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 May 13, 2004
ING GROEP N.V.
Amstelveenseweg 500
1081-KL Amsterdam
The Netherlands
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
Form 20-F X Form 40-F
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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):
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This Report contains a copy of the following:
(1) The Press Release issued on May 13, 2004
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[ING GROUP LOGO]
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PRESS RELEASE
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Amsterdam o 13 May 2004
ING GROUP FIRST-QUARTER OPERATING NET PROFIT RISES 32%
STRONG BANKING RESULTS CONTINUE TO DRIVE PROFIT GROWTH
o OPERATING NET PROFIT RISES 32.0% TO EUR 1,191 MILLION (EUR 0.57 PER SHARE)
o OPERATING NET PROFIT FROM BANKING JUMPS 65.1% TO EUR 657 MILLION
o OPERATING NET PROFIT FROM INSURANCE RISES 6.0% TO EUR 534 MILLION
o NET PROFIT INCREASES TO EUR 1,202 MILLION (EUR 0.57 PER SHARE)
o DEBT/EQUITY RATIO OF ING GROEP NV IMPROVES TO 13.3% FROM 14.4% AT YEAR-END
2003
CHAIRMAN'S STATEMENT
"ING made a strong start to the year, driven mainly by an excellent performance
at our banking businesses. Insurance performance also improved," said Michel
Tilmant, chairman of the Executive Board. "The operating net profit from banking
reached an all-time high in the first quarter, thanks to strong revenue growth
at almost all business units, especially from ING Direct and the financial
markets activities. Risk costs also showed a marked decline, falling well below
long-term average levels in the first quarter."
"Operating net profit from insurance gained, although the increase in profit
before tax was tempered by higher taxes. Life premium income showed a solid
increase, especially in the U.S. and the growth markets of Asia. Profit from
ING's insurance business in the U.S. improved as a result of a sharp decline in
credit losses and continued focus on profitable sales growth from core products.
Profit from non-life insurance was strong, thanks to a favourable claims
environment," Mr. Tilmant said.
"ING will not give an outlook for full-year profit," Mr. Tilmant said. "We see
signs of improvement in the major economies where ING is active, although Europe
is lagging behind. Risk costs and credit losses are going down, and were
exceptionally low in the first quarter. However, the performance of the major
stock markets is still uncertain for this year. The low interest-rate
environment continues to affect some of our businesses. A sharp increase would
also create its own challenges."
"In the year ahead, we will strive for excellence in service to all our
customers, and invest further in growth markets to secure ING's future. We will
actively manage our capital, committing funds to those markets and businesses
that provide superior returns for shareholders. ING will continue to focus on
improving its operational performance through strict cost control and risk
management," Mr. Tilmant said.
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ALL FIGURES COMPARE FIRST QUARTER 2004 WITH FIRST QUARTER 2003 UNLESS OTHERWISE STATED.
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Please refer to www.ing.com/group `press room' or `investor relations' for additional information on the first-quarter results
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PRESS CONFERENCE ON 13 MAY 2004 AT 10.00 AM CET, AT ING ANALYST CONFERENCE CALL ON 14 MAY 2004 AT 3.30 PM CET
HOUSE, AMSTELVEENSEWEG 500, AMSTERDAM Listen in via:
o The Netherlands: +31 45 631 6910
Live webcast via a direct link at www.ing.com/group o United Kingdom: +44 20 8515 2312
o North America: +1 303 262 2130
Press presentation available at Live webcast via a direct link at www.ing.com/group
http://press.ing.comhttp://press.ing.com/ Analyst presentation available via
http://investors.ing.comhttp://www.ing.com/group
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MEDIA RELATIONS: +31 20 541 5446 INVESTOR RELATIONS: +31 20 541 5462 INTERNET: www.ing.com/group
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TABLE 1. KEY PROFIT AND LOSS FIGURES ING GROUP
%
1Q 1Q % organic** 4Q %
in EUR x million 2004 2003 change change 2003 change
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Operating net profit*
- insurance operations 534 504 6.0 6.9 698 -23.5
- banking operations 657 398 65.1 60.0 343 91.5
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Operating net profit* 1,191 902 32.0 32.3 1,041 14.4
Capital gains/neg. value adj. shares 11 -735 -5
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Net profit 1,202 167 1,036 16.0
Total operating income 17,296 16,657 3.8 11.2 16,705 3.5
- insurance operations 14,062 13,777 2.1 10.8 13,826 1.7
- banking operations 3,267 2,891 13.0 13.9 2,984 9.5
Total operating expenses 3,261 3,159 3.2 7.5 3,531 -7.6
- insurance operations 1,142 1,189 -4.0 4.4 1,339 -14.7
- banking operations 2,119 1,970 7.6 9.2 2,192 -3.3
in EUR
Operating net profit* per share 0.57 0.46 24.6 24.9 0.50 14.0
Net profit per share 0.57 0.08 0.50 14.0
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* Operating net profit =net profit excluding realised capital gains/ losses on shares and negative revaluation reserve
shares in 1Q2003
** Organic = excluding currency-rate differences and acquisitions/divestments
ING Group posted an operating net profit of EUR 1,191 million in the first
quarter, an increase of 32.0% from the same period a year earlier. Profit growth
was driven by a 65.1% jump in operating net profit at ING's banking operations,
boosted by higher income as well as lower risk costs. Operating profit before
tax from ING's insurance business increased 28.9%, supported by good life
results in the U.S. and Asia, and strong non-life earnings from the Netherlands,
Canada and Australia. Due to a sizeable tax benefit in the first quarter of
2003, operating net profit from insurance increased 6.0%.
Operating net profit per share rose 24.6% to EUR 0.57 from EUR 0.46 in the first
quarter of 2003. The increase in earnings per share lagged the growth in total
operating net profit due to a 6.3% increase in the average number of shares
outstanding as the final dividend for 2002 and the interim dividend for 2003
were fully funded with stock.
Net profit increased to EUR 1,202 million from EUR 167 million in the first
quarter of 2003, when net profit included a charge of EUR 735 million to cover a
negative balance in the revaluation reserve for shares. As stock markets
recovered in 2003 the reserve had a positive balance at the close of each
subsequent quarter, and at the end of March 2004, the reserve was EUR 1,310
million. In the first quarter of 2004, net profit included EUR 11 million from
realised gains on the sale of shares.
Compared with the fourth quarter of 2003, operating net profit increased 14.4%
from EUR 1,041 million and total net profit increased 16.0% from EUR 1,036
million. Profit growth was driven entirely by the banking business, which posted
a 91.5% increase in operating net profit as a result of higher income and lower
loan losses. Expenses at the banking businesses also declined from an
exceptionally high level in the fourth quarter of 2003, when an extra charge
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was taken to accelerate the depreciation of capitalised software. Operating net
profit from insurance declined 23.5%, mainly as a result of one-off items in the
fourth quarter of 2003, including the release of a catastrophe provision, gains
from the sale of Sviluppo and Seguros Bital, and exceptionally high gains on
real estate. Excluding those items, operating net profit rose 26.8%.
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INCOME
Total operating income increased 3.8% to EUR 17,296 million, driven by a 13.0%
increase in operating income from the banking activities, notably ING Direct and
the financial markets activities. Higher interest income, commission and other
income contributed to this growth. Operating income from insurance increased
2.1%. Strong growth in premium income from life insurance, especially in the
U.S. and Asia/Pacific was partially offset by currency fluctuations. Excluding
currency effects, acquisitions and divestments, operating income from insurance
increased 10.8% and total operating income climbed 11.2%.
EXPENSES
Total operating expenses rose 3.2% to EUR 3,261 million in the first quarter of
2004 and increased 7.5% organically. Strict cost control at ING's businesses in
mature markets was offset by higher expenses to support the growth of ING
Direct, as well as costs linked to the sale of ING's Asian cash equities
business and investments to improve efficiency and reduce backlogs at the Dutch
life insurance operations.
The cost/income ratio for ING's banking operations was 64.9% in the first
quarter, a strong improvement compared with both the first quarter of 2003
(68.1%) and the full-year 2003 (70.1%). Expenses from insurance increased
organically. However costs as a percentage of assets under management for
investment products declined 2 basis points to 0.79%, mainly as a result of
growth in managed funds. Expenses as a percentage of premiums for other life
insurance products declined 1.15%-point to 11.55% as a result of lower costs and
higher premiums. The combined ratio for ING's non-life insurance business
improved strongly to 89% from 97% in the first quarter of 2003, due to lower
claims while the expense ratio remained unchanged at 22%.
