Executing our strategy for profitable growth - 2005 ING Group
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www.ing.com 2005 ING Group Annual Review Executing our strategy for profitable growth
1.0 WHO WE ARE
FIVE YEARS’ KEY FIGURES
IFRS Dutch GAAP
2005 2004 2004 2003 2002 2001
Balance sheet (in EUR billion)
Total assets* 1,159 964 866 779 716 705
Capital and reserves* 37 28 26 21 18 22
Assets under management (in EUR billion) 547 492 492 463 449 513
Market capitalisation (in EUR billion) 65 49 49 39 32 57
Income (in EUR million)
Insurance operations 57,424 55,602 55,398 53,233 59,449 55,274
Banking operations 13,848 12,678 12,537 11,680 11,201 11,111
Expenses (in EUR million)
Insurance operations 5,195 4,746 4,837 4,897 5,203 5,583
Banking operations 8,844 8,795 8,658 8,184 8,298 8,186
Impairments/additions to the provision
for loan losses (in EUR million) 119 475 497 1,288 2,099 907
Profit (in EUR million)
Insurance operations 3,978 4,322 4,005 3,486 3,170 2,792
Banking operations 4,916 3,418 3,414 2,371 1,468 2,170
Profit before tax 8,894 7,740 7,419 5,857 4,638 4,962
Underlying (IFRS)/operating net profit (Dutch GAAP) 6,196 4,959 5,389 4,053 3,433 3,539
Divestments and special items (IFRS)/non-operating net profit (Dutch GAAP) 1,014 796 579 -10 1,067 1,038
Net profit 7,210 5,755 5,968 4,043 4,500 4,577
Distributable net profit 7,210 5,755 5,968 4,043 4,253 4,252
Figures per ordinary share of EUR 0.24 nominal value
Net profit 3.32 2.71 2.80 2.00 2.32 2.37
Distributable net profit 3.32 2.71 2.80 2.00 2.20 2.20
Dividend 1.18 1.07 1.07 0.97 0.97 0.97
Capital and reserves* 16.96 12.95 11.76 10.08 9.14 11.03
Ratios (in %)
ING Group
(Operating) return on equity (ROE) 26.6 25.4 22.9 21.5 17.4 15.3
(Operating) net profit growth 25 n.a. 33 18 -3 4
Insurance operations
Combined ratio 95 94 94 98 102 103
Capital-coverage ratio* 255 204 210 180 169 180
Banking operations
BIS ratio ING Bank* 10.86 10.46 11.47 11.34 10.98 10.57
Tier-1 ratio ING Bank* 7.32 6.92 7.71 7.59 7.31 7.03
Cost/income ratio 63.9 69.4 69.1 70.1 74.1 73.7
Employees (average FTEs) 115,300 113,000 113,000 115,200 113,060 112,000
* Comparable figures shown under 2004 are IFRS-based figures at 1 January 2005;
figures were restated due to adjustments to the opening balance sheet under IFRS.
CONTENTS
1.0 WHO WE ARE
ING AT A GLANCE 2
TOTAL ASSETS
in EUR billion CHAIRMAN’S STATEMENT 4
1,200
1,100 STRATEGY 6
1,000
900
800
700
600
2.0 OUR PERFORMANCE
500
400 FINANCIAL HIGHLIGHTS 8
300 IFRS
200
100 Dutch GAAP RISK MANAGEMENT 11
0
96 97 98 99 00 01 02 03 04 04 05 INSURANCE 12
– Insurance overview 12
MARKET CAPITALISATION – Insurance Europe 13
in EUR billion – Insurance Asia/Pacific 14
90 – Insurance Americas 15
80
70 BANKING 16
60 – Banking overview 16
50 – Wholesale Banking 17
40 – Retail Banking 18
30 – ING Direct 19
20
10 ASSET MANAGEMENT 20
0
96 97 98 99 00 01 02 03 04 05 OUR PEOPLE 22
OPERATING/UNDERLYING NET PROFIT CORPORATE RESPONSIBILITY 23
in EUR billion
10
9 3.0 GOVERNANCE AND COMPLIANCE
8
7
CORPORATE GOVERNANCE 24
6
5
4
COMPLIANCE 25
3 IFRS
2 SUPERVISORY BOARD AND
1 Dutch GAAP EXECUTIVE BOARD 26
0
96 97 98 99 00 01 02 03 04 04 05 REMUNERATION 28
EMPLOYEES
average FTEs, in thousands 4.0 GENERAL INFORMATION
120
110 INFORMATION FOR SHAREHOLDERS 30
100
90
80 ADDITIONAL INFORMATION 32
70
60
50
40
30
20
10
0
96 97 98 99 00 01 02 03 04 05
ING Group Annual Review 2005 1
1.0 WHO WE ARE
ING AT A GLANCE
MISSION PROFILE
We strive to deliver our financial ING is a global financial services company individuals, families, small businesses,
products and services in the way our with 150 years of experience, providing large corporations, institutions and
customers expect: with exemplary a wide array of insurance, banking and governments. Based on market
service, maximum convenience and asset-management services in over 50 capitalisation, ING is one of the 15
at competitive rates. This is reflected countries. Our 115,000 employees work largest financial institutions worldwide
in our mission statement: to set the daily to satisfy a broad customer base: and in the top-10 in Europe.
standard in helping our customers
manage their financial future.
ING INSURANCE – BANKING – ASSET MANAGEMENT
ING has six business lines. A clear client focus and strong
business logic are the key elements in this structure.
