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 August 5, 2004
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 X Form 40-F
------------ -----------
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 No X
---------- ----------
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
Page 1 of 39
--------------------------------------------------------------------------------
This Report contains a copy of the following:
(1) The Press Release issued on August 5, 2004
Page 2 of 39
--------------------------------------------------------------------------------
[ING GROUP LOGO]
--------------------------------------------------------------------------------
PRESS RELEASE
--------------------------------------------------------------------------------
Amsterdam o 5 August 2004
ING GROUP 2004 FIRST-HALF OPERATING NET PROFIT RISES 35.2%
STRONG RESULTS FROM BANKING BUSINESSES CONTINUE TO DRIVE PROFIT GROWTH
o OPERATING NET PROFIT RISES 35.2% TO EUR 2,796 MILLION
o NET PROFIT PER SHARE RISES 32.0% TO EUR 1.36 FROM EUR 1.03
o OPERATING NET PROFIT FROM BANKING RISES 65.3% TO EUR 1,327 MILLION
o OPERATING NET PROFIT FROM INSURANCE RISES 16.1% TO EUR 1,469 MILLION
o RAROC OF BANKING AND IRR OF INSURANCE BOTH SHOW STRONG INCREASE
o DEBT/EQUITY RATIO OF ING GROUP IMPROVES TO 12.1% FROM 14.4% AT END 2003
o ING TO PAY INTERIM DIVIDEND OF EUR 0.49 PER SHARE, EQUAL TO HALF OF 2003
DIVIDEND
o ING CHANGES DIVIDEND POLICY, CASH PORTION WILL NOT BE FINANCED BY ISSUING
STOCK
CHAIRMAN'S STATEMENT
"ING posted strong results in the first half, driven by an excellent
performance at our banking businesses, as well as exceptionally low claims at
our non-life insurance units and a gain on the sale of our Australian non-life
business," said Michel Tilmant, chairman of the Executive Board. "All three
banking business lines showed top-line growth while improving their cost/income
ratios, and risk costs declined sharply. The life insurance businesses in the US
and Asia also benefited from higher sales, stricter product pricing and lower
credit losses."
"This year we accelerated a programme to actively manage our portfolio of
businesses, taking steps to sell units that no longer fit into our long-term
strategy, such as the Asian cash equities business, and the Australian non-life
insurance joint venture. We have agreed to sell CenE Bankiers in the
Netherlands, and are in talks regarding ING BHF-Bank in Germany," Tilmant said.
"As a result, ING's debt/equity ratio is improving, so we decided to change
ING's dividend-funding policy to limit dilution of earnings per share."
"The positive trends we experienced in the first quarter continued in the
second quarter. Loan loss provisions and credit losses have declined sharply,
and are now well below long-term average levels," Tilmant said. "However, there
is still need for caution, as stock-market volatility and swift changes in
interest rates could pose challenges for some businesses in the short run."
"We are optimistic about the results for the full year," Tilmant said. "However,
we have adopted a policy to no longer give profit forecasts."
--------------------------------------------------------------------------------
ALL FIGURES COMPARE FIRST HALF 2004 WITH FIRST HALF 2003 UNLESS OTHERWISE
STATED.
--------------------------------------------------------------------------------
PRESS CONFERENCE: 5 August, 9:30 a.m. CET at ING House, Amsterdam. Presentation
& webcast at www.ing.com
ANALYST PRESENTATION: 5 August, 11:15 a.m. CET at ING House, Amsterdam.
Presentation & webcast at www.ing.com
ANALYST CONFERENCE CALL: 5 August, 3 p.m. CET.
Listen in: NL +31 45 631 6910 UK +44 20 8515 2312 US +1 303 262 2130
ANALYST PRESENTATION: 6 August, 11 a.m. UK time in London.
Webcast at www.ing.com
--------------------------------------------------------------------------------
MEDIA RELATIONS +31 20 541 5446 INVESTOR RELATIONS +31 20 541 5571
--------------------------------------------------------------------------------
Page 3 of 39
--------------------------------------------------------------------------------
1.1 ING GROUP
------------------------------------------------------------------------------------------------------------
TABLE 1. ING GROUP KEY FIGURES
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
------------------------------------------------------------------------------------------------------------
Operating profit before tax:
- Insurance Europe 774 798 -3.0 365 400 -8.8
- Insurance Americas 800 634 26.2 460 395 16.5
- Insurance Asia/Pacific 527 176 199.4 405 105 285.7
- Other -43 88 39 184
------- ------- ----- -----
INSURANCE OPERATING PROFIT BEFORE TAX 2,058 1,696 21.3 1,269 1,084 17.1
- Wholesale Banking 1,170 752 55.6 511 358 42.7
- Retail Banking 678 493 37.5 351 257 36.6
- ING Direct 203 31 554.8 128 24 433.3
- Other -71 -66 -21 -25
------- ------- ----- -----
BANKING OPERATING PROFIT BEFORE TAX 1,980 1,210 63.6 969 614 57.8
TOTAL OPERATING PROFIT BEFORE TAX 4,038 2,906 39.0 2,238 1,698 31.8
Taxation 1,100 678 62.2 568 444 27.9
Third-party interests 142 160 -11.3 65 88 -26.1
------- ------- ----- -----
OPERATING NET PROFIT* 2,796 2,068 35.2 1,605 1,166 37.7
- of which Insurance 1,469 1,265 16.1 935 761 22.9
- of which Banking 1,327 803 65.3 670 405 65.4
Capital gains/negative value adjustment
shares 47 -38 36 697
------- ------- ----- -----
NET PROFIT 2,843 2,030 40.0 1,641 1,863 -11.9
Net profit per share (In EUR) 1.36 1.03 32.0 0.79 0.95 -16.8
Operating net return on equity** 24.8% 21.5%
Debt/equity ratio*** 12.1% 14.4%
Total staff (average FTEs) 113,300 115,500 -1.9
------------------------------------------------------------------------------------------------------------
* Operating net profit = net profit excluding realised capital gains/losses on shares and negative
revaluation reserve shares
** 2003 figures are full-year
*** 2003 figures are year-end
FIRST-HALF PROFIT
Operating net profit rose 35.2% to EUR 2,796 million, led by strong increases in
operating profit from ING's three banking business lines, driven by a sharp
decline in risk costs and higher income. The insurance businesses in the
Americas and Asia/Pacific also posted higher profit, driven by exceptionally
strong results from non-life insurance, higher life insurance sales in the US
and Asia, and a gain on the sale of ING's non-life joint venture in Australia.
Profit from Insurance Europe declined due to lower results in the Netherlands.
First-half net profit rose 40.0% to EUR 2,843 million, including EUR 47 million
in realised capital gains on equities in the first half of 2004 as well as
realised capital losses and a negative adjustment to the revaluation reserve
shares which totalled EUR 38 million in the first half of 2003.
Net profit per share rose 32.0% to EUR 1.36 from EUR 1.03 in the first half last
year. The increase lagged growth in total net profit due to an increase in the
average number of shares outstanding because ING's dividend has been fully
funded in stock since the final dividend 2002. ING will continue to offer
shareholders a choice to receive the dividend in cash or stock, but beginning
with the interim dividend for 2004, it will no longer issue shares to fund the
cash portion of the dividend.
Operating net profit from insurance rose 16.1% to EUR 1,469 million led by
higher profit from the Americas and Asia/Pacific. For Insurance Americas,
operating profit before tax increased 26.2% to EUR 800 million. Results from the
US life business continued to improve and the Canadian non-life insurance
operations posted exceptionally good results due to a very favourable claims
experience. Operating profit before tax from Insurance Asia/Pacific increased
from EUR 176 million to EUR 527 million, including a one-
Page 4 of 39
--------------------------------------------------------------------------------
off gain of EUR 219 million from the sale of ING's stake in its Australian
non-life insurance venture. Excluding that gain, operating profit before tax
from Insurance Asia/Pacific increased 75.0%, driven by higher sales and a
favourable claims environment. Insurance Europe posted a 3.0% decrease in
operating profit before tax to EUR 774 million, due to lower life insurance
profit in the Netherlands mainly as a result of higher costs and lower one-off
gains.
Operating net profit from banking rose 65.3% to EUR 1,327 million, lifted by
higher profit from all three business lines. Wholesale Banking posted a 55.6%
increase in operating profit before tax, driven by a substantial reduction in
risk costs and continued growth in income. Operating profit before tax from
Retail Banking increased 37.5% to EUR 678 million, bolstered by higher income,
lower risk costs and a decline in operating expenses. ING Direct posted an
operating profit before tax of EUR 203 million, up from EUR 31 million in the
first half of 2003, as it continued to attract new clients and funds.
ONE-OFF ITEMS
One-off items resulted in a net gain of EUR 184 million in the first half of
2004, which was roughly balanced by a net gain of EUR 207 million in the first
half of 2003. In the first half of 2004, ING booked gains of EUR 146 million
(EUR 219 million before tax) on the sale of its Australian non-life insurance
venture and EUR 92 million (EUR 96 million before tax) from a gain on old
reinsurance business, as well as a loss plus additional expenses of EUR 54
million (EUR 84 million before tax) from the sale of the Asian equities unit.
The year-earlier period included a gain of EUR 247 million (EUR 303 million
before tax) from old reinsurance business and a restructuring charge of EUR 40
million (EUR 45 million before tax) for ING BHF-Bank and ING Bank France. (See
Appendix 5.2)
CURRENCY IMPACT
The weakening of most currencies against the euro had a negative impact of EUR
46 million on first-half net profit. That was partially offset by a gain of EUR
87 million after tax on the US dollar hedge, compared with a gain of EUR 54
million on the hedge in the first half of 2003. ING has hedged the expected
profits in US dollar and dollar-linked currencies for the remainder of 2004.
SECOND-QUARTER PROFIT
Second-quarter operating net profit rose 37.7% to EUR 1,605 million, compared
with the second quarter of 2003. Operating net profit from banking increased
65.4% to EUR 670 million, boosted by higher income and substantially lower risk
costs. Insurance operating net profit rose 22.9% to EUR 935 million, lifted by
very strong non-life results in Canada, higher life results in Asia, and the
gain on the sale of the Australian non-life business. Second-quarter net profit
declined 11.9% to EUR 1,641 million, due to a gain of EUR 697 million in the
second quarter of 2003, when ING recouped most of the negative value adjustment
on the revaluation reserve shares taken in the first quarter of 2003.
Compared with the first quarter of 2004, operating net profit rose 34.8% to EUR
1,605 million from EUR 1,191 million, driven by a 75.1% increase in operating
net profit from insurance, due in part to the gains on the sale of the
Australian non-life insurance joint venture and the old reinsurance business.
Operating net profit from banking rose 2.0% to EUR 670 million from EUR 657
million.
Page 5 of 39
--------------------------------------------------------------------------------
1.2 BALANCE SHEET & CAPITAL
--------------------------------------------------------------------------------
TABLE 2. KEY BALANCE SHEET FIGURES
30 June 31 Dec. % 31 March
In EUR billion 2004 2003 Change 2004
--------------------------------------------------------------------------------
Shareholders' equity 24.1 21.3 12.8 22.9
- insurance operations 13.3 12.0 11.5 12.8
- banking operations 17.4 16.7 4.1 17.4
- eliminations* -6.6 -7.4 -7.3
TOTAL ASSETS 871.6 778.8 11.9 830.0
Operating net return on equity 24.8% 21.5% 21.8%
- insurance operations 23.0% 22.7% 17.2%
- banking operations 17.9% 11.1% 18.1%
--------------------------------------------------------------------------------
* own shares, subordinated loans, third-party interests, debenture loans and
other eliminations
SHAREHOLDERS' EQUITY
On 30 June 2004, ING's shareholders' equity amounted to EUR 24.1 billion, an
increase of EUR 2.8 billion, or 12.8%, compared with year-end 2003. The
first-half net profit added EUR 2.8 billion to shareholders' equity and
revaluations accounted for an increase of EUR 0.3 billion.
CAPITAL RATIOS
The debt/equity ratio of ING Groep NV improved to 12.1% from 14.4% at the end of
2003. The improvement was caused by a EUR 3.4 billion increase in the capital
base due to higher retained earnings, a positive revaluation of shares and real
estate, and the issue of hybrid securities in June as well as a EUR 0.3 billion
decrease in core debt. The capital coverage ratio for ING's insurance operations
increased to 184% of regulatory requirements at the end of June, compared with
180% at year-end 2003. The Tier-1 ratio of ING Bank Holding NV stood at 7.65% on
30 June 2004 up from 7.59% at the end of 2003. The solvency ratio (BIS ratio)
for the bank fell from 11.34% to 11.27%. Compared with year-end 2003, total
risk-weighted assets rose by EUR 21.4 billion, or 8.5%, to EUR 272.7 billion.
Almost half of the increase was due to the growth of ING Direct.
RETURN ON EQUITY
The operating net return on equity increased from 21.5% for the full year 2003
to 24.8% in the first half of 2004. The operating net return on equity of the
insurance operations rose from 22.7% in 2003 to 23.0% in the first half, while
the operating net return on equity from banking rose from 11.1% to 17.9%.
