, to EUR 2,770 million. Income was lifted by the acquisition of Mercator Bank in Belgium and the proportional (50%) consolidation of Postkantoren BV in the Netherlands (which had no impact on total profit). Income in the first quarter of 2004 included a EUR 48 million loss on a unit-linked mortgage product in the Netherlands. Excluding that charge and the impact of the consolidation of Mercator Bank and Postkantoren BV, the underlying increase was 7.8%, driven by higher income from mortgages in the Netherlands and growth in savings and current accounts in Belgium.

Operating expenses increased 9.2% to EUR 1,903 million, due in part to the consolidation of Postkantoren BV in the Netherlands and Mercator Bank in Belgium. Excluding that impact, operating expenses were up 5.6%, mainly due to wage increases related to a new collective labor agreement in the Netherlands and higher IT expenses. The cost/income ratio improved to 67.2% from 70.5% in the first six months of 2004. Excluding the gain on ING Bank Slaski shares, the cost/income ratio improved to 68.7%.

Profit before tax increased by EUR 222 million, or 34.3%, including the gain of EUR 62 million on the sale of the ING Bank Slaski shares. Excluding that gain and the results in 2004 from the divested retail banking activities of ING BHF-Bank, profit before tax increased by EUR 164 million, or 25.5%, to EUR

808 million, mainly due to higher results from Belgium and the Netherlands.

ING Direct

Total income increased by EUR 187 million, or 23.5%, to EUR 984 million, driven mainly by an 18.3% increase in the interest result as funds entrusted and the mortgage portfolio continued to show strong growth. Since the end of June 2004, total funds entrusted grew by EUR 47.6 billion, or 37.1%, to EUR 175.8 billion at the end of June 2005. The total mortgage portfolio increased by EUR 16.2 billion, or 60.7%, to EUR 42.9 billion, driven by strong growth in Germany, the U.S. and Australia. The total interest margin of the ING Direct operations narrowed in the first six months of 2005 to 0.83%, compared to 1.00% in the first six months of 2004, mainly due to a flattening of the yield curve. In all currency zones in which ING Direct is active, the long-term interest rates decreased during the second quarter, while short-term interest rates remained stable in all countries except the U.S., where rates increased further.

Operating expenses increased by EUR 118 million, or 21.5%, to EUR 667 million as a result of higher marketing costs and higher expenses to facilitate the continued strong growth of the business, notably in mortgage distribution. The cost/income ratio of ING Direct improved to 67.8% from 68.9% in the first half year of 2004.

Profit before tax increased by EUR 51 million, or 25.1%, to EUR 254 million from EUR 203 million in the first half year of 2004. Seven out of the eight countries in which ING Direct is active posted a profit before tax in the first six months of 2005, with Germany, Spain, Australia and France showing strong profit growth. Only the U.K., which started operations in May 2003, is still loss-making. Due to the inversion of the yield curve in the U.K. in the second quarter, the loss in that market increased slightly, however total start-up losses remain lower than expected.

INVESTMENT PORTFOLIO IMPAIRMENTS AND UNREALIZED LOSSES

ING has classified some of its financial assets as available-for-sale, where they are intended to be held for an indefinite period of time and may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices. Available-for-sale financial assets are measured at fair value. Unrealized gains and losses arising from changes in the fair value are recognized in equity.

ING assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss — measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss — is removed from equity and recognized in the profit and loss account.

The following information represents additional disclosures required under US GAAP. The information has been prepared in accordance with IFRS unless it specifically states that it is based on US GAAP. See page 35 for the description of differences that exist between IFRS and US GAAP in accounting for financial investments available-for-sale.

Unrealized gains/losses

Unrealized gains and losses relating to the investment portfolio are discussed below.

June 30, 2005

As of June 30, 2005, our consolidated investment portfolio included unrealized gains of EUR 18,705 million and unrealized losses of EUR 803 million.