INSURANCE Operates the insurance activities in the Netherlands, Belgium,
EUROPE Spain, Greece and Central Europe. In these countries we offer life UNDERLYING PROFIT BEFORE TAX
insurance with a particular focus on pensions. In the Netherlands INSURANCE EUROPE
and Belgium we also offer non-life insurance. Insurance Europe 2005 2,021
also includes our European asset-management operations. 2004 1,612
in EUR million
INSURANCE Conducts insurance operations and asset-management
AMERICAS activities in the Americas. It is well-established in the United UNDERLYING PROFIT BEFORE TAX
States with retirement services, annuities, life insurance and INSURANCE AMERICAS
asset management. We have a leading position in non-life 2005 1,979
insurance in Canada. Furthermore, we are active in Mexico, 2004 1,601
Chile, Peru and Brazil. in EUR million
INSURANCE Conducts the life-insurance operations and asset/wealth-
ASIA/PACIFIC management activities in Asia/Pacific. It has well-established UNDERLYING PROFIT BEFORE TAX
positions in Australia and New-Zealand, Hong Kong, Japan, INSURANCE ASIA/PACIFIC
South Korea, Malaysia and Taiwan. The activities in China, 2005 447
India and Thailand are future growth engines for ING. 2004 475
in EUR million
PREMIUM INCOME
PER BUSINESS LINE
in EUR million
Insurance Europe 23% 10,702
Insurance Americas 50% 22,744
Insurance Asia/Pacific 27% 12,286
Other 26
Total 100% 45,758
2 ING Group Annual Review 2005
Visit www.ing.com for further information
BUSINESS STAKEHOLDERS
ING is a major financial services company insurer based on direct written premium. ING conducts its business on the
in the Benelux home market. ING ING Direct is a leading direct bank with basis of clearly defined business
services its retail clients in these markets 15 million customers in nine countries. principles. In all our activities we
with a wide range of retail-banking, In the growth markets of Asia, Central carefully weigh the interests of our
insurance and asset-management Europe and Latin America we provide stakeholders: customers, shareholders,
products. In our wholesale-banking life insurance. We are also a large employees, business partners and
activities we operate worldwide, but asset manager with assets under society at large. ING strives to be
with a primary focus on the Benelux management of almost EUR 550 billion. a good corporate citizen.
countries. In the United States, ING is a ING Real Estate is the largest property
top-10 provider of retirement services company in the world based on its
and life insurance, based on sales and total business portfolio.
assets under management. In Canada,
we are the top property and casualty
WHOLESALE Conducts all the global wholesale-banking operations.
BANKING Wholesale Banking offers a full range of products to corporates UNDERLYING PROFIT BEFORE TAX
and institutions in the home markets in the Benelux countries. WHOLESALE BANKING
Elsewhere it follows a more selective and focused client and 2005 2,276
product approach. 2004 2,092
A separate activity is ING Real Estate, the world’s largest in EUR million
property company.
RETAIL Offers retail-banking services in the Netherlands, Belgium,
BANKING Poland, Romania, India and China. Private banking is offered UNDERLYING PROFIT BEFORE TAX
in the Netherlands, Belgium, Luxembourg, Switzerland and RETAIL BANKING
various countries in Asia, Latin America, and Central and 2005 1,815
Eastern Europe. 2004 1,168
in EUR million
ING DIRECT Operates direct retail-banking activities for individual clients
in Australia, Canada, France, Germany, Austria, Italy, Spain, UNDERLYING PROFIT BEFORE TAX
the United Kingdom and the United States. The main ING DIRECT
products offered are savings, mortgages and mutual funds. 2005 617
A separate activity is ING Card, which manages for ING the 2004 435
credit cards within the Benelux and Germany. in EUR million
DISTRIBUTION OF LOANS AND ADVANCES
TO CUSTOMERS
in EUR billion
Netherlands 55% 238.2
Belgium 9% 41.6
Rest of Europe 21% 90.3
North America 9% 40.5
Latin America 1% 2.8
Asia 2% 10.9
Australia 3% 14.9
Total 100% 439.2
ING Group Annual Review 2005 3
1.0 WHO WE ARE
CHAIRMAN’S STATEMENT
In 2005, we focused on creating value for our
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.
progress. Only a few years ago the
internet was considered by many
to be a hype, now it is big business,
especially for financial services
companies. People everywhere want
to enjoy the practical benefits of
modern technology. The third trend
concerns the gradual shift in economic
power from West to East (including
Central Europe). In the coming
decades China and India will be
among the four largest economies in
the world, together with the United
States and Japan. The countries of
Central Europe will benefit from their
entry into the European Union.
At ING, we are seizing the opportunities
these trends offer and we are using
them to drive our three growth
engines – retirement services, direct
banking and life insurance in
emerging markets. In 2005, our
growth engines showed very
Dear stakeholder, costs, risk and reputation. All this is encouraging results. We significantly
reflected in the theme of this annual increased our pension activities, both
2005 was a very good year for ING. We review: ‘Executing our strategy for in the United States and in the growth
were able to lift our profits to a next profitable growth’. In August 2005, markets of Central Europe, Asia and
level. Our net profit rose from EUR 5,755 Standard & Poor’s endorsed our Latin America. The pre-tax profit from
billion to EUR 7,210 billion, an increase strategic direction by awarding ING our retirement-services activities in the
of 25.3%. Our underlying profit before with AA credit ratings. The upgrades United States went up by 22%.
tax increased by 19.4%. This illustrates underline the fact that ING is a solid
that our strategy of improving execution company and we are pleased to have The success of ING Direct shows that
and investing for growth and value achieved these ratings. technological progress helps to deliver
creation is paying off. Stock markets excellent service to customers and to
rewarded our efforts, as evidenced by At the heart of our strategy lies a drive down costs. ING Direct’s profits
the performance of ING’s share price. thorough analysis of our position in rose 42% in a challenging interest-rate
the global financial environment. environment. Built from scratch in
Our goal is to deliver value to There are in my opinion three 1997, ING Direct has grown to become
shareholders through a combination fundamental trends that are shaping the world’s leading direct bank. It
of growth and return that is higher this environment. The first is ageing serves 15 million customers in North
than the average of our peers. To populations – a phenomenon that is America, Europe and Australia and
achieve that, we steer our business being observed everywhere in the manages close to EUR 200 billion in
towards value creation and aim to world, whether in Europe, Asia or the funds entrusted.
keep improving the execution of our Americas. As a consequence, an
business fundamentals. We want to increasing number of people are As for life insurance in emerging
excel at what we do and focus on looking for ways to secure their markets, ING is the leading foreign
delivering outstanding service to our financial situation after retirement. insurer in Central Europe and the
customers and on firmly managing The second trend is technological second-largest in Asia. We have built
4 ING Group Annual Review 2005
on our early-entry advantage in and attract new ones. For we know I was also happy to work with my
important countries like China, India, that customers look for reliable and colleagues in a strong and united
Japan and South Korea in Asia and the knowledgeable advice about their management team. In 2006, the
Czech Republic, Hungary, Poland and financial future. composition of the Executive Board
Romania in Central Europe. In 2005, will change. Fred Hubbell, Alexander
we continued to invest in high-growth When executing our strategy, we Rinnooy Kan and Hans Verkoren have
markets. We acquired a stake in the have a set of values that guide us: decided to retire from the Executive
Bank of Beijing, which gives us a the ING Business Principles. They Board. Each of them played an
platform for selling a range of insurance embody the standards of behaviour important role in the development of
and investment products in China. we expect from our employees and ING. I am grateful for their strong
the commitments we have towards commitment during their years at ING.
