FORM 6-K
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 February 16, 2006
Commission File Number 1-14642
ING Groep N.V.
Amstelveenseweg 500
1081-KL Amsterdam
The Netherlands
Indicate by check mark whether the registrant files or will file annual reports under cover of
Form 20-F or Form 40-F.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T rule 101(b)(1): o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T rule 101(b)(7): o
Indicate by check mark whether the registrant by furnishing the information contained in this
Form is also thereby furnishing the information to the Commission pursuant to rule 12g3-2(b) under
the Securities Exchange Act of 1934.
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with
Rule 12g3-2(b).
This Report contains a copy of the following:
(1) The Press Release issued on February 16, 2006
Amsterdam
• 16 February 2006
ING Group net profit rises 25.3% to EUR 7,210 million in 2005
Delivering value for our shareholders through higher returns and profitable growth
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Earnings per share increase 22.7% from EUR 2.71 to EUR 3.32 in 2005 |
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Underlying profit before tax increases 19.4% to EUR 8,506 million |
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Strong top-line growth: underlying bank income +11.4%, life premiums +12.5% |
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Focus on value leads to higher returns: RAROC 18.8% after tax, IRR 13.2% |
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Embedded value of life business rises 22.9% to EUR 27,586 million |
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Efficiency improves due to sharpened focus on execution across the Group |
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Total dividend proposed at EUR 1.18 per share, up 10.3% from EUR 1.07 in 2004 |
Chairman’s statement
“ING produced strong results in 2005, driven by double-digit top-line growth, higher returns, and
an improvement in the efficiency ratios for both banking and insurance,” said Michel Tilmant,
Chairman of the Executive Board.
“We have focused on creating value for shareholders through a stringent approach to capital
allocation, investing for growth, improving execution and increasing returns at all of our
businesses. Our results provide evidence that we are delivering on those objectives and that our
strategy is paying off. Returns have increased in both banking and insurance, with all business
lines performing above ING’s hurdles. ING’s three key growth engines — ING Direct, retirement
services, and life insurance in developing markets — continued their strong performance, while the
banking businesses in the Benelux also made a solid contribution to growth. We took important steps
to improve efficiency going forward, and recurring expenses remained under control in 2005.”
“As a result of this strong performance and our confidence in the future, the Board proposes to
increase the total dividend by 10.3% to EUR 1.18 per share.”
“Although we were confronted with low interest rates and a flattening yield curve, we also
benefited from some favourable market conditions in 2005, including strong equity and real estate
markets, historically low credit losses for both bank lending and fixed-income investments, low
claims at most non-life insurance units, and low taxes. Looking ahead, the interest rate
environment will remain challenging, while risk costs and non-life claims are expected to return
gradually to more normal levels. However, we have confidence in the growth of the underlying
business and in the Group’s ability to continue creating value for our shareholders.”
“Today we also announced some changes to the Executive Board. The current board has accomplished
significant change at ING over the last two years. I would like to thank Fred Hubbell, Alexander
Rinnooy Kan and Hans Verkoren for their teamwork and strong personal contributions, and I am happy
that we were able to prepare for the future with them. The new board members — Dick Harryvan, Tom
McInerney, Hans van der Noordaa and Jacques de Vaucleroy — all come with strong experience within
ING, proven track records and performance-driven management styles. I am fully confident that the
new team has the capability and enthusiasm to lead ING to a successful future.”
Figures compare full-year 2005 with full-year 2004 unless otherwise stated. Figures for 2004 exclude IAS 32, 39 and IFRS 4.
Press conference: 16 February, 9:30 am CET, ING House, Amsterdam. Presentation & webcast www.ing.com
Analyst presentation: 16 February, 11:15 am CET, ING House, Amsterdam. Presentation & webcast www.ing.com
Analyst call: 16 February, 4 pm CET. Listen in: +31 20 794 8504 +44 20 7190 1595 +1 480 629 9562
Analyst presentation London: 17 February, 11:15 UK time, 60 London Wall. Webcast www.ing.com
Analyst call on Embedded Value: 17 February, 3 pm UK
time. Listen in: +31 20 794 8504 +44 20 7190 1595 +1 480 629 9562
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Media relations +31 20 541 6522
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Investor relations +31 20 541 5571 |
Contents
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1. ING Group Key Figures |
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2 |
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1.1 Capital & Reserves |
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6 |
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1.2 Dividend |
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6 |
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2. Insurance |
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7 |
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2.1 Insurance Europe |
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9 |
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2.2 Insurance Americas |
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12 |
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2.3 Insurance Asia/Pacific |
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15 |
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3. Banking |
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19 |
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3.1 Wholesale Banking |
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22 |
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3.2 Retail Banking |
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25 |
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3.3 ING Direct |
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28 |
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4. Asset Management |
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30 |
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Appendices |
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32 |
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1. ING Group Key Figures
Table 1. ING Group Key Figures
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Full Year |
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Fourth Quarter |
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In EUR million |
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2005 |
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2004 |
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Change |
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2005 |
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2004 |
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Change |
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Underlying profit before tax1: |
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- Insurance Europe |
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2,021 |
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1,612 |
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25.4 |
% |
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561 |
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365 |
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53.7 |
% |
- Insurance Americas |
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1,979 |
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1,601 |
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23.6 |
% |
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424 |
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417 |
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1.7 |
% |
- Insurance Asia/Pacific |
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447 |
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475 |
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-5.9 |
% |
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112 |
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120 |
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-6.7 |
% |
- Other2 |
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-472 |
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-124 |
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-75 |
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-31 |
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Underlying profit before tax from Insurance |
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3,975 |
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3,564 |
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11.5 |
% |
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1,022 |
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871 |
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17.3 |
% |
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- Wholesale Banking |
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2,276 |
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2,092 |
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8.8 |
% |
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502 |
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537 |
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-6.5 |
% |
- Retail Banking |
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1,815 |
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1,168 |
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55.4 |
% |
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506 |
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174 |
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190.8 |
% |
- ING Direct |
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617 |
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435 |
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41.8 |
% |
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184 |
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118 |
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55.9 |
% |
- Other3 |
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-177 |
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-134 |
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-64 |
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-3 |
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Underlying profit before tax from Banking |
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4,531 |
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3,561 |
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27.2 |
% |
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1,128 |
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826 |
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36.6 |
% |
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Total underlying profit before tax |
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8,506 |
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7,125 |
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19.4 |
% |
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2,150 |
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1,697 |
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26.7 |
% |
Gains/losses on divestments |
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366 |
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55 |
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17 |
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85 |
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Profit before tax from divested units |
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22 |
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218 |
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-8 |
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42 |
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Special items |
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342 |
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46 |
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Total profit before tax |
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8,894 |
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7,740 |
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14.9 |
% |
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2,159 |
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1,870 |
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15.5 |
% |
Taxation |
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1,379 |
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1,709 |
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-19.3 |
% |
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210 |
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397 |
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-47.1 |
% |
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Profit before third-party interests |
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7,515 |
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6,031 |
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24.6 |
% |
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1,949 |
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1,473 |
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32.3 |
% |
Third-party interests |
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305 |
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276 |
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10.5 |
% |
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109 |
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65 |
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67.7 |
% |
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Net profit (attributable to shareholders) |
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7,210 |
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5,755 |
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25.3 |
% |
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1,840 |
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1,408 |
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30.7 |
% |
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Net profit from Insurance |
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3,268 |
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3,349 |
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-2.4 |
% |
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861 |
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875 |
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-1.6 |
% |
Net profit from Banking |
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3,942 |
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2,406 |
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63.8 |
% |
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979 |
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533 |
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83.7 |
% |
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Earnings per share (in EUR) |
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3.32 |
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2.71 |
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22.7 |
% |
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0.85 |
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0.65 |
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30.8 |
% |
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Key figures |
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Net return on capital and reserves4 |
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26.6 |
% |
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25.4 |
% |
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Debt/equity ratio5 |
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9.3 |
% |
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11.9 |
% |
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Total staff (average FTEs) |
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115,300 |
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113,000 |
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2.0 |
% |
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1. |
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Underlying profit before tax is a non-GAAP measure for profit before tax excluding
divestments and special items as specified in Appendix 2 |
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2. |
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Other insurance results are mainly interest on core debt and gains on equity investments that
are not allocated to the three business lines |
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3. |
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Other banking results consist mainly of interest expenses that are not allocated to the business
lines |
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4. |
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2004 figures are on Dutch GAAP basis; 2005 figures exclude revaluation reserves for
available-for-sale securities |
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5. |
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Comparable figure is based on IFRS at 1 January 2005 |
Full-year profit
In 2005 ING Group continued to focus on delivering value to shareholders by increasing returns,
investing for growth, and improving the execution of the business fundamentals. The emphasis on
managing for value has resulted in a sharper attention to product pricing and a more stringent
approach to capital allocation within the Group. As a result, returns have improved across the
company, with net total return on capital & reserves increasing to 26.6%. ING has also been
investing in future growth, by attributing capital to fast-growing businesses like ING Direct,
retirement services, and the life insurance activities in developing markets. At the same time, ING
has taken steps to improve execution throughout the company by focusing on the business
fundamentals, including cost reduction and customer satisfaction, which has resulted in
improvements in the efficiency ratios for both banking and insurance.
Total underlying profit before tax increased 19.4% to EUR 8,506 million in 2005. The increase
was driven by strong growth from Retail Banking and ING Direct as well as the insurance activities
in the Americas and Europe, supported by growth in retirement services and favourable results from
non-life insurance. Including the impact of divestments and special items, total profit before tax
increased 14.9% to EUR 8,894 million. Net profit rose 25.3% to EUR 7,210 million, due in part to a
lower effective tax rate. Earnings per share rose to EUR 3.32 from EUR 2.71.
Insurance
ING’s insurance operations continued to benefit from strong growth in retirement services and life
insurance in developing markets, as well as strong investment results and an exceptionally
favourable claims environment for non-life insurance. Underlying profit before tax from the
insurance operations increased 11.5% to EUR 3,975 million. The life insurance activities posted a
7.4% increase in underlying profit before tax, driven by the U.S., Central Europe,
2
South Korea and the Netherlands, supported by higher sales, growth in assets under management, and
investment gains. Life premium income rose 12.5% excluding divestments and reclassifications as a
result of IFRS. The efficiency ratios for life and investment products both improved. The non-life
insurance units continued to benefit from an exceptionally favourable claims environment,
particularly in Canada, resulting in a 21.3% increase in underlying profit before tax from
non-life. Continued emphasis on value creation has resulted in a 27.4% increase in the value of new
life business, and a 22.9% increase in the embedded value of the life insurance business to EUR
27,586 million, driven by higher sales and improved margins. The internal rate of return on new
life business increased to 13.2%.
Insurance Europe showed a 25.4% increase in underlying profit before tax to EUR 2,021 million,
driven by a 48.3% increase in life results from Central Europe as well as strong underwriting
results at the non-life businesses in Belgium and the Netherlands. Underlying life results in the
Netherlands increased 20.0%, as a result of higher investment income, positive fair value changes
under IFRS, and releases of disability provisions and employee benefit provisions triggered by
changes in legislation in the Netherlands.
Insurance Americas posted a 23.6% increase in underlying profit before tax to EUR 1,979 million,
driven by strong growth in the U.S. and Canada. Underlying profit from insurance in the U.S.
increased 27.4%, led by higher results from retirement services and annuities due to growth in
assets, improved investment performance, and higher margins as the company continued to focus on
the most attractive market segments. The Canadian non-life business posted a 35.8% increase in
underlying profit before tax, supported by a favourable claims environment and the acquisition of
Allianz Canada. Growth was moderated by lower results from Latin America, due in part to an active
hurricane season in Mexico in the second half of 2005.
Insurance Asia/Pacific posted a 5.9% decline in underlying profit before tax to EUR 447 million due
to continued reserve strengthening in Taiwan. Excluding Taiwan, underlying profit before tax from
the rest of Asia/Pacific increased 15.8%, led by South Korea. The value of new life business rose
16.2% to EUR 373 million driven by strong sales in South Korea. The internal rate of return
increased to 15.0%.
Other Insurance results declined to EUR -472 million from EUR -124 million, mainly due to high
realised gains on shares in 2004. Other results in 2004 included EUR 398 million in realised gains
on equities, compared with EUR 190 million of realised gains in 2005. In addition, the buy-back of
legacy debt in the U.S. in the fourth quarter of 2005 resulted in a pre-tax loss of EUR 102 million
which was included under Other.
Banking
ING’s banking operations showed a strong profit increase in 2005, driven by solid growth at ING
Direct and Retail Banking as well as historically low risk costs. Total underlying profit before
tax from the banking operations increased 27.2% to EUR 4,531 million. Income rose 11.4% on an
underlying basis, driven by growth at Retail Banking and ING Direct. Risk costs remained at
historically low levels, supported by releases of provisions at Wholesale Banking, and total risk
costs amounted to 3 basis points of average credit-risk-weighted assets. Continued attention on
cost control as well as the strong growth in income resulted in an improvement in the cost/income
ratio to 65.6% from 66.6%on an underlying basis, despite continued investments for growth at ING
Direct and other units. The focus on value creation resulted in an increase in the underlying
risk-adjusted return on capital after tax to 18.8% from 16.4%.
Wholesale Banking posted an 8.8% increase in underlying profit before tax to EUR 2,276 million
supported by a release of risk costs and an improvement in the profitability of the international
network outside the Benelux following a programme to realign the operating model and focus on key
clients and products. Growth in underlying income was driven by Structured Finance, Leasing and ING
Real Estate. Continued emphasis on managing for value resulted in an improvement in the underlying
risk-adjusted return on capital after tax to 16.7%.
Retail Banking posted a 55.4% increase in underlying profit before tax to EUR 1,815 million, driven
by strong growth, particularly in the home markets of the Benelux. Income increased 11.1% on a
comparable basis, supported by growth in savings and mortgages, including higher prepayment
penalties on mortgages in the Netherlands as clients refinanced to take advantage of low interest
rates. Risk costs declined as a result of the benign credit environment as well as releases in
Belgium and Poland as the quality of the credit portfolio improved. The cost/income ratio improved
to 66.1%, supported in part by cost-containment measures, while continued focus on profitable
growth led to a further increase in the underlying risk-adjusted return on capital after tax to
34.1%.
3
ING Direct posted a 41.8% increase in profit before tax to EUR 617 million as it continued to add
new clients, grow funds entrusted and increase the mortgage portfolio. ING Direct added 3.2 million
new customers in 2005 and welcomed the 15 millionth customer in January 2006. Funds entrusted
increased 29.3% to EUR 188.0 billion. The mortgage portfolio grew 65.9% to EUR 54.9 billion. Strong
profit growth was achieved despite the challenging interest rate environment. The interest margin
narrowed to 0.86% from 0.98% in 2004; however it improved slightly to 0.89% in the fourth quarter
of 2005. The impact of the narrower interest margin was offset by improvements in efficiency. The
operational cost base (excluding marketing costs) improved to 0.40% of total assets from 0.44% in
2004.
Divestments & special items
Divestments resulted in a pre-tax gain of EUR 366 million in 2005 compared with EUR 55 million in
2004. Divested units contributed EUR 22 million to profit before tax in 2005, down from EUR 218
million a year earlier. Special items include a gain of EUR 287 million on the U.S. dollar hedge, a
EUR 96 million gain on old reinsurance business and restructuring provisions of EUR 41 million at
Wholesale Banking, all in 2004. Including the impact of divestments and special items, total profit
before tax increased 14.9% to EUR 8,894 million. Special items also include releases of tax
provisions in both years. Excluding divestments and special items after tax, net profit rose 24.9%
to EUR 6,196 million from EUR 4,959 million. (See Appendix 2 for a full specification of gains and
losses on divestments and special items.)
Taxes & net profit
The effective tax rate declined to 15.5% in 2005 from 22.1% in 2004 due to a lower statutory tax
rate in the Netherlands, high tax-exempt gains on divestments, and EUR 583 million from the
creation of tax assets and net releases from tax provisions compared with EUR 161 million in
releases in 2004. The effective tax rate is expected to return to a normalised level of 20% to 25%.
Currency impact
Currency rate differences had a positive impact of EUR 81 million on net profit and EUR 116 million
on total profit before tax, mainly due to strengthening of the Canadian and Australian dollars,
Polish zloty and South Korean won.
Impact of IFRS
The application of IAS 32, 39 and IFRS 4 from 1 January 2005 had a positive impact on ING Group’s
results in 2005, however the change in accounting standards has led to increased volatility on a
quarterly basis, mainly due to value adjustments on non-trading derivatives. In total, IAS 32, 39
and IFRS 4 had a positive impact of approximately EUR 455 million on total profit before tax, or
EUR 392 million after tax. The estimated impact on the insurance operations was EUR 238 million
before tax, mainly due to realised gains on the sale of bonds and the revaluation of embedded
derivatives, which were offset by the absence of amortised income from gains on fixed interest
securities, and negative valuation changes on fixed-income investment derivatives. The estimated
impact on the banking operations was EUR 217 million before tax, mainly due to valuation
adjustments on non-trading derivatives and prepayment penalties. On a quarterly basis, the
accounting standards had a total positive impact of EUR 148 million before tax in the fourth
quarter compared with a positive impact of EUR 242 million in the third quarter of 2005, a negative
impact of EUR 24 million in the second quarter, and a positive impact of EUR 89 million in the
first quarter.
Compliance
ING took several steps in 2005 to improve its compliance organisation and culture as part of the
company’s emphasis on improving execution. Compliance has been defined as one of ING Group’s
management priorities. A new compliance policy was approved in June 2005, and implementation of the
policy is one of the performance targets for members of the ING Management Council for 2006. In the
Netherlands the compliance departments were restructured and the headcount increased from 23 to 58
full-time positions.
Fourth-quarter profit
In the fourth quarter, underlying profit before tax increased 26.7% to EUR 2,150 million
compared with EUR 1,697 million in the fourth quarter of 2004. The increase was driven by strong
growth at Retail Banking and ING Direct, as well as Insurance Europe. Total underlying profit
before tax from insurance rose 17.3% to EUR 1,022 million. Results were driven by Insurance Europe,
which posted a 53.7% increase in underlying profit before tax, mainly due to strong results in the
Netherlands supported by revaluation of derivatives, higher results on real estate as well as the
release of actuarial and employee benefit provisions. Insurance Americas posted an increase of 1.7%
as higher non-life results in Canada and life
4
results in the U.S. were largely offset by lower results in Latin America, due in part to claims
and expenses from hurricanes in Mexico. Underlying profit before tax from Insurance Asia/Pacific
was 6.7% lower due to reserve strengthening in Taiwan, which offset strong results at other Asian
life operations, particularly South Korea. Excluding Taiwan and a one-time release of provisions in
the year-earlier period, profit in the fourth quarter from Asia/Pacific rose 41.8%. Underlying
profit before tax from the banking operations rose 36.6% to EUR 1,128 million. Retail Banking rose
to EUR 506 million from EUR 174 million, driven by higher income due to the growth of mortgages and
savings, and lower risk costs and operating expenses. The Netherlands, Belgium and Poland
contributed to the strong growth. ING Direct’s profit rose 55.9%, driven by continued strong growth
in both savings and mortgages. Wholesale Banking posted a 6.5% decline in underlying profit, mainly
due to impairments on real estate. Divestments resulted in a gain of EUR 17 million in the fourth
quarter of 2005 and a gain of EUR 85 million a year earlier. Divested units posted a loss of EUR 8
million compared with a profit of EUR 42 million in the fourth quarter of 2004. Special items
include EUR 87 million from a gain on the U.S. dollar hedge and a EUR 41 million restructuring
provision at Wholesale Banking, both in 2004. Including those items, total profit before tax
increased 15.5% to EUR 2,159 million. The effective tax rate decreased to 9.7% from 21.2% in 2004,
supported by releases of tax provisions and the creation of tax assets. Net profit rose 30.7% to
EUR 1,840 million. Excluding divestments and special items after tax, the underlying net profit
rose 29.2% to EUR 1,549 million from EUR 1,199 million. (See Appendix 3 for a specification of
divestments and special items in the fourth quarter.)
Fourth quarter vs. third quarter
Profit in the fourth quarter was strong, though slightly lower than the very strong results in the
third quarter. Underlying profit before tax declined 8.4% to EUR 2,150 million in the fourth
quarter from EUR 2,348 million in the third quarter of 2005, primarily due to lower results from
Insurance Americas and Wholesale Banking. Total underlying profit before tax from insurance fell
7.3% to EUR 1,022 million from EUR 1,103 million, due to a 25.5% decrease in underlying profit at
Insurance Americas as a result of higher credit losses, lower investment income and a lower IFRS
impact in the U.S. as well as hurricane claims and strengthening of provisions in the Mexican
non-life operations. Insurance Europe posted an increase of 20.6% in underlying profit, driven by
higher fair-value adjustments to real estate, some sizable releases from insurance provisions, and
lower expenses. Underlying profit from Insurance Asia/Pacific was flat at EUR 112 million. Other
insurance results declined to EUR -75 million from EUR -44 million, mainly due to the loss on the
buy-back of legacy debt and lower results on derivatives, partially offset by higher realised gains
on shares. Total underlying profit before tax from banking declined 9.4% to EUR 1,128 million,
mainly caused by a decrease of the Wholesale Banking results. Underlying profit of Wholesale
Banking declined 11.6%, mainly due to lower results from Financial Markets and higher operating
expenses, which offset higher results from Structured Finance and Corporate Finance & Equity
Markets. Retail Banking and ING Direct posted increases of 1.0% and 2.8% respectively. Other
banking results were EUR -64 million compared with EUR -3 million in the third quarter, as a result
of higher financing charges and non-allocated expenses as well as the implementation of the
fair-value option under IFRS in the third quarter. Divestments resulted in a gain of EUR 17 million
in the fourth quarter of 2005 and a gain of EUR 4 million in the third quarter. Divested units had
a loss of EUR 8 million compared with a profit of EUR 1 million in the third quarter. Including
those items, total profit before tax declined 8.2% to EUR 2,159 million. Net profit declined 2.0%
to EUR 1,840 million from EUR 1,878 million, and earnings per share were EUR 0.85 compared with EUR
0.86 in the third quarter of 2005. Excluding divestments and special items after tax, underlying
net profit declined 9.4% to EUR 1,549 million from EUR 1,709 million in the third quarter. (See
Appendix 4 for an overview of quarterly profit developments including the impact of divestments and
special items.)
5
1.1 Balance Sheet and Capital & Reserves
Table 2. Key Balance Sheet Figures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IFRS |
|
|
|
|
|
|
|
Excl. IAS 32, 39 & IFRS 4 |
|
|
|
|
31 December |
|
|
1 January |
|
|
|
|
|
|
|
31 December |
|
|
|
|
In EUR billion |
|
|
2005 |
|
|
2005 |
|
|
Change |
|
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Capital & reserves |
|
|
|
36.7 |
|
|
|
28.2 |
|
|
|
30.4 |
% |
|
|
|
24.1 |
|
|
|
52.3 |
% |
- insurance operations |
|
|
|
20.6 |
|
|
|
15.3 |
|
|
|
34.6 |
% |
|
|
|
13.2 |
|
|
|
56.1 |
% |
- banking operations |
|
|
|
20.9 |
|
|
|
17.2 |
|
|
|
21.5 |
% |
|
|
|
14.4 |
|
|
|
45.1 |
% |
- eliminations1 |
|
|
|
-4.8 |
|
|
|
-4.3 |
|
|
|
|
|
|
|
|
-3.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
1,158.6 |
|
|
|
964.5 |
|
|
|
20.1 |
% |
|
|
|
876.4 |
|
|
|
32.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net return on capital & reserves2 |
|
|
|
26.6 |
% |
|
|
25.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
- insurance operations |
|
|
|
21.1 |
% |
|
|
27.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
- banking operations |
|
|
|
24.2 |
% |
|
|
15.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. |
|
Own shares, subordinated loans, third-party interests, debenture loans and other
eliminations |
|
2. |
|
The comparable figures shown under 1 January 2005 are FY 2004 figures based on net profit and
average capital and reserves under Dutch GAAP |
Capital & Reserves
Total capital & reserves of ING Group were further strengthened in 2005 with an increase of EUR 8.6
billion to EUR 36.7 billion on 31 December 2005, compared with EUR 28.2 billion on 1 January 2005.
The increase resulted primarily from the strong growth in net profit to EUR 7.2 billion. Unrealised
revaluations on investments added EUR 1.6 billion to capital & reserves, currency effects had a
positive effect of EUR 2.1 billion, primarily due to the appreciation of the U.S., Canadian and
Australian dollars against the euro, and a change in cash-flow/net investment hedge of EUR 0.8
billion. This increase was partially offset by capital gains released to the profit & loss account
of EUR 0.7 billion and the total cash dividend payout of EUR 2.5 billion. The balance sheet per 1
January 2005 and 31 December 2004 have been restated due to changes in the impact of implementing
IFRS. There was no material impact on capital & reserves.
Capital Ratios
The growth in capital & reserves further strengthened ING’s solvency position, with all ratios in
line with the Group’s targets. ING calculates these ratios on the basis of adjusted capital, which
differs from total capital & reserves in that it excludes unrealised gains on fixed-interest
investments and includes hybrid capital. On this basis, the debt/equity ratio of ING Group improved
to 9.3% compared with 11.9% at 1 January 2005, supported by growth in capital & reserves. The
capital coverage ratio for ING Verzekeringen N.V. increased to 259% of E.U. regulatory requirements
at the end of December, compared with 200% at 1 January 2005. The Tier-1 ratio of ING Bank N.V.
stood at 7.32% at the end of 2005, up from 6.92% on 1 January 2005, as growth in capital was
partially offset by strong growth in risk-weighted assets. The solvency ratio (BIS ratio) for the
bank improved to 10.86% at the end of December from 10.46% on 1 January 2005. Total risk-weighted
assets of the banking operations increased by EUR 45.6 billion, or 16.6%, to EUR 319.7 billion at
the end of December, driven by growth in all three banking business lines.
Credit Ratings
Both ING Groep N.V. and ING Verzekeringen N.V. have an AA— 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 from S&P were upgraded in August 2005 and the ratings from Moody’s were
confirmed in May 2005. All ratings have a stable outlook.
Return on Capital & Reserves
The net return on capital & reserves increased to 26.6% in 2005 from 25.4% in 2004. The insurance
operations posted a 21.1% net return on capital & reserves in 2005, down from 27.0% in 2004, due to
an increase in capital & reserves. The banking operations posted an increase to 24.2% from 15.8%.
The 2004 figures for net return on capital & reserves are based on net profit and average capital &
reserves under Dutch GAAP and the 2005 figures are based on IFRS.
1.2 Dividend
At the Annual General Meeting of Shareholders on 25 April 2006, ING will propose a total
dividend for 2005 of EUR 1.18 per (depositary receipt for an) ordinary share, up from EUR 1.07 per
(depositary receipt for an) ordinary share in 2004. Taking into account the interim dividend of EUR
0.54 made payable in September 2005, the final dividend will amount to EUR 0.64 per (depositary
receipt for an) ordinary share to be paid fully in cash. ING’s shares will be quoted ex-dividend as
of 27 April 2006 and the dividend will be made payable on 4 May 2006.
