SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For November 21, 2002
ING GROEP N.V.
Amstelveenseweg 500
1081-KL Amsterdam
THE NETHERLANDS
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
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Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
Page 1 of 27
This Report contains a copy of the following:
(1) The Press Release issued on November 21, 2002
Page 2 of 27
[ING GROUP LOGO]
PRESS RELEASE
Amsterdam, 21 November 2002
ING GROUP FIRST NINE MONTHS 2002 RESULTS
All comparable figures in this press release relate to nine months 2002 versus
nine months 2001, unless indicated otherwise
o OPERATIONAL NET PROFIT +0.7% TO EUR 3,328 MILLION; PER SHARE EUR 1.72
(+0.6%)
o TOTAL INCOME EUR 58.1 BILLION (+8.3%, ORGANICALLY +6.4%)
o TOTAL OPERATING EXPENSES +2.5% (ORGANICALLY +0.6%)
o SOLVENCY GOOD: ING VERZEKERINGEN N.V. 157% OF LEGALLY REQUIRED LEVEL,
TIER-1 RATIO OF ING BANK N.V. 6.90%
o FURTHER RESTRUCTURING OF INTERNATIONAL WHOLESALE BANKING; FURTHER REDUCTION
OF WORKFORCE BY 1,000 FTES; RESTRUCTURING PROVISION OF EUR 128 MILLION
CREATED
o ACCELERATED UNLOCKING OF DEFERRRED ACQUISITION COSTS (DAC) ON US VARIABLE
BUSINESS
o FULL YEAR PROFIT EXPECTATION: ING EXPECTS TO MATCH LAST YEAR'S OPERATIONAL
PROFIT PER SHARE
CHANGES IN CAPITAL GAINS AND DIVIDEND POLICY
o STARTING IN 2003, TAKING OF CAPITAL GAINS ON EQUITY INVESTMENTS WILL DEPEND
ON MARKET DEVELOPMENTS. END TO AUTOMATISM OF A 15% YEAR-ON-YEAR INCREASE
o PROPOSAL TO GENERAL SHAREHOLDERS' MEETING IN APRIL 2003 TO INTRODUCE
OPTIONAL CASH/STOCK DIVIDEND AS FROM FINAL DIVIDEND 2002 TO FURTHER
STRENGTHEN SOLVENCY AND SUPPORT ORGANIC GROWTH
CHAIRMAN'S STATEMENT
"The continued weak economic climate and the further sharp fall of stock market
indices in the third quarter have affected our nine months' results, but we are
pleased with a 0.7% increase in operational net profit." said Ewald Kist,
chairman of the Executive Board. "Our broad product range - matching our
clients' increased demand for low-risk products - enabled us to grow total
income by 8.3%. Strong growth was reported by Postbank and ING Direct as well as
by our pension business and developing markets insurance activities. In view of
the uncertain future course of the economy and especially of the equity markets,
however, we must step up our efforts to use capital more efficiently, to make
additional cost cuts and to further rationalise the organisation. We will, for
instance, continue to restructure our international wholesale banking operations
to improve its profitability in the current strongly changed business
environment. Starting in 2003, taking of capital gains on equity investments
will depend on market developments. This decision puts an end to the automatism
of a 15% year-on-year increase in realised capital gains on equities. We
nevertheless intend to complete our capital gains programme for 2002 as planned.
In order to further strengthen solvency and support organic growth, we will
propose to our shareholders to introduce optional cash/stock dividend as from
the final dividend 2002."
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PRESS CONFERENCE CALL: 21 NOVEMBER 2002, AT 3 P.M. CET. ANALYST CONFERENCE CALL: 22 NOVEMBER 2002, 3.30 P.M. CET
Press presentation available at 1 p.m. CET via Analyst presentation available on 21 November, 3.30 p.m.
http://press.ing.com. Listen-in mode only: CET via www.ing.com. Listen-in mode only:
- The Netherlands: +31 (0) 45 631 6902 - The Netherlands: +31 (0) 45 631 6902
- United Kingdom: + 44 (0) 208 515 2320 - United Kingdom: + 44 (0) 208 515 2306
- North America: +1 (0) 416 646 3096
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MEDIA RELATIONS: +31 20 541 5446 INVESTOR RELATIONS: +31 20 541 5462 INTERNET: www.ing.com
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Page 3 of 27
PROFIT EXPECTATION 2002
Provided that economic conditions and financial markets will not deteriorate
further until year-end, the Executive Board expects to match last year's
operational net profit per share of EUR 2.20.
CHANGES IN CAPITAL GAINS AND DIVIDEND POLICY
ING's strong financial position has been impacted by the depressed stock
markets, the continued weak economic climate and the uncertainty with respect to
a future recovery. Risk costs have risen substantially and low equity prices
affect growth in income. The latter also limits the possibilities to realise
capital gains on equity investments.
In order to further strengthen solvency, the following measures will be taken in
addition to a more efficient use of capital, intensified cost cutting and
increased focus on core businesses.
CAPITAL GAINS ON EQUITY INVESTMENTS OF THE INSURANCE OPERATIONS
Due to the continued decline of stock markets, the revaluation reserve of the
equity investments of the insurance operations decreased to approximately EUR
0.9 billion (20 November 2002). In view of this low level of the revaluation
reserve, ING will take capital gains on equities depending on market
developments as from 2003. This decision ends the policy of a fixed and
predetermined annual increase in capital gains on equities of 15%.
DIVIDEND POLICY
ING will propose to the Annual General Meeting of Shareholders in April 2003 to
introduce optional cash/stock dividend as from the final dividend 2002. ING
intends to fully fund the cash element by selling the stock dividends in the
market. This policy change will enable ING to further strengthen solvency.
Additional solvency will serve as a risk buffer for swings in asset values as
well as support organic growth.
RESULTS
INCOME
Total income rose by a healthy 8.3% to EUR 58.1 billion. The organic increase
(excluding acquisitions and exchange rate fluctuations) was 6.4%. Insurance
income advanced 9.1% to EUR 49.5 billion. Premium income from life insurance
grew by 6.4% to EUR 33.4 billion. Non-life premiums increased by 38.5% to EUR
6.3 billion, primarily reflecting the acquisition of ING Comercial America in
Mexico. Banking income was up 4.0% to EUR 8.6 billion as the interest result
increase exceeded the decline in commission and other income.
EFFICIENCY
Due to restructuring, integration and tight cost control, the increase in total
operating expenses was limited to 2.5%. The organic increase was 0.6%. Compared
to a year ago, the total number of staff decreased by 5,500 to 111,700 full-time
equivalents. The organic decrease in operating expenses of the insurance
activities was 5.3%. The difference between the relative premium growth and the
relative expense growth was +22.8%-points (excluding GICs and the impact of the
joint venture with ANZ in Australia), well above the target of at least
+2%-points. There was an organic increase in banking operating expenses of 4.3%,
largely due to a EUR 128 million restructuring provision with respect to the
international wholesale banking operation. Excluding this provision and the
fast-growing ING Direct, organic banking expenses showed a slight increase of
0.4%. The efficiency ratio of the banking activities (excluding ING Direct and
the restructuring provision for international wholesale banking) improved to
69.9% from 70.5% in the first nine months of 2001 and 71.7% for the full year
2001.
Page 4 of 27
PROFIT DEVELOPMENT
Operational net profit increased by 0.7% to EUR 3,328 million from EUR 3,304
million a year ago. The effective tax rate decreased from 22.8% to 20.4%,
largely as a result of a change in tax legislation in Australia, the release of
a tax provision, the sale of shares in Cedel and the ANZ transaction. The
operational result before taxation declined by 2.1% to EUR 4,489 million.
Operational net profit from insurance improved 17.1% to EUR 2,478 million due to
higher results in the Netherlands and Rest of Europe and an amount of EUR 225
million representing part of the profit on the sale of the life and mutual fund
operations in Australia to the joint venture with ANZ. As announced earlier, the
total profit of EUR 475 million on this transaction was made available for
add-on acquisitions and was booked accordingly as non-operational
non-distributional profit in the second quarter 2002. An amount of EUR 225
million of this profit had been earmarked for the earlier announced acquisition
of additional shares in Bital in Mexico. This company was acquired by HSBC in
the third quarter. Therefore, this amount has now been relabeled as operational
distributable profit. Gross investment losses on fixed income securities of the
insurance operations were EUR 474 million- equalling 68 basis points of the
total bond portfolio - against EUR 119 million a year ago. Of these investment
losses EUR 395 million was charged to the profit and loss account against EUR 55
million a year ago. The gross result of the insurance operations - i.e. before
investment losses - increased by EUR 668 million to EUR 3,527 million (+23.4%).