We are able to move ahead with our stakeholders. In addition, we I am fully confident that the new team,
these growth engines because our want to contribute to addressing including the new to be appointed
long-established businesses in the global issues. One of them is the lack members Dick Harryvan, Tom McInerney,
Netherlands, Belgium and the United of access to education for children in Hans van der Noordaa and
States provide the resources and many developing countries. In 2005, Jacques de Vaucleroy, has the capacity
experience to do so. In 2005, these together with UNICEF we successfully and enthusiasm to lead ING to a
businesses again achieved solid profit launched a new global community successful future. This new team will
and income growth. Looking ahead, development programme: ING pursue our strategic course with energy
our focus in the mature markets will Chances for Children. At year-end, and consistency.
remain on improving customer service ING had raised enough money to
and on working more efficiently. In 2005, send over 30,000 children to school.
we took the decision to streamline
and outsource parts of our Operations It is with satisfaction that I look back
and IT activities in the Netherlands on the past year. ING is successfully
and Belgium and to reduce the cost executing its strategy for profitable
base of Nationale-Nederlanden. This growth. In this report, you are being
will lead to a reduction in jobs, but updated on the financial and strategic Michel Tilmant
it is a necessary step to ensure the developments of ING Group and its chairman Executive Board
future competitiveness of our company. business lines. The Executive Board
We take our responsibilities towards would like to thank the ING staff for
employees seriously by making every their contribution to our favourable
effort to help those affected. achievements in 2005. The dedication
and commitment of our staff is crucial
Our strong focus on execution has also to the company’s success.
resulted in a greater emphasis on the
importance of adhering to laws and Furthermore, I would like to stress the
regulations in 2005. Much to our importance of the Supervisory Board,
regret, we experienced some compliance guiding the Executive Board in its daily
incidents, mainly in the Netherlands. management of the company. At the
In each case, we took the necessary 2006 Shareholders’ Meeting we will say
steps to address the issues, including goodbye to two members: Aad Jacobs
compensating customers where and Paul de Meester. Both of them
appropriate, and tightening up were of great value during their eight
compliance to better adhere to policies years on the Supervisory Board, for
and business principles. We want to be which I am very grateful. At the same
a reliable company to deal with. That Shareholders’ meeting Piet Klaver, a
is why customer satisfaction is central in Dutchman, will be nominated for
our strategy – both to retain customers appointment.
ING Group Annual Review 2005 5
1.0 WHO WE ARE
EXECUTING OUR STRATEGY FOR PROFITABLE GROWTH
The successful implementation of ING’s strategy led to
good financial results and allowed us to reward our
shareholders with a higher total return.
In 2005, ING continued to pursue the ING’s objective is clear: to give our Enhancing customer satisfaction
strategy it embarked on in 2004, which shareholders, over the long term, ING attaches great importance to
is founded on value-based management. a better total return on investment exemplary customer service: we believe
We achieved good results in our than on most other investments in the high levels of customer satisfaction can
businesses in mature markets, thanks to financial sector. Value-based management differentiate us and generate profitable
a constant focus on executing business is at the heart of our strategy, focusing top-line growth, especially in mature
fundamentals efficiently. In addition, we on return improvement and profitable markets. In 2005, ING Direct continued
grew in three highly promising business organic growth. This strategy has been to achieve an outstanding level of
areas – our ‘growth engines’. successful: in 2005, our underlying customer satisfaction, while Nationale-
profit before tax increased by 19.4% Nederlanden, our Dutch insurance
to EUR 8,506 million. business, further raised its customer-
satisfaction levels to almost the industry
In our mature banking and life-insurance average. To further improve customer
businesses in the Benelux and the United satisfaction in the future, we have
States, the key to generating profitable adjusted our brand positioning, aiming
organic growth lies in the proper to excel by ‘being easy to deal with’,
execution of business fundamentals. ‘treating our customers fairly’, and
This means managing costs, risks and ‘delivering on promises’. In 2005,
our reputation as well as offering we started to promote this brand
exemplary customer service. positioning within ING worldwide.
ING continues to invest in ‘growth Managing costs
engines’, business areas with clear Fierce competition means we are
growth potential. We have identified continuously looking for ways to contain
three such areas: direct banking, costs and improve efficiency. In 2005, we
retirement services and life insurance launched an efficiency programme to
in emerging markets. We already have reduce Nationale-Nederlanden’s annual
strong positions in these areas, and cost base and took initiatives to stream-
intend to draw on experience and capital line and outsource parts of our IT
from our mature businesses to raise their organisation in the Benelux. Together
profit potential still further. with the outsourcing of our technology
infrastructure in the United States, these
measures are expected to yield cost
savings of some EUR 500 million by 2008.
6 ING Group Annual Review 2005
Managing risks Investing in growth LOOKING AHEAD
To achieve stable, profitable growth, Our three ‘growth engines’ – direct
we need to manage our risks and make banking, retirement services and life ING managed for value and created
optimal use of our capital. For this insurance in emerging markets – all value in 2005. The consistent
purpose, we use integrated risk made good progress in 2005. ING Direct’s implementation of our strategy lifted
management, combining credit risk, performance was outstanding: our direct- our financial results and gave our
market risk, insurance risk and banking business in mature markets shareholders an above-average total
operational risk into a single view. delivered high growth and profit in a return compared with our peer group
It allows us to benefit from being a challenging interest-rate environment. in the financial sector. In 2006, we aim
diversified financial services firm, and In the United States, profits in retirement to create further value. We will continue
to better align our risk-taking with services went up by 22%. In the Slovak to emphasise return improvement and
our risk appetite. In 2005, we achieved Republic, we acquired the pension profitable organic growth so that we can
substantial progress in the area of credit provider VSP Tatry Sympatia. Finally, reward our shareholders with a higher
risk, in terms of both risk modelling and our life-insurance business in emerging total return on investment than most
data quality (both key elements of markets posted a 40% rise in the value other investments in the financial sector.