The total number of staff (full-time equivalents) fell by 1,435 to 112,900 at
the end of March 2004 from 114,335 at the end of 2003. The decrease was due
primarily to the run-off of ING's insurance business in Argentina, the sale of a
unit in Indonesia, restructuring at ING BHF-Bank and the sales of the Asian cash
equities business and Baring Private Equity Partners.
TAX
The effective tax rate increased to 29.6% in the first quarter of 2004 compared
with 19.4% in the first three months of 2003, due to higher taxes in both the
insurance and banking operations. The tax rate for insurance increased due to
the impact of a sizeable deferred tax benefit in the Netherlands in the first
quarter of 2003, and lower tax-free dividend income and a greater share of
profits with a higher tax burden in the first quarter of 2004. The tax rate for
the banking operations increased mainly due to incidentally higher taxes at ING
Belgium.
OPERATING PROFIT BEFORE TAX
Total operating profit before tax rose 49.0% from EUR 1,208 million in the first
three months of 2003 to EUR 1,800 million in the first quarter of 2004.
Operating profit before tax from insurance rose 28.9% to EUR 789 million, while
operating profit before tax from banking increased 69.6% to EUR 1,011 million.
ONE-OFF ITEMS
One-off items in the first quarter of 2004 amounted to EUR -84 million before
tax (EUR -54 million after tax) in the banking operations from a book loss and
costs related to the sale of the Asian cash equities business. In the first
three months of 2003 there were no one-off items.
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CURRENCY FLUCTUATIONS
A small negative impact from the weakening of most currencies against the euro
was more than offset by a gain of EUR 52 million after tax from the US dollar
hedge. That compares with a EUR 24 million gain on the hedge in the same period
last year. Including the mitigating effect from the hedge in both periods,
exchange rates had a positive net impact of EUR 11 million on first-quarter
profit. ING has hedged the expected profits in US dollar and dollar-linked
currencies for 2004. Based on a change in ING's view on the longer run
development of the euro/dollar exchange rate, it was recently decided to unwind
the hedges with respect to the 2005 results.
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TABLE 2. KEY BALANCE-SHEET FIGURES ING GROUP
31 MARCH 31 December %
In EUR x billion 2004 2003 change
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Shareholders' equity 22.9 21.3 7.3
- insurance operations 12.8 12.0 6.7
- banking operations 17.4 16.7 4.2
- eliminations* -7.3 -7.4
Total assets 830.0 778.8 6.6
Operating net return on equity 21.8% 21.5%
- insurance operations 17.2% 22.7%
- banking operations 18.1% 11.1%
Total assets under management 487.8 462.7 5.4
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* Own shares, subordinated loans, third-party interests, debenture loans and
other eliminations.
SHAREHOLDERS' EQUITY
On 31 March 2004, shareholders' equity amounted to EUR 22.9 billion, an increase
of EUR 1.6 billion, or 7.3%, compared with year-end 2003. The first-quarter net
profit added EUR 1.2 billion to shareholders' equity and revaluations accounted
for an increase of EUR 0.3 billion. Shareholders' equity per share increased to
EUR 10.82 from EUR 10.08 at the end of 2003.
CAPITAL RATIOS
The capital coverage ratio for ING's insurance operations increased to 184% of
regulatory requirements at the end of the first quarter, compared with 180% at
year-end 2003. The Tier-1 ratio of the banking business stood at 7.52% on 31
March compared with 7.59% at the end of 2003. The debt/equity ratio of ING Groep
NV improved to 13.3% from 14.4% at end 2003.
RETURN ON EQUITY
The operating net return on equity increased from 21.5% for the full year 2003
to 21.8% in the first quarter of 2004. The return on equity of the insurance
operations was 17.2% against 22.7% for the full year 2003. That was partly due
to an increase in the average shareholders' equity from EUR 11.0 billion to EUR
12.4 billion in the first quarter because of retained profits and a higher
revaluation reserve shares. The return on equity of the banking operations
increased to 18.1% from 11.1% in the full year 2003. The risk-adjusted return on
capital (RAROC) of ING's banking operations improved significantly to 25.9% from
17.0% in full-year 2003 (pre-tax). The wholesale banking activities performed
above ING's hurdles with a pre-tax RAROC of 22.3%.
ASSETS UNDER MANAGEMENT
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Assets under management increased 5.4% from EUR 462.7 billion at the end of 2003
to EUR 487.8 billion at the end of March 2004. The increase was the result of a
net inflow (+EUR 9.0 billion), higher stock markets (+EUR 8.9 billion), currency
rate differences (+EUR 9.2 billion) and divestments (-EUR 2.0 billion),
including the deconsolidation of Baring Private Equity Partners.
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OPERATING NET PROFIT FROM INSURANCE RISES 6.0% TO EUR 534 MILLION
o OPERATING PROFIT BEFORE TAX FROM INSURANCE INCREASES 28.9%
o PREMIUM INCOME RISES 12.2% ORGANICALLY, LED BY US AND ASIA
o INTERNAL RATE OF RETURN ON NEW BUSINESS RISES TO 11.7%
Operating net profit of the insurance operations increased 6.0% to EUR 534
million in the first quarter of 2004. Strong results from both life and non-life
insurance were offset in part by higher taxes. The effective tax rate increased
from 14.5% in the first quarter of 2003 to 29.2% in the first quarter of 2004,
mainly due to the impact of a deferred tax benefit in the Netherlands in the
first quarter of 2003, lower tax-free dividend income and a higher share of
profits from businesses with a higher tax burden (e.g. the US life business) in
the first quarter of 2004. Operating profit before tax from insurance rose 28.9%
to EUR 789 million.
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TABLE 3. PREMIUM INCOME AND OPERATING PROFIT BEFORE TAX OF THE INSURANCE
OPERATIONS
1Q 1Q % % organic*
in EUR x million 2004 2003 change change
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PREMIUM INCOME** 11,366 10,980 3.5 12.2
Life insurance 9,234 8,789 5.1 14.2
Non-life insurance 2,132 2,191 -2.7 4.0
OPERATING PROFIT BEFORE TAX 789 612 28.9 33.7
Life insurance 562 445 26.3 29.5
Non-life insurance 227 167 35.9 43.7
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* Organic = excluding currency rate differences and acquisitions/divestments
** Premium income has been adjusted to exclude Guaranteed Investment Contracts
(GICs) in line with international practice
Life insurance profit before tax increased 26.3% to EUR 562 million, driven by
profit growth in the US and Asia/Pacific. In the US, higher stock markets
resulted in higher fee income, while credit-related investment losses on the
fixed-income portfolio were negligible. Strong sales volume and continued focus
on profitable sales growth also contributed to an improved performance from the
US life business. In Asia/Pacific, high sales and a favourable claims experience
had a positive impact on results. Results in the Netherlands were under pressure
mainly because of higher expenses related to the improvement of service and
clearing backlogs, though the internal rate of return on new business showed a
marked improvement.
Non-life insurance profit before tax increased 35.9% to EUR 227 million, mainly
as a result of a favourable claims experience. The combined ratio from ING's
non-life insurance units improved to 89% compared with 97% in the first quarter
of 2003. Results from Canada, the Netherlands and Australia improved strongly,
particularly from motor and fire insurance.
PREMIUM INCOME
Total premiums increased 3.5% to EUR 11,366 million. Strong growth in life
premiums from the US and Asia/Pacific was partially offset by the depreciation
of most currencies against the euro. Excluding the impact of currencies and
acquisitions or divestments, the organic increase in total premium income was
12.2%. In the U.S., insurance premiums increased 22.9% at constant currency
rates, while the fast-growing markets in Asia posted a 26.8% increase in
premiums in local currencies. Life premiums in the Netherlands fell 0.7%.
Starting from the first quarter of 2004, Guaranteed Investment Contracts (GICs)
are no longer included in premium income and underwriting expenditure, to bring
reporting into line with practice at other insurers. Figures in the
corresponding periods have been adjusted accordingly. In the first quarter, EUR
1,179 million in GICs were received, compared with EUR 1,570 million in the
first quarter of 2003.
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EXPENSES
Operating expenses from ING's insurance businesses declined 4.0% to EUR 1,142
million, due in part to the depreciation of many currencies against the euro.