6
2. Insurance operations
Table 3. ING Group: Insurance profit & loss account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Life premium income |
|
|
|
39,144 |
|
|
|
36,975 |
|
|
|
5.9 |
% |
|
|
|
10,189 |
|
|
|
9,408 |
|
|
|
8.3 |
% |
Non-life premium income |
|
|
|
6,614 |
|
|
|
6,642 |
|
|
|
-0.4 |
% |
|
|
|
1,505 |
|
|
|
1,461 |
|
|
|
3.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total premium income |
|
|
|
45,758 |
|
|
|
43,617 |
|
|
|
4.9 |
% |
|
|
|
11,694 |
|
|
|
10,869 |
|
|
|
7.6 |
% |
Investment income |
|
|
|
9,944 |
|
|
|
10,179 |
|
|
|
-2.3 |
% |
|
|
|
2,536 |
|
|
|
2,731 |
|
|
|
-7.1 |
% |
Commission income |
|
|
|
1,346 |
|
|
|
1,198 |
|
|
|
12.4 |
% |
|
|
|
294 |
|
|
|
312 |
|
|
|
-5.8 |
% |
Other income |
|
|
|
376 |
|
|
|
608 |
|
|
|
-38.2 |
% |
|
|
|
86 |
|
|
|
172 |
|
|
|
-50.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
|
57,424 |
|
|
|
55,602 |
|
|
|
3.3 |
% |
|
|
|
14,610 |
|
|
|
14,084 |
|
|
|
3.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
|
47,120 |
|
|
|
45,384 |
|
|
|
3.8 |
% |
|
|
|
11,893 |
|
|
|
11,216 |
|
|
|
6.0 |
% |
Other interest expenses |
|
|
|
1,100 |
|
|
|
1,140 |
|
|
|
-3.5 |
% |
|
|
|
247 |
|
|
|
288 |
|
|
|
-14.2 |
% |
Operating expenses |
|
|
|
5,195 |
|
|
|
4,746 |
|
|
|
9.5 |
% |
|
|
|
1,408 |
|
|
|
1,345 |
|
|
|
4.7 |
% |
Impairments/investment losses |
|
|
|
31 |
|
|
|
10 |
|
|
|
210.0 |
% |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
|
53,446 |
|
|
|
51,280 |
|
|
|
4.2 |
% |
|
|
|
13,571 |
|
|
|
12,849 |
|
|
|
5.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
3,978 |
|
|
|
4,322 |
|
|
|
-8.0 |
% |
|
|
|
1,039 |
|
|
|
1,235 |
|
|
|
-15.9 |
% |
Taxation |
|
|
|
455 |
|
|
|
850 |
|
|
|
-46.5 |
% |
|
|
|
97 |
|
|
|
318 |
|
|
|
-69.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before third-party interests |
|
|
|
3,523 |
|
|
|
3,472 |
|
|
|
1.5 |
% |
|
|
|
942 |
|
|
|
917 |
|
|
|
2.7 |
% |
Third-party interests |
|
|
|
255 |
|
|
|
123 |
|
|
|
107.3 |
% |
|
|
|
81 |
|
|
|
42 |
|
|
|
92.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit (attributable to shareholders) |
|
|
|
3,268 |
|
|
|
3,349 |
|
|
|
-2.4 |
% |
|
|
|
861 |
|
|
|
875 |
|
|
|
-1.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
3,978 |
|
|
|
4,322 |
|
|
|
-8.0 |
% |
|
|
|
1,039 |
|
|
|
1,235 |
|
|
|
-15.9 |
% |
Gains/losses on divestments |
|
|
|
-13 |
|
|
|
221 |
|
|
|
|
|
|
|
|
17 |
|
|
|
254 |
|
|
|
|
|
Profit before tax from divested units |
|
|
|
16 |
|
|
|
151 |
|
|
|
|
|
|
|
|
|
|
|
|
45 |
|
|
|
|
|
Special items |
|
|
|
|
|
|
|
386 |
|
|
|
|
|
|
|
|
|
|
|
|
65 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
3,975 |
|
|
|
3,564 |
|
|
|
11.5 |
% |
|
|
|
1,022 |
|
|
|
871 |
|
|
|
17.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax life insurance |
|
|
|
2,682 |
|
|
|
2,498 |
|
|
|
7.4 |
% |
|
|
|
739 |
|
|
|
595 |
|
|
|
24.2 |
% |
Underlying profit before tax non-life insurance |
|
|
|
1,293 |
|
|
|
1,066 |
|
|
|
21.3 |
% |
|
|
|
283 |
|
|
|
276 |
|
|
|
2.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key figures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded value |
|
|
|
27,586 |
|
|
|
22,451 |
|
|
|
22.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of new life business |
|
|
|
805 |
|
|
|
632 |
|
|
|
27.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Internal rate of return |
|
|
|
13.2 |
% |
|
|
12.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual premium equivalent (APE) |
|
|
|
6,312 |
|
|
|
4,969 |
|
|
|
27.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio non-life business |
|
|
|
95 |
% |
|
|
94 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net return on capital and reserves1 |
|
|
|
21.1 |
% |
|
|
27.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staff (average FTEs) |
|
|
|
51,600 |
|
|
|
49,400 |
|
|
|
4.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. |
|
2004 figures are full-year on Dutch GAAP basis |
Full-year
profit
ING’s insurance operations continued to benefit from strong growth in retirement services and
life insurance in developing markets, higher investment results and a favourable claims environment
for the non-life insurance businesses. Underlying profit before tax from insurance rose 11.5% to
EUR 3,975 million. The non-life operations in the Netherlands, Belgium and Canada continued to
benefit from a historically low claims ratio, which helped drive underlying profit before tax from
non-life insurance up 21.3%. The life insurance activities in the Netherlands, U.S. and Central
Europe showed strong profit growth, supported by increased sales, improved returns, growth in
assets under management, and investment gains. Underlying profit before tax from life insurance
increased 7.4%, as growth was somewhat tempered by continued reserve strengthening in Taiwan and
lower capital gains on equities. Strong sales and a focus on cost control led to an improvement in
the efficiency ratios for life and investment products. Continued focus on value creation resulted
in a 27.4% increase in the value of new life business as sales and margins both increased. The
embedded value of the life business rose 22.9% to EUR 27,586 million.
Divestments resulted in a loss of EUR 13 million in 2005 and a gain of EUR 221 million in 2004.
Divested units contributed EUR 16 million to profit before tax in 2005 and EUR 151 million a year
earlier. Results in 2004 also included a gain of EUR 290 million from the U.S. dollar hedge and a
gain of EUR 96 million from old reinsurance activities, both of which were reported as special
items. Including the impact of divestments and special items, total profit before tax from
insurance declined 8.0% to EUR 3,978 million. The effective tax rate declined from 19.7% to 11.4%
due to non-taxable gains on divestments, a lower statutory tax rate in the Netherlands and releases
of tax provisions. Net profit from insurance was 2.4% lower at EUR 3,268 million. (See Appendix 2
for divestments and special items.)
7
Income
Total premium income increased 4.9% to EUR 45,758 million, driven mainly by strong growth of life
premiums in Asia, particularly South Korea and Japan. Premium growth was partially offset by
divestments and the reclassification of some life products to investment contracts from the
beginning of 2005 under IFRS 4, notably in Australia, the U.S. and Belgium, which had a total
negative impact of EUR 2,053 million. Excluding divestments and the reclassification, life premiums
rose 12.5% and total premium income increased 10.4% on a comparable basis. Non-life premiums
declined 0.4%, or 0.8% on an underlying basis, as lower premiums in the Netherlands and Mexico
offset higher premiums in Canada following the acquisition of Allianz Canada.
Investment income declined 2.3% to EUR 9,944 million, reflecting the impact of divestments.
Excluding divestments, investment income rose 3.5% as higher realised gains on bonds and the
positive revaluation of real estate were partially offset by lower realised capital gains on
equities. Commission income increased 12.4% to EUR 1,346 million, mainly driven by a
reclassification of products from life insurance to investment products under IFRS 4. Other income
declined 38.2% to EUR 376 million, reflecting the impact of divestments in both periods and the
gain on the U.S. dollar hedge in 2004, which offset higher profit from associates. (See Appendix
7.3)
Expenses
Operating expenses from the insurance operations increased 9.5% to EUR 5,195 million, due to costs
to support the ongoing growth of the business, particularly in Asia, as well as the impact of a new
collective labour agreement in the Netherlands, investments in IT infrastructure, and start-up
costs for a new distribution channel in Canada. Recurring expenses increased 4.9% to EUR 4,831
million. The efficiency ratios for life insurance and investment products improved as premium and
asset growth outpaced the increase in expenses. Expenses as a percentage of assets under management
for investment products improved to 0.82% compared with 0.86% in 2004. Expenses as a percentage of
life premiums improved to 13.28% from 13.52%. The expense ratio for the non-life operations
deteriorated slightly to 32% from 31%, driven by higher costs related to the purchase of Allianz
Canada. The claims ratio remained at a historically low 63%, resulting in a combined ratio of 95%
in 2005 compared with 94% a year earlier.
Embedded Value & Value of New Business
Table 4. New life insurance production and value by region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New production 2005 |
|
|
New production 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
Annual |
|
Single |
|
New |
|
|
|
|
|
Annual |
|
|
Single |
|
|
New |
|
|
|
|
In EUR million |
|
|
premium |
|
Premium |
|
Business |
|
IRR |
|
|
Premium |
|
|
Premium |
|
|
Business |
|
|
IRR |
|
|
Insurance Europe |
|
|
|
476 |
|
|
|
3,144 |
|
|
|
226 |
|
|
|
14.6 |
% |
|
|
|
432 |
|
|
|
3,508 |
|
|
|
138 |
|
|
|
12.4 |
% |
Insurance Americas |
|
|
|
1,594 |
|
|
|
15,875 |
|
|
|
207 |
|
|
|
11.1 |
% |
|
|
|
1,409 |
|
|
|
13,917 |
|
|
|
173 |
|
|
|
10.7 |
% |
Insurance Asia/Pacific |
|
|
|
1,687 |
|
|
|
6,527 |
|
|
|
373 |
|
|
|
15.0 |
% |
|
|
|
1,086 |
|
|
|
2,996 |
|
|
|
321 |
|
|
|
13.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
3,757 |
|
|
|
25,545 |
|
|
|
805 |
|
|
|
13.2 |
% |
|
|
|
2,926 |
|
|
|
20,421 |
|
|
|
632 |
|
|
|
12.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Developing markets |
|
|
|
1,631 |
|
|
|
826 |
|
|
|
375 |
|
|
|
17.4 |
% |
|
|
|
1,072 |
|
|
|
647 |
|
|
|
268 |
|
|
|
13.5 |
% |
The embedded value of ING’s life insurance operations increased 22.9% to EUR 27,586 million,
including net dividends of EUR 474 million paid to the Group. Before dividends/capital injections,
the embedded value rose 25.0% to EUR 28,061 million from EUR 22,451 million. The figures are
calculated in accordance with European Embedded Value principles. In addition to the value
attributable to new business and the unwinding of the discount rate, significant contributors to
the increase in embedded value came from favourable experience variances and currency movements,
changes to discount rates, and the investment return on free surplus. That was partially offset by
changes in economic assumptions, particularly in Asia/Pacific, due to revised new money assumptions
in Taiwan. Embedded value profit, an important measure of value creation, increased 262.4% to EUR
2,254 million, driven by strong growth in the value of new business, robust investment performance,
and better operational experience. The value of new business increased 27.4% to EUR 805 million,
driven by improved pricing margins, higher sales, and a more profitable product mix in the U.S. and
Asia/Pacific. Central Europe and Asia/Pacific both generated particularly strong growth in 2005,
indicating the strong future earnings potential of the businesses in both regions. New sales,
measured in annual premium equivalent, rose 27.0% to EUR 6,312 million, while the internal rate of
return increased to 13.2% from 12.1% in 2004. The internal rate of return in developing markets
increased to 17.4% as business units benefited from increased scale. New sales in developing
markets rose 51%. (See Appendix 8)
8
2.1 Insurance Europe profit rises 25.4%: strong growth in Central Europe
• |
|
Life insurance results from Central Europe increase 48.3%, driven by Poland, Hungary |
• |
|
Value of new life business rises 63.8% on strong sales and improved margins |
• |
|
Profit from the Netherlands increases 23.2% supported by investment gains |
Table 5. Insurance Europe profit & loss account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
Life premium income |
|
|
|
8,695 |
|
|
|
9,305 |
|
|
|
-6.6 |
% |
|
|
|
2,368 |
|
|
|
2,315 |
|
|
|
2.3 |
% |
Non-life premium income |
|
|
|
2,007 |
|
|
|
2,064 |
|
|
|
-2.8 |
% |
|
|
|
283 |
|
|
|
346 |
|
|
|
-18.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total premium income |
|
|
|
10,702 |
|
|
|
11,369 |
|
|
|
-5.9 |
% |
|
|
|
2,651 |
|
|
|
2,661 |
|
|
|
-0.4 |
% |
Investment income |
|
|
|
4,583 |
|
|
|
4,172 |
|
|
|
9.9 |
% |
|
|
|
1,096 |
|
|
|
1,068 |
|
|
|
2.6 |
% |
Commission and other income |
|
|
|
760 |
|
|
|
500 |
|
|
|
52.0 |
% |
|
|
|
253 |
|
|
|
179 |
|
|
|
41.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
|
16,045 |
|
|
|
16,041 |
|
|
|
0.0 |
% |
|
|
|
4,000 |
|
|
|
3,908 |
|
|
|
2.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
|
11,644 |
|
|
|
12,327 |
|
|
|
-5.5 |
% |
|
|
|
2,837 |
|
|
|
2,916 |
|
|
|
-2.7 |
% |
Other interest expenses |
|
|
|
481 |
|
|
|
322 |
|
|
|
49.4 |
% |
|
|
|
111 |
|
|
|
92 |
|
|
|
20.7 |
% |
Operating expenses |
|
|
|
1,870 |
|
|
|
1,768 |
|
|
|
5.8 |
% |
|
|
|
477 |
|
|
|
542 |
|
|
|
-12.0 |
% |
Impairments/investment losses |
|
|
|
19 |
|
|
|
1 |
|
|
|
|
|
|
|
|
14 |
|
|
|
-7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
|
14,014 |
|
|
|
14,418 |
|
|
|
-2.8 |
% |
|
|
|
3,439 |
|
|
|
3,543 |
|
|
|
-2.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
2,031 |
|
|
|
1,623 |
|
|
|
25.1 |
% |
|
|
|
561 |
|
|
|
365 |
|
|
|
53.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
2,031 |
|
|
|
1,623 |
|
|
|
25.1 |
% |
|
|
|
561 |
|
|
|
365 |
|
|
|
53.7 |
% |
Gains/losses on divestments |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax from divested units
Special items |
|
|
|
|
|
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
2,021 |
|
|
|
1,612 |
|
|
|
25.4 |
% |
|
|
|
561 |
|
|
|
365 |
|
|
|
53.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax life insurance |
|
|
|
1,597 |
|
|
|
1,307 |
|
|
|
22.2 |
% |
|
|
|
431 |
|
|
|
286 |
|
|
|
50.7 |
% |
Underlying profit before tax non-life insurance |
|
|
|
424 |
|
|
|
305 |
|
|
|
39.0 |
% |
|
|
|
130 |
|
|
|
79 |
|
|
|
64.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key figures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded value |
|
|
|
14,929 |
|
|
|
12,258 |
|
|
|
21.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of new life business |
|
|
|
226 |
|
|
|
138 |
|
|
|
63.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Internal rate of return |
|
|
|
14.6 |
% |
|
|
12.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual premium equivalent (APE) |
|
|
|
791 |
|
|
|
783 |
|
|
|
1.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets under management1 (in EUR billion) |
|
|
|
169.3 |
|
|
|
148.4 |
|
|
|
14.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Staff (average FTEs) |
|
|
|
16,100 |
|
|
|
15,900 |
|
|
|
1.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-year profit
At Insurance Europe, the focus in 2005 was on improving execution at Nationale-Nederlanden,
while continuing to grow the life insurance and pensions businesses in Central Europe. At NN,
important progress was made in improving customer satisfaction and reducing backlogs, while
investments in new IT systems are starting to pay off as the first new systems came online in the
second half of 2005. The focus on value creation resulted in a strong increase in margins and new
business value as products were re-priced. In Central Europe, ING continued to deliver strong
growth in life premiums and pension fund inflows, resulting in a sharp increase in the value of new
business from the region.
Underlying profit before tax from Insurance Europe rose 25.4% to EUR 2,021 million, driven by life
insurance in Central Europe as well as strong underwriting results at the non-life businesses in
Belgium and the Netherlands. Profit from life insurance rose 22.2% to EUR 1,597 million, led by a
48.3% increase in life results from Central Europe, particularly in Poland and Hungary. Life
results from the Netherlands increased 20.0%, supported by higher investment income, fair value
changes on derivatives and releases from disability provisions. Profit from non-life insurance rose
39.0% to EUR 424 million, supported by strong underwriting results and releases of actuarial
provisions.
Profit before tax included a gain of EUR 10 million on the sale of Freeler in 2005, and a gain of
EUR 11 million on old reinsurance business in 2004. Including those items, total profit before tax
rose 25.1% to EUR 2,031 million.
Income
Total premium income declined 5.9% to EUR 10,702 million, due to the reclassification of some
products from life insurance to investment contracts under IFRS 4 as well as a decline in non-life
premiums in the Netherlands due to legislation changes related to disability insurance. Excluding
the reclassification of investment products under IFRS, which had a negative impact of EUR 761
million, life premium income rose 1.8% as double-digit growth in Central Europe and
9
Belgium was offset by lower life premiums in the Netherlands after Nationale-Nederlanden adjusted
rates in 2005 to improve profitability. Non-life premium income declined 2.8% to EUR 2,007 million,
due to premium refunds resulting from the new long-term disability laws in the Netherlands which
took effect in 2006.
Investment income increased 9.9% to EUR 4,583 million, supported by pre-payment penalties and
capital gains on bonds and private equity investments. Commission and other income increased 52.0%
to EUR 760 million due to higher profits from associates, such as minority shareholdings in real
estate funds and private equity.
Expenses
Operating expenses rose 5.8% due to an increase in the Netherlands, mainly related to the new
collective labour agreement, EUR 23 million in costs for streamlining the IT organisation, as well
as severance and reorganisation costs. That was partially offset by a release of EUR 47 million
from provisions for employee benefits following legislative changes in the Netherlands relating to
healthcare and pensions. Operating expenses in Belgium and Central Europe declined as a result of
cost containment programmes. Expenses as a percentage of assets under management improved from
1.06% to 0.93%, while expenses as a percentage of life premiums deteriorated from 20.99% to 23.38%.
The average number of staff increased slightly to 16,100.
Embedded Value & Value of New Business
Table 6. Insurance Europe new life insurance production
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New production 2005 |
|
|
New production 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
Annual |
|
|
Single |
|
|
New |
|
|
|
|
|
|
|
Annual |
|
|
Single |
|
|
New |
|
|
|
|
In EUR million |
|
|
premium |
|
|
Premium |
|
|
Business |
|
|
|
IRR |
|
|
Premium |
|
|
Premium |
|
|
Business |
|
|
IRR |
|
Netherlands1 |
|
|
|
168 |
|
|
|
1,413 |
|
|
|
95 |
|
|
|
13.2 |
% |
|
|
|
178 |
|
|
|
1,709 |
|
|
|
58 |
|
|
|
10.5 |
% |
Belgium2 |
|
|
|
49 |
|
|
|
1,361 |
|
|
|
36 |
|
|
|
16.9 |
% |
|
|
|
51 |
|
|
|
1,583 |
|
|
|
42 |
|
|
|
22.8 |
% |
Central Europe3 & Spain |
|
|
|
260 |
|
|
|
370 |
|
|
|
94 |
|
|
|
15.6 |
% |
|
|
|
202 |
|
|
|
216 |
|
|
|
38 |
|
|
|
12.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
476 |
|
|
|
3,144 |
|
|
|
226 |
|
|
|
14.6 |
% |
|
|
|
432 |
|
|
|
3,508 |
|
|
|
138 |
|
|
|
12.4 |
% |
|
|
|
1. |
|
VNB statistics for Nationale-Nederlanden were reported with a lag of one quarter, thus the
2004 figures for the Netherlands represent
production for 4Q 2003 and 9M 2004. As of 2005 VNB statistics reflect actual reporting
periods. |
|
2. |
|
Including Luxembourg |
|
3. |
|
Poland, Hungary, Czech Republic, Slovakia, Romania, Bulgaria, Greece, Russia |
The embedded value for Insurance Europe increased 21.8% to EUR 14,929 million including net
dividends/capital injections of EUR 364 million paid to the Group. Before dividends/capital
injections, the 2005 embedded value was EUR 15,294 million. In addition to the contribution from
new business, the increase was driven mainly by favourable experience variances due to strong
investment and operating performances as well as a high return on free surplus. That was partially
offset by operating assumption changes in the Netherlands and Belgium, and changes in economic
assumptions. The developing markets of Central Europe showed an increase of EUR 528 million in
embedded value to EUR 2,314 million in 2005 before dividends, up 29.6%. The value of new life
insurance business written by Insurance Europe increased 63.8% to EUR 226 million in 2005, driven
by strong sales in Central Europe, due in part to pension fund acquisitions, as well as improved
margins in the Netherlands. New sales, measured in annual premium equivalent, increased 1.0% to EUR
791 million as sales growth in Central Europe was largely offset by a decline in the Netherlands
and Belgium, mainly due to lower single-premium sales. The overall internal rate of return for
Insurance Europe increased to 14.6% from 12.4%, driven by a sharp improvement in the Netherlands.
Geographical breakdown Insurance Europe
Table 7. Insurance Europe underlying profit before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
Netherlands |
|
|
|
1,589 |
|
|
|
1,290 |
|
|
|
23.2 |
% |
|
|
|
453 |
|
|
|
298 |
|
|
|
52.0 |
% |
- of which life |
|
|
|
1,220 |
|
|
|
1,017 |
|
|
|
20.0 |
% |
|
|
|
340 |
|
|
|
220 |
|
|
|
54.5 |
% |
- of which non-life |
|
|
|
369 |
|
|
|
273 |
|
|
|
35.2 |
% |
|
|
|
113 |
|
|
|
78 |
|
|
|
44.9 |
% |
Belgium1 |
|
|
|
174 |
|
|
|
143 |
|
|
|
21.7 |
% |
|
|
|
46 |
|
|
|
33 |
|
|
|
39.4 |
% |
- of which life |
|
|
|
126 |
|
|
|
122 |
|
|
|
3.3 |
% |
|
|
|
30 |
|
|
|
34 |
|
|
|
-11.8 |
% |
- of which non-life |
|
|
|
48 |
|
|
|
21 |
|
|
|
128.6 |
% |
|
|
|
16 |
|
|
|
-1 |
|
|
|
|
|
Central Europe2 & Spain |
|
|
|
258 |
|
|
|
179 |
|
|
|
44.1 |
% |
|
|
|
62 |
|
|
|
34 |
|
|
|
82.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
2,021 |
|
|
|
1,612 |
|
|
|
25.4 |
% |
|
|
|
561 |
|
|
|
365 |
|
|
|
53.7 |
% |
|
|
|
1. |
|
Including Luxembourg |
|
2. |
|
Poland, Hungary, Czech Republic, Slovakia, Romania, Bulgaria, Greece, Russia |
10
Netherlands
In the Netherlands, underlying profit before tax increased 23.2% to EUR 1,589 million, as higher
investment income more than offset growth in expenses related to the new collective labour
agreement and measures to improve customer satisfaction and efficiency. Results included a EUR 151
million revaluation of non-trading derivatives, EUR 83 million higher results from real estate
investments and EUR 94 million higher results from private equity, as well as a EUR 98 million
release from disability and other actuarial provisions triggered by the introduction of a new
long-term disability act in 2006. Profit from the Dutch life insurance businesses rose 20.0% to EUR
1,220 million driven by higher investment income and an improved morbidity result due to the
release of disability provisions. Life premiums declined 6.4%, mainly due to lower acquisition of
group life contracts and lower single-premium sales due to enhanced pricing discipline to improve
profitability. Life premiums at RVS increased 4.4%. Continued emphasis on value creation resulted
in a sharp increase in the value of new life business in the Netherlands to EUR 95 million from EUR
58 million in 2004, driven by improved margins. The internal rate of return increased to 13.2% from
10.5%. Profit from non-life insurance increased 35.2% to EUR 369 million, driven by higher results
from real estate and private equity investments as well as actuarial provision releases. Non-life
premiums declined 3.0%, largely caused by premium refunds in loss of income/accident insurance due
to the new long-term disability act. That was partially offset by higher fire insurance premiums
following a premium rate adjustment. Operating expenses rose 8.2% due to the new collective labour
agreement, EUR 39 million in severance costs at Nationale-Nederlanden and IT projects at
Nationale-Nederlanden and ING Investment Management, including EUR 23 million for streamlining the
shared IT organisation. This was partially offset by a net release of EUR 47 million from
provisions for employee benefits following legislative changes relating to healthcare and pensions.
At Nationale-Nederlanden operating expenses increased 7.2%, largely due to software depreciation on
new policy administration systems and severance costs. Staff reductions at Nationale-Nederlanden
are proceeding ahead of plan. At the end of 2005 internal staff had been reduced by about 500
positions, while temporary staff was reduced to 840 from a peak of 1,460 in September 2004.
Belgium
In Belgium, underlying profit from insurance rose 21.7% to EUR 174 million, mainly due to a sharp
increase in results from non-life insurance, which rose to EUR 48 million from EUR 21 million,
driven by favourable claims development, especially in fire, health and loss of income/accident
insurance, as well as lower operating expenses. Non-life premiums declined 1.5% to EUR 319 million,
mainly due to the sale of part of the health portfolio. Results from life insurance, including
Luxembourg, increased 3.3% to EUR 126 million as a decline in operating expenses compensated for
higher lapses and lower management/entrance fees. Excluding the reclassification of products from
life insurance to investment products under IFRS 4, which had a negative impact of EUR 761 million,
life premium income increased 20.4% to EUR 1,630 million due to strong sales of universal life
products. The value of new business in Belgium declined to EUR 36 million from EUR 42 million in
2004, due to a shift in sales from unit-linked to universal life products which have lower margins
and lower sales. However, the internal rate of return in Belgium remained high at 16.9%.
Central Europe & Spain
In Central Europe & Spain, underlying profit increased 44.1% to EUR 258 million, driven by a 48.3%
increase in life results in Central Europe to EUR 251 million. Poland, Hungary, Greece, Spain and
Romania all showed strong growth in life and pensions, driven by higher premiums and lower
operating expenses. Life premium income rose 18.3% to EUR 1,617 million driven by high sales of
unit-linked products in Hungary and universal life products in Poland and Greece. Operating
expenses declined 3.4% due to cost containment in Poland, a provision in 2004 for a discontinued
business, and a release of provisions in Spain in 2005.