Basel II). To improve efficient use of of new business. We also acquired
capital, we also introduced integrated a 19.9% stake in the Bank of Beijing,
centralised capital management. which provides us with a platform
for selling insurance and investment
Managing reputation products to an increasingly affluent
Two of ING’s most important assets are customer base in China.
integrity and reputation, because long-
term relationships with clients are only Embedding a performance culture
possible when formed in a spirit of Executing our strategy successfully
fairness and trust. We therefore wish to and accelerating profitable growth
see compliance totally ingrained within throughout the company requires that
our corporate culture. In 2005, we employees understand the company’s
adopted a new compliance policy. strategy and the goals of their business
As from 2006, compliance will also be unit. Employees must know their role in
integrated in the performance targets achieving these goals and should receive
and remuneration structure from ING’s regular feedback on their performance
senior management. Some incidents and be rewarded accordingly. In 2005,
took place in 2005 (mainly in the appropriate steps were taken at all
Netherlands), and necessary steps business levels to embed a performance
were taken to address these issues. culture still more firmly, ranging from
management-change workshops and
programmes to individual talent and
team-development initiatives.
ING Group Annual Review 2005 7
2.0 OUR PERFORMANCE
FINANCIAL HIGHLIGHTS
ING produced strong results in 2005. We achieved
double-digit underlying top-line growth, higher
returns and an improvement in efficiency ratios across
the board. This strong performance together with our
confidence in the future, allows us to increase the total
dividend by 10.3% to EUR 1.18 per share.
Net profit rose 25.3% to EUR 7,210 EUR 161 million in releases in 2004. The at 1 January 2005, supported by growth
million, due in part to a lower effective effective tax rate is expected to return to in capital and reserves. The capital-
tax rate. Earnings per share rose to a normalised level of 20% to 25%. coverage ratio for ING Verzekeringen
EUR 3.32 from EUR 2.71. Total underlying N.V. increased to 259% of E.U. regulatory
profit before tax* increased 19.4% to Impact of IFRS requirements at the end of December
EUR 8,506 million in 2005, driven by The application of new accounting 2005, compared with 200% at 1 January
strong growth from Retail Banking and standards (IAS 32, 39 and IFRS 4) from 2005. The Tier-1 ratio of ING Bank N.V.
ING Direct as well as the insurance 1 January 2005 had a positive impact on stood at 7.32% at the end of 2005, up
activities in the Americas and Europe, ING Group’s results in 2005, with more from 6.92% on 1 January 2005, as growth
supported by growth in retirement volatility on a quarterly basis, mainly due in capital was partially offset by strong
services and favourable results from to value adjustments on non-trading growth in risk-weighted assets. The
non-life insurance. derivatives. The total impact on total solvency ratio (BIS ratio) for the bank
profit before tax of ING Group was improved to 10.86% at the end of
Divestments resulted in a pre-tax gain approximately EUR 455 million, or December 2005 from 10.46% on
of EUR 366 million in 2005 compared EUR 392 million after tax. 1 January 2005. Total risk-weighted assets
with EUR 55 million in 2004. Divested of the banking operations increased by
units contributed EUR 22 million to Dividend EUR 45.6 billion, or 16.6%, to EUR 319.7
profit before tax in 2005, down from At the annual General Meeting of billion at the end of December 2005,
EUR 218 million a year earlier. Special Shareholders on 25 April 2006, ING will driven by growth in all three banking
items refer to a gain of EUR 287 million propose a total dividend for 2005 of business lines.
on the U.S. dollar hedge, a EUR 96 million EUR 1.18 per (depositary receipt for an)
gain on old reinsurance business and ordinary share, up 10.3% from EUR 1.07 INSURANCE OPERATIONS
restructuring provisions of EUR 41 million per (depositary receipt for an) ordinary
at Wholesale Banking, all in 2004. share in 2004. Taking into account the ING’s insurance operations continued to
Including the impact of divestments and interim dividend of EUR 0.54 made benefit from strong growth in retirement
special items, total profit before tax payable in September 2005, the final services and life insurance in developing
increased 14.9% to EUR 8,894 million. dividend will amount to EUR 0.64 per markets, higher investment results and
(depositary receipt for an) ordinary share a favourable claims environment for the
Taxes and net profit to be paid fully in cash. ING’s shares will non-life insurance businesses. Underlying
The effective tax rate declined to be quoted ex-dividend as of 27 April 2006 profit before tax from insurance rose
15.5% in 2005 from 22.1% in 2004 due and the dividend will be made payable 11.5% to EUR 3,975 million. The non-life
to a lower statutory tax rate in the on 4 May 2006. operations in the Netherlands, Belgium
Netherlands, high tax-exempt gains on and Canada continued to benefit from a
divestments, and EUR 583 million from Capital ratios historically low claims ratio, which helped
the creation of tax assets and net releases The debt/equity ratio of ING Group drive underlying profit before tax from
from tax provisions compared with improved to 9.3% compared with 11.9% non-life insurance up 21.3%. The life-
insurance activities in the Netherlands,
United States and Central Europe showed
UNDERLYING PROFIT BEFORE TAX PER BUSINESS LINE* strong profit growth, supported by
in EUR million increased sales, improved returns, growth
Insurance Europe 22% 2,021
Insurance Americas 22% 1,979
in assets under management, and
Insurance Asia/Pacific 5% 447 investment gains. Underlying profit
Wholesale Banking 24% 2,276 before tax from life insurance increased
Retail Banking 20% 1,815 7.4%, as growth was somewhat
ING Direct 7% 617
tempered by continued reserve
Excludes the component ‘Other’ in
banking and insurance strengthening in Taiwan and lower
capital gains on equities. Strong sales
* Underlying profit before tax is defined as profit before tax excluding divestments
and special items. and a focus on cost control led to an
improvement in the efficiency ratios for
life and investment products.
8 ING Group Annual Review 2005Total 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
United States and Belgium. Excluding
divestments and the reclassification,
total premium income increased 10.4%
on a comparable basis.