Organically, operating expenses increased 4.4%, mainly because of higher
expenses to clear backlogs and improve service at the Dutch life insurance unit,
as well as higher expenses resulting from increased sales in the US and higher
costs to support the growth of insurance activities in developing markets.
Expenses as a percentage of assets under management for investment products
declined 2 basis points compared with full-year 2003 to 0.79%. Expenses as a
percentage of premiums for other life insurance products fell to 11.55% in the
first quarter, compared with 12.70% for full-year 2003. The expense ratio for
non-life insurance was unchanged at 22%.
CREDIT-RELATED LOSSES
Credit-related investment losses dropped to EUR 9 million, or 3 basis points of
total fixed interest securities, compared with EUR 103 million, or 31 basis
points, in the first quarter last year.
CURRENCY RATES AND ONE-OFF ITEMS
Exchange rate differences at the insurance business had a positive net impact of
EUR 25 million before tax and EUR 17 million after tax, including the effect of
the dollar hedge. There were no one-off items included in the insurance results
in the first quarter of 2004 or in the corresponding quarter of 2003.
CAPITAL BASE
At the end of March 2004, the capital base of ING Verzekeringen NV was EUR 16.6
billion, or 184% of the legally required level of EUR 9.0 billion. The
debt/equity ratio of ING Verzekeringen NV deteriorated slightly from 19.8% at
the end of 2003 to 20.2% at the end of March 2004.
GEOGRAPHICAL BREAKDOWN INSURANCE OPERATIONS
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TABLE 4. GEOGRAPHICAL BREAKDOWN OF PREMIUM INCOME AND OPERATING PROFIT BEFORE TAX FROM INSURANCE OPERATIONS
PREMIUM INCOME OPERATING PROFIT BEFORE TAX
1Q 1Q % % organic 1Q 1Q % % organic
in EUR x million 2004 2003 change change 2004 2003 change change
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The Netherlands 2,555 2,577 -0.9 -0.9 329 336 -2.1 2,8
Belgium 665 759 -12.4 -12.4 33 23 43.5 43.5
Rest of Europe 323 344 -6.1 4.3 47 40 17.5 23.7
North America 5,194 4,880 6.4 22.6 276 167 65.3 101.5
Latin America* 550 658 -16.4 -4.5 65 74 -12.2 4.8
Asia 1,709 1,473 16.0 26.8 70 46 52.2 70.7
Australia 366 334 9.6 -1.6 52 26 100.0 85.7
Other 4 -45 -83** -100**
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TOTAL 11,366 10,980 3.5 12.2 789 612 28.9 33.7
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* Latin America = South America, including Mexico.
** Other: Since January 2004 Other includes interest on core debt and result on USD hedge. The corresponding figures
have been adjusted.
THE NETHERLANDS
Operating profit before tax from the Netherlands declined 2.1% to EUR 329
million, mainly due to an increase in operating expenses at the Dutch life
insurance business due to higher
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pension costs and additional expenses to improve the quality of service and
reduce backlogs. Life insurance profit before tax in the Netherlands declined
7.0% to EUR 254 million, while life premiums fell 0.7% to EUR 1,663 million,
mainly due to lower sales of individual single-premium products.
However, the internal rate of return on new business improved strongly to 12.4%
compared with 8.0% in 2003.
Profit before tax from the Dutch non-life business increased 19.0% to EUR 75
million. Results from Fire and Miscellaneous, which includes personal liability
and surety insurance, increased strongly, mainly due to an improved claims
ratio. The results from motor insurance showed moderate growth, while results
from Loss of Income/Accident decreased, mainly due to the release of a redundant
insurance provision in the first quarter of 2003. Non-life premiums fell 1.2% to
EUR 892 million, mainly due to lower Motor and Loss of Income/Accident sales.
BELGIUM
Operating profit before tax from the Belgian insurance business increased 43.5%
to EUR 33 million. Profit from life insurance was up EUR 6 million (+31.6%) to
EUR 25 million. Life premiums in Belgium, including Luxembourg, fell 15.2% to
EUR 562 million due to exceptionally high sales of single individual life
products in the first quarter of 2003. Non-life profit before tax doubled to EUR
8 million, thanks to a continued improvement in the claims experience.
REST OF EUROPE
Operating profit before tax from the insurance units in the rest of Europe
increased 17.5% to EUR 47 million, driven by higher results in Poland and
Hungary. Life profit before tax increased 15.4% to EUR 45 million, while life
premium income in local currencies grew 3.8% to EUR 310 million, driven mainly
by strong growth in the pension business in the Czech Republic and a moderate
increase in other Central European countries. Non-life profit before tax
amounted to EUR 2 million in the first quarter of 2004, EUR 1 million higher
than the same period last year.
UNITED STATES
The US businesses reported operating profit before tax of EUR 220 million for
the first quarter of 2004, up 45.7% from the same period last year and an
organic increase of 75.8%. Results were attributable to strong premium growth in
annuities, retirement services and life along with lower credit losses and
higher assets under management, which were supported by improved equity markets.
Continued sales growth supported a 22.9% organic increase in gross premiums
(excluding guaranteed investment contracts), which reached EUR 4,749 million.
Fixed and variable annuity premiums posted organic increases of 61.0% and 56.6%
respectively, while retirement services and life increased 11.3% and 12.0%
respectively. Returns also improved as a result of continued focus on profitable
sales growth. The internal rate of return in US dollars rose to 10.4% for the
first quarter compared with 9.9% for the full year 2003. Results were partially
offset by higher expenses, which increased 6.0% organically, in line with
production growth.
Composite margins after credit losses increased to 1.44% in the first quarter of
2004 from 1.17% in the fourth quarter of 2003, primarily as a result of
rate-crediting actions, the impact of which amounted to 24 basis points. Yields
on mortgage-backed securities, which represent 18% of the assets supporting
composite margin products, improved 25 basis points to 5.11% in the first
quarter compared with the fourth quarter of 2003.
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Starting 1 January 2004, ING adopted the US GAAP accounting standard "Statement
of Position 03-1: Accounting and Reporting by Insurance Enterprises for Certain
Non-Traditional Long-Duration Contracts and for Separate Accounts" for both its
Dutch and US accounting. SOP 03-1 requires the establishment of benefit reserves
for annuity contracts, such as guaranteed minimum death benefits, and the timing
of profit recognition of universal life contracts. ING already held adequate
reserves for guaranteed minimum death benefits with variable annuities, so the
impact for ING mainly relates to the timing of the profit recognition in
universal life contracts in the US. This accounting change resulted in an EUR 45
million after-tax reduction in shareholders' equity.
CANADA
Operating profit before tax from Canada increased to EUR 56 million in the first
quarter from EUR 14 million in the year-earlier period, mainly as a result of
favourable underwriting results. Lower claims and a milder winter coupled with
premium growth enhanced results and delivered a record low combined ratio of
92.3% versus 106.7% reported for same period in 2003.
LATIN AMERICA
The operating profit before tax from insurance in Latin America declined 12.2%
to EUR 65 million, as a result of the decline of many currencies against the
euro and the sale of the Seguros Bital joint venture in 2003. Organically,
operating profit before tax increased 4.8%. Favourable claims experience in
Mexico's motor business was softened by lower premiums.
ASIA
Operating profit before tax from Asia increased 52.2% to EUR 70 million in the
first quarter, boosted mainly by the life insurance businesses in South Korea
and Japan. In local currencies, profit increased 70.7%. Across Asia, profits
were driven by higher premium volumes, favourable claims experience and
continued emphasis on controlling costs. Premium income rose 16.0% (26.8% in
local currencies) fuelled by South Korea and Japan, where premiums increased
50.8% and 32.5% respectively in local currency terms. Operating expenses
declined 11.3% (2.4% in local currencies). Profit in Taiwan declined as ING
doubled the reserve strengthening for the low interest rate environment to EUR
25 million in the first quarter. The increase is due to the continuing
volatility of interest rates in the low interest rate environment. Taiwan
increased its focus on selling investment-linked products, which amounted to 47%
of new business premium income. In the developing markets businesses of China,
India and Thailand, premium income increased by 64%, 405% and 54% respectively
in local currencies. The value of new business climbed 14.5% to EUR 70 million
compared with one-quarter of the full-year production in 2003.
AUSTRALIA
Operating profit before tax from Australia doubled in the first quarter to EUR
52 million. ING's non-life insurance joint venture with QBE continued to benefit
from favourable premium rates, while claims experience was positively impacted
by the absence of major bush-fires and storms, which affected results in the
first quarter of 2003. The Australian life and fund management joint venture
with ANZ showed strong profit growth due to improved capital investment earnings
and continued expense control, which offset the effects of a net funds outflow.