Table 8. Insurance Europe premium income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
Netherlands |
|
|
|
7,091 |
|
|
|
7,516 |
|
|
|
-5.7 |
% |
|
|
|
1,702 |
|
|
|
1,690 |
|
|
|
0.7 |
% |
- of which life |
|
|
|
5,449 |
|
|
|
5,823 |
|
|
|
-6.4 |
% |
|
|
|
1,502 |
|
|
|
1,428 |
|
|
|
5.2 |
% |
- of which non-life |
|
|
|
1,642 |
|
|
|
1,693 |
|
|
|
-3.0 |
% |
|
|
|
200 |
|
|
|
262 |
|
|
|
-23.7 |
% |
Belgium1 |
|
|
|
1,949 |
|
|
|
2,439 |
|
|
|
-20.1 |
% |
|
|
|
455 |
|
|
|
545 |
|
|
|
-16.5 |
% |
- of which life |
|
|
|
1,630 |
|
|
|
2,115 |
|
|
|
-22.9 |
% |
|
|
|
384 |
|
|
|
473 |
|
|
|
-18.8 |
% |
- of which non-life |
|
|
|
319 |
|
|
|
324 |
|
|
|
-1.5 |
% |
|
|
|
71 |
|
|
|
72 |
|
|
|
-1.4 |
% |
Central Europe2 & Spain |
|
|
|
1,662 |
|
|
|
1,414 |
|
|
|
17.5 |
% |
|
|
|
494 |
|
|
|
426 |
|
|
|
16.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
10,702 |
|
|
|
11,369 |
|
|
|
-5.9 |
% |
|
|
|
2,651 |
|
|
|
2,661 |
|
|
|
-0.4 |
% |
|
|
|
1. |
|
Including Luxembourg |
|
2. |
|
Poland, Hungary, Czech Republic, Slovakia, Romania, Bulgaria, Greece, Russia |
11
2.2 |
|
Insurance Americas profit rises 23.6%: strong growth in U.S. & Canada |
• |
|
U.S. profit increases 27.4% on strong retirement services and annuity results |
• |
|
Profit before tax in Canada climbs 35.8% on continued low claims environment |
• |
|
Results from Mexico impacted by active hurricane season in the second half of 2005 |
Table 9. Insurance Americas profit & loss account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
Life premium income |
|
|
|
18,192 |
|
|
|
18,429 |
|
|
|
-1.3 |
% |
|
|
|
4,668 |
|
|
|
4,302 |
|
|
|
8.5 |
% |
Non-life premium income |
|
|
|
4,552 |
|
|
|
4,332 |
|
|
|
5.1 |
% |
|
|
|
1,207 |
|
|
|
1,110 |
|
|
|
8.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total premium income |
|
|
|
22,744 |
|
|
|
22,761 |
|
|
|
-0.1 |
% |
|
|
|
5,875 |
|
|
|
5,412 |
|
|
|
8.6 |
% |
Investment income |
|
|
|
4,387 |
|
|
|
4,502 |
|
|
|
-2.6 |
% |
|
|
|
1,042 |
|
|
|
1,407 |
|
|
|
-25.9 |
% |
Commission and other income |
|
|
|
905 |
|
|
|
821 |
|
|
|
10.2 |
% |
|
|
|
127 |
|
|
|
204 |
|
|
|
-37.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
|
28,036 |
|
|
|
28,084 |
|
|
|
-0.2 |
% |
|
|
|
7,044 |
|
|
|
7,023 |
|
|
|
0.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
|
23,597 |
|
|
|
24,058 |
|
|
|
-1.9 |
% |
|
|
|
6,045 |
|
|
|
5,658 |
|
|
|
6.8 |
% |
Other interest expenses |
|
|
|
98 |
|
|
|
118 |
|
|
|
-16.9 |
% |
|
|
|
-82 |
|
|
|
58 |
|
|
|
-241.4 |
% |
Operating expenses |
|
|
|
2,397 |
|
|
|
2,202 |
|
|
|
8.9 |
% |
|
|
|
666 |
|
|
|
584 |
|
|
|
14.0 |
% |
Impairments/investment losses |
|
|
|
3 |
|
|
|
14 |
|
|
|
-78.6 |
% |
|
|
|
1 |
|
|
|
12 |
|
|
|
-91.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
|
26,095 |
|
|
|
26,392 |
|
|
|
-1.1 |
% |
|
|
|
6,630 |
|
|
|
6,312 |
|
|
|
5.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
1,941 |
|
|
|
1,692 |
|
|
|
14.7 |
% |
|
|
|
414 |
|
|
|
711 |
|
|
|
-41.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
1,941 |
|
|
|
1,692 |
|
|
|
14.7 |
% |
|
|
|
414 |
|
|
|
711 |
|
|
|
-41.8 |
% |
Gains/losses on divestments |
|
|
|
-50 |
|
|
|
2 |
|
|
|
|
|
|
|
|
-10 |
|
|
|
254 |
|
|
|
|
|
Profit before tax from divested units |
|
|
|
12 |
|
|
|
89 |
|
|
|
|
|
|
|
|
|
|
|
|
40 |
|
|
|
|
|
Special items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
1,979 |
|
|
|
1,601 |
|
|
|
23.6 |
% |
|
|
|
424 |
|
|
|
417 |
|
|
|
1.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax life insurance |
|
|
|
1,165 |
|
|
|
933 |
|
|
|
24.9 |
% |
|
|
|
269 |
|
|
|
248 |
|
|
|
8.5 |
% |
Underlying profit before tax non-life insurance |
|
|
|
814 |
|
|
|
668 |
|
|
|
21.9 |
% |
|
|
|
155 |
|
|
|
169 |
|
|
|
-8.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key figures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded value |
|
|
|
10,858 |
|
|
|
8,118 |
|
|
|
33.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of new life business |
|
|
|
207 |
|
|
|
173 |
|
|
|
19.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Internal rate of return |
|
|
|
11.1 |
% |
|
|
10.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual premium equivalent (APE) |
|
|
|
3,182 |
|
|
|
2,801 |
|
|
|
13.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets under management1 (in EUR billion) |
|
|
|
201.7 |
|
|
|
164.6 |
|
|
|
22.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Staff (average FTEs) |
|
|
|
27,100 |
|
|
|
25,300 |
|
|
|
7.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-year profit
Insurance Americas continued to focus on improving execution and value creation across the
region through pricing discipline and by concentrating on businesses with the most long-term growth
potential. In the U.S., profit growth was driven by strong sales of retirement services, supported
by new asset allocation and enhanced guarantee products, as well as higher margins on variable
annuities following changes in the product mix and the introduction of a new withdrawal benefit. In
the fourth quarter a new term life insurance product was introduced to complement the product
portfolio and improve unit costs. The focus on value creation resulted in strong growth in the
value of new business. The Canadian non-life insurance business continued to benefit from a low
claims environment as well as the purchase and integration of Allianz Canada.
Underlying profit before tax from Insurance Americas increased 23.6% to EUR 1,979 million. Profit
growth was driven by a 27.4% increase in the U.S., led by higher results from retirement services
and annuities due to higher asset levels, improved investment performance and higher margins. The
Canadian non-life business posted a 35.8% increase in underlying profit before tax, driven by
continued strong underwriting results and the acquisition of Allianz Canada. Growth in the region
was moderated by losses in the fourth quarter in Latin America, including claims and expenses
related to recent hurricanes in Mexico. Currency movements had a positive impact of EUR 46 million
due to the strengthening of the Canadian dollar, and the Mexican and Chilean pesos against the
euro.
Divestments resulted in a loss of EUR 50 million in 2005 compared with a gain of EUR 2 million in
2004. Divested units generated a profit before tax of EUR 12 million in 2005, compared with EUR 89
million in 2004. Including these items, total profit before tax increased 14.7% to EUR 1,941
million.
12
Income
Premium income was virtually flat at EUR 22,744 million as higher non-life premiums were offset by
lower life premiums. Non-life premium income rose 5.1% to EUR 4,552 million, driven by a 16.8%
increase in Canada, primarily due to the acquisition of Allianz Canada. That growth was partially
offset by lower non-life premium income in Mexico from the non-renewal of certain large property &
casualty cases and lower sales. Life premium income declined 1.3% to EUR 18,192 million, due to the
reclassification of products from life insurance to investment products under IFRS, which had a
negative impact of EUR 241 million. Excluding that impact, life premiums were flat as a slight
decline in individual life single premium and lower fixed annuity sales was compensated by higher
sales in retirement services.
Investment income declined 2.6% to EUR 4,387 million, reflecting the EUR 249 million gain on the
ING Canada IPO as well as EUR 157 million higher investment income from divested businesses in
2004. Excluding those items, investment income increased 7.3% driven by higher yields, prepayment
penalty income on fixed income investments, investment gains from sales of fixed-income securities,
and higher private equity gains. Investment income declined in the fourth quarter due to lower
gains on bonds as interest rates increased. It will be difficult to realise gains on bonds going
forward if interest rates continue to rise.
Expenses
Operating expenses increased 8.9% to EUR 2,397 million due to the acquisition of Allianz Canada and
expenses in the U.S. related to strategic initiatives and higher incentive-related benefit costs.
Expenses as a percentage of assets under management for investment products were unchanged at
0.75%, while expenses as a percentage of premiums for life products improved from 13.99% to 13.76%.
The average number of full-time staff increased 7.1% to 27,100, mainly due to the acquisition of
Allianz Canada and an increase in the sales forces in Latin America.
Embedded Value & Value of New Business
Table 10. Insurance Americas new life insurance production
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New production 2005 |
|
|
|
|
|
|
|
|
|
New production 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
Annual |
|
|
Single |
|
|
New |
|
|
|
|
|
|
|
Annual |
|
|
Single |
|
|
New |
|
|
|
|
In EUR million |
|
|
premium |
|
|
Premium |
|
|
Business |
|
|
IRR |
|
|
|
Premium |
|
|
Premium |
|
|
Business |
|
|
IRR |
|
|
United States |
|
|
|
1,379 |
|
|
|
15,659 |
|
|
|
172 |
|
|
|
11.0 |
% |
|
|
|
1,194 |
|
|
|
13,726 |
|
|
|
138 |
|
|
|
10.3 |
% |
Mexico |
|
|
|
119 |
|
|
|
12 |
|
|
|
21 |
|
|
|
19.9 |
% |
|
|
|
138 |
|
|
|
14 |
|
|
|
25 |
|
|
|
26.3 |
% |
South America1 |
|
|
|
96 |
|
|
|
204 |
|
|
|
13 |
|
|
|
10.0 |
% |
|
|
|
77 |
|
|
|
177 |
|
|
|
10 |
|
|
|
10.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
1,594 |
|
|
|
15,875 |
|
|
|
207 |
|
|
|
11.1 |
% |
|
|
|
1,409 |
|
|
|
13,917 |
|
|
|
173 |
|
|
|
10.7 |
% |
The embedded value of the life insurance business in the Americas increased 33.8% to EUR 10,858
million in 2005, primarily due to significant currency effects (EUR 1,298 million) related to
strengthening of the U.S. dollar against the euro. The embedded value of the U.S. life insurance
business increased to EUR 9,911 million from EUR 7,270 million in 2004 due to the above-mentioned
currency effects (EUR 1,121 million), one-off model changes, and net proceeds from divestments. The
embedded value of the Latin American businesses climbed 19.5% to EUR 1,012 million before net
dividends/capital injections of EUR 66 million, largely due to a favourable currency impact (EUR
177 million). The value of new life insurance business written by Insurance Americas rose 19.7% to
EUR 207 million, driven by a combination of higher margins across all business lines and higher
sales, primarily in retirement services. The internal rate of return improved to 11.1% from 10.7%
in 2004, due to continued pricing discipline and changes to the product mix, particularly in the
U.S. New sales, measured as annual premium equivalent, increased 13.6% driven by higher sales at
the U.S. retirement services business.
Geographical breakdown Insurance Americas
Table 11. Insurance Americas underlying profit before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
United States |
|
|
|
1,149 |
|
|
|
902 |
|
|
|
27.4 |
% |
|
|
|
260 |
|
|
|
247 |
|
|
|
5.3 |
% |
Canada |
|
|
|
671 |
|
|
|
494 |
|
|
|
35.8 |
% |
|
|
|
178 |
|
|
|
129 |
|
|
|
38.0 |
% |
Latin America |
|
|
|
159 |
|
|
|
205 |
|
|
|
-22.4 |
% |
|
|
|
-14 |
|
|
|
41 |
|
|
|
|
|
- of which Mexico |
|
|
|
105 |
|
|
|
122 |
|
|
|
-13.9 |
% |
|
|
|
-13 |
|
|
|
10 |
|
|
|
|
|
- of which South America1 |
|
|
|
54 |
|
|
|
83 |
|
|
|
-34.9 |
% |
|
|
|
-1 |
|
|
|
31 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
1,979 |
|
|
|
1,601 |
|
|
|
23.6 |
% |
|
|
|
424 |
|
|
|
417 |
|
|
|
1.7 |
% |
|
|
|
1. |
|
Argentina, Chile, Peru and Brazil through 30 September 2005 |
13
United States
In the United States, underlying profit before tax increased 27.4% to EUR 1,149 million, led by
strong results in retirement services and annuities, supported by higher margins and continued
asset growth. The composite margin including net credit-related gains and losses increased to 162
basis points from 134 basis points in 2004, including 5 basis points of net credit recoveries in
2005 and 6 basis points of net credit losses in 2004. Premium income declined 1.3% to EUR 18,077
million as lower individual life single premium and fixed annuity sales were largely offset by
higher sales in retirement services, particularly in the third quarter after recording a number of
large new contracts. Operating expenses were 8.0% higher at EUR 1,468 million on an underlying
basis due to spending on strategic initiatives such as enhancements to web capabilities, costs
related to implementing Sarbanes-Oxley, and higher incentive-related benefit costs. Expenses in
2005 also included EUR 16 million of restructuring costs for the insurance and investment
management businesses to enhance future profitability. The value of new life business in the U.S.
increased 24.6% to EUR 172 million on higher sales and an increase in the internal rate of return
from 10.3% to 11.0%, or 11.4% in U.S. dollars.
Canada
In Canada, underlying profit before tax climbed 35.8% to EUR 671 million on continued strong
underwriting results, higher investment income, and the purchase of Allianz Canada in the fourth
quarter of 2004. The strengthening of the Canadian dollar contributed EUR 34 million to the profit
increase. The strong underwriting results were driven by a historically low claims ratio coupled
with an increase in volume from the Allianz acquisition. The claims ratio improved slightly to
56.3% from 56.6% in 2004. The expense ratio was higher in 2005 due to expenses related to the
integration of the Allianz Canada business. The combined ratio deteriorated to 86.8% in 2005 from
85.1% in 2004. Premium income rose 16.8% to EUR 2,585 million primarily due to the acquisition of
Allianz Canada in December 2004.
Latin America
In Mexico, underlying profit before tax declined 13.9% to EUR 105 million primarily due to claims
and expenses from three major hurricanes, two of which occurred during the fourth quarter, causing
a loss in that period. The hurricanes, along with related costs to extend reinsurance coverage
after the storms, had a negative impact of EUR 39 million before tax in 2005, of which EUR 28
million was accounted for in the fourth quarter. The fourth-quarter also includes a charge of EUR 9
million for a broad restructuring designed to improve efficiency and customer service, including a
reduction of the workforce by approximately 15%. Premium income declined 8.2% to EUR 1,424 million
on lower sales and the non-renewal of some large property & casualty contracts as the company
focuses on more profitable retail market segments. Competitive conditions in Mexico remain
challenging due to the increased cost of reinsurance and continued pressure on pricing in the auto
and pension markets.
In South America, underlying profit before tax declined 34.9% to EUR 54 million due to lower
earnings in Chile, including the impact of lower investment income as a result of low interest
rates and reserve strengthening in the health business. Premium income in the region increased 9.3%
to EUR 597 million mainly due to higher life sales in Chile. Operating expenses for the region
increased 25.0% due to higher staffing and office expenses in Chile as a result of IT improvements
and customer service enhancements. A loss in Brazil after reserve strengthening in the life and
auto lines was not reflected in results from the fourth quarter, consistent with equity accounting
for ING’s 49% stake in Sul America.
Table 12. Insurance Americas premium income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
United States |
|
|
|
18,077 |
|
|
|
18,308 |
|
|
|
-1.3 |
% |
|
|
|
4,634 |
|
|
|
4,260 |
|
|
|
8.8 |
% |
Canada |
|
|
|
2,585 |
|
|
|
2,213 |
|
|
|
16.8 |
% |
|
|
|
646 |
|
|
|
555 |
|
|
|
16.4 |
% |
Latin America |
|
|
|
2,021 |
|
|
|
2,097 |
|
|
|
-3.6 |
% |
|
|
|
589 |
|
|
|
565 |
|
|
|
4.2 |
% |
- of which Mexico |
|
|
|
1,424 |
|
|
|
1,551 |
|
|
|
-8.2 |
% |
|
|
|
430 |
|
|
|
423 |
|
|
|
1.7 |
% |
- of which South America1 |
|
|
|
597 |
|
|
|
546 |
|
|
|
9.3 |
% |
|
|
|
159 |
|
|
|
142 |
|
|
|
12.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium income excluding divestments |
|
|
|
22,683 |
|
|
|
22,618 |
|
|
|
0.3 |
% |
|
|
|
5,869 |
|
|
|
5,380 |
|
|
|
9.1 |
% |
Premium income from divested units |
|
|
|
61 |
|
|
|
143 |
|
|
|
|
|
|
|
|
6 |
|
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total premium income |
|
|
|
22,744 |
|
|
|
22,761 |
|
|
|
-0.1 |
% |
|
|
|
5,875 |
|
|
|
5,412 |
|
|
|
8.6 |
% |
|
|
|
1. |
|
Argentina, Chile, Peru |
14
2.3 Insurance Asia/Pacific profit excluding Taiwan increases 15.8%
• |
|
Strong income growth from all business units: life premiums increase 32.6% |
|
• |
|
Focus on value creation: value of new business rises 16.2% to EUR 373 million |
|
• |
|
Further increase in margins: internal rate of return increases to 15.0% |
Table 13. Insurance Asia/Pacific profit & loss account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
Life premium income |
|
|
|
12,245 |
|
|
|
9,232 |
|
|
|
32.6 |
% |
|
|
|
3,148 |
|
|
|
2,788 |
|
|
|
12.9 |
% |
Non-life premium income |
|
|
|
41 |
|
|
|
237 |
|
|
|
-82.7 |
% |
|
|
|
10 |
|
|
|
7 |
|
|
|
42.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total premium income |
|
|
|
12,286 |
|
|
|
9,469 |
|
|
|
29.7 |
% |
|
|
|
3,158 |
|
|
|
2,795 |
|
|
|
13.0 |
% |
Investment income |
|
|
|
925 |
|
|
|
944 |
|
|
|
-2.0 |
% |
|
|
|
266 |
|
|
|
186 |
|
|
|
43.0 |
% |
Commission and other income |
|
|
|
-12 |
|
|
|
77 |
|
|
|
-115.6 |
% |
|
|
|
-41 |
|
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
|
13,199 |
|
|
|
10,490 |
|
|
|
25.8 |
% |
|
|
|
3,383 |
|
|
|
2,982 |
|
|
|
13.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
|
11,838 |
|
|
|
9,003 |
|
|
|
31.5 |
% |
|
|
|
2,992 |
|
|
|
2,649 |
|
|
|
12.9 |
% |
Other interest expenses |
|
|
|
8 |
|
|
|
8 |
|
|
|
|
|
|
|
|
2 |
|
|
|
2 |
|
|
|
|
|
Operating expenses |
|
|
|
867 |
|
|
|
727 |
|
|
|
19.3 |
% |
|
|
|
243 |
|
|
|
210 |
|
|
|
15.7 |
% |
Impairments/investment losses |
|
|
|
8 |
|
|
|
-4 |
|
|
|
|
|
|
|
|
7 |
|
|
|
-4 |
|
|
|
275.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
|
12,721 |
|
|
|
9,734 |
|
|
|
30.7 |
% |
|
|
|
3,244 |
|
|
|
2,857 |
|
|
|
13.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
478 |
|
|
|
756 |
|
|
|
-36.8 |
% |
|
|
|
139 |
|
|
|
125 |
|
|
|
11.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
478 |
|
|
|
756 |
|
|
|
-36.8 |
% |
|
|
|
139 |
|
|
|
125 |
|
|
|
11.2 |
% |
Gains/losses on divestments |
|
|
|
27 |
|
|
|
219 |
|
|
|
|
|
|
|
|
27 |
|
|
|
|
|
|
|
|
|
Profit before tax from divested units |
|
|
|
4 |
|
|
|
62 |
|
|
|
|
|
|
|
|
|
|
|
|
5 |
|
|
|
|
|
Special items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
447 |
|
|
|
475 |
|
|
|
-5.9 |
% |
|
|
|
112 |
|
|
|
120 |
|
|
|
-6.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax life insurance |
|
|
|
441 |
|
|
|
472 |
|
|
|
-6.6 |
% |
|
|
|
110 |
|
|
|
120 |
|
|
|
-8.3 |
% |
Underlying profit before tax non-life insurance |
|
|
|
6 |
|
|
|
3 |
|
|
|
100.0 |
% |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key figures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded value |
|
|
|
1,799 |
|
|
|
2,076 |
|
|
|
-13.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of new life business |
|
|
|
373 |
|
|
|
321 |
|
|
|
16.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Internal rate of return |
|
|
|
15.0 |
% |
|
|
13.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual premium equivalent (APE) |
|
|
|
2,339 |
|
|
|
1,386 |
|
|
|
68.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets under management1 (in EUR billion) |
|
|
|
71.8 |
|
|
|
50.9 |
|
|
|
41.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Staff (average FTEs) |
|
|
|
8,400 |
|
|
|
8,200 |
|
|
|
2.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-year profit
Insurance Asia/Pacific continued to focus on delivering growth for the Group by expanding its
market position in the countries where it is active and investing for future growth in important
markets such as China and India. In 2005 virtually all business units increased market share on the
back of strong sales growth as businesses in the region continued to expand their distribution
strength through professional tied agent networks and bancassurance channels. Continued emphasis on
value creation as well as increased scale led to a further improvement in margins on new life
sales, which, combined with strong sales growth, resulted in a solid increase in the value of new
business. Financial results continued to be affected by reserve strengthening in Taiwan as a result
of low interest rates.
Underlying profit before tax from Insurance Asia/Pacific declined 5.9% to EUR 447 million as a
result of the strengthening of reserves in Taiwan due to the continued low interest rate
environment. Excluding Taiwan, underlying profit before tax in the rest of the region increased
15.8% to EUR 447 million from EUR 386 million, driven by a 52.1% increase in South Korea. Results
in 2004 were favoured by the release of a EUR 29 million reserve for capital-guaranteed products in
Australia and a EUR 30 million release of reserves for a
wage-tax assessment. Excluding Taiwan and these one-off items, profit rose 36.7%. Underlying profit
before tax declined 6.7% in the fourth quarter from the same period last year, however excluding
Taiwan and the release in Australia in the fourth quarter of 2004, profit rose 41.8%.
Divestments had a significant impact on Insurance Asia/Pacific’s total profit before tax. In 2004,
ING realised a gain of EUR 219 million on the sale of its 50% stake in a non-life insurance joint
venture in Australia. Results in 2005 included a gain of EUR 27 million from the IPO of 90% of the
shares in Austbrokers Holdings as ING focuses on the funds management and life insurance businesses
in Australia. Including those gains and profit from the divested units, total profit before tax
from Insurance Asia/Pacific declined 36.8% to EUR 478 million.
15
Income
Premium income rose 29.7% to EUR 12,286 million, led by a 32.6% increase in life premiums. Growth
was driven by sharply higher sales of single-premium variable annuities in Japan, tied agency
products in South Korea and short-term savings products in Taiwan. Strong premium growth rates were
recorded in local currency terms in Japan (87.8%), South Korea (27.9%), Taiwan (11.3%), Malaysia
(13.8%), India (141.8%), Thailand (42.6%), Hong Kong (10.8%) and China (27.2%). A reclassification
of products in Australia from life insurance to investment products under IFRS 4 reduced premium
income by EUR 1,051 million. Excluding the IFRS change, total life premiums increased 49.7%.
Non-life premium income fell 82.7%, reflecting the sale of the Australian non-life business in the
second quarter of 2004.
Investment income declined to EUR 925 million from EUR 944 million in 2004. However, excluding the
realised gains on divestments in both years, investment income rose 24.2% to EUR 898 million,
driven by growth of the investment portfolio in the region. Assets under management increased from
EUR 50.9 billion to EUR 71.8 billion, mainly due to strong inflows of EUR 12.0 billion. Following a
management restructuring in 2005 at the South Korean fund management joint venture, Kookmin Bank
Asset Management, ING’s figures have been adjusted to reflect 20% of the total assets under
management at the joint venture, in line with ING’s stake in the company.
Commission and other income declined to EUR -12 million from EUR 77 million, mainly due to losses
under IFRS on derivatives in Japan that are used to hedge minimum-benefit guarantees on
single-premium variable annuities, as well as an unrealised loss on non-trading derivatives in
South Korea. That was partially offset by higher fee income on wealth management products in
Australia as a result of growth in assets under management and the reclassification of most
products in Australia from life insurance to investment products under IFRS.
Expenses
Operating expenses increased 19.3% to EUR 867 million, reflecting staff and salary increases to
support the continuing growth of the businesses across the region. Expenses in the year-earlier
period also benefited from the release of a EUR 30 million provision for a wage-tax assessment.
Excluding that release and the impact of divestments and currency effects, operating expenses
increased 14.5%, driven mainly by Japan and South Korea. Adjusted for the release of the wage-tax
provision, expenses as a percentage of assets under management for investment products improved
from 1.13% in 2004 to 0.93% in 2005, while expenses as a percentage of premiums for life products
improved from 9.03% to 8.35%. The average number of full-time staff rose 2.4% to 8,400 mainly due
to increases in India and South Korea.
Embedded Value & Value of New Business
Table 14. Insurance Asia/Pacific new life insurance production
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New production 2005 |
|
|
New production 2004 |
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
Annual |
|
|
Single |
|
|
New |
|
|
|
|
|
|
|
Annual |
|
|
Single |
|
|
New |
|
|
|
In EUR million |
|
|
premium |
|
|
premium |
|
|
Business |
|
|
IRR |
|
|
|
Premium |
|
|
Premium |
|
|
Business |
|
|
IRR |
|
|
|
|
|
|
|
Australia & New Zealand |
|
|
|
70 |
|
|
|
1,088 |
|
|
|
16 |
|
|
|
12.6 |
% |
|
|
|
66 |
|
|
|
682 |
|
|
|
8 |
|
|
|
11.2 |
% |
South Korea |
|
|
|
611 |
|
|
|
213 |
|
|
|
159 |
|
|
|
48.9 |
% |
|
|
|
384 |
|
|
|
201 |
|
|
|
98 |
|
|
|
26.7 |
% |
Taiwan |
|
|
|
484 |
|
|
|
149 |
|
|
|
107 |
|
|
|
14.2 |
% |
|
|
|
222 |
|
|
|
131 |
|
|
|
97 |
|
|
|
11.0 |
% |
Japan |
|
|
|
393 |
|
|
|
5,007 |
|
|
|
85 |
|
|
|
11.3 |
% |
|
|
|
303 |
|
|
|
1,941 |
|
|
|
112 |
|
|
|
15.0 |
% |
Rest of Asia1 |
|
|
|
129 |
|
|
|
70 |
|
|
|
5 |
|
|
|
8.4 |
% |
|
|
|
112 |
|
|
|
42 |
|
|
|
7 |
|
|
|
9.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
1,687 |
|
|
|
6,527 |
|
|
|
373 |
|
|
|
15.0 |
% |
|
|
|
1,086 |
|
|
|
2,996 |
|
|
|
321 |
|
|
|
13.6 |
% |
|
|
|
1. |
|
Including China, India, Thailand, Hong Kong and Malaysia |
The embedded value of the life business at Insurance Asia/Pacific declined to EUR 1,799 million
at the end of 2005 from EUR 2,076 million in 2004 as a result of changes in economic assumptions,
particularly in Taiwan where interest rate assumptions have been adjusted downwards. The initial
risk-free rates have been lowered to 2.41% and the future path to 5.75% has been lengthened to 20
years from 10 years, resulting in a negative impact of EUR 1,075 million (net of corresponding
discount rate adjustments). As a result, the embedded value for Taiwan was EUR -852 million. The
value of new life insurance business written by Insurance Asia/Pacific increased 16.2% to EUR 373
million, driven by strong sales and higher margins at almost all business units. South Korea made a
particularly strong contribution driven by robust sales, higher margins and an improved product
mix. Japan saw a decline in the value of new business compared with 2004 due to lapse assumption
changes on the corporate-owned life insurance business. New sales, measured in annual premium
equivalent, increased 68.8% driven by South Korea, Japan and Taiwan. The internal rate of return
increased to 15.0% from 13.6% due to continued strong pricing discipline and increased scale of the
business units.
16
Geographical breakdown Insurance Asia/Pacific
Table 15. Insurance Asia/Pacific underlying profit before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter |
|
|
|
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Australia & New Zealand |
|
|
|
169 |
|
|
|
163 |
|
|
|
3.7 |
% |
|
|
|
37 |
|
|
|
69 |
|
|
|
-46.4 |
% |
South Korea |
|
|
|
181 |
|
|
|
119 |
|
|
|
52.1 |
% |
|
|
|
47 |
|
|
|
39 |
|
|
|
20.5 |
% |
Taiwan |
|
|
|
0 |
|
|
|
89 |
|
|
|
|
|
|
|
|
0 |
|
|
|
12 |
|
|
|
|
|
Japan |
|
|
|
74 |
|
|
|
71 |
|
|
|
4.2 |
% |
|
|
|
19 |
|
|
|
6 |
|
|
|
216.7 |
% |
Rest of Asia1 |
|
|
|
23 |
|
|
|
33 |
|
|
|
-30.3 |
% |
|
|
|
9 |
|
|
|
-6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
447 |
|
|
|
475 |
|
|
|
-5.9 |
% |
|
|
|
112 |
|
|
|
120 |
|
|
|
-6.7 |
% |
1. Including China, India, Thailand, Indonesia, Hong Kong and Malaysia
Australia & New Zealand
ING’s businesses in Australia & New Zealand include ING Holdings, ING Investment Management and
ING’s 51% interests in two wealth management and life insurance joint ventures with ANZ Bank called
ING Australia and ING New Zealand. ING and ANZ formed the second joint venture, ING New Zealand, as
of 1 October 2005. The new entity includes all insurance and managed funds products distributed by
ANZ National Bank in New Zealand as well as the New Zealand operations that were previously
included in the ING Australia joint venture. Total underlying profit before tax from the businesses
increased 3.7% to EUR 169 million. Results included a one-off release from reserves of EUR 29
million in the fourth quarter of 2004 related to a review of capital guaranteed products at ING
Australia. Excluding that impact, profit before tax from Australia and New Zealand increased 26.1%.