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. Cees Maas vice-chairman and CFO
Recurring expenses increased 4.9% to
EUR 4,831 million. The efficiency ratios PROFIT AND LOSS ACCOUNT
for life insurance and investment in EUR million 2005 2004 change
products improved as premium and Total income 71,141 68,159 4.4%
asset growth outpaced the increase Total expenditures 62,247 60,419 3.0%
in expenses. Profit before tax 8,894 7,740 14.9%
Taxation 1,379 1,709 -19.3%
Embedded value/value of new business Third-party interests 305 276 10.5%
The embedded value of ING’s life Net profit 7,210 5,755 25.3%
insurance operations increased 22.9%
to EUR 27,586 million. The value of new Profit before tax 8,894 7,740 14.9%
business increased 27.4% to EUR 805 Gains/losses from divestments 366 55
million, driven by improved pricing Profit from divested units 22 218
margins, higher sales, and a more Special items 342
profitable product mix in the United Underlying profit before tax 8,506 7,125 19.4%
States 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. The internal rate of return
increased to 13.2% from 12.1% in 2004.
ING Group Annual Review 2005 92.0 OUR PERFORMANCE
FINANCIAL HIGHLIGHTS
CONTINUED
BANKING OPERATIONS Operations & IT activities in the Benelux, ASSET MANAGEMENT
impairments on development projects
ING’s banking businesses showed a strong at ING Real Estate and provisions taken Assets under management increased
increase in profit in 2005 driven by solid in Belgium). An additional EUR 168 23.5% to EUR 547.4 billion in 2005,
growth in income at ING Direct and million was related to the consolidation excluding the impact of several
Retail Banking, as well as historically low of 50% of Postkantoren BV. The divestments and restatements including
risk costs. Underlying profit before tax remaining increase was driven by Baring Asset Management and parts of
rose 27.2% to EUR 4,531 million. Growth continued investment in growth ING BHF-Bank. The growth in assets was
was driven by higher savings and strong opportunities, such as ING Direct and the driven by a net inflow of EUR 33.8 billion,
demand for mortgages at both Retail expansion of retail banking activities in plus EUR 34.9 billion attributable to
Banking and ING Direct, including high Romania, Poland and India. higher currencies and EUR 35.5 billion
prepayment penalties on the refinancing from higher stock markets. Including
of mortgages in the Netherlands. Profit Additions to the provision for loan losses divestments and restatements, total assets
was also supported by the sale of equity remained exceptionally low, supported under management increased 11.3%.
investments and a positive impact on by an improvement of the credit
balance from IFRS. portfolio, the release of provisions LOOKING AHEAD
previously taken, the absence of new
Total income from banking increased large defaults and improvements in risk In 2005, ING was confronted with low
9.2% to EUR 13,848 million. On an management. The total addition in 2005 interest rates and a flattening yield curve,
underlying basis, excluding divestments amounted to EUR 88 million compared but also benefited from some favourable
and special items, banking income rose with EUR 465 million in 2004. market conditions, including strong
11.4% to EUR 13,408 million, mainly equity and real-estate markets,
due to strong growth in savings and RAROC historically low credit losses for both
mortgage lending as well as higher The after-tax risk-adjusted return bank lending and fixed-income
investment income. on capital (RAROC) of the banking investments, low claims at most non-life
operations improved to 22.6% from insurance units, and low taxes. Looking
Total operating expenses increased 0.6% 14.5% in 2004. On an underlying basis, ahead, the interest-rate environment will
to EUR 8,844 million, as divestments excluding divestments and special items, remain challenging, while risk costs and
largely offset the impact of consolidations, the after-tax RAROC improved to 18.8% non-life claims are expected to return
higher labour costs and one-off expenses. from 16.4%, driven by higher economic gradually to more normal levels.
On an underlying basis, excluding the returns due to the sharpened focus on However, ING has confidence in the
impact of divestments and special managing for value throughout the growth of the underlying business and
items, operating expenses rose 9.6% company, and a more stringent approach in the Group’s ability to continue
to EUR 8,789 million, an increase to capital allocation. All three banking creating value for shareholders.
of EUR 768 million. Of that increase, business lines posted higher RAROCs,
EUR 255 million was related to one-off and all performed above ING’s target
costs (such as restructuring the of 12.0% after tax.
10 ING Group Annual Review 2005RISK MANAGEMENT
ING quantifies risks through several risk-management
techniques and monitors the risk classes of its lending
portfolio for the banking businesses and the fixed-
income portfolio for the insurance businesses.
The Executive Board manages the Group’s Earnings-at-Risk (EaR) and VaR. EaR Equity Risk Through scenario analysis,
overall risk profile, aiming for a good measures the loss of net accrual interest ING Insurance also measures potential
balance between risk, return and capital. income over a period of one year changes in the expected earnings of the
This chapter focuses on ING’s exposure to resulting from an instantaneous increase insurance operations over a period of
and management of key risks. of 2% in market interest rates. As at one year resulting from an instantaneous
31 December 2005, EaR was EUR -733 increase/decrease of 10% in equity
ING BANK million. VaR at 31 December 2005 was markets. As at 31 December 2005, the
EUR -3,203 million. impact on net profit of a 10% increase
Credit risk was estimated at EUR 59 million, and
ING Bank aims to maintain an Liquidity Risk This is the risk that ING the impact of a 10% decrease at
internationally diversified loan and Bank or one of its subsidiaries cannot EUR -80 million.
bond portfolio, while avoiding large meet its financial liabilities when they
risk concentrations. The emphasis is on come due, at reasonable costs and in a Credit risk
managing developments within the timely manner. As at 31 December 2005, For the investment portfolios backing
business lines by means of concentration the one-week/one-month liquidity position the insurance liabilities, ING Insurance’s
limits for countries, individual borrowers was EUR 111,165/24,512 million. policy is to maintain a well-diversified
and borrower groups. In 2005, ING investment portfolio across companies
added EUR 88 million to the provision ING INSURANCE and industries
for loan losses, which was historically
low (2004: EUR 456 million). Actuarial and underwriting risk The percentages in the table below are
ING is exposed to life and non-life based on EUR 172 billion of general
RISK CLASSES ING BANK insurance risks. Actuarial risks arise with account fixed-income assets on
LENDING PORTFOLIO respect to the adequacy of insurance 31 December 2005 and exclude
as percent of total outstandings 2005 premium-rate levels and provisions equities and real estate, but include
with respect to insurance liabilities. preference shares.
AAA (1) 13.8% Underwriting exposures are limited
AA (2-4) 22.1% through exclusions, cover limits and RISK CLASSES ING INSURANCE
A (4-7) 9.5% reinsurance. FIXED-INCOME SECURITIES
BBB (8-10) 21.6% in percentages 2005
BB (11-13) 27.6% Market risk
B (14-17) 4.0% Insurance market risks are managed AAA 26.3%
Watch / Problem Grade (18-22) 1.4% through asset-and-liability (ALM) policies AA 23.0%
A 32.8%
100.0% and procedures with an ALM committee
BBB 14.3%
structure established at both business Other 3.6%
Market risk line and business-unit levels.