VALUE OF NEW BUSINESS OF ING'S LIFE INSURANCE OPERATIONS
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The value of new life business written in the first quarter of 2004 was EUR 157
million, which is 43% higher than one-fourth of the total 2003 new business
value, or EUR 110 million. The increase is primarily due to higher sales and a
more profitable product mix. The US and Asia in particular showed significant
increases in sales, which positively impacted new business value. The
Netherlands increased more than six-fold to EUR 17.4 million, due to adjusted
pricing. Latin America showed a large increase due to the inclusion of the
pension business for the first time.
The internal rate of return for the new business written in the first three
months of 2004 is 11.7%. This compares to an overall return of 10.9% for 2003.
The reported internal rates of return are consistent with the 7.5% discount rate
in the Netherlands. The after-tax acquisition expense overrun deducted from the
value of new business for the first three months of 2004 is EUR 15.8 million
compared with EUR 19.5 million for one-quarter of the 2003 overrun.
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BANKING PROFITS RISE 65.1% TO ALL-TIME HIGH OF EUR 657 MILLION
o OPERATING INCOME FROM BANKING RISES 13.0%, LED BY ING DIRECT AND FINANCIAL
MARKETS
o LOAN LOSS PROVISIONING DROPS TO EUR 137 MILLION FROM EUR 325 MILLION
o RAROC RISES TO 25.9% AND WHOLESALE BANKING PASSES HURDLE WITH RAROC OF 22.3%
Operating net profit of the banking operations rose 65.1% to an all-time high of
EUR 657 million in the first quarter, supported by strong growth in income, a
sharp reduction in risk costs, and good cost control.
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TABLE 5. OPERATING PROFIT BEFORE TAX OF THE BANKING OPERATIONS
1Q 1Q %
in EUR x million 2004 2003 change
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Interest result 2,163 1,969 9.9
Income from securities and participating interests 42 0 n.a.
Commission 710 597 18.9
Results from financial transactions 232 234 -0.9
Other results 120 91 31.9
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TOTAL INCOME 3,267 2,891 13.0
Personnel expenses 1,189 1,153 3.1
Other expenses 930 817 13.8
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TOTAL OPERATING EXPENSES 2,119 1,970 7.6
GROSS RESULT 1,148 921 24.6
Additions to the provision for loan losses 137 325 -57.8
----- -----
OPERATING PROFIT BEFORE TAX 1,011 596 69.6
COST/INCOME RATIO 64.9% 68.1%
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Operating profit before tax from the banking operations rose 69.6% to EUR 1,011
million. Additions to provisions for loan losses declined sharply from EUR 325
million in the first quarter of 2003 to EUR 137 million in the same quarter this
year. The gross result increased 24.6%. Total income rose 13.0% to EUR 3,267
million, with almost all income lines contributing to the increase. The interest
result rose 9.9% as a result of higher volumes, notably at ING Direct, and a
slightly higher interest margin in the Netherlands. Commission and other results
rose 18.9% and 31.9% respectively. Income from securities and participating
interests increased despite a loss of EUR 42 million booked on the sale of the
Asian cash equities business. Results from financial transactions were
negatively impacted by a EUR 48 million loss taken by Postbank in the first
quarter to compensate customers for a disappointing return on investments
related to the unit-linked mortgage `MeerWaardehypotheek'. Total operating
expenses rose 7.6%, mainly due to the expansion of ING Direct and EUR 42 million
in costs from the sale of the Asian equities unit.
Almost all banking units reported higher results. Operating profit before tax
from ING Direct rose from EUR 7 million in the first quarter of 2003 to EUR 77
million in the first three months of 2004. ING BHF-Bank in Germany returned to
profit after a number of loss-making quarters. ING Belgium and ING Bank
Netherlands reported substantially higher earnings and the international
wholesale banking units posted a solid increase, supported by strong financial
markets results.
FIRST QUARTER 2004 VERSUS FOURTH QUARTER 2003
Page 14 of 33
--------------------------------------------------------------------------------
Compared with the fourth quarter of 2003, operating net profit from banking
increased 91.5% from EUR 343 million to EUR 657 million. Operating profit before
tax nearly doubled from EUR 522 million in the fourth quarter to EUR 1,011
million in the first three months of 2004. Almost all business units contributed
to the increase. Total income increased by EUR 283 million on the back of a
strong recovery of the results from financial transactions. The interest result
rose by EUR 107 million. Total operating expenses decreased by EUR 73 million
despite the EUR 42 million one-off expenses related to the sale of the Asian
cash equities business. It should be mentioned that operating expenses in the
fourth quarter of 2003 were high due in part to the accelerated depreciation of
capitalised software. The addition to the provision for loan losses fell from
EUR 270 million in the fourth quarter of 2003 to EUR 137 million in the first
quarter.
INTEREST RESULT
The interest result increased substantially by EUR 194 million, or 9.9%, to EUR
2,163 million, due to a higher average balance sheet total, notably caused by
the continued strong growth of ING Direct. In the Netherlands, the interest
margin improved by 1 basis point to 2.03%, mainly due to higher product margins.
The total interest margin decreased by 7 basis points to 1.56%. This is fully
attributable to the increased share of the balance sheet total from outside the
Netherlands, where interest margins are lower (mainly triggered by ING Direct,
which has an interest margin of approximately 1%). Compared with the fourth
quarter of 2003 the total interest margin improved by 4 basis points.
Bank lending was up EUR 8.8 billion, or 3.0%, at the end of March compared with
year-end 2003. At constant exchange rates the increase was 2.3%. Corporate
lending rose by EUR 3.5 billion, while personal lending increased by EUR 5.4
billion. The growth in personal lending was almost entirely from growth in
residential mortgages (+EUR 5.1 billion, of which EUR 2.9 billion was from ING
Direct).
Funds entrusted to and debt securities of the banking operations rose by EUR
24.0 billion, or 6.4%, to EUR 401.8 billion at the end of March 2004, caused to
a large extent by the continued strong growth of ING Direct.
INCOME FROM SECURITIES AND PARTICIPATING INTERESTS
Total income from securities and participating interests increased from nil in
the first quarter 2003 to EUR 42 million in the same quarter of 2004, despite a
one-off loss of EUR 42 million caused by the discount to net asset value on the
sale of the Asian cash equities business to Macquarie Bank.
--------------------------------------------------------------------------------
TABLE 6. COMMISSION
1Q 1Q %
In EUR x million 2004 2003 change
--------------------------------------------------------------------------------
Funds transfer 149 148 0.7
Securities business 219 149 47.0
Insurance broking 42 37 13.5
Management fees 185 146 26.7
Brokerage and advisory fees 27 43 -37.2
Other 88 74 18.9
-- --
TOTAL 710 597 18.9
--------------------------------------------------------------------------------
COMMISSION
Page 15 of 33
--------------------------------------------------------------------------------
Total commission income increased 18.9% to EUR 710 million. Commission from
securities rose 47.0% due to higher activity on the stock markets. Management
fees were 26.7% higher, while the brokerage and advisory fees dropped by 37.2%.
The increase in commission from insurance broking of 13.5% occurred entirely in
the Netherlands. The 18.9% increase in 'other' commission can be mainly
attributed to the international wholesale banking units.
Page 16 of 33
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE 7. RESULTS FROM FINANCIAL TRANSACTIONS
1Q 1Q %
in EUR x million 2004 2003 change
--------------------------------------------------------------------------------
Result from securities trading portfolio 149 147 1.4
Result from currency trading portfolio 111 -6 n.a.
Other results from financial transactions -28 93 n.a.
--- ---
TOTAL 232 234 -0.9
--------------------------------------------------------------------------------
RESULTS FROM FINANCIAL TRANSACTIONS
Results from financial transactions decreased by EUR 2 million (-0.9%). The
international wholesale banking units and ING BHF-Bank reported higher results
from financial transactions, and ING Belgium matched the high level it reported
in the first quarter of 2003. That was offset by the EUR 48 million loss taken
by Postbank, which is classified under Other results from financial
transactions. Compared with the low results in the fourth quarter of 2003 (EUR
15 million), results from financial transactions improved by EUR 217 million.
OTHER RESULTS
Other results rose 31.9% to EUR 120 million, due in part to higher results from
real estate.