ING Australia and ING New Zealand posted a 10.0% increase in profit to EUR 110 million, excluding
the release of reserves mentioned above, driven mainly by higher investment income due to strong
investment markets, as well as favourable claims. Results from the wealth management business were
driven by higher assets under management underpinned by strong market performance and increased
sales, resulting in higher fee income. In the life insurance business, underwriting profits
increased due to higher in-force premiums on group life and master trust business, higher
investment returns and favourable claims experience. New business sales increased, driven by sales
through ANZ distribution channels. Operating expenses were 9.6% higher, or 6.0% excluding currency
effects, due to provisions to resolve unit-pricing issues following an enforceable undertaking
agreed with ASIC, a local regulator. Life premium income declined to EUR 181 million from EUR 1,223
million, reflecting the reclassification of the majority of products from life insurance to
investment products under IFRS.
ING Investment Management posted a profit of EUR 10 million, up 9.1% from last year, supported by
strong investment markets. Underlying profit before tax also includes EUR 49 million from the
holding company in Australia, including additional interest income from the sales proceeds of the
non-life joint venture.
South Korea
In South Korea, underlying profit before tax rose 52.1% to EUR 181 million, due to strong sales.
Premium income rose 42.6%, driven by sales of variable and universal life products as well as
continued high persistency on existing contracts. Premiums were boosted by the introduction of new
products, expansion of the tied agency network and new bancassurance partnerships. The launch of
the bancassurance joint venture with Kookmin Bank, KB Life, in the first quarter of 2005 further
increased premiums and generated a profit. Profits were negatively impacted by EUR 15 million in
unrealised losses on non-trading derivatives which do not qualify for hedge accounting under IFRS.
The internal rate of return on new life business increased strongly to 48.9%. The value of new
business rose 62.2% to EUR 159 million due to a move towards unit-linked products.
Taiwan
ING recorded a profit of nil for Taiwan in 2005 as a result of measures taken to strengthen
reserves due to the continued low interest rate environment. A total charge of EUR 220 million was
taken in 2005 to strengthen reserves, compared with EUR 100 million in 2004. At the end of 2005,
reserves remained adequate at the 50% confidence level under IFRS accounting. However a decline in
interest rates in the fourth quarter of 2005 and assumption changes had a further negative impact
on the reserve adequacy, which stood at a 53% confidence level (EUR 165 million) at the end of the
year, compared with 57% at the end of the second quarter. At ING’s 90% confidence level, the
reserve inadequacy in Taiwan remained in the EUR 2.8 billion to EUR 3.3 billion range, while the
inadequacy for the Insurance Asia/Pacific region narrowed to between EUR 1.1 billion and EUR 1.6
billion. That is more than compensated by reserves elsewhere in the Group, and ING’s life insurance
businesses as a whole has excess adequacy of between EUR 6 billion and EUR 7 billion
17
at a 90%
confidence level, including the shortfall in Taiwan. These figures remain highly sensitive to
interest rates and other assumptions and can only be reliably estimated within broad ranges which
are bound to vary significantly from quarter to quarter. If a further decline in interest rates or
other unfavourable experience were to result in IFRS reserves becoming inadequate at a 50%
confidence level, ING’s policy is to record a loss to restore reserves to the 50% confidence level.
A yield curve shift of 10 basis points would have an impact of approximately EUR 150 million on the
50% reserve adequacy under IFRS.
Under U.S. GAAP accounting rules, the treatment of reserve adequacy is different because reserve
strengthening is not permitted if reserves are adequate according to “best estimate” assumptions,
which is similar to the 50% confidence level testing used under IFRS. Therefore, actions announced
by ING to strengthen reserves in the past by approximately EUR 420 million under IFRS do not apply
under U.S. GAAP. As a result, reserves are lower on a U.S. GAAP basis, and no longer satisfy the
best estimate assumptions. Therefore, a loss will be recognised in ING’s profit under U.S. GAAP.
Taiwan continues to focus on creating value through profitable new business sales. The value of new
business rose 10.3% in 2005 to EUR 107 million. The internal rate of return on new business
increased to 14.2% from 11.0% a year earlier. Adjusted for currency effects, premium income rose
11.3%, lifted by an increase in new sales as well as high persistency on renewal premiums. Adjusted
for currency effects, operating expenses rose 2.5% compared with the prior year, mainly due to
regulatory matters including pension changes and Sarbanes-Oxley compliance.
Japan
In Japan, underlying profit before tax increased 4.2% to EUR 74 million. Profits from the
single-premium variable annuity and mutual fund businesses increased due to strong growth in
premiums resulting in higher fee income. Despite growth in new business and higher premiums,
profits from the corporate-owned life insurance business decreased mainly due to lower investment
yields from the continuing low interest rate environment and higher levels of early surrenders.
Premium income from single-premium variable annuities increased sharply to EUR 5,019 million from
EUR 2,266 million as a result of strong sales through a diversified distribution network of banks,
securities brokers and independent agents. Premiums from corporate-owned life insurance rose 11.0%
to EUR 1,324 million due to ING’s leading position in the independent agency channel.
Rest of Asia
In the Rest of Asia, underlying profit before tax declined to EUR 23 million from EUR 33 million in
2004, when results were positively impacted by the release of a EUR 30 million reserve for a wage
tax assessment in the second quarter. Excluding this impact profit before tax increased by EUR 20
million, mainly driven by Hong Kong and Malaysia.
Table 16. Insurance Asia/Pacific premium income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter |
|
|
|
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Australia & New Zealand |
|
|
|
181 |
|
|
|
1,223 |
|
|
|
-85.2 |
% |
|
|
|
52 |
|
|
|
330 |
|
|
|
-84.2 |
% |
South Korea |
|
|
|
2,278 |
|
|
|
1,598 |
|
|
|
42.6 |
% |
|
|
|
644 |
|
|
|
450 |
|
|
|
43.1 |
% |
Taiwan |
|
|
|
2,707 |
|
|
|
2,348 |
|
|
|
15.3 |
% |
|
|
|
784 |
|
|
|
726 |
|
|
|
8.0 |
% |
Japan |
|
|
|
6,343 |
|
|
|
3,459 |
|
|
|
83.4 |
% |
|
|
|
1,454 |
|
|
|
1,113 |
|
|
|
30.6 |
% |
Rest of Asia1 |
|
|
|
777 |
|
|
|
641 |
|
|
|
21.2 |
% |
|
|
|
224 |
|
|
|
177 |
|
|
|
26.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium income excluding divestments |
|
|
|
12,286 |
|
|
|
9,269 |
|
|
|
32.5 |
% |
|
|
|
3,158 |
|
|
|
2,796 |
|
|
|
12.9 |
% |
Divested units |
|
|
|
|
|
|
|
200 |
|
|
|
|
|
|
|
|
|
|
|
|
-1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total premium income |
|
|
|
12,286 |
|
|
|
9,469 |
|
|
|
29.7 |
% |
|
|
|
3,158 |
|
|
|
2,795 |
|
|
|
13.0 |
% |
1. Including India, China, Hong Kong, Thailand, Indonesia and Malaysia
18
3. Banking operations
Table 17. ING Group: Banking profit & loss account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Interest result |
|
|
|
9,162 |
|
|
|
8,699 |
|
|
|
5.3 |
% |
|
|
|
2,409 |
|
|
|
2,223 |
|
|
|
8.4 |
% |
Investment income |
|
|
|
937 |
|
|
|
363 |
|
|
|
158.1 |
% |
|
|
|
126 |
|
|
|
36 |
|
|
|
250.0 |
% |
Commission income |
|
|
|
2,401 |
|
|
|
2,581 |
|
|
|
- 7.0 |
% |
|
|
|
626 |
|
|
|
590 |
|
|
|
6.1 |
% |
Other income |
|
|
|
1,348 |
|
|
|
1,035 |
|
|
|
30.2 |
% |
|
|
|
223 |
|
|
|
265 |
|
|
|
- 15.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
|
13,848 |
|
|
|
12,678 |
|
|
|
9.2 |
% |
|
|
|
3,384 |
|
|
|
3,114 |
|
|
|
8.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
8,844 |
|
|
|
8,795 |
|
|
|
0.6 |
% |
|
|
|
2,238 |
|
|
|
2,380 |
|
|
|
- 6.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross result |
|
|
|
5,004 |
|
|
|
3,883 |
|
|
|
28.9 |
% |
|
|
|
1,146 |
|
|
|
734 |
|
|
|
56.1 |
% |
Addition to provisions for loan losses |
|
|
|
88 |
|
|
|
465 |
|
|
|
- 81.1 |
% |
|
|
|
26 |
|
|
|
99 |
|
|
|
-73.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
4,916 |
|
|
|
3,418 |
|
|
|
43.8 |
% |
|
|
|
1,120 |
|
|
|
635 |
|
|
|
76.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation |
|
|
|
924 |
|
|
|
859 |
|
|
|
7.6 |
% |
|
|
|
113 |
|
|
|
79 |
|
|
|
43.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before third-party interests |
|
|
|
3,992 |
|
|
|
2,559 |
|
|
|
56.0 |
% |
|
|
|
1,007 |
|
|
|
556 |
|
|
|
81.1 |
% |
Third-party interests |
|
|
|
50 |
|
|
|
153 |
|
|
|
-67.3 |
% |
|
|
|
28 |
|
|
|
23 |
|
|
|
21.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit (attributable to shareholders) |
|
|
|
3,942 |
|
|
|
2,406 |
|
|
|
63.8 |
% |
|
|
|
979 |
|
|
|
533 |
|
|
|
83.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
4,916 |
|
|
|
3,418 |
|
|
|
43.8 |
% |
|
|
|
1,120 |
|
|
|
635 |
|
|
|
76.4 |
% |
Gains/losses on divestments |
|
|
|
379 |
|
|
|
-166 |
|
|
|
|
|
|
|
|
0 |
|
|
|
-169 |
|
|
|
|
|
Profit before tax from divested units |
|
|
|
6 |
|
|
|
67 |
|
|
|
|
|
|
|
|
-8 |
|
|
|
-3 |
|
|
|
|
|
Special items |
|
|
|
0 |
|
|
|
-44 |
|
|
|
|
|
|
|
|
0 |
|
|
|
-19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
4,531 |
|
|
|
3,561 |
|
|
|
27.2 |
% |
|
|
|
1,128 |
|
|
|
826 |
|
|
|
36.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key figures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost/income ratio |
|
|
|
63.9 |
% |
|
|
69.4 |
% |
|
|
|
|
|
|
|
66.1 |
% |
|
|
76.4 |
% |
|
|
|
|
RAROC (pre-tax) |
|
|
|
27.7 |
% |
|
|
19.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RAROC (after tax) |
|
|
|
22.6 |
% |
|
|
14.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net return on capital and reserves1 |
|
|
|
24.2 |
% |
|
|
15.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-weighted assets2 (in EUR billion) |
|
|
|
319.7 |
|
|
|
274.1 |
|
|
|
16.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Addition to provisions for loan losses in basis points
of average credit-risk-weighted assets |
|
|
|
3 |
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staff (average FTEs) |
|
|
|
63,700 |
|
|
|
63,600 |
|
|
|
0.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. |
|
Figures are full-year and 2004 figures are on Dutch GAAP basis |
Full-year profit
ING’s banking businesses showed a strong increase in profit in 2005 driven by solid growth in
income at ING Direct and Retail Banking, as well as historically low risk costs. Underlying profit
before tax rose 27.2% to EUR 4,531 million. Growth was driven by higher savings and strong demand
for mortgages at both Retail Banking and ING Direct, including high prepayment penalties on the
refinancing of mortgages in the Netherlands. Profit was also supported by the sale of equity
investments and a positive impact on balance from IFRS. The cost/income ratio improved as strong
income growth outpaced a modest increase in underlying operating expenses. Continued focus on value
creation and a stringent approach to capital allocation resulted in a strong increase in the
risk-adjusted return on capital after tax, driven by higher returns from all three banking business
lines.
Divestments had a positive impact on profit before tax in 2005, including EUR 379 million in
realised gains compared with a loss of EUR 166 million in 2004. Divested units contributed EUR 6
million to profit in 2005 and EUR 67 million in 2004. Results in 2004 also included a restructuring
provision of EUR 41 million for the international Wholesale Banking network. Including those items,
total profit before tax from banking rose 43.8% to EUR 4,916 million. The effective tax rate
declined to 18.8% from 25.1% due to non-taxable gains on divestments, a lower statutory tax rate in
the Netherlands, non-taxable gains on equities mainly in Belgium, a release of EUR 35 million from
the tax provisions, and a EUR 148 million tax asset created in the U.S. in the fourth quarter of
2005. Net profit from banking rose 63.8% to EUR 3,942 million. (See Appendix 2 for divestments and
special items.)
Income
Total income from banking increased 9.2% to EUR 13,848 million, however on an underlying basis,
excluding divestments and special items, banking income rose 11.4% to EUR 13,408 million, mainly
due to strong growth in savings and mortgage lending as well as higher investment income.
The interest result increased 5.3% to EUR 9,162 million. On an underlying basis, the interest
result rose 9.0% to EUR 9,157 million, driven by strong growth in savings and mortgage lending at
Retail Banking and ING Direct, as well as
19
higher prepayment penalties as customers refinanced their mortgages to take advantage of low
interest rates. This was partially offset by lower interest results in Wholesale Banking due to
margin pressure and a decline in volumes as the business focused on cross-selling fee products and
limiting growth in risk-weighted assets. The implementation of IAS 32 and 39 from 2005 had a
negative impact of approximately EUR 70 million on the interest result. The total interest margin
was 1.17%, down 5 basis points compared with the estimated interest margin (including IAS 32 and
39) for 2004. The decrease was caused by a flattening of the yield curve, some pressure on margins,
and a larger proportion of assets from ING Direct, which has a lower average interest margin. In
2005, loans and advances to customers of the banking operations grew by EUR 63.3 billion, or 18.6%,
to EUR 403.1 billion at the end of December. Corporate lending increased 11.7% or EUR 23.2 billion,
of which EUR 14.2 billion was in the Netherlands and EUR 9.0 billion was outside the Netherlands.
Personal lending grew by 27.1% or EUR 39.5 billion, including a EUR 35.1 billion increase in
residential mortgages, of which EUR 21.1 billion was from ING Direct and EUR 10.8 billion was from
the Dutch retail banking activities. Customer deposits and other funds on deposit of the banking
operations grew by EUR 68.0 billion, or 17.1%, to EUR 466.2 billion at year-end 2005, driven by
strong growth at ING Direct. (See Appendix 7.5 for loans and advances to customers of the banking
operations.)
Investment income increased sharply due to the inclusion of EUR 379 million in gains on divestments
in 2005 and a loss of EUR 166 million from divestments in 2004. On an underlying basis, investment
income increased 18.7% to EUR 558 million from EUR 470 million, mainly due to gains on equity
investments in Belgium and the Americas, and EUR 60 million in realised gains on the sale of bonds.
That was partially offset by lower income from investment properties.
Commission income declined 7.0% to EUR 2,401 million, fully caused by the impact of divestments. On
an underlying basis, commission income rose 6.7%, to EUR 2,348 million, driven by higher management
fees (mainly from ING Real Estate) and higher commissions from the securities business, funds
transfers and brokerage and advisory fees. Other commission and insurance broking commission
declined compared with 2004.
Other income rose 30.2% to EUR 1,348 million. On an underlying basis, Other income increased EUR
383 million, or 39.8%, to EUR 1,345 million, including a EUR 226 million positive valuation result
on non-trading derivatives. The proportional (50%) consolidation of Postkantoren BV in the
Netherlands from 2005, which had no impact on total profit, added EUR 168 million to Other income.
The share of profit from associates increased by EUR 106 million, mainly due to minority
shareholdings at ING Real Estate. The underlying result of the trading portfolio decreased by EUR
141 million, in part due to a reclassification of interest-related components from trading results
to interest results. (See Appendix 7.4 for additional information on banking income.)
Expenses
Total operating expenses increased 0.6% to EUR 8,844 million, as divestments largely offset the
impact of consolidations, higher labour costs and one-off expenses. On an underlying basis,
excluding the impact of divestments and special items, operating expenses rose 9.6% to EUR 8,789
million, an increase of EUR 768 million. Of that increase, EUR 255 million was related to one-off
costs, including EUR 47 million to restructure the Operations & IT activities in the Benelux, EUR
27 million for accelerated software depreciation, EUR 78 million in impairments on development
projects at ING Real Estate (including EUR 40 million in the fourth quarter), and EUR 103 million
in provisions taken in Belgium. An additional EUR 168 million was related to the consolidation of
50% of Postkantoren BV. The remaining increase was driven by continued strong growth of ING Direct,
the acquisition of Mercator Bank in Belgium, investments to expand the retail banking activities in
Romania, Poland and India, as well as higher IT costs. Personnel expenses increased, particularly
in the Netherlands as a result of the new collective labour agreement. However, that was largely
offset by a net release of EUR 119 million in provisions for employee benefits following
legislative changes in the Netherlands related to healthcare and pensions. Excluding all
non-recurring items, and adjusted for exchange rate differences, recurring operating expenses of
the banking operations increased 5.5% (and 3.3% excluding ING Direct). The total cost/income ratio
of the banking operations improved to 63.9% from 69.4%. On an underlying basis, the cost/income
ratio improved to 65.6% from 66.6% in 2004. The average number of staff increased slightly to
63,700 from 63,600 as the impact of divestments and the reductions in the Operations & IT
activities was fully offset by the consolidation of Postkantoren BV and Mercator Bank, growth at
ING Direct and the retail activities in Poland, India and Romania.
20
Additions to the provision for loan losses remained exceptionally low, supported by an improvement
of the credit portfolio, the release of provisions previously taken, the absence of new large
defaults and improvements in risk management. The total addition in 2005 amounted to EUR 88
million, including EUR 26 million in the fourth quarter, compared with EUR 465 million in 2004. As
a percentage of average credit-risk-weighted assets, the addition in 2005 equalled just 3 basis
points compared with 18 basis points in 2004. Although there is no indication yet of a
deterioration of the credit environment, risk costs are expected to return gradually to a
normalised level estimated at this point in time to be between 25-30 basis points.
RAROC
The after-tax risk-adjusted return on capital (RAROC) of the banking operations improved to
22.6% from 14.5% in 2004. On an underlying basis, excluding divestments and special items, the
after-tax RAROC improved to 18.8% from 16.4%, driven by higher economic returns due to the
sharpened focus on managing for value throughout the company and a more stringent approach to
capital allocation. All three banking business lines posted higher RAROCs, and all performed above
ING’s target of 12.0% after tax. Wholesale Banking’s underlying RAROC after-tax improved to 16.7%
from 14.9%. The underlying RAROC after-tax of Retail Banking rose to 34.1% from 26.1%, and the
after-tax RAROC of ING Direct improved to 14.9% from 11.3%. Total economic capital decreased by EUR
0.2 billion to EUR 15.0 billion, reflecting the impact of divestments. Excluding divestments,
economic capital increased by EUR 0.7 billion due to higher capital at ING Direct and Retail
Banking, while economic capital at Wholesale Banking was reduced by EUR 0.2 billion. In the RAROC
calculation, the actual credit-risk provisioning is replaced by statistically expected losses
reflecting the average credit losses over the entire economic cycle. Figures for 2004 have been
adjusted for changes to the model for market risk, and further refinements to the model are
expected as ING prepares for Basel II.
21
3.1 Wholesale Banking profit rises 8.8%: focus on key clients, products
• |
|
New target operating model for international network improves profitability |
• |
|
Releases from loan loss provisions due to benign credit environment |
• |
|
Underlying RAROC after tax improves to 16.7% from 14.9% |
Table 18. Wholesale Banking profit & loss account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Interest result |
|
|
|
2,928 |
|
|
|
3,272 |
|
|
|
-10.5 |
% |
|
|
|
755 |
|
|
|
807 |
|
|
|
-6.4 |
% |
Commission income |
|
|
|
1,199 |
|
|
|
1,363 |
|
|
|
-12.0 |
% |
|
|
|
327 |
|
|
|
310 |
|
|
|
5.5 |
% |
Other income |
|
|
|
1,830 |
|
|
|
1,236 |
|
|
|
48.1 |
% |
|
|
|
283 |
|
|
|
192 |
|
|
|
47.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
|
5,957 |
|
|
|
5,871 |
|
|
|
1.5 |
% |
|
|
|
1,365 |
|
|
|
1,309 |
|
|
|
4.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
3.466 |
|
|
|
3.734 |
|
|
|
-7.2 |
% |
|
|
|
882 |
|
|
|
967 |
|
|
|
-8.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross result |
|
|
|
2,491 |
|
|
|
2,137 |
|
|
|
16.6 |
% |
|
|
|
483 |
|
|
|
342 |
|
|
|
41.2 |
% |
Addition to provisions for loan losses |
|
|
|
-108 |
|
|
|
192 |
|
|
|
|
|
|
|
|
-11 |
|
|
|
19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
2,599 |
|
|
|
1,945 |
|
|
|
33.6 |
% |
|
|
|
494 |
|
|
|
323 |
|
|
|
52.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
2,599 |
|
|
|
1,945 |
|
|
|
33.6 |
% |
|
|
|
494 |
|
|
|
323 |
|
|
|
52.9 |
% |
Gains/losses on divestments |
|
|
|
317 |
|
|
|
-166 |
|
|
|
|
|
|
|
|
0 |
|
|
|
-169 |
|
|
|
|
|
Profit before tax from divested units |
|
|
|
6 |
|
|
|
60 |
|
|
|
|
|
|
|
|
-8 |
|
|
|
-4 |
|
|
|
|
|
Special items |
|
|
|
0 |
|
|
|
-41 |
|
|
|
|
|
|
|
|
0 |
|
|
|
-41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
2,276 |
|
|
|
2,092 |
|
|
|
8.8 |
% |
|
|
|
502 |
|
|
|
537 |
|
|
|
-6.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key figures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost/income ratio |
|
|
|
58.2 |
% |
|
|
63.6 |
% |
|
|
|
|
|
|
|
64.6 |
% |
|
|
73.9 |
% |
|
|
|
|
RAROC pre-tax |
|
|
|
24.4 |
% |
|
|
16.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RAROC after tax |
|
|
|
22.3 |
% |
|
|
12.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-weighted assets (in EUR billion) |
|
|
|
156.1 |
|
|
|
147.5 |
|
|
|
5.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Addition to provisions for loan losses in
basis points of average
credit-risk-weighted assets |
|
|
|
-7 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staff (average FTEs) |
|
|
|
20,800 |
|
|
|
24,000 |
|
|
|
-13.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-year profit
In 2005 the Wholesale Banking activities focused on increasing cross-selling and strengthening
client relationships. This contributed to a strong deal flow, including a number of landmark deals,
particularly in the Benelux. The international Wholesale Banking network achieved a strong
improvement in profitability in 2005, particularly in the Americas, the U.K. and Central & Eastern
Europe, following a restructuring to focus on key clients and product segments. A sharp focus on
capital allocation has enabled ING Wholesale Banking to increase its risk-adjusted returns. The
introduction of a functional organisation structure at the beginning of last year has sharpened the
focus on profitable growth in key products such as Payments & Cash Management, Structured Finance,
Leasing and Financial Markets. ING Real Estate showed strong growth, particularly in the investment
management business line, driven by organic growth and the acquisition of a number of large
property portfolios.
Underlying profit before tax from Wholesale Banking rose 8.8% to EUR 2,276 million, driven by
higher income from Structured Finance, Leasing and ING Real Estate, as well as a release of loan
loss provisions due to a benign credit environment and improved risk management.
Gains on divestments contributed EUR 317 million to profit before tax in 2005, while divestments in
2004 resulted in a loss of EUR 166 million. Divested units contributed EUR 6 million to profit
before tax in 2005, compared with EUR 60 million in 2004. Results in 2004 also included a
restructuring provision of EUR 41 million for the international Wholesale Banking network.
Including those items, total profit before tax rose 33.6% to EUR 2,599 million.
Income
Total income increased 1.5% to EUR 5,957 million. Excluding divestments, underlying income rose
4.8% to EUR 5,579 million, driven by the international Wholesale Banking activities in the U.K.,
the Americas and Central & Eastern Europe, growth of Leasing as well as a 16.2% increase in income
from ING Real Estate. Underlying interest income declined 2.3% to EUR 2,923 million due to pressure
on margins. Commission income rose 6.9% on an underlying basis to EUR 1,146 million, due to higher
management fees at ING Real Estate, while Other income rose 19.7% to EUR 1,510 million, supported
by gains on the sale of equity investments and fair value changes on non-trading derivatives.
22
Expenses
Operating expenses declined 7.2% to EUR 3,466 million, due entirely to the divestments of the Asian
cash equities business, CenE Bankiers, parts of BHF-Bank, and Baring Asset Management. Excluding
divestments, underlying operating expenses increased 12.1% to EUR 3,411 million, due in part to
non-recurring items such as EUR 103 million in provisions taken in Belgium in 2005, EUR 12 million
in restructuring costs for initiatives to improve efficiency in the IT organisation and EUR 78
million in impairment losses on development projects at ING Real Estate. Those items were partially
offset by EUR 36 million in releases of provisions for employee benefits following legislative
changes in the Netherlands related to healthcare and pensions. Excluding all non-recurring items
and adjusted for exchange rate differences, recurring operating expenses of Wholesale Banking
increased 6.3%. The underlying cost/income ratio deteriorated to 61.1% from 57.1% as a result of
the non-recurring costs above. The average number of wholesale staff decreased 13.3% to 20,800,
mainly due to divestments.
The addition to the provision for loan losses declined from EUR 192 million in 2004 to a net
release of EUR 108 million in 2005, due to improvements in the credit environment and the limited
inflow of large new problem loans. Only the Wholesale Banking activities in the Netherlands showed
an addition to loan loss provisions in 2005. The net release equalled -7 basis points of average
credit-risk-weighted assets compared with an addition of 12 basis points in 2004.
RAROC
Table 19. Wholesale Banking risk-adjusted return on capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RAROC %1 (pre-tax) |
|
|
|
Economic capital (in EUR billion) |
|
|
|
|
2005 |
|
|
2004 |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Netherlands |
|
|
|
27.7 |
|
|
|
25.5 |
|
|
|
|
2.5 |
|
|
|
3.0 |
|
|
|
-16.7 |
% |
Belgium |
|
|
|
19.9 |
|
|
|
22.2 |
|
|
|
|
1.9 |
|
|
|
2.5 |
|
|
|
-24.0 |
% |
Rest of World |
|
|
|
17.5 |
|
|
|
-1.6 |
|
|
|
|
2.7 |
|
|
|
3.1 |
|
|
|
-12.9 |
% |
Other |
|
|
|
-28.8 |
|
|
|
-43.6 |
|
|
|
|
0.2 |
|
|
|
0.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Wholesale Banking |
|
|
|
20.6 |
|
|
|
13.6 |
|
|
|
|
7.3 |
|
|
|
8.8 |
|
|
|
-17.0 |
% |
Asset management2 |
|
|
|
46.9 |
|
|
|
39.5 |
|
|
|
|
1.2 |
|
|
|
0.8 |
|
|
|
50.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-tax |
|
|
|
24.4 |
|
|
|
16.0 |
|
|
|
|
8.5 |
|
|
|
9.6 |
|
|
|
-11.5 |
% |
Total after tax |
|
|
|
22.3 |
|
|
|
12.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. |
|
2004 RAROC figures have been restated to reflect changes in the model for market risk
|
|
2. |
|
Mainly ING Real Estate and Baring Asset Management |
The after-tax risk-adjusted return on capital from Wholesale Banking improved from 12.2% in
2004 to 22.3% in 2005, lifted in part by the impact of divestments. Underlying RAROC after-tax
improved to 16.7% from 14.9%. The pre-tax RAROC of the Wholesale Banking activities in the
Netherlands remained strong, while Belgium showed a slight decrease. The pre-tax RAROC in Rest of
World, excluding divestments, improved to 16.4% from 11.8%, supported by a realignment of the
operating model outside the Benelux to focus on key clients and products. RAROCs in the U.K. and
the Americas improved strongly, while the performance in Germany and Asia is still below ING’s
target. The pre-tax RAROC of ING Real Estate declined to 27.5% from 40.9% in 2004 due to
impairments on development projects. Total economic capital decreased by EUR 1.1 billion, mainly
due to divestments. Excluding divestments, economic capital was EUR 0.2 billion lower.
