ING GROEP NV
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For
the month of September 2005
Commission File Number 1-14642
ING Groep N.V.
Amstelveenseweg 500
1081-KL Amsterdam
The Netherlands
Indicate by check mark whether the registrant files or will file annual reports under cover of
Form 20-F or Form 40-F.
Form 20-F þ Form 40-F o
Indicate by check mark if the
registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T rule 101(b)(1): ____
Indicate by check mark if the
registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T rule 101(b)(7): ____
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 o No þ
If Yes is marked, indicate below the file number assigned to the registrant in connection with
Rule 12g3-2(b):
This Report contains a copy of the following:
(1) |
|
2004 Comparative IFRS figures |
2004
Comparative IFRS figures
Amsterdam,
May 2005
1
This document provides a general overview of the impact of IFRS on ING Groups financial
reporting. It does not replace any formal reporting. Investment considerations should continue to
be based on the periodical reporting and other information that ING is required to disclose by law
or stock exchange regulations. This presentation has been prepared based on IFRS Standards as of 31
March 2004 (stable platform). All amounts in this press release are estimates, unaudited and
presented in millions of Euros unless otherwise indicated. The IFRS accounting policies are not
final and may change as a result of (amongst others) the following:
|
|
Changes in IFRS Standards; |
|
|
|
Changes in regulatory requirements; |
|
|
|
Additional reviews and analyses, including market trends; |
|
|
|
Audit procedures. |
The figures and trends published in this document are for informational purposes only.
Certain of the statements contained herein are statements of future expectations and other
forward-looking statements. These expectations are based on managements 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 INGs 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, (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.
2
BASIS
OF PRESENTATION
ING Group applies International Financial Reporting Standards as endorsed by the European
Union (EU). IFRS as endorsed by the EU differs from full IFRS as promulgated by the International
Accounting Standards Board (IASB) only in respect of IAS 39 (Financial instruments) in the
following areas:
|
|
elimination of the option to measure non-trading financial liabilities at fair value; |
|
|
|
elimination of certain restrictions concerning hedge accounting for portfolio hedges of core deposits. |
Application of IFRS as endorsed by the EU is optional for ING Group. ING Group has adopted IFRS as
endorsed by the EU as its accounting framework because it believes (together with several other
European banks) that it enables a better reflection of the way in which European banks undertake
asset/liability management, particularly in a fixed interest rate environment.
ING Group has early adopted ED 7 (regarding presentation and disclosure of financial instruments)
as it is expected that this will be a final standard in 2005.
During 2005, new IFRS requirements and/or interpretations may be issued. As a result, the
accounting principles set out below may differ from the final accounting principles that will be
applied in the 2005 annual accounts. All amounts are shown in millions of Euro unless otherwise
stated and are unaudited.
CHANGES
IN ACCOUNTING PRINCIPLES
ING Group adopted IFRS as endorsed by the EU (IFRS) as of 2005. The 2004 comparatives have
been restated to comply with IFRS. However, as permitted by IFRS 1, ING Group has not restated the
2004 comparatives for the impact of IAS 32, IAS 39 and IFRS 4. Accordingly, comparative
information with respect to financial instruments and insurance contracts is prepared under ING
Groups previous accounting polices (ING GAAP). The effects of implementing IFRS are set out below
under Impact of changes in accounting principles on net profit and equity. ING Group has
implemented IFRS retrospectively, using the following transitional provisions:
|
|
Goodwill is only capitalised on acquisitions after 1 January 2004. Accounting for
acquisitions before that date has not been restated; goodwill on those acquisitions was
charged directly to shareholders equity. |
|
|
|
Hedge accounting is applied to all hedge relationships that were accounted for as a hedge
under ING GAAP and meet the IAS 39 criteria for hedge accounting as of 1 January 2005. |
|
|
|
Unrecognised actuarial losses on employee benefit plans were recognised directly in equity at 1
January 2004. |
|
|
|
The cumulative translation differences reserve in equity was reset to nil at 1 January 2004. |
|
|
|
IFRS 2 (share based payments) is applied for unvested awards that were issued after 7 November 2002. |
IFRS provides several options in accounting principles. ING Groups accounting principles under
IFRS and its decision on the options available are set out in the section Principles of valuation
and determination of results below.
IMPACT OF CHANGES IN ACCOUNTING PRINCIPLES ON NET PROFIT AND EQUITY
The impact of implementing IFRS on equity and net profit is summarised as
follows:
IMPACT OF CHANGES IN ACCOUNTING PRINCIPLES
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
1 January 2005 |
|
|
Net Profit |
|
Group equity |
Amounts in accordance with ING GAAP |
|
|
5,968 |
|
|
|
29,361 |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
25 |
|
|
|
163 |
|
Real estate |
|
|
(407 |
) |
|
|
(68 |
) |
Employee benefits |
|
|
107 |
|
|
|
(2,963 |
) |
Leases |
|
|
|
|
|
|
(37 |
) |
Available for sale debt securities |
|
|
|
|
|
|
9,922 |
|
Insurance provisions |
|
|
|
|
|
|
(3,267 |
) |
Derivatives and embedded derivatives/hedge accounting |
|
|
|
|
|
|
(695 |
) |
Loans |
|
|
|
|
|
|
465 |
|
Loan loss provisions |
|
|
|
|
|
|
609 |
|
Venture capital investments |
|
|
|
|
|
|
90 |
|
Foreign currency translation |
|
|
(20 |
) |
|
|
|
|
Result on sale of consolidated subsidiaries |
|
|
42 |
|
|
|
|
|
Other |
|
|
(22 |
) |
|
|
6 |
|
Taxation |
|
|
63 |
|
|
|
(1,393 |
) |
Classification of equity instruments shareholders equity |
|
|
|
|
|
|
(411 |
) |
|
|
|
|
IFRS
impact on net profit and shareholders equity |
|
|
(212 |
) |
|
|
2,421 |
|
Classification of equity instruments minority interest |
|
|
|
|
|
|
(1,442 |
) |
Minority interests in equity |
|
|
|
|
|
|
42 |
|
|
|
|
|
|
IFRS
impact on net profit and group equity |
|
|
(212 |
) |
|
|
1,021 |
|
|
|
|
|
|
|
|
|
|
Amounts
in accordance with IFRS |
|
|
5,756 |
|
|
|
30,382 |
|
3
EXPLANATION
OF DIFFERENCES BETWEEN IFRS AND ING GAAP
The explanation of differences in accounting principles between IFRS (applied as of 2005)
and the accounting principles applied by ING Group in the 2004 annual accounts (ING GAAP) is
presented below in two sections:
|
|
differences between ING GAAP and IFRS excluding IAS 32/39 and IFRS 4, which are implemented
in the
restated 2004 comparatives as of 1 January 2004; |
|
|
|
differences due to the impact of IAS 32/39 and IFRS 4 which are implemented as of 1 January 2005. |
DIFFERENCES
BETWEEN ING GAAP AND IFRS EXCLUDING IAS 32/39 AND IFRS 4
goodwill
Under ING GAAP, goodwill was charged to equity. Under IFRS, all goodwill arising after 1
January 2004 is capitalised and subject to an annual impairment review. Goodwill charged to equity
prior to 1 January 2004 is not restated.
real estate investment property
Under IFRS, investment property is reported at fair value, with changes in fair value
reported in the profit and loss account. Under ING GAAP, investment property was reported at fair
value, with changes in fair value reported in a revaluation reserve in equity; at disposal, the
accumulated revaluation was recognised in the profit and loss account under ING GAAP.
real estate property in own use
Both under IFRS and ING GAAP, property in own use is reported at fair value, with changes in
fair value reported in a revaluation reserve in equity. However, under IFRS a depreciation charge
is recognised in the profit and loss account. At disposal, the accumulated revaluation was
recognised in the profit and loss account under ING GAAP. Under IFRS, no result is recognised on
disposal. Furthermore, under IFRS individually negative revaluation reserves on a
property-by-property basis are charged to the profit and loss account; under ING GAAP negative
revaluation reserves were offset against positive revaluation reserves.
real estate property under development for third parties
Under IFRS, real estate in the course of construction is reported under the percentage of
completion method (pro rata profit recognition). Under ING GAAP profit was recognised on
completion. In addition, IFRS is more restrictive on the overhead expenses that may be capitalised.
employee benefits
Accounting for pension liabilities under ING GAAP was similar to IFRS; however, at
transition to IFRS all unrecognised actuarial gains and losses were charged to shareholders
equity. Under IFRS additional provisions for certain employee benefits are required.
employee benefits share based payments
Under IFRS, the fair value of shares and options granted to employees is recognised in the
profit and loss account
over the vesting period of the award. Under ING GAAP the intrinsic value was recognised in the
profit and loss
account.
leases
Under ING GAAP, leases where ING is the lessor were presented as Lending. Under IFRS, these
are presented as fixed assets, with depreciation recognised in the profit and loss account on a
straight-line basis. Certain bonuses/discounts are amortised over the lease term under IFRS whilst
under ING GAAP they were reported in income immediately.
foreign currency translation
Under ING GAAP, translation differences on insurance liabilities and related investments
were recorded in equity. Under IFRS, both are recognised in the profit and loss account. Both
under IFRS and ING GAAP translation differences on foreign operations are reported in a
translation reserve in equity; however, at transition to IFRS the translation differences reserve
was reset to nil.
result on sale of consolidated subsidiaries
The result on sale under IFRS is different from ING GAAP as the book value at the time of
disposal under IFRS differs from ING GAAP. This specifically relates to a negative revaluation on
property in own use that under IFRS was charged to the profit and loss account in 2004, whereas it
was included in the result on disposal under ING GAAP (also in 2004). There is no net effect on
2004 net income.
dividend income on equity securities
Under ING GAAP, dividend income was accrued over the year whereas under IFRS dividend income
is recognised when declared.
taxation
Deferred taxation was adjusted for the (deferred) tax effect of the above differences
between ING GAAP and IFRS.