TOTAL OPERATING EXPENSES
Total operating expenses increased 7.6% to EUR 2,119 million, due in large part
to one-off expenses related to the sale of the Asian cash equities business (EUR
42 million) and continued growth of ING Direct (+EUR 89 million at constant
exchange rates). Excluding those factors, currency effects, and the impact of
acquisitions and divestments, operating expenses increased by a modest 2.7%. On
a comparable basis (i.e. excluding currency effects, acquisitions/divestments,
the one-off expenses from the Asian equities sale and ING Direct) personnel
expenses increased by 2.3%, largely due to higher bonus accruals. The impact of
the collective labour agreement and higher pension costs were more-or-less
offset by a reduction of the average headcount by about 2,700, excluding an
increase at ING Direct. On the same basis, other operating expenses were 3.3%
higher.
COST/INCOME RATIO
The cost/income ratio (operating expenses as a percentage of total income)
improved to 64.9% in the first quarter, compared with 68.1% in the first quarter
of 2003 and 70.1% for full-year 2003.
ADDITIONS TO THE PROVISION FOR LOAN LOSSES
Total additions to the provision for loan losses amounted to EUR 137 million in
the first quarter of 2004, down 57.8% from EUR 325 million in the first quarter
of 2003. The addition in the first quarter of 2004 equalled an annualised 22
basis points of average credit risk-weighted assets, which is lower than the
statistically expected losses used in the RAROC calculations (approximately 35
basis points). In the full year 2003, the addition to loan loss provisions was
46 basis points of average credit risk-weighted assets.
RISK-ADJUSTED RETURN ON CAPITAL
The Risk-Adjusted Return on Capital (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
Page 17 of 33
--------------------------------------------------------------------------------
replaced by statistically expected losses reflecting average credit losses over
the entire economic cycle. From 2004, ING Direct is included in the RAROC
calculations and the 2003 figures have been restated.
--------------------------------------------------------------------------------
TABLE 8. RAROC BANKING OPERATIONS
RAROC (PRE-TAX) ECONOMIC CAPITAL
(in %) (in EUR x billion)
1Q 2004 FY 2003 1Q 2003 1Q 2004 FY 2003
--------------------------------------------------------------------------------
MC Netherlands 41.2 41.7 38.2 4.6 4.5
MC South West Europe 40.8 20.8 29.8 3.1 3.2
MC Germany 9.4 -3.6 -0.7 1.3 1.4
MC Central Europe 18.6 10.8 12.9 0.7 0.7
MC UK/Americas/Asia 18.3 5.1 3.1 1.7 1.9
ING Direct 19.1 12.5 4.8 2.1 1.7
Asset Management 36.4 44.0 21.5 0.8 0.4
Other -73.4 -79.9 -116.1 0.7 0.7
TOTAL BANKING OPERATIONS 25.9 17.0 17.5 15.0 14.5
Wholesale 22.3 12.5 16.4 10.1 10.0
Retail 33.3 27.0 20.5 4.9 4.5
--------------------------------------------------------------------------------
The total pre-tax RAROC of ING's banking operations was 25.9%, a strong
improvement from both the first quarter of 2003 (17.5%) and the full year 2003
(17.0%). The improvement was due entirely to higher economic returns. MC South
West Europe (mainly retail banking), MC Americas and ING Direct reported
significantly higher RAROCs. The RAROC of the wholesale activities improved by
5.9%-points to 22.3%, while the strong RAROC of the retail banking activities
increased from 20.5% to 33.3%.
CAPITAL ADEQUACY
At the end of March 2004, the Tier-1 ratio of ING Bank NV was 7.52%, a slight
decrease of 7 basis points from year-end 2003 (7.59%). The solvency ratio (BIS
ratio) fell from 11.34% to 11.23%. The modest deterioration of the ratios was
entirely caused by higher risk-weighted assets. Compared with year-end 2003,
total risk-weighted assets rose by EUR 10.9 billion, or 4.3%, to EUR 262.2
billion. Almost half of the increase was due to growth of ING Direct.
GEOGRAPHICAL BREAKDOWN BANKING
-----------------------------------------------------------------------------------------------------------------
TABLE 9. GEOGRAPHICAL BREAKDOWN OF OPERATING INCOME AND OPERATING PROFIT BEFORE TAX FROM BANKING ACTIVITIES
OPERATING INCOME OPERATING PROFIT BEFORE TAX
in EUR x million 1Q 2004 1Q 2003 % change 1Q 2004 1Q 2003 % change
-----------------------------------------------------------------------------------------------------------------
The Netherlands 1,355 1,288 5.2 455 357 27.5
Belgium 649 588 10.4 286 189 51.3
Rest of Europe 850 671 26.7 147 -28 n.a.
North America 252 163 54.6 109 19 473.7
Latin America* 39 49 -20.4 26 30 -13.3
Asia 82 103 -20.4 -35 21 n.a.
Australia 40 29 37.9 23 12 91.7
Other 0 0 0 -4
----- ----- ----- ---
TOTAL 3,267 2,891 13.0 1,011 596 69.6
-----------------------------------------------------------------------------------------------------------------
* Latin America = South America, including Mexico.
In the Netherlands, operating profit before tax rose 27.5% to EUR 455 million.
Total income increased 5.2% despite the EUR 48 million loss taken by Postbank
for the unit-linked
Page 18 of 33
--------------------------------------------------------------------------------
mortgage. Operating expenses were 4.7% higher, while risk costs declined
significantly, supported by the release of some debtor provisions.
In Belgium operating profit before tax jumped 51.3% to EUR 286 million. Compared
with the already high level in the first quarter of 2003, total income rose
10.4% supported by higher revenue from both retail and wholesale banking.
Operating expenses declined 3.0%, while risk costs fell to one-third of the
level reported in the year-earlier period.
The operational result before tax in the Rest of Europe improved very strongly
from a loss of EUR 28 million in the first quarter 2003 to a pre-tax profit of
EUR 147 million. Almost all banking units in the region contributed to the
improvement. Especially the results of ING Direct, ING BHF-Bank, ING Bank Slaski
and the activities of MC South West Europe in the region were significantly
better. ING BHF-Bank posted a pre-tax profit after a number of loss-making
quarters.
In North America operating profit before tax increased from EUR 19 million to
EUR 109 million, mainly caused by higher income. Both the wholesale banking
activities and ING Direct contributed to the increase.
In Latin America, operating profit before tax fell 13.3% to EUR 26 million.
Lower income and higher expenses were only partly compensated by lower risk
costs.
The Asian banking operations posted a loss before tax of EUR 35 million compared
with a profit of EUR 21 million in the same period a year earlier. The decrease
was caused entirely by the loss on the sale of the Asian cash equities business.
Of the total pre-tax loss of EUR 84 million, EUR 74 million was accounted for in
Asia and the rest was booked in Rest of Europe and North America.
Australia's operating profit before tax almost doubled to EUR 23 million mainly
due to ING Direct.
-----------------------------------------------------------------------------------------------------
TABLE 10. ING DIRECT
NUMBER OF CLIENTS (X 1,000) FUNDS ENTRUSTED (in EUR x billion)
31 MARCH End % 31 MARCH End %
2004 2003 change 2004 2003 change
-----------------------------------------------------------------------------------------------------
Canada 959 905 6.0 7.6 7.0 8.6
Spain 799 753 6.1 8.4 7.9 6.3
Australia 777 719 8.1 7.2 6.9 4.3
France 354 339 4.4 7.9 7.6 3.9
USA 1,649 1,399 17.9 15.9 12.8 24.2
Italy 433 379 14.2 9.3 7.6 22.4
UK 471 305 54.4 17.9 11.5 55.7
Germany 3,978 3,735 6.5 41.8 38.1 9.7
----- ----- ---- ----
Total 9,420 8,534 10.4 116.0 99.4 16.7
-----------------------------------------------------------------------------------------------------
ING DIRECT
ING Direct continued its excellent performance resulting in an operating profit
before tax of EUR 77 million, up from EUR 7 million in the first quarter of 2003
and EUR 58 million in the fourth quarter of 2003. The continued strong growth in
funds entrusted and number of customers combined with the steep yield curve were
the main drivers of this growth. Canada, the US, Spain, Australia and Germany
all contributed to the profit, and France broke even for the first time.