ASSETS UNDER MANAGEMENT
Assets under management increased 6.1% in the first six months to EUR 490.8
billion at the end of June 2004. The EUR 28.1 billion increase resulted from a
net inflow of EUR 13.7 billion, EUR 8.6 billion from higher stock markets, and
EUR 7.8 billion from positive currency rate differences. Divestments had a
negative impact of EUR 2.0 billion, mainly due to the deconsolidation of Baring
Private Equity Partners.
1.3 DIVIDEND
ING Group will pay an interim dividend of EUR 0.49 per ordinary share, equal to
a rounded half of the total dividend paid over the book-year 2003 (EUR 0.97), in
line with the dividend policy. Shareholders can choose to receive the dividend
in either cash or shares. As ING's capital position is more than adequate and
the debt/equity ratio of the group has been reduced, ING will not issue new
shares to finance the cash portion of the dividend. The ING share will be quoted
ex-dividend as from 6 August 2004. From 6 August until 27 August shareholders
can decide to receive the interim dividend 2004 in cash or shares. The exchange
ratio, which will be announced on 3 September after closing of the Euronext
Amsterdam Stock Exchange, will be based on the volume-weighted average share
price over the period of 30 August to 3 September inclusively. The interim
dividend will be made payable on 10 September 2004. The value of the dividend in
cash will be 0 to 4% lower than the dividend in stock.
Page 6 of 39
--------------------------------------------------------------------------------
1.4 INSURANCE OPERATIONS
--------------------------------------------------------------------------------------------------------
TABLE 3. ING GROUP: INSURANCE PROFIT & LOSS ACCOUNT
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
--------------------------------------------------------------------------------------------------------
Premium income 21,894 20,852 5.0 10,528 9,872 6.6
- of which life 18,139 16,804 7.9 8,905 8,015 11.1
- of which non-life 3,755 4,048 -7.2 1,623 1,857 -12.6
Income from investments 4,716 4,804 -1.8 2,467 2,531 -2.5
Commission income 582 639 -8.9 281 313 -10.2
Other income 360 349 3.2 214 151 41.7
------ ------ ------ ------
TOTAL OPERATING INCOME 27,552 26,644 3.4 13,490 12,867 4.8
Underwriting expenditure 22,612 21,900 3.3 10,775 10,300 4.6
Other interest expenses 540 534 1.1 255 261 -2.3
Operating expenses 2,318 2,377 -2.5 1,176 1,188 -1.0
Investment losses 24 137 -82.5 15 34 -55.9
------ ------ ------ ------
TOTAL OPERATING EXPENDITURE 25,494 24,948 2.2 12,221 11,783 3.7
OPERATING PROFIT BEFORE TAX 2,058 1,696 21.3 1,269 1,084 17.1
- of which life insurance 1,225 1,147 6.8 663 702 -5.6
- of which non-life insurance 833 549 51.7 606 382 58.6
Taxation 538 383 40.5 308 294 4.8
Third-party interests 51 48 6.3 26 29 -10.3
------ ------ ------ ------
OPERATING NET PROFIT* 1,469 1,265 16.1 935 761 22.9
Capital gains/negative value
adjustment shares 47 -15 36 598
------ ------ ------ ------
NET PROFIT 1,516 1,250 21.3 971 1,359 -28.6
KEY FIGURES
Value of new business** 286 220 30.0
Internal rate of return*** 11.4% 10.9%
Operating net return on equity*** 23.0% 22.7%
Staff (average FTEs) 49,700 51,400 -3.3
--------------------------------------------------------------------------------------------------------
* Operating net profit = net profit excluding realised capital gains/losses on shares and negative
revaluation reserve shares
** 2003 figures represent one-half of full-year 2003 production
*** 2003 figures are full-year
FIRST-HALF PROFIT
Operating net profit from insurance increased 16.1% to EUR 1,469 million,
bolstered by exceptionally strong non-life insurance results in Canada, higher
life results in the US and Asia, and the gain on the sale of ING's non-life
insurance joint venture in Australia. Net profit from insurance increased 21.3%
to EUR 1,516 million in the first half, including EUR 47 million in capital
gains on equities compared with a negative value adjustment of EUR 15 million on
the revaluation reserve shares in the first half last year. The effective tax
rate on operating profit increased to 26.1% from 22.6% in the first half of
2003, mainly due to a deferred tax benefit in the Netherlands in the
year-earlier period. Operating profit before tax rose 21.3% to EUR 2,058
million.
Operating profit before tax from life insurance rose 6.8% to EUR 1,225 million,
driven by higher profit from the US and Asia, mainly due to lower credit-related
losses and higher sales. That was partially offset by lower life results in the
Netherlands, mainly due to higher expenses and a lower one-off gain from the old
reinsurance business.
Operating profit before tax from non-life insurance increased 51.7% to EUR 833
million, boosted by the one-off gain from the sale of the Australian non-life
business and exceptionally favourable claims experience, particularly in Canada
and Australia. The combined ratio improved sharply to 89% from 97% in the first
half of 2003. The Australian operations, which were sold as of 30 June 2004,
will be excluded from ING's figures as of the third quarter.
Page 7 of 39
--------------------------------------------------------------------------------
Total operating income increased 3.4%, driven by a 5.0% increase in premium
income to EUR 21,894 million, led by the US and Asia. Excluding the impact of
currencies, acquisitions and divestments, premium income rose 12.6%, driven by a
21.4% increase in US life premiums and a 26.4% increase in life premiums from
Asia/Pacific. Investment income declined 1.8% to EUR 4,716 million, largely due
to currency effects in the Americas.
Operating expenses from the insurance operations declined 2.5% to EUR 2,318
million. Excluding the impact of currencies, acquisitions and divestments,
operating expenses increased 5.2%, mainly due to a restructuring provision of
EUR 21 million and costs related to clearing backlogs and improving service
levels in the Netherlands. Almost all other operations world-wide showed either
a modest increase or a decrease in operating expenses. Expenses as a percentage
of assets under management for investment products improved by one basis point
to 85 basis points from 86 basis points for full-year 2003. Expenses as a
percentage of premiums for life products fell to 12.14% from 13.23% in 2003. The
expense ratio for non-life insurance was 27%, up from 26% a year earlier.
Investment losses dropped to EUR 24 million, or 4 basis points of total
fixed-interest securities, which is far below the normalised level of about 20
basis points. In the first half last year, investment losses amounted to EUR 137
million, or 20 basis points of total fixed-income securities.
VALUE OF NEW LIFE INSURANCE BUSINESS
The value of new business at ING's life insurance operations increased to EUR
286 million, up 30.0% compared with one-half of full-year 2003 production. The
increase was primarily due to higher sales and a more profitable product mix.
Within Insurance Europe, the Dutch life insurance unit increased margins as it
adjusted product pricing. The value of new business in the Netherlands
recovered, increasing from EUR 5 million to EUR 30 million. In the Americas both
sales and margins increased from 2003. The value of new life business in the
Americas increased more than 70% to EUR 82 million, including EUR 15 million
from the inclusion of the pension business in Latin America starting from 2004.
The value of new life business in Asia/Pacific increased 6% to EUR 134 million,
accounting for 46.9% of the Group's total.
The internal rate of return for the business written in the first six months was
11.4%, up from 10.9% overall for 2003. The internal rate of return in the
Netherlands improved strongly to 11.0% from 8.0% in 2003. (See Appendix 6)
Page 8 of 39
--------------------------------------------------------------------------------
1.5 BANKING OPERATIONS
-------------------------------------------------------------------------------------------------------------------
TABLE 4. ING GROUP: BANKING PROFIT & LOSS ACCOUNT
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
-------------------------------------------------------------------------------------------------------------------
Interest result 4,390 3,917 12.1 2,227 1,948 14.3
Commission 1,352 1,232 9.7 642 635 1.1
Other income 664 628 5.7 270 303 -10.9
------ ------ ----- -----
TOTAL OPERATING INCOME 6,406 5,777 10.9 3,139 2,886 8.8
OPERATING EXPENSES 4,161 3,952 5.3 2,042 1,982 3.0
------ ------ ----- -----
Gross result 2,245 1,825 23.0 1,097 904 21.3
Addition to provisions for loan losses 265 615 -56.9 128 290 -55.9
------ ------ ----- -----
OPERATING PROFIT BEFORE TAX 1,980 1,210 63.6 969 614 57.8
Taxation 562 295 90.5 260 150 73.3
Third-party interests 91 112 -18.8 39 59 -33.9
------ ------ ----- -----
OPERATING NET PROFIT 1,327 803 65.3 670 405 65.4
Capital gains/negative value adjustment shares -23 99
------ ------ ----- -----
NET PROFIT 1,327 780 70.1 670 504 32.9
KEY FIGURES
Cost/income ratio 65.0% 68.4% 65.1% 68.7%
RAROC (pre-tax) 23.9% 18.0%
Total risk-weighted assets** (in EUR billion) 272.7 251.3 8.5
Addition to provisions for loan losses in
basis points of average credit-risk-weighted
assets 21 51
Staff (average FTEs) 63,600 64,100 -0.8
-------------------------------------------------------------------------------------------------------------------
* Operating net profit = net profit excluding realised capital gains/losses on shares and negative revaluation
reserve shares
** 30 June 2004 compared with year-end 2003
FIRST-HALF PROFIT
First-half operating net profit from the banking operations rose 65.3% to EUR
1,327 million, driven by a 10.9% increase in operating income, a sharp reduction
in risk costs, and continued cost control. All three banking business lines
reported strong increases in results. Net profit increased 70.1%, including a
negative adjustment of EUR 23 million on the revaluation reserve shares in the
first half last year. The effective tax rate on operating profit increased to
28.4% from 24.4% in the first half of 2003. Operating profit before tax rose
63.6% to EUR 1,980 million.
Total operating income from banking rose 10.9% to EUR 6,406 million, with almost
all income lines contributing to the increase. The interest result rose 12.1% to
EUR 4,390 million, due to a higher average balance sheet total, mainly driven by
the continued strong growth of ING Direct. The total interest margin narrowed 6
basis points to 1.53% compared with the same period last year. That was fully
attributable to the increased share of the balance sheet total from outside the
Netherlands, where interest margins are lower, mainly triggered by ING Direct,
which has an interest margin of about 1%. The interest margin narrowed in the
second quarter to 1.49% from 1.56% in the first. Bank lending increased by EUR
21.8 billion, or 7.5%, from the end of 2003 to EUR 314.4 billion at the end of
June. Corporate lending rose by EUR 10.8 billion, while personal lending
increased by EUR 11.1 billion. The growth in personal lending was almost
entirely due to a EUR 10.5 billion increase in residential mortgages, of which
EUR 5.7 billion was from ING Direct. (See Appendix 5.5) Funds entrusted to and
debt securities of the banking operations increased by EUR 45.5 billion, or
12.0%, to EUR 423.3 billion, caused to a large extent by the continued growth of
ING Direct.
Commission income rose 9.7% to EUR 1,352 million, mainly driven by higher
securities-related commissions. Management fees were up EUR 97 million, or
34.2%, of which EUR 44 million was caused by
Page 9 of 39
--------------------------------------------------------------------------------
the transfer of activities between insurance and banking. Commissions from the
securities business rose 19.6%, due to higher activity on the stock markets.
Brokerage and advisory fees declined 41.0% to EUR 49 million. Commission from
insurance broking rose 13.4% to EUR 76 million, mainly in the Netherlands. (See
Appendix 5.6)
Other income increased 5.7% to EUR 664 million. Income from securities and
participating interests rose 71.7% to EUR 79 million, despite a one-off loss of
EUR 42 million caused by the discount to net asset value on the sale of the
Asian cash equities business in the first quarter. Results from financial
transactions declined 14.7% to EUR 378 million. The decrease was mainly caused
by the loss of EUR 48 million taken by Postbank in the first quarter of 2004 to
compensate customers for a disappointing return on investments related to the
unit-linked mortgage `MeerWaardehypotheek'. Compared with the very good first
quarter of 2004, results from financial transactions in the second quarter fell
from EUR 232 million to EUR 146 million, mainly due to lower financial markets
results, notably in Belgium. Other results increased 48.9% to EUR 207 million,
mainly caused by higher leasing income and higher results from real estate. (See
Appendix 5.7)
Total operating expenses increased 5.3% to EUR 4,161 million, due in large part
to higher expenses to support the growth of ING Direct. One-off expenses had a
limited impact in the first half, as EUR 42 million in costs related to the sale
of the Asian cash equities business in the first quarter of 2004 was largely
balanced by a provision of EUR 45 million in the second quarter last year to pay
for restructuring at ING BHF-Bank and ING Bank France. Excluding those factors,
currency effects, and the impact of transfers of activities between insurance
and banking, operating expenses increased by a modest 2.6%. The cost/income
ratio of the banking activities improved to 65.0% in the first half of 2004,
from 68.4% in the first half of 2003 and 70.1% for full-year 2003. The average
number of staff declined 0.8% to 63,600 in the first half of 2004.