4
DIFFERENCES FROM IMPLEMENTING IAS 32/39 AND IFRS 4 AS OF 1 JANUARY 2005
available-for-sale debt securities
Under IFRS, quoted debt securities (non-trading) other than those designated as being
held-to-maturity are reported at fair value, with changes in fair value recognised in a
revaluation reserve in equity; realised results are recognised directly in the profit and loss
account. Under ING GAAP, debt securities were reported at amortised cost; realised results were
deferred and amortised over the remaining term.
insurance provisions
Under IFRS certain contracts that do not contain significant insurance risk are presented as
investment contracts
and measured either at amortised cost or at fair value.
For insurance contracts with discretionary participation features, a deferred profit sharing
liability is recorded
under IFRS for the full amount of unrealised results on allocated investments. In addition, a
deferred profit sharing
liability is recorded for the policyholders share in other differences between ING GAAP and IFRS
as at 1 January
2005.
Insurance liabilities are adjusted to compensate for the impact of the transition to IFRS on
reserve inadequacy.
derivatives and embedded derivatives
Under IFRS, all derivatives (including embedded derivatives that are not closely related to
the host contract) are reported at fair value. Under ING GAAP, non-trading derivatives were valued
similar to the item being hedged (mainly at cost).
hedge accounting
Under IFRS, for derivatives qualifying as cash flow hedges and net investment hedges, the
fair value movements
are initially deferred in equity and subsequently released to the income statement in the same
period in which the
hedged item affects profit and loss. For fair value hedges, the valuation of the hedged item is
adjusted to reflect
the hedged risk; this fair value adjustment on the hedged item is reported in the profit and loss
account and (partly)
offsets the fair value impact on the derivative that is also reported in the profit and loss
account. Under ING
GAAP, non-trading derivatives used for risk management purposes were valued similar to the item
being hedged
(mainly at cost).
As an alternative for hedge accounting under IFRS, financial assets may be designated at fair value
through profit
or loss, which implies that these are presented at fair value, with all changes in fair value
recognised directly in the
profit and loss account.
loans
Under both
ING GAAP and IFRS loans are measured at amortised cost. Under IFRS, certain
fees/costs are capitalised and amortised whilst under ING GAAP they were expensed immediately
(e.g. mortgage broker fees). The amortisation of premiums, discounts and fees under IFRS is based
on effective yield whereas under ING GAAP these were amortised on a straight-line basis. Under
IFRS, realised results are reported in net income. Under ING GAAP these were amortised over the
remaining term (e.g. prepayment penalties on mortgages).
loan loss provisions
Under IFRS loan loss provisions for portfolios of individually smaller loans are calculated
based on a more prescriptive methodology. Furthermore, under IFRS no unallocated provisions are
allowed.
equity securities
Under ING GAAP, negative revaluations on equity securities were only charged to the income
statement as impairment when triggered by the financial condition of the issuer. Under IFRS,
impairment is also triggered by a prolonged decline of the market value below cost.
classification of equity instruments
Under ING
GAAP, preference shares and trust preferred securities were in accordance with
the legal form classified as equity. Under IFRS, the conditions of ING Groups preference shares
and trust preferred securities require classification as liabilities.
venture capital investments
Under ING GAAP, venture capital investments were reported at the lower of cost or fair
value. Under IFRS, investments in which ING has no significant influence are reported at fair
value with changes in fair value reported in a revaluation reserve in equity. Investments in which
ING has significant influence are reported at fair value, with changes in fair value reported in
the profit and loss account.
taxation
Deferred taxation was adjusted for the (deferred) tax effect of the above differences
between ING GAAP and IFRS.
5
ANALYSIS
OF IMPACT OF CHANGES IN ACCOUNTING PRINCIPLES BANK AND INSURANCE
1 JANUARY 2005 EQUITY IMPACT BY BANK/INSURANCE
(INCLUDING IAS 32/39 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group equity as at 1 January 2005 |
|
|
|
|
BANK |
|
|
INSURANCE |
|
|
GROUP |
|
Amounts
in accordance with ING GAAP |
|
|
16,438 |
|
|
|
15,656 |
|
|
|
29,361 |
|
|
Goodwill |
|
|
42 |
|
|
|
221 |
|
|
|
163 |
|
Real estate |
|
|
(68 |
) |
|
|
|
|
|
|
(68 |
) |
Employee benefits |
|
|
(1,621 |
) |
|
|
(1,342 |
) |
|
|
(2,963 |
) |
Leases |
|
|
(37 |
) |
|
|
|
|
|
|
(37 |
) |
Available for sale debt securities |
|
|
3,923 |
|
|
|
5,999 |
|
|
|
9,922 |
|
Insurance provisions |
|
|
|
|
|
|
(3,267 |
) |
|
|
(3,267 |
) |
Derivatives and embedded derivatives/hedge accounting |
|
|
(657 |
) |
|
|
(38 |
) |
|
|
(695 |
) |
Loans |
|
|
293 |
|
|
|
167 |
|
|
|
465 |
|
Loan loss provisions |
|
|
462 |
|
|
|
147 |
|
|
|
609 |
|
Venture capital investments |
|
|
|
|
|
|
90 |
|
|
|
90 |
|
Other |
|
|
(14 |
) |
|
|
32 |
|
|
|
6 |
|
Taxation |
|
|
(826 |
) |
|
|
(573 |
) |
|
|
(1,393 |
) |
Classification equity instruments shareholders equity |
|
|
|
|
|
|
|
|
|
|
(411 |
) |
|
|
|
IFRS impact on shareholders equity |
|
|
1,497 |
|
|
|
1,436 |
|
|
|
2,421 |
|
Classification of equity instruments minority interest |
|
|
(158 |
) |
|
|
|
|
|
|
(1,442 |
) |
Minority interests in equity |
|
|
(13 |
) |
|
|
55 |
|
|
|
42 |
|
|
|
|
IFRS impact on group equity |
|
|
1,326 |
|
|
|
1,491 |
|
|
|
1,021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in accordance with IFRS |
|
|
17,764 |
|
|
|
17,147 |
|
|
|
30,382 |
|
2004 PROFIT IMPACT BY BANK/INSURANCE
(EXCLUDING IAS 32/39 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Profit 2004 |
|
|
|
|
BANK |
|
|
INSURANCE |
|
|
GROUP |
|
Amounts in accordance with ING GAAP |
|
|
2,404 |
|
|
|
3,564 |
|
|
|
5,968 |
|
|
Goodwill |
|
|
25 |
|
|
|
|
|
|
|
25 |
|
Real estate |
|
|
(97 |
) |
|
|
(310 |
) |
|
|
(407 |
) |
Result on sale of consolidated subsidiaries |
|
|
42 |
|
|
|
|
|
|
|
42 |
|
Employee benefits |
|
|
30 |
|
|
|
77 |
|
|
|
107 |
|
Foreign currency translation |
|
|
|
|
|
|
(20 |
) |
|
|
(20 |
) |
Other |
|
|
2 |
|
|
|
(24 |
) |
|
|
(22 |
) |
Taxation |
|
|
|
|
|
|
63 |
|
|
|
63 |
|
|
|
|
Total IFRS impact |
|
|
2 |
|
|
|
(214 |
) |
|
|
(212 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in accordance with IFRS |
|
|
2,406 |
|
|
|
3,350 |
|
|
|
5,756 |
|
6
ANALYSIS OF IMPACT OF CHANGES IN ACCOUNTING PRINCIPLES QUARTERLY INFORMATION
2004 PROFIT AND LOSS-GROUP
(EXCLUDING IAS 32/39 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit & Loss 2004 |
|
|
|
|
Q1 |
|
|
|
Q2 |
|
|
|
Q3 |
|
|
|
Q4 |
|
|
|
TOTAL |
|
Premium income |
|
|
11,366 |
|
|
|
10,528 |
|
|
|
10,854 |
|
|
|
10,869 |
|
|
|
43,617 |
|
Income from investments |
|
|
2,150 |
|
|
|
2,609 |
|
|
|
2,838 |
|
|
|
2,807 |
|
|
|
10,404 |
|
Interest result banking operations |
|
|
2,152 |
|
|
|
2,220 |
|
|
|
2,161 |
|
|
|
2,208 |
|
|
|
8,741 |
|
Commission income |
|
|
1,013 |
|
|
|
926 |
|
|
|
938 |
|
|
|
902 |
|
|
|
3,779 |
|
Other income |
|
|
500 |
|
|
|
434 |
|
|
|
344 |
|
|
|
382 |
|
|
|
1,660 |
|
Total income |
|
|
17,181 |
|
|
|
16,717 |
|
|
|
17,135 |
|
|
|
17,168 |
|
|
|
68,201 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
11,786 |
|
|
|
10,827 |
|
|
|
11,555 |
|
|
|
11,214 |
|
|
|
45,382 |
|
Other interest expenses |
|
|
252 |
|
|
|
220 |
|
|
|
274 |
|
|
|
273 |
|
|
|
1,019 |
|
