16 February 2006
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Transcript of 16 February 2006
16 February 2006
Full Year 2005 Results
Delivering value through higher returns and profitable growth
Full year 2005 results 2
• Strategy is delivering value
• Strong underlying top-line growth
• Better returns and improved efficiency
• Confidence in growth underlying business
Key points
Full year 2005 results 3
• Net profit rises 25.3% to EUR 7,210 million
• EPS up 22.7% to EUR 3.32
• Underlying profit before tax rises 19.4% to EUR 8,506 million**• Insurance +11.5%; Banking +27.2%
• Strong underlying top-line growth
• Life premiums +12.5%; bank income +11.4%
• Improvement efficiency ratios due to sharpened focus on execution
• Strong value creation• Embedded Value +22.9% to EUR 27.6 billion; ROEV 14%
• Value of New Business up 27.4% to EUR 805 million
• IRR increases to 13.2% (12.1%)
• Underlying after-tax RAROC up to 18.8% (16.4%)
• Total dividend 2005 proposed at EUR 1.18 per share, up 10.3%
* All figures compare full year 2005 with full year 2004 unless otherwise stated** Underlying profit before tax is a non-GAAP measure for profit before tax excl. divestments and special items
Summary financial results 2005*
Full year 2005 results 4
Impact divestmentsSpecial items
Underlying net profit excluding realised capital gains on shares from Insurance
Realised capital gains on shares from Insurance
in E
UR
mil
lio
n
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2003 ING GAAP 2004 ING GAAP 2004 IFRS 2005 IFRS
+36%
+34%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Strong underlying profit performance …
Full year 2005 results 5
… with higher quarterly underlying profit level
Impact divestmentsSpecial items
Underlying net profit excluding realised capital gains on shares from Insurance
Realised capital gains on shares from Insurance
Average underlying net profit, excluding realised capital gains on
shares from Insurance: +34%
0
500
1,000
1,500
2,000
Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405
in E
UR
mil
lio
n
1,130
1,663 1,554
1,408
1,941
1,551
1,8781,840
Full year 2005 results 6
US Retirement ServicesGrowth 2005
• VNB +41%
• Sales +18%
Pre
-tax
pro
fit (
at c
on
stan
t ex
chan
ge
rate
s)
Quarterly average 2004:
EUR 73m
0
20
40
60
80
100
120
Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405
Quarterly average 2005:
EUR 89m
22%
Growth engines show strong performance (1)
Full year 2005 results 7
Life insurance developing markets
Growth 2005• VNB +40%• Sales +51%
0
20
40
60
80
100
120
140
Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405
Value of new business
10%
11%
12%
13%
14%
15%
16%
17%
18%
14.0%
17.4%
56
128
Internal rate of return
Va
lue
of
ne
w b
us
ine
ss (
in E
UR
mill
ion
)
Inte
rna
l rate
of re
turn
(%)
Growth engines show strong performance (2)
Full year 2005 results 8
ING Direct
Growth 2005• Funds entrusted +29%• Mortgage portfolio +66%• Number of customers +28%
Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405
Pre
-tax
pro
fit
(in
EU
R m
illio
n) Quarterly
average 2004: EUR 109m
Quarterly average 2005:
EUR 154m
0
50
100
150
200
42%
Growth engines show strong performance (3)
Full year 2005 results 9
Recurring expenses Insurance show modest growth
Total operating expenses
Divestments / special items
Non-recurring expenses
FX impact
Recurring expenses
Asia
Recurring expensesexcl. Asia
2004 2005
4,746
157
58
77
4,608
555
4,053
9.5%
4.9%
3.1%
5,195
119
245
4,831
654
4,177
Full year 2005 results 10
Recurring expenses Banking show modest growth
Total operating expenses
Divestments / special items
Non-recurring expenses
FX impact
Recurring expenses
ING Direct
Recurring expensesexcl. ING Direct
8,844
55
508
8,281
1,395
6,886
8,795
774
219
51
7,853
1,186
6,667
0.6%
5.5%
3.3%
2004 2005
Full year 2005 results 11
Improved efficiency ratios
Cost/income ratio Banking
2001 2002 2003 2004 2005
Total banking excluding divestments and special items
Expenses as % of AuM
Expenses as % of premiums
0.80%
0.90%
1.00%
2004
2005
13.0%
14.0%
15.0%
Expense ratios Insurance
2004
2005
0.86%
0.82%