ING added EUR 265 million to the provision for loan losses in the first half of
2004, compared with EUR 615 million in the same period last year. The addition
equalled an annualised 21 basis points of average credit-risk-weighted assets,
which is well below the long-term average of about 35 basis points. In the
full-year 2003, the addition to provision for loan losses was 46 basis points of
average credit-risk-weighted assets. Risk costs declined slightly in the second
quarter from the first. ING added EUR 128 million to provisions for loan losses
in the second quarter, equal to 20 basis points of credit-risk-weighted assets,
compared with EUR 137 million, or 22 basis points, in the first quarter of 2004.
RAROC
The pre-tax Risk-Adjusted Return on Capital (RAROC) of ING's banking operations
improved strongly to 23.9% in the first half of 2004, compared with 18.0% in the
year-earlier period, due entirely to higher economic returns, notably from
Wholesale Banking and ING Direct, as well as continued strong returns from
Retail Banking. The full-year 2003 RAROC was 17.0%.
Page 10 of 39
--------------------------------------------------------------------------------
2.1 INSURANCE EUROPE OPERATING PROFIT BEFORE TAX FALLS 3.0%
o PROFIT IN NETHERLANDS DECLINES 7.2% DUE TO HIGHER COSTS, LOWER ONE-OFF GAIN
o INTERNAL RATE OF RETURN FROM DUTCH LIFE BUSINESS IMPROVES TO 11.0%
o VALUE OF NEW LIFE INSURANCE BUSINESS IN EUROPE RISES 48.9% TO EUR 70 MILLION
-------------------------------------------------------------------------------------------------------------------
TABLE 5. INSURANCE EUROPE PROFIT & LOSS ACCOUNT
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
-------------------------------------------------------------------------------------------------------------------
Premium income 6,047 6,351 -4.8 2,505 2,671 -6.2
- of which life 4,730 4,911 -3.7 2,196 2,242 -2.1
- of which non-life 1,317 1,440 -8.5 309 429 -28.0
Income from investments 2,033 2,039 -0.3 1,018 1,103 -7.7
Commission and other income 233 312 -25.3 85 139 -38.8
------ ------ ----- -----
TOTAL OPERATING INCOME 8,313 8,702 -4.5 3,608 3,913 -7.8
Underwriting expenditure 6,491 6,876 -5.6 2,703 2,999 -9.9
Other interest expenses 168 170 -1.2 72 82 -12.2
Operating expenses 866 846 2.4 461 425 8.5
Investment losses 14 12 16.7 7 7
------ ------ ----- -----
TOTAL OPERATING EXPENDITURE 7,539 7,904 -4.6 3,243 3,513 -7.7
OPERATING PROFIT BEFORE TAX 774 798 -3.0 365 400 -8.8
- of which life insurance 634 679 -6.6 310 348 -10.9
- of which non-life insurance 140 119 17.6 55 52 5.8
KEY FIGURES
Value of new business* 70 47 48.9
Internal rate of return** 12.8% 10.9%
Staff (average FTEs) 15,800 17,000 -7.1
-------------------------------------------------------------------------------------------------------------------
* 2003 figures represent one-half of full-year 2003 production
** 2003 figures are full-year
FIRST-HALF PROFIT
Operating profit before tax from Insurance Europe declined 3.0% to EUR 774
million, due to lower life insurance results in the Netherlands. Almost all
other units, including Belgium, Poland and Hungary, posted higher results. Total
operating profit before tax from life insurance in Europe fell 6.6% to EUR 634
million. Operating profit before tax from non-life insurance increased 17.6% to
EUR 140 million, driven by an improvement in the claims ratio to 61.9% from
73.6% in the same period last year.
Total operating income declined 4.5% to EUR 8,313 million, mainly due to a 4.8%
drop in premium income. Lower life sales in Belgium and the sale of the health
insurance business in the Netherlands were only partly offset by growth
elsewhere. Life premiums in Belgium and Luxembourg declined 15.9% due to
exceptionally high sales of single-premium products in the first half last year.
Non-life premiums in the Netherlands declined 11.0% due to the sale of the Dutch
health insurance business in the second quarter. Life premiums in the rest of
Europe rose 7.9%, excluding the impact of currencies and divestments, mainly
driven by higher sales in Central Europe.
Operating expenses rose 2.4% to EUR 866 million. Excluding the impact of
divestments, operating expenses rose 13.2%, due to a sharp increase in the
Netherlands, including a restructuring provision of EUR 21 million as well as
higher pension costs and expenses to reduce backlogs and improve efficiency.
Expenses in Belgium were almost flat, while operating expenses in the rest of
Europe fell 4.0%.
VALUE OF NEW BUSINESS
The value of new life insurance business written by Insurance Europe was EUR 70
million, an increase of 48.9% compared with one-half of full-year 2003
production. The overall internal rate of return expected on these sales is
12.8%, up from 10.9% in 2003. The improvement in the internal rate of return was
seen
Page 11 of 39
--------------------------------------------------------------------------------
largely in the Netherlands, where the company took steps to adjust pricing on
single-premium products without a material effect on sales levels.
GEOGRAPHICAL BREAKDOWN INSURANCE EUROPE
-----------------------------------------------------------------------------
TABLE 6. INSURANCE EUROPE OPERATING PROFIT BEFORE TAX
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
-----------------------------------------------------------------------------
Netherlands 621 669 -7.2 292 333 -12.3
- of which life 503 566 -11.1 249 293 -15.0
- of which non-life 118 103 14.6 43 40 7.5
Belgium 64 49 30.6 31 26 19.2
- of which life 47 39 20.5 22 20 10.0
- of which non-life 17 10 70.0 9 6 50.0
Rest of Europe* 89 80 11.3 42 41 2.4
--- --- --- ---
Total 774 798 -3.0 365 400 -8.8
-----------------------------------------------------------------------------
* Poland, Hungary, Czech Republic, Slovakia, Romania, Bulgaria, Greece, Spain
In the Netherlands, operating profit before tax from the insurance operations
declined 7.2% to EUR 621 million, due in part to EUR 29 million lower one-off
gains and EUR 9 million lower gains on real estate. Operating expenses excluding
divestments increased 16.5% due to a EUR 21 million restructuring provision for
life and non-life, higher pension costs, and expenses to improve service at the
life insurance business. Life results in the Netherlands fell 11.1% to EUR 503
million, due to higher costs, which were only partially offset by an improved
morbidity result and higher investment income. Life premiums showed a moderate
increase of 0.9% to EUR 3,070 million. However, the internal rate of return on
new life business increased significantly to 11.0% from 8.0% in 2003 as a result
of price adjustments, and the value of new business improved from EUR 5 million
to EUR 30 million. Profit before tax from the Dutch non-life insurance business
rose 14.6% to EUR 118 million, driven by a favourable claims experience from
fire and motor insurance, which more than offset a loss of EUR 14 million on the
sale of the health insurance business. Non-life premiums fell 11.0% to EUR 1,112
million, due to the sale of the health business. Excluding that impact, non-life
premiums rose 0.7%.
In Belgium, operating profit before tax from the insurance operations rose 30.6%
to EUR 64 million, bolstered by higher results from both life and non-life
insurance. Life results (including Luxembourg) rose 20.5% to EUR 47 million
despite a 15.9% drop in life premium income compared with the first half last
year, when sales of individual single premium products were exceptionally high.
Non-life results climbed 70.0% to EUR 17 million, due to higher results from
fire, motor and loss of income/accident insurance. Non-life premiums increased
7.1% to EUR 180 million.
In the Rest of Europe, operating profit before tax increased 11.3% to EUR 89
million, lifted by higher profit from Poland and Hungary. Lower expenses and
higher investment and fee income were the main drivers for this development.
Excluding the impact of currencies and divestments, life premiums rose 7.9% to
EUR 647 million.
--------------------------------------------------------------------------------
TABLE 7. INSURANCE EUROPE PREMIUM INCOME
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
--------------------------------------------------------------------------------
Netherlands 4,182 4,294 -2.6 1,627 1,717 -5.2
- of which life 3,070 3,044 0.9 1,407 1,370 2.7
- of which non-life 1,112 1,250 -11.0 220 347 -36.6
Belgium 1,193 1,373 -13.1 528 614 -14.0
- of which life 1,013 1.205 -15.9 451 543 -16.9
- of which non-life 180 168 7.1 77 71 8.5
Rest of Europe* 672 684 -1.8 350 340 2.9
----- ----- ----- -----
Total 6,047 6,351 -4.8 2,505 2,671 -6.2
--------------------------------------------------------------------------------
* Poland, Hungary, Czech Republic, Slovakia, Romania, Bulgaria, Greece, Spain
Page 12 of 39
--------------------------------------------------------------------------------
2.2 INSURANCE AMERICAS OPERATING PROFIT BEFORE TAX RISES 26.2%
o EXCLUDING CURRENCY EFFECTS, OPERATING PROFIT BEFORE TAX INCREASED 39.1%
o US LIFE SALES RISE 48.6%, ANNUITY SALES UP 51.2% AT CONSTANT EXCHANGE RATES
o CANADA OPERATING PROFIT MORE THAN DOUBLES, DRIVEN BY GOOD UNDERWRITING
EXPERIENCE
-------------------------------------------------------------------------------------------------------
TABLE 8. INSURANCE AMERICAS PROFIT & LOSS ACCOUNT
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
-------------------------------------------------------------------------------------------------------
Premium income 11,530 11,059 4.3 5,786 5,522 4.8
- of which life 9,324 8,558 9.0 4,606 4,160 10.7
- of which non-life 2,206 2,501 -11.8 1,180 1,362 -13.4
Income from investments 2,062 2,254 -8.5 1,058 1,057 0.1
Commission and other income 422 417 1.2 226 170 32.9
------ ------ ----- -----
TOTAL OPERATING INCOME 14,014 13,730 2.1 7,070 6,749 4.8
Underwriting expenditure 12,074 11,787 2.4 6,031 5,724 5.4
Other interest expenses 40 46 -13.0 17 26 -34.6
Operating expenses 1,089 1,137 -4.2 553 576 -4.0
Investment losses 11 126 -91.3 9 28 -67.9
------ ------ ----- -----
TOTAL OPERATING EXPENDITURE 13,214 13,096 0.9 6,610 6,354 4.0
OPERATING PROFIT BEFORE TAX 800 634 26.2 460 395 16.5
- of which life insurance 484 456 6.1 260 303 -14.2
- of which non-life insurance 316 178 77.5 200 92 117.4
KEY FIGURES
Value of new business* 82 47 74.5
Internal rate of return** 9.7% 9.0%
Staff (average FTEs) 25,400 26,200 -3.1
-------------------------------------------------------------------------------------------------------
* 2003 figures represent one-half of full-year 2003 production
** 2003 figures are full-year
FIRST-HALF PROFIT
Operating profit before tax from Insurance Americas increased 26.2% to EUR 800
million in the first half of 2004, bolstered by exceptionally low claims at the
Canadian non-life insurance business, lower credit-related investment losses and
higher asset levels driven by strong sales of core products from the US life
business. Profit growth was dampened in part by the decline of all currencies in
the region against the euro. Excluding currency effects, operating profit before
tax increased 39.1%.
Total operating income increased 2.1% to EUR 14,014 million, driven by higher
premium income in the US. Excluding currency impacts, total income increased
12.7%. Premium income rose 4.3% as higher production in the US and Canada was
partially offset by lower premiums from Latin America. At constant exchange
rates, premium income increased 15.1%. Investment income declined 8.5% to EUR
2,062 million, due mainly to currency effects. At constant exchange rates,
investment income increased slightly due to higher asset levels, despite lower
yields.
Operating expenses fell 4.2%, due to the decline of most currencies against the
euro. At constant exchange rates, expenses increased 5.3%, due to the transfer
of some investment management activities from banking to insurance in the US and
the consolidation of subsidiaries in Mexico. Excluding those impacts, operating
expenses rose 1.1% as a result of higher production and benefit costs.
VALUE OF NEW BUSINESS
The value of new life insurance business written by Insurance Americas increased
74.5% to EUR 82 million compared with one-half of the full-year new business
value in 2003, due in part to the inclusion of the Latin American pension
business starting in 2004. The overall internal rate of return for the first
half of 2004 was
Page 13 of 39
--------------------------------------------------------------------------------
9.7%, up from 9.0% for the full year 2003, due to continued focus on profitable
revenue growth in the US and the inclusion of the Latin American pension
business.
GEOGRAPHICAL BREAKDOWN INSURANCE AMERICAS
--------------------------------------------------------------------------------
TABLE 9. INSURANCE AMERICAS OPERATING PROFIT BEFORE TAX
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
--------------------------------------------------------------------------------
United States 469 423 10.9 250 271 -7.7
Canada 218 82 165.9 162 68 138.2
Latin America 113 129 -12.4 48 55 -12.7
- of which Mexico 80 103 -23.8 32 47 -31.9
- of which South America* 33 26 37.5 16 8 100.0
--- --- --- ---
Total 800 634 26.2 460 394 16.8
--------------------------------------------------------------------------------
* Argentina, Brazil, Chile, Peru
The United States insurance businesses reported operating profit before tax of
EUR 469 million in the first half of 2004, an increase of 10.9% over the same
period last year. Excluding currency impacts, operating profit before tax
increased 23.1%. Results improved due to strong asset growth, supported by
increased sales, good persistency, higher equity market levels and lower credit
losses. In the second quarter, operating profit before tax fell 7.7% from the
same period a year earlier, due to the decline of the dollar against the euro.