Operating expenses |
|
|
3,258 |
|
|
|
3,278 |
|
|
|
3,280 |
|
|
|
3,725 |
|
|
|
13,541 |
|
Impairments/additions to the provision for loan losses |
|
|
149 |
|
|
|
142 |
|
|
|
142 |
|
|
|
86 |
|
|
|
519 |
|
Total expenditure |
|
|
15,445 |
|
|
|
14,467 |
|
|
|
15,251 |
|
|
|
15,298 |
|
|
|
60,461 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit
before tax |
|
|
1,736 |
|
|
|
2,250 |
|
|
|
1,884 |
|
|
|
1,870 |
|
|
|
7,740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxation |
|
|
529 |
|
|
|
521 |
|
|
|
262 |
|
|
|
397 |
|
|
|
1,709 |
|
Third-party interests |
|
|
77 |
|
|
|
66 |
|
|
|
68 |
|
|
|
65 |
|
|
|
276 |
|
|
|
|
Net
profit |
|
|
1,130 |
|
|
|
1,663 |
|
|
|
1,554 |
|
|
|
1,408 |
|
|
|
5,755 |
|
|
Impact
from divestments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
profit before tax |
|
|
1,736 |
|
|
|
2,250 |
|
|
|
1,884 |
|
|
|
1,870 |
|
|
|
7,740 |
|
Gains and losses on divestments |
|
|
(84 |
) |
|
|
219 |
|
|
|
(165) |
|
|
|
85 |
|
|
|
55 |
|
Profit before tax from divested units |
|
|
125 |
|
|
|
43 |
|
|
|
(14 |
) |
|
|
30 |
|
|
|
184 |
|
|
|
|
Profit
before tax excluding divestments |
|
|
1,695 |
|
|
|
1,988 |
|
|
|
2,063 |
|
|
|
1,755 |
|
|
|
7,501 |
|
2004 PROFIT IMPACT BY QUARTER GROUP
(EXCLUDING IAS 32/39 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Profit 2004 |
|
|
|
|
Q1 |
|
|
|
Q2 |
|
|
|
Q3 |
|
|
|
Q4 |
|
|
|
TOTAL |
|
Amounts
in accordance with ING GAAP |
|
|
1,202 |
|
|
|
1,641 |
|
|
|
1,594 |
|
|
|
1,531 |
|
|
|
5,968 |
|
|
Goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25 |
|
|
|
25 |
|
Real estate |
|
|
(42 |
) |
|
|
(120 |
) |
|
|
(146 |
) |
|
|
(99 |
) |
|
|
(407 |
) |
Result on sale of consolidated subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42 |
|
|
|
42 |
|
Employee benefits |
|
|
17 |
|
|
|
38 |
|
|
|
62 |
|
|
|
(10 |
) |
|
|
107 |
|
Foreign currency translation |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(17 |
) |
|
|
(1 |
) |
|
|
(20 |
) |
Dividend income on equity securities |
|
|
(52 |
) |
|
|
93 |
|
|
|
22 |
|
|
|
(63 |
) |
|
|
|
|
Other |
|
|
(7 |
) |
|
|
(19 |
) |
|
|
8 |
|
|
|
(5 |
) |
|
|
(23 |
) |
Taxation |
|
|
13 |
|
|
|
31 |
|
|
|
31 |
|
|
|
(12 |
) |
|
|
63 |
|
|
|
|
Total IFRS impact |
|
|
(72 |
) |
|
|
22 |
|
|
|
(40 |
) |
|
|
(123 |
) |
|
|
(213 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in accordance with IFRS |
|
|
1,130 |
|
|
|
1,663 |
|
|
|
1,554 |
|
|
|
1,408 |
|
|
|
5,755 |
|
7
2004
PROFIT AND LOSS BANK
(EXCLUDING IAS 32/29 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit & Loss
2004 |
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
TOTAL |
Interest result |
|
|
2,134 |
|
|
|
2,198 |
|
|
|
2,144 |
|
|
|
2,223 |
|
|
|
8,699 |
|
Investment income |
|
|
84 |
|
|
|
65 |
|
|
|
178 |
|
|
|
36 |
|
|
|
363 |
|
Commission income |
|
|
710 |
|
|
|
642 |
|
|
|
639 |
|
|
|
590 |
|
|
|
2,581 |
|
Other income |
|
|
354 |
|
|
|
216 |
|
|
|
200 |
|
|
|
265 |
|
|
|
1,035 |
|
Total income |
|
|
3,282 |
|
|
|
3,121 |
|
|
|
3,161 |
|
|
|
3,114 |
|
|
|
12,678 |
|
|
Operating expenses |
|
|
2,125 |
|
|
|
2,139 |
|
|
|
2,151 |
|
|
|
2,380 |
|
|
|
8,795 |
|
Gross result |
|
|
1,157 |
|
|
|
982 |
|
|
|
1,010 |
|
|
|
734 |
|
|
|
3,883 |
|
Addition to provision for loan losses |
|
|
137 |
|
|
|
128 |
|
|
|
101 |
|
|
|
99 |
|
|
|
465 |
|
Total profit before tax |
|
|
1,020 |
|
|
|
854 |
|
|
|
909 |
|
|
|
635 |
|
|
|
3,418 |
|
|
Taxation |
|
|
305 |
|
|
|
228 |
|
|
|
247 |
|
|
|
79 |
|
|
|
859 |
|
Third-party interests |
|
|
52 |
|
|
|
39 |
|
|
|
39 |
|
|
|
23 |
|
|
|
153 |
|
|
|
|
Net profit |
|
|
663 |
|
|
|
587 |
|
|
|
623 |
|
|
|
533 |
|
|
|
2,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact from divestments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
1,020 |
|
|
|
854 |
|
|
|
909 |
|
|
|
635 |
|
|
|
3,418 |
|
Gains/losses on divestments |
|
|
(84 |
) |
|
|
0 |
|
|
|
87 |
|
|
|
(169 |
) |
|
|
(166 |
) |
Profit before tax from divested units |
|
|
96 |
|
|
|
2 |
|
|
|
(28 |
) |
|
|
(3 |
) |
|
|
67 |
|
|
|
|
Profit before tax excluding divestments |
|
|
1,008 |
|
|
|
852 |
|
|
|
850 |
|
|
|
807 |
|
|
|
3,517 |
|
2004
PROFIT IMPACT BY QUARTER BANK
(EXCLUDING IAS 32/39 AND
IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Profit 2004 |
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
TOTAL |
Amounts in accordance with ING GAAP |
|
|
657 |
|
|
|
670 |
|
|
|
601 |
|
|
|
476 |
|
|
|
2,404 |
|
|
Goodwill |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25 |
|
|
|
25 |
|
Real estate |
|
|
3 |
|
|
|
(110 |
) |
|
|
(21 |
) |
|
|
31 |
|
|
|
(97 |
) |
Result on sale of consolidated subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42 |
|
|
|
42 |
|
Employee benefits |
|
|
8 |
|
|
|
9 |
|
|
|
40 |
|
|
|
(27 |
) |
|
|
30 |
|
Other |
|
|
(3 |
) |
|
|
(14 |
) |
|
|
11 |
|
|
|
8 |
|
|
|
2 |
|
Taxation |
|
|
(2 |
) |
|
|
32 |
|
|
|
(8 |
) |
|
|
(22 |
) |
|
|
|
|
|
|
|
Total IFRS impact |
|
|
6 |
|
|
|
(83 |
) |
|
|
22 |
|
|
|
57 |
|
|
|
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts in accordance with IFRS |
|
|
663 |
|
|
|
587 |
|
|
|
623 |
|
|
|
533 |
|
|
|
2,406 |
|
8
2004
PROFIT AND LOSS INSURANCE
(EXCLUDING IAS 32/29 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit & Loss
2004 |
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
TOTAL |
Life premium income |
|
|
9,234 |
|
|
|
8,905 |
|
|
|
9,428 |
|
|
|
9,408 |
|
|
|
36,975 |
|
Non-life premium income |
|
|
2,132 |
|
|
|
1,623 |
|
|
|
1,426 |
|
|
|
1,461 |
|
|
|
6,642 |
|
Total premium income |
|
|
11,366 |
|
|
|
10,528 |
|
|
|
10,854 |
|
|
|
10,869 |
|
|
|
43,617 |
|
Income from investments |
|
|
2,117 |
|
|
|
2,601 |
|
|
|
2,715 |
|
|
|
2,771 |
|
|
|
10,204 |
|
Commission income |
|
|
303 |
|
|
|
284 |
|
|
|
299 |
|
|
|
312 |
|
|
|
1,198 |
|
Other income |
|
|
146 |
|
|
|
218 |
|
|
|
144 |
|
|
|
117 |
|
|
|
625 |
|
Total income |
|
|
13,932 |
|
|
|
13,631 |
|
|
|
14,012 |
|
|
|
14,069 |
|
|
|
55,644 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting expenditure |
|
|
11,786 |
|
|
|
10,827 |
|
|
|
11,555 |
|
|
|
11,214 |
|
|
|
45,382 |
|
Other Interest expenses |
|
|
285 |
|
|
|
255 |
|
|
|
312 |
|
|
|
288 |
|
|
|
1,140 |
|
Operating expenses |
|
|
1,133 |
|
|
|
1,139 |
|
|
|
1,129 |
|
|
|
1,345 |
|
|
|
4,746 |
|
Impairments/investment losses |
|
|
12 |
|
|
|
14 |
|
|
|
41 |
|
|
|
(13 |
) |
|
|
54 |
|
Total expenditure |
|
|
13,216 |
|
|
|
12,235 |
|
|
|
13,037 |
|
|
|
12,834 |
|
|
|
51,322 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
profit before tax |
|
|
716 |
|
|
|
1,396 |
|
|
|
975 |
|
|
|
1,235 |
|
|
|
4,322 |
|
- of which life insurance |
|
|
474 |
|
|
|
791 |
|
|
|
676 |
|
|
|
705 |
|
|
|
2,646 |
|
- of which non-life insurance |
|
|
242 |
|
|
|
605 |
|
|
|
299 |
|
|
|
530 |
|
|
|
1,676 |
|
|
Taxation |
|
|
224 |
|
|
|
293 |
|
|
|
15 |
|
|
|
318 |
|
|
|
850 |
|
Third-party interests |
|
|
25 |
|
|
|
27 |
|
|
|
29 |
|
|
|
42 |
|
|
|
123 |
|
|
|
|
Net
profit |
|
|
467 |
|
|
|
1,076 |
|
|
|
931 |
|
|
|
875 |
|
|
|
3,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact
from divestments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total profit before tax |
|
|
716 |
|
|
|
1,396 |
|
|
|
975 |
|
|
|
1,235 |
|
|
|
4,322 |
|
Gains/losses on divestments |
|
|
|
|
|
|
219 |
|
|
|
(252 |
) |
|
|
254 |
|
|
|
221 |
|
Profit
before tax from divested units |
|
|
29 |
|
|
|
41 |
|
|
|
14 |
|
|
|
33 |
|
|
|
117 |
|
|
|
|
Profit
before tax excluding divestments |
|
|
687 |
|
|
|
1,136 |
|
|
|
1,213 |
|
|
|
948 |
|
|
|
3,984 |
|
- of which life insurance |
|
|
465 |
|
|
|
784 |
|
|
|
914 |
|
|
|
667 |
|
|
|
2,830 |
|
- of which non-life insurance |
|
|
222 |
|
|
|
352 |
|
|
|
299 |
|
|
|
281 |
|
|
|
1,154 |
|
2004
PROFIT IMPACT BY QUARTER INSURANCE
(EXCLUDING IAS 32/39 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit 2004 |