The following table shows the composition of investments in marketable securities at June 30, 2005. Debt securities include fixed-interest securities, with the exception of mortgage loans and policy loans. Amounts reported in the column “Amortized cost” correspond to the amortized cost on a US GAAP basis.

						Gross unrealized				Gross unrealized
		Amortized cost				gains				losses				Estimated fair value
		(EUR millions)
Debt securities:
Dutch Government			7,034				703								7,737
Foreign Governments			88,982				8,087				48				97,021
Corporate debt securities			93,040				4,592				350				97,282
Mortgage-backed securities			72,026				1,059				305				72,780
Other			8,628				572				19				9,181
Sub-total			269,710				15,013				722				284,001
Equity securities			10,027				3,692				81				13,638
Total			279,737				18,705				803				297,639

The table below analyzes the gross unrealized loss of EUR 803 million for the six months period ended June 30, 2005 broken down by type of security and by the period of time for which the fair value was below cost price.

		Less than				Between				More than
		6 months				6 and 12 months				12 months
		below cost				below cost				below cost				Total
		(EUR millions)
Debt securities:
Foreign Governments			8				6				35				49
Corporate debt securities			241				35				74				350
Mortgage-backed securities			85				47				172				304
Other			3				4				12				19
Sub-total			337				92				293				722
Equity securities			48				13				20				81
Total			385				105				313				803

The Group does not consider the debt securities with unrealized losses for over 12 months of EUR 293 million as of June 30, 2005 to be impaired since either:

— the market values of the securities are only insignificantly lower than the cost price

— the unrealized losses arose due to changes interest rates, however this has not effected the expected future cash flows, or

— the issuers of debt securities are not considered to be in financial difficulty, despite the fact that their credit rating has been lowered resulting in a reduction in the market value of the concerned securities.

Of the EUR 33 million unrealized losses on equity securities that were in an unrealized loss position for more than six months as of June 30, 2005, EUR 10 million related to the equity security portfolio of our insurance operations in the Netherlands. These unrealized losses are concentrated in the industrial sector (EUR 2 million) and in non-redeemable unquoted preference shares (EUR 8 million).

December 31, 2004

As of December 31, 2004, our consolidated investment portfolio included unrealized gains of EUR 13,860 million and unrealized losses of EUR 918 million on a US GAAP basis.

The following table shows the composition of investments in marketable securities at December 31, 2004. Debt securities include fixed-interest securities, with the exception of mortgage loans and policy loans. Amounts reported in the column “Amortized cost” correspond to the amortized cost on a US GAAP basis.

						Gross unrealized				Gross unrealized
		Amortized cost				gains				losses				Estimated fair value
		(EUR millions)
Debt securities:
Dutch Government			6,699				484				1				7,182
Foreign Governments			82,127				5,688				84				87,731
Corporate debt securities			97,414				3,816				259				100,971
Mortgage-backed securities			75,151				1,144				329				75,966
Other			6,568				324				93				6,799
Sub-total			267,959				11,456				766				278,649
Equity securities			8,204				2,404				152				10,456
Total			276,163				13,860				918				289,105

The table below analyzes the gross unrealized loss for the year ended December 31, 2004 broken down by type of security and by the period of time for which the fair value was below cost price.

		Less than				Between				More than
		6 months				6 and 12 months				12 months
		below cost				below cost				below cost				Total
		(EUR millions)
Debt securities:
Dutch Government							1								1
Foreign Governments			29				17				38				84
Corporate debt securities			79				55				125				259
Mortgage-backed securities			124				118				87				329
Other			37				5				51				93
Sub-total			269				196				301				766
Equity securities			67				26				59				152
Total			336				222				360				918

    Impairments

Impairments relating to the investment portfolio are discussed below.

Impairments are measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss.

In the first six months of 2005, we recorded impairments on a US GAAP basis of EUR 151 million. Of this amount, EUR 101 million is related to our portfolio of debt securities.