At constant exchange rates, profit in the second quarter was unchanged, as
growth in asset levels, higher fee income and lower credit losses were offset by
a favourable unlocking of deferred acquisition costs in the second quarter of
2003.
Enhanced product designs in annuities and life insurance, combined with expanded
distribution capacity, helped increase market share. Premium income rose 7.6% to
EUR 9,364 million in the first half and climbed 19.5% at constant currency
rates. Individual life sales in US dollars increased 48.6% driven by new
universal life products introduced in the fourth quarter of 2003. Annuity sales
increased 51.2% at constant exchange rates, driven by higher sales of
equity-indexed fixed annuities, enhanced variable annuity product features, and
expanded distribution. The internal rate of return in US dollars rose to 10.2%
for the first half, compared with 9.9% for the full year 2003, as a result of
pricing discipline.
Composite margins after credit losses increased in the second quarter to 1.45%
from 1.44% in the first quarter of 2004. Actions to reduce credited rates
improved margins by 6 basis points in the second quarter but were largely offset
by higher credit losses. Credit-related investment losses increased to 6 basis
points in the second quarter from 1 basis point in the first, but remained
substantially below historical levels. The earned rate remained unchanged during
the period. Surrender rates were in line with pricing assumptions.
Operating expenses for the first half of 2004 declined 2.3% to EUR 727 million,
though at constant exchange rates expenses rose 8.5%. The increase was due
mainly to the transfer of some investment management activities previously
included under Wholesale Banking to Insurance Americas. Excluding this impact,
expenses increased 2.7% due to higher production levels and benefit costs.
The mortality experience in the individual life reinsurance business during the
year 2003 was worse than expected. As a result, ING Re is conducting an in-depth
study of its mortality experience and assumptions.
In Canada, operating profit before tax from the non-life insurance business more
than doubled to EUR 218 million from EUR 82 million in the first half last year.
Strong underwriting experience resulted in a record-low combined ratio of 82.7%,
compared with 95.1% in the year-earlier period. The business benefited from rate
increases filed since 2003, along with lower claims frequency and severity
supported by
Page 14 of 39
--------------------------------------------------------------------------------
regulatory caps on certain types of claims in several provinces. The substantial
increase in results is expected to soften in the second half of 2004 as
rate-reduction actions required by several provinces will have a greater effect.
Claims levels are also not expected to remain at the current historically low
levels. The second quarter of 2004 also included a EUR 17 million gain on the
sale of an investment in an operating subsidiary. Premium income in Canada rose
4.0% to EUR 1,080 million. Higher asset levels also delivered an increase in
investment income.
In Mexico, operating profit before tax declined 23.8% to EUR 80 million in the
first half of 2004, as a result of currency exchange rates and the sale of the
Seguros Bital joint venture in the fourth quarter of 2003. Excluding those
impacts, operating profit before tax declined 3.6%. Premiums fell 24.7% to EUR
825 million, due in part to the decline of the Mexican peso against the euro. At
constant exchange rates, premiums fell 11.0% due to a strategic decision not to
renew less profitable contracts. Claims experience in the non-life business was
impacted by several large claims resulting from hail storms and fires, although
claims in motor insurance continued to show favourable developments. Operating
expenses fell 8.3% to EUR 155 million. Excluding the impact of currency rates as
well as the consolidation of subsidiaries in 2004, operating expenses rose 4.7%
due to higher investments in Mexico's life insurance distribution.
In South America, operating profit before tax from Chile, Brazil, Peru and
Argentina totalled EUR 33 million, up 37.5% from the same period last year,
driven by higher results in Chile. Premiums increased 18.6%, lifted by higher
annuity premiums in Chile. Operating expenses fell 18.0%, supported by actions
in Chile to close branches and offices.
--------------------------------------------------------------------------------------------
TABLE 10. INSURANCE AMERICAS PREMIUM INCOME
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
--------------------------------------------------------------------------------------------
United States 9,364 8,706 7.6 4,614 4,247 8.6
Canada 1,080 1,038 4.0 635 619 2.6
Latin America 1,086 1,315 -17.4 537 657 -18.3
- of which Mexico 825 1,095 -24.7 397 548 -27.6
- of which South America* 261 220 18.6 140 109 28.4
------ ------ ----- -----
Total 11,530 11,059 4.3 5,786 5,523 4.8
--------------------------------------------------------------------------------------------
* Argentina, Brazil, Chile, Peru
Page 15 of 39
--------------------------------------------------------------------------------
2.3 INSURANCE ASIA/PACIFIC POSTS STRONG INCREASE IN OPERATING PROFIT
o EXCLUDING GAIN ON SALE OF AUSTRALIAN BUSINESS, OPERATING PROFIT BEFORE TAX
ROSE 75.0%
o PREMIUM INCOME INCREASES 22.4% TO EUR 4,303 MILLION
o VALUE OF NEW LIFE BUSINESS RISES TO EUR 134 MILLION, ACCOUNTING FOR 47% OF
ING'S TOTAL
------------------------------------------------------------------------------------------------------
TABLE 11. INSURANCE ASIA/PACIFIC PROFIT & LOSS ACCOUNT
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
------------------------------------------------------------------------------------------------------
Premium income 4,303 3,516 22.4 2,227 1,709 30.3
- of which life 4,080 3,331 22.5 2,100 1,610 30.4
- of which non-life 223 185 20.5 127 99 28.3
Income from investments 546 283 92.9 339 147 130.6
Commission and other income 57 76 -25.0 34 48 -29.2
----- ----- ----- -----
TOTAL OPERATING INCOME 4,906 3,875 26.6 2,600 1,904 36.6
Underwriting expenditure 4,046 3,319 21.9 2,040 1,610 26.7
Other interest expenses 6 4 50.0 2 2 0
Operating expenses 327 376 -13.0 153 187 -18.2
----- ----- ----- -----
TOTAL OPERATING EXPENDITURE 4,379 3,699 18.4 2,195 1,799 22.0
OPERATING PROFIT BEFORE TAX 527 176 199.4 405 105 285.7
- of which life 252 162 55.6 151 95 58.9
- of which non-life 275 14 254 10
KEY FIGURES
Value of new business* 134 126 6.3
Internal rate of return %** 14.1% 14.7%
Staff (average FTEs) 8,500 8,200 3.7
------------------------------------------------------------------------------------------------------
* 2003 figures represent one-half of full-year 2003 production
** 2003 figures are full-year
FIRST-HALF PROFIT
Operating profit before tax from Insurance Asia/Pacific increased to EUR 527
million from EUR 176 million, including a one-time gain of EUR 219 million from
the sale of ING's 50% stake in its Australian non-life insurance joint venture.
Excluding that gain, operating profit rose 75.0% to EUR 308 million, led by
higher life insurance profits in South Korea and Japan, and very strong results
from the Australian non-life insurance joint venture, which was sold as of 30
June 2004. Operating profit from life insurance increased 55.6% to EUR 252
million. Across Asia/Pacific, profits were driven by higher premium income,
lower claims and strict cost control.
Premium income rose 22.4% to EUR 4,303 million, fuelled by South Korea and
Japan, where premiums increased 40.9% and 52.6% respectively. Double-digit
premium growth rates were recorded in Hong Kong, Thailand, India and China.
Investment income includes the EUR 219 million gain on the sale of Australian
non-life insurance joint venture. Excluding that gain, investment income rose
15.5% as general account assets grew from EUR 13.2 billion at year-end 2003 to
EUR 15.0 billion at the end of June.
Operating expenses fell 13.0% reflecting a number of one-off items as well as
continued efforts to control costs. The favourable settlement of a wage tax
assessment resulted in the release of a EUR 30 million provision in the second
quarter of 2004. In Taiwan, premium tax rates fell from 5% to 2% which resulted
in a EUR 7.9 million reduction in costs in the first half. Excluding those
items, operating expenses declined 3.0% in the first half.
Page 16 of 39
--------------------------------------------------------------------------------
VALUE OF NEW BUSINESS
The value of new life insurance business written by Insurance Asia/Pacific was
EUR 134 million in the first half year, accounting for almost half of ING
Group's total, and up 6% compared with one-half of the full-year production in
2003. ING invested EUR 182 million to write new life insurance business in the
region in the first half of 2004, and the overall internal rate of return
expected on this investment is 14.1%. This compares with an overall rate of
return of 14.7% in 2003. The decline in IRR is primarily attributable to an
increase in the capital levels reflected in the Taiwan business.
GEOGRAPHICAL BREAKDOWN INSURANCE ASIA/PACIFIC
------------------------------------------------------------------------------
TABLE 12. INSURANCE ASIA/PACIFIC OPERATING PROFIT BEFORE TAX
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
------------------------------------------------------------------------------
Australia 337 63 434.9 285 37 670.3
- of which life 64 48 33.3 32 27 18.5
- of which non-life 273 15 253 10
Korea 51 33 54.5 23 27 -14.8
Taiwan 60 46 30.4 41 18 127.8
Japan 45 16 181.3 20 6 233.3
Rest of Asia* 34 18 88.9 36 17 111.8
--- --- --- ---
Total 527 176 199.4 405 105 285.7
------------------------------------------------------------------------------
* Including China, India, Thailand, Indonesia, Hong Kong and Malaysia
In Australia, operating profit before tax jumped to EUR 337 million in the first
half from EUR 63 million in the year-earlier period. Excluding the EUR 219
million gain on sale of ING's non-life insurance joint venture, operating profit
before tax increased 87.3% to EUR 118 million. The non-life insurance venture
with QBE posted an operating profit of EUR 54 million, up from EUR 15 million in
the same period last year, as it continued to benefit from higher premium rates
and a low claims ratio. ING sold its 50% stake in the venture as of 30 June
2004, and the business will be excluded as of the third quarter. Operating
profit before tax from ING's Australian life and wealth management joint venture
with ANZ grew 45.6% to EUR 48 million, mainly due to improved capital investment
earnings.
In South Korea, operating profit before tax increased 54.5% to EUR 51 million,
driven by higher sales of life insurance and higher renewal premiums as well as
continued low claim levels. Premium income rose 40.9% to EUR 720 million, or
52.1% in local currency terms. During the second quarter of 2004, ING Life Korea
became the largest foreign insurance company and now ranks fourth in the life
insurance market in terms of annualised new premiums.
In Taiwan, operating profit before tax increased 30.4% to EUR 60 million in the
first half, driven by a 21.0% drop in operating expenses, due in part to a
reduction in the premium tax rate as well as strict cost control. Taiwan doubled
its programme to strengthen reserves due to the continued low interest rate
environment, resulting in a charge of EUR 50 million in the first half of 2004,
up from EUR 25 million in the same period last year. The unit increased its
focus on selling investment-linked products, which accounted for 40% of new
business premium income in the first half. Total premiums fell 0.9% to EUR 1,079
million, but increased 6.2% in local currency terms.
In Japan, operating profit before tax increased to EUR 45 million from EUR 16
million in the year-earlier period, led by higher sales of corporate-owned life
insurance and single-premium variable annuities. Premium income increased 52.5%
to EUR 1,443 million.
Page 17 of 39
--------------------------------------------------------------------------------
In the Rest of Asia, operating profit before tax rose to EUR 34 million from EUR
18 million in the first half of 2003. In Malaysia, operating profit before tax
increased 15.4% to EUR 15 million, driven by growth in sales of employee
benefits and individual life insurance. In the developing markets businesses of
China, India and Thailand, premium income increased by 23.6%, 288.8% and 30.2%
respectively.
-------------------------------------------------------------------------------
TABLE 13. INSURANCE ASIA/PACIFIC PREMIUM INCOME
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
-------------------------------------------------------------------------------
Australia 749 690 8.6 384 356 7.9
Korea 720 511 40.9 380 257 47.9
Taiwan 1,079 1,089 -0.9 564 553 2.0
Japan 1,443 946 52.5 747 402 85.8
Rest of Asia* 312 280 11.4 152 141 7.8
----- ----- ----- -----
Total 4,303 3,516 22.4 2,227 1,709 30.3
-------------------------------------------------------------------------------
* including India, China, Hong Kong, Thailand, Indonesia and Malaysia
Page 18 of 39
--------------------------------------------------------------------------------
2.4 WHOLESALE BANKING OPERATING PROFIT BEFORE TAX RISES 55.6%
o INCOME INCREASES 4.2%, WHILE COST/INCOME RATIO IMPROVES TO 57.8%
o RISK COSTS DECLINE SHARPLY TO EUR 139 MILLION FROM EUR 466 MILLION
o RAROC IMPROVES TO 20.2% FROM 15.8%, SURPASSING ING'S HURDLE
----------------------------------------------------------------------------------------------------------------
TABLE 14. WHOLESALE BANKING PROFIT & LOSS ACCOUNT
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
----------------------------------------------------------------------------------------------------------------
Interest result 1,726 1,772 -2.6 851 865 -1.6
Commission 724 683 6.0 322 353 -8.8
Other income 654 523 25.0 270 229 17.9
------ ------ ----- -----
TOTAL OPERATING INCOME 3,104 2,978 4.2 1,443 1,447 -0.3
OPERATING EXPENSES 1,795 1,760 2.0 864 884 -2.3
------ ------ ----- -----
Gross result 1,309 1,218 7.5 579 563 2.8
Addition to provisions for loan losses 139 466 -70.2 68 205 -66.8
------ ------ ----- -----
OPERATING PROFIT BEFORE TAX 1,170 752 55.6 511 358 42.7
KEY FIGURES
Cost/income ratio 57.8% 59.1% 59.9% 61.1%
RAROC (pre-tax) 20.2% 15.8%
Total risk-weighted assets* (in EUR billion) 160.7 152.9 5.1
Addition to provisions for loan losses in
basis points of average credit-risk-weighted
assets 18 59
Staff (average FTEs) 24,000 24,800 -3.2
----------------------------------------------------------------------------------------------------------------
* 30 June 2004 compared with year-end 2003
FIRST-HALF PROFIT
Operating profit before tax from Wholesale Banking increased 55.6% to EUR 1,170
million, driven by a sharp decline in risk costs and continued growth in
commissions and other income. The wholesale banking business of ING BHF-Bank in
Germany was profitable in the first half after posting a loss in the same period
last year.