On the banking side, the interest result showed a strong increase exceeding the
combined effect of lower commission and other income. The economic downturn
drove up the addition to loan loss provisions to EUR 925 million - equalling 50
basis points of credit risk weighted assets on an annual basis - compared to EUR
500 million a year ago. A restructuring provision with respect to the
international wholesale banking activities of EUR 128 million was charged to the
(operational) profit and loss account. As a result, operational net profit from
banking came in 28.5% lower at EUR 850 million. The gross banking result - i.e.
before the addition to loan loss provisions - improved by EUR 2 million to EUR
2.282 million (+0.1%), excluding the restructuring provision the gross banking
result rose by EUR 130 million (+5.7%).
RETURN ON EQUITY
The operational net return on equity increased from 18.4% for the full year 2001
to 21.8% in the first nine months of 2002. The return on equity of the insurance
operations was 22.6% against 16.9% for the full year 2001. The risk-adjusted
return on capital (RAROC) of ING's banking operations was 14.5% compared to
13.5% for the full year 2001 (pre-tax and excluding ING Direct). Also excluding
the restructuring provision, RAROC was 15.7%.
SOLVENCY
The capital base of ING Verzekeringen N.V. amounted to EUR 14.1 billion, end of
period, well in excess (157%) of the legally required solvency of EUR 9.0
billion. On 30 September 2002, the tier-1 ratio and the BIS ratio of ING Bank
N.V. stood at 6.90% and 10.30% respectively, both well above the regulatory
required levels.
OPERATIONAL REALISED CAPITAL GAINS
Net realised capital gains on equity investments of the insurance operations
were EUR 615 million compared to EUR 523 million a year ago (+17.6%). Net
realised capital gains on real estate amounted to EUR 150 million against EUR 73
million in the first nine months of 2001. End of September 2002, the revaluation
reserve of equity investments of the insurance operations was EUR 0.1 billion
and has since increased to EUR 0.9 billion (20 November 2002). For the full year
2002, realised capital gains on equity investments are expected to increase at
the planned rate of 15% to approximately EUR 820 million provided the equity
markets and in particular the Euronext Amsterdam Stock Market do not deteriorate
significantly.
Page 5 of 27
ACCELERATED UNLOCKING OF DEFERRED ACQUISITION COSTS (DAC)
In the US, acquisition expenses of variable business are deferred and
subsequently amortised. The annual write-off is determined on the basis of
estimated future gross profits. Lower expected profits - e.g. reflecting stock
market weakness and a lower depressed level of assets under management as is
currently happening - causes a higher write-off of DAC in the current year due
to the catch-up of amortisation in old and future years. This process which is
known as DAC unlocking led to an extra charge of EUR 155 million (pre-tax in the
first nine months 2002; first six months 2002 EUR 69 million).
Furthermore, ING has decided to adopt a more conservative approach than current
industry practice to determine the estimated future gross profits of its
variable business in the US. ING also revised its assumptions with respect to
the future growth of the funds in which premiums are invested. This has been
done in view of the sharply increased volatility in the stock markets and the
absence of any strong sign of a near-term rebound. These changes led to an
additional charge of EUR 70 million to the third quarter operational result
before taxation.
STRATEGIC DEVELOPMENTS
FURTHER RESTRUCTURING OF INTERNATIONAL WHOLESALE BANKING
The international wholesale banking operations will be restructured further in
order to restore its profitability. Adapting the size of the organisation to
match current market conditions, the workforce will be reduced by a further
1,000 full-time equivalents on top of the realised reduction at wholesale
banking by 700 compared to year-end 2001. The additional restructuring measures
particularly focus on underperforming branches and businesses. Also, the
efficiency of back offices and operations / information technology will be
improved by reducing the number of booking and administrative centres. To cover
the expenses of these measures, a restructuring provision of EUR 128 million has
been charged to the (operational) profit and loss account in the third quarter
2002.
US INSURANCE OPERATIONS
US insurance operations remained on track with expense controls and integration
efforts. In the fourth quarter of 2001, the company announced a major
reorganisation of its US operations. In the first nine months 2002, 1,895
employees have been notified of their release dates, of which 1,374 have been
released. The related gross cost savings are EUR 94 million for the year 2002
increasing to EUR 120 million on an annualised basis. Compared to end of
September last year, the total US workforce decreased by 14.6% from 11,325
employees to 9,669 employees as per 30 September 2002.
STRONG GROWTH AT ING DIRECT; BREAK-EVEN IN THIRD QUARTER
Compared to a year ago, ING Direct realised a 77% increase in the number of
clients to 4.6 million and more than doubled funds entrusted to EUR 51.3
billion. For the first time, the combined ING Direct operations in 7 large
countries reached break-even in the third quarter 2002 (after capital charges
and overhead costs). The nine months' loss before taxation decreased to EUR 80
million from EUR 151 million in the same period last year. The strong growth in
funds entrusted and client base combined with the current steep yield curve led
to a substantial increase in income, exceeding the rise in expenses. The
operations in Canada, Australia and Germany (DiBa) reported profits for the
first nine months' period.
CONTINUED GROWTH OF DEVELOPING MARKETS INSURANCE
Premium income of the insurance operations in developing markets increased in
local currencies by 51.8% to EUR 5.9 billion. Excluding the full consolidation
of ING Comercial America in Mexico and the divestment of Aetna Argentina,
premium growth was 10.3%. The pre-tax operational result of developing markets
insurance improved by 50.3% to EUR 532 million,
Page 6 of 27
which is equal to 17% of the overall result from insurance. Strong performance
improvements were reported by Poland, Mexico and Korea.
CUSTODY ALLIANCE WITH BANK OF NEW YORK
ING and Bank of New York (BNY) will create a European commercial alliance for
sales, marketing and servicing of global custody and related services to
institutional clients in Germany, the Benelux and Central and Eastern Europe.
The new partnership will provide global custody services to the global assets of
ING Investment Management's Benelux operations, encompassing approximately EUR
90 billion. ING Bank will provide sub-custody services to BNY in the
Netherlands, Germany and Central and Eastern Europe complementing the
long-standing sub-custody relationship between BNY and BBL. Several weeks prior
to the agreement on the alliance, ING and BNY announced a global arrangement to
outsource ING's international cash equities clearing and settlement operations
in London, New York, Hong Kong and Singapore to BNY.
ING INVESTMENT MANAGEMENT STRENGTHENS LINKS WITH DISTRIBUTION CHANNELS
The three regional platforms of ING Investment Management (IIM), the largest
asset management unit of ING, have been transformed into business units within
ING's regional Executive Centres in the Americas, Asia/Pacific and Europe. Each
Executive Centre now includes ING's three core businesses insurance, banking and
asset management. The purpose of this organisation change is to strengthen the
strategic and operational links between the investment units and the
distribution channels. The financial results of all asset management activities
will be reported within the regional Executive Centres as of 2003, but ING will
continue to coordinate its asset management business globally at Executive Board
level and report the total functional profit contribution from asset management
on a global basis.
ING VYSYA BANK: SHAREHOLDING INCREASED TO 44%
ING closed the purchase of an additional 24% stake in Vysya Bank Ltd. in India
for approximately EUR 73 million increasing its interest to 44%. The transaction
marks the largest foreign direct investment by an international financial
institution in an Indian bank under the newly increased 49% cap on foreign
direct investment in Indian banks.
PENSION FUND LAUNCH IN RUSSIA
Recently, ING launched the Non-State Pension Fund ING in Russia. The fund, the
first of its kind in Russia and modelled after similar ING funds in western
markets, will focus on providing tailor-made pension solutions for employees of
international and local companies. The Non-State Pension Fund ING will offer
defined contribution schemes to corporate clients with individual employee
pension accounts. This will be offered through dedicated ING pension
consultants, ING Bank and third party international brokers.
ING REAL ESTATE STRENGTHENS POSITION IN SPAIN AND US
ING Real Estate recently increased its 30% stake in Spanish real estate company
Promodeico to full ownership by acquiring the remaining 70%. Promodeico will be
combined with ING Real Estate Iberica Development and Viena Inmuebles. As of
January 2003, the combined company will operate under the name ING Real Estate
Development and will be active as an all-round real estate developer creating
value in the field of shopping centres, residential units and industrial real
estate.