    Impairment of debt securities

Unrealized losses on debt securities consist of two components: interest related unrealized losses and credit related unrealized losses. Interest related unrealized losses, which fully relate to fluctuations in risk free market interest rates, do not generally result in any impairment. Credit related unrealized losses may relate to impairment if it is uncertain whether future interest and principal payments will be collected. Under US GAAP impairments are determined similar to IFRS.

Under IFRS, if, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed through the profit and loss account. Under US GAAP impairments may not be reversed in future periods.

Developments in the first six months of 2005

The impairment review of the debt securities in our investment portfolio gave rise to an impairment charge of EUR 101 million for the six month period ended June 30, 2005. The impairment charge is

related to our portfolio in the United States. The most significant item is EUR 100 million relating to impairment asset-backed securities, collateralized debt obligations, mortgage-backed and mortgage-backed derivative securities was based on the application of EITF 99-20 which requires impairments to be taken when market values are below carrying values and there are adverse changes in expected future cash flows.

    Impairment of equity securities

In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the assets are impaired. US GAAP impairments are determined similar to IFRS. Impairment losses recognized in the profit and loss account on equity instruments are not reversed through the profit and loss account under both IFRS and US GAAP.

Developments in the first six months of 2005

In the first six months of 2005, we recorded an impairment of EUR 50 million on equity securities related to other than temporary losses.

    Impact on future earnings

Although all individual securities were reviewed to ensure that all material impairments or other than temporary losses were charged to the profit and loss account in 2005, the identification of impairment and other then temporary losses and the determination of the recoverable amount are an inherently uncertain process involving various assumptions and factors, including the financial condition of the counterparty, expected future cash flows, observable market prices and expected net selling prices. Further developments after June 30, 2005 may indicate that certain unrealized losses that existed as of June 30, 2005 will need to be considered other than temporary, resulting in a negative impact on our profit and loss account.

US GAAP GOODWILL

ING Group performs the goodwill impairment test if any events or a change in circumstances indicate that impairment may have taken place, or at a minimum on an annual basis. Evaluating whether or not the indication of impairment is significant enough to require an impairment test to be performed involves significant judgment. ING Group performs the annual goodwill impairment test in the fourth quarter for all segments.

With the exception of reporting unit Latin America discussed below, there is no indication that goodwill is impaired as of June 30, 2005.

Goodwill for reporting unit Latin America was almost fully impaired in the 2002 transitional goodwill impairment test and an additional EUR 127 million was written off in the annual goodwill test in 2003 and 2004. Remaining goodwill for Latin America totaled EUR 377 million prior to the 2005 impairment test discussed below, primarily related to the 49% interest in Sul America, accounted for under the equity method under IFRS. Goodwill allocated to equity method investments is not tested for impairment in accordance with SFAS 142 but under APB 18, which requires that an other than temporary decline in value of an equity method investments is recognized in the profit and loss account. Goodwill for the acquisition of Sul America totaled EUR 354 million while the goodwill for ING Chile totaled EUR 23 million.

Since the acquisition of Sul America in 2002, the local economic environment and business conditions in Brazil have deteriorated, leading to higher interest rates and the devaluation of the Real. The decline in fair value was viewed as other than temporary and ING Group recognized an impairment charge of EUR 101 million in 2003 for US GAAP purposes.

The fair value of the reporting unit, estimated using a discounted cash flow model decreased further in 2004 and the decrease was viewed as other than temporary. In 2004, ING Group has recognized an additional impairment charge of EUR 26 million for US GAAP purposes for goodwill allocated to the reporting unit Latin America. In 2005, a valuation was performed on the business to determine the extent of future capital requirements of the Brazilian joint venture. The valuation incorporates

continued deterioration of the health business and further worsening of the claims payment experience. Based on this study, the valuation was below the carrying value, supporting an additional impairment of EUR 354 million in 2005 to write-off all remaining goodwill for Sul America. The impairment charge had no impact on net income under IFRS since the goodwill relates to an acquisition prior to January 1, 2004 and was therefore not capitalized under IFRS.