Total operating income increased 4.2% to EUR 3,104 million. Commission income
rose 6.0%, while other income increased 25.0%, driven mainly by strong financial
markets results in the first quarter and higher asset management results. Other
income also includes a one-off loss of EUR 42 million on the sale of the Asian
cash equities business, which was booked in the first quarter of 2004. The
interest result declined 2.6%, mainly in the Netherlands.
Operating expenses increased 2.0% to EUR 1,795 million. On balance, one-off
expenses had a limited impact in the first half. Additional costs of EUR 42
million related to the sale of the Asian cash equities business in the first
quarter of 2004 were balanced by a charge of EUR 45 million in the second
quarter of 2003 to pay for restructuring at ING BHF-Bank in Germany and ING Bank
France. Excluding the one-off costs, currency effects, and the impact of
transfers of activities between Insurance and Banking, operating expenses rose
3.2%. The cost/income ratio for Wholesale Banking improved to 57.8% from 59.1%
in the first half of 2003 and 63.3% for full-year 2003. The average number of
wholesale staff fell 3.2% compared with the first half of 2003, mainly due to
the sale of the Asian cash equities business.
The addition to the provision for loan losses declined sharply in the first half
to EUR 139 million from EUR 466 million in the same period last year, mainly in
the Netherlands, Germany and the Americas. The addition was equal to an
annualised 18 basis points of average credit-risk-weighted assets, compared with
59 basis points in the first half last year, and 56 basis points for full-year
2003.
Page 19 of 39
--------------------------------------------------------------------------------
GEOGRAPHICAL BREAKDOWN WHOLESALE BANKING
-------------------------------------------------------------------------------
TABLE 15. WHOLESALE BANKING OPERATING PROFIT BEFORE TAX
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
-------------------------------------------------------------------------------
Netherlands 488 444 9.9 241 285 -15.4
Belgium 443 349 26.9 165 115 43.5
Germany 8 -124 3 -100
Rest of world 116 49 136.7 59 45 31.1
Other -25 -24 -20 -2
------ ---- ---- ----
SUBTOTAL WHOLESALE BANKING 1,030 694 48.4 448 343 30.6
Asset management* 140 58 141.4 63 15 320.0
------ ---- ---- ----
TOTAL 1,170 752 55.6 511 358 42.7
-------------------------------------------------------------------------------
* ING Real Estate and Baring Asset Management
In the Netherlands, operating profit before tax from Wholesale Banking increased
9.9% to EUR 488 million, caused by a sharp decline in risk costs supported by
the release of some debtor provisions. In the first half of 2004 risk costs were
only 4 basis points of average credit-risk-weighted assets, down from 48 basis
points in the first half 2003. The gross result was 12.8% lower, mainly due to
lower results from the asset and liability-matching book. Total operating income
in the Netherlands fell 3.9%, while operating expenses rose 7.2%.
In Belgium, operating profit before tax from Wholesale Banking increased 26.9%
to EUR 443 million, lifted by strong financial markets results, particularly in
the first quarter, and good cost control. Total income rose 10.8% while
operating expenses increased 1.3%. Risk costs were 8 basis points of average
credit-risk-weighted assets against 18 basis points in the first half of 2003.
In Germany, the wholesale banking activities of ING BHF-Bank posted an operating
profit before tax of EUR 8 million compared with a loss of EUR 124 million in
the first half last year. Total income was up 15.5% supported by higher income
from financial markets activities. Operating expenses decreased 14.4%, mainly
due to the EUR 30 million restructuring provision taken in the second quarter of
2003. The addition to the provision for loan losses fell from 152 basis points
of average credit-risk-weighted assets in the first half of 2003 to 84 basis
points in the first half this year.
In the rest of the world the wholesale banking activities posted an operating
profit before tax of EUR 116 million, more than double the EUR 49 million profit
posted in the same period last year. Excluding the book loss and one-off
expenses related to the sale of the Asian cash equities business, which totalled
EUR 84 million in the first quarter of 2004, operating profit before tax rose
four-fold to EUR 200 million. This increase was fully caused by EUR 117 million
lower additions to the provision for loan losses and a EUR 37 million lower cost
base. Particularly the operating profit before tax in the Americas and UK
improved significantly.
The banking asset management units, including ING Real Estate and Baring Asset
Management, increased their operating profit before tax to EUR 140 million from
EUR 58 million in the first half last year. ING Real Estate posted an operating
profit before tax of EUR 118 million, up from EUR 50 million in the first half
of 2003, including EUR 26 million from the transfer of the ING Real Estate
Investment Management companies from insurance to banking. Excluding that
impact, operating profit before tax rose 55.3%, driven by strong revenue growth
across all business lines and substantially higher profits from the finance and
development activities in the first half of 2004. The purchase of Rodamco Asia
NV was consolidated in June, adding about EUR 800 million in assets. Pre-tax
profit of Baring Asset Management rose to EUR 22 million from EUR 2 million.
Page 20 of 39
--------------------------------------------------------------------------------
RAROC
The pre-tax Risk-Adjusted Return on Capital for Wholesale Banking improved
strongly to 20.2% from 15.8% in the same period last year, driven by higher
economic returns. With the exception of the Netherlands, all regions reported
improved RAROCs. The wholesale banking activities of ING BHF-Bank in Germany
posted a positive RAROC in the first half of 2004, though it was not yet up to
ING's hurdle of 18.5%
--------------------------------------------------------------------------------
TABLE 16. WHOLESALE BANKING RISK-ADJUSTED RETURN ON CAPITAL
RAROC % (pre-tax) ECONOMIC CAPITAL
(in EUR billion)
1H 1H FY 1H 1H FY
2004 2003 2003 2004 2003 2003
--------------------------------------------------------------------------------
Netherlands 24.3 29.5 28.2 3.1 3.0 2.9
Belgium 27.2 24.0 16.1 2.7 2.5 2.7
Germany 6.7 -3.5 -3.8 1.2 1.3 1.3
Rest of world 11.6 5.8 5.0 2.1 2.7 2.5
Other -36.9 -43.0 -45.4 0.2 0.1 0.3
--- --- ---
SUBTOTAL WHOLESALE BANKING 18.9 15.9 12.6 9.3 9.6 9.7
Asset management* 34.2 15.1 44.0 0.9 0.5 0.4
--- --- ---
TOTAL 20.2 15.8 13.9 10.2 10.1 10.1
--------------------------------------------------------------------------------
* ING Real Estate and Baring Asset Management
Page 21 of 39
--------------------------------------------------------------------------------
2.5 RETAIL BANKING OPERATING PROFIT BEFORE TAX RISES 37.5%
o INCOME INCREASES 3.6%, WHILE OPERATING EXPENSES FALL 3.0%
o RISK COSTS DROP TO EUR 81 MILLION FROM EUR 126 MILLION
o RAROC IMPROVES FURTHER TO 54.9%
--------------------------------------------------------------------------------------------------------------------
TABLE 17. RETAIL BANKING PROFIT & LOSS ACCOUNT
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
--------------------------------------------------------------------------------------------------------------------
Interest result 1,935 1,792 8.0 982 891 10.2
Commission 585 534 9.6 304 276 10.1
Other income -47 60 -28 42
------ ------ ----- -----
TOTAL OPERATING INCOME 2,473 2,386 3.6 1,258 1,209 4.1
OPERATING EXPENSES 1,714 1,767 -3.0 871 878 -0.8
------ ------ ----- -----
Gross result 759 619 22.6 387 331 16.9
Addition to provisions for loan losses 81 126 -35.7 36 74 -51.4
------ ------ ----- -----
OPERATING PROFIT BEFORE TAX 678 493 37.5 351 257 36.6
KEY FIGURES
Cost/income ratio 69.3% 74.1% 69.2% 72.6%
RAROC (pre-tax) 54.9% 45.3%
Total risk-weighted assets* (in EUR billion) 72.8 69.9 4.1
Addition to provisions for loan losses in
basis points of average credit-risk-weighted
assets 22 38
Staff (average FTEs) 34,600 35,800 -3.4
--------------------------------------------------------------------------------------------------------------------
* 30 June 2004 compared with year-end 2003
FIRST-HALF PROFIT
Operating profit before tax from Retail Banking increased 37.5% to EUR 678
million, driven by continued growth in income and strict cost control, which led
to a 22.6% increase in the gross result. Additions to provisions for loan losses
also declined sharply.
Total operating income increased 3.6% to EUR 2,473 million in the first half of
2004. Interest income climbed 8.0% due to higher mortgage lending and increased
savings, while commission income rose 9.6% mainly driven by securities-related
commissions. Other income declined, mainly due to a EUR 48 million loss taken by
Postbank in the first quarter of 2004 to compensate customers for a
disappointing return on investments related to the unit-linked mortgage product
"MeerWaardehypotheek." Excluding the impact of the unit-linked mortgage product,
total income increased 5.7%.
Operating expenses from Retail Banking declined 3.0% to EUR 1,714 million as
continued cost control offset the impact of the collective labour agreement and
higher pension costs. As a result, the cost/income ratio improved to 69.3% from
74.1% in the first half of 2003 and 73.9% for full-year 2003. The average number
of retail staff was 3.4% lower than in the same period of 2003.
The addition to the provision for loan losses declined sharply to EUR 81 million
from EUR 126 million in the first half last year, mainly in the Netherlands and
Poland. The addition was equal to an annualised 22 basis points of average
credit-risk-weighted assets compared with 38 basis points in the first half of
2003 and 27 basis points for the full-year.
Page 22 of 39
--------------------------------------------------------------------------------
GEOGRAPHICAL BREAKDOWN RETAIL BANKING
-------------------------------------------------------------------------------
TABLE 18. RETAIL BANKING OPERATING PROFIT BEFORE TAX
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Netherlands 561 446 25.8 313 206 51.9
Belgium 100 34 194.1 43 39 10.3
Poland 11 -11 8 -10
Other retail* 6 24 -75.0 -13 22
--- --- --- ---
TOTAL 678 493 37.5 351 257 36.6
-------------------------------------------------------------------------------
* mainly ING Vysya Bank, Private Banking rest of world, Kookmin Bank stake,
In the Netherlands, operating profit before tax from retail banking rose 25.8%
to EUR 561 million. Total income increased 3.0%, driven by higher interest
results. That more than offset the EUR 48 million loss taken by Postbank for the
unit-linked mortgage product in the first quarter of 2004. The residential
mortgage portfolio in the Netherlands increased by EUR 4.0 billion in the first
half to EUR 77.3 billion at the end of June 2004. Operating expenses were 3.2%
lower, while risk costs declined from 35 basis points of average
credit-risk-weighted assets to 20 basis points in the first half of 2004.
In Belgium operating profit before tax from retail banking rose from EUR 34
million to EUR 100 million, driven by strong income growth. Total income rose
14.8%, due mainly to higher interest results on lending and savings accounts and
higher securities-related commissions. Operating expenses increased only 1.8%.
Risk costs increased from 18 basis points of average credit-risk-weighted assets
to 27 basis points in the first half of 2004.
In Poland, the operating profit before tax of the retail banking activities of
ING Bank Slaski turned from a loss of EUR 11 million in the first half of 2003
to a profit of EUR 11 million this year. The swing was mainly due to a 69%
decline in risk costs. The level of loan loss provisioning, however, remains
high, amounting to 222 basis points of average credit-risk-weighted assets in
the first half of 2004.
The other retail banking activities posted a sharp decline in operating profit
before tax from EUR 24 million in the first half of 2003 to EUR 6 million this
year. The decrease can be fully attributed to lower results on the bond
portfolio of ING Vysya Bank in India.
RAROC
The pre-tax Risk-Adjusted Return on Capital for the business line Retail Banking
climbed to 54.9% from 45.3% in the first half last year. All regions reported
improved RAROCs.