Page 19 of 33
--------------------------------------------------------------------------------
ASSET MANAGEMENT OPERATING PROFIT BEFORE TAX RISES 26%
The functional operating profit before tax from asset management activities
increased 26.0% to EUR 116 million. This figure is derived by breaking out the
asset management profit contribution from the insurance and banking results. The
increase was largely due to higher results from the asset management activities
in Europe, notably ING Belgium, and the U.S. In the first quarter of 2004, asset
management activities accounted for 6.0% of ING's operating profit before tax.
REAL ESTATE
Despite weaker real estate markets, ING Real Estate generated a satisfactory 7%
profit growth and profit from the insurance-owned real estate portfolios managed
by ING Real Estate increased 11%. In the US, ING Real Estate successfully closed
a new fund by raising over USD 1.5 billion in a common share offering. This
represents the largest-ever real estate close-end fund. On 5 March, ING Real
Estate announced it would make a public offer for all shares in Rodamco Asia NV.
The bid was launched on 5 April, and on 6 May ING Real Estate said it would
honour the bid after 85.7% of all shares were tendered.
ING INVESTMENT MANAGEMENT
The performance of funds managed by ING Investment Management continued to be
satisfactory and improved on all time horizons. On a 5-year basis, 65% of global
fund assets were performing above their benchmark. Rating agencies have assigned
the highest rating (5 stars) to 18 mutual funds and another 46 funds managed by
ING have a 4-star rating. Together, these funds represent a total of EUR 14.7
billion, underlining ING's strong position in the mutual-fund market.
ASSETS UNDER MANAGEMENT
Assets under management increased from EUR 462.7 billion at the end of 2003 to
EUR 487.8 billion at the end of March 2004 (+EUR 25.1 billion or +5.4%). Net
inflow of EUR 9.0 billion, the effect of higher stock markets (+EUR 8.9 billion)
and positive currency rate differences (+EUR 9.2 billion) contributed to this
increase. Divestments had a negative impact of EUR 2.0 billion, mainly due to
the deconsolidation of Baring Private Equity Partners. All three regional units
of ING Investment Management as well as ING Real Estate contributed to the EUR
9.0 billion net inflow.
--------------------------------------------------------------------------------
TABLE 11. ASSETS UNDER MANAGEMENT BY CLIENT CATEGORY
in EUR x billion 31 MARCH 2004 31 December 2003 % change
--------------------------------------------------------------------------------
Private clients 201.7 187.9 7.3
Institutional clients 131.1 125.6 4.4
----- -----
Third parties 332.8 313.5 6.2
Internal clients 155.0 149.2 3.9
----- -----
Total 487.8 462.7 5.4
Share of third parties 68.2% 67.8%
--------------------------------------------------------------------------------
----------------
The accounting principles applied in this document correspond with those applied
in ING Group's Annual Accounts 2003 and the change in US GAAP accounting noted
on page 7. 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
Page 20 of 33
--------------------------------------------------------------------------------
conditions in ING's core markets, (ii) performance of financial markets,
including emerging markets, (iii) the frequency and severity of insured loss
events, (iv) mortality and morbidity levels and trends, (v) persistency levels,
(vi) interest rate levels, (vii) currency exchange rates, (viii) general
competitive factors, (ix) changes in laws and regulations, and (x) changes in
the policies of governments and/or regulatory authorities. ING assumes no
obligation to update any forward-looking information contained in this document.
Page 21 of 33
--------------------------------------------------------------------------------
APPENDICES
1. Key figures
2. Consolidated profit and loss account
3. Consolidated balance sheet and changes in shareholders' equity
4. Condensed consolidated statement of cash flows
5. Additional information: quarterly results, results by Executive Centre,
geographical breakdown, realised capital gains on real estate, bank lending
and assets under management
6. Additional information on value of new business at the insurance operations
7. Consolidated balance sheet ING Verzekeringen N.V.
8. Consolidated balance sheet ING Bank N.V.
9. Information for shareholders
Page 22 of 33
--------------------------------------------------------------------------------
APPENDIX 1.
---------------------------------------------------------------------------------------------------------------------------
1. KEY FIGURES
1Q 1Q
2004 2003 2003 2002 2001 2000
---------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET (EUR x billion)
Total assets 830 733 779 716 705 650
Shareholders' equity 23 18 21 18 22 25
ASSETS UNDER MANAGEMENT (EUR x billion) 488 433 463 449 513 503
MARKET CAPITALISATION (EUR x billion) 38 21 39 32 57 83
OPERATING INCOME (EUR x million)
Insurance operations 14,062 13,777 53,233 59,449 55,274 34,521
Banking operations 3,267 2,891 11,680 11,201 11,111 11,302
OPERATING EXPENSES (EUR x million)
Insurance operations 1,142 1,189 4,897 5,203 5,583 5,023
Banking operations 2,119 1,970 8,184 8,298 8,186 8,273
ADDITIONS TO THE PROVISION FOR LOAN/INVESTMENT
LOSSES (EUR x million) 146 428 1,288 2,099 907 400
PROFIT (EUR x million)
Insurance operations 789 612 3,486 3,170 2,792 2,307
Banking operations 1,011 596 2,371 1,468 2,170 2,605
------- ------- ------- ------- ------- ------
Operating profit before tax 1,800 1,208 5,857 4,638 4,962 4,912
Operating net profit 1,191 902 4,053 3,433 3,539 3,388
Capital gains/neg. value adjustment shares 11 -735 -10 820 713 620
Non-operating net profit ____ 247 325 7,976
------- ------- ------- ------
Net profit 1,202 167 4,043 4,500 4,577 11,984
Distributable net profit 1,202 167 4,043 4,253 4,252 4,901
FIGURES PER ORDINARY SHARE OF EUR 0.24 NOMINAL VALUE
Operating net profit 0.57 0.46 2.00 1.77 1.83 1.76
Net profit 0.57 0.08 2.00 2.32 2.37 6.27
Distributable net profit 0.57 0.08 2.00 2.20 2.20 2.56
Dividend 0.97 0.97 0.97 1.13
Shareholders' equity 10.82 8.79 10.08 9.14 11.03 13.04
RATIOS (in %)
ING Group
Operating return on equity (ROE) 21.8 20.4 21.5 17.4 15.3 10.3
Operating net profit growth 32 -3 18 -3 4 27
Dividend pay-out ratio 48.5 44.1 44.1 43.9
Insurance operations
Combined ratio 89 97 98 102 103 104
Capital coverage ratio 184 158 180 169 180 235
Banking operations
BIS ratio ING Bank 11.23 10.78 11.34 10.98 10.57 10.75
Tier-1 ratio ING Bank 7.52 7.27 7.59 7.31 7.03 7.22
Cost/income ratio 64.9 68.1 70.1 74.1 73.7 73.2
EMPLOYEES (average number) 113,100 115,600 115,200 113,060 112,000 92,650
---------------------------------------------------------------------------------------------------------------------------
Page 23 of 33
--------------------------------------------------------------------------------
APPENDIX 2.
----------------------------------------------------------------------------------------------------------------------
2. CONSOLIDATED PROFIT AND LOSS ACCOUNT
INSURANCE BANKING TOTAL* % CHANGE
OPERATIONS OPERATIONS
1Q 1Q 1Q 1Q 1Q 1Q
in EUR x million 2004 2003 2004 2003 2004 2003
----------------------------------------------------------------------------------------------------------------------
Premium income 11,366 10,980 11,366 10,980 3.5
Income from investments of the
insurance operations 2,249 2,273 2,198 2,246 -2.1
Interest result banking operations 2,163 1,969 2,181 1,985 9.9
Commission 301 326 710 597 1,011 923 9.5
Other income 146 198 394 325 540 523 3.3
--- --- --- --- --- ---
TOTAL OPERATING INCOME 14,062 13,777 3,267 2,891 17,296 16,657 3.8
Underwriting expenditure 11,837 11,600 11,837 11,600 2.0
Other interest expenses 285 273 252 262 -3.8
Operating expenses 1,142 1,189 2,119 1,970 3,261 3,159 3.2
Additions to the provision for
loan losses/investment losses 9 103 137 325 146 428 -65.9
- --- --- --- --- ---
TOTAL OPERATING EXPENDITURE 13,273 13,165 2,256 2,295 15,496 15,449 0.3
OPERATING PROFIT BEFORE TAX 789 612 1,011 596 1,800 1,208 49.0
Taxation 230 89 302 145 532 234 127.4
Third-party interests 25 19 52 53 77 72 6.9
-- -- -- -- -- --
OPERATING NET PROFIT 534 504 657 398 1,191 902 32.0
OPERATING NET PROFIT 534 504 657 398 1,191 902 32.0
Capital gains/negative. value
adjustment shares 11 -613 -122 11 -735
-- ---- ---- -- ----
NET PROFIT 545 -109 657 276 1,202 167 619.8
----------------------------------------------------------------------------------------------------------------------
* Including inter-company eliminations.