100.0%
Trading Risk ING Bank focuses on an
internationally diversified and mainly Interest Rate Risk ING Insurance
client-related trading portfolio. To measures potential changes in the
measure trading risk, ING applies Value- expected earnings of insurance
at-Risk (VaR). In addition, ING performs operations over a period of one year
stress testing to monitor market risk resulting from an instantaneous
increase/decrease of 1% in interest rates. Some information for 2004 has not been stated,
under extreme market movements. due to a lack of comparability following the first-
Average VaR over 2005 was EUR 28 As at 31 December 2005, the impact on time application of the IFRS accounting standards
million (2004: EUR 25 million). net profit of a 1% increase/decrease was for financial instruments and insurance contracts
estimated at EUR -68/-1,743 million. in 2005.
Non-Trading Risk ING Bank has a
structural interest-rate risk mismatch
in its non-trading books. To measure
interest-rate risk, ING Bank applies
ING Group Annual Review 2005 112.0 OUR PERFORMANCE
INSURANCE
Insurance Overview UNDERLYING PROFIT BEFORE TAX INSURANCE
in EUR million
ING booked good results with its insurance Insurance Europe
Insurance Americas
45%
45%
2,021
1,979
activities. Retirement services and life Insurance Asia/Pacific
Other*
10% 447
-472
insurance in emerging markets – two of Total 100% 3,975
*Other insurance results are mainly interest on core
ING’s growth engines – continued their debt and gains on equity investments that are not
allocated to the three business lines. The component
strong performance. ‘Other’ is not included in the pie chart.
The underlying profit before tax from Central-Europe, ING has a strong LOOKING AHEAD
the insurance operations increased foothold in the life-insurance market.
11.5% to EUR 3,975 million in 2005. Looking ahead, risk costs and non-life
We benefited from strong growth in In 2005, ING successfully focused claims are expected to return to more
retirement services and life insurance in on upgrading customer service and normal levels. ING will create value
developing markets and a favourable improving efficiency to counter the in insurance by emphasising return
claims environment for the non-life relatively modest growth in the mature improvement and profitable organic
insurance business. ING is a leading insurance markets. The insurance growth. Cost control and good customer
insurance company in the Netherlands business in high-growth markets in Asia service remain a priority. Furthermore,
and Belgium. Also in the United States and Central Europe are expanding faster we want to continue to expand our
we are well-established with a wide than in mature markets worldwide. We business in retirement services and
array of insurance and asset- also dealt with an increase in legislative in those emerging markets in which
management products and services, and regulatory requirements, which had we already enjoy a leading position.
while in Canada we are the number an impact on product design and costs.
one non-life insurer. In Asia and
Satisfaction &
performance
“Customer-centricity can be achieved by
meeting customers’ individual financial
needs,” says Sungjin Choi from ING Life
Korea. “To help them best as a financial
consultant, I use reliable sources of
information, including views from experts
from various financial service sectors. I also
link my clients to my expert network of tax
experts, stock brokers and lawyers. This
helps my clients find the proper solutions
to their specific financial questions.”
12 ING Group Annual Review 2005Insurance Europe PROFIT AND LOSS ACCOUNT
in EUR million
ING achieved strong value creation 2005 2004 change
across Europe thanks to improved Premium income 10,702 11,369 -5.9%
Operating expenses 1,870 1,768 5.8%
margins in the Netherlands and Total profit before tax 2,031 1,623 25.1%
robust sales in other countries. Underlying profit before tax* 2,021 1,612 25.4%
* Underlying profit before tax is defined as profit before tax excl. divestments
and special items.
Strong sales growth in Central Europe and Developments in mature markets local projects. Our Polish pension fund
solid non-life results of the Netherlands Against the background of modest was again rated best performer in the
and Belgium were the main contributors market growth in the Netherlands and market by the independent press.
to the profit increase in Europe. The Belgium and a wide range of new Hungary strengthened market leadership
improvement in customer satisfaction regulations, ING focused on improving by introducing an innovative unit-linked
levels at Nationale-Nederlanden brought customer service and efficiency. Customer product. In the Slovak Republic, we gained
the company close to the industry satisfaction at Nationale-Nederlanden a strong position in both mandatory and
average, confirming that sustained large- increased significantly and is now close to voluntary pensions by setting up a new
scale investments have begun to bear fruit. the industry average. Its product portfolio fund and acquiring two existing funds.
has been optimised to concentrate on
Underlying profit before tax increased products that offer particularly attractive Enhanced investment performance
25.4% to EUR 2,021 million in 2005, returns, such as group life and mortgages. In 2005, ING Investment Management
thanks to robust performance in Central Also, Nationale-Nederlanden continued to Europe and insurance business units
Europe and strong underwriting results at look for ways to improve efficiency and worked closely together to improve
the non-life businesses in the Netherlands preserve its competitive position. In May the performance of client-driven
and Belgium. Underlying profit from life 2005, a cost-containment programme investment services. New funds
insurance increased 22.2% to EUR 1,597 was announced, which will reduce the successfully introduced included the
million, while that from non-life insurance workforce by 1,000 positions by the end of Premium Dividend Fund for the Dutch
rose 39.0% to EUR 424 million. 2007. As for the other insurance business and European markets (EUR 500 million)
units in the Netherlands, RVS strongly and the Multi-Manager Fund for
Total premium income declined 5.9% to increased sales in an otherwise flat the Dutch institutional market
EUR 10,702 million. Part of this decline market. Postbank Insurance saw a strong (EUR 400 million).
was the result of a reclassification of increase in mortage-linked insurance sales.
some life products due to the new In Belgium, ING Insurance increased LOOKING AHEAD
accounting standards. Operating product offerings, introduced innovations
expenses rose 5.8% to EUR 1,870 million, in underwriting life policies, and In 2006, Nationale-Nederlanden will
reflecting higher expenses in the expanded distribution through endeavour to further improve customer-
Netherlands. Underlying profit before independent brokers. satisfaction ratings. In Central Europe
tax in the Netherlands increased 23.2% we will continue to expand our existing
to EUR 1,589 million, mainly due to Market leader in Central Europe business; in order to accelerate growth,
higher investment income. In Central Europe, we are a leading we will focus on the fast-emerging,
foreign provider in pensions and life upper middle-class segment. Increased
insurance. We have optimised the operational leverage across borders
current business and accelerated new should improve our competitive position.