Geographical breakdown Wholesale Banking
Table 20. Wholesale Banking underlying profit before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Netherlands |
|
|
|
790 |
|
|
|
826 |
|
|
|
- 4.4 |
% |
|
|
|
190 |
|
|
|
183 |
|
|
|
3.8 |
% |
Belgium |
|
|
|
519 |
|
|
|
665 |
|
|
|
- 22.0 |
% |
|
|
|
79 |
|
|
|
105 |
|
|
|
-24.8 |
% |
Rest of World |
|
|
|
671 |
|
|
|
313 |
|
|
|
114.4 |
% |
|
|
|
132 |
|
|
|
113 |
|
|
|
16.8 |
% |
Other |
|
|
|
-50 |
|
|
|
-47 |
|
|
|
|
|
|
|
|
4 |
|
|
|
-3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Wholesale Banking |
|
|
|
1,930 |
|
|
|
1,757 |
|
|
|
9.8 |
% |
|
|
|
405 |
|
|
|
398 |
|
|
|
1.8 |
% |
Asset management1 |
|
|
|
346 |
|
|
|
335 |
|
|
|
3.3 |
% |
|
|
|
97 |
|
|
|
139 |
|
|
|
-30.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
2,276 |
|
|
|
2,092 |
|
|
|
8.8 |
% |
|
|
|
502 |
|
|
|
537 |
|
|
|
-6.5 |
% |
|
|
|
1. |
|
Mainly ING Real Estate |
Netherlands
In the Netherlands, underlying profit before tax declined 4.4% to EUR 790 million as growth in
income was more than offset by higher operating expenses. Total income rose 3.7%, driven by
Structured Finance and Leasing. That was partially offset by lower income from Payments & Cash
Management and General Lending due to lower margins, as well
23
as lower income from Financial Markets. Operating expenses increased 11.8%, due to higher expenses
resulting from the collective labour agreement, the growth of Leasing and higher IT expenses,
including EUR 12 million in restructuring costs for initiatives to improve efficiency in the IT
organisation as announced in 2005. That was offset in part by the EUR 36 million release from
provisions for employee benefits following legislative changes in the Netherlands related to
healthcare and pensions. Risk costs declined to 10 basis points of average credit-risk-weighted
assets from 12 basis points in 2004.
Belgium
In Belgium, underlying profit before tax declined 22.0% to EUR 519 million, due to lower Financial
Markets results compared with a very strong 2004, as well as higher operating expenses due to
provisions. Total income declined 8.1% as lower Financial Markets results more than offset higher
income from Corporate Finance & Equity Markets and from Structured Finance. Operating expenses
increased 12.8 %, due to EUR 103 million in provisions taken in 2005, mainly related to Williams de
Broë. Risk costs declined from the already very low level of 3 basis points of average
credit-risk-weighted assets in 2004 to -17 basis points in 2005, due to a net release of EUR 64
million.
Rest of World
In the Rest of the World, underlying profit before tax more than doubled to EUR 671 million from
EUR 313 million, driven by releases of debtor provisions as well as higher income following the
successful implementation of a programme to improve profitability by focusing on key clients and
products. Total income rose 14.2%, due to higher Structured Finance and Financial Markets results
in the U.K., higher income from all product groups in the Americas, and higher income from
Financial Markets in Central & Eastern Europe. Underlying operating expenses increased 3.5%, of
which 2.4%-points were due to currency movements. Past restructuring initiatives largely offset
investments in the infrastructure in Germany following the sale of most of BHF-Bank and higher
bonuses as a result of the increased income. Risk costs dropped from EUR 109 million, or 23 basis
points of average credit-risk-weighted assets in 2004, to a release of EUR 87 million, or -20 basis
points, in 2005. All regions in the Rest of the World showed a net release of risk costs in 2005.
ING Real Estate
Profit before tax from ING Real Estate declined 4.4% to EUR 349 million from EUR 365 million as
impairments on development projects offset higher profit from the real estate finance and
investment management activities. The real estate financing activities benefited from growth in the
lending portfolio and lower risk costs. Profit before tax from the investment management activities
increased due to strong growth of assets under management following the purchases of portfolios
including the Gables Residential Trust in the U.S. and the Abbey National portfolio in the U.K., as
well as revaluations on properties to fair value. Results from real estate development declined
sharply, due to EUR 78 million in impairments, of which EUR 40 million was taken in the fourth
quarter of 2005, mainly related to projects in Poland and the Czech Republic. Total underlying
profit of the asset management activities of Wholesale Banking, including ING Real Estate, was EUR
346 million, an increase of 3.3% compared with 2004.
24
3.2 Retail Banking profit rises 55.4%: strong growth in the Benelux
• |
|
Strong income increase of 14.5% driven by growth in mortgages and savings |
• |
|
Cost/income ratio improves to 66.1% from 73.2% supported by strict cost control |
• |
|
Underlying RAROC after-tax rises to 34.1% from 26.1% |
Table 21. Retail Banking profit & loss account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Interest result |
|
|
|
4,397 |
|
|
|
3,928 |
|
|
|
11.9 |
% |
|
|
|
1,125 |
|
|
|
995 |
|
|
|
13.1 |
% |
Commission income |
|
|
|
1,098 |
|
|
|
1,137 |
|
|
|
- 3.4 |
% |
|
|
|
272 |
|
|
|
260 |
|
|
|
4.6 |
% |
Other income |
|
|
|
301 |
|
|
|
-3 |
|
|
|
|
|
|
|
|
59 |
|
|
|
38 |
|
|
|
55.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
|
5,796 |
|
|
|
5,062 |
|
|
|
14.5 |
% |
|
|
|
1,456 |
|
|
|
1,293 |
|
|
|
12.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
3,829 |
|
|
|
3,703 |
|
|
|
3.4 |
% |
|
|
|
925 |
|
|
|
1,054 |
|
|
|
- 12.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross result |
|
|
|
1,967 |
|
|
|
1,359 |
|
|
|
44.7 |
% |
|
|
|
531 |
|
|
|
239 |
|
|
|
122.2 |
% |
Addition to provisions for loan losses |
|
|
|
90 |
|
|
|
184 |
|
|
|
-51.1 |
% |
|
|
|
25 |
|
|
|
64 |
|
|
|
-60.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
1,877 |
|
|
|
1,175 |
|
|
|
59.7 |
% |
|
|
|
506 |
|
|
|
175 |
|
|
|
189.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
1,877 |
|
|
|
1,175 |
|
|
|
59.7 |
% |
|
|
|
506 |
|
|
|
175 |
|
|
|
189.1 |
% |
Gains/losses on divestments |
|
|
|
62 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax from divested units |
|
|
|
|
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
1 |
|
|
|
|
|
Special items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
1,815 |
|
|
|
1,168 |
|
|
|
55.4 |
% |
|
|
|
506 |
|
|
|
174 |
|
|
|
190.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key figures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost/income ratio |
|
|
|
66.1 |
% |
|
|
73.2 |
% |
|
|
|
|
|
|
|
63.5 |
% |
|
|
81.5 |
% |
|
|
|
|
RAROC pre-tax |
|
|
|
52.4 |
% |
|
|
38.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RAROC after tax |
|
|
|
36.0 |
% |
|
|
26.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-weighted assets (in EUR billion) |
|
|
|
89.8 |
|
|
|
76.5 |
|
|
|
17.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Addition to provisions for loan losses in
basis points of average
credit-risk-weighted assets |
|
|
|
11 |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staff (average FTEs) |
|
|
|
36,400 |
|
|
|
34,300 |
|
|
|
6.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-year profit
The Retail Banking business line posted very strong growth in 2005, while further improving the
already high risk-adjusted return on capital. The retail banking units in the Netherlands and
Belgium continued to strive for profitable and selective growth, while improving efficiency and
customer satisfaction. In Belgium, ING expanded the distribution capacity of its Record Bank unit
with the purchases of Mercator Bank in 2004 and Eural, which was completed in December 2005. At the
same time, Retail Banking is concentrating on growth in Poland, Romania and India as well as
Private Banking. ING also bought a 19.9% stake in Bank of Beijing in 2005.
Underlying profit before tax from Retail Banking rose 55.4% to EUR 1,815 million, driven by strong
growth in the home markets of the Benelux. Double-digit top-line growth was driven by savings and
mortgages in Belgium and the Netherlands, including higher prepayment penalties on mortgages as
clients refinanced to take advantage of low interest rates. Risk costs declined as a result of the
benign credit environment as well as releases in Belgium and Poland as the quality of the credit
portfolio improved. Cost containment measures and strong income growth resulted in an improvement
in the cost/income ratio, while continued focus on profitable growth led to a further increase in
the risk-adjusted return on capital.
Divestments in 2005 contributed EUR 62 million to profit before tax, representing Retail Banking’s
portion of the gain on the sale of a 12.8% stake in ING Bank Slaski in Poland, taking ING’s stake
to 75%. The divested retail banking activities of BHF-Bank contributed EUR 7 million to profit in
2004. Including those items total profit before tax rose 59.7% to EUR 1,877 million.
Income
Total income increased 14.5% to EUR 5,796 million, driven mainly by higher income from mortgages
and savings in the Netherlands and growth from savings, current accounts and structured notes in
Belgium. Excluding the impact of divestments, income growth was also affected by the proportional
(50%) consolidation of Postkantoren BV in the Netherlands from January 2005 (which had no impact on
total profit) and the EUR 48 million loss taken in the first quarter of 2004 on a unit-linked
mortgage product in the Netherlands. Excluding those items, total income rose a healthy 11.1%.
25
Expenses
Expenses were well under control in 2005. Operating expenses increased 3.4% to EUR 3,829 million.
Underlying operating expenses rose 5.7%, mainly due to the consolidation of Postkantoren BV, as
well as EUR 33 million in one-off costs related to the announced efficiency programme for the
Operations & IT activities in the Benelux, and EUR 27 million in accelerated software depreciation
in the Netherlands. Excluding those items, operating expenses decreased slightly as the impact of
the new labour agreement in the Netherlands was offset by a release of EUR 83 million from
provisions following legislative changes in the Netherlands related to healthcare and pensions.
Excluding all non-recurring items and adjusted for exchange rate differences, recurring operating
expenses of Retail Banking increased 0.5%, even including investments to expand in Romania, Poland,
India and Private Banking. The cost/income ratio improved to 66.1% from 73.2%. The average number
or retail staff rose 6.1% to 36,400, reflecting the consolidation of Postkantoren BV and growth in
Poland, Romania and India.
The addition to the provision for loan losses declined 51.1% to EUR 90 million from EUR 184
million, mainly due to releases in Belgium and Poland. The addition equalled 11 basis points of
average credit-risk-weighted assets compared with 25 basis points in 2004.
RAROC
Table 22. Retail Banking risk-adjusted return on capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RAROC % (pre-tax) |
|
|
|
Economic capital (in EUR billion) |
|
|
|
|
2005 |
|
|
20041 |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Netherlands |
|
|
|
70.4 |
|
|
|
58.5 |
|
|
|
|
2.0 |
|
|
|
1.9 |
|
|
|
5.3 |
% |
Belgium |
|
|
|
51.1 |
|
|
|
16.4 |
|
|
|
|
0.6 |
|
|
|
0.5 |
|
|
|
20.0 |
% |
Poland |
|
|
|
53.8 |
|
|
|
20.5 |
|
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
|
|
Other Retail Banking2 |
|
|
|
3.0 |
|
|
|
- 3.1 |
|
|
|
|
0.7 |
|
|
|
0.6 |
|
|
|
16.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total pre-tax |
|
|
|
52.4 |
|
|
|
38.8 |
|
|
|
|
3.4 |
|
|
|
3.1 |
|
|
|
9.7 |
% |
Total after tax |
|
|
|
36.0 |
|
|
|
26.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. |
|
2004 RAROC figures have been restated to reflect changes in the model for market risk
|
|
2. |
|
Mainly ING Vysya Bank, Private Banking rest of world, and the Kookmin Bank stake |
The after-tax risk-adjusted return on capital from Retail Banking improved to 36.0% from 26.2%
in 2004. Excluding divestments, the underlying after-tax RAROC was 34.1% compared with 26.1% in
2004. The Netherlands and Belgium achieved very high pre-tax RAROCs. The pre-tax RAROC of Poland
was 53.8%, however excluding the gain on ING Bank Slaski shares, the pre-tax RAROC declined to 6.7%
from 20.5% as a result of increased investments in the branch network while income rose slightly.
The low pre-tax RAROC from Other Retail Banking can be fully attributed to ING Vysya Bank and the
Kookmin Bank stake, while the private banking activities in Asia are performing above ING’s target.
Geographical breakdown Retail Banking
Table 23. Retail Banking underlying profit before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Netherlands |
|
|
|
1,387 |
|
|
|
1,091 |
|
|
|
27.1 |
% |
|
|
|
397 |
|
|
|
219 |
|
|
|
81.3 |
% |
Belgium |
|
|
|
337 |
|
|
|
55 |
|
|
|
512.7 |
% |
|
|
|
96 |
|
|
|
- 41 |
|
|
|
|
|
Poland |
|
|
|
41 |
|
|
|
19 |
|
|
|
115.8 |
% |
|
|
|
13 |
|
|
|
6 |
|
|
|
116.7 |
% |
Other Retail Banking1 |
|
|
|
50 |
|
|
|
3 |
|
|
|
|
|
|
|
|
0 |
|
|
|
- 10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
1,815 |
|
|
|
1,168 |
|
|
|
55.4 |
% |
|
|
|
506 |
|
|
|
174 |
|
|
|
190.8 |
% |
|
|
|
1. |
|
Mainly ING Vysya Bank, Private Banking rest of world, and the Kookmin Bank stake |
Netherlands
In the Netherlands, underlying profit before tax rose 27.1% to EUR 1,387 million, driven by growth
in mortgage lending and savings, as well as higher income from prepayment penalties on mortgages.
The residential mortgage portfolio in the Netherlands grew by EUR 10.8 billion, or 13.4%, to EUR
91.5 billion at the end of 2005. The total interest margin stayed almost flat, supported by high
prepayment penalties, while interest margins on savings and current accounts were under pressure
due to low interest rates. Margins are expected to remain under pressure in the current interest
rate environment. Income growth was affected by the consolidation of Postkantoren BV from 2005 and
the EUR 48 million loss on the unit-linked mortgage product at Postbank in the first quarter of
2004. Excluding those items income rose 9.3%. Operating expenses increased 11.2% due to the
consolidation of Postkantoren BV, as well as EUR 33 million in
26
restructuring costs for the streamlining and outsourcing of ING’s Operations & IT activities as
announced in July and November, and EUR 27 million in accelerated software depreciation. Excluding
those items, operating expenses increased 0.4%, strongly supported by the release of EUR 83 million
from provisions for employee benefits following legislative changes for healthcare and pensions,
which offset the impact of the new collective labour agreement. Risk costs were 18 basis points of
average credit-risk-weighted assets compared with 21 basis points in 2004.
Belgium
In Belgium, underlying profit before tax jumped from EUR 55 million in 2004 to EUR 337 million in
2005, driven by higher income due to strong growth of savings and current accounts and high sales
of structured notes, as well as lower expenses and releases from loan loss provisions. Total income
rose 11.9%, while operating expenses declined 7.0% due to high non-recurring expenses in 2004,
including provisions for litigation issues and impairments on real estate under IFRS. The effect of
the acquisition of Mercator Bank in the fourth quarter of 2004 was largely offset by the sale of
ING Securities Bank France and Banque Baring Brothers Suisse in 2005, which were reported under ING
Belgium. Risk costs declined from 34 basis points of average credit-risk-weighted assets in 2004 to
–8 basis points in 2005 due to a EUR 11 million net release. The purchase of Eural from Dexia Bank
was successfully completed in December 2005.
Poland
In Poland, underlying profit before tax from the retail banking activities of ING Bank Slaski more
than doubled from EUR 19 million in 2004 to EUR 41 million in 2005 due to releases from loan loss
provisions following an improvement in the quality of the lending portfolio. Risk costs turned from
EUR 17 million in 2004 to a net release of EUR 16 million in 2005. Adjusted for exchange rate
changes, income rose 2.0% as the growth in savings and deposits was largely offset by narrower
margins and lower lending volumes. Operating expenses increased by 13.1% due to investments to
upgrade the branch network and higher marketing costs.
Other Retail Banking
The Other Retail Banking activities posted an underlying profit before tax of EUR 50 million
compared to EUR 3 million in 2004, due to higher results from ING Vysya Bank in India, the private
banking activities in Asia and the Kookmin Bank stake in South Korea.
27
3.3 ING Direct profit climbs 41.8%: strong growth in savings, mortgages
• |
|
Funds entrusted grow 29.3% to EUR 188.0 billion |
• |
|
Mortgage portfolio increases 65.9% to EUR 54.9 billion |
• |
|
ING Direct welcomed its 15 millionth customer in January 2006 |
Table 24. ING Direct1 profit & loss account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Interest result |
|
|
|
1,947 |
|
|
|
1,608 |
|
|
|
21.1 |
% |
|
|
|
547 |
|
|
|
431 |
|
|
|
26.9 |
% |
Commission income |
|
|
|
104 |
|
|
|
82 |
|
|
|
26.8 |
% |
|
|
|
28 |
|
|
|
22 |
|
|
|
27.3 |
% |
Other income |
|
|
|
68 |
|
|
|
19 |
|
|
|
257.9 |
% |
|
|
|
0 |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
|
2,119 |
|
|
|
1,709 |
|
|
|
24.0 |
% |
|
|
|
575 |
|
|
|
463 |
|
|
|
24.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
1,396 |
|
|
|
1,185 |
|
|
|
17.8 |
% |
|
|
|
379 |
|
|
|
329 |
|
|
|
15.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross result |
|
|
|
723 |
|
|
|
524 |
|
|
|
38.0 |
% |
|
|
|
196 |
|
|
|
134 |
|
|
|
46.3 |
% |
Addition to provisions for loan losses |
|
|
|
106 |
|
|
|
89 |
|
|
|
19.1 |
% |
|
|
|
12 |
|
|
|
16 |
|
|
|
-25.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
|
617 |
|
|
|
435 |
|
|
|
41.8 |
% |
|
|
|
184 |
|
|
|
118 |
|
|
|
55.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key figures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost/income ratio |
|
|
|
65.9 |
% |
|
|
69.3 |
% |
|
|
|
|
|
|
|
65.9 |
% |
|
|
71.1 |
% |
|
|
|
|
RAROC pre-tax |
|
|
|
20.9 |
% |
|
|
19.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RAROC after tax |
|
|
|
14.9 |
% |
|
|
11.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total risk-weighted assets (in EUR billion) |
|
|
|
73.8 |
|
|
|
50.1 |
|
|
|
47.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Addition to provisions for loan losses in
basis points of average
credit-risk-weighted assets |
|
|
|
17 |
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Staff (average FTEs) |
|
|
|
6,500 |
|
|
|
5,300 |
|
|
|
22.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-year profit
ING Direct showed strong growth in 2005 as it continued to add new clients, grow funds
entrusted and expand its mortgage portfolio. The company accelerated its push into the mortgage
market in 2005, and aims to increase its portfolio further in the coming years to reach 40% of
total funds entrusted. The strong results in 2005 were achieved against the backdrop of a
challenging interest rate environment, particularly in the U.K. and the U.S. However, ING Direct
managed to maintain a satisfying interest margin through client rate adjustments while maintaining
its commercial growth. Returns also increased as business units benefited from increased scale.
Profit before tax from ING Direct rose 41.8% to EUR 617 million, driven by the continued strong
growth of the business. ING Direct added 3.2 million new customers, bringing the total at year-end
2005 to 14.7 million, and welcomed its 15 millionth customer worldwide in January 2006. Funds
entrusted grew by EUR 42.6 billion, supported in part by positive currency impacts, which accounted
for EUR 6.5 billion of the increase. Total funds entrusted reached EUR 188.0 billion at the end of
December. In addition, off-balance funds entrusted, which are mainly mutual funds and brokerage
accounts, almost doubled to EUR 10.8 billion from EUR 5.7 billion. The mortgage portfolio increased
by EUR 21.8 billion, or 65.9%, to EUR 54.9 billion at year-end 2005. The risk-adjusted return on
equity and the cost/income ratio both improved as ING Direct units benefited from increased scale.
Income
Total income rose 24.0% to EUR 2,119 million, mainly driven by a 21.1% increase in the interest
result due to the continued strong growth in funds entrusted. The total interest margin in 2005
narrowed to 0.86% from 0.98% in 2004, mainly caused by a flattening of the yield curve and the
strategic decision to maintain competitive client rates in favour of stimulating growth. The impact
on profit was mitigated by a lower operational cost base. The interest margin improved slightly in
the fourth quarter of 2005, despite an increase in client rates in the U.S. and Canada, reaching
0.89% from 0.87% in the third quarter and 0.77% in the second quarter.
Expenses
Operating expenses rose 17.8% to EUR 1,396 million, reflecting investments to support the continued
growth of the business, notably in mortgage distribution. Nonetheless, the cost/income ratio
improved to 65.9% from 69.3% in 2004, and the operational cost base (excluding marketing expenses)
improved to a better-than-expected 0.40% of total assets compared with 0.44% in 2004. The average
number of full-time employees in 2005 rose to 6,500 from 5,300 in 2004,
28
mainly due to expansion in Germany, the U.S. and the U.K. Total marketing expenses were up 12.5%,
increasingly focused on mortgages.
The addition to the provision for loan losses increased 19.1% to EUR 106 million. The addition
equalled 17 basis points of average credit-risk-weighted assets, down from 22 basis points in 2004
as the probability of default diminished.
RAROC
The after-tax risk-adjusted return on capital of ING Direct improved to 14.9% from 11.3% in
2004. Total economic capital increased to EUR 3.1 billion from EUR 2.4 billion in 2004, reflecting
the strong growth of the business. With the exception of ING Card and ING Direct U.K., all ING
Direct units are performing above ING’s target for risk-adjusted return on capital.
Geographical breakdown ING Direct
Table 25. ING Direct profit before tax (including ING Card)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Canada |
|
|
|
73 |
|
|
|
66 |
|
|
|
10.6 |
% |
|
|
|
20 |
|
|
|
17 |
|
|
|
17.6 |
% |
Spain |
|
|
|
50 |
|
|
|
32 |
|
|
|
56.3 |
% |
|
|
|
10 |
|
|
|
4 |
|
|
|
150.0 |
% |
Australia |
|
|
|
80 |
|
|
|
60 |
|
|
|
33.3 |
% |
|
|
|
25 |
|
|
|
16 |
|
|
|
56.3 |
% |
France |
|
|
|
25 |
|
|
|
5 |
|
|
|
400.0 |
% |
|
|
|
11 |
|
|
|
1 |
|
|
|
|
|
United States |
|
|
|
156 |
|
|
|
170 |
|
|
|
- 8.2 |
% |
|
|
|
38 |
|
|
|
50 |
|
|
|
- 24.0 |
% |
Italy |
|
|
|
29 |
|
|
|
11 |
|
|
|
163.6 |
% |
|
|
|
11 |
|
|
|
5 |
|
|
|
120.0 |
% |
United Kingdom |
|
|
|
- 34 |
|
|
|
- 54 |
|
|
|
|
|
|
|
|
- 7 |
|
|
|
- 24 |
|
|
|
|
|
Germany1 |
|
|
|
254 |
|
|
|
151 |
|
|
|
68.2 |
% |
|
|
|
78 |
|
|
|
55 |
|
|
|
41.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal ING Direct |
|
|
|
633 |
|
|
|
441 |
|
|
|
43.5 |
% |
|
|
|
186 |
|
|
|
124 |
|
|
|
50.0 |
% |
ING Card |
|
|
|
- 16 |
|
|
|
- 6 |
|
|
|
|
|
|
|
|
- 2 |
|
|
|
- 6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
617 |
|
|
|
435 |
|
|
|
41.8 |
% |
|
|
|
184 |
|
|
|
118 |
|
|
|
55.9 |
% |
|
|
|
|
|
|
|
1. Including Austria & Degussa Bank
The increase in profit before tax at ING Direct was driven mainly by strong growth in the
euro-countries — Germany, France, Spain and Italy – due to client-rate reductions in most of these
countries in the third quarter as well as strong commercial growth. Of the eight ING Direct units,
only the U.K., which started operations in May 2003, is still loss-making. However, the loss
narrowed compared to 2004, and total start-up losses are lower than expected. Profit before tax in
the U.S. declined slightly to EUR 156 million due to increases of client rates, partially following
increases in the Federal Reserve rate, and an unfavourable yield curve development. In the fourth
quarter client rates in the U.S. were increased further as Federal Reserve rates rose.
ING Card showed a loss of EUR 16 million compared with a loss of EUR 6 million in 2004, mainly due
to higher risk costs to bring provisions fully into line with IFRS as well as higher marketing and
IT expenses.
Table 26. ING Direct clients, funds entrusted and mortgages
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Clients |
|
|
|
Funds Entrusted |
|
|
|
Mortgage Portfolio |
|
|
|
|
(x 1,000) |
|
|
|
(in EUR billion) |
|
|
|
(in EUR billion) |
|
|
|
|
31 Dec. |
|
|
30 Sep. |
|
|
31 Dec. |
|
|
|
31 Dec. |
|
|
30 Sep. |
|
|
31 Dec. |
|
|
|
31 Dec. |
|
|
30 Sep. |
|
|
31 Dec. |
|
|
|
|
2005 |
|
|
2005 |
|
|
2004 |
|
|
|
2005 |
|
|
2005 |
|
|
2004 |
|
|
|
2005 |
|
|
2005 |
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
Canada |
|
|
|
1,309 |
|
|
|
1,261 |
|
|
|
1,121 |
|
|
|
|
12.6 |
|
|
|
11.7 |
|
|
|
9.0 |
|
|
|
|
7.9 |
|
|
|
7.3 |
|
|
|
5.2 |
|
Spain1 |
|
|
|
1,249 |
|
|
|
1,175 |
|
|
|
975 |
|
|
|
|
12.8 |
|
|
|
12.7 |
|
|
|
10.2 |
|
|
|
|
3.6 |
|
|
|
2.0 |
|
|
|
0.9 |
|
Australia |
|
|
|
1,240 |
|
|
|
1,199 |
|
|
|
996 |
|
|
|
|
10.4 |
|
|
|
10.3 |
|
|
|
8.5 |
|
|
|
|
14.0 |
|
|
|
13.1 |
|
|
|
9.9 |
|
France |
|
|
|
501 |
|
|
|
480 |
|
|
|
413 |
|
|
|
|
10.8 |
|
|
|
10.5 |
|
|
|
9.2 |
|
|
|
|
0.0 |
|
|
|
0.0 |
|
|
|
0.0 |
|
United States |
|
|
|
3,382 |
|
|
|
3,154 |
|
|
|
2,226 |
|
|
|
|
34.0 |
|
|
|
31.5 |
|
|
|
21.2 |
|
|
|
|
10.9 |
|
|
|
10.2 |
|
|
|
7.3 |
|
Italy |
|
|
|
632 |
|
|
|
611 |
|
|
|
485 |
|
|
|
|
13.3 |
|
|
|
13.6 |
|
|
|
10.6 |
|
|
|
|
0.8 |
|
|
|
0.6 |
|
|
|
0.2 |
|
United Kingdom |
|
|
|
1,003 |
|
|
|
957 |
|
|
|
762 |
|
|
|
|
35.7 |
|
|
|
34.1 |
|
|
|
27.9 |
|
|
|
|
0.0 |
|
|
|
0.0 |
|
|
|
0.0 |
|
Germany2 |
|
|
|
5,390 |
|
|
|
5,136 |
|
|
|
4,511 |
|
|
|
|
58.4 |
|
|
|
57.7 |
|
|
|
48.8 |
|
|
|
|
17.7 |
|
|
|
14.9 |
|
|
|
9.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
14,706 |
|
|
|
13,973 |
|
|
|
11,489 |
|
|
|
|
188.0 |
|
|
|
182.1 |
|
|
|
145.4 |
|
|
|
|
54.9 |
|
|
|
48.1 |
|
|
|
33.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. |
|
Mortgage portfolio 31 December 2005 includes EUR 1.1 billion in mortgages bought from
Nationale-Nederlanden in the fourth quarter |
|
2. |
|
Including Austria & Degussa Bank |
29
4. Assets under management increase 23.5% to EUR 547.4 billion
• |
|
Including the impact of divestments, assets under management grew by 11.3% |
|
• |
|
Fund inflow of EUR 33.8 billion driven by Insurance Asia/Pacific and ING Real Estate |
|
• |
|
ING Real Estate’s portfolio grows 39.5% to EUR 69.9 billion |
Table 27. Assets under management by business line
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 |
|
|
|
|
|
|
|
31 December |
|
|
31 December |
|
|
FY |
|
|
|
September |
|
|
4Q |
|
In EUR billion |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
Change |
|
|
|
|
|
|
|
|
Insurance Europe |
|
|
|
169.3 |
|
|
|
148.4 |
|
|
|
14.1 |
% |
|
|
|
164.9 |
|
|
|
2.7 |
% |
Insurance Americas |
|
|
|
201.7 |
|
|
|
164.6 |
|
|
|
22.5 |
% |
|
|
|
198.4 |
|
|
|
1.7 |
% |
Insurance Asia/Pacific |
|
|
|
71.8 |
|
|
|
50.9 |
|
|
|
41.1 |
% |
|
|
|
68.5 |
|
|
|
4.8 |
% |
Retail Banking |
|
|
|
49.3 |
|
|
|
40.5 |
|
|
|
21.7 |
% |
|
|
|
47.3 |
|
|
|
4.2 |
% |
Wholesale Banking |
|
|
|
49.5 |
|
|
|
35.8 |
|
|
|
38.3 |
% |
|
|
|
45.0 |
|
|
|
10.0 |
% |
ING Direct |
|
|
|
5.8 |
|
|
|
3.0 |
|
|
|
93.3 |
% |
|
|
|
4.3 |
|
|
|
34.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets managed excluding divested units |
|
|
|
547.4 |
|
|
|
443.2 |
|
|
|
23.5 |
% |
|
|
|
528.4 |
|
|
|
3.6 |
% |
Divestments & restatements |
|
|
|
|
|
|
|
48.7 |
|
|
|
|
|
|
|
|
9.6 |
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
547.4 |
|
|
|
491.9 |
|
|
|
11.3 |
% |
|
|
|
538.0 |
|
|
|
1.7 |
% |
|
|
|
|
|
|
|
|
|
|
1. |
|
Adjustment regarding change in joint venture structure of Kookmin Bank Asset Management |
Assets under management increased 23.5% to EUR 547.4 billion in 2005, excluding the impact of
several divestments and restatements including Baring Asset Management and parts of BHF-Bank. The
growth in assets was driven by a net inflow of EUR 33.8 billion, plus EUR 34.9 billion attributable
to higher currencies and EUR 35.5 billion from higher stock markets. Including divestments and
restatements, total assets under management increased 11.3%.