13.52%
13.28%
Improving efficiency remains priority
60.0%
65.0%
70.0%
75.0%
80.0%
75.7%
65.6%
Full year 2005 results 12
Strong Embedded Value profit growth reflects value creation
Growth 2005• Embedded Value life insurance + 22.9% to EUR 27.6 bn• Return on Embedded Value 14%• Value of New Business + 27.4% to EUR 805 m• Internal rate of return 13.2% from 12.1% in 2004
2003 2004 2005
EV
pro
fit
(in
EU
R m
illi
on
)
EV profit* 2005: + 262%
488 622
2,254
500
1,000
1,500
2,000
2,500
EV profit growth due to:
• Value of new business
• Financial variances
• Operational variances
• Assumption changes
11%
41%
9%
39%
100%
EV-profit growth
strongly correlated with TSR
* EV Profit is defined as the change in value during the year in excess of the required return which arises from only those items in embedded value that business line management can influence.
Full year 2005 results 13
• Underlying after-tax RAROC improved to 18.8% (from 16.4%)
• Improved IRR reflects focus on strict pricing discipline
• All return ratios well above ING hurdles
Improved returns in all business lines
20052004
Banking: after-tax RAROC
12.2
26.2
11.314.5
22.3
36.0
14.9
22.6
0
10
20
30
40
Wholesale
Banking
Retail
Banking
ING Direct Total
%
Life Insurance: IRR new business
12.4
10.7
13.612.1
14.6
11.1
15.0
13.2
0
4
8
12
16
Insurance
Europe
Insurance
Americas
Insurance
Asia/Pacific
Total
20052004%
Full year 2005 results 14
Source: Bloomberg, ING
TSR 1 January 2004 – 31 December 2005
0 20 40 60 80 100
ING Group
TSR ING Group # 2 with +76%
Average TSR peer group +37%
ING’s total shareholder return in top quartile
Full year 2005 results 15
Dividend increase reflects strong performance and confidence in the future
0.450.52
0.63
0.820.94 0.97 0.97 0.97
1.071.18
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
10%10%
• Total dividend 2005 proposed EUR 1.18 per share, up 10.3%
• Final dividend 2005 proposed EUR 0.64, fully in cash
Div
iden
d p
er s
har
e (i
n E
UR
)
Full year 2005 results 16
Group profits 200520
04
in E
UR
mil
lio
n
2005
in
EU
R m
illi
on
7,125 7,467 7,740
5,755
342 55 218 1,709
276
Underlyingprofit before
tax
Specialitems
Profit beforetax excl.
divestments
Gains /losses on
divestments
Profit beforetax fromdivested
units
Profit beforetax
Taxation 3rd partyinterest
Net Profit
8,506 8,506 8,894
7,210
366 22 1,379
305
+25.3%+14.9%+19.4% +13.9%
EPS(EUR)
3.32
2.71
+22.7%
Full year 2005 results 17
In EUR million 2005 2004 %-change
Net Profit 7,210 5,755 25.3%
1) Divestments 166
1019
-46
13 20434 384
-54
2549247
4 38397 -43
2) Special items
583 455
Gain old reinsurance business 134Hedge result 190Tax releases 400Insurance operations 400 373Hedge result -2Tax releases / tax asset 183
Banking operations 183 82
Underlying net profit 6,196 4,959 24.9%
Total ING Group 431 341
Total ING Group
Net impact divestments and special items
13 -217Gain sale Australian non-life
Gain sale FreelerGain on IPO CanadaLoss sale Life of Georgia
Profit from divested unitsInsurance operations
Loss sale Asian equities business
Gain sale Baring Asset ManagementGain partial sale ING Bank Slaski sharesRestructuring NMB-HellerProfit from divested unitsBanking operations
Losses rel. to sale ING Re 2004/True up 2005
Gain on sale of CenE Bankiers 87
49
249
Sale BHF-Bank -114
-18Gain sale Austbrokers 25
112Restructuring provision Wholesale -28
Full year 2005 results 18
Tax developments
1. Low effective tax rate in 2005 (15.5%) driven by:
• Tax exempt gains on divestments
• Substantial releases of tax provisions in insurance operations
• Benefits from participation exemption in the Netherlands and Belgium
• Lower statutory tax rate in the Netherlands (31.5%)
• Compensation of historical tax losses / tax assets in banking
2. Expected effective tax rate in the range 20-25% for the coming years
• Structural decline driven by lower statutory tax rate in the Netherlands
Full year 2005 results 19
60
-51
71
-60
-40
-20
0
20
40
60
80
27
47
0
20
40
60
80
100
120
Insu
ran
ce
Ban
kin
g
(EUR m)
(EUR m)
Impact on quarterly net results
Realised gains on bonds*
Fair value changes deriv/invest.