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
TOTAL |
Amounts
in accordance with ING GAAP |
|
|
545 |
|
|
|
971 |
|
|
|
993 |
|
|
|
1,055 |
|
|
|
3,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate |
|
|
(45 |
) |
|
|
(10 |
) |
|
|
(125 |
) |
|
|
(130 |
) |
|
|
(310 |
) |
Employee benefits |
|
|
9 |
|
|
|
29 |
|
|
|
22 |
|
|
|
17 |
|
|
|
77 |
|
Foreign currency translation |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(17 |
) |
|
|
(1 |
) |
|
|
(20 |
) |
Dividend income on equity securities |
|
|
(52 |
) |
|
|
93 |
|
|
|
22 |
|
|
|
(63 |
) |
|
|
|
|
Other |
|
|
(4 |
) |
|
|
(5 |
) |
|
|
(3 |
) |
|
|
(13 |
) |
|
|
(25 |
) |
Taxation |
|
|
15 |
|
|
|
(1 |
) |
|
|
39 |
|
|
|
10 |
|
|
|
63 |
|
|
|
|
Total IFRS impact |
|
|
(78 |
) |
|
|
105 |
|
|
|
(62 |
) |
|
|
(180 |
) |
|
|
(215 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
in accordance with IFRS |
|
|
467 |
|
|
|
1,076 |
|
|
|
931 |
|
|
|
875 |
|
|
|
3,349 |
|
9
ANALYSIS OF IMPACT OF CHANGES IN ACCOUNTING PRINCIPLES BY BUSINESS LINE
2004
PROFIT BEFORE TAX BY BUSINESS LINE
(EXCLUDING IAS 32/29 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax 2004 |
|
|
|
|
Q1 |
|
|
|
Q2 |
|
|
|
Q3 |
|
|
|
Q4 |
|
|
|
TOTAL |
|
Profit before tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Insurance Europe |
|
|
352 |
|
|
|
509 |
|
|
|
397 |
|
|
|
365 |
|
|
|
1,623 |
|
- Insurance Americas |
|
|
344 |
|
|
|
473 |
|
|
|
164 |
|
|
|
711 |
|
|
|
1,692 |
|
- Insurance Asia/Pacific |
|
|
132 |
|
|
|
405 |
|
|
|
94 |
|
|
|
125 |
|
|
|
756 |
|
- Other |
|
|
(112 |
) |
|
|
9 |
|
|
|
320 |
|
|
|
34 |
|
|
|
251 |
|
|
|
|
Insurance profit before tax |
|
|
716 |
|
|
|
1,396 |
|
|
|
975 |
|
|
|
1,235 |
|
|
|
4,322 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Wholesale Banking |
|
|
668 |
|
|
|
426 |
|
|
|
528 |
|
|
|
323 |
|
|
|
1,945 |
|
- Retail Banking |
|
|
330 |
|
|
|
318 |
|
|
|
352 |
|
|
|
175 |
|
|
|
1,175 |
|
- ING Direct |
|
|
78 |
|
|
|
125 |
|
|
|
114 |
|
|
|
118 |
|
|
|
435 |
|
- Other |
|
|
(56 |
) |
|
|
(15 |
) |
|
|
(85 |
) |
|
|
19 |
|
|
|
(137 |
) |
|
|
|
Banking profit before tax |
|
|
1,020 |
|
|
|
854 |
|
|
|
909 |
|
|
|
635 |
|
|
|
3,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
|
|
1,736 |
|
|
|
2,250 |
|
|
|
1,884 |
|
|
|
1,870 |
|
|
|
7,740 |
|
2004
PROFIT BEFORE TAX EXCLUDING DIVESTMENTS BY BUSINESS LINE
(EXCLUDING IAS 32/29 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax 2004 |
|
|
|
|
Q1 |
|
|
|
Q2 |
|
|
|
Q3 |
|
|
|
Q4 |
|
|
|
TOTAL |
|
Profit before tax excluding divestments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Insurance Europe |
|
|
352 |
|
|
|
509 |
|
|
|
397 |
|
|
|
365 |
|
|
|
1,623 |
|
- Insurance Americas |
|
|
335 |
|
|
|
466 |
|
|
|
402 |
|
|
|
424 |
|
|
|
1,627 |
|
- Insurance Asia/Pacific |
|
|
112 |
|
|
|
152 |
|
|
|
94 |
|
|
|
125 |
|
|
|
483 |
|
- Other |
|
|
(112 |
) |
|
|
9 |
|
|
|
320 |
|
|
|
34 |
|
|
|
251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance profit before tax excluding divestments |
|
|
687 |
|
|
|
1,136 |
|
|
|
1,213 |
|
|
|
948 |
|
|
|
3,984 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax excluding divestments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Wholesale Banking |
|
|
661 |
|
|
|
423 |
|
|
|
471 |
|
|
|
496 |
|
|
|
2,051 |
|
- Retail Banking |
|
|
325 |
|
|
|
319 |
|
|
|
350 |
|
|
|
174 |
|
|
|
1,168 |
|
- ING Direct |
|
|
78 |
|
|
|
125 |
|
|
|
114 |
|
|
|
118 |
|
|
|
435 |
|
-Other |
|
|
(56 |
) |
|
|
(15 |
) |
|
|
(85 |
) |
|
|
19 |
|
|
|
(137 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking profit before tax excluding divestments |
|
|
1,008 |
|
|
|
852 |
|
|
|
850 |
|
|
|
807 |
|
|
|
3,517 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax excluding divestments |
|
|
1,695 |
|
|
|
1,988 |
|
|
|
2,063 |
|
|
|
1,755 |
|
|
|
7,501 |
|
10
INSURANCE
EUROPE PROFIT BEFORE TAX
(EXCLUDING IAS 32/29 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax 2004 |
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
TOTAL |
Profit before tax |
|
|
352 |
|
|
|
509 |
|
|
|
397 |
|
|
|
365 |
|
|
|
1,623 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains / losses from divestments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax from divested units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax excluding divestments |
|
|
352 |
|
|
|
509 |
|
|
|
397 |
|
|
|
365 |
|
|
|
1,623 |
|
INSURANCE
AMERICAS PROFIT BEFORE TAX
(EXCLUDING IAS 32/29 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax 2004 |
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
TOTAL |
Profit before tax |
|
|
344 |
|
|
|
473 |
|
|
|
164 |
|
|
|
711 |
|
|
|
1,692 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains / losses from divestments |
|
|
|
|
|
|
|
|
|
|
(252 |
) |
|
|
254 |
|
|
|
2 |
|
-ING Canada IPO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
249 |
|
|
|
249 |
|
-ING Re |
|
|
|
|
|
|
|
|
|
|
(252 |
) |
|
|
33 |
|
|
|
(219 |
) |
|
- Loss on pending sale of Life of Georgia |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(28 |
) |
|
|
(28 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax from divested units |
|
|
9 |
|
|
|
7 |
|
|
|
14 |
|
|
|
33 |
|
|
|
63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax excluding divestments |
|
|
335 |
|
|
|
466 |
|
|
|
402 |
|
|
|
424 |
|
|
|
1,627 |
|
INSURANCE
ASIA PACIFIC PROFIT BEFORE TAX
(EXCLUDING IAS 32/29 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax 2004 |
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
TOTAL |
Profit before tax |
|
|
132 |
|
|
|
405 |
|
|
|
94 |
|
|
|
125 |
|
|
|
756 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains / losses from divestments |
|
|
|
|
|
|
219 |
|
|
|
|
|
|
|
|
|
|
|
219 |
|
- Australia non-life |
|
|
|
|
|
|
219 |
|
|
|
|
|
|
|
|
|
|
|
219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax from divested units |
|
|
20 |
|
|
|
34 |
|
|
|
|
|
|
|
|
|
|
|
54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax excluding divestments |
|
|
112 |
|
|
|
152 |
|
|
|
94 |
|
|
|
125 |
|
|
|
483 |
|
11
WHOLESALE BANKING PROFIT BEFORE TAX
(EXCLUDING IAS 32/29 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax 2004 |
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
TOTAL |
Profit before tax |
|
|
668 |
|
|
|
426 |
|
|
|
528 |
|
|
|
323 |
|
|
|
1,945 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains / losses from divestments |
|
|
(84 |
) |
|
|
|
|
|
|
87 |
|
|
|
(169 |
) |
|
|
(166 |
) |
- loss sale Asian cash equities business |
|
|
(84 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(84 |
) |
- gain sale CenE Bankiers |
|
|
|
|
|
|
|
|
|
|
87 |
|
|
|
|
|
|
|
87 |
|
- loss sale BHF-Bank |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(169 |
) |
|
|
(169 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax from divested units |
|
|
91 |
|
|
|
3 |
|
|
|
(30 |
) |
|
|
(4 |
) |
|
|
60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax excluding divestments |
|
|
661 |
|
|
|
423 |
|
|
|
471 |
|
|
|
496 |
|
|
|
2,051 |
|
RETAIL BANKING PROFIT BEFORE TAX
(EXCLUDING IAS 32/29 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax 2004 |
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
TOTAL |
Profit before tax |
|
|
330 |
|
|
|
318 |
|
|
|
352 |
|
|
|
175 |
|
|
|
1,175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains / losses from divestments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax from divested units |
|
|
5 |
|
|
|
(1 |
) |
|
|
2 |
|
|
|
1 |
|
|
|
7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax excluding divestments |
|
|
325 |
|
|
|
319 |
|
|
|
350 |
|
|
|
174 |
|
|
|
1,168 |
|
ING DIRECT PROFIT BEFORE TAX
(EXCLUDING IAS 32/29 AND IFRS 4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax 2004 |
