• 3Q underlying net result of EUR 1,043 million vs. EUR 727 million in 3Q2009 and EUR 1,202 million in 2Q2010
- Net result of EUR 371 million impacted predominantly by goodwill write-down of EUR 513 million related to Insurance US
- Net profi t per share amounted to EUR 0.10; excluding goodwill write-down the net profi t per share rose to EUR 0.23
- Shareholders’ equity increased by EUR 0.9 billion to EUR 42.5 billion; return on IFRS equity 11.1% for the fi rst nine months of 2010
- Underlying net profi t for the fi rst nine months climbed to EUR 3,262 million vs. EUR 706 million in the same period last year
• Bank posted strong increase in underlying profi t before tax to EUR 1,513 million vs. EUR 250 million in 3Q2009
- Improvement on 3Q2009 was driven by lower negative market-related impacts and risk costs, while margins remained healthy
- Underlying results decreased slightly from EUR 1,613 million in 2Q2010 which included a capital gain on the sale of an equity stake
- Addition to loan loss provisions continued to decline to EUR 374 million or 45 bps of average risk-weighted assets
- Cost/income ratio of 56.5%, or 53.4% excluding impairments and other market impacts
- Core Tier 1 ratio increased to 9.0% from 8.6% at the end of June 2010; capital generation of EUR 3.9 billion year-to-date
• Insurance operating result showed good improvement; underlying result affected by assumption changes on VAs
- Operating result increased for the third consecutive quarter, rising to EUR 473 million from EUR 393 million in 3Q2009
- Investment margin jumped 39.8% from 3Q2009, or 29.4% excl. currencies, on higher investment spreads in the US and Benelux
- Administrative expenses/operating income ratio improved to 43.4% on robust revenue generation
- Underlying result before tax EUR 18 million impacted by EUR -356 million variable annuity (VA) assumption changes in Japan & US
• Operational separation gaining momentum; preparing for a base case of two Insurance IPOs
- Europe-led IPO with strong growth positions in developing markets; US-focused IPO with leading retirement services franchise
- Actions planned in 4Q2010 and 1Q2011 to bring hedging and accounting for US business more into line with US peers
- Changes would lead to a DAC write-down on US VAs of approximately EUR 1 billion pre-tax (EUR 0.7 billion after tax) in 4Q2010
- ING is studying a move towards fair-value accounting on withdrawal benefi t reserves for US VAs as of the fi rst quarter of 2011
- Fair-value accounting would result in an adjustment to book value of approximately EUR -1 to -1.3 billion as of 1 January 2011
- Measures expected to improve US VA reserve adequacy, reduce earnings volatility and enhance reported profi tability
CHAIRMAN’S STATEMENT
“We continue to make good progress towards our strategic priorities as we work to create strong stand-alone companies for banking and
insurance. The operational separation is gaining momentum and costs for this year are coming in at the low end of our expectations. While
the option of one IPO remains open, we are going to prepare ourselves for a base case of two IPOs for our insurance businesses: one
Europe-led IPO with solid cashfl ow combined with strong growth positions in developing markets, and one separate US-focused IPO with a
leading franchise in retirement services. For that reason, we are aligning our management structure for Insurance and taking action to bring
the hedging and accounting for our US business more into line with US peers,” said Jan Hommen, CEO of ING Group.
“The bank posted another set of strong results in the third quarter, with an underlying profi t before tax of EUR 1,513 million, up from EUR
250 million in the third quarter last year, as impairments and other negative market impacts diminished signifi cantly. Compared with the
second quarter, pre-tax results were down slightly from EUR 1,613 million, mainly due to a capital gain in the previous quarter. Volume
growth was subdued given continued economic uncertainty, but spreads on lending and savings remained healthy, and the net interest
margin edged up from the second quarter. Loan losses continued to trend downwards, particularly in Commercial Banking, although risk
costs remain elevated for the mid-corporate and SME segment in the Benelux. Compared with the third quarter of 2009, operating
expenses were signifi cantly impacted by exchange rates and one-off items, but increased just 4.1% on a comparable basis due to higher
marketing costs and selective investments in growth opportunities and system improvements as we continue to invest in the long-term
future of the bank.”