Prepayment penalties
Interest preference shares
Other
Total pre-tax
Tax
Third party interest
Total net
55
95
58
0
30
238
76
0
162
-17
226
118
-111
1
217
98
-111
230
Insurance Banking
Impact on 2005 results (pre-tax)
111
*Net of amortisation of capitalised gains on fixed incomesecurities under Dutch GAAP in 2004.
The figures in these tables are estimates
Total estimated net impact amounts to EUR 392 m
45
Q105 Q205 Q305 Q405
82
38
321
176
-111
31
455
174
-111
392
Total
Q105 Q205 Q305 Q405
Estimated impact of IAS 32/39 and IFRS 4 on net profit
Full year 2005 results 20
Value of New Business (EUR 805 m)
Profit & loss accountin EUR million 2005 2004
% change
Premium income 45,758 43,617 4.9
Operating expenses 5,195 4,746 9.5
Net profit 3,268 3,349 -2.4
10.4
10.6
% changeunderlying
3,975 3,564 11.5
Insurance activities
Underlying profit before tax
Insurance
Europe 28%
Insurance
Americas26%
Insurance Asia/Pacific
46%
• Underlying profit before tax up 11.5% driven by strong non-life results (+21.3%)
• Underlying life profit up 7.4% supported by NL, US and Central Europe
• Premium growth led by Asia and Central Europe
• Rise in operating expenses due to investments in growth Asia and restructuring Netherlands
• Embedded Value life business increases 22.9% to EUR 27.6 bn
• Value of New Business rises 27.4% driven by strong sales and higher returns
• Historically low investment losses (EUR -12 m), thanks to recovery US
9.3
Full year 2005 results 21
• Underlying profit growth driven by Central Europe, Netherlands, and non-life Belgium
• Underlying profit from Central Europe up 44.1% driven by Poland and Hungary
• Underlying profit rise NL (+23%) boosted by high investment income and release provisions
• Staff reductions Nationale-Nederlanden proceeding ahead of plan
• Strong rise in VNB Netherlands (64%) due to sharply improved margins
• Assets under Management increase 14.1% to EUR 169 bn
Europe AmericasAsia/
Pacific
ING Insurance
Profit & loss accountin EUR million 2005 2004
% change
Premium income 10,702 11,369 -5.9
Operating expenses 1,870 1,768 5.8
Total profit before tax 2,031 1,623 25.1
0.9
6.0
% changeunderlying
VNB: EUR 226 m (+64%)
IRR: 14.6% (12.4%)
AuM: EUR 169.3 bn
(EUR 148.4 bn end 2004)2,021 1,612 25.4Underlying profit before tax
Insurance Europe: strong growth Central Europe
Full year 2005 results 22 Europe AmericasAsia/
Pacific
ING Insurance
• Strong underlying profit growth in the United States and Canada
• US profits up 27.4%, driven by retirement services and annuities
• Benign credit environment, higher AuM and investment performance support US results, but will be more challenging if interest rates continue to rise
• US composite margin increased to 162 bps (from 134 bps)
• Canadian non-life profit rise driven by continued strong underwriting result
• Expense growth reflects acquisition Allianz Canada and strategic investments in US
• Strict pricing discipline leads to improvement VNB and IRR
• Mexican result declined due to claims and expenses from hurricanes
• Assets under Management increase 22.5% to EUR 202 bn
VNB: EUR 207 m (+19.7%)
IRR: 11.1% (10.7%)
AuM: EUR 201.7 bn
(EUR 164.6 bn end 2004)
Profit & loss accountin EUR million
Premium income 22,744 22,761 -0.1
Operating expenses 2,397 2,202 8.9
Total profit before tax 1,941 1,692 14.7
0
11.8
2005 2004%
change % change
underlying
1,979 1,601 23.6Underlying profit before tax
Insurance Americas: strong growth US, Canada