|
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
TOTAL |
Profit before tax |
|
|
78 |
|
|
|
125 |
|
|
|
114 |
|
|
|
118 |
|
|
|
435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains / losses from divestments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax from divested units |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax excluding divestments |
|
|
78 |
|
|
|
125 |
|
|
|
114 |
|
|
|
118 |
|
|
|
435 |
|
12
PRINCIPLES OF VALUATION AND DETERMINATION OF RESULTS
CONSOLIDATION
ING Group (ING) comprises ING Groep N.V. (the Company), ING Verzekeringen N.V., ING Bank
N.V. and all other subsidiaries. The consolidated financial statements of ING Group comprise all
entities (including special purpose entities) where ING Group, and/or it subsidiaries, has, either
directly or indirectly, the power to exercise control over the financial and operating policies.
Control is presumed to exist when ING Group has, directly or indirectly through subsidiaries, more
than one half of the voting power or otherwise exercises effective control.
All intercompany transactions, balances and unrealised surpluses and deficits on transactions
between group companies have been eliminated. Where necessary, the accounting policies used by
subsidiaries have been changed to ensure consistency with Group policies. In general, the
reporting date of subsidiaries is the same as the reporting date of ING Group N.V. There are no
material restrictions on subsidiaries to transfer funds to the parent company.
ING Groups interests in jointly controlled entities are accounted for by proportionate
consolidation. ING Group proportionately consolidates its share of the joint ventures individual
income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar
items in ING Groups financial statements. ING Group recognises the portion of gains or losses on
the sale of assets to the joint venture that it is attributable to the other venturers. ING Group
does not recognise its share of profits or losses from the joint venture that result from the
purchase of assets by ING Group from the joint venture until it resells the assets to an
independent party. However, if a loss on the transaction provides evidence of a reduction in the
net realisable value of current assets or an impairment loss, the loss is recognised immediately.
For interests in investment vehicles the existence of control is determined taking into account
both INGs financial interests for own risk and its role as investment manager.
USE OF ESTIMATES
The preparation of the consolidated financial statements necessitates the use of estimates
and assumptions. These estimates and assumptions affect the reported amounts of the assets and
liabilities and the amounts of the contingent liabilities as at balance sheet date as well as
reported income and expenses for the year. The actual outcome may differ from these estimates.
SEGMENTAL REPORTING
A business segment is a distinguishable component of the Group engaged in providing products
or services that is subject to risks and returns that are different from those of other business
segments. A geographical segment is engaged in providing products or services within a particular
economic environment that are subject to risks and returns that are different from those of
segments operating in other economic environments. The geographical analyses are based on the
location of the office from which the transactions are originated. The business lines of the Group
are the primary segment reporting format, the geographical segments the secondary.
ANALYSIS OF INSURANCE BUSINESS
Where amounts in respect of insurance business are analysed into life and non-life,
health and disability insurance business is included in non-life.
FOREIGN CURRENCY TRANSLATION
functional and presentation currency Items included in the financial statements of
each of the Groups entities are measured using the currency of the primary economic environment
in which the entity operates (the functional currency). The consolidated financial statements
are presented in Euro, which is the Companys functional and presentation currency.
transactions and balances Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the income statement, except when deferred in equity as part of
qualifying cash flow hedges and qualifying net investment hedges.
Translation differences on non-monetary items, measured at fair value through profit or loss are
reported as part of the fair value gain or loss. Non-monetary items are retranslated at the date
fair value is determined. Translation differences on non-monetary items measured at fair value
through the revaluation reserve are included in the revaluation reserve in equity.
13
group companies The results and financial position of all the group companies that
have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
|
|
assets and liabilities for each balance sheet are translated at the closing rate at the date of
that balance sheet; |
|
|
|
income and expenses for each income statement are translated at average
exchange rates (unless this average is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case income and expenses are
translated at the dates of the transactions); and |
|
|
|
all resulting exchange differences are
recognised as a separate component of equity. |
On consolidation, exchange differences arising from the translation of a monetary item that forms
part of the net investment in a foreign operation, and of borrowings and other instruments
designated as hedges of such investments, are taken to shareholders equity. When a foreign
operation is sold, such exchange differences are recognised in the income statement as part of the
gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated
as assets and liabilities of the foreign operation and translated at the closing rate.
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The fair value of financial instruments traded in active markets (such as publicly traded
derivatives and trading and available-for-sale securities) is based on quoted market prices at the
balance sheet date. The quoted market price used for financial assets held by the Group is the
current bid price; the appropriate quoted market price for financial liabilities is the current ask
price.
The fair value of financial instruments that are not traded in an active market (for example
over-the-counter derivatives) is determined by using valuation techniques. The Group uses a variety
of methods and makes assumptions that are based on market conditions existing at each balance sheet
date.
DERIVATIVES AND HEDGE ACCOUNTING
Derivatives are initially recognised at fair value on the date on which a derivative
contract is entered into and are subsequently remeasured at their fair value. Fair values are
obtained from quoted market prices in active markets, including recent market transactions, and
valuation techniques, including discounted cash flow models and options pricing models, as
appropriate. All derivatives are carried as assets when fair value is positive and as liabilities
when fair value is negative.
The method of recognising the resulting fair value gain or loss depends on whether the derivative
is designated as a hedging instrument and, if so, the nature of the item being hedged. The Group
designates certain derivatives as either (1) hedges of the fair value of recognised assets or
liabilities or firm commitments (fair value hedge); (2) hedges of highly probable future cash
flows attributable to a recognised asset or liability or a forecasted transaction (cash flow
hedge) or (3) hedges of a net investment of a foreign operation. Hedge accounting is used for
derivatives designated in this way provided certain criteria are met.