INDEX TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Consolidated balance sheet as of June 30, 2005 and January 1, 2005			28
Consolidated profit and loss account for the six months ended June 30, 2005 and June 30, 2004			29
Condensed consolidated statement of cash flows for the six months ended June 30, 2005 and June 30, 2004			30
Notes to the consolidated profit and loss account for the six months ended June 30, 2005 and June 30, 2004			31
Differences between IFRS and U.S. accounting principles			36

CONSOLIDATED BALANCE SHEET
Amounts in millions

ASSETS

		US$(1)				EUR				EUR
		June 30,				June 30,				Jan. 1,
		2005				2005				2005
Cash and balances with central banks			14,073				11,414				9,805
Amounts due from banks			70,069				56,828				51,721
Non-trading derivatives			11,638				9,439				9,127
Financial assets at fair value through profit or loss			268,485				217,749				182,819
Investments			385,637				312,763				265,597
Loans and advances to customers			537,303				435,769				390,846
Reinsurance contracts			9,573				7,764				6,818
Property and equipment			7,022				5,695				5,805
Other assets			61,237				49,664				41,945
Total assets			1,365,037				1,107,085				964,483
LIABILITIES
Capital and reserves			43,537				35,310				28,286
Third-party interests			2,053				1,665				2,096
Total equity			45,590				36,975				30,382
Preference shares			365				296				296
Subordinated loans			6,036				4,895				4,157
Insurance and investment contracts			305,322				247,625				218,551
Amounts due to banks			159,389				129,269				95,621
Customer deposits and other funds on deposit			549,504				445,664				395,699
Debt securities in issue/other borrowed funds			131,927				106,997				107,155
Financial liabilities at fair value through profit or loss			105,132				85,265				73,861
Non-trading derivatives			10,347				8,392				8,647
Other liabilities			51,425				41,707				30,114
Total liabilities			1,319,447				1,070,110				934,101
Total equity and liabilities			1,365,037				1,107,085				964,483

CONSOLIDATED PROFIT AND LOSS ACCOUNT
Amounts in millions

		Six months ended June 30,
		US$(1)				EUR				EUR
		2005				2005				2004
Premium income			27,895				22,624				21,894
Income from investments			6,847				5,553				4,759
Interest result from banking operations			5,246				4,255				4,372
Commission income			2,168				1,758				1,939
Other income			1,138				923				934
Total income (1.2)			43,294				35,113				33,898
Underwriting expenditure			28,765				23,329				22,866
Other interest expenses			592				480				473
Operating expenses			8,476				6,874				6,536
Impairments/additions to the provision for loan losses			58				48				289
Total expenditure (1.3)			37,891				30,731				30,164
Profit before tax (1.4)			5,403				4,382				3,734
Taxation			945				766				962
Third-party interests			152				124				143
Net profit (1.5)			4,306				3,492				2,629

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Amounts in millions

		Six months ended June 30,
		US$(1)				EUR				EUR
		2005				2005				2004
Net cash flow from operating activities			22,084				17,911				43,562
Investments and advances:
— associated undertakings			(266	)			(216	)
— available-for-sale-investment securities			(154,871	)			(125,605	)
— held-to-maturity-investment securities			(1,269	)			(1,029	)
— investment properties			(132	)			(107	)
— property and equipment			(413	)			(335	)
— assets subject to operating leases			(641	)			(520	)
— investments for the risk of policyholders			(24,262	)			(19,677	)
— other investments			(1	)			(1	)
Disposals and redemptions:
— associated undertakings			1,469				1,191
— available-for-sale investment securities			121,696				98,699
— held-to-maturity investment securities			226				183
— investment properties			223				181
— property and equipment			413				335
— assets subject to operating leases			222				180
— investments for the risk of policyholders			19,124				15,510
— other investments			3				3
Net cash flow from investment activities			(38,479	)			(31,208	)			(44,109	)
Proceeds from insurance of subordinated loans			617				500
Repayments of subordinated loans			(255	)			(207	)
Proceeds from borrowed funds and debt securities			11,546				9,364
Repayment from borrowed funds and debt securities			(13,198	)			(10,703	)
Deposits by reinsurers			247				200
Issuance of ordinary shares			137				111
Dividends paid			(1,572	)			(1,275	)
Net cash flow from financing activities			(2,478	)			(2,010	)			(966	)
Net cash flow			(18,873	)			(15,307	)			(1,513	)
Cash and equivalents at beginning of year			15,113				12,257				7,338
Effect of exchange-rate changes on cash and cash equivalents			430				349				107
Cash and equivalents at end of period			(3,330	)			(2,701	)			5,932
Cash comprises the following items:
Treasury bills			17,426				14,133				10,613
Loans and advances to banks			(34,831	)			(28,249	)			(15,568	)
Cash and bank balances and call money of the insurance operations			14,075				11,415				10,887
Cash and equivalents at end of period			(3,330	)			(2,701	)			5,932