In the US, ING Real Estate's subsidiary Clarion has entered into an
agreement to acquire the Crow Holdings Industrial Trust, a private Real Estate
Investment Trust ('REIT') which invests in industrial real estate throughout the
United States.
Page 7 of 27
GROUP FINANCIAL HIGHLIGHTS
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TABLE 1. KEY PROFIT AND LOSS FIGURES ING GROUP
First FIRST % Q3 Q3 %
nine NINE change 2001 2002 change
months MONTHS
in EUR x million 2001 2002
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Total income 53,641 58,107 8.3 17,429 17,593 0.9
- insurance operations 45,345 49,471 9.1 14,840 14,817 -0.2
- banking operations 8,311 8,647 4.0 2,594 2,779 7.1
Operational net profit 3,304 3,328 0.7 901 974 8.1
- insurance operations 2,116 2,478 17.1 653 825 26.3
- banking operations 1,188 850 -28.5 248 149 -39.9
Non-operational net profit 325 250 -233
Net profit 3,629 3,578 -1.4 901 741 -17.8
in EUR
Operational net profit per share 1.71 1.72 0.6 0.47 0.50 6.4
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RESULTS FIRST NINE MONTHS 2002 VERSUS FIRST NINE MONTHS 2001
This year's first nine months' results were affected by increasingly volatile
financial markets, the continued downward trend in equity prices and a further
deterioration of the general business climate. These developments resulted in a
marked increase in risk costs and investment losses in both banking and
insurance as well as in lower securities commission income and lower asset
management fees. Thanks to total income growth of 8.3% as a result of strongly
higher sales of savings products and interest rate linked life insurance
products and a limited increase in total operating expenses of 2.5%, the modest
increase in Group operational net profit is a satisfactory result. The results
of the banking operations were down due to higher risk costs, lower commission
income, lower results from financial transactions and the restructuring
provision for the international wholesale banking operations in the third
quarter 2002. The insurance operations reported a 17.1% increase in operational
net profit despite substantially increased investment losses and the charges
with respect to acceleratedDAC unlocking in the US life operations.
Group operational net profit improved 0.7% to EUR 3,328 million or EUR 1.72 per
share (+0.6%). The result was positively influenced by a relatively low
effective tax rate and a number of exceptional items totalling EUR 270 million
against EUR 150 million a year ago.
The insurance operations reported an increase in operational net profit by 17.1%
to EUR 2,478 million. The gross result of the insurance operations - i.e. before
investment losses - increased by EUR 668 million to EUR 3,527 million (+23.4%).
As explained, EUR 225 million of the EUR 475 million profit related to the joint
venture with ANZ is included. The surrender of a large group life insurance
contract contributed an exceptional profit of EUR 79 million after tax. The
comparable period last year included exceptional items to an amount of EUR 150
million. Both life and non-life operations saw a result increase. ING Comercial
America added EUR 101 million to net profit compared to EUR 14 million a year
ago.
The operational net profit of the banking operations fell by 28.5% to EUR 850
million due to strongly increased risk costs and a restructuring provision of
EUR 128 million with respect to international wholesale banking. Despite this
provision, the gross result - i.e. before the addition to loan loss provisions -
increased by EUR 2 million (+0.1%). The interest result improved strongly as a
result of increased volumes and a widening of the interest margin. Total
operating expenses showed an increase by 5.6%. Excluding the restructuring
provision for wholesale banking, acquisitions, exchange rate fluctuations and
ING Direct, the increase was only 0.4%. The tax-exempt profit on the sale of the
shareholding in clearing house Cedel of EUR 94 million was included as an
exceptional item in 2002.
Page 8 of 27
Currency exchange rate fluctuations impacted Group operational net profit by +
EUR 9 million, including EUR 19 million from the dollar hedge, being the
difference between the dollar hedge result for this and last year. As stated in
the first six months release, the results of the Group's insurance operations in
the US for the year 2002 are fully hedged at a EUR/USD exchange rate of 0.879.
In anticipation of a further strengthening of the euro versus the US dollar, ING
has hedged the expected profits of the US insurance operations for the years
2003 and 2004 at a EUR/USD exchange rate of 0.920 and 0.922 respectively.
Total operating expenses edged up 2.5%. Organically, i.e. excluding acquisitions
and exchange rate fluctuations, operating expenses were up 0.6%. Among the
factors that pushed expenses up were new acquisitions, higher personnel expenses
in the Netherlands (new collective labour agreement and higher pension costs),
the growth at ING Direct, start-up expenses in China and India, the wholesale
banking restructuring provision and additional investments in a number of
synergy projects. The impact of these factors was largely neutralised by the
expense reduction resulting from significant headcount reductions relating to
integration projects and strict cost control.
The effective tax rate decreased from 22.8% to 20.4%. The decrease mainly
followed from a change in tax legislation in Australia, the release of a tax
provision, the sale of shares in Cedel and the transaction with ANZ. This effect
was mitigated by higher taxes of the operations in Taiwan.
RESULT THIRD QUARTER 2002 VERSUS SECOND QUARTER 2002
The third quarter operational net result dropped 20.0% on the second quarter
2002. The insurance operations reported a decrease of 4.7%, largely due to
accelerated DAC unlocking, lower realised gains on real estate and a higher
effective tax rate, partly compensated by the gain on the ANZ transaction and
the profit on the surrender of a group life contract in the second quarter. The
operational net profit from banking operations dropped by 57.7%. The decrease is
- next to the restructuring provision for international wholesale banking -
caused by lower commission income, lower results from financial transactions and
the Cedel gain in the second quarter. The interest result, however, improved,
while the addition to the provision for loan losses decreased by EUR 25 million.
RESULT THIRD QUARTER 2002 VERSUS THIRD QUARTER 2001
Operational net profit in the third quarter 2002 increased by 8.1% compared to
the same quarter last year. The increase of the insurance operations (+26.3%)
was strongly affected by the WTC losses last year and the ANZ gain this year.
Excluding these items, the net profit decreased by 20.3% mainly caused by
accelerated DAC unlocking, higher default losses, lower fee income and a
substantially higher effective tax rate, partly offset by the full consolidation
of the Mexican operations. In the third quarter 2002, the banking operations
reported a 39.9% lower net profit compared to a year ago, entirely caused by the
restructuring provision created for international wholesale banking. Excluding
this item, net profit more or less equalled last year's profit for the same
quarter. The increase in (interest) income was sufficient to compensate for
substantially higher risk costs and higher operating expenses.
Page 9 of 27
RESULTS BY EXECUTIVE CENTRE
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TABLE 2. OPERATIONAL RESULT BEFORE TAXATION BY EXECUTIVE CENTRE
First nine months FIRST NINE MONTHS %
in EUR x million 2001 2002 change
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ING Group 4,584 4,489 -2.1
- ING Europe 3,366 3,092 -8.1
- ING Americas 772 753 -2.5
- ING Asia/Pacific 278 484 74.1
- ING Asset Management 117 115 -1.7
Other 51 45 -11.8
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Higher risk costs in banking and the restructuring provision with respect to
international wholesale banking pushed down the pre-tax operational result of
ING Europe. However, excluding these risk costs and the restructuring provision
the result increased by 6.9%. Postbank and ING Direct continued to perform
solidly thanks to strong demand for savings. The results of the German banking
operations were disappointing. The insurance operations of ING Europe reported a
10.2% increase in pre-tax profit.
Notwithstanding better insurance results in Canada and Mexico, the ING Americas'
pre-tax operational result slipped due to higher investment losses and higher
DAC unlocking in the US life operations. The comparable result in 2001 was
negatively impacted by the WTC losses.
ING Asia/Pacific reported a strong increase in its pre-tax operational profit
due to the operational part (EUR 225 million) of the EUR 475 million profit on
the sale of the Australian life and mutual fund operations to the joint venture
with ANZ. Korea, Taiwan and Japan reported higher life results, Malaysia was
lower. Start-up expenses in India and China had a modest negative impact on
result.
ING Asset Management continued to be impacted by the downward trend in
equity prices and lower seed capital returns.