Fund inflow
The net inflow of EUR 33.8 billion was mainly realised by Insurance Asia/Pacific, ING Real Estate
(reported under Wholesale Banking) and Retail Banking. Insurance Asia/Pacific reported a net inflow
of EUR 12.0 billion, including EUR 4.1 billion in third-party funds sold by ING Life Japan. ING
Real Estate realised an inflow of EUR 9.0 billion, mainly due to ING Clarion in the U.S., which
accounted for EUR 6.2 billion of the increase. Private Banking clients boosted Retail Banking’s net
inflow.
Table 28. Assets originated by business line
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 |
|
|
|
|
|
|
|
31 December |
|
|
31 December |
|
|
FY |
|
|
|
September |
|
|
4Q |
|
In EUR billion |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
Change |
|
|
|
|
|
|
|
|
Insurance Europe |
|
|
|
63.1 |
|
|
|
50.8 |
|
|
|
24.2 |
% |
|
|
|
57.6 |
|
|
|
9.5 |
% |
Insurance Americas |
|
|
|
117.4 |
|
|
|
93.9 |
|
|
|
25.0 |
% |
|
|
|
117.3 |
|
|
|
0.1 |
% |
Insurance Asia/Pacific |
|
|
|
46.2 |
|
|
|
32.0 |
|
|
|
44.4 |
% |
|
|
|
44.5 |
|
|
|
3.8 |
% |
Retail Banking |
|
|
|
81.0 |
|
|
|
73.8 |
|
|
|
9.8 |
% |
|
|
|
79.2 |
|
|
|
2.3 |
% |
Wholesale Banking |
|
|
|
39.2 |
|
|
|
23.7 |
|
|
|
65.4 |
% |
|
|
|
36.3 |
|
|
|
8.0 |
% |
ING Direct |
|
|
|
5.8 |
|
|
|
3.0 |
|
|
|
93.3 |
% |
|
|
|
4.3 |
|
|
|
34.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total third parties |
|
|
|
352.7 |
|
|
|
277.2 |
|
|
|
27.2 |
% |
|
|
|
339.2 |
|
|
|
4.0 |
% |
Proprietary assets |
|
|
|
194.7 |
|
|
|
166.0 |
|
|
|
17.3 |
% |
|
|
|
189.2 |
|
|
|
2.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets managed excluding divested units |
|
|
|
547.4 |
|
|
|
443.2 |
|
|
|
23.5 |
% |
|
|
|
528.4 |
|
|
|
3.6 |
% |
Divestments & restatements |
|
|
|
|
|
|
|
48.7 |
|
|
|
|
|
|
|
|
9.6 |
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
547.4 |
|
|
|
491.9 |
|
|
|
11.3 |
% |
|
|
|
538.0 |
|
|
|
1.7 |
% |
|
|
|
|
|
|
|
|
|
|
1. |
|
Adjustment regarding change in joint venture structure of Kookmin Bank Asset Management |
Table 29. Assets under management by asset class
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In EUR billion |
|
|
31 December 2005 |
|
|
|
31 December 2004 |
|
|
|
30 September 2005 |
|
|
|
|
|
|
|
|
|
|
|
Equities |
|
|
|
167.0 |
|
|
|
30.5 |
% |
|
|
|
136.1 |
|
|
|
30.7 |
% |
|
|
|
161.5 |
|
|
|
30.6 |
% |
Fixed income |
|
|
|
286.3 |
|
|
|
52.3 |
% |
|
|
|
240.5 |
|
|
|
54.3 |
% |
|
|
|
278.6 |
|
|
|
52.7 |
% |
Real Estate1 |
|
|
|
51.3 |
|
|
|
9.4 |
% |
|
|
|
36.6 |
|
|
|
8.2 |
% |
|
|
|
46.7 |
|
|
|
8.8 |
% |
Cash |
|
|
|
42.8 |
|
|
|
7.8 |
% |
|
|
|
30.0 |
|
|
|
6.8 |
% |
|
|
|
41.6 |
|
|
|
7.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
547.4 |
|
|
|
100 |
% |
|
|
|
443.2 |
|
|
|
100 |
% |
|
|
|
528.4 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
1. |
|
ING Real Estate investment management and development activities plus real estate assets
from other business lines |
30
Table 30. Assets under management by client category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30 |
|
|
|
|
|
|
|
31 December |
|
|
31 December |
|
|
FY |
|
|
|
September |
|
|
4Q |
|
In EUR billion |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
Change |
|
|
|
|
|
|
|
|
Private clients |
|
|
|
247.8 |
|
|
|
194.9 |
|
|
|
27.1 |
% |
|
|
|
238.4 |
|
|
|
3.9 |
% |
Institutional clients |
|
|
|
104.9 |
|
|
|
82.3 |
|
|
|
27.5 |
% |
|
|
|
100.8 |
|
|
|
4.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total third parties |
|
|
|
352.7 |
|
|
|
277.2 |
|
|
|
27.2 |
% |
|
|
|
339.2 |
|
|
|
4.0 |
% |
Proprietary assets |
|
|
|
194.7 |
|
|
|
166.0 |
|
|
|
17.3 |
% |
|
|
|
189.2 |
|
|
|
2.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets managed excluding divested units |
|
|
|
547.4 |
|
|
|
443.2 |
|
|
|
23.5 |
% |
|
|
|
528.4 |
|
|
|
3.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of third parties |
|
|
|
64.4 |
% |
|
|
62.5 |
% |
|
|
|
|
|
|
|
64.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
Assets under management for third-party clients
Total assets under management for third-party clients increased to EUR 352.7 billion in 2005.
The majority of those assets are managed by ING Investment Management (55%). Private Banking and
U.S. Financial Services each manage 14% and ING Real Estate had an 11% share. The remaining 6% was
managed by other business units, such as ING Direct. Assets managed on behalf of private clients
amounted EUR 247.8 billion, or 45% of ING Group assets under management. Higher third-party assets
under management were mainly driven by growth at ING Real Estate (+68.0%), Private Banking (+21.7%)
and ING Investment Management (+11.7%).
ING Investment Management
ING Investment Management oversees both third-party assets and proprietary assets of ING Group. The
third-party businesses of ING IM increased its assets under management by 11.7% to EUR 193.7
billion at the end of 2005. The net inflow amounted to EUR 5.7 billion, of which ING IM Europe
contributed EUR 2.8 billion. In the fourth quarter of 2005, the new open-ended Covered Call funds
raised more than EUR 0.5 billion. The Premium Dividend fund was the most successful fund launch in
the Dutch market for several years, raising EUR 400 million. ING IM Asia/Pacific showed an inflow
of EUR 4.7 billion in 2005. In Taiwan retail funds achieved a net inflow of EUR 1.3 billion due to
successful new fund launches and strong net inflows from existing products. The China Merchants
Cash Enhancement fund, managed by China Merchants Fund Management, had a net outflow of EUR 1.1
billion in the fourth quarter due to a lower yield on short-term treasury bills in which the fund
invests compared with the rates on bank deposits. ING IM Americas had a net outflow of EUR 1.8
billion as a result of the maturing of structured products and guaranteed-return portfolios, which
are no longer popular. That offset inflow from the launch of the closed-end funds ING Global
Advantage and Premium Opportunity Fund in the fourth quarter, which raised EUR 0.3 billion, and the
ING Global Equity Dividend and Premium Opportunity Fund, which raised EUR 1.5 billion earlier in
the year.
ING Real Estate
The total portfolio of ING Real Estate, including the finance activities, increased 39.5% to EUR
69.9 billion, driven mainly by the investment management activities. ING Real Estate’s investment
management portfolio grew by 52% to EUR 47.1 billion. This record growth was driven by the
acquisitions of the portfolios of Gables Residential Trust in the U.S. and Abbey National in the
U.K., along with a strong inflow into 13 new funds that were created in 2005. In the U.K. a new
listed fund was successfully introduced, raising EUR 700 million. The ING Korea Property
Investments Fund was created with a target size of USD 800 million. The real estate development
portfolio increased by EUR 0.4 billion to EUR 2.5 billion. ING Real Estate has been selected to
participate in a prominent redevelopment project in Hamburg, Germany, and it has been pre-selected
for a public-private partnership project in Amsterdam. The real estate finance portfolio increased
to EUR 20.3 billion from EUR 17.1 billion at year-end 2004, driven by strong growth of the
international portfolio in line with a strategy to diversify the portfolio.
31
Appendices
1. |
|
Key figures from 2000 to 2005 |
|
2. |
|
Full-year profit & loss account, underlying profit before tax, underlying net profit |
|
3. |
|
Fourth quarter profit & loss account, underlying profit before tax, underlying net profit |
|
4. |
|
Net profit and underlying profit before tax per quarter, divestments and special items per
quarter |
|
5. |
|
Balance Sheet and Capital & Reserves
|
|
6. |
|
Cash Flows |
|
7. |
|
Additional information: Insurance profit & loss by life/non-life, income information
Insurance and Banking, loans
and advances to customers of the banking operations |
|
8. |
|
Embedded Value and Value of New Business Statistics of the life insurance business
|
|
9. |
|
Information for shareholders |
The following documents are also available to be downloaded at www.ing.com:
- Media/Analyst presentation
- Additional Information slides
- Embedded Value report
- Embedded Value presentation
- U.S. Statistical Supplement
The accounting principles applied in this document are in accordance with International
Financial Reporting Standards as endorsed by the European Union (“EU”).
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 developing 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.
32
Appendix 1.
1. Key Figures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IFRS |
|
|
|
|
|
|
|
Dutch GAAP |
|
|
|
FY |
|
|
FY |
|
|
|
FY |
|
|
FY |
|
|
FY |
|
|
FY |
|
|
FY |
|
|
|
2005 |
|
|
2004 |
|
|
|
2004 |
|
|
2003 |
|
|
2002 |
|
|
2001 |
|
|
2000 |
|
|
|
|
|
Balance sheet (EUR x billion) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets1 |
|
|
1,159 |
|
|
|
964 |
|
|
|
|
866 |
|
|
|
779 |
|
|
|
716 |
|
|
|
705 |
|
|
|
650 |
|
Capital and reserves1 |
|
|
37 |
|
|
|
28 |
|
|
|
|
26 |
|
|
|
21 |
|
|
|
18 |
|
|
|
22 |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets under management (EUR x billion) |
|
|
547 |
|
|
|
492 |
|
|
|
|
492 |
|
|
|
463 |
|
|
|
449 |
|
|
|
513 |
|
|
|
503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market capitalisation (EUR x billion) |
|
|
65 |
|
|
|
49 |
|
|
|
|
49 |
|
|
|
39 |
|
|
|
32 |
|
|
|
57 |
|
|
|
83 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (EUR x million) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance operations |
|
|
57,424 |
|
|
|
55,602 |
|
|
|
|
55,398 |
|
|
|
53,233 |
|
|
|
59,449 |
|
|
|
55,274 |
|
|
|
34,521 |
|
Banking operations |
|
|
13,848 |
|
|
|
12,678 |
|
|
|
|
12,537 |
|
|
|
11,680 |
|
|
|
11,201 |
|
|
|
11,111 |
|
|
|
11,302 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses (EUR x million) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance operations |
|
|
5,195 |
|
|
|
4,746 |
|
|
|
|
4,837 |
|
|
|
4,897 |
|
|
|
5,203 |
|
|
|
5,583 |
|
|
|
5,023 |
|
Banking operations |
|
|
8,844 |
|
|
|
8,795 |
|
|
|
|
8,658 |
|
|
|
8,184 |
|
|
|
8,298 |
|
|
|
8,186 |
|
|
|
8,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairments/additions to the provision for loan
losses (EUR x million) |
|
|
119 |
|
|
|
475 |
|
|
|
|
497 |
|
|
|
1,288 |
|
|
|
2,099 |
|
|
|
907 |
|
|
|
400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (EUR x million) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance operations |
|
|
3,978 |
|
|
|
4,322 |
|
|
|
|
4,005 |
|
|
|
3,486 |
|
|
|
3,170 |
|
|
|
2,792 |
|
|
|
2,307 |
|
Banking operations |
|
|
4,916 |
|
|
|
3,418 |
|
|
|
|
3,414 |
|
|
|
2,371 |
|
|
|
1,468 |
|
|
|
2,170 |
|
|
|
2,605 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
8,894 |
|
|
|
7,740 |
|
|
|
|
7,419 |
|
|
|
5,857 |
|
|
|
4,638 |
|
|
|
4,962 |
|
|
|
4,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying (IFRS)/operating net profit (Dutch GAAP) |
|
|
6,196 |
|
|
|
4,959 |
|
|
|
|
5,389 |
|
|
|
4,053 |
|
|
|
3,433 |
|
|
|
3,539 |
|
|
|
3,388 |
|
Divestments & special items (IFRS)/non-operating
net profit (Dutch GAAP) |
|
|
1,014 |
|
|
|
796 |
|
|
|
|
579 |
|
|
|
-10 |
|
|
|
1,067 |
|
|
|
1,038 |
|
|
|
8,596 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit |
|
|
7,210 |
|
|
|
5,755 |
|
|
|
|
5,968 |
|
|
|
4,043 |
|
|
|
4,500 |
|
|
|
4,577 |
|
|
|
11,984 |
|
Distributable net profit |
|
|
7,210 |
|
|
|
5,755 |
|
|
|
|
5,968 |
|
|
|
4,043 |
|
|
|
4,253 |
|
|
|
4,252 |
|
|
|
4,901 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figures per ordinary share of EUR 0.24 nominal value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit |
|
|
3.32 |
|
|
|
2.71 |
|
|
|
|
2.80 |
|
|
|
2.00 |
|
|
|
2.32 |
|
|
|
2.37 |
|
|
|
6.27 |
|
Distributable net profit |
|
|
3.32 |
|
|
|
2.71 |
|
|
|
|
2.80 |
|
|
|
2.00 |
|
|
|
2.20 |
|
|
|
2.20 |
|
|
|
2.56 |
|
Dividend |
|
|
1.18 |
|
|
|
1.07 |
|
|
|
|
1.07 |
|
|
|
0.97 |
|
|
|
0.97 |
|
|
|
0.97 |
|
|
|
1.13 |
|
Capital and reserves1 |
|
|
16.96 |
|
|
|
12.95 |
|
|
|
|
11.76 |
|
|
|
10.08 |
|
|
|
9.14 |
|
|
|
11.03 |
|
|
|
13.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios (in %) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ING Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Operating) return on equity (ROE) |
|
|
26.6 |
|
|
|
25.4 |
|
|
|
|
22.9 |
|
|
|
21.5 |
|
|
|
17.4 |
|
|
|
15.3 |
|
|
|
10.3 |
|
(Operating) net profit growth |
|
|
25 |
|
|
|
n/a |
|
|
|
|
33 |
|
|
|
18 |
|
|
|
-3 |
|
|
|
4 |
|
|
|
27 |
|
Insurance operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio |
|
|
95 |
|
|
|
94 |
|
|
|
|
94 |
|
|
|
98 |
|
|
|
102 |
|
|
|
103 |
|
|
|
104 |
|
Capital coverage ratio1 |
|
|
259 |
|
|
|
200 |
|
|
|
|
210 |
|
|
|
180 |
|
|
|
169 |
|
|
|
180 |
|
|
|
235 |
|
Banking operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BIS ratio ING Bank1 |
|
|
10.86 |
|
|
|
10.46 |
|
|
|
|
11.47 |
|
|
|
11.34 |
|
|
|
10.98 |
|
|
|
10.57 |
|
|
|
10.75 |
|
Tier-1 ratio ING Bank1 |
|
|
7.32 |
|
|
|
6.92 |
|
|
|
|
7.71 |
|
|
|
7.59 |
|
|
|
7.31 |
|
|
|
7.03 |
|
|
|
7.22 |
|
Cost/income ratio |
|
|
63.9 |
|
|
|
69.4 |
|
|
|
|
69.1 |
|
|
|
70.1 |
|
|
|
74.1 |
|
|
|
73.7 |
|
|
|
73.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employees (average FTEs) |
|
|
115,300 |
|
|
|
113,000 |
|
|
|
|
113,000 |
|
|
|
115,200 |
|
|
|
113,060 |
|
|
|
112,000 |
|
|
|
92,650 |
|
|
|
|
|
|
|
|
1. |
|
Comparable figures shown under FY 2004 are IFRS-based figures at 1 January 2005; figures
restated due to adjustments to the opening balance sheet under IFRS. |
33
Appendix 2. Full-year profit & loss account
2.1 ING Group full-year consolidated profit & loss account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
Banking |
|
|
Total1 |
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
|
2005 |
|
|
2004 |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
Premium income |
|
|
|
45,758 |
|
|
|
43,617 |
|
|
|
|
|
|
|
|
|
|
|
|
|
45,758 |
|
|
|
43,617 |
|
|
|
4.9 |
% |
Investment income |
|
|
|
9,944 |
|
|
|
10,179 |
|
|
|
|
937 |
|
|
|
363 |
|
|
|
|
10,845 |
|
|
|
10,379 |
|
|
|
4.5 |
% |
Interest result banking operations |
|
|
|
|
|
|
|
|
|
|
|
|
9,162 |
|
|
|
8,699 |
|
|
|
|
9,067 |
|
|
|
8,741 |
|
|
|
3.7 |
% |
Commission income |
|
|
|
1,346 |
|
|
|
1,198 |
|
|
|
|
2,401 |
|
|
|
2,581 |
|
|
|
|
3,747 |
|
|
|
3,779 |
|
|
|
-0.8 |
% |
Other income |
|
|
|
376 |
|
|
|
608 |
|
|
|
|
1,348 |
|
|
|
1,035 |
|
|
|
|
1,724 |
|
|
|
1,643 |
|
|
|
4.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
|
57,424 |
|
|
|
55,602 |
|
|
|
|
13,848 |
|
|
|
12,678 |
|
|
|
|
71,141 |
|
|
|
68,159 |
|
|
|
4.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
|
47,120 |
|
|
|
45,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
47,120 |
|
|
|
45,384 |
|
|
|
3.8 |
% |
Other interest expenses |
|
|
|
1,100 |
|
|
|
1,140 |
|
|
|
|
|
|
|
|
|
|
|
|
|
969 |
|
|
|
1,019 |
|
|
|
-4.9 |
% |
Operating expenses |
|
|
|
5,195 |
|
|
|
4,746 |
|
|
|
|
8,844 |
|
|
|
8,795 |
|
|
|
|
14,039 |
|
|
|
13,541 |
|
|
|
3.7 |
% |
Impairments/additions to the
provision for loan losses |
|
|
|
31 |
|
|
|
10 |
|
|
|
|
88 |
|
|
|
465 |
|
|
|
|
119 |
|
|
|
475 |
|
|
|
-74.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
|
53,446 |
|
|
|
51,280 |
|
|
|
|
8,932 |
|
|
|
9,260 |
|
|
|
|
62,247 |
|
|
|
60,419 |
|
|
|
3.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
3,978 |
|
|
|
4,322 |
|
|
|
|
4,916 |
|
|
|
3,418 |
|
|
|
|
8,894 |
|
|
|
7,740 |
|
|
|
14.9 |
% |
Taxation |
|
|
|
455 |
|
|
|
850 |
|
|
|
|
924 |
|
|
|
859 |
|
|
|
|
1,379 |
|
|
|
1,709 |
|
|
|
-19.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before third-party interests |
|
|
|
3,523 |
|
|
|
3,472 |
|
|
|
|
3,992 |
|
|
|
2,559 |
|
|
|
|
7,515 |
|
|
|
6,031 |
|
|
|
24.6 |
% |
Third-party interests |
|
|
|
255 |
|
|
|
123 |
|
|
|
|
50 |
|
|
|
153 |
|
|
|
|
305 |
|
|
|
276 |
|
|
|
10.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit (attributable to
shareholders) |
|
|
|
3,268 |
|
|
|
3,349 |
|
|
|
|
3,942 |
|
|
|
2,406 |
|
|
|
|
7,210 |
|
|
|
5,755 |
|
|
|
25.3 |
% |
|
|
|
1. |
|
Including inter-company eliminations. |
2.2 Full-year underlying profit before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
Banking |
|
|
Total |
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
|
2005 |
|
|
2004 |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
3,978 |
|
|
|
4,322 |
|
|
|
|
4,916 |
|
|
|
3,418 |
|
|
|
|
8,894 |
|
|
|
7,740 |
|
|
|
14.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains/losses on divestments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sale of Freeler |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10 |
|
|
|
|
|
|
|
|
|
- gain ING Canada IPO |
|
|
|
19 |
|
|
|
249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
19 |
|
|
|
249 |
|
|
|
|
|
- sale Life of Georgia |
|
|
|
-89 |
|
|
|
-28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
-89 |
|
|
|
-28 |
|
|
|
|
|
- sale Australia non-life |
|
|
|
|
|
|
|
219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
219 |
|
|
|
|
|
- sale ING Re |
|
|
|
20 |
|
|
|
-219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
20 |
|
|
|
-219 |
|
|
|
|
|
- sale Austbrokers |
|
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 |
|
|
|
|
|
|
|
|
|
- sale BHF-Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-169 |
|
|
|
|
|
|
|
|
-169 |
|
|
|
|
|
- sale Baring Asset Management |
|
|
|
|
|
|
|
|
|
|
|
|
240 |
|
|
|
|
|
|
|
|
240 |
|
|
|
|
|
|
|
|
|
- sale of ING Bank Slaski shares |
|
|
|
|
|
|
|
|
|
|
|
|
92 |
|
|
|
|
|
|
|
|
92 |
|
|
|
|
|
|
|
|
|
- restructuring NMB-Heller |
|
|
|
|
|
|
|
|
|
|
|
|
47 |
|
|
|
|
|
|
|
|
47 |
|
|
|
|
|
|
|
|
|
- sale Asian cash equity business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-84 |
|
|
|
|
|
|
|
|
-84 |
|
|
|
|
|
- sale CenE Bankiers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87 |
|
|
|
|
|
|
|
|
87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal gains/losses on divestments |
|
|
|
-13 |
|
|
|
221 |
|
|
|
|
379 |
|
|
|
-166 |
|
|
|
|
366 |
|
|
|
55 |
|
|
|
|
|
Profit before tax from divested units |
|
|
|
16 |
|
|
|
151 |
|
|
|
|
6 |
|
|
|
67 |
|
|
|
|
22 |
|
|
|
218 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax excl. divestments |
|
|
|
3,975 |
|
|
|
3,950 |
|
|
|
|
4,531 |
|
|
|
3,517 |
|
|
|
|
8,506 |
|
|
|
7,467 |
|
|
|
13.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- gain old reinsurance business |
|
|
|
|
|
|
|
96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96 |
|
|
|
|
|
- restructuring provisions wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-41 |
|
|
|
|
|
|
|
|
-41 |
|
|
|
|
|
- hedge result |
|
|
|
|
|
|
|
290 |
|
|
|
|
|
|
|
|
-3 |
|
|
|
|
|
|
|
|
287 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal special items |
|
|
|
|
|
|
|
386 |
|
|
|
|
|
|
|
|
-44 |
|
|
|
|
|
|
|
|
342 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
3,975 |
|
|
|
3,564 |
|
|
|
|
4,531 |
|
|
|
3,561 |
|
|
|
|
8,506 |
|
|
|
7,125 |
|
|
|
19.4 |
% |
34
2.3 Full-year underlying net profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
|
Banking |
|
|
|
Total |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
|
2005 |
|
|
2004 |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Net profit |
|
|
|
3,268 |
|
|
|
3,349 |
|
|
|
|
3,942 |
|
|
|
2,406 |
|
|
|
|
7,210 |
|
|
|
5,755 |
|
|
|
25.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains/losses on divestments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sale of Freeler |
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10 |
|
|
|
|
|
|
|
|
|
- gain ING Canada IPO |
|
|
|
19 |
|
|
|
249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
19 |
|
|
|
249 |
|
|
|
|
|
- sale Life of Georgia |
|
|
|
-46 |
|
|
|
-18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
-46 |
|
|
|
-18 |
|
|
|
|
|
- sale Australia non-life |
|
|
|
|
|
|
|
166 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166 |
|
|
|
|
|
- sale ING Re |
|
|
|
13 |
|
|
|
-217 |
|
|
|
|
|
|
|
|
|
|
|
|
|
13 |
|
|
|
-217 |
|
|
|
|
|
- sale Austbrokers |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25 |
|
|
|
|
|
|
|
|
|
- sale BHF-Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-114 |
|
|
|
|
|
|
|
|
-114 |
|
|
|
|
|
- sale Baring Asset Management |
|
|
|
|
|
|
|
|
|
|
|
|
254 |
|
|
|
|
|
|
|
|
254 |
|
|
|
|
|
|
|
|
|
- sale of ING Bank Slaski shares |
|
|
|
|
|
|
|
|
|
|
|
|
92 |
|
|
|
|
|
|
|
|
92 |
|
|
|
|
|
|
|
|
|
- restructuring NMB-Heller |
|
|
|
|
|
|
|
|
|
|
|
|
47 |
|
|
|
|
|
|
|
|
47 |
|
|
|
|
|
|
|
|
|
- sale Asian cash equity business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-54 |
|
|
|
|
|
|
|
|
-54 |
|
|
|
|
|
- sale CenE Bankiers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87 |
|
|
|
|
|
|
|
|
87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal gains/losses on divestments |
|
|
|
21 |
|
|
|
180 |
|
|
|
|
393 |
|
|
|
-81 |
|
|
|
|
414 |
|
|
|
99 |
|
|
|
|
|
Net profit from divested units |
|
|
|
13 |
|
|
|
204 |
|
|
|
|
4 |
|
|
|
38 |
|
|
|
|
17 |
|
|
|
242 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit excluding divestments |
|
|
|
3,234 |
|
|
|
2,965 |
|
|
|
|
3,545 |
|
|
|
2,449 |
|
|
|
|
6,779 |
|
|
|
5,414 |
|
|
|
25.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- tax releases/tax assets |
|
|
|
400 |
|
|
|
49 |
|
|
|
|
183 |
|
|
|
112 |
|
|
|
|
583 |
|
|
|
161 |
|
|
|
|
|
- gain old reinsurance business |
|
|
|
|
|
|
|
134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134 |
|
|
|
|
|
- restructuring provisions wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-28 |
|
|
|
|
|
|
|
|
-28 |
|
|
|
|
|
- hedge result |
|
|
|
|
|
|
|
190 |
|
|
|
|
|
|
|
|
-2 |
|
|
|
|
|
|
|
|
188 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal special items |
|
|
|
400 |
|
|
|
373 |
|
|
|
|
183 |
|
|
|
82 |
|
|
|
|
583 |
|
|
|
455 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying net profit |
|
|
|
2,834 |
|
|
|
2,592 |
|
|
|
|
3,362 |
|
|
|
2,367 |
|
|
|
|
6,196 |
|
|
|
4,959 |
|
|
|
24.9 |
% |
35
Appendix 3. Fourth-quarter profit & loss account
3.1 ING Group fourth-quarter consolidated profit & loss account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
|
Banking |
|
|
|
Total1 |
|
In EUR million |
|
|
Q4 2005 |
|
|
|
Q4 2004 |
|
|
|
Q4 2005 |
|
Q4 2004 |
|
|
|
Q4 2005 |
|
|
Q4 2004 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Premium income |
|
|
|
11,694 |
|
|
|
10,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11,694 |
|
|
|
10,869 |
|
|
|
7.6 |
% |
Investment income |
|
|
|
2,536 |
|
|
|
2,731 |
|
|
|
|
126 |
|
|
|
36 |
|
|
|
|
2,649 |
|
|
|
2,767 |
|
|
|
-4.3 |