Full year 2005 results 23 Europe AmericasAsia/
Pacific
ING Insurance
VNB: EUR 373 m (+16.2%)
IRR: 15.0% (13.6%)
AuM: EUR 71.8 bn
(EUR 50.9 bn end 2004)
Profit & loss accountin EUR million
Premium income 12,286 9,469 29.7
Operating expenses 867 727 19.3
Total profit before tax 478 756 -36.8
49.5
23.0
2005 2004%
change % change
underlying
447 475 -5.9Underlying profit before tax
• Excl. reserve strengthening Taiwan, divestments and one-off items 2004, profit + 37%
• Strong premium growth in all countries, including India (+142%), Thailand (+43%) and China (+27%)
• Premium growth Japan boosted by success of SPVA product
• Excellent results in South Korea (profit +52%) driven by strong sales
• Expense increase reflects continuing investment in growth; expense ratios improved
• VNB increase 16.2%, mainly from South Korea and Taiwan
• Internal rate of return improved to 15.0% (13.6%)
• Taiwan reserve inadequacy remained in EUR 2.8-3.3 bn range as announced earlier
• Assets under Management increase 41.1% to EUR 72 bn
Insurance Asia/Pacific: solid growth engine
Full year 2005 results 24
• Underlying profit increase driven by solid income growth and low risk costs
• Income growth driven by higher savings and mortgages at ING Direct and Retail Banking, including prepayment penalties in the Netherlands
• Interest margin narrowed 5 bps to 1.17% due to flattening yield curve and growth ING Direct
• Loan loss provisions remained historically low at 3 bps (18 bps)
• Cost/income ratio improved 1%-point to 65.6% on an underlying basis
• After-tax underlying RAROC improved to 18.8% (16.4%) due to higher net profit and more stringent approach to capital allocation
2005 Underlying profit before tax*
Banking activities
Wholesale Banking
48%
RetailBanking39%
ING Direct13%
* Excludes component ‘Other‘
Profit & loss account
in EUR million
Total income 13,848 12,678 9.2
Operating expenses 8,844 8,795 0.6
Net profit 3,942 2,406 63.8
11.4
9.6
4,531 3,561 27.2
Additions to loan loss provisions 88 465
2005 2004%
change % change
underlying
Underlying profit before tax
42.0
Full year 2005 results 25
ING BankingWhole-
sale RetailING
Direct
C/I ratio: 58.2% from 63.6%
Risk costs: -7 bps from 12 bps
Econ. cap: EUR 8.5 bn (EUR 9.6 bn)
After-tax RAROC: 22.3% (12.2%)
RWAs: EUR 156.1 bn (EUR 147.5 bn end 2004)
5,957 5,871 1.5
3,466 3,734 -7.2
Profit before tax 2,599 1,945 33.6
4.8
12.1
-108 192
Profit & loss account
in EUR million
Total income
Operating expenses
Additions to loan loss provisions
2005 2004%
change % change
underlying
2,276 2,092 8.8Underlying profit before tax
Wholesale Banking: focus on key clients, products
• Underlying profit rises 8.8% driven by historically low risk costs and strong performance of the international network, mitigated by several non-recurring costs
• Income growth supported by ING Real Estate and focus on key products
• Release of loan loss provisions due to benign credit environment and improved risk management
• Interest margin under pressure; challenging yield curve
• Underlying expenses high due to several non-recurring items
• Underlying after-tax RAROC up to 16.7% (14.9%), reflecting more efficient use of capital in the international network
Full year 2005 results 26
ING BankingWhole-
sale RetailING
Direct
C/I ratio: 66.1% from 73.2%
Risk costs: 11 bps from 25 bps
Econ. cap: EUR 3.4 bn (EUR 3.1 bn)
After-tax RAROC: 36.0% (26.2%)
RWAs: EUR 89.8 bn (EUR 76.5 bn end 2004)
Profit & loss account