KEY BALANCE SHEET FIGURES
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TABLE 3. KEY BALANCE SHEET FIGURES
Year-end 30 SEPTEMBER % change
in EUR x billion 2001 2002 on year-end
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Shareholders' equity 21.5 16.5 -23.3
- insurance operations 15.4 10.6
- banking operations 15.4 15.4
- eliminations* -9.3 -9.5
Total assets 705.1 721.6 2.3
Operational net return on equity 18.4% 21.8%
- insurance operations 16.9% 22.6%
- banking operations 10.2% 8.3%
Total assets under management 513.2 456.7 -11.0
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* Own shares, subordinated loans, third-party interests, debenture loans, and
other eliminations.
Shareholders' equity decreased as the net result of a negative revaluation (-EUR
4.9 billion) of the equity and real estate portfolio, the write-off of goodwill
(-EUR 1.1 billion), exchange rate fluctuations (-EUR 0.9 billion), the payment
of the final dividend 2001 and interim dividend 2002 (-EUR 2.0 billion) and the
addition of the net profit in the first nine months of 2002 (+EUR 3.6 billion).
Page 10 of 27
The operational net return on equity increased from 18.4% for the full year 2001
to 21.8%. The insurance operations showed a return of 22.6% compared to 16.9%
for the full year 2001. The return on equity of the banking operations was 8.3%
compared to the full year 2001 level of 10.2%. Excluding ING Direct and the
restructuring provision, however, the banking operations returned 10.7% on
equity against 11.6% for the full year 2001.
Compared to year-end 2001, total assets under management were 11.0% lower at EUR
456.7 billion. The net new inflow of EUR 7.3 billion demonstrates continued
strong client confidence in ING's investment professionals. In addition, the
joint venture with ANZ contributed EUR 4.3 billion. The negative impact of the
ongoing slide in asset values and exchange rate fluctuations was EUR 68 billion.
KEY FIGURES AND HIGHLIGHTS OF THE INSURANCE OPERATIONS
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TABLE 4. PREMIUM INCOME AND PRE-TAX OPERATIONAL RESULT OF THE INSURANCE OPERATIONS
First nine FIRST NINE % %
months MONTHS change organic
in EUR x million 2001 2002 change
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PREMIUM INCOME 35,942 39,711 10.5 8.4
Life insurance 31,383 33,399 6.4 8.4
Non-life insurance 4,559 6,312 38.5 8.9
OPERATIONAL RESULT BEFORE TAXATION
2,804 3,132 11.7 4.7
Life insurance 2,332 2,622 12.4 6.0
Non-life insurance 472 510 8.1 -0.8
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Given the deteriorated economic climate, life insurance premiums increased
organically at a satisfactory pace of 8.4%. Compared to a year ago, sales of
GICs (guaranteed investment contracts) were much lower. Excluding GICs, life
premiums rose by 16.1% reflecting increases in Belgium, Korea, Japan - where a
new annuity product is a strong seller - and Australia. In the US, fixed annuity
premiums grew strongly by 123% in US dollars. The consolidation of ING Comercial
America is the most important contributing factor to the increase in non-life
premiums. Life insurance premiums stood at 84% of total premiums.
Ongoing expense control and further restructuring and integration, led to a 5.3%
decrease in organic operating expenses notwithstanding expense increases with
respect to pensions and the life insurance start-ups in China and India. The
difference between the relative premium growth and the relative expense growth
was +22.8% (excluding GICs and the joint venture with ANZ), well above the
target of at least +2%-points. The improvement was largely due to higher fixed
annuity sales in the US.
The operational result before taxation increased by 11.7% to EUR 3,132 million.
This figure includes exceptional profits of EUR 225 million with respect to ANZ
and EUR 120 million from the surrender of a group life insurance contract.
Exceptional items in the first nine months 2001 totalled EUR 217 million. Other
contributing factors to the result increase were higher realised capital gains
on equity investments and real estate.
The combined ratio of the non-life operations improved from 102% to 100%.
Page 11 of 27
ING EUROPE
Life premiums in the Netherlands improved slightly by 2.6% to EUR 3,846 million.
Group life premiums - both recurring and single premiums - increased. Individual
single life premiums decreased following the changed tax treatment but also as a
consequence of ING's policy to put profitability before sales volume. Non-life
premiums increased by 2.2% to EUR 1,564 million, largely reflecting higher
premiums in Health.
The life result in the Netherlands strengthened by 9.9% to EUR 1,559 million due
to higher realised capital gains, a profit on the surrender of a group life
contract and a higher than expected result on expenses. The comparable result in
2001 was positively impacted by a partial release of a catastrophe provision and
a gain from old reinsurance business. Interest received on an intercompany loan
to the US operations was lower and so were results on venture capital
activities. Investment losses were higher. The non-life result decreased by
10.9% to EUR 147 million with lower results in Loss of income/Accident, Motor
and Miscellaneous due to lower realised capital gains.
Life premiums in Belgium grew by 32.1% to EUR 1,495 million on the back of
ongoing strong sales of unit-linked products. Over the last few years ING has
gained a strong position in the Belgian market for unit-linked life insurance.
Life premium income in other countries in Europe decreased by 2.4% in local
currencies to EUR 1,060 million, primarily due to lower sales of employee
benefits products in Spain. The total life result increased from EUR 88 million
to EUR 108 million. Higher results were reported by Italy, Poland, Hungary and
the Czech Republic while Greece and Spain reported much lower results.
ING AMERICAS
ING Americas' result before taxation was 2.5% lower at EUR 753 million compared
to EUR 772 million for the first nine months of 2001. The decline is the net
result of expense reductions in the US, Mexico, Canada and Chile, better
underwriting performance in Mexico, higher investment income and lower financing
costs on the one hand and accelerated amortisation of deferred acquisition
costs, higher investment losses and lower revenues on assets under management on
the other. Corporate reinsurance business made a profit of EUR 24 million, EUR
40 million lower than a year ago. The decrease was primarily due to a one-off
gain from old reinsurance activities in 2001. The hedge program of the US and
Canadian dollar contributed EUR 49 million compared to EUR 20 million a year
ago.
In the United States, the pre-tax operational result decreased by EUR 156
million to EUR 307 million. The performance continued to be affected by the
adverse economic situation, the continued downward trend in equity prices and
unfavourable mortality on individual reinsurance. The decrease was softened by
strong expense reduction (-13%, organically), better results from fixed and
guaranteed performance products, higher investment income and lower financing
costs. The 2001 result was strongly impacted by the WTC losses of EUR 150
million. The weak economy and business climate caused an increase in investment
losses to EUR 410 million (86 basis points of the relevant bond portfolio).
Furthermore, financial market developments continued to accelerate DAC
amortisation on variable annuities which led to an extra charge of EUR 155
million. Also the methodology and net growth rate used to determine the
estimated future gross profits for the variable business were revised. This led
to additional DAC amortisation of EUR 70 million. Financial market developments
also led to higher increases in reserves for guaranteed benefits associated with
the variable products. Reserves for guaranteed benefits increased by EUR 22
million in the first nine months 2002, including an extra EUR 10 million from
the lowering of the assumed net growth rate of equities. The financing costs of
the US operations were positively impacted by lower interest rates and lower
debt levels.
Page 12 of 27
-------------------------------------------------------------------------------
TABLE 5. LIFE PREMIUM INCOME IN THE US BY PRODUCT LINE
First nine FIRST NINE %
months MONTHS change
In EUR x million 2001 2002
-------------------------------------------------------------------------------
Life 1,754 1,804 2.9
Fixed annuities 2,103 4,534 115.6
Variable annuities 3,589 3,407 -5.1
Rollover Payout 251 174 -30.7
Employee Benefits 580 579 -0.2
Defined Contribution 6,504 6,344 -2.5
Reinsurance 698 731 4.7
Institutional Markets (GICs) 5,071 3,417 -32.6
Other - 11 n.a.
------ ------ -----
Total 20,550 21,001 2.2
-------------------------------------------------------------------------------
Strong sales of fixed annuities were the main driver of the increase in life
premium income in the US. GIC premiums were lower compared to a record high in
2001, due to reduced levels of short-term contract renewals. Excluding GICs,
total premium income increased by 14%.
The Canadian operations reported a pre-tax operational result of EUR 118
million, EUR 25 million better than a year ago. The increase is mainly
associated with favourable loss ratios and higher realised capital gains. For
the first nine months of 2002, the combined ratio stood at 95%. Premium income
in Canada increased by 42% (at constant exchange rates), primarily due to the
businesses acquired from Zurich North America Canada (excluding Zurich NAC
+23%).
Compared to the first nine months of 2001, the operational result before
taxation in Mexico improved by EUR 141 million to EUR 208 million. This is due
primarily to favourable underwriting results and higher investment income, as
well as the acquisition of the additional 58.5% of ING Comercial America in the
second half of 2001.