--------------------------------------------------------------------------------
TABLE 19. RAROC RETAIL BANKING
RAROC % (pre-tax) ECONOMIC CAPITAL (in EUR billion)
1H 1H FY 1H 1H FY
2004 2003 2003 2004 2003 2003
--------------------------------------------------------------------------------
Netherlands 72.4 63.2 62.2 1.6 1.6 1.5
Belgium 47.9 11.5 18.3 0.4 0.5 0.5
Poland 23.8 10.0 19.5 0.1 0.1 0.1
Other retail* 4.3 -20.3 5.4 0.4 0.1 0.4
--- --- ---
TOTAL 54.9 45.3 43.4 2.5 2.3 2.5
--------------------------------------------------------------------------------
* mainly ING Vysya Bank, Private Banking rest of world, Kookmin Bank stake,
Page 23 of 39
--------------------------------------------------------------------------------
2.6 ING DIRECT POSTS OPERATING PROFIT BEFORE TAX OF EUR 203 MILLION
o FUNDS ENTRUSTED JUMP 29% IN FIRST HALF TO EUR 128.2 BILLION
o ING DIRECT ADDED NEARLY 1.5 MILLION NEW CUSTOMERS IN FIRST HALF TO
10.0 MILLION
o MORTGAGE LENDING PORTFOLIO GROWS 27% TO EUR 26.7 BILLION
-----------------------------------------------------------------------------------------------------------------
TABLE 20. ING DIRECT* PROFIT & LOSS ACCOUNT
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
-----------------------------------------------------------------------------------------------------------------
Interest result 747 390 91.5 396 211 87.7
Commission 44 15 193.3 26 8 225.0
Other income 6 9 -33.3 3 4 -25.0
----- ----- ----- ------
TOTAL OPERATING INCOME 797 414 92.5 425 223 90.6
OPERATING EXPENSES 549 360 52.5 273 188 45.2
----- ----- ----- ------
Gross result 248 54 359.3 152 35 334.3
Addition to provisions for loan losses 45 23 95.7 24 11 118.2
----- ----- ----- ------
OPERATING PROFIT BEFORE TAX 203 31 554.8 128 24 433.3
KEY FIGURES
Cost/income ratio 68.9% 87.0% 64.2% 84.3%
RAROC (pre-tax) 19.4% 9.7%
Total risk-weighted assets** (in EUR billion) 39.2 28.5 37.5
Addition to provisions for loan losses in basis
points of average credit-risk-weighted assets 26 21
Staff (average in FTE) 5,000 3,500 +42.9
-----------------------------------------------------------------------------------------------------------------
* Including ING Card from 2004
** 30 June 2004 compared with year-end 2003
FIRST-HALF PROFIT
Operating profit before tax from ING Direct jumped to EUR 203 million in the
first half of 2004 compared with EUR 31 million in the same period a year
earlier as it continued to attract new customers and gain critical mass in the
markets where it operates. Of the eight countries in which ING Direct is active,
it is profitable in six.
Operating income at ING Direct increased 92.5% to EUR 797 million, driven mainly
by a 91.5% jump in interest income as a result of continued growth in funds
entrusted. Since year-end 2003, total funds entrusted grew by EUR 28.8 billion,
or 29.0%, to EUR 128.2 billion. Compared with a year ago, funds entrusted are
61.9% higher. Growth in mortgage lending also boosted income, particularly in
the US and Germany. At the end of June, ING Direct had a total mortgage loan
portfolio of EUR 26.7 billion, an increase of EUR 5.7 billion from the end of
2003.
Operating expenses at ING Direct increased 52.5% to EUR 549 million as a result
of higher costs to handle the continued growth of the business. The cost/income
ratio of ING Direct improved to 68.9% from 87.0% in the first half last year.
The average number of full-time employees at ING Direct increased 42.9% to 5,000
in the first half of 2004, mainly due to expansion in Germany, the US and the
UK.
The addition to the provision for loan losses rose to EUR 45 million in the
first half of 2004 from EUR 23 million in the same period last year. Risk costs
equalled an annualised 26 basis points of average credit-risk-weighted assets,
up from 21 basis points in the first half of 2003, and unchanged from the same
level for full-year 2003.
Page 24 of 39
--------------------------------------------------------------------------------
RAROC
The pre-tax Risk-Adjusted Return on Capital for ING Direct improved to 19.4%
from 9.7% in the first half of 2003, surpassing ING's hurdle of 18.5%. The
increase was due entirely to higher economic returns as the business units reach
critical mass. The economic capital increased to EUR 2.4 billion from EUR 1.5
billion in the first half of 2003.
GEOGRAPHICAL BREAKDOWN ING DIRECT
----------------------------------------------------------------------------------------------------------
TABLE 21. ING DIRECT OPERATING PROFIT BEFORE TAX (including ING Card)
FIRST HALF SECOND QUARTER
1H 1H % 2Q 2Q %
In EUR million 2004 2003 Change 2004 2003 Change
----------------------------------------------------------------------------------------------------------
Canada 29 24 20.8 14 13 7.7
Spain 22 8 175.0 11 6 83.3
Australia 30 23 30.4 13 13 0.0
France 2 -15 2 -8
US 76 19 300.0 51 10 410.0
Italy -1 -17 6 -7
UK -16 -19 -5 -13
Germany* 64 8 700.0 37 10 270.0
--- --- --- ---
SUBTOTAL ING DIRECT 206 31 564.5 129 24 437.5
ING Card -3 0 -1 0
--- --- --- ---
TOTAL 203 31 554.8 128 24 433.3
----------------------------------------------------------------------------------------------------------
* Including Austria
Of the ING Direct operations, six out of eight countries posted profits in the
first half of 2004. Only the UK, which started operations in May 2003, and Italy
were loss making in the first half, although Italy turned to profit in the
second quarter of 2004. All ING Direct units except France, Italy and the UK are
performing above ING's 18.5% hurdle for risk-adjusted return on capital.
The US and Germany posted the strongest profit increases, driven by the
continued growth of funds entrusted and number of clients. Developments in the
UK have been much better than planned, with higher-than-expected funds entrusted
and client numbers resulting in lower start-up losses. Funds entrusted in
Australia declined slightly in the second quarter of 2004 due to the impact of
the exchange rates and increased competition.
---------------------------------------------------------------------------------------------------------
TABLE 22. ING DIRECT CLIENTS AND FUNDS ENTRUSTED
NUMBER OF CLIENTS FUNDS ENTRUSTED
(x 1,000) (in EUR billion)
30 June 31 March 31 Dec. 30 June 31 March 31 Dec.
2004 2004 2003 2004 2004 2003
---------------------------------------------------------------------------------------------------------
Canada 1,009 959 905 8.2 7.6 7.0
Spain 836 799 753 8.6 8.4 7.9
Australia 831 777 719 6.9 7.2 6.9
France 367 354 339 8.6 7.9 7.6
USA 1,823 1,649 1,399 18.4 15.9 12.8
Italy 449 433 379 9.5 9.3 7.6
U.K. 606 471 305 23.4 17.9 11.5
Germany* 4,097 3,978 3,735 44.6 41.8 38.1
------ ----- ----- ----- ----- ----
TOTAL 10,018 9,420 8,534 128.2 116.0 99.4
---------------------------------------------------------------------------------------------------------
* Including Austria
Page 25 of 39
--------------------------------------------------------------------------------
3. ASSETS UNDER MANAGEMENT RISE 6.1% TO EUR 490.8 BILLION
Assets under management increased 6.1% to EUR 490.8 billion at the end of June
2004 from EUR 462.7 billion at the end of December 2003. The EUR 28.1 billion
increase resulted from a net inflow of EUR 13.7 billion, EUR 8.6 billion from
higher stock markets, and EUR 7.8 billion from positive currency rate
differences. Divestments had a negative impact of EUR 2.0 billion, mainly due to
the deconsolidation of Baring Private Equity Partners. The table below shows the
Group's assets under management by business line from a management perspective.
Assets sold through the bank distribution channels may be managed by insurance
units, and are thus reported under the insurance business lines.
--------------------------------------------------------------------------------
TABLE 23. ASSETS UNDER MANAGEMENT BY BUSINESS LINE
30 June 31 December 1H % 31 March 2004 2Q %
In EUR billion 2004 2003 Change Change
--------------------------------------------------------------------------------
Insurance Europe 145.7 139.6 4.4 145.1 0.4
Insurance Americas 174.4 167.0 4.4 174.7 -0.2
Insurance Asia/Pacific 51.5 43.1 19.5 50.6 1.8
Retail Banking 56.0 52.2 7.3 55.1 1.6
Wholesale Banking 63.2 60.8 3.9 62.3 1.4
----- ----- -----
TOTAL 490.8 462.7 6.1 487.8 0.6
--------------------------------------------------------------------------------
FUND INFLOW
The net fund inflow of EUR 13.7 billion was driven mainly by Insurance
Asia/Pacific, Retail Banking and ING Real Estate. Insurance Asia/Pacific
reported a net inflow of EUR 6.1 billion, driven by strong sales of Money Market
Funds and structured products at KB Asset Management in Korea as well as strong
life premium growth in Taiwan. ING's Retail Banking businesses accounted for a
net inflow of EUR 4.2 billion, driven mainly by the Private Banking business in
Belgium. ING Real Estate reported a net inflow of EUR 3.2 billion, lifted by the
purchase of Rodamco Asia, which added almost EUR 800 million in assets, as well
as the ING Clarion Global Real Estate Income Fund, which was launched in the US
in the first quarter with EUR 1.3 billion in assets. The fund, which was sold
through ING Funds, was the largest-ever closed-end real estate fund.
--------------------------------------------------------------------------------
TABLE 24. ASSETS UNDER MANAGEMENT BY CLIENT CATEGORY
30 June 31 March 31 December
In EUR billion 2004 2004 2003
-------------------------------------------------------------------------------
Private clients 202.5 201.7 187.9
Institutional clients 131.0 131.1 125.6
----- ----- -----
Third parties 333.5 332.8 313.5
Internal clients 157.3 155.0 149.2
----- ----- -----
TOTAL 490.8 487.8 462.7
Share of third parties 68.0% 68.2% 67.8%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE 25. ASSETS UNDER MANAGEMENT BY ASSET CLASS
In EUR billion 30 June 2004 31 December 2003
--------------------------------------------------------------------------------
Equities 166.4 34% 161.0 35%
Fixed income 257.0 52% 236.6 51%
Real Estate 32.8 7% 28.9 6%
Cash 34.6 7% 36.2 8%
----- ---- ----- ----
TOTAL 490.8 100% 462.7 100%
--------------------------------------------------------------------------------
REAL ESTATE
ING Real Estate's portfolio, including real estate finance, increased to EUR 47
billion at the end of June from EUR 42 billion at the end of 2003, driven mainly
by the real estate investment management activities. ING Real Estate Investment
Management's assets under management increased by EUR 3.1 billion, due in part
to the purchase of Rodamco Asia. In addition, the ING Clarion Global Real Estate
Income Fund has grown to more than EUR 2.0 billion in assets.
Page 26 of 39
--------------------------------------------------------------------------------
ING Real Estate Finance continued the international expansion of its activities,
notably in the US and Spain. In the first half it completed a major refinancing
of the real estate portfolio for Vendex KBB in close co-operation with ING Bank.
ING Real Estate Development showed high turnover of development projects. In the
first half, EUR 495 million of projects were sold to institutional investors,
compared with EUR 950 million for full-year 2003. Sales included the Spanish
shopping centres Vitoria, San Vicente, Logrono, Berceo and Castellon. In
addition, a contract was signed with the municipality of Maastricht in the
Netherlands for the redevelopment of the Belvedere industrial area into a
residential area with 4,000 houses.
PROFIT CONTRIBUTION
The functional operating profit from asset management, which is derived from
figures included in the banking and insurance results, increased 20% to EUR 232
million in the first half of 2004. The profit growth was realised mainly within
Insurance Americas and the institutional asset management business of Wholesale
Banking. Asset management activities accounted for 6% of the group's total
operating profit before tax.
Page 27 of 39
--------------------------------------------------------------------------------
APPENDICES
1. Key figures
2. Consolidated profit and loss account (Insurance/Banking) first half and
second quarter
3. Consolidated balance sheet and changes in shareholders' equity
4. Condensed consolidated statement of cash flows
5. Additional information: quarterly results, one-off items, specification
of realised capital gains on real estate and equities from insurance,
insurance profit & loss by life/non-life, bank lending, bank commission
income, banking other income
6. Value of new business at the life insurance operations
7. Consolidated balance sheet ING Verzekeringen N.V.
8. Consolidated balance sheet ING Bank Holding N.V.
9. Information for shareholders
----------------
The accounting principles applied in this document correspond with those applied
in ING Group's Annual Accounts 2003. However, starting 1 January 2004, ING
adopted the US GAAP accounting standard "Statement of Position 03-1: Accounting
and Reporting by Insurance Enterprises for Certain Non-Traditional Long-Duration
Contracts and for Separate Accounts" for both its Dutch and US accounting. All
figures in this document are unaudited.
Certain of the statements contained in this release are statements of future
expectations and other forward-looking statements. These expectations are based
on management's current views and assumptions and involve known and unknown
risks and uncertainties. Actual results, performance or events may differ
materially from those in such statements due to, among other things, (i) general
economic conditions, in particular economic conditions in ING's core markets,
(ii) performance of financial markets, including emerging markets, (iii) the
frequency and severity of insured loss events, (iv) mortality and morbidity
levels and trends, (v) persistency levels, (vi) interest rate levels, (vii)
currency exchange rates, (viii) general competitive factors, (ix) changes in
laws and regulations, and (x) changes in the policies of governments and/or
regulatory authorities. ING assumes no obligation to update any forward-looking
information contained in this document.