1.

NOTES TO THE CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND JUNE 30, 2004

31

property-by-property basis are charged to the profit and loss account; under ING GAAP negative revaluation reserves were offset against positive revaluation reserves.

Real Estate — Property under Development for Third Parties: Under IFRS, real estate in the course of construction is reported under the percentage of completion method (pro rata profit recognition). Under ING GAAP profit was recognized on completion. In addition, IFRS is more restrictive on the overhead expenses that may be capitalized.

Employee Benefits: Accounting for pension liabilities under ING GAAP was similar to IFRS; however, at transition to IFRS all unrecognized actuarial gains and losses were charged to capital and reserves. Under IFRS additional provisions for certain employee benefits are required.

Employee Benefits — Share-based Payments: Under IFRS, the fair value of shares and options granted to employees is recognized in the profit and loss account over the vesting period of the award. Under ING GAAP the intrinsic value was recognized in the profit and loss account.

Leases: Under ING GAAP, leases where ING is the lessor were presented as Lending. Under IFRS, these are presented as fixed assets, with depreciation recognized in the profit and loss account on a straight-line basis. Certain bonuses/discounts are amortized over the lease term under IFRS whilst under ING GAAP they were reported in income immediately.

Foreign Currency Translation: Under ING GAAP, translation differences on insurance liabilities and related investments were recorded in equity. Under IFRS, both are recognised in the profit and loss account. Both under IFRS and ING GAAP translation differences on foreign operations are reported in a translation reserve in equity; however, at transition to IFRS the translation differences reserve was reset to nil.

Result on the Sale of Consolidated Subsidiaries: The result on sale under IFRS is different from ING GAAP as the book value at the time of disposal under IFRS differs from ING GAAP. This specifically relates to a negative revaluation on property in own use that under IFRS was charged to the profit and loss account in 2004, whereas it was included in the result on disposal under ING GAAP (also in 2004). There is no net effect on 2004 net income.

Dividend income on Equity Securities: Under ING GAAP, dividend income was accrued over the year whereas under IFRS dividend income is recognized when declared.

Taxation: Deferred taxation was adjusted for the (deferred) tax effect of the above differences between ING GAAP and IFRS.

Differences from Implementing IAS 32/39 and IFRS 4 as of January 1, 2005

Available-for-Sale Debt Securities: Under IFRS, quoted debt securities (non-trading) other than those designated as being held-to-maturity are reported at fair value, with changes in fair value recognized in a revaluation reserve in equity; realized results are recognized directly in the profit and loss account. Under ING GAAP, debt securities were reported at amortized cost; realised results were deferred and amortized over the remaining term.

Insurance Provisions: Under IFRS certain contracts that do not contain significant insurance risk are presented as investment contracts and measured either at amortized cost or at fair value.

For insurance contracts with discretionary participation features, a deferred profit sharing liability is recorded under IFRS for the full amount of unrealized results on allocated investments. In addition, a deferred profit sharing liability is recorded for the policyholders’ share in other differences between ING GAAP and IFRS as at January 1, 2005.