The South American operations showed a pre-tax result of EUR 48 million, EUR 14
million below the same period last year. Continuation of the economic crisis in
Argentina and the economic uncertainty in Brazil are being monitored closely,
although the financial risk of the insurance operations is limited.
ING ASIA/PACIFIC
The insurance operations in Asia/Pacific reported a pre-tax operational result
of EUR 472 million, up 71% from EUR 276 million in the first nine months of
2001. The operational result includes EUR 225 million from the EUR 475 million
profit on the sale of 49% of the life and mutual fund operations in Australia to
the joint venture with ANZ. The remaining EUR 250 million has been booked as
non-operational non-distributable net profit.
The Australian life result improved strongly due to the operational part of the
profit on the sale of the life and mutual fund operations to the joint venture
with ANZ. This increase was partly offset by the impact of an accounting change
for premium and investment taxes. China and India experienced higher start-up
expenses. Taiwan showed strong results due to growth of business in combination
with tight expense control. The result of the life company in Japan increased by
120% to EUR 26 million following lower claims in the second and third quarter
and tight expense control. The life company in Korea recorded a 32% result
increase fuelled by continued strong production, better persistency and a higher
business volume. The result of Australian non-life operations was better with
fewer large claims. Premium income in Asia/Pacific grew with 22% mainly due to
Korea and the strong sales of a newly introduced single premium variable annuity
product in Japan.
Page 13 of 27
KEY FIGURES AND HIGHLIGHTS OF THE BANKING OPERATIONS
---------------------------------------------------------------------------------------------
TABLE 6. PROFIT AND LOSS ACCOUNT OF THE BANKING OPERATIONS
First nine FIRST NINE %
in EUR x million months 2001 MONTHS 2002 change
---------------------------------------------------------------------------------------------
Interest result 4,407 5,583 26.7
Income from securities and participating interests 344 289 - 16.0
Commission 2,085 1,993 - 4.4
Results from financial transactions 1,012 482 - 52.4
Other results 463 300 - 35.2
----- -----
TOTAL INCOME 8,311 8,647 4.0
Personnel expenses 3,781 3,695 - 2.3
Other operating expenses 2,245 2,670 18.9
----- -----
Total operating expenses 6,026 6,365 5.6
Other interest expenses 5 0
----- -----
Total expenses 6,031 6,365 5.5
GROSS RESULT 2,280 2,282 0.1
Additions to the provision for loan losses 500 925 85.0
----- -----
RESULT BEFORE TAXATION 1,780 1,357 - 23.8
EFFICIENCY RATIO* 70.5% 69.9%
---------------------------------------------------------------------------------------------
* Excluding ING Direct and the restructuring provision with respect to
international wholesale banking.
The banking operations reported an operational result before taxation of EUR
1,357 million, EUR 423 million (-23.8%) lower than a year ago. The decrease is
largely attributable to a substantially higher addition to loan loss provisions
(+EUR 425 million to EUR 925 million) necessitated by an ongoing deterioration
of economic conditions. Furthermore, the creation of a provision for the
restructuring of the international wholesale banking activities outside the
Netherlands led to a charge of EUR 128 million in the third quarter 2002.
Despite the restructuring provision, the gross result rose by EUR 2 million
(+0.1%). Total income improved by EUR 336 million (+4.0%), reflecting strongly
increased interest results more than offsetting the decrease in the other income
components. Operating expenses rose by EUR 339 million or 5.6%, to a large
extent caused by the continuous expansion of the ING Direct activities and the
restructuring provision. While most banking units showed lower results before
taxation, both Postbank and ING Direct reported a strongly improved performance.
At EUR 274 million the pre-tax banking result in the third quarter 2002 was EUR
263 million lower than in the preceding quarter. The decrease was - apart from
an exceptional profit of EUR 94 million on the sale of Cedel shares in the
second quarter - mainly caused by lower (securities) commission, lower results
from financial transactions and the aforementioned restructuring provision. The
addition to loan loss provisions decreased slightly by EUR 25 million.
-------------------------------------------------------------------------------
TABLE 7. ING DIRECT
NUMBER OF CLIENTS FUNDS ENTRUSTED
x 1,000 in EUR x billion
Year- 30 SEP- Year- 30 SEP-
end TEMBER % end TEMBER %
2001 2002 change 2001 2002 change
-------------------------------------------------------------------------------
Canada 480 627 31 3.4 5.4 59
Spain 397 578 46 3.8 6.0 58
Australia 278 414 49 2.9 4.0 38
France 181 253 40 3.2 5.3 66
USA 338 760 125 3.3 9.2 179
Italy 75 202 169 1.2 3.6 200
Germany 827 1,738 110 6.2 17.8 187
----- ----- ----- ---- ---- ----
Total 2,576 4,572 77 24.0 51.3 114
-------------------------------------------------------------------------------
Page 14 of 27
Ahead of plan, ING Direct (including DiBa as from 2002) reached break-even for
the first time in the third quarter 2002. The nine months' loss before taxation
decreased to EUR 80 million from EUR 151 million in the same period last year.
The strong growth in funds entrusted and client base combined with the current
steep yield curve led to a substantial increase in income, exceeding the rise in
expenses. The operations in Canada, Australia and Germany (DiBa) reported
profits.
The operational result before taxation in the Netherlands shows a satisfactory
6.0% increase(see also appendix 6). The result in Belgium rose even stronger by
26.8%, helped by the exceptional profit on Cedel (EUR 64 million booked in
Belgium) and lower risk costs. Despite a disappointing performance in the third
quarter 2002 (mainly caused by high risk costs), the nine months' 2002 result in
North America improved strongly, but was still negative. Australia is now
showing a firm profit, mainly due to ING Direct. The pre-tax results in the Rest
of Europe, South America and Asia, however, decreased sharply, mainly because of
substantial higher risk costs, lower results from financial transactions and the
restructuring provision created in the third quarter 2002.
The interest result increased by EUR 1,176 million (+26.7%) to EUR 5,583 million
due to a higher average balance sheet total (+EUR 30.5 billion) and an
improvement of the interest margin in the first nine months 2002 to 1.59% from
1.34% a year ago. The widening of the interest margin can be attributed to
improved product margins, a steepening of the average yield curve and strong
growth in retail savings.
Bank lending increased by EUR 18.3 billion (+7.2%) compared to year-end 2001, of
which EUR 4.9 billion relates to the consolidation of DiBa and Toplease. Bank
lending in the Netherlands was up EUR 18.1 billion (+14.5%), of which EUR 12.4
billion is attributable to corporate lending (including a EUR 6.7 billion
increase in reverse repos) and EUR 5.7 billion to personal lending (mainly
residential mortgages). Bank lending outside the Netherlands did not change
significantly (+EUR 0.2 billion). DiBa added EUR 4.4 billion, but reverse repos
decreased by EUR 6.0 billion (mainly BBL). The depreciation of most currencies
against the euro also had a negative impact.
Income from securities and participating interests amounted to EUR 289 million,
a decrease by EUR 55 million (-16.0%) on the first nine months 2001. This item
includes the exceptional profit of EUR 94 million on the sale of Cedel-shares
(realised in the second quarter 2002). In the first nine months 2001 the EUR 40
million profit on the sale of the US investment banking activities was included.
-------------------------------------------------------------------------------
TABLE 8. COMMISSION
First nine FIRST NINE %
in EUR x million months 2001 MONTHS 2002 change
-------------------------------------------------------------------------------
Funds transfer 393 472 20.1
Securities 664 560 - 15.7
Insurance broking 63 87 38.1
Management fees 548 525 - 4.2
Brokerage and advisory fees 157 127 - 19.1
Other 260 222 - 14.6
----- ----- ----
Total 2,085 1,993 - 4.4
-------------------------------------------------------------------------------
Total commission decreased by EUR 92 million (-4.4%) compared to the first nine
months 2001. Securities commission dropped by EUR 104 million (-15.7%) caused by
the sharp fall of the stock markets. This also caused a decline in management
fees (-4.2%) and brokerage and advisory fees (-19.1%). Funds transfer commission
increased strongly (+20.1%), primarily in the Netherlands. The 38.1% increase in
insurance broking commission is entirely due to BBL.