“The insurance company showed steady improvement in its operating results as the measures set out in our Ambition 2013 programme
begin to take hold. Operating results improved to EUR 473 million in the third quarter, up from EUR 393 million in the third quarter last
year and EUR 419 million in the second quarter. The improvement was driven by an increase in the investment margin largely due to
reinvestment into fi xed income securities, as well as higher fees and an improvement in the technical margin. Administrative expenses
increased, due in part to currency effects; however, the effi ciency ratio improved. The underlying results for Insurance were impacted by
assumption changes on variable annuities in both Japan and the US, and the net profi t included a write-down of goodwill related to
Insurance US.”
“As we prepare ourselves for a base case of two IPOs for Insurance, we are working to implement a number of changes to increase
transparency and bring our US Insurance accounting and hedging more into line with US peers. These measures are expected to result in a
write-down of deferred acquisition costs of approximately EUR 1 billion before tax (EUR 0.7 billion after tax) in the fourth quarter. In
addition, a move towards fair-value accounting on part of the legacy variable annuity reserves would result in an adjustment to book value
of approximately EUR -1 to -1.3 billion, which would be refl ected in shareholders’ equity as of 1 January 2011. These changes will
substantially improve the reserve adequacy on the legacy VA book, allow the company to better hedge interest rate risk, and will reduce
earnings volatility going forward. Separately, the US management is implementing a programme to sharpen the strategic focus of the US
business on life and retirement services while reducing annual expenses by EUR 100 million per year from 2011. The aim is to create a
strong and profi table US Insurance business that can be IPOed when earnings and market circumstances improve.”


CHANGES 4Q2010 AND 1Q2011
In preparation for a potential US-focused IPO, ING is working to
implement a number of changes to increase transparency, improve
reserve adequacy on the US Legacy Variable Annuity book, reduce
earnings volatility going forward, and bring accounting and
hedging for the US businesses more into line with US peers.
As of 1 October 2010, ING intends to report the US Legacy VA
business as a separate business line to improve transparency for
both the legacy and ongoing businesses. Under ING’s existing
accounting policies, the separation will trigger a charge in the
fourth quarter to bring reserve adequacy on the new Legacy VA
business line to the 50% level. This charge will be refl ected as a
DAC write-down of approximately EUR 1 billion before tax (EUR
0.7 billion after tax), based on fi gures at the end of the third
quarter. The fi nal P&L impact, which will be refl ected in the fourth
quarter, will depend on market developments in the quarter.
From 2011, ING aims to bring its accounting practices for its US
insurance businesses more into line with US peers. The company is
currently studying an introduction of reversion to mean in its US
equity markets assumption for determining DAC, which would
reduce earnings volatility going forward.
In addition, ING is studying a move towards fair-value accounting
on reserves for Guaranteed Minimum Withdrawal Benefi ts
(GMWB) as of the fi rst quarter of 2011 in order to better refl ect
the economic value of guarantees. Such a move would enable
ING to substantially increase hedging of interest rates on the
Legacy VA book without causing signifi cant earnings volatility,
because results from hedging derivatives would largely be
mirrored in fair-value changes of the guarantees.
As of the end of September, the difference between the current
book value of the reserves (under SOP 03-01) and the estimated
fair value is approximately EUR -1 to -1.3 billion. Implementation
of fair value accounting for GMWB would represent a change in
accounting policy under IFRS with a transitional impact being
refl ected only in shareholders’ equity as of 1 January 2011.
Comparative periods’ results will be restated.
Combined, if implemented, these measures are expected to
reduce the DAC balance and improve the reserve adequacy on the
Legacy VAs to well above the 50% confi dence level. It would
substantially reduce earnings volatility and bring reported earnings
more into line with the economics of the business, including the
potential to report profi ts from the Legacy VA book going forward
as markets recover.
Separately, the US management is implementing a programme to
sharpen the strategic focus of the US business on life and
retirement services while reducing annual expenses by EUR 100
million per year. The aim is to create a strong and profi table US
business, which over time can be IPOed when earnings and
market circumstances improve.