Page 28 of 39
--------------------------------------------------------------------------------
APPENDIX 1.
---------------------------------------------------------------------------------------------------------------------------
1. KEY FIGURES
1H 1H FY FY FY FY
2004 2003 2003 2002 2001 2000
---------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET (EUR x billion)
Total assets 872 762 779 716 705 650
Shareholders' equity 24 19 21 18 22 25
ASSETS UNDER MANAGEMENT (EUR x billion) 491 452 463 449 513 503
MARKET CAPITALISATION (EUR x billion) 42 31 39 32 57 83
OPERATING INCOME (EUR x million)
Insurance operations 27,552 26,644 53,233 59,449 55,274 34,521
Banking operations 6,406 5,777 11,680 11,201 11,111 11,302
OPERATING EXPENSES (EUR x million)
Insurance operations 2,318 2,377 4,897 5,203 5,583 5,023
Banking operations 4,161 3,952 8,184 8,298 8,186 8,273
ADDITIONS TO THE PROVISION FOR LOAN/INVESTMENT
LOSSES (EUR x million) 289 752 1,288 2,099 907 400
PROFIT (EUR x million)
Insurance operations 2,058 1,696 3,486 3,170 2,792 2,307
Banking operations 1,980 1,210 2,371 1,468 2,170 2,605
------- ------- ------- ------- ------- ------
Operating profit before tax 4,038 2,906 5,857 4,638 4,962 4,912
Operating net profit 2,796 2,068 4,053 3,433 3,539 3,388
Capital gains/neg. value adjustment shares 47 -38 -10 820 713 620
Non-operating net profit 247 325 7,976
------- ------- ------- ------- ------- ------
Net profit 2,843 2,030 4,043 4,500 4,577 11,984
Distributable net profit 2,843 2,030 4,043 4,253 4,252 4,901
FIGURES PER ORDINARY SHARE OF EUR 0.24 NOMINAL VALUE
Operating net profit 1.33 1.04 2.00 1.77 1.83 1.76
Net profit 1.36 1.03 2.00 2.32 2.37 6.27
Distributable net profit 1.36 1.04 2.00 2.20 2.20 2.56
Dividend 0.49 0.48 0.97 0.97 0.97 1.13
Shareholders' equity 11.16 9.29 10.08 9.14 11.03 13.04
RATIOS (in %)
ING Group
Operating return on equity (ROE) 24.8 23.1 21.5 17.4 15.3 10.3
Operating net profit growth 35 6 18 -3 4 27
Dividend pay-out ratio 48.5 44.1 44.1 43.9
Insurance operations
Combined ratio 89 97 98 102 103 104
Capital coverage ratio 184 171 180 169 180 235
Banking operations
BIS ratio ING Bank 11.27 11.23 11.34 10.98 10.57 10.75
Tier-1 ratio ING Bank 7.65 7.47 7.59 7.31 7.03 7.22
Cost/income ratio 65.0 68.4 70.1 74.1 73.7 73.2
EMPLOYEES (average FTEs) 113,300 115,500 115,200 113,060 112,000 92,650
---------------------------------------------------------------------------------------------------------------------------
Page 29 of 39
--------------------------------------------------------------------------------
APPENDIX 2.
-------------------------------------------------------------------------------------------------------------------------
2.1 ING GROUP FIRST-HALF YEAR CONSOLIDATED PROFIT & LOSS ACCOUNT
INSURANCE BANKING TOTAL*
1H 1H 1H 1H 1H 1H %
In EUR million 2004 2003 2004 2003 2004 2003 Change
----------------------------------------------------------------------------------------------------------------------
Premium income 21,894 20,852 21,894 20,852 5.0
Income from investments of the
insurance operations 4,716 4,804 4,608 4,766 -3.3
Interest result banking operations 4,390 3,917 4,430 3,932 12.7
Commission 582 639 1,352 1,232 1,934 1,871 3.4
Other income 360 349 664 628 1,024 977 4.8
------ ------ ----- ----- ------ ------
TOTAL OPERATING INCOME 27,552 26,644 6,406 5,777 33,890 32,398 4.6
Underwriting expenditure 22,612 21,900 22,612 21,900 3.3
Other interest expenses 540 534 472 511 -7.6
Operating expenses 2,318 2,377 4,161 3,952 6,479 6,329 2.4
Additions to the provision for loan
losses/investment losses 24 137 265 615 289 752 -61.6
------ ------ ----- ----- ------ ------
TOTAL OPERATING EXPENDITURE 25,494 24,948 4,426 4,567 29,852 29,492 1.2
OPERATING PROFIT BEFORE TAX 2,058 1,696 1,980 1,210 4,038 2,906 39.0
Taxation 538 383 562 295 1,100 678 62.2
Third-party interests 51 48 91 112 142 160 -11.3
------ ------ ----- ----- ------ ------
OPERATING NET PROFIT 1,469 1,265 1,327 803 2,796 2,068 35.2
Capital gains/negative. value
adjustment shares 47 -15 -23 47 -38
------ ------ ----- ----- ------ ------
NET PROFIT 1,516 1,250 1,327 780 2,843 2,030 40.0
----------------------------------------------------------------------------------------------------------------------
* Including inter-company eliminations.
--------------------------------------------------------------------------------------------------------------------------
2.2 ING GROUP SECOND QUARTER CONSOLIDATED PROFIT & LOSS ACCOUNT
INSURANCE BANKING TOTAL*
2Q 2Q 2Q 2Q 2Q 2Q %
In EUR million 2004 2003 2004 2003 2004 2003 Change
-----------------------------------------------------------------------------------------------------------------------
Premium income 10,528 9,872 10,528 9,872 6.6
Income from investments of the
insurance operations 2,467 2,531 2,410 2,520 -4.4
Interest result banking operations 2,227 1,948 2,249 1,947 15.5
Commission 281 313 642 635 923 948 -2.6
Other income 214 151 270 303 484 454 6.6
------ ------ ----- ----- ------ ------
TOTAL OPERATING INCOME 13,490 12,867 3,139 2,886 16,594 15,741 5.4
Underwriting expenditure 10,775 10,300 10,775 10,300 4.6
Other interest expenses 255 261 220 249 -11.6
Operating expenses 1,176 1,188 2,042 1,982 3,218 3,170 1.5
Additions to the provision for loan
losses/investment losses 15 34 128 290 143 324 -55.9
------ ------ ----- ----- ------ ------
TOTAL OPERATING EXPENDITURE 12,221 11,783 2,170 2,272 14,356 14,043 2.2
OPERATING PROFIT BEFORE TAX 1,269 1,084 969 614 2,238 1,698 31.8
Taxation 308 294 260 150 568 444 27.9
Third-party interests 26 29 39 59 65 88 -26.1
------ ------ ----- ----- ------ ------
OPERATING NET PROFIT 935 761 670 405 1,605 1,166 37.7
Capital gains/negative. value
adjustment shares 36 598 99 36 697 n.a.
------ ------ ----- ----- ------ ------
NET PROFIT 971 1,359 670 504 1,641 1,863 -11.9
-----------------------------------------------------------------------------------------------------------------------
* Including inter-company eliminations.
Page 30 of 39
--------------------------------------------------------------------------------
APPENDIX 3.
---------------------------------------------------------------------------------------------------------------
3.1 ING GROEP N.V. CONSOLIDATED BALANCE SHEET
30 June 31 December 1H % 31 March 2Q %
In EUR million 2004 2003 Change 2004 Change
---------------------------------------------------------------------------------------------------------------
ASSETS
Tangible fixed assets 1,252 1,311 -4.5 1,286 -2.6
Participating interests 3,643 3,167 15.0 3,768 -3.3
Investments 382,942 335,003 14.3 368,301 4.0
Lending 314,379 292,556 7.5 301,367 4.3
Banks 70,567 61,060 15.6 63,747 10.7
Cash 10,887 11,738 -7.2 8,708 25.0
Other assets 66,008 53,473 23.4 61,246 7.8
Accrued assets 21,962 20,463 7.3 21,542 2.0
------- ------- -------
TOTAL 871,640 778,771 11.9 829,965 5.0
EQUITY AND LIABILITIES
Shareholders' equity 24,061 21,331 12.8 22,883 5.1
Preference shares of Group companies 1,441 1,783 -19.2 1,839 -21.6
Third-party interests 1,665 1,730 -3.8 1,607 3.6
------- ------- -------
Group equity 27,167 24,844 9.4 26,329 3.2
Subordinated loan 4,326 3,252 33.0 3,312 30.6
------- ------- -------
Group capital base 31,493 28,096 12.1 29,641 6.2
General provisions 2,680 2,740 -2.2 2,900 -7.6
Insurance provisions 210,816 198,035 6.5 208,101 1.3
Funds entrusted to and debt securities of
the banking operations 423,261 377,824 12.0 401,761 5.4
Banks 131,542 102,115 28.8 114,648 14.7
Other liabilities 64,919 61,123 6.2 65,812 -1.4
Accrued liabilities 6,929 8,838 -21.6 7,102 -2.4
------- ------- -------
TOTAL 871,640 778,771 11.9 829,965 5.0
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
3.2 CHANGES IN SHAREHOLDERS' EQUITY
In EUR million
---------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY AS PER 31 DECEMBER 2003 / 2002 21,331 18,254
Net profit 2,843 4,043
Revaluations (after tax) 331 335
Realised capital gains transferred to P&L account -47 10
Write-off of goodwill -28 -145
Exchange rate differences -37 -1,196
Issue of shares 784 925
Changes in ING Groep N.V. shares held by Group companies 2 50
Dividend paid -1,044 -943
Other -74 -2
------ ------
SHAREHOLDERS' EQUITY AS PER 30 JUNE 2004 / 31 DECEMBER 2003 24,061 21,331
---------------------------------------------------------------------------------------------------------------
Page 31 of 39
--------------------------------------------------------------------------------
APPENDIX 4.