The Group documents, at the inception of the transaction, the relationship between hedging
instruments and hedged items, as well as its risk management objective and strategy for
undertaking various hedge transactions. The Group also documents its assessment, both at hedge
inception and on an ongoing basis, of whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in fair values or cash flows of hedged
items including the method for assessing the hedging instruments effectiveness in offsetting the
exposure to changes in the hedged items fair value or cash flows attributable to the hedged risk.
Certain derivatives embedded in other contracts are measured as separate derivatives when their
economic characteristics and risks are not closely related to those of the host contract, the host
contract is not carried at fair value through profit or loss and if a separate instrument with the
same terms as the embedded derivative would meet the definition of a derivative. These embedded
derivatives are measured at fair value with changes in fair value recognised in the income
statement.
fair value hedge Changes in the fair value of derivatives that are designated and qualify
as fair value hedges are recognised in the income statement, together with fair value adjustments
to the hedged item attributable to the hedged risk. If the hedge relationship no longer meets the
criteria for hedge accounting, the cumulative adjustment of the hedged item is, in the case of
interest bearing instruments, amortised in the income statement over the remaining term of the
original hedge. For non-interest bearing instruments, the cumulative adjustment of the hedged item
is recognised in the income statement when the hedged instrument is derecognised.
cash flow hedge The effective portion of changes in the fair value of derivatives that
are designated and qualify as cash flow hedges are recognised in equity. The gain or loss relating
to the ineffective portion is recognised immediately in the income statement.
Amounts accumulated in equity are recycled to the income statement in the periods in which the
hedged item will affect profit or loss. When a hedging instrument expires or is sold, or when a
hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in
equity at that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the income statement. When a forecast transaction is no longer expected
to occur, the cumulative gain or loss that was reported in equity is immediately transferred to
the income statement.
14
net
investment hedge Hedges of net investments in foreign operations are accounted for
similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the
effective portion of the hedge is recognised in equity; the gain or loss relating to the
ineffective portion is recognised immediately in the income statement. Gains and losses
accumulated in equity are included in the income statement when the foreign operation is disposed
of.
non-trading derivatives that do not qualify for hedge accounting Certain non-trading derivative
instruments that are used by the Group as part of its risk management strategies do not qualify
for hedge accounting under the Groups accounting policies. Changes in the fair value of
non-trading derivatives that do not qualify for hedge accounting are recognised immediately in the
income statement. See also Financial assets at fair value through profit or loss.
FINANCIAL ASSETS
recognition of financial assets All purchases and sales of financial assets classified as
held-to-maturity, available-for-sale and trading that require delivery within the time frame
established by regulation or market convention (regular way purchases and sales) are recognised
at trade date, which is the date that the Group commits to purchase or sell the asset. Loans and
deposits are recognised at settlement date.
derecognition of financial assets Financial assets are derecognised when the rights to
receive cash flows from the financial assets have expired or where the Group has transferred
substantially all risks and rewards of ownership. If the Group neither transfers nor retains
substantially all the risks and rewards of ownership of a financial asset, it derecognises the
financial asset if it has no longer control over the asset. In transfers where control over the
asset is retained, the Group continues to recognise the asset to the extent of its continuing
involvement. The extent of continuing involvement is determined by the extent to which the Group is
exposed to changes in the value of the asset.
loans and advances to customers Loans and advances to customers are carried at amortised
cost using the effective interest rate method less any impairment losses.
investment securities Investment securities (including loans quoted in active markets)
are classified either as held-to-maturity or available-for-sale assets. Investment securities and
loans quoted in active markets with fixed maturity where management has both the intent and the
ability to hold to maturity are classified as held-to-maturity. Investment securities and actively
traded loans intended to be held for an indefinite period of time, which may be sold in response
to needs for liquidity or changes in interest rates, exchange rates or equity prices are
classified as available-for-sale.
available-for-sale financial assets All available-for-sale financial assets are initially
recognised at cost. For available-for-sale debt securities, the difference between cost and
redemption value is amortised using the effective yield method. Subsequently, available-for-sale
financial assets are measured at fair value. Unrealised gains and losses arising from changes in
the fair value are recognised in equity. When the securities are disposed of, the related
accumulated fair value adjustments are included in the income statement as gains and losses from
investment securities. For impairments on available-for-sale financial assets reference is made to
the impairment section.
held-to-maturity investments Investments for which the Group has the positive intention
to hold to maturity and which are designated as held-to-maturity assets are carried at amortised
cost using the effective yield method, less any provision for impairment.
financial assets at fair value through profit or loss Financial assets at fair value through
profit or loss comprise three sub-categories: financial assets held for trading, investments for
the risk of policyholders and other financial assets designated at fair value through profit or
loss by management. A financial asset is classified as at fair value through profit or loss if
acquired principally for the purpose of selling in the short term or if so designated by
management. Investments for the risk of policyholders are investments against insurance
liabilities for which all changes in fair value of invested assets are offset by similar changes
in insurance liabilities. See also Non-trading derivatives that do not qualify for hedge
accounting.
realised gains and losses on investments Realised gains and losses on investments are determined
as the difference between the sale proceeds and (amortised) cost. Cost is determined
systematically (weighted average or specific identification) on a consistent basis per portfolio.
OFFSETTING OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Financial assets and financial liabilities are offset and the net amount reported in the
balance sheet when the Group has a legally enforceable right to set off the recognised amounts and
intends to either settle on a net basis or to realise the asset and settle the liability
simultaneously.
REPURCHASE TRANSACTIONS AND REVERSE REPURCHASE TRANSACTIONS
Securities sold subject to repurchase agreements (repos) are reclassified in the
consolidated financial statements as pledged assets when the transferee has the right by contract
or custom to sell or repledge the collateral; the counterparty liability is included in amounts
due to other banks, other borrowed funds or customer deposits due to customers, as appropriate.
15
Securities purchased under agreements to resell (reverse repos) are recorded as loans and
advances to other banks or customers, as appropriate. The difference between sale and repurchase
price is treated as interest and accrued over the life of the agreements using the effective
interest method. Securities lent to counterparties are also retained in the consolidated financial
statements.
Securities borrowed are not recognised in the financial statements, unless these are sold to third
parties, in which case the purchase and sale are recorded with the gain or loss included in
trading income. The obligation to return is recorded at fair value as a trading liability.
IMPAIRMENT OF FINANCIAL ASSETS
assets carried at amortised cost The Group assesses at each balance sheet
date whether there is objective evidence that a financial asset or group of financial assets is
impaired. A financial asset or a group of financial assets is impaired and impairment losses are
incurred if, and only if, there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition of the asset (a loss event) and that loss
event (or events) has an impact on the estimated future cash flows of the financial asset or group
of financial assets that can be reliably estimated.
The Group first assesses whether objective evidence of impairment exists individually for financial
assets that are individually significant, and individually or collectively for financial assets
that are not individually significant. If the Group determines that no objective evidence of
impairment exists for an individually assessed financial asset, whether significant or not, it
includes the asset in a group of financial assets with similar credit risk characteristics and
collectively assesses them for impairment. Assets that are individually assessed for impairment and
for which an impairment loss is or continues to be recognised are not included in a collective
assessment of impairment.
If there is objective evidence that an impairment loss on assets carried at amortised cost has been
incurred, the amount of the loss is measured as the difference between the assets carrying amount
and the present value of estimated future cash flows (excluding future credit losses that have not
been incurred) discounted at the financial assets original effective interest rate. The carrying
amount of the asset is reduced through the use of an allowance account and the amount of the loss
is recognised in the income statement. If the asset has a variable interest rate, the discount rate
for measuring any impairment loss is the current effective interest rate determined under the
contract. As a practical expedient, the Group may measure impairment on the basis of an instruments
fair value using an observable market price.
For the purposes of a collective evaluation of impairment, financial assets are grouped on the
basis of similar credit risk characteristics (i.e., on the basis of the Groups credit risk rating
process that considers asset type, industry, geographical location, collateral type, past-due
status and other relevant factors). Those characteristics are relevant to the estimation of future
cash flows for groups of such assets by being indicative of the debtors ability to pay all
amounts due according to the contractual terms of the assets being evaluated.
Future cash flows in a portfolio of financial assets that are collectively evaluated for impairment
are estimated on the basis of the contractual cash flows of the assets in the portfolio and
historical loss experience for assets with credit risk characteristics similar to those in the
portfolio. Historical loss experience is adjusted on the basis of current observable data to
reflect the effects of current conditions that did not affect the period on which the historical
loss experience is based and to remove the effects of conditions in the historical period that do
not exist currently.
When a loan is uncollectable, it is written off against the related provision for loan impairment.
Such loans are written off after all the necessary procedures have been completed and the amount
of the loss has been determined. Subsequent recoveries of amounts previously written off decrease
the amount of the provision for loan impairment in the income statement.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised (such as an
improvement in the debtors credit rating), the previously recognised impairment loss is reversed
by adjusting the allowance account. The amount of the reversal is recognised in the income
statement.
assets carried at fair value The Group assesses at each balance sheet date whether there
is objective evidence that a financial asset or a group of financial assets is impaired. In the
case of equity investments classified as available-for-sale, a significant or prolonged decline in
the fair value of the security below its cost is considered in determining whether the assets are
impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss
measured as the difference between the acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognised in profit or loss is removed from
equity and recognised in the income statement. Impairment losses recognised in the income
statement on equity instruments are not reversed through the income statement. If, in a subsequent
period, the fair value of a debt instrument classified as available-for-sale increases and the
increase can be objectively related to an event occurring after the impairment loss was recognised
in profit or loss, the impairment loss is reversed through the income statement.