3.41
That is the customer satisfaction score achieved in 2005 by
Nationale-Nederlanden in the independent annual Dutch Insurance
Performance Survey, out of a maximum of 5. It confirms the tide is
turning for Nationale-Nederlanden, with customer service now
almost back to industry average. Customers valued the significantly
shorter processing times and improvements to http://mijn.NN.nl,
which enables online transactions.
ING Group Annual Review 2005 132.0 OUR PERFORMANCE
INSURANCE
CONTINUED
Insurance Americas PROFIT AND LOSS ACCOUNT
in EUR million
ING created more value through 2005 2004 change
higher profits and strongly Premium income 22,744 22,761 -0.1%
Operating expenses 2,397 2,202 8.9%
improved operational execution. Total profit before tax 1,941 1,692 14.7%
Underlying profit before tax* 1,979 1,601 23.6%
* Underlying profit before tax is defined as profit before tax excl. divestments
and special items.
In 2005, ING Insurance Americas had a acquisition of Allianz Canada and In December 2005, ING Canada, whose
strong focus on improving execution and expenses in the United States related to core business is auto and homeowners
value creation across the region, through strategic initiatives and higher incentive- insurance, completed its first full year as
continued pricing discipline and by related benefit costs. a public company with success. In almost
concentrating on business with the best a year, its stock price more than doubled
long-term growth potential. We showed Leading market positions to over CAD 52.
strong results in Canada and the United ING Insurance Americas concentrated
States. The results in Mexico declined on those businesses in which we have Restructuring in Mexico
primarily due to claims and expenses leading market positions. In line with this ING Mexico introduced a restructuring
from hurricanes. strategy, several other businesses were programme based on a new strategy,
divested, including ING Chile’s property- organisational structure and
Underlying profit before tax from and-casualty insurance operations and management team, with members
Insurance Americas increased 23.6% to Life Insurance Company of Georgia. from ING as well as recruited from
EUR 1,979 million in 2005. Profit growth the local market. In addition, we
was driven by a 27.4% increase in the In the United States, ING launched a launched a new distribution strategy
United States, led by higher results from broad Six Sigma initiative to improve via tied agents based on ING’s
retirement services and annuities due to processes to better meet customer global best practices. This runs
higher asset levels, improved investment needs while reducing costs. It also made counter to traditional practice in the
performance and higher margins. The substantial headway in outsourcing its Mexican market, which is dominated
Canadian non-life insurance business technology infrastructure to IBM. by independent intermediaries.
posted a 35.8% increase in underlying
profit before tax, driven by continued Investment Management LOOKING AHEAD
strong underwriting results and the With some newly recruited top
acquisition of Allianz Canada. managers, ING Investment Management ING will continue to balance growth
delivered strong and improved with solid value creation by leveraging
Premium-income development at performance across core United States our leading market positions for sales
Insurance Americas was virtually flat at assetclasses. In March 2005, we raised and top-line growth and driving unit
EUR 22,744 million as higher non-life EUR 1.8 billion of investor assets for the costs down. We will focus on execution,
premiums were offset by lower life new ING Global Equity Dividend and increase margins on new business
premiums. Operating expenses increased Premium Opportunity Fund, which made (where market conditions permit)
8.9% to EUR 2,397 million due to the it the eighth largest closed-end fund and aggressively manage risk to
listed on the New York Stock Exchange. ensure value creation.
44,000
Building relationships gives Insurance Americas
a competitive advantage. When the State of
Connecticut decided to combine its government
and education retirement plans, going from
many vendors to one, it chose ING’s US Financial
Services as the retirement administrator for
44,000 state employees with combined
retirement plan assets of USD 2.5 billion. Why?
Because of ING’s experience, relationship
management and strong reputation.
14 ING Group Annual Review 2005Insurance Asia/Pacific PROFIT AND LOSS ACCOUNT
in EUR million
The value of new life business 2005 2004 change
again increased significantly, Premium income 12,286 9,469 29.7%
Operating expenses 867 727 19.3%
which indicates healthy growth Total profit before tax 478 756 -36.8%
opportunities and confirms that Underlying profit before tax* 447 475 -5.9%
* Underlying profit before tax is defined as profit before tax excl. divestments
life insurance in Asia is a solid and special items.
growth engine for ING.
In 2005, Insurance Asia/Pacific enjoyed distributors. Overall, our bancassurance and several other major cities. In India,
another good year with South Korea and strategy in the region paid off: 22% of ING Vysya Life, opened 61 new branches
Japan as the main growth drivers. ING is total annualised premium equivalent and hired over 11,000 agents.
the second-largest foreign life insurance (APE) came through banks and securities
company in Asia/Pacific. We remain houses (14% in 2004). Investment Management
committed to investing in growth In Asia/Pacific, ING enjoyed strong
opportunities across the region. Portfolio and performance growth in assets under management
As competition in the region is fierce, to EUR 72 billion (from EUR 51 billion
Underlying profit before tax from we optimised our product portfolios to in 2004) thanks to increased bank
Insurance Asia/Pacific declined 5.9% to capitalise on customer needs and we distribution, relaxation of regulations,
EUR 447 million. This is a reflection of focused on efficiency. In Taiwan, for and a move from traditional insurance
our decision to strengthen reserves in instance, ING broadened its product products to investment-linked products.