% |
Interest result banking operations |
|
|
|
|
|
|
|
|
|
|
|
|
2,409 |
|
|
|
2,223 |
|
|
|
|
2,381 |
|
|
|
2,209 |
|
|
|
7.8 |
% |
Commission income |
|
|
|
294 |
|
|
|
312 |
|
|
|
|
626 |
|
|
|
590 |
|
|
|
|
920 |
|
|
|
902 |
|
|
|
2.0 |
% |
Other income |
|
|
|
86 |
|
|
|
172 |
|
|
|
|
223 |
|
|
|
265 |
|
|
|
|
309 |
|
|
|
437 |
|
|
|
-29.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
|
14,610 |
|
|
|
14,084 |
|
|
|
|
3,384 |
|
|
|
3,114 |
|
|
|
|
17,953 |
|
|
|
17,184 |
|
|
|
4.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
|
11,893 |
|
|
|
11,216 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11,893 |
|
|
|
11,216 |
|
|
|
6.0 |
% |
Other interest expenses |
|
|
|
247 |
|
|
|
288 |
|
|
|
|
|
|
|
|
|
|
|
|
|
206 |
|
|
|
274 |
|
|
|
-24.8 |
% |
Operating expenses |
|
|
|
1,408 |
|
|
|
1,345 |
|
|
|
|
2,238 |
|
|
|
2,380 |
|
|
|
|
3,646 |
|
|
|
3,725 |
|
|
|
-2.1 |
% |
Impairments/additions to the
provision for loan losses |
|
|
|
23 |
|
|
|
|
|
|
|
|
26 |
|
|
|
99 |
|
|
|
|
49 |
|
|
|
99 |
|
|
|
-50.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
|
13,571 |
|
|
|
12,849 |
|
|
|
|
2,264 |
|
|
|
2,479 |
|
|
|
|
15,794 |
|
|
|
15,314 |
|
|
|
3.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
1,039 |
|
|
|
1,235 |
|
|
|
|
1,120 |
|
|
|
635 |
|
|
|
|
2,159 |
|
|
|
1,870 |
|
|
|
15.5 |
% |
Taxation |
|
|
|
97 |
|
|
|
318 |
|
|
|
|
113 |
|
|
|
79 |
|
|
|
|
210 |
|
|
|
397 |
|
|
|
-47.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before third-party interests |
|
|
|
942 |
|
|
|
917 |
|
|
|
|
1,007 |
|
|
|
556 |
|
|
|
|
1,949 |
|
|
|
1,473 |
|
|
|
32.3 |
% |
Third-party interests |
|
|
|
81 |
|
|
|
42 |
|
|
|
|
28 |
|
|
|
23 |
|
|
|
|
109 |
|
|
|
65 |
|
|
|
67.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit (attributable to
shareholders) |
|
|
|
861 |
|
|
|
875 |
|
|
|
|
979 |
|
|
|
533 |
|
|
|
|
1,840 |
|
|
|
1,408 |
|
|
|
30.7 |
% |
|
|
|
1. |
|
Including inter-company eliminations. |
3.2 Fourth-quarter underlying profit before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
|
Banking |
|
|
|
Total |
|
In EUR million |
|
|
Q4 2005 |
|
|
Q4 2004 |
|
|
|
Q4 2005 |
|
|
Q4 2004 |
|
|
|
Q4 2005 |
|
|
Q4 2004 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
1,039 |
|
|
|
1,235 |
|
|
|
|
1,120 |
|
|
|
635 |
|
|
|
|
2,159 |
|
|
|
1,870 |
|
|
|
15.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains/losses on divestments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sale Life of Georgia |
|
|
|
-10 |
|
|
|
-28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
-10 |
|
|
|
-28 |
|
|
|
|
|
- sale ING Re |
|
|
|
|
|
|
|
33 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33 |
|
|
|
|
|
- gain IPO Canada |
|
|
|
|
|
|
|
249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
249 |
|
|
|
|
|
- gain Austbrokers |
|
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 |
|
|
|
|
|
|
|
|
|
- sale BHF-Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-169 |
|
|
|
|
|
|
|
|
-169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal gains/losses on divestments |
|
|
|
17 |
|
|
|
254 |
|
|
|
|
|
|
|
|
-169 |
|
|
|
|
17 |
|
|
|
85 |
|
|
|
|
|
Profit before tax from divested units |
|
|
|
|
|
|
|
45 |
|
|
|
|
-8 |
|
|
|
-3 |
|
|
|
|
-8 |
|
|
|
42 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax excluding divestments |
|
|
|
1,022 |
|
|
|
936 |
|
|
|
|
1,128 |
|
|
|
807 |
|
|
|
|
2,150 |
|
|
|
1,743 |
|
|
|
23.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- restructuring provisions wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-41 |
|
|
|
|
|
|
|
|
-41 |
|
|
|
|
|
- hedge result |
|
|
|
|
|
|
|
65 |
|
|
|
|
|
|
|
|
22 |
|
|
|
|
|
|
|
|
87 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal special items |
|
|
|
|
|
|
|
65 |
|
|
|
|
|
|
|
|
-19 |
|
|
|
|
|
|
|
|
46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
1,022 |
|
|
|
871 |
|
|
|
|
1,128 |
|
|
|
826 |
|
|
|
|
2,150 |
|
|
|
1,697 |
|
|
|
26.7 |
% |
3.3 Fourth-quarter underlying net profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
|
Banking |
|
|
|
Total |
|
In EUR million |
|
|
Q4 2005 |
|
|
Q4 2004 |
|
|
|
Q4 2005 |
|
|
Q4 2004 |
|
|
|
Q4 2005 |
|
|
Q4 2004 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
Net profit |
|
|
|
861 |
|
|
|
875 |
|
|
|
|
979 |
|
|
|
533 |
|
|
|
|
1,840 |
|
|
|
1,408 |
|
|
|
30.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains/losses on divestments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sale Australia non-life |
|
|
|
|
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20 |
|
|
|
|
|
- sale Life of Georgia |
|
|
|
-7 |
|
|
|
-18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
-7 |
|
|
|
-18 |
|
|
|
|
|
- sale ING Re |
|
|
|
|
|
|
|
-53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-53 |
|
|
|
|
|
- gain IPO Canada |
|
|
|
|
|
|
|
249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
249 |
|
|
|
|
|
- sale Austbrokers |
|
|
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25 |
|
|
|
|
|
|
|
|
|
- sale BHF-Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-114 |
|
|
|
|
|
|
|
|
-114 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal gains/losses on divestments |
|
|
|
18 |
|
|
|
198 |
|
|
|
|
|
|
|
|
-114 |
|
|
|
|
18 |
|
|
|
84 |
|
|
|
|
|
Net profit from divested units |
|
|
|
1 |
|
|
|
56 |
|
|
|
|
-6 |
|
|
|
-22 |
|
|
|
|
-5 |
|
|
|
34 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit excluding divestments |
|
|
|
842 |
|
|
|
621 |
|
|
|
|
985 |
|
|
|
669 |
|
|
|
|
1,827 |
|
|
|
1,290 |
|
|
|
41.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- tax releases/tax assets |
|
|
|
130 |
|
|
|
-51 |
|
|
|
|
148 |
|
|
|
112 |
|
|
|
|
278 |
|
|
|
61 |
|
|
|
|
|
- restructuring provisions wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-28 |
|
|
|
|
|
|
|
|
-28 |
|
|
|
|
|
- hedge result |
|
|
|
|
|
|
|
44 |
|
|
|
|
|
|
|
|
14 |
|
|
|
|
|
|
|
|
58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal special items |
|
|
|
130 |
|
|
|
-7 |
|
|
|
|
148 |
|
|
|
98 |
|
|
|
|
278 |
|
|
|
91 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying net profit |
|
|
|
712 |
|
|
|
628 |
|
|
|
|
837 |
|
|
|
571 |
|
|
|
|
1,549 |
|
|
|
1,199 |
|
|
|
29.2 |
% |
36
Appendix 4. Net profit and underlying profit before tax per quarter
4.1 Quarterly Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4Q |
|
|
3Q |
|
|
2Q |
|
|
1Q |
|
|
|
4Q |
|
|
3Q |
|
|
2Q |
|
|
1Q |
|
In EUR million |
|
|
2005 |
|
|
2005 |
|
|
2005 |
|
|
2005 |
|
|
|
2004 |
|
|
2004 |
|
|
2004 |
|
|
2004 |
|
|
|
|
|
|
|
|
Underlying profit before tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Insurance Europe |
|
|
|
561 |
|
|
|
465 |
|
|
|
490 |
|
|
|
505 |
|
|
|
|
365 |
|
|
|
397 |
|
|
|
498 |
|
|
|
352 |
|
- Insurance Americas |
|
|
|
424 |
|
|
|
569 |
|
|
|
549 |
|
|
|
437 |
|
|
|
|
417 |
|
|
|
395 |
|
|
|
461 |
|
|
|
328 |
|
- Insurance Asia/Pacific |
|
|
|
112 |
|
|
|
113 |
|
|
|
52 |
|
|
|
170 |
|
|
|
|
120 |
|
|
|
95 |
|
|
|
150 |
|
|
|
110 |
|
- Other |
|
|
|
-75 |
|
|
|
-44 |
|
|
|
-226 |
|
|
|
-127 |
|
|
|
|
-31 |
|
|
|
253 |
|
|
|
-151 |
|
|
|
-195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance underlying profit before tax |
|
|
|
1,022 |
|
|
|
1,103 |
|
|
|
865 |
|
|
|
985 |
|
|
|
|
871 |
|
|
|
1,140 |
|
|
|
958 |
|
|
|
595 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Wholesale Banking |
|
|
|
502 |
|
|
|
568 |
|
|
|
481 |
|
|
|
725 |
|
|
|
|
537 |
|
|
|
471 |
|
|
|
423 |
|
|
|
661 |
|
- Retail Banking |
|
|
|
506 |
|
|
|
501 |
|
|
|
414 |
|
|
|
394 |
|
|
|
|
174 |
|
|
|
350 |
|
|
|
319 |
|
|
|
325 |
|
- ING Direct |
|
|
|
184 |
|
|
|
179 |
|
|
|
127 |
|
|
|
127 |
|
|
|
|
118 |
|
|
|
114 |
|
|
|
125 |
|
|
|
78 |
|
- Other |
|
|
|
-64 |
|
|
|
-3 |
|
|
|
-56 |
|
|
|
-54 |
|
|
|
|
-3 |
|
|
|
-85 |
|
|
|
7 |
|
|
|
-53 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking underlying profit before tax |
|
|
|
1,128 |
|
|
|
1,245 |
|
|
|
966 |
|
|
|
1,192 |
|
|
|
|
826 |
|
|
|
850 |
|
|
|
874 |
|
|
|
1,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying profit before tax |
|
|
|
2,150 |
|
|
|
2,348 |
|
|
|
1,831 |
|
|
|
2,177 |
|
|
|
|
1,697 |
|
|
|
1,990 |
|
|
|
1,832 |
|
|
|
1,606 |
|
- divestments |
|
|
|
9 |
|
|
|
5 |
|
|
|
-24 |
|
|
|
398 |
|
|
|
|
127 |
|
|
|
-173 |
|
|
|
269 |
|
|
|
50 |
|
- special items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46 |
|
|
|
67 |
|
|
|
149 |
|
|
|
80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
2,159 |
|
|
|
2,353 |
|
|
|
1,807 |
|
|
|
2,575 |
|
|
|
|
1,870 |
|
|
|
1,884 |
|
|
|
2,250 |
|
|
|
1,736 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit |
|
|
|
1,840 |
|
|
|
1,878 |
|
|
|
1,551 |
|
|
|
1,941 |
|
|
|
|
1,408 |
|
|
|
1,554 |
|
|
|
1,663 |
|
|
|
1,130 |
|
- of which Insurance operations |
|
|
|
861 |
|
|
|
977 |
|
|
|
700 |
|
|
|
730 |
|
|
|
|
875 |
|
|
|
931 |
|
|
|
1,076 |
|
|
|
467 |
|
- of which Banking operations |
|
|
|
979 |
|
|
|
901 |
|
|
|
851 |
|
|
|
1,211 |
|
|
|
|
533 |
|
|
|
623 |
|
|
|
587 |
|
|
|
663 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit per ordinary share (in EUR) |
|
|
|
0.85 |
|
|
|
0.86 |
|
|
|
0.72 |
|
|
|
0.89 |
|
|
|
|
0.65 |
|
|
|
0.73 |
|
|
|
0.79 |
|
|
|
0.54 |
|
4.2 Divestments and special items before tax per quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4Q |
|
|
3Q |
|
|
2Q |
|
|
1Q |
|
|
|
4Q |
|
|
3Q |
|
|
2Q |
|
|
1Q |
|
In EUR million |
|
|
2005 |
|
|
2005 |
|
|
2005 |
|
|
2005 |
|
|
|
2004 |
|
|
2004 |
|
|
2004 |
|
|
2004 |
|
|
|
|
|
|
|
|
Gains/ losses on divestments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sale Australia non-life |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
219 |
|
|
|
|
|
- sale ING Re |
|
|
|
|
|
|
|
20 |
|
|
|
|
|
|
|
|
|
|
|
|
33 |
|
|
|
-252 |
|
|
|
|
|
|
|
|
|
- sale Life of Georgia |
|
|
|
-10 |
|
|
|
-1 |
|
|
|
-78 |
|
|
|
|
|
|
|
|
-28 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- gain IPO Canada |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19 |
|
|
|
|
249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- sale Freeler |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sale Austbrokers |
|
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sale Asian cash equity business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-84 |
|
- sale BHF-Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
- sale CenE Bankiers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
87 |
|
|
|
|
|
|
|
|
|
- sale BAM |
|
|
|
|
|
|
|
-15 |
|
|
|
|
|
|
|
255 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- sale ING Bank Slaski shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- restructuring NMB-Heller |
|
|
|
|
|
|
|
|
|
|
|
47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gains/losses on divestments |
|
|
|
17 |
|
|
|
4 |
|
|
|
-31 |
|
|
|
376 |
|
|
|
|
85 |
|
|
|
-165 |
|
|
|
219 |
|
|
|
-84 |
|
— of which insurance |
|
|
|
17 |
|
|
|
19 |
|
|
|
-78 |
|
|
|
29 |
|
|
|
|
254 |
|
|
|
-252 |
|
|
|
219 |
|
|
|
|
|
— of which banking |
|
|
|
|
|
|
|
-15 |
|
|
|
47 |
|
|
|
347 |
|
|
|
|
-169 |
|
|
|
87 |
|
|
|
|
|
|
|
-84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax from divested units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
|
|
|
|
|
1 |
|
|
|
7 |
|
|
|
8 |
|
|
|
|
45 |
|
|
|
20 |
|
|
|
48 |
|
|
|
38 |
|
Banking |
|
|
|
-8 |
|
|
|
|
|
|
|
|
|
|
|
14 |
|
|
|
|
-3 |
|
|
|
-28 |
|
|
|
2 |
|
|
|
96 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax from divested units |
|
|
|
-8 |
|
|
|
1 |
|
|
|
7 |
|
|
|
22 |
|
|
|
|
42 |
|
|
|
-8 |
|
|
|
50 |
|
|
|
134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impact of divestments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
|
17 |
|
|
|
20 |
|
|
|
-71 |
|
|
|
37 |
|
|
|
|
299 |
|
|
|
-232 |
|
|
|
267 |
|
|
|
37 |
|
Banking |
|
|
|
-8 |
|
|
|
-15 |
|
|
|
47 |
|
|
|
361 |
|
|
|
|
-172 |
|
|
|
59 |
|
|
|
2 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total impact of divestments |
|
|
|
9 |
|
|
|
5 |
|
|
|
-24 |
|
|
|
398 |
|
|
|
|
127 |
|
|
|
-173 |
|
|
|
269 |
|
|
|
49 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- hedge result |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65 |
|
|
|
67 |
|
|
|
75 |
|
|
|
83 |
|
- gain on old reinsurance business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
96 |
|
|
|
|
|
Banking: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- hedge result |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22 |
|
|
|
|
|
|
|
-22 |
|
|
|
-3 |
|
- restructuring provisions wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total special items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46 |
|
|
|
67 |
|
|
|
149 |
|
|
|
80 |
|
— of which Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65 |
|
|
|
67 |
|
|
|
171 |
|
|
|
83 |
|
— of which Banking |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-19 |
|
|
|
|
|
|
|
-22 |
|
|
|
-3 |
|
37
Appendix 5. Balance Sheet and Capital & Reserves
5.1 ING Group Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Excl. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IAS 32/39 and |
|
|
|
|
|
|
|
|
IFRS |
|
|
|
|
|
|
|
IFRS 4 |
|
|
|
|
31 December |
|
|
1 January |
|
|
|
|
|
|
|
31 December |
|
In EUR million |
|
|
2005 |
|
|
2005 |
|
|
Change |
|
|
|
2004 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and balances with central banks |
|
|
|
13,084 |
|
|
|
9,805 |
|
|
|
33.4 |
% |
|
|
|
9,113 |
|
Amounts due from banks |
|
|
|
47,466 |
|
|
|
51,721 |
|
|
|
-8.2 |
% |
|
|
|
45,084 |
|
Non-trading derivatives |
|
|
|
7,766 |
|
|
|
9,127 |
|
|
|
-14.9 |
% |
|
|
|
|
|
Financial assets at fair value through profit
or loss |
|
|
|
260,378 |
|
|
|
182,819 |
|
|
|
42.4 |
% |
|
|
|
160,645 |
|
Investments |
|
|
|
322,712 |
|
|
|
265,597 |
|
|
|
21.5 |
% |
|
|
|
276,331 |
|
Loans and advances to customers |
|
|
|
439,181 |
|
|
|
390,846 |
|
|
|
12.4 |
% |
|
|
|
330,458 |
|
Reinsurance contracts |
|
|
|
8,285 |
|
|
|
6,818 |
|
|
|
21.5 |
% |
|
|
|
6,744 |
|
Property and equipment |
|
|
|
5,757 |
|
|
|
5,805 |
|
|
|
-0.8 |
% |
|
|
|
5,783 |
|
Other assets |
|
|
|
54,010 |
|
|
|
41,945 |
|
|
|
28.8 |
% |
|
|
|
42,233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
1,158,639 |
|
|
|
964,483 |
|
|
|
20.1 |
% |
|
|
|
876,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital and reserves |
|
|
|
36,736 |
|
|
|
28,172 |
|
|
|
30.4 |
% |
|
|
|
24,069 |
|
Third-party interests |
|
|
|
1,689 |
|
|
|
2,095 |
|
|
|
-19.4 |
% |
|
|
|
3,481 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
|
38,425 |
|
|
|
30,267 |
|
|
|
27.0 |
% |
|
|
|
27,550 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preference shares |
|
|
|
296 |
|
|
|
296 |
|
|
|
|
|
|
|
|
|
|
Subordinated loans |
|
|
|
6,096 |
|
|
|
4,157 |
|
|
|
46.6 |
% |
|
|
|
4,109 |
|
Insurance and investments contracts |
|
|
|
263,487 |
|
|
|
218,351 |
|
|
|
20.7 |
% |
|
|
|
216,851 |
|
Amounts due to banks |
|
|
|
122,234 |
|
|
|
95,621 |
|
|
|
27.8 |
% |
|
|
|
95,878 |
|
Customer deposits and other funds on deposit |
|
|
|
465,712 |
|
|
|
395,699 |
|
|
|
17.7 |
% |
|
|
|
349,241 |
|
Debt securities in issue/other borrowed funds |
|
|
|
113,514 |
|
|
|
107,155 |
|
|
|
5.9 |
% |
|
|
|
102,724 |
|
Financial liabilities at fair value through P&L |
|
|
|
103,620 |
|
|
|
74,143 |
|
|
|
39.8 |
% |
|
|
|
53,841 |
|
Non-trading derivatives |
|
|
|
6,248 |
|
|
|
8,647 |
|
|
|
-27.7 |
% |
|
|
|
|
|
Other liabilities |
|
|
|
39,007 |
|
|
|
30,147 |
|
|
|
29.4 |
% |
|
|
|
26,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
1,120,214 |
|
|
|
934,216 |
|
|
|
19.9 |
% |
|
|
|
848,841 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities |
|
|
|
1,158,639 |
|
|
|
964,483 |
|
|
|
20.1 |
% |
|
|
|
876,391 |
|
5.2 Changes in capital & reserves
|
|
|
|
|
|
|
|
|
In EUR million |
|
|
|
|
|
|
|
|
|
Capital & reserves as of 31 December 2004 (Dutch GAAP) |
|
|
|
|
|
|
25,866 |
|
Adjustments to IFRS excluding IAS 32, 39 and IFRS 4 |
|
|
|
|
|
|
-1,797 |
|
|
|
|
|
|
|
|
|
Capital & reserves as of 31 December 2004 (IFRS excluding IAS 32, 39 and IFRS 4) |
|
|
|
|
|
|
24,069 |
|
Adjustments due to implementation of IAS 32, 39 and IFRS 4 |
|
|
|
|
|
|
4,103 |
|
|
|
|
|
|
|
|
|
Capital & reserves as of 1 January 2005 (IFRS) |
|
|
|
|
|
|
28,172 |
|
|
|
|
|
|
|
|
|
|
Net profit 2005 |
|
|
7,210 |
|
|
|
|
|
Unrealised revaluations equities |
|
|
1,760 |
|
|
|
|
|
Unrealised revaluations debt securities |
|
|
-134 |
|
|
|
|
|
Transfer to insurance liabilities (shadow accounting) |
|
|
-89 |
|
|
|
|
|
Realised capital gains equities released to profit & loss account |
|
|
-431 |
|
|
|
|
|
Realised capital gains debt securities released to profit & loss account |
|
|
-226 |
|
|
|
|
|
Change in cashflow / net investment hedge reserve |
|
|
764 |
|
|
|
|
|
Cash dividend |
|
|
-2,461 |
|
|
|
|
|
Exchange rate differences |
|
|
2,141 |
|
|
|
|
|
Other |
|
|
30 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total changes 2005 |
|
|
|
|
|
|
8,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital and reserves as of 31 December 2005 |
|
|
|
|
|
|
36,736 |
|
38
Appendix 6. Cash Flows
6.1 Condensed consolidated statement of cash flows
|
|
|
|
|
|
|
|
|
In EUR million |
|
2005 |
|
|
2004 |
|
|
|
|
|
|
|
|
|
|
|
Net cash flow from operating activities |
|
|
33,749 |
|
|
|
75,102 |
|
|
|
|
|
|
|
|
|
|
Investments and advances: |
|
|
|
|
|
|
|
|
- associates |
|
|
-1,109 |
|
|
|
-2,643 |
|
- available-for-sale investments |
|
|
-260,769 |
|
|
|
-262,293 |
|
- held-to-maturity investments |
|
|
-1,030 |
|
|
|
|
|
- investment properties |
|
|
-1,156 |
|
|
|
-1,169 |
|
- property and equipment |
|
|
-540 |
|
|
|
-380 |
|
- assets subject to operating leases |
|
|
-991 |
|
|
|
-950 |
|
- investments for the risk of policyholders |
|
|
-41,781 |
|
|
|
-34,467 |
|
- other investments |
|
|
-164 |
|
|
|
-103 |
|
Disposals and redemptions: |
|
|
|
|
|
|
|
|
- associates |
|
|
1,761 |
|
|
|
1,520 |
|
- available-for-sale investments |
|
|
218,847 |
|
|
|
197,070 |
|
- held-to-maturity investments |
|
|
245 |
|
|
|
|
|
- investment property |
|
|
1,030 |
|
|
|
1,123 |
|
- property and equipment |
|
|
483 |
|
|
|
192 |
|
- assets subject to operating leases |
|
|
391 |
|
|
|
388 |
|
- investments for the risk of policyholders |
|
|
34,464 |
|
|
|
29,382 |
|
- other investments |
|
|
13 |
|
|
|
65 |
|
|
|
|
|
|
|
|
Net cash flow from investing activities |
|
|
-50,306 |
|
|
|
-72,265 |
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of subordinated loans |
|
|
1,901 |
|
|
|
1,000 |
|
Repayments of subordinated loans |
|
|
-177 |
|
|
|
-410 |
|
Borrowed funds and debt securities |
|
|
7,842 |
|
|
|
26 |
|
Deposits by reinsurers |
|
|
93 |
|
|
|
309 |
|
Issuance of ordinary shares |
|
|
114 |
|
|
|
1,037 |
|
Purchase of treasury shares
|
|
|
|
|
|
|
|
|
Sale of treasury shares
|
|
|
|
|
|
|
|
|
Dividends paid |
|
|
-2,461 |
|
|
|
-883 |
|
|
|
|
|
|
|
|
Net cash flow from financing activities |
|
|
7,312 |
|
|
|
1,079 |
|
|
|
|
|
|
|
|
|
|
Net cash flow |
|
|
-9,245 |
|
|
|
3,916 |
|
Cash and equivalents at beginning of year |
|
|
11,588 |
|
|
|
7,715 |
|
Implementation IAS 32/39 |
|
|
692 |
|
|
|
|
|
Effect of exchange-rate changes on cash and cash equivalents |
|
|
300 |
|
|
|
-43 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of period |
|
|
3,335 |
|
|
|
11,588 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In this summary, cash comprises the following items: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury bills and other eligible bills |
|
|
11,572 |
|
|
|
12,382 |
|
Amounts due to/from banks |
|
|
-21,321 |
|
|
|
-9,907 |
|
Cash and balances with central banks |
|
|
13,084 |
|
|
|
9,113 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents at end of period |
|
|
3,335 |
|
|
|
11,588 |
|
|
|
|
|
|
|
|
39
Appendix 7. Additional information
7.1 Life insurance profit & loss account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Premium income |
|
|
|
39,144 |
|
|
|
36,975 |
|
|
|
5.9 |
% |
|
|
|
10,189 |
|
|
|
9,408 |
|
|
|
8.3 |
% |
Investment income |
|
|
|
8,990 |
|
|
|
8,881 |
|
|
|
1.2 |
% |
|
|
|
2,310 |
|
|
|
2,243 |
|
|
|
3.0 |
% |
Commission and other income |
|
|
|
1,709 |
|
|
|
1,779 |
|
|
|
-3.9 |
% |
|
|
|
376 |
|
|
|
491 |
|
|
|
-23.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
|
49,843 |
|
|
|
47,635 |
|
|
|
4.6 |
% |
|
|
|
12,875 |
|
|
|
12,142 |
|
|
|
6.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
|
42,162 |
|
|
|
40,282 |
|
|
|
4.7 |
% |
|
|
|
10,788 |
|
|
|
10,119 |
|
|
|
6.6 |
% |
Other interest expenses |
|
|
|
1,100 |
|
|
|
1,140 |
|
|
|
-3.5 |
% |
|
|
|
247 |
|
|
|
288 |
|
|
|
-14.2 |
% |
Operating expenses |
|
|
|
3,884 |
|
|
|
3,556 |
|
|
|
9.2 |
% |
|
|
|
1,061 |
|
|
|
1,029 |
|
|
|
3.1 |
% |
Impairments/investment losses |
|
|
|
31 |
|
|
|
10 |
|
|
|
210.0 |
% |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
|
47,177 |
|
|
|
44,988 |
|
|
|
4.9 |
% |
|
|
|
12,119 |
|
|
|
11,436 |
|
|
|
6.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
2,666 |
|
|
|
2,647 |
|
|
|
0.7 |
% |
|
|
|
756 |
|
|
|
706 |
|
|
|
7.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.2 Non-life insurance profit and loss account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Premium income |
|
|
|
6,614 |
|
|
|
6,642 |
|
|
|
-0.4 |
% |
|
|
|
1,505 |
|
|
|
1,461 |
|
|
|
3.0 |
% |
Investment income |
|
|
|
954 |
|
|
|
1,298 |
|
|
|
-26.5 |
% |
|
|
|
226 |
|
|
|
488 |
|
|
|
-53.7 |
% |
Commission and other income |
|
|
|
13 |
|
|
|
27 |
|
|
|
-51.9 |
% |
|
|
|
4 |
|
|
|
-7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income |
|
|
|
7,581 |
|
|
|
7,967 |
|
|
|
-4.8 |
% |
|
|
|
1,735 |
|
|
|
1,942 |
|
|
|
-10.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
|
4,958 |
|
|
|
5,102 |
|
|
|
-2.8 |
% |
|
|
|
1,105 |
|
|
|
1,097 |
|
|
|
0.7 |
% |
Operating expenses |
|
|
|
1,311 |
|
|
|
1,190 |
|
|
|
10.2 |
% |
|
|
|
347 |
|
|
|
316 |
|
|
|
9.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenditure |
|
|
|
6,269 |
|
|
|
6,292 |
|
|
|
-0.4 |
% |
|
|
|
1,452 |
|
|
|
1,413 |
|
|
|
2.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
1,312 |
|
|
|
1,675 |
|
|
|
-21.7 |
% |
|
|
|
283 |
|
|
|
529 |
|
|
|
-46.5 |
% |
7.3 Insurance investment income & other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Income from debt securities/other
fixed-interest securities |
|
|
|
8,870 |
|
|
|
9,244 |
|
|
|
-4.0 |
% |
|
|
|
1,999 |
|
|
|
2,509 |
|
|
|
-20.3 |
% |
Realised gains/losses on bonds1 |
|
|
|
279 |
|
|
|
|
|
|
|
|
|
|
|
|
-1 |
|
|
|
|
|
|
|
|
|
Income investment property |
|
|
|
232 |
|
|
|
287 |
|
|
|
-19.2 |
% |
|
|
|
80 |
|
|
|
79 |
|
|
|
1.3 |
% |
Change in fair value real estate |
|
|
|