16
INVESTMENTS IN ASSOCIATES
Associates are all entities over which the Group has significant influence but not control,
generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in
associates are initially recognised at cost and subsequently accounted for by the equity method of
accounting.
The Groups investment in associates includes goodwill (net of any accumulated impairment loss)
identified on acquisition. The Groups share of its associates post-acquisition profits or losses
is recognised in the income statement, and its share of post-acquisition movements in reserves is
recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying
amount of the investment. When the Groups share of losses in an associate equals or exceeds its
interest in the associate, including any other unsecured receivables, the Group does not recognise
further losses, unless it has incurred obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent
of the Groups interest in the associates. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency with the policies adopted by
the Group.
For interests in investment vehicles the existence of significant influence is determined taking
into account both INGs financial interests for own risk and its role as investment manager.
INVESTMENT PROPERTY
Investment property is stated at fair value as at the balance sheet date. Changes in the
carrying amount resulting from revaluations are recorded in the income statement. On disposal the
difference between the sale proceeds and book value is recognised in the income statement.
Fair value of investment property is based on regular appraisals.
PROPERTY AND EQUIPMENT
property in own use Land and buildings held for own use are stated at fair
value as at balance sheet date. Increases in the carrying amount arising on revaluation of land
and buildings held for own use are credited to the revaluation reserves in shareholders equity.
Decreases that offset previous increases of the same asset are charged against revaluation
reserves directly in equity; all other decreases are charged to the income Depreciation is
recognised based on the fair value and the estimated useful life (in general 20-50 years). On
disposal the related revaluation reserve is released to retained earnings.
The fair value of land and buildings is based on regular appraisals. Subsequent expenditure is
included in the assets carrying amount when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the item can be measured reliably.
Property in own use is reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. The carrying amount of property is
written down immediately to its recoverable amount if its carrying amount is greater than its
estimated recoverable amount. The recoverable amount is the higher of the assets fair value less
costs to sell and value in use.
property under construction Land and buildings under construction (including investment
property) are stated at the directly attributable purchase and construction costs incurred up to
the balance sheet date plus borrowing costs incurred during construction and the Groups own
development and supervision expenses, where necessary less impairment losses.
property under development for third parties Property under development which is held
with the intention to sell to third parties is valued using the percentage of completion method
when appropriate and when not appropriate (i.e. when the outcome of a construction contract cannot
be measured reliably) at direct construction cost incurred up to the balance sheet date, including
borrowing costs incurred during construction and the Groups own development and supervision
expenses.
When the percentage of completion method is applied, the stage of completion is measured by
reference to the contract costs incurred up to the balance sheet date as a percentage of total
estimated costs for each contract.
When the percentage of completion method is not applied, the
difference between the net proceeds on disposal and cost of property under development, and any
required provision for impairment is reflected in the income statement.
equipment Equipment is stated at cost less accumulated depreciation and any impairment
losses. The cost of the assets is depreciated on a straight-line basis over their estimated useful
lives, which are generally as follows: for data processing equipment 2 to 5 years and 4 to 10
years for fixtures and fittings. Expenditures for maintenance and repairs are charged to the
income statement as incurred. Expenditure incurred on major improvements is capitalised and
depreciated.
assets
under operating leases Assets leased out under operating leases in which ING is
the lessor are stated at cost less accumulated depreciation and any impairment losses. The cost of
the assets is depreciated on a straight-line basis over the lease term. Reference is made to
Leases.
17
disposals On disposal of property and equipment including assets under operating leases,
the difference between the proceeds on disposal and net book value is recognised in the income
statement.
BORROWING COSTS Borrowing costs incurred for the construction of any qualifying asset are
capitalised during the period of time that is required to complete and prepare the asset for its
intended use.
LEASES
the group as the lessee The leases entered into by ING are primarily
operating leases. The total payments made under operating leases are charged to the income
statement on a straight-line basis over the period of the lease. When an operating lease is
terminated before the lease period has expired, any payment required to be made to the lessor by
way of penalty is recognised as an expense in the period in which termination takes place.
the group as the lessor When assets are held subject to a finance lease, the present value of the
lease payments is recognised as a receivable under Loans and advances to customers. The difference
between the gross receivable and the present value of the receivable is recognised as unearned
finance income. Lease income is recognised over the term of the lease using the net investment
method (before tax), which reflects a constant periodic rate of return. When assets are held
subject to an operating lease, the assets are included under Assets under operating leases.
PURCHASE ACCOUNTING, GOODWILL AND OTHER INTANGIBLE ASSETS
goodwill ING Groups acquisitions are accounted for under the purchase method of accounting,
whereby the cost of the acquisitions is allocated to the fair value of the assets, liabilities and
contingent liabilities acquired. Goodwill, being the difference between the cost of the
acquisition (including assumed debt) and the Groups interest in the fair value of the acquired
assets, liabilities and contingent liabilities as at the date of acquisition, is capitalised as an
intangible asset. The results of the operations of the acquired companies are included in the
income statement from their respective dates of acquisition.
Goodwill is only capitalised on acquisitions after the date of implementing IFRS (1 January 2004).
As permitted by IFRS transitional requirements, accounting for acquisitions before that date has
not been restated; goodwill and internally generated intangibles on those acquisitions were
charged directly to shareholders equity. Goodwill is allocated to cash-generating units for the
purpose of impairment testing. This test is performed annually or more frequently if there are
indicators of impairment. Under the impairment tests, the carrying value of the cash generating
units (including goodwill) is compared to its recoverable amount which is the higher of its fair
value less costs to sell and its value in use.
Adjustments to the fair value as of the date of acquisition of acquired assets and liabilities
that are identified within one year after acquisition are recorded as an adjustment to goodwill;
any subsequent adjustment is recognised as income or expense. However, recognition of deferred tax
assets after the acquisition date is recorded as an adjustment to goodwill even after the first
year. On disposal of group companies, the difference between the sale proceeds and book value
(including goodwill) is included in the income statement.
computer software Computer software that has been purchased or generated internally for internal
use is stated at cost less amortisation and any impairment losses. Amortisation is calculated on a
straight-line basis over its useful life. This period will generally not exceed three years.
Amortisation is included in other expenses.
value of business acquired (voba) VOBA is an asset that represents the present
value of estimated net cash flows embedded in the insurance contracts of an acquired company,
which existed at the time the company was acquired. VOBA is amortised similar to amortisation of
deferred acquisition costs as described in the section Deferred acquisition costs.
other intangible assets Other intangible assets are capitalised and amortised over the
expected economic life.
DEFERRED ACQUISITION COSTS
Deferred acquisition costs (DAC) are an asset and represent costs of acquiring insurance
business that are deferred and amortised. The deferred costs, all of which vary with and are
primarily related to the production of new and renewal business, consist principally of
commissions, certain underwriting and contract issuance expenses, and certain agency expenses. DAC
is amortised over the life of the underlying contracts.
For traditional life insurance contracts DAC is amortised over the premium payment period in
proportion to the premium revenue recognition.
For flexible life insurance contracts DAC is amortised over the lives of the policies in relation
to the emergence of estimated gross profits. Amortisation is adjusted retrospectively when
estimates of current or future gross profits to be realised from a group of products are revised.
The estimates and the assumptions are reassessed at the end of each reporting period. For DAC on
flexible insurance contracts the approach is that in determining the estimate of future gross
profits ING assumes the short-term and long-term separate account growth rate assumption to be the
same. Higher/lower expected profits e.g. reflecting stock market performance and a changed level
of assets under management may cause a lower/higher amortisation of DAC due to the catch-up of
amortisation in old and future years. This process is known as DAC unlocking. The impact of the DAC
unlocking is recorded in the profit and loss account of the period in which the unlocking occurs.
DAC is adjusted for the impact of unrealised results on allocated investments through equity.
18
TAXATION
Income tax payable on profits, based on the applicable tax law in each jurisdiction, is
recognised as an expense in the period in which profits arise.
deferred income tax Deferred income tax is provided in full, using the liability method,
on temporary differences arising between the tax bases of assets and liabilities and their
carrying amounts in the consolidated
financial statements. Deferred income tax is determined using tax rates (and laws) that have been
enacted or substantially enacted by the balance sheet date and are expected to apply when the
related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised where it is probable that future taxable profit will be
available against which the temporary differences can be utilised. Deferred income tax is provided
on temporary differences arising from investments in subsidiaries and associates, except where the
timing of the reversal of the temporary difference is controlled by the Group and it is probable
that the difference will not reverse in the foreseeable future. The tax effects of income tax
losses available for carry forward are recognised as an asset when it is probable that future
taxable profits will be available against which these losses can be utilised.
Deferred tax related to fair value re-measurement of available-for-sale investments and cash flow
hedges, which are charged or credited directly to equity, is also credited or charged directly to
equity and is subsequently recognised in the income statement together with the deferred gain or
loss.