Page 15 of 27
-------------------------------------------------------------------------------------
TABLE 9. RESULTS FROM FINANCIAL TRANSACTIONS
First nine FIRST NINE %
in EUR x million months 2001 MONTHS 2002 change
-------------------------------------------------------------------------------------
Result from securities trading portfolio 592 325 - 45.1
Result from currency trading portfolio 395 218 - 44.8
Other 25 -61
----- ---
Total 1,012 482 - 52.4
-------------------------------------------------------------------------------------
The continued downward trend in equity prices impacted the result from
securities trading negatively by EUR 267 million (-45.1%). The decrease can
largely be attributed to BBL, international wholesale banking and the former ING
Furman Selz Asset Management (revaluation of seed capital investments). The
result from currency trading was EUR 177 million lower (-44.8%). The other
result from financial transactions (including results from derivatives trading)
dropped from +EUR 25 million in the first nine months 2001 to a loss of EUR 61
million this year of which EUR 53 million follows from a reclassification of
result from derivatives trading to interest income.
Other results decreased by EUR 163 million (-35.2%) compared to the first nine
months 2001. The decrease is among others due to lower leasing income.
Total operating expenses increased by EUR 339 million (+5.6%) compared to the
first nine months of 2001. To an amount of EUR 128 million this increase is due
to the restructuring provision for international wholesale banking. If currency
exchange rate fluctuations, the consolidation of DiBa and Toplease and the
restructuring provision are excluded, the increase amounted EUR 127 million
(+2.1%). The further expansion of ING Direct (excluding DiBa) added EUR 103
million to expenses. The investments in a number of synergy projects rose by EUR
110 million. These effects were partly offset by the sale of the US investment
banking activities in April 2001, stringent cost control and lower bonus
accruals.
Despite the impact of the collective labour agreement and higher pension costs
mainly in the Netherlands, total personnel expenses decreased by EUR 86 million
(-2.3%), reflecting a 0.9% lower average headcount, lower bonus accruals and a
change in the staff composition (fewer staff in investment banking, more in ING
Direct). Total other operating expenses were EUR 425 million (+18.9%) higher,
mainly due to ING Direct, the consolidation of DiBa and Toplease and the
restructuring provision.
Excluding the continued rapidly expanding ING Direct operations and the
restructuring provision for international wholesale banking, the efficiency
ratio (total expenditure, excluding the addition to the provision for loan
losses, as a percentage of income) was 69.9%, a slight improvement compared to
70.5% for the first nine months of 2001 and 71.7% for the full year 2001.
The continued weak economic conditions in the third quarter 2002 required a EUR
300 million addition to the provision for loan losses. This is a slight decrease
compared to the second quarter 2002 (EUR 325 million). Loan loss provisioning
for the first nine months 2002 was EUR 925 million, an increase of EUR 425
million compared to a year ago, corresponding with 50 basis points (annualised)
of credit risk weighted assets against 32 basis points for the full year 2001.
RISK ADJUSTED RETURN ON CAPITAL
The Risk adjusted Return on Capital (RAROC) measures performance on a
risk-adjusted basis. RAROC is calculated as the economic return divided by
economic capital. The economic returns of RAROC are based on the principles of
valuation and calculation of results applied in the annual accounts. The credit
risk provisioning is replaced by statistically expected losses reflecting
average credit losses over the entire economic cycle. ING Group continues to
develop and refine the models supporting the RAROC calculations. ING Direct is
excluded.
Page 16 of 27
--------------------------------------------------------------------------------------------------
TABLE 10. RAROC BANKING OPERATIONS, EXCLUDING ING DIRECT
RAROC (pre-tax) Economic capital
in EUR x billion
Full year FIRST NINE Full year FIRST NINE
2001* MONTHS 2002 2001* MONTHS 2002
--------------------------------------------------------------------------------------------------
ING Europe 13.7% 15.1% 13.7 14.1
ING Asset Management 9.5% 3.7% 0.6 0.7
---- ---- ---- ----
Total banking operations 13.5% 14.5% 14.3 14.8
--------------------------------------------------------------------------------------------------
* Restated based on changed management structure.
The overall (pre-tax) RAROC figure of ING's banking operations was 14.5%, an
improvement of 1.0%-points compared to the full year 2001. Excluding the
restructuring provision RAROC was 15.7%. Total economic capital increased by EUR
0.5 billion, mainly due to higher credit and market risk capitals.
The solvency ratio (BIS ratio) of ING Bank N.V. was 10.30% at the end of
September 2002 (year-end 2001: 10.57%). The tier-1 ratio was 6.90% against 7.03%
at year-end 2001. Both ratios are well above the required levels. In July 2002,
ING Group issued USD 800 million additional tier-1 securities, which were used
to strengthen the ratios of ING Bank N.V. Total risk weighted assets amounted to
EUR 257.5 billion at the end of September 2002 (year-end 2001: EUR 243.2
billion).
KEY FIGURES AND HIGHLIGHTS OF THE ASSET MANAGEMENT OPERATIONS
---------------------------------------------------------------------------------
TABLE 11. ASSETS UNDER MANAGEMENT
Year-end 30 September %
in EUR x billion 2001 2002 change
---------------------------------------------------------------------------------
Mutual funds 183.9 164.6 - 10.5
Institutional clients 163.4 133.4 - 18.4
----- -----
Third parties 347.3 298.0 - 14.2
For own account 165.9 158.7 - 4.3
----- -----
Total 513.2 456.7 - 11.0
Share of third parties 67.7% 65.3%
---------------------------------------------------------------------------------
Compared to year-end 2001, total assets under management were 11.0% lower at EUR
456.7 billion. The net new inflow of EUR 7.3 billion demonstrates continued
strong client confidence in ING's investment professionals. Most business units
contributed to the inflow, but notably ING Investment Management and the US
operations. In addition, the joint venture with ANZ contributed EUR 4.3 billion.
The negative impact of the ongoing slide in asset values amounted to EUR 44.6
billion, while the impact of exchange rate fluctuations was a negative EUR 23.4
billion.
At 30 September 2002, 33% of total assets under management was invested in
equity, 57% in fixed income, 6% in real estate and 4% in cash.
Of ING's mutual funds, 50% performed better on an asset-weighted basis than
their relevant benchmark on a 3- and 5-year investment horizon. With 62% of
assets showing an above median one-year fund performance, ING's asset managers
continued to perform well in comparison with their peers. With at least 62% of
assets delivering an above-median investment performance on a 1- and 5-year
horizon, ING's fixed income performance stands out especially.
Page 17 of 27
PROFIT CONTRIBUTION
Asset management activities are conducted by both the insurance and banking
operations and their results are included in the results of both operations. A
functional asset management profit can be extracted from these results that
gives a more comprehensive insight into the relative importance of asset
management within ING Group than the operational result of the EC ING Asset
Management. The functional operational result before taxation from asset
management activities decreased by 51% from EUR 410 million to EUR 200 million.
The functional share of asset management in ING Group's operational result
before taxation declined from 9% to 4%.
-------------------------------------
The accounting principles applied in this document correspond with those applied
in ING Group's Annual Accounts 2001. All figures in this document are unaudited.
Certain of the statements contained in this release are statements of future
expectations and other forward-looking statements. These expectations are based
on management's current views and assumptions and involve known and unknown
risks and uncertainties. Actual results, performance or events may differ
materially from those in such statements due to, among other things, (i) general
economic conditions, in particular economic conditions in ING's core markets,
(ii) performance of financial markets, including emerging markets, (iii) the
frequency and severity of insured loss events, (iv) mortality and morbidity
levels and trends, (v) persistency levels, (vi) interest rate levels, (vii)
currency exchange rates, (viii) general competitive factors, (ix) changes in
laws and regulations, and (x) changes in the policies of governments and/or
regulatory authorities. ING assumes no obligation to update any forward-looking
information contained in this document.