Taiwan, in response to the country’s range, leading to a diversification of We launched new funds in India, the
continuing low interest rates. Excluding risks. Across all business units, ING Philippines, South Korea and Taiwan.
the impact of this reserve strengthening, enhanced efficiency by actively
underlying profit rose 15.8% to managing against benchmarks LOOKING AHEAD
EUR 447 million. Premium income and by improving operational risk
rose 29.7% to EUR 12,286 million driven management. In South Korea, ING’s ING aims to expand activities in the
by sharply higher sales in Japan, South growth strategy of rapidly expanding its countries where we currently operate,
Korea and Taiwan. Operating expenses sales force whilst maintaining its high especially the larger markets. A major
increased 19.3% to EUR 867 million, standards of quality has paid off. We goal is to further strengthen partner-
reflecting the continued growth of now have over 5,000 highly productive ships with banks and securities houses.
our businesses across the region. tied agents in the country. Our product portfolio will continue to
shift from traditional life-insurance
Strong distribution channels Markets with growth potential products to investment-linked products,
To optimise our distribution channels, In 2005, Insurance Asia/Pacific continued as well as mutual funds, group insurance
we focused on strengthened to invest in growth opportunities in its and pension products. ING is looking
partnerships with local banks and tied greenfield operations. In China, we forward to participating in the
agents across the region. In Japan, increased operations by acquiring a opportunities created by pension
the increase in sales in 2005 can be stake in the Bank of Beijing and by reforms in several countries.
attributed to the rapidly growing setting up insurance branches (through
network of bank and securities-house our joint ventures) in Beijing, Shenyang
170,000
That is the total number of agents in the network of banks, securities houses and
independent agents through which ING sells life-insurance products in Japan – a
number that has quadrupled in the past three years. Corporate-owned life-insurance
(COLI) products are sold through independent agents and variable annuities are sold
primarily through banks and securities houses.
ING Group Annual Review 2005 152.0 OUR PERFORMANCE
BANKING
Banking Overview UNDERLYING PROFIT BEFORE TAX BANKING
in EUR million
It was a good year for ING’s banking Wholesale Banking
Retail Banking
48%
39%
2,276
1,815
activities. Our focus was on return, ING Direct
Other*
13% 617
-177
growth and exemplary customer service. Total 100% 4,531
*Other banking results consist mainly of interest
This led to solid results. expenses that are not allocated to the business
lines. The component ‘Other’ is not included
in the pie chart.
2005 was a good year for our banking Our wholesale banking business line LOOKING AHEAD
activities. The underlying profit rose operates across the globe with its
by 27.2% to EUR 4,531 million. ING biggest markets in the Netherlands and Looking forward, the interest-rate
benefited especially from higher savings Belgium. Wholesale Banking offers a full environment will remain challenging,
and a strong demand for mortgages, range of products to corporates and but we have confidence in the growth
while risk costs were historically low. institutions. In Retail Banking, ING caters of the underlying business. We want
Although we were confronted with low to the banking needs of retail customers to continue building our reputation
interest rates and a relatively small in the Netherlands, Belgium and towards our banking customers.
difference between long-term and Luxemburg and several emerging Exemplary customer service is key in this.
short-term interest rates, we benefited markets. We also offer private banking Value will also be created through our
from historically low credit losses for services in various countries across the focus on good management of costs, risks
bank lending. globe. Finally, ING Direct is one of the and reputation and our focus on growth.
company’s ‘growth engines’. ING Direct
All our banking business lines offers direct-banking activities for retail
contributed to profit growth, helped by customers in nine large mature markets.
their focus on good execution and growth.
Clear savings
through orange
mortgage
“No catches, no hidden costs or fees with
the ING Direct 5/1 Orange Mortgage,”
say ING Direct customers Linda and Sean
from Princeton, New Jersey. They could not
believe the savings they would see during
the first five years, compared with other
mortgages. “We can open another savings
account, start a college fund for our
child or invest the money – a million
different things.”
16 ING Group Annual Review 2005Wholesale Banking PROFIT AND LOSS ACCOUNT*
in EUR million
Through client focus, 2005 2004 change
cross-selling and cost control Total income 5,957 5,871 1.5%
Operating expenses 3,466 3,734 -7.2%
ING Wholesale Banking Additions to loan loss provisions -108 192
achieved satisfying results Total profit before tax 2,599 1,945 33.6%
Underlying profit before tax** 2,276 2,092 8.8%
in a highly competitive market. * These numbers include the result from ING Real Estate which is discussed
in detail in the chapter on asset management.
** Underlying profit before tax is defined as profit before tax excl. divestments
and special items.
In 2005, ING’s Wholesale Banking Client focus and cross-selling evaluating our client portfolio to focus
activities achieved satisfying results in a In 2005, we placed even greater more on core clients who we can offer
highly competitive market. We created emphasis on client needs and on cross- value-creating products. Positive results
new opportunities and closed many selling high-value-added solutions, have already been achieved in Asia, the
landmark deals by increasing cross-selling intensifying the use of so-called Client Americas and the United Kingdom.
and improving our client focus. We Relationship Planning. In this process,
created more value by redistributing account managers involve product and To control costs, we established a single
capital to more profitable clients and sector specialists in determining how database running across all regions and
product opportunities. Furthermore, best to serve clients. In addition, senior products in the Financial Markets
tightening cost controls and strategic bankers and focus-sector heads provide division; we outsourced the Equities
divestments reduced our economic additional knowledge to ensure we Clearing and Settlement business in the
capital in 2005. identify all opportunities we should United Kingdom; and we introduced
pitch to our clients. Value Chain Management, creating
In a competitive market with eroding more cost transparency, which enables
credit margins and low interest rates, One brand a better allocation of business resources.
Wholesale Banking’s underlying pre-tax To better serve our clients and present
profit rose 8.8% to EUR 2,276 million, one face to the world, we implemented LOOKING AHEAD
driven by higher income from Structured a single global brand for Wholesale
Finance, Leasing and ING Real Estate, as Banking in 2005. We introduced a new Even though our overall priorities
well as the release of loan-loss provisions visual identity and customised the ING – client focus, cross-selling and cost
due to a benign credit environment and brand values to fit the Wholesale control – led to better results in 2005,
improved risk management. Operating Banking business. we aim to achieve further improvement
expenses declined 7.2% to EUR 3,466 in these areas in 2006, extending the
million, due to the divestment of our Cost control successful programmes mentioned
Asian cash equities business, CenE Cost control was a significant priority above, improving product offerings,
Bankiers and parts of ING BHF-Bank, in 2005. We made good progress in and increasing investments in key
as well as Baring Asset Management. implementing our so-called Target product areas such as Financial Markets,
Operating Model to improve cost Payments & Cash Management, Leasing
control, revenue growth, use of capital and Structured Finance.
and operational efficiency. This involved
Cross-selling works
NASDAQ-listed Central European Distribution Corporation (CEDC), Poland’s leading
alcoholic beverage importer/exporter, is a prime example of Wholesale Banking’s cross-sell
strategy involving several ING Banking teams. In 2005, Wholesale Banking not only
advised CEDC on its acquisition of Polmos (Poland’s second-largest vodka producer),
but also acted as sole bookrunner in its initial high-yield bond offering and as joint
bookrunner on its equity offering.
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