Page 24 of 33
--------------------------------------------------------------------------------
APPENDIX 3.
-----------------------------------------------------------------------------------------
3.1 CONSOLIDATED BALANCE SHEET ING GROEP N.V.
in EUR x million 31 MARCH 2004 31 December 2003 % change
-----------------------------------------------------------------------------------------
ASSETS
Tangible fixed assets 1,286 1,311 -1.9
Participating interests 3,768 3,167 19.0
Investments 368,301 335,003 9.9
Lending 301,367 292,556 3.0
Banks 63,747 61,060 4.4
Cash 8,708 11,738 -25.8
Other assets 61,246 53,473 14.5
Accrued assets 21,542 20,463 5.3
------- -------
TOTAL 829,965 778,771 6.6
EQUITY AND LIABILITIES
Shareholders' equity 22,883 21,331 7.3
Preference shares of Group companies 1,839 1,783 3.1
Third-party interests 1,607 1,730 -7.1
------- -------
Group equity 26,329 24,844 6.0
Subordinated loan 3,312 3,252 1.8
------- -------
Group capital base 29,641 28,096 5.5
General provisions 2,900 2,740 5.8
Insurance provisions 208,101 198,035 5.1
Funds entrusted to and debt securities of
the banking operations 401,761 377,824 6.3
Banks 114,648 102,115 12.3
Other liabilities 65,812 61,123 7.6
Accrued liabilities 7,102 8,838 -19.6
------- -------
TOTAL 829,965 778,771 6.6
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
3.2 CHANGES IN SHAREHOLDERS' EQUITY
In EUR million
-----------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY AS PER 31 DECEMBER 2003 / 2002 21,331 18,254
Net profit 1,202 4,043
Revaluations (after tax) 330 335
Realised capital gains transferred to P&L account 10
Write-off of goodwill -9 -145
Exchange rate differences 118 -1,196
Issue of shares 925
Changes in ING Groep N.V. shares held by Group companies 4 50
Dividend paid -943
Other -93 -2
------ ------
SHAREHOLDERS' EQUITY AS PER 31 MARCH 2004 / 31 DECEMBER 2003 22,883 21,331
-----------------------------------------------------------------------------------------
Page 25 of 33
--------------------------------------------------------------------------------
APPENDIX 4.
--------------------------------------------------------------------------------
4.1 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
1Q 1Q*
in EUR x million 2004 2003
--------------------------------------------------------------------------------
Net cash flow from operating activities 23,237 20,658
Investments and advances:
- participating interests -271 -208
- investments in shares and property -1,747 -1,365
- investments in fixed-interest securities -90,076 -87,357
- other investments -99 -89
Disposals and redemptions:
- participating interests 199
- investments in shares and property 1,636 1,373
- investments in fixed-interest securities 65,256 69,988
- other investments 9 17
Net investment for risk of policyholders -2,300 -960
------ ----
Net cash flow from investing activities -27,393 -18,601
Subordinated loans of Group companies 600 -171
Bonds, loans taken up and deposits by reinsurers 55 -87
Private placements of ordinary shares 8 11
Changes in shares ING Groep N.V. 0 -16
- ---
Net cash flow from financing activities 663 -263
Net cash flow -3,493 1,794
Cash at beginning of year 7,338 7,830
Exchange rate differences 278 -185
--- ----
CASH AT END OF PERIOD 4,123 9,439
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
In this summary, cash comprises the following items:
Short-dated government paper 8,531 6,389
Banks, available on demand -13,116 -6,487
Cash and bank balances and call money of the insurance
operations 8,708 9,537
CASH AT END OF PERIOD 4,123 9,439
--------------------------------------------------------------------------------
* Restated
Page 26 of 33
--------------------------------------------------------------------------------
APPENDIX 5. ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
5.1 QUARTERLY RESULTS
1Q 4Q 3Q 2Q 1Q
in EUR x million 2004 2003 2003 2003 2003
--------------------------------------------------------------------------------
Life 562 762 569 702 445
Non-life 227 248 211 382 167
--- --- --- --- ---
Total insurance operations 789 1,010 780 1,084 612
Total banking operations 1,011 522 639 614 596
----- --- --- --- ---
OPERATING PROFIT BEFORE TAX 1,800 1,532 1,419 1,698 1,208
OPERATING NET PROFIT 1,191 1,041 944 1,166 902
of which:
Insurance operations 534 698 545 761 504
Banking operations 657 343 399 405 398
OPERATING NET PROFIT
PER ORDINARY SHARE 0.57 0.50 0.46 0.58 0.46
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5.2 RESULTS BEFORE TAX BY EXECUTIVE CENTRE
1Q 1Q % % organic*
in EUR x million 2004 2003 change change
--------------------------------------------------------------------------------
ING Group 1,800 1,208 49.0 50.2
- EC Europe 1,465 1,044 40.3 41.3
- EC Americas 343 232 47.8 70.6
- EC Asia/Pacific 124 74 67.6 74.6
- Other -132 -142 n.a.
--------------------------------------------------------------------------------
* Organic = excluding currency rate differences and acquisitions/divestments
--------------------------------------------------------------------------------
5.3 GEOGRAPHICAL BREAKDOWN OF GROUP OPERATING INCOME AND OPERATING PROFIT
BEFORE TAX
OPERATING INCOME* OPERATING PROFIT BEFORE TAX
1Q 1Q % 1Q 1Q %
in EUR x million 2004 2003 change 2004 2003 change
--------------------------------------------------------------------------------
The Netherlands 4,848 4,769 1.7 784 693 13.1
Belgium 1,411 1,431 -1.4 319 212 50.5
Rest of Europe 1,266 1,116 13.4 194 12 n.a.
North America 6,536 6,363 2.7 385 186 107.0
Latin America** 700 833 -16.0 91 104 -12.5
Asia 1,924 1,709 12.6 35 67 -47.8
Australia 503 398 26.4 75 38 97.4
Other 278 268 3.7 -83 -104 n.a.
--- --- --- ----
17,466 16,887 3.4 1,800 1,208 49.0
Income between areas -170 -230 n.a.
---- ----
TOTAL 17,296 16,657 3.8 1,800 1,208 49.0
--------------------------------------------------------------------------------
* After eliminations.
** Latin America = South America, including Mexico.
Page 27 of 33
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5.4 SPECIFICATION OF REALISED CAPITAL GAINS ON REAL ESTATE
1Q 1Q %
in EUR x million 2004 2003 change
--------------------------------------------------------------------------------
Life insurance 61 51 19.6
Non-life insurance 3 3
- -
Total before taxation 64 54 18.5
Taxation/third parties 27 20 35.0
-- --
NET 37 34 8.8
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5.5 BANK LENDING
in EUR x billion 31 MARCH 2004 31 December 2003 % change
--------------------------------------------------------------------------------
- Public authorities 16.0 14.9 7.4
- Other corporate 163.1 160.7 1.5
----- -----
Total corporate 179.1 175.6 2.0
- Mortgages 109.3 104.2 4.9
- Other personal 17.7 17.4 1.7
---- ----
Total personal 127.0 121.6 4.4
Provisions for bank lending -4.7 -4.6
TOTAL BANK LENDING 301.4 292.6 3.0
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5.6 ASSETS UNDER MANAGEMENT BY ASSET CLASS
[TWO PIE CHARTS]
31 March 2004
Equity Fixed income Real Estate Cash
34% 53% 6% 7%
31 December 2003
Equity Fixed income Real Estate Cash
35% 51% 6% 8%
--------------------------------------------------------------------------------
5.7 ASSETS UNDER MANAGEMENT BY EXECUTIVE CENTRE
in EUR x billion 31 MARCH 2004 31 December 2003 % change
--------------------------------------------------------------------------------
EC Europe 262.5 252.6 3.9
EC Americas 174.7 167.0 4.6
EC Asia/Pacific 50.6 43.1 17.4
---- ----
Total 487.8 462.7 5.4
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Page 28 of 33
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APPENDIX 6.