APPENDICES
1. Key figures
2. Consolidated profit and loss account
3. Consolidated profit and loss account third quarter
4. Consolidated balance sheet and changes in shareholders' equity
5. Quarterly results and condensed consolidated statement of cash flows
6. Geographical breakdown of operational income and geographical breakdown of
operational result before taxation
7. Additional information: operational realised capital gains on equities,
operational realised capital gains on real estate, bank lending and
efficiency ratios banking operations per executive centre
8. Information for shareholders
Page 18 of 27
APPENDIX 1. KEY FIGURES
1997 1998 1999 2000 2001 First FIRST
nine NINE
months MONTHS
2001 2002
---------------------------------------------------------------------------------------------------------------------
BALANCE SHEET (EUR x billion)
Total assets 281.5 394.9 492.8 650.2 705.1 682.6 721.6
Investments 110.9 149.8 195.8 277.2 307.4 284.8 306.7
Lending 113.8 153.7 201.8 246.8 254.2 236.8 272.5
Insurance provisions 75.5 84.6 107.5 200.2 214.0 199.6 199.0
Shareholders' equity 21.9 29.1 34.6 25.3 21.5 20.0 16.5
RESULTS (EUR x million)
Income insurance operations
Premium income 14,345 20,448 22,412 29,114 50,460 35,942 39,711
Income from investments,
commission and other income 5,190 6,460 7,308 9,193 12,617 9,403 9,760
------ ------ ------ ------ ------ ------ ------
19,535 26,908 29,720 38,307 63,077 45,345 49,471
Income banking operations
Interest 3,516 5,201 5,652 5,786 6,072 4,407 5,583
Commission 1,645 2,323 2,856 3,630 2,765 2,085 1,993
Other income 1,145 891 1,368 1,886 2,274 1,819 1,071
------ ------ ------ ------ ------ ------ ------
6,306 8,415 9,876 11,302 11,111 8,311 8,647
Total income 25,823 35,307 39,584 49,568 74,163 53,641 58,107
Total expenditure 22,859 32,438 35,203 43,801 68,422 49,057 53,618
Operational result before taxation
Insurance operations 1,688 2,065 2,400 3,162 3,571 2,804 3,132
Banking operations 1,276 804 1,981 2,605 2,170 1,780 1,357
------ ------ ------ ------ ------ ------ ------
2,964 2,869 4,381 5,767 5,741 4,584 4,489
Dividend on own shares -44
------ ------ ------ ------ ------ ------ ------
Total 2,920 2,869 4,381 5,767 5,741 4,584 4,489
Operational net profit 2,180 2,103 3,229 4,008 4,252 3,304 3,328
Net profit 2,206 2,669 4,922 11,984 4,577 3,629 3,578
Net profit available for ordinary
shares 2,185 2,648 4,901 11,963 4,556 3,613 3,562
Figures per ordinary share of EUR 0.24 nominal value
Operational net profit 1.40 1.12 1.68 2.09 2.20 1.71 1.72
Net profit 1.42 1.42 2.56 6.27 2.37 1.88 1.85
Distributable net profit 1.42 1.42 1.84 2.56 2.20 1.71 1.72
Diluted net profit 1.38 1.40 2.52 6.18 2.35 1.87 1.85
Dividend 0.52 0.63 0.82 1.13 0.97
Dividend pay-out ratio 36.9 43.9 44.4 43.9 44.1
Shareholders' equity 13.30 15.21 17.90 13.04 11.03 10.24 8.40
Diluted shareholders' equity 12.94 14.93 17.65 12.86 10.92 10.18 8.40
Employees
Average number of staff 64,162 82,750 86,040 92,650 111,998 111,010 112,180
Full time equivalents, end of period 88,931 108,965 113,143 117,221 111,732
Page 19 of 27
APPENDIX 2. CONSOLIDATED PROFIT AND LOSS ACCOUNT*
INSURANCE BANKING TOTAL* %
OPERATIONS OPERATIONS FIRST NINE CHANGE
FIRST NINE FIRST NINE MONTHS
MONTHS MONTHS
in EUR x million 2001 2002 2001 2002 2001 2002
-------------------------------------------------------------------------------------------------------------------
Premium income 35,942 39,711 35,942 39,711 10.5
Income from investments of the insurance
operations for own risk 7,787 8,132 7,725 8,079 4.6
Interest result 4,407 5,583 4,454 5,625 26.3
Commission 1,034 1,031 2,085 1,993 3,119 3,024 -3.0
Other income 582 597 1,819 1,071 2,401 1,668 -30.5
------ ------ ----- ----- ------ ------
TOTAL INCOME 45,345 49,471 8,311 8,647 53,641 58,107 8.3
Underwriting expenditure 37,776 41,699 37,776 41,699 10.4
Other interest expenses 960 932 5 950 921 -3.1
Operating expenses 3,805 3,708 6,026 6,365 9,831 10,073 2.5
Additions to the provision for loan losses
500 925 500 925 85.0
------ ------ ----- ----- ------ ------
TOTAL EXPENDITURE 42,541 46,339 6,531 7,290 49,057 53,618 9.3
OPERATIONAL RESULT BEFORE TAXATION 2,804 3,132 1,780 1,357 4,584 4,489 -2.1
Taxation 640 584 406 330 1,046 914 -12.6
Third-party interests 48 70 186 177 234 247 5.6
------ ------ ----- ----- ------ ------
OPERATIONAL NET PROFIT 2,116 2,478 1,188 850 3,304 3,328 0.7
Non-operational results:
Result on sale of investments re
financing of acquisitions 325 325
Part of the gain on joint-venture ANZ 283 283
------ ------ ----- ----- ------ ------
Non-operational results before taxation
325 283 325 283
Taxation on non-operational results 33 33
------ ------ ----- ----- ------ ------
NON-OPERATIONAL NET PROFIT 325 250 325 250
NET PROFIT 2,441 2,728 1,188 850 3,629 3,578 -1.4
* Including intercompany eliminations.
Page 20 of 27
APPENDIX 3. CONSOLIDATED PROFIT AND LOSS ACCOUNT THIRD QUARTER
INSURANCE BANKING TOTAL* % CHANGE
OPERATIONS OPERATIONS THIRD QUARTER
THIRD QUARTER THIRD QUARTER
in EUR x million 2001 2002 2001 2002 2001 2002
-----------------------------------------------------------------------------------------------------------------------
Premium income 11,452 11,551 11,452 11,551 0.9
Income from investments of the insurance
operations for own risk 2,913 2,841 2,896 2,819 -2.7
Interest result 1,465 1,950 1,477 1,969 33.3
Commission 319 293 647 606 966 899 -6.9
Other income 156 132 482 223 638 355 -44.4
------ ------ ----- ----- ------ ------
TOTAL INCOME 14,840 14,817 2,594 2,779 17,429 17,593 0.9
Underwriting expenditure 12,410 12,342 12,410 12,342 -0.5
Other interest expenses 293 262 288 259 -10.1
Operating expenses 1,301 1,134 1,971 2,205 3,272 3,339 2.0
Additions to the provision for loan
losses 225 300 225 300 33.3
------ ------ ----- ----- ------ ------
TOTAL EXPENDITURE 14,004 13,738 2,196 2,505 16,195 16,240 0.3
OPERATIONAL RESULT BEFORE TAXATION 836 1,079 398 274 1,234 1,353 9.6
Taxation 168 237 91 69 259 306 18.1
Third-party interests 15 17 59 56 74 73 -1.4
------ ------ ----- ----- ------ ------
OPERATIONAL NET PROFIT 653 825 248 149 901 974 8.1
* Including intercompany eliminations.
Page 21 of 27
APPENDIX 4. CONSOLIDATED BALANCE SHEET
In EUR x million 31 DECEMBER 2001 30 SEPTEMBER 2002 % CHANGE
Assets
Tangible fixed assets 2,032 1,410 -30.6
Participating interests 2,628 3,065 16.6
Investments 307,446 306,659 -0.3
Lending 254,214 272,535 7.2
Banks 54,083 55,960 3.5
Cash 9,264 8,776 -5.3
Other assets 49,775 47,276 -5.0
Accrued assets 25,677 25,883 0.8
------- -------
TOTAL 705,119 721,564 2.3
Equity and liabilities
Shareholders' equity 21,514 16,494 -23.3
Preference shares of Group companies 2,542 2,287 -10.0
Third-party interests 1,461 1,720 17.7
------- -------
Group equity 25,517 20,501 -19.7
Subordinated loan 600 1,413 135.5.