--------------------------------------------------------------------------------------------
4. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
1H 1H*
In EUR million 2004 2003
--------------------------------------------------------------------------------------------
Net cash flow from operating activities 43,562 34,840
Investments and advances:
- participating interests -2,217 -109
- investments in shares and property -5,547 -3,176
- investments in fixed-interest securities -170,162 -158,061
- other investments -122 -11
Disposals and redemptions:
- participating interests 888 141
- investments in shares and property 5,658 4,406
- investments in fixed-interest securities 131,310 125,200
- other investments 348 28
Net investment for risk of policyholders -4,265 -6,201
-------- --------
Net cash flow from investing activities -44,109 -37,783
Subordinated loans of Group companies 1,000 750
Bonds, loans taken up and deposits by reinsurers -1,297 -1,484
Private placements of ordinary shares 32
Private placement of preference shares of group companies -407
Changes in shares ING Groep N.V. 209 451
Cash dividends -471 -450
-------- --------
Net cash flow from financing activities -966 -701
Net cash flow -1,513 -3,644
Cash at beginning of year 7,338 7,829
Exchange rate differences 107 360
-------- --------
CASH AT END OF PERIOD 5,932 4,545
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
In this summary, cash comprises the following items:
Short-dated government paper 10,613 8,424
Banks, available on demand -15,568 -12,937
Cash and bank balances and call money of the insurance operations 10,887 9,058
-------- --------
CASH AT END OF PERIOD 5,932 4,545
--------------------------------------------------------------------------------------------
* Restated
Page 32 of 39
--------------------------------------------------------------------------------
APPENDIX 5. ADDITIONAL INFORMATION
-------------------------------------------------------------------------------------------------------------
5.1 QUARTERLY RESULTS
2Q 1Q 4Q 3Q 2Q 1Q
In EUR million 2004 2004 2003 2003 2003 2003
-------------------------------------------------------------------------------------------------------------
Life 663 562 762 569 702 445
Non-life 606 227 248 211 382 167
----- ----- ----- ----- ----- -----
Total insurance operations 1,269 789 1,010 780 1,084 612
Total banking operations 969 1,011 522 639 614 596
----- ----- ----- ----- ----- -----
OPERATING PROFIT BEFORE TAX 2,238 1,800 1,532 1,419 1,698 1,208
OPERATING NET PROFIT 1,605 1,191 1,041 944 1,166 902
of which:
Insurance operations 935 534 698 545 761 504
Banking operations 670 657 343 399 405 398
In EUR
Operating net profit per ordinary
share 0.76 0.57 0.50 0.46 0.58 0.46
NET PROFIT PER ORDINARY SHARE 0.79 0.57 0.50 0.47 0.95 0.08
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
5.2 ONE-OFF ITEMS
FIRST HALF BEFORE TAX FIRST HALF AFTER TAX
1H 1H % 1H 1H %
In EUR million 2004 2003 Change 2004 2003 Change
-------------------------------------------------------------------------------------------------------------
INSURANCE
- old reinsurance business 96 303 92 247
- sale Australia non-life 219 146
----- ----- ----- -----
SUBTOTAL INSURANCE 315 303 4.0 238 247 -3.6
BANKING
- sale of Asian equities business -84 -54
- restructuring provisions -45 -40
----- ----- ----- -----
SUBTOTAL BANKING -84 -45 -86.7 -54 -40 -35.0
TOTAL 231 258 -10.5 184 207 -11.1
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
5.3 SPECIFICATION OF REALISED CAPITAL GAINS ON REAL ESTATE AND EQUITIES FROM INSURANCE
FIRST HALF BEFORE TAX FIRST HALF AFTER TAX
1H 1H % 1H 1H %
In EUR million 2004 2003 Change 2004 2003 Change
-------------------------------------------------------------------------------------------------------------
REAL ESTATE
- life 143 138 3.6
- non-life 10 8 25.0
----- ----- ----- -----
Subtotal 153 146 4.8 94 93 1.1
EQUITIES 40 -20 47 -15
----- ----- ----- -----
TOTAL 193 126 53.2 141 78 80.8
-------------------------------------------------------------------------------------------------------------
Page 33 of 39
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
5.4 INSURANCE PROFIT FROM LIFE AND NON-LIFE
FIRST HALF 2004 FIRST HALF 2003
In EUR million Life Non-life Total Life Non-life Total
--------------------------------------------------------------------------------------------------------------
Premium income 18,139 3,755 21,894 16,804 4,048 20,852
Income from investments 4,058 658 4,716 4,220 584 4,804
Commission and other income 989 -47 942 983 5 988
------ ----- ------ ------ ----- ------
TOTAL OPERATING INCOME 23,186 4,366 27,552 22,007 4,637 26,644
Underwriting expenditure 19,663 2,949 22,612 18,404 3,496 21,900
Other interest expenses 540 540 534 534
Operating expenses 1,734 584 2,318 1,785 592 2,377
Investment losses 24 24 137 137
------ ----- ------ ------ ----- ------
TOTAL OPERATING EXPENDITURE 21,961 3,533 25,494 20,860 4,088 24,948
OPERATING PROFIT BEFORE TAX 1,225 833 2,058 1,147 549 1,696
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
5.5 BANK LENDING
In EUR billion 30 June 2004 31 December 2003 % change
--------------------------------------------------------------------------------------------------------------
- Public authorities 14.9 14.9 0.0
- Other corporate 171.5 160.7 6.7
----- -----
Total corporate 186.4 175.6 6.2
- Mortgages 114.7 104.2 10.1
- Other personal 18.0 17.4 3.4
----- -----
Total personal 132.7 121.6 9.1
Provisions for bank lending -4.7 -4.6
TOTAL BANK LENDING 314.4 292.6 7.5
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
5.6 BANKING COMMISSION INCOME
1H 1H %
In EUR million 2004 2003 change
--------------------------------------------------------------------------------------------------------------
Funds transfer 293 297 -1.3
Securities business 390 326 19.6
Insurance broking 76 67 13.4
Management fees 381 284 34.2
Brokerage and advisory fees 49 83 -41.0
Other 163 175 -6.9
----- -----
TOTAL 1,352 1,232 9.7
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
5.7 BANKING OTHER INCOME
1H 1H %
In EUR million 2004 2003 change
--------------------------------------------------------------------------------------------------------------
Income from securities and participating 79 46 71.7
interests
Result from securities trading portfolio 94 281 -66.5
Result from currency trading portfolio 86 -17 n.a.
Other results from financial transactions 198 179 10.6
----- -----
RESULTS FROM FINANCIAL TRANSACTIONS 378 443 -14.7
Other results 207 139 48.9
----- -----
TOTAL 664 628 5.7
--------------------------------------------------------------------------------------------------------------
Page 34 of 39
--------------------------------------------------------------------------------
APPENDIX 6.
6.1 NEW BUSINESS PRODUCTION AND VALUE BY REGION
The value of new life business written in the first half of 2004 was EUR 286
million. ING invested EUR 906 million to write new life insurance business. The
overall rate of return expected on this investment is 11.4%. The value of new
business and IRR for 2004 reflect ING's internal capital requirements, including
the impact of financial options and guarantees for all business units where
these benefits are significant. If ING were to use minimum regulatory capital
(200% NAIC risk-based capital in the US, 100% EU capital in Europe, and local
regulatory requirements in Asia and Latin America) the value of new business
would increase by EUR 57 million and the overall IRR would increase by 1.7% to
13.1%. By region, the IRRs based on the minimum regulatory capital requirements
would be 13.0% for Europe, 10.7% for the Americas, and 20.0% for Asia/Pacific.
-------------------------------------------------------------------------------------------------------------------
6.2 BUSINESS PRODUCTION AND VALUE BY REGION
NEW PRODUCTION 1H 2004 NEW PRODUCTION 1/2 2003
Value of Value of FY
Annual Single New IRR Annual Single New IRR
In EUR million premium Premium Business in % Premium Premium Business in %
-------------------------------------------------------------------------------------------------------------------
INSURANCE EUROPE 202.9 1,494.7 69.9 12.8 170.3 1,557.1 46.8 10.9
- Netherlands 76.0 696.6 30.2 11.0 80.3 609.9 5.3 8.0
- Belgium 29.2 501.9 20.0 22.1 14.4 636.9 19.4 23.7
- Rest of Europe 97.7 296.2 19.7 12.7 75.6 310.3 22.1 14.4
INSURANCE AMERICAS 917.1 8,067.3 81.8 9.7 816.2 7,311.0 47.1 9.0
INSURANCE ASIA/PACIFIC 544.5 1,247.1 133.9 14.1 492.5 794.2 126.0 14.7
- Asia 514.2 895.8 130.6 14.4 474.9 493.7 122.2 15.0
- Australia 30.3 351.3 3.3 9.9 17.6 300.5 3.8 11.0
------- -------- ----- ------- ------- -----
TOTAL 1,664.5 10,809.1 285.6 11.4 1,479.0 9,662.3 220.0 10.9
-------------------------------------------------------------------------------------------------------------------
The expected internal rate of return in developing markets is 13.3.% compared to
15.3% for 2003.
-------------------------------------------------------------------------------------------------------------------
6.3 NEW BUSINESS PRODUCTION AND VALUE IN DEVELOPING MARKETS* BY REGION
NEW PRODUCTION 1H 2004 NEW PRODUCTION 1/2 2003
Value of Value of FY
Annual Single New IRR Annual Single New IRR
In EUR million premium Premium Business in % Premium Premium Business in %
-------------------------------------------------------------------------------------------------------------------
Europe 65.6 8.4 9.3 11.4 53.6 26.3 12.2 13.9
Americas 106.2 76.8 11.3 12.0 24.7 38.6 -3.2 4.8
Asia/Pacific 344.6 144.0 86.3 14.4 340.4 71.2 101.9 16.9
------- -------- ----- ------- ------- -----
TOTAL 516.4 229.2 106.9 13.3 418.8 136.1 110.8 15.3
-------------------------------------------------------------------------------------------------------------------
* The countries included as developing markets are:
Europe: Bulgaria, Czech Republic, Hungary, Poland, Romania, Slovakia
Americas: Argentina, Chile, Mexico, Peru
Asia/Pacific: China, Hong Kong, India, Korea, Malaysia, Thailand, Taiwan
Page 35 of 39
--------------------------------------------------------------------------------
APPENDIX 7.
--------------------------------------------------------------------------------
7. ING VERZEKERINGEN N.V. CONSOLIDATED BALANCE SHEET
In EUR million 30 June 2004 31 December 2003 % change
--------------------------------------------------------------------------------
ASSETS
Tangible fixed assets 324 315 2.9
Participating interests 1,818 2,587 14.3
Investments 229,981 215,231 6.4
Cash 1,432 1,848 -22.5
Other assets 8,235 7,935 3.8
Accrued assets 13,764 12,668 8.7
------- -------
TOTAL 255,554 240,584 6.2
EQUITY AND LIABILITIES
Shareholders' equity 13,390 12,011 11.5
Third-party interests 1,191 1,187 0.3
Subordinated loans 2,662 2,647 0.6
------- -------
Group equity 17,243 15,845 8.8
General provisions 1,640 1,665 -1.5
Insurance provisions 210,816 198,035 6.5
Other liabilities 24,825 23,973 3.6
Accrued liabilities 1,030 1,066 -3.4
------- -------
TOTAL 255,554 240,584 6.2
--------------------------------------------------------------------------------
Page 36 of 39
--------------------------------------------------------------------------------
APPENDIX 8.
-----------------------------------------------------------------------------------------
8. ING BANK HOLDING N.V.* CONSOLIDATED BALANCE SHEET
In EUR million 30 June 2004 31 December 2003 % change
-----------------------------------------------------------------------------------------
ASSETS
Cash 9,630 10,135 -5.0
Short-dated government paper 10,613 6,521 62.8
Banks 70,567 61,060 15.6
Loans and advances 315,721 293,987 7.4
Interest-bearing securities 177,219 140,032 26.6
Shares 11,284 8,882 27.0
Other participating interests 1,874 1,613 16.2
Property and equipment 6,442 5,720 12.6
Other assets 6,104 4,581 33.2
Accrued assets 9,911 9,063 9.4
------- -------
TOTAL 619,365 541,594 14.4
EQUITY AND LIABILITIES
Banks 131,542 102,115 28.8
Funds entrusted 346,833 307,793 12.7
Debt securities 78,561 72,372 8.6
Other liabilities 19,468 17,400 11.9
Accrued liabilities 7,310 8,815 -17.1
General provisions 1,386 1,412 -1.8
------- -------
585,100 509,907 14.7
Fund for general banking risks 1,332 1,281 4.0
Subordinated liabilities 16,473 14,516 13.5
Shareholders' equity 15,476 14,868 4.1
Third-party interests 496 553 -10.3
Capital and reserves of Stichting Regio Bank 488 469 4.1
------- -------
Group equity 16,460 15,890 3.6
Group capital base 34,265 31,687 8.1
------- -------
TOTAL 619,365 541,594 14.4
-----------------------------------------------------------------------------------------
* The accounting principles applied in this balance sheet correspond with those
applied in ING Bank N.V.'s Annual Accounts 2003.
Page 37 of 39
--------------------------------------------------------------------------------
APPENDIX 9. INFORMATION FOR SHAREHOLDERS
SHARES AND WARRANTS
The average number of shares used for the calculation of net profit per share
for the first six months 2004, was 2,091.3 million (1,970.1 million for the
first six months 2003). The number of (depositary receipts for) ordinary shares
of EUR 0.24 nominal value outstanding at the end of June 2004 was 2,158.6
million (including 28.2 million own shares to cover outstanding options for ING
personnel). The number of (depositary receipts for) "A" preference shares of EUR
1.20 nominal value outstanding at the end of June 2004 was 87.1 million. The
dividend percentage for the "A" shares for the period from 1 January, 2004 to 1
January 2014 has been set at 4.65%. This dividend will amount to EUR 0.1582 per
year until 1 January 2014. This dividend will be paid for the first time in
2005.
On 5 January 1998, 17.2 million ING Group warrants B were issued. With an
additional payment of the exercise price of EUR 49.92 one warrant B entitles the
holder to two ING Group depositary receipts up to 5 January 2008. The number of
warrants B outstanding at the end of June 2004 was 17.2 million.
In the six months of 2004, the turnover of (depositary receipts for) ordinary
shares on the Euronext Amsterdam Stock Market was 1,230.1 million (purchases and
sales). The highest closing price was EUR 21.20, the lowest EUR 16.73; the
closing price at the end of June 2004 was EUR 19.40.
LISTING
The (depositary receipts for) ordinary shares ING Group are quoted on the
exchanges of Amsterdam, Brussels, Frankfurt, Paris, New York (NYSE) and the
Swiss exchange. The (depositary receipts for) preference shares and warrants B
are quoted on the Euronext Amsterdam Stock Market. Warrants B are also quoted on
the exchange of Brussels. Options on (depositary receipts for) ordinary shares
ING Group are traded at the Euronext Amsterdam Derivative Markets and the
Chicago Board Options Exchange.
RATING
Both ING Groep N.V. and ING Verzekeringen N.V. have an A+ rating from Standard &
Poor's and an Aa3 rating from Moody's. ING Bank N.V. has an Aa2 rating from
Moody's and an AA- from Standard & Poor's. All ratings were confirmed in 2003
and have a stable outlook.
IMPORTANT DATES IN 2004 AND 2005*
6 August 2004 ING shares quoted ex-interim dividend
6-27 August 2004 Shareholders can indicate choice between cash or stock dividend
30 August - 3 September 2004 Volume-weighted average share price calculated for this period
3 September Announcement of exchange ratio for stock dividend
10 September 2004 Payment of 2004 interim dividend
4 November 2004 Publication results first nine months 2004
17 February 2005 Publication of annual results 2004
26 April 2005 Annual general meeting of shareholders
* All dates shown are provisional.
Page 38 of 39
--------------------------------------------------------------------------------
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ING Groep N.V.
(Registrant)
By: /s/H. van Barneveld
-------------------
H. van Barneveld
General Manager Corporate Control & Finance
By: /s/C.F. Drabbe
--------------
C.F. Drabbe
Assistant General Counsel
Dated: August 5, 2004
Page 39 of 39
--------------------------------------------------------------------------------