117 |
|
|
|
138 |
|
|
|
-15.2 |
% |
|
|
|
46 |
|
|
|
93 |
|
|
|
-50.5 |
% |
Dividend income |
|
|
|
469 |
|
|
|
425 |
|
|
|
10.4 |
% |
|
|
|
70 |
|
|
|
44 |
|
|
|
59.1 |
% |
Realised gains/losses on equities |
|
|
|
399 |
|
|
|
590 |
|
|
|
-32,4 |
% |
|
|
|
223 |
|
|
|
154 |
|
|
|
44.8 |
% |
Other |
|
|
|
1,199 |
|
|
|
1,094 |
|
|
|
9.6 |
% |
|
|
|
702 |
|
|
|
513 |
|
|
|
36.8 |
% |
Eliminations |
|
|
|
-1,621 |
|
|
|
-1,599 |
|
|
|
|
|
|
|
|
-464 |
|
|
|
-646 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment income |
|
|
|
9,944 |
|
|
|
10,179 |
|
|
|
-2.3 |
% |
|
|
|
2,655 |
|
|
|
2,746 |
|
|
|
-3.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation results non-trading derivatives |
|
|
|
-179 |
|
|
|
|
|
|
|
|
|
|
|
|
-119 |
|
|
|
|
|
|
|
|
|
Share of profit associates |
|
|
|
401 |
|
|
|
195 |
|
|
|
|
|
|
|
|
145 |
|
|
|
43 |
|
|
|
|
|
Other |
|
|
|
154 |
|
|
|
413 |
|
|
|
|
|
|
|
|
60 |
|
|
|
129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income |
|
|
|
376 |
|
|
|
608 |
|
|
|
-38.2 |
|
|
|
|
86 |
|
|
|
172 |
|
|
|
-50.0 |
|
1. |
|
Approximately 50% of this amount has been transferred to the provision for deferred profit
sharing (shadow accounting). Realised gains also include
recoveries of previous impairments. |
40
7.4 Banking investment income, commission income and other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year |
|
|
|
Fourth Quarter |
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
|
|
|
Change in fair value real estate |
|
|
|
59 |
|
|
|
61 |
|
|
|
-3.3 |
% |
|
|
|
21 |
|
|
|
61 |
|
|
|
-65.6 |
% |
Realised gains/losses on equities |
|
|
|
126 |
|
|
|
45 |
|
|
|
180.0 |
% |
|
|
|
1 |
|
|
|
26 |
|
|
|
-96.2 |
% |
Realised gains/losses on bonds |
|
|
|
60 |
|
|
|
— |
|
|
|
|
|
|
|
|
7 |
|
|
|
— |
|
|
|
|
|
Gains/losses on divestments |
|
|
|
379 |
|
|
|
-124 |
|
|
|
|
|
|
|
|
— |
|
|
|
-169 |
|
|
|
|
|
Other investment income |
|
|
|
313 |
|
|
|
381 |
|
|
|
-17.8 |
% |
|
|
|
97 |
|
|
|
118 |
|
|
|
-17.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total investment income |
|
|
|
937 |
|
|
|
363 |
|
|
|
158.1 |
% |
|
|
|
126 |
|
|
|
36 |
|
|
|
250.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds transfer |
|
|
|
589 |
|
|
|
575 |
|
|
|
2.4 |
% |
|
|
|
160 |
|
|
|
131 |
|
|
|
22.1 |
% |
Securities business |
|
|
|
641 |
|
|
|
665 |
|
|
|
-3.6 |
% |
|
|
|
161 |
|
|
|
146 |
|
|
|
10.3 |
% |
Insurance broking |
|
|
|
115 |
|
|
|
136 |
|
|
|
-15.4 |
% |
|
|
|
14 |
|
|
|
29 |
|
|
|
-51.7 |
% |
Management fees |
|
|
|
648 |
|
|
|
766 |
|
|
|
-15.4 |
% |
|
|
|
167 |
|
|
|
188 |
|
|
|
-11.2 |
% |
Brokerage and advisory fees |
|
|
|
146 |
|
|
|
139 |
|
|
|
5.0 |
% |
|
|
|
25 |
|
|
|
54 |
|
|
|
-53.7 |
% |
Other |
|
|
|
262 |
|
|
|
300 |
|
|
|
-12.7 |
% |
|
|
|
99 |
|
|
|
42 |
|
|
|
135.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total commission income |
|
|
|
2,401 |
|
|
|
2,581 |
|
|
|
-7.0 |
% |
|
|
|
626 |
|
|
|
590 |
|
|
|
6.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation results non-trading derivatives |
|
|
|
226 |
|
|
|
— |
|
|
|
|
|
|
|
|
29 |
|
|
|
— |
|
|
|
|
|
Share of profit associates |
|
|
|
140 |
|
|
|
34 |
|
|
|
311.8 |
% |
|
|
|
55 |
|
|
|
23 |
|
|
|
139.1 |
% |
Result of trading portfolio |
|
|
|
421 |
|
|
|
626 |
|
|
|
-32.7 |
% |
|
|
|
-57 |
|
|
|
135 |
|
|
|
-142.2 |
% |
Other |
|
|
|
561 |
|
|
|
375 |
|
|
|
49.6 |
% |
|
|
|
196 |
|
|
|
107 |
|
|
|
83.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income |
|
|
|
1,348 |
|
|
|
1,035 |
|
|
|
30.2 |
% |
|
|
|
223 |
|
|
|
265 |
|
|
|
-15.8 |
% |
7.5 Loans and advances to customers of the banking operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31 December |
|
|
1 January |
|
|
FY |
|
|
|
30 September |
|
|
4Q |
|
In EUR billion |
|
|
2005 |
|
|
20051 |
|
|
Change |
|
|
|
20051 |
|
|
Change |
|
|
|
|
|
|
|
|
– Public authorities |
|
|
|
18.6 |
|
|
|
16.9 |
|
|
|
10.1 |
% |
|
|
|
19.6 |
|
|
|
-5.1 |
% |
– Other corporate |
|
|
|
202.8 |
|
|
|
181.3 |
|
|
|
11.9 |
% |
|
|
|
207.4 |
|
|
|
-2.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total corporate |
|
|
|
221.4 |
|
|
|
198.2 |
|
|
|
11.7 |
% |
|
|
|
227.0 |
|
|
|
-2.5 |
% |
– Mortgages |
|
|
|
159.6 |
|
|
|
124.5 |
|
|
|
28.2 |
% |
|
|
|
149.9 |
|
|
|
6.5 |
% |
– Other personal |
|
|
|
25.4 |
|
|
|
21.0 |
|
|
|
21.0 |
% |
|
|
|
23.4 |
|
|
|
8.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total personal |
|
|
|
185.0 |
|
|
|
145.5 |
|
|
|
27.1 |
% |
|
|
|
173.3 |
|
|
|
6.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions for bank lending |
|
|
|
-3.3 |
|
|
|
-3.9 |
|
|
|
|
|
|
|
|
-3.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total bank lending |
|
|
|
403.1 |
|
|
|
339.8 |
|
|
|
18.6 |
% |
|
|
|
396.8 |
|
|
|
1.6 |
% |
|
|
|
1. |
|
Restated due to adjustments to the opening balance sheet under IFRS |
41
Appendix 8. Embedded value & value of new business statistics
8.1. Embedded Value — life insurance business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In EUR million |
|
|
2005 |
|
|
2004 |
|
|
Change |
|
|
|
|
|
Free surplus (FS) |
|
|
|
2,274 |
|
|
|
599 |
|
|
|
279.6 |
% |
Required capital (RC) |
|
|
|
13,691 |
|
|
|
11,509 |
|
|
|
19.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net worth (ANW) |
|
|
|
15,964 |
|
|
|
12,108 |
|
|
|
31.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present value of future (statutory book) profits (PVFP) |
|
|
|
16,431 |
|
|
|
14,571 |
|
|
|
12.8 |
% |
Cost of holding required capital (CoC) |
|
|
|
-4,810 |
|
|
|
-4,227 |
|
|
|
13.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Value of in-force covered business (ViF) |
|
|
|
11,622 |
|
|
|
10,344 |
|
|
|
12.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded value (ViF and ANW) |
|
|
|
27,586 |
|
|
|
22,451 |
|
|
|
22.9 |
% |
Embedded value results ING life insurance
Embedded value is the total of the adjusted net worth (including the free surplus and required
capital) and the value of in-force business of the life insurance operations. The embedded value of
ING’s life insurance operations increased 25.0% to EUR 28,061 million before net dividends/capital
injections of EUR 474 million paid to the Group. After dividends/capital injections, the embedded
value was EUR 27,586 million, an increase of EUR 5,135 million from 2004. In addition to the
increase in value from new business written in 2005 as well as the unwinding of the discount rate,
the increase in embedded value was attributable mainly to favourable investment performance (EUR
1,105 million), changes to the discount rates (EUR 804 million), favourable currency movements (EUR
1,575 million), model changes, and the investment return on the free surplus. The increase in
embedded value was partially offset by changes in economic assumptions (EUR –2,030 million),
particularly in Asia/Pacific, primarily due to revised new money assumptions in Taiwan. The ING
Group embedded value, after deduction for pension deficit, shows a value of EUR 42,352 million,
which compares to a reported Group embedded value of EUR 29,912 million in 2004. Please note that
the Group embedded value for 2005 is based on shareholders’ equity under IFRS and the 2004 figures
are based on shareholders’ equity under Dutch GAAP. (A separate Embedded Value Report 2005 is
available at www.ing.com)
8.2. Analysis of movement in Embedded Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
Insurance |
|
|
Insurance |
|
|
|
|
|
in EUR million |
|
|
Europe |
|
|
Americas |
|
|
Asia/Pacific |
|
|
|
Total |
|
|
|
|
|
|
|
|
Embedded Value 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free surplus (FS) |
|
|
|
4,377 |
|
|
|
128 |
|
|
|
-3,906 |
|
|
|
|
599 |
|
Required capital (RC) |
|
|
|
2,411 |
|
|
|
4,256 |
|
|
|
4,843 |
|
|
|
|
11,509 |
|
ViF |
|
|
|
5,470 |
|
|
|
3,735 |
|
|
|
1,139 |
|
|
|
|
10,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EV 2004 |
|
|
|
12,258 |
|
|
|
8,118 |
|
|
|
2,076 |
|
|
|
|
22,451 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Addition of business / (divested business) |
|
|
|
-21 |
|
|
|
218 |
|
|
|
-1 |
|
|
|
|
196 |
|
Currency effects |
|
|
|
48 |
|
|
|
1,298 |
|
|
|
230 |
|
|
|
|
1,575 |
|
Model changes |
|
|
|
236 |
|
|
|
314 |
|
|
|
-212 |
|
|
|
|
338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revised starting Embedded Value |
|
|
|
12,521 |
|
|
|
9,947 |
|
|
|
2,092 |
|
|
|
|
24,560 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of new business (VNB) |
|
|
|
226 |
|
|
|
207 |
|
|
|
373 |
|
|
|
|
805 |
|
Financial variances |
|
|
|
979 |
|
|
|
61 |
|
|
|
65 |
|
|
|
|
1,105 |
|
Operational variances |
|
|
|
316 |
|
|
|
-94 |
|
|
|
72 |
|
|
|
|
294 |
|
Operating assumption changes |
|
|
|
-82 |
|
|
|
-12 |
|
|
|
144 |
|
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded Value Profit (EV Profit) |
|
|
|
1,439 |
|
|
|
162 |
|
|
|
654 |
|
|
|
|
2,254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Required return — return on RC and ViF |
|
|
|
645 |
|
|
|
769 |
|
|
|
493 |
|
|
|
|
1,907 |
|
Investment return on free surplus |
|
|
|
780 |
|
|
|
-5 |
|
|
|
-246 |
|
|
|
|
530 |
|
Discount rate changes |
|
|
|
307 |
|
|
|
41 |
|
|
|
455 |
|
|
|
|
804 |
|
Economic assumption changes |
|
|
|
-401 |
|
|
|
-49 |
|
|
|
-1,579 |
|
|
|
|
-2,030 |
|
Embedded value of business acquired |
|
|
|
2 |
|
|
|
0 |
|
|
|
34 |
|
|
|
|
36 |
|
Capital injections |
|
|
|
10 |
|
|
|
455 |
|
|
|
22 |
|
|
|
|
486 |
|
Dividends |
|
|
|
-374 |
|
|
|
-461 |
|
|
|
-125 |
|
|
|
|
-960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal |
|
|
|
969 |
|
|
|
750 |
|
|
|
-946 |
|
|
|
|
772 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded
Value 2005 — after capital injections/ dividends |
|
|
|
14,929 |
|
|
|
10,858 |
|
|
|
1,799 |
|
|
|
|
27,586 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Embedded
Value 2005 — before capital injections/dividends |
|
|
|
15,294 |
|
|
|
10,865 |
|
|
|
1,903 |
|
|
|
|
28,061 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RoEV% — before capital injections/(dividends) |
|
|
|
22 |
% |
|
|
9 |
% |
|
|
-11 |
% |
|
|
|
14 |
% |
Embedded Value Profit (EV Profit)
Economic value creation is measured at ING by Embedded Value Profit (EV Profit), which represents
the value of those items in the embedded value movement, in excess of the required return, that the
business line management can influence. EV profit consists of the value of new business written
during the period, variances from current and future
42
expected profits due to performance over the current year (i.e. the financial and operational
performance variances), and operating assumption changes (i.e. non-economic assumption changes).
In 2005, EV profit increased 262.4% to EUR 2,254 million, driven by strong growth in value of new
business (up 27.4% to EUR 805 million), robust investment performance (financial variances of EUR
1,105 million) and better operational experience (EUR 294 million). These results reflect a strong
focus and emphasis on value creation at ING’s life businesses. EV Profit increased sharply in
Insurance Europe, primarily due to strong investment performance in the Netherlands (financial
variances EUR 841 million) and to a lesser extent to positive net operational variances (EUR 316
million). EV profit in the Americas was negatively impacted by higher lapses in Mexico and South
America owing to transfer wars (operational variances of EUR —38 million). EV profit in
Asia/Pacific was driven by strong growth in the value of new business and a positive impact of
operational assumption changes in Taiwan (EUR 288 million).
Sensitivity analysis
Embedded Value calculations rely upon several best-estimates with respect to assumptions
including future investment income and mortality, morbidity and lapse rates. This section gives the
impact of changes in these assumptions on embedded value. The sensitivity results include estimates
of the impact of changes in the financial options and guarantees. Please note that if several
changes occurred at once, the results would not be the sum of the individual sensitivity tests.
Economic assumptions
The tables below show the outcome of sensitivity analysis of the Embedded Value as at 31 December
2005 to:
- |
|
One percentage point decrease and increase in new money interest rates; |
|
- |
|
One percentage point decrease and increase in the discount rates; |
|
- |
|
New money rates based on implied market forward rates derived from the swap rates as at 31 October 2005. The discount rate is adjusted accordingly; |
|
- |
|
10bp lower short-term rates for the period 2006-2015: assumes a parallel shift of the yield curve for this period. The discount rate is adjusted accordingly; |
|
- |
|
One percentage point decrease in assumed investment returns for equity and real estate investments; |
|
- |
|
Ten percent fall in market value of equity and real estate investments; and |
|
- |
|
Local regulatory minimum capital requirement. |
In each sensitivity calculation, all other assumptions remain unchanged except where they are
directly affected by the revised economic conditions. For example, future bonus crediting rates are
automatically adjusted to reflect sensitivity changes to future investment returns. When indicated
above that the risk discount rate is adjusted accordingly, then the risk margin remains unchanged.
8.3 Sensitivity of Embedded Value to economic assumptions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance |
|
|
Insurance |
|
|
Insurance |
|
|
|
|
in EUR million |
|
|
Europe |
|
|
Americas |
|
|
Asia/Pacific |
|
|
Total |
|
|
|
|
|
As reported — Embedded Value (net of tax) |
|
|
|
14,929 |
|
|
|
10,858 |
|
|
|
1,799 |
|
|
|
27,586 |
|
1% decrease in new-money rates |
|
|
|
-449 |
|
|
|
-410 |
|
|
|
-2,029 |
|
|
|
-2,888 |
|
1% increase in new-money rates |
|
|
|
436 |
|
|
|
150 |
|
|
|
2,047 |
|
|
|
2,633 |
|
1% decrease in discount rates |
|
|
|
915 |
|
|
|
584 |
|
|
|
655 |
|
|
|
2,154 |
|
1% increase in discount rates |
|
|
|
-772 |
|
|
|
-518 |
|
|
|
-541 |
|
|
|
-1,831 |
|
Implied market forward rates (31 Oct 2005) |
|
|
|
51 |
|
|
|
18 |
|
|
|
-1,540 |
|
|
|
-1,471 |
|
Lower short-term rates with 10bp |
|
|
|
14 |
|
|
|
27 |
|
|
|
-26 |
|
|
|
15 |
|
1% lower equity and real estate returns1 |
|
|
|
-576 |
|
|
|
-179 |
|
|
|
-150 |
|
|
|
-905 |
|
10% downward shift in market values of equity and
real estate investments |
|
|
|
-877 |
|
|
|
-378 |
|
|
|
-202 |
|
|
|
-1,456 |
|
Local regulatory minimum capital requirement |
|
|
|
12 |
|
|
|
125 |
|
|
|
2,261 |
|
|
|
2,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impact of2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1% decrease in new-money & 1% decrease in discount
rates |
|
|
|
467 |
|
|
|
174 |
|
|
|
-1,374 |
|
|
|
-734 |
|
1% increase in new-money & 1% increase in discount
rates |
|
|
|
-336 |
|
|
|
-368 |
|
|
|
1,506 |
|
|
|
802 |
|
1. In comparison with 2004 results of the equity sensitivity may differ as in 2004 this
sensitivity was applied to unit-linked and variable products only.
2. Net impact is the sum of the individual sensitivities presented above. This may differ from an
exact calculation of changing both parameters together.
We make the following observations on the above results:
- |
|
The negative impact to Embedded Value from using implied market forward rates (net of
corresponding discount rate |
43
adjustments) is EUR 1,471 million, almost entirely due to impact from Taiwan (EUR 1,499
million negative).
Insurance Europe and Americas actually benefit from using implied market forward curves as new
money
assumptions (net of adjustment to discount rates) reflecting alignment of new money
assumptions used with
observable market rates at 31 October 2005.
- |
|
The impact of using local regulatory minimum capital instead of ING capital model is positive
EUR 2,398 million and
primarily due to Taiwan for which ING allocates capital at a significantly higher level than
local regulatory level |
|
- |
|
The net impact of one percentage point decrease in new money rate (1% downward parallel shift)
and discount rates
is EUR —734 million, compared with 2004 (EUR —937 million) |
Value of new business statistics
The internal rates of return have been adjusted to be consistent with a 7.5% discount rate in
the Netherlands to reflect expected currency movements relative to the euro. The value of new
business fully reflects acquisition expense overruns, which represent excess costs for acquiring
new business over and above the expense allowances provided for in the product pricing. Starting in
2005, new business statistics are converted at the average exchange rate instead of the closing
exchange rate of the reporting period. In compliance with the European Embedded Value Principles,
statistics are included for Value of New Business divided by the present value of premiums in Table
8.4. ING continues to focus primarily on the value of new business and the internal rate of return
as key value drivers.
8.4 Value of new life business statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New production 2005 |
|
|
|
New production 2004 |
|
|
|
|
Value of New |
|
|
Present value of |
|
|
VNB/PV |
|
|
|
Value of New |
|
|
Present value of |
|
|
VNB/PV |
|
In EUR million |
|
|
Business |
|
|
premiums |
|
|
premiums |
|
|
|
Business |
|
|
premiums |
|
|
premiums |
|
|
|
|
|
|
|
|
Netherlands |
|
|
|
95 |
|
|
|
2,667 |
|
|
|
3.6 |
% |
|
|
|
58 |
|
|
|
3,058 |
|
|
|
1.9 |
% |
Belgium (& Luxembourg) |
|
|
|
36 |
|
|
|
1,748 |
|
|
|
2.1 |
% |
|
|
|
42 |
|
|
|
1,946 |
|
|
|
2.2 |
% |
Central Europe & Spain |
|
|
|
94 |
|
|
|
2,475 |
|
|
|
3.8 |
% |
|
|
|
38 |
|
|
|
1,623 |
|
|
|
2.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance Europe |
|
|
|
226 |
|
|
|
6,890 |
|
|
|
3.3 |
% |
|
|
|
138 |
|
|
|
6,627 |
|
|
|
2.1 |
% |
U.S.1 |
|
|
|
172 |
|
|
|
18,571 |
|
|
|
0.9 |
% |
|
|
|
138 |
|
|
|
16,229 |
|
|
|
0.9 |
% |
Latin America |
|
|
|
34 |
|
|
|
568 |
|
|
|
6.0 |
% |
|
|
|
35 |
|
|
|
462 |
|
|
|
7.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance Americas1 |
|
|
|
207 |
|
|
|
19,139 |
|
|
|
1.1 |
% |
|
|
|
173 |
|
|
|
16,691 |
|
|
|
1.0 |
% |
Insurance Asia/Pacific |
|
|
|
373 |
|
|
|
13,814 |
|
|
|
2.7 |
% |
|
|
|
321 |
|
|
|
6,714 |
|
|
|
4.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
805 |
|
|
|
39,843 |
|
|
|
2.0 |
% |
|
|
|
632 |
|
|
|
30,032 |
|
|
|
2.1 |
% |
1. 2004 excludes U.S. individual reinsurance business and Life of Georgia
8.5 Investment in new life business & acquisition expense overruns
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New production 2005 |
|
|
|
New production 2004 |
|
|
|
|
Investment in new |
|
|
Acquisition expense |
|
|
|
Investment in new |
|
|
Acquisition expense |
|
In EUR million |
|
|
business |
|
|
overruns |
|
|
|
business |
|
|
overruns |
|
|
|
|
|
|
|
|
Netherlands |
|
|
|
147 |
|
|
|
1 |
|
|
|
|
158 |
|
|
|
6 |
|
Belgium (& Luxembourg) |
|
|
|
45 |
|
|
|
2 |
|
|
|
|
42 |
|
|
|
3 |
|
Central Europe & Spain |
|
|
|
122 |
|
|
|
7 |
|
|
|
|
100 |
|
|
|
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance Europe |
|
|
|
313 |
|
|
|
10 |
|
|
|
|
300 |
|
|
|
28 |
|
U.S. |
|
|
|
817 |
|
|
|
52 |
|
|
|
|
791 |
|
|
|
13 |
|
Latin America |
|
|
|
104 |
|
|
|
13 |
|
|
|
|
85 |
|
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance Americas |
|
|
|
920 |
|
|
|
65 |
|
|
|
|
876 |
|
|
|
22 |
|
Insurance Asia/Pacific |
|
|
|
536 |
|
|
|
27 |
|
|
|
|
452 |
|
|
|
23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
1,770 |
|
|
|
103 |
|
|
|
|
1,628 |
|
|
|
73 |
|
8.6 New business production and value in developing markets1 by region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New production 2005 |
|
|
|
New production 2004 |
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of |
|
|
|
|
|
|
|
Annual |
|
|
Single |
|
|
New |
|
|
|
|
|
|
|
Annual |
|
|
Single |
|
|
New |
|
|
|
|
In EUR million |
|
|
premium |
|
|
Premium |
|
|
Business |
|
|
IRR |
|
|
|
Premium |
|
|
Premium |
|
|
Business |
|
|
IRR |
|
|
|
|
|
|
|
|
Europe |
|
|
|
191 |
|
|
|
178 |
|
|
|
69 |
|
|
|
16.6 |
% |
|
|
|
140 |
|
|
|
82 |
|
|
|
31 |
|
|
|
14.2 |
% |
Americas |
|
|
|
216 |
|
|
|
216 |
|
|
|
34 |
|
|
|
12.6 |
% |
|
|
|
215 |
|
|
|
191 |
|
|
|
35 |
|
|
|
14.7 |
% |
Asia/Pacific |
|
|
|
1,224 |
|
|
|
432 |
|
|
|
272 |
|
|
|
19.3 |
% |
|
|
|
717 |
|
|
|
374 |
|
|
|
201 |
|
|
|
13.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
1,631 |
|
|
|
826 |
|
|
|
375 |
|
|
|
17.4 |
% |
|
|
|
1,072 |
|
|
|
647 |
|
|
|
268 |
|
|
|
13.5 |
% |
1. The countries included as developing markets are: Europe: Bulgaria, Czech Republic,
Hungary, Poland, Romania, Slovakia, Russia (note Russia was added for 2004); Americas: Chile,
Mexico, Peru; Asia/Pacific: China, Hong Kong, India, Korea, Malaysia, Thailand, Taiwan
44
Appendix 9. Information for shareholders
Shares and warrants
The average number of shares used for the calculation of net profit per share for 2005, was 2,169.5
million (2,125.3 million for 2004). The number of (depositary receipts for) ordinary shares of EUR
0.24 nominal value outstanding at the end of December 2005 was 2,204.9 million (including 38.7
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 December
2005 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 was 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 December 2005 was 17.2
million.
In 2005, the turnover of (depositary receipts for) ordinary shares on the Euronext Amsterdam Stock
Market was 2,131.7 million (purchases and sales). The highest closing price was EUR 29.75, the
lowest EUR 20.99; the closing price at the end of December 2005 was EUR 29.30.
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.
|
|
|
Important dates1 |
25 April 2006
|
|
Annual General Meeting of shareholders in Amsterdam |
27 April 2006
|
|
ING share quoted ex-final dividend |
11 May 2006
|
|
Publication of results first three months |
10 August 2006
|
|
Publication of results first six months |
11 August 2006
|
|
ING share quoted ex-interim dividend |
9 November 2006
|
|
Publication of results first nine months |
15 February 2007
|
|
Publication of annual results 2006 |
24 April 2007
|
|
Annual General Meeting of shareholders in Amsterdam |
26 April 2007
|
|
ING share quoted ex-final dividend |
|
|
|
1. |
|
All dates shown are provisional. For further information see the Financial Calendar at
www.ing.com |
45
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. Blokbergen |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C.Blokbergen |
|
|
|
|
Corporate Legal, Compliance & Security Department |
|
|
|
|
Head Legal Department |
Dated: February 16, 2006