------- -------
Group capital base 26,117 21,914 -16.1
General provisions 4,587 4,068 -11.3
Insurance provisions 213,986 199,008 -7.0
Funds entrusted to and debt securities of
the banking operations 276,367 312,143 12.9
Banks 107,810 101,907 -5.5
Other liabilities 63,349 69,739 10.1
Accrued liabilities 12,903 12,785 -0.9
------- -------
TOTAL 705,119 721,564 2.3
CHANGES IN SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY AS PER 31 DECEMBER 2000/2001 25,274 21,514
In EUR x million
Revaluations (after tax) -3,978 -4,906
Write-off of goodwill -1,908 -1,123
Exchange rate differences 212 -865
Net profit 4,577 3,578
Exercise of warrants and stock options 163 -2
Changes in ING Groep N.V. shares held by group companies -526 171
Dividend paid -2,300 -1,969
Other 96
-------
SHAREHOLDERS' EQUITY AS PER 31 DECEMBER 2001 / 30 SEPTEMBER 2002 21,514 16,494
Page 22 of 27
APPENDIX 5. QUARTERLY RESULTS
2001 2001 2001 2001 2002 2002 2002
in EUR x million Q1 Q2 Q3 Q4 Q1 Q2 Q3
------------------------------------------------------------------------------------------------------------------
Life 794 824 714 626 828 906 888
Non-life 125 225 122 141 153 166 191
----- ----- ----- ----- ----- ----- -----
Total insurance operations 919 1,049 836 767 981 1,072 1,079
Total banking operations 675 707 398 390 546 537 274
----- ----- ----- ----- ----- ----- -----
OPERATIONAL RESULT BEFORE TAXATION 1,594 1,756 1,234 1,157 1,527 1,609 1,353
Taxation 383 404 260 118 316 292 306
Third-party interests 80 80 73 91 75 99 73
----- ----- ----- ----- ----- ----- -----
OPERATIONAL NET PROFIT 1,131 1,272 901 948 1,136 1,218 974
of which:
Insurance operations 681 782 653 694 787 866 825
Banking operations 450 490 248 254 349 352 149
OPERATIONAL NET PROFIT PER ORDINARY SHARE 0.59 0.65 0.47 0.49 0.59 0.63 0.50
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FIRST NINE MONTHS 2002
in EUR x million
-------------------------------------------------------------------------------
Net cash flow from operating activities 27,013
Investments and advances:
- participating interests -1,318
- investments in shares and property -6,171
- investments in fixed-interest securities -216,153
- other investments -40
Disposals and redemptions:
- participating interests 595
- investments in shares and property 6,464
- investments in fixed-interest securities 180,389
- other investments 65
Net investment for risk of policyholders 9,485
-----
Net cash flow from investing activities -26,684
Subordinated loans of Group companies 2,068
Bonds, loans taken up and deposits by reinsurers 1,460
Private placements of ordinary shares 25
Changes in shares ING Groep N.V. 97
Cash dividends -1,977
------
Net cash flow from financing activities 1,673
Net cash flow 2,002
Cash at beginning of year 4,681
Exchange rate differences 1,504
-----
CASH AT END OF PERIOD 8,187
Page 23 of 27
APPENDIX 6. GEOGRAPHICAL BREAKDOWN OF OPERATIONAL INCOME
INSURANCE BANKING TOTAL %
OPERATIONS OPERATIONS FIRST NINE CHANGE
FIRST NINE FIRST NINE MONTHS*
MONTHS MONTHS
in EUR x million 2001 2002 2001 2002 2001 2002
---------------------------------------------------------------------------------------------------------
The Netherlands 8,836 9,105 3,553 3,807 12,376 12,904 4.3
Belgium 1,539 1,936 1,516 1,613 3,055 3,549 16.2
Rest of Europe 1,391 1,391 2,204 2,203 3,595 3,594 -0.0
North America 27,544 30,257 446 482 27,988 30,738 9.8
South America 1,044 695 170 164 1,214 859 -29.2
Asia 3,978 4,685 381 293 4,359 4,978 14.2
Australia 1,244 1,742 35 79 1,279 1,821 42.4
Other 148 330 6 6 154 336 118.2
------ ------ ----- ----- ------ -----
45,724 50,141 8,311 8,647 54,020 58,779 8.8
Income between areas -379 -670 -379 -672
------ ------ ----- ----- ------ -----
OPERATIONAL INCOME 45,345 49,471 8,311 8,647 53,641 58,107 8.3
* After eliminations
GEOGRAPHICAL BREAKDOWN OF OPERATIONAL RESULT BEFORE TAXATION
INSURANCE BANKING TOTAL %
OPERATIONS OPERATIONS FIRST NINE CHANGE
FIRST NINE FIRST NINE MONTHS
MONTHS MONTHS
in EUR x million 2001 2002 2001 2002 2001 2002
---------------------------------------------------------------------------------------------------------
The Netherlands 1,583 1,706 1,097 1,163 2,680 2,869 7.1
Belgium 70 56 358 454 428 510 19.2
Rest of Europe 91 112 339 -99 430 13 -97.0
North America 656 710 -198 -124 458 586 27.9
South America 62 48 44 -46 106 2 -98.1
Asia 184 181 157 -23 341 158 -53.7
Australia 96 298 -14 34 82 332 304.9
Other 62 21 -3 -2 59 19 -67.8
----- ----- ----- ----- ----- -----
OPERATIONAL RESULT
BEFORE TAXATION 2,804 3,132 1,780 1,357 4,584 4,489 -2.1
Page 24 of 27
APPENDIX 7. ADDITIONAL INFORMATION
SPECIFICATION OF OPERATIONAL REALISED CAPITAL GAINS ON EQUITIES
FIRST NINE FIRST NINE %
In EUR x million MONTHS MONTHS CHANGE
2001 2002
-------------------------------------------------------------------------
Life insurance 488 665 36.3
Non-life insurance 88 69 -21.6
-- --
Total before taxation 576 734 27.4
Taxation 53 119 124.5
-- ---
TOTAL AFTER TAXATION 523 615 17.6
SPECIFICATION OF OPERATIONAL REALISED CAPITAL GAINS ON REAL ESTATE
FIRST NINE MONTHS FIRST NINE MONTHS
in EUR x million 2001 2002
--------------------------------------------------------------------------
Life insurance 109 219
Non-life insurance 3 17
--- ---
Total before taxation 112 236
Taxation/third parties 39 86
--- ---
TOTAL AFTER TAXATION 73 150
BANK LENDING
31 DECEMBER 30 SEPTEMBER %
in EUR x billion 2001 2002 CHANGE
------------------------------------------------------------------------------
The Netherlands
- public authorities 2.2 1.9 -13.6
- other corporate 52.8 65.5 24.1
----- -----
Total corporate 55.0 67.4 22.5
Personal 70.1 75.8 8.1
----- -----
Total the Netherlands 125.1 143.2 14.5
International 129.1 129.3 0.2
----- -----
TOTAL BANK LENDING 254.2 272.5 7.2
EFFICIENCY RATIOS BANKING OPERATIONS PER EXECUTIVE CENTRE
FIRST NINE FIRST NINE
MONTHS MONTHS
in % 2001 2002
--------------------------------------------------------------------------
ING Europe* 69.7 69.3
ING Asset Management 93.8 88.5
TOTAL BANKING OPERATIONS* 70.5 69.9
* Excluding ING Direct and the restructuring provision for international
wholesale banking.
Page 25 of 27
APPENDIX 8. INFORMATION FOR SHAREHOLDERS
SHARES AND WARRANTS
The average number of shares used for the calculation of net profit per share,
was 1,925.8 million (1,923.0 million for the first nine months 2001). The number
of (depositary receipts for) ordinary shares of EUR 0.24 nominal value
outstanding at the end of September 2002 was 1,992.7 million (including 64.8
million own shares to cover outstanding options for ING personnel). The number
of (depositary receipts for) preference shares of EUR 1.20 nominal value
outstanding at the end of September 2002 was 87.1 million. Until 1 January 2004,
the dividend on these preference shares will amount to EUR 0.2405.
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 September 2002 was 17.2 million.
In the first nine months of 2002, the turnover of (depositary receipts for)
ordinary shares on the Euronext Amsterdam Stock Market was 1,393.1 million
(purchases and sales). The highest closing price was EUR 31.20, the lowest EUR
13.30; the closing price at the end of September 2002 was EUR 14.00.
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 DATES IN 2003*:
o 21 February 2003: publication annual results 2002
o 15 April 2003, 10:30 a.m. CET: Annual General Meeting of Shareholders,
Circustheater, The Hague
o 15 May 2003: publication results first three months 2003
o 14 August 2003: publication results first six months 2003
o 14 November 2003: publication results first nine months 2003
* All dates shown are provisional.
Page 26 of 27
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/C.Maas
------------------------------------------------
C. Maas
Chief Financial Officer
By: /s/H. van Barneveld
------------------------------------------------
H. van Barneveld
General Manager Corporate Control & Finance
Dated: November 21, 2002
Page 27 of 27