CASH AND CASH EQUIVALENTS
For the purposes of the cash flow statement, cash and cash equivalents comprise balances
with less than three months maturity from the date of acquisition, including cash and
non-restricted balances with central banks, treasury bills and other eligible bills, loans and
advances to banks, amounts due from other banks and short-term government securities.
FINANCIAL LIABILITIES
Preference shares, which carry a mandatory coupon or are redeemable on a specific date or at
the option of the shareholder, are classified as financial liabilities. The dividends on these
preference shares are recognised in the income statement as interest expense using the effective
interest method.
Borrowings are recognised initially at their issue proceeds (fair value of consideration received)
net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any
difference between proceeds net of transaction costs and the redemption value is recognised in the
income statement over the period of the borrowings using the effective interest method.
If the Group purchases its own debt, it is removed from the balance sheet, and the difference
between the carrying amount of the liability and the consideration paid is included in net income.
INSURANCE, REINSURANCE AND INVESTMENT CONTRACTS
insurance contracts Insurance provisions represent estimates of future payouts that
will be required in respect of life and non-life insurance claims, including expenses relating to
such claims.
reinsurance contracts Reinsurance premiums, commissions and claim settlements, as well as the
reinsurance element of technical provisions are accounted for in the same way as the original
contracts for which the reinsurance was concluded.
provision for life policy liabilities The Provision for life policy liabilities is
calculated on the basis of a prudent prospective actuarial method, taking into account the
conditions for current insurance contracts.
The as yet unamortised interest-rate rebates on periodic and single premium contracts are deducted
from the Provision for life policy liabilities. Interest-rate rebates granted during the year are
capitalised and amortised in conformity with the anticipated recovery pattern and are debited to
the income statement.
Insurance provisions on traditional life policies are calculated using various assumptions,
including assumptions on mortality, morbidity, expenses, investment returns and surrenders.
Assumptions for insurance provisions on traditional life insurance contracts, including
traditional whole life and term life insurance contracts, are based on best estimate assumptions
including margins for adverse deviations. The assumptions are set initially at the policy issue
date and remain constant throughout the life of the policy, except in case of loss recognition.
Insurance provisions for universal life, variable life and annuity contracts, unit linked
contracts, etc. are generally set equal to the balance that accrues to the benefit of the policyholders. Certain variable annuity products contain minimum guarantees on the amounts payable upon
death and/or maturity. The insurance provisions include the impact of these minimum guarantees,
taking into account the difference between the potential minimum benefit payable and the total
account balance, expected mortality and surrender.
19
provision for unearned premiums and unexpired insurance risks The provision
is calculated in proportion to the unexpired periods of risk. For insurance policies covering a
risk increasing during the term of the policy at premium rates independent of age, this risk is
taken into account in determining the provision. Further provisions are made to cover claims under
unexpired insurance contracts, which may exceed the unearned premiums and the premiums due in
respect of these contracts.
claims provision The Claims provision is calculated either on a case-by-case basis or by
approximation on the basis of experience. Provisions have also been made for claims incurred but
not reported and for future claims handling expenses. The
adequacy of the Claims provision is evaluated each year using standard actuarial techniques.
Claims reserves on non-life insurance are determined on a case-by-case basis, based on the facts
known at the time provisions are established, and are periodically adjusted to recognise the
estimated ultimate cost of a claim. In addition, so-called IBNR reserves are set to recognise
the estimated cost of losses that have occurred but which have not yet been notified.
deferred profit sharing liability For insurance contracts with discretionary participation
features a deferred profit sharing liability is recorded for the full amount of the unrealised
revaluation on allocated investments. Furthermore, a deferred profit sharing liability is recorded
for the share in realised results on allocated investments that is expected to be shared with
policy holders. The deferred profit sharing liability is reduced with the actual allocation of
profit sharing to individual policyholders.
insurance provisions for policies for which the policyholders bear the investment risk The
Insurance provisions for policies for which the Policyholders bear the investment risk are
calculated on the same basis as the provision for life policy liabilities.
For insurance contracts for which policyholders bear the investment risk the insurance provisions
are generally shown at the balance sheet value of the associated investments.
investment contracts Insurance policies which do not bear significant insurance risk
under the Group accounting policies are presented as Investment contacts. Provisions for
liabilities under investment contracts are determined either at amortised cost, using the
effective interest method (including certain initial acquisition expenses) or at fair value.
adequacy test The adequacy of the Provision for life policy liabilities net of DAC and
VOBA is evaluated each year by each business unit. The test considers current estimates of all
contractual and related cash flows. If it is determined using a best estimate (50%) confidence
level that a shortfall exists, it is immediately recorded in the profit and loss account.
OTHER LIABILITIES
employee benefits - pension obligations Group companies operate various pension
schemes. The schemes are generally funded through payments to insurance companies or
trustee-administered funds, determined by periodic actuarial calculations. The Group has both
defined benefit and defined contribution plans.
A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee
will receive on retirement, usually dependent on one or more factors such as age, years of service
and compensation.
The liability recognised in the balance sheet in respect of defined benefit
pension plans is the present value of the defined benefit obligation at the balance sheet date less
the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses
and past service costs. The defined benefit obligation is calculated annually by internal and
external actuaries using the projected unit credit method.
The defined benefit obligation is
calculated using the expected rate of return on plan assets. Differences between this expected
return and the actual return on these plan assets and actuarial changes are not recognised in the
income statement, unless the accumulated differences and changes exceed 10% of the greater of the
defined benefit obligation and the fair value of the plan assets. The excess is amortised and
charged or credited to the income statement over employees remaining working lives. In accordance
with IFRS transition provisions, the corridor was reset to nil at the date of transition to IFRS (1
January 2004).
The rates used for salary developments, interest discount factors and other
adjustments reflect specific country conditions.
For defined contribution plans, the Group pays contributions to publicly or privately administered
pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further
payment obligations once the contributions have been paid. The contributions are recognised as
employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the
extent that a cash refund or a reduction in the future payments is available.
other post-retirement obligations Some Group companies provide post-retirement healthcare
benefits to their retirees. The entitlement to these benefits is usually conditional on the
employee remaining in service up to retirement age and the completion of a minimum service period.
The expected costs of these benefits are accrued over the period of employment using an accounting
methodology similar to that for defined benefit pension plans.
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other provisions A provision involves a present obligation arising from past events, the
settlement of which is expected to result in an outflow from the company of resources embodying
economic benefits, whereas the timing or the amount is uncertain. Unless stated otherwise below,
provisions are discounted using a pre-tax discount rate to reflect the time value of money.
INCOME RECOGNITION
premium income Premiums from life insurance policies are recognised as revenue when due
from the policyholder. For non-life insurance policies, premium income is recognised on a pro-rata
basis over the term of the related policy coverage. Payments under investment contracts are not
recognised as premium income.
net interest income Interest income and expense are recognised in the income statement using the
effective interest method. The effective interest method is a method of calculating the amortised
cost of a financial asset or a financial liability and of allocating the interest income or
interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments or receipts through the expected life of the financial
instrument or, when appropriate, a shorter period to the net carrying amount of the financial
asset or financial liability. When calculating the effective interest rate, the Group estimates
cash flows considering all contractual terms of the financial instrument (for example, prepayment
options) but does not consider future credit losses. The calculation includes all fees and points
paid or received between parties to the contract that are an integral part of the effective
interest rate, transaction costs and all other premiums or discounts. Once a financial asset or a
group of similar financial assets has been written down as a result of an impairment loss,
interest income is recognised using the rate of interest used to discount the future cash flows
for the purpose of measuring the impairment loss.
fees and commissions Fees and commissions are generally recognised when the service has
been provided. Loan commitment fees for loans that are likely to be drawn down are deferred
(together with related direct costs) and recognised as an adjustment to the effective interest rate
on the loan. Loan syndication fees are recognised as revenue when the syndication has been
completed and the Group retained no part of the loan package for itself or retained a part at the
same effective interest rate for the other participants. Commission and fees arising from
negotiating, or participating in the negotiation of, a transaction for a third party such as the
arrangement of the acquisition of shares or other securities or the purchase or sale of businesses
- are recognised on completion of the underlying transaction. Portfolio and other management
advisory and service fees are recognised based on the applicable service contracts when the service
has been provided. Asset management fees related to investment funds are recognised rateably over
the period the service is provided. The same principle is applied for wealth management, financial
planning and custody services that are continuously provided over an extended period of time.
lease income The proceeds from leasing out assets under operating leases are recognised on a
straight-line basis over the life of the lease agreement. Lease payments received in respect of
finance leases when ING is the lessor are divided into an interest component (recognised as
interest income) and a repayment component.
FIDUCIARY ACTIVITIES
The Group commonly acts as trustee and in other fiduciary capacities that result in the holding or
placing of assets on behalf of individuals, trusts, retirement benefit plans and other
institutions. These assets and income arising thereon are excluded from these financial
statements, as they are not assets of the Group.
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TABLE OF CONTENTS
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.
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ING Groep N.V. |
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(Registrant) |
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By:
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/s/ H. van Barneveld |
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H. van Barneveld |
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General Manager Corporate Control & Finance |
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By:
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/s/ C. Blokbergen |
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C. Blokbergen |
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Corporate Legal, Compliance & Security Department |
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Head Legal department |
Dated:
September 12, 2005