Insurance liabilities are adjusted to compensate for the impact of the transition to IFRS on reserve inadequacy.

Derivatives and Embedded Derivatives: Under IFRS, all derivatives (including embedded derivatives that are not closely related to the host contract) are reported at fair value. Under ING GAAP, non-trading derivatives were valued similar to the item being hedged (mainly at cost).

Hedge Accounting: Under IFRS, for derivatives qualifying as cash flow hedges and net investment hedges, the fair value movements are initially deferred in equity and subsequently released to the income statement in the same period in which the hedged item affects profit and loss. For fair value hedges, the valuation of the hedged item is adjusted to reflect the hedged risk; this fair value adjustment on the hedged item is reported in the profit and loss account and (partly) offsets the fair value impact on the derivative that is also reported in the profit and loss account. Under ING GAAP, non-trading derivatives used for risk management purposes were valued similar to the item being

hedged (mainly at cost). As an alternative for hedge accounting under IFRS, financial assets may be designated at fair value through profit or loss, which implies that these are presented at fair value, with all changes in fair value recognized directly in the profit and loss account.

Loans: Under both ING GAAP and IFRS loans are measured at amortised cost. Under IFRS, certain fees/costs are capitalized and amortised whilst under ING GAAP they were expensed immediately (e.g. mortgage broker fees). The amortization of premiums, discounts and fees under IFRS is based on effective yield whereas under ING GAAP these were amortised on a straight-line basis. Under IFRS, realised results are reported in net income. Under ING GAAP these were amortised over the remaining term (e.g. prepayment penalties on mortgages).

Loan Loss Provisions: Under IFRS loan loss provisions for portfolios of individually smaller loans are calculated based on a more prescriptive methodology. Furthermore, under IFRS no unallocated provisions are allowed.

Equity Securities: Under ING GAAP, negative revaluations on equity securities were only charged to the income statement as impairment when triggered by the financial condition of the issuer. Under IFRS, impairment is also triggered by a prolonged decline of the market value below cost.

Classification of Equity Instruments: Under ING GAAP, preference shares and trust preferred securities were — in accordance with the legal form — classified as equity. Under IFRS, the conditions of ING Group’s preference shares and trust preferred securities require classification as liabilities.

Venture Capital Investments: Under ING GAAP, venture capital investments were reported at the lower of cost or fair value. Under IFRS, investments in which ING has no significant influence are reported at fair value with changes in fair value reported in a revaluation reserve in equity. Investments in which ING has significant influence are reported at fair value, with changes in fair value reported in the profit and loss account.

Taxation: Deferred taxation was adjusted for the (deferred) tax effect of the above differences between ING GAAP and IFRS.

1.2 Income (EUR millions)

		Insurance operations								Banking operations								Eliminations (1)								Total
		Six months ended								Six months ended								Six months ended								Six months ended
		June 30,								June 30,								June 30,								June 30,
		2005				2004				2005				2004				2005				2004				2005				2004
Premium income			22,624				21,894																				22,624				21,894
Income from investments			4,726				4,718				840				149				13				108				5,553				4,759
Interest result banking operations											4,297				4,332				42				(40	)			4,255				4,372
Commission income			622				587				1,136				1,352												1,758				1,939
Other income			176				364				747				570												923				934
Total income			28,148				27,563				7,020				6,403				55				68				35,113				33,898
Distribution of income by business line (EUR millions)
Insurance Europe			8,245				8,365																				8,245				8,365
Insurance Americas			13,320				14,022																				13,320				14,022
Insurance Asia/Pacific			6,663				4,915																				6,663				4,915
Wholesale Banking											3,244				3,102												3,244				3,102
Retail Banking											2,832				2,472												2,832				2,472
ING Direct											984				797												984				797
Other			(80	)			261				(40	)			32				55				68				(175	)			225
Total income			28,148				27,563				7,020				6,403				55				68				35,113				33,898