6.1 NEW BUSINESS PRODUCTION AND VALUE BY REGION
The value of new life business written in the first quarter of 2004 was EUR 157
million. This compares to EUR 110 million for one quarter of the 2003 new
business value (the 2003 premiums and new business values are one quarter of the
full year's values). The increase is primarily due to higher sales, a more
profitable product mix, and higher pricing.
In the first quarter of 2004 ING invested EUR 462 million to write new life
insurance business. The overall rate of return expected on this investment is
11.7%. This compares to an overall return of 10.9% for 2003. The expected
internal rate of return in developing markets is 14.0%.
The value of new business for the first quarter of 2004 is calculated using
assumptions that are consistent with those used in the year-end 2003
calculations. The IRRs in the tables below have been adjusted to be consistent
with the 7.5% discount rate in the Netherlands.
--------------------------------------------------------------------------------------------------------------------
6.2 BUSINESS PRODUCTION AND VALUE BY REGION
NEW PRODUCTION 1Q 2004 1/4 NEW PRODUCTION 2003
Value of Value of
Annual Single New IRR Annual Single New IRR
In EUR million premium Premium Business In % Premium Premium Business in %
--------------------------------------------------------------------------------------------------------------------
Netherlands 36.2 280.2 17.4 12.4 40.1 304.9 2.6 8.0
Belgium 6.5 277.1 13.5 34.9 7.2 318.4 9.7 23.7
Rest of Europe 47.9 161.8 12.3 13.4 37.8 155.2 11.1 14.4
Americas 484.6 4,559.9 42.1 9.7 408.1 3,655.5 23.6 9.0
Asia 280.2 417.4 70.0 14.5 237.5 246.9 61.1 15.0
Australia 19.2 188.4 2.0 9.6 8.8 150.3 1.9 11.0
Total 874.6 5,884.8 157.3 11.7 739.5 4,831.2 110.0 10.9
--------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------
6.3 NEW BUSINESS PRODUCTION AND VALUE IN DEVELOPING MARKETS* BY REGION
NEW PRODUCTION 1Q 2004 1/4 NEW PRODUCTION 2003
Value of Value of
Annual Single New IRR Annual Single New IRR
In EUR million premium Premium Business In % Premium Premium Business in %
--------------------------------------------------------------------------------------------------------------------
Europe 35.0 3.1 5.1 11.0 26.8 13.2 6.1 13.9
Americas 45.6 29.4 4.3 11.3 12.4 19.3 -1.6 4.8
Asia 178.4 83.7 47.0 14.6 170.2 35.6 50.9 16.9
Total 259.0 116.2 56.4 14.0 209.4 68.1 55.4 15.3
--------------------------------------------------------------------------------------------------------------------
* The countries included as developing markets are:
Americas: Argentina, Chile, Mexico, Peru;
Asia/Pacific: China, Hong Kong, India, Korea, Malaysia, Thailand, Taiwan;
Europe: Bulgaria, Czech Republic, Hungary, Poland, Romania, Slovakia
Page 29 of 33
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APPENDIX 7.
--------------------------------------------------------------------------------
7.1 CONSOLIDATED BALANCE SHEET ING VERZEKERINGEN N.V.
in EUR x million 31 MARCH 2004 31 December 2003 % change
--------------------------------------------------------------------------------
ASSETS
Tangible fixed assets 320 315 1.6
Participating interests 2,743 2,587 6.0
Investments 226,312 215,231 5.1
Cash 1,493 1,848 -19.2
Other assets 8,534 7,935 7.5
Accrued assets 13,693 12,668 8.1
------- -------
TOTAL 253,095 240,584 5.2
EQUITY AND LIABILITIES
Shareholders' equity 12,810 12,011 6.7
Third-party interests 1,119 1,187 -5.7
Subordinated loans 2,659 2,647 0.5
------- ------
Group equity 16,588 15,845 4.7
General provisions 1,825 1,665 9.6
Insurance provisions 208,101 198,035 5.1
Other liabilities 25,398 23,973 5.9
Accrued liabilities 1,183 1,066 11.0
------- -------
TOTAL 253,095 240,584 5.2
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Page 30 of 33
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APPENDIX 8.
-------------------------------------------------------------------------------------------
8.1 CONSOLIDATED BALANCE SHEET ING BANK N.V.*
in EUR x million 31 MARCH 2004 31 December 2003 % change
-------------------------------------------------------------------------------------------
ASSETS
Cash 7,482 10,135 -26.2
Short-dated government paper 8,531 6,521 30.8
Banks 63,747 61,060 4.4
Loans and advances 302,732 293,987 3.0
Interest-bearing securities 165,998 140,032 18.5
Shares 9,973 8,882 12.3
Other participating interests 1,991 1,613 23.4
Property and equipment 5,794 5,720 1.3
Other assets 4,625 4,581 1.0
Accrued assets 9,432 9,063 4.1
----- -----
TOTAL 580,305 541,594 7.1
EQUITY AND LIABILITIES
Banks 114,649 102,115 12.3
Funds entrusted 332,789 307,793 8.1
Debt securities 71,408 72,372 -1.3
Other liabilities 19,977 17,400 14.8
Accrued liabilities 7,110 8,815 -19.3
General provisions 1,405 1,412 -0.5
----- -----
547,338 509,907 7.3
Fund for general banking risks 1,304 1,281 1.8
Subordinated liabilities 15,189 14,516 4.6
Shareholders' equity 15,497 14,868 4.2
Third-party interests 499 553 -9.8
Capital and reserves of Stichting Regio Bank 478 469 1.9
--- ---
Group equity 16,474 15,890 3.7
Group capital base 32,967 31,687 4.0
------ ------
TOTAL 580,305 541,594 7.1
-------------------------------------------------------------------------------------------
* The accounting principles applied in this balance sheet correspond with those
applied in ING Bank N.V.'s Annual Accounts 2003.
Page 31 of 33
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APPENDIX 9. INFORMATION FOR SHAREHOLDERS
SHARES AND WARRANTS
The average number of shares used for the calculation of net profit per share
for the first three months 2004, was 2,087.7 million (1,964.1 million for the
first three months 2003). The number of (depositary receipts for) ordinary
shares of EUR 0.24 nominal value outstanding at the end of March 2004 was
2,115.9 million (including 28.0 million own shares to cover outstanding options
for ING personnel). The number of (depositary receipts for) "A" preference
shares of EUR 1.20 nominal value outstanding at the end of March 2004 was 87.1
million. The dividend percentage for the period from 1 January, 2004 to 1
January 2014 has been set at 4.65%. The dividend will amount to EUR 0.1582 per
year until 1 January 2014. The dividend will be paid for the first time in 2005.
On 5 January 1998, 17.2 million ING Group warrants B were issued. With an
additional payment of the exercise price of EUR 49.92 one warrant B entitles the
holder to two ING Group depositary receipts up to 5 January 2008. The number of
warrants B outstanding at the end of March 2004 was 17.2 million.
In the first three months of 2004, the turnover of (depositary receipts for)
ordinary shares on the Euronext Amsterdam Stock Market was 667.1 million
(purchases and sales). The highest closing price was EUR 21.20, the lowest EUR
16.73; the closing price at the end of March 2004 was EUR 17.88.
LISTING
The (depositary receipts for) ordinary shares ING Group are quoted on the
exchanges of Amsterdam, Brussels, Frankfurt, Paris, New York (NYSE) and the
Swiss exchange. The (depositary receipts for) preference shares and warrants B
are quoted on the Euronext Amsterdam Stock Market. Warrants B are also quoted on
the exchange of Brussels. Options on (depositary receipts for) ordinary shares
ING Group are traded at the Euronext Amsterdam Derivative Markets and the
Chicago Board Options Exchange.
RATING
Both ING Groep N.V. and ING Verzekeringen N.V. have an A+ rating from Standard &
Poor's and and Aa3 rating from Moody's. ING Bank N.V. has an Aa2 rating from
Moody's and an AA- from Standard & Poor's. All ratings were confirmed in 2003
and have a stable outlook.
IMPORTANT DATES IN 2004*
5 August 2004: publication results first six months 2004
4 November 2004: publication results first nine months 2004
* All dates shown are provisional.
Page 32 of 33
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ING Groep N.V.
(Registrant)
By: /s/H. van Barneveld
-------------------
H. van Barneveld
General Manager Corporate Control & Finance
By: /s/C.F. Drabbe
--------------
C.F. Drabbe
Assistant General Counsel
Dated: May 13, 2004
Page 33 of 33
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