in EUR million
Total income 5,796 5,062 14.5
Operating expenses 3,829 3,703 3.4
Profit before tax 1,877 1,175 59.7
15.5
5.7
Additions to loan loss provisions 90 184
2005 2004%
change % change
underlying
1,815 1,168 55.4Underlying profit before tax
• Underlying profit up 55% due to strong growth in the Netherlands and Belgium
• Solid income growth driven by savings and mortgages, incl. high prepayment income
• Interest margins narrowed and expected to remain under pressure in current interest rate environment
• Continued strong performance Private Banking
• Significant improvement in cost efficiency; C/I ratio decreased 7%-points to 66.1%
• Announced streamlining and outsourcing initiatives in Ops&IT on track
• Low risks costs in Poland; roll-out self-banking concept in Romania on track
Retail Banking: strong top-line growth in Benelux
Full year 2005 results 27
ING BankingWhole-
sale RetailING
Direct
C/I ratio: 65.9% from 69.3%
Risk costs: 17 bps from 22 bps
Econ. cap: EUR 3.1 bn (EUR 2.4 bn)
After-tax RAROC: 14.9% (11.3%)
RWAs: EUR 73.8 bn (EUR 50.1 bn end 2004)
* Including ING Card
Profit & loss account *in EUR million 2005 2004
% change
2,119 1,709 24.0
1,396 1,185 17.8
(Underlying) Profit before tax 617 435 41.8
106 89
Total income
Operating expenses
Additions to loan loss provisions
• Strong profit growth driven by savings and mortgages, against backdrop of challenging interest rate environment
• Continuing strong commercial performance growth in all countries
• 14.7 million customers end 2005; 15 millionth customer in January 2006
• Funds entrusted +29% to EUR 188 bn; off-balance (mainly mutual) funds almost doubled to EUR 10.8 bn
• Mortgages + 66% to EUR 55 bn
• Operational costs-to-assets ratio improved to 40 bps from 44 bps in 2004
• Interest margin was 0.89% in the fourth quarter, up 2 bps from third quarter
ING Direct: strong growth in savings, mortgages
Full year 2005 results 28
• Strong overall 2005 performance
• Double-digit underlying income growth, higher returns and improved
efficiency ratios
• Strategy focused on value creation for shareholders is paying off
• Returns increased in all lines of business
• Growth engines – ING Direct, retirement services and life insurance in
developing markets – continued strong performance
• Steps taken to improve efficiency in mature markets
• Impact challenging interest rate environment mitigated by some
favourable market conditions
Conclusions on financial results
Full year 2005 results 29
ReturnReturn
GrowthGrowth
ExecutionExecutionShareholder
Value
Strategic priorities 2006
1. Organic growth
2. Balance growth and return to increase shareholder value
3. Improve cost efficiency, while continue to invest in future growth
4. Further strengthen compliance
Continue strategic direction in 2006
Full year 2005 results 30
Domestic markets• In line with nominal GDP growth
• Supplemented by:
• Leveraging customer base to gain market position
• Efficiency gains
• Improved returns / capital efficiency
Growth engines
• ING Direct – growth model in mature markets
• Retirement Services – driven by strong demand from aging population
• Life insurance developing markets – markets with strong potential
Long-term growth potential
Full year 2005 results 31
ING – a leading global Asset Manager
Total Assets under Management, including ING Real Estate (in EUR bn)
0
100
200
300
400
500
600
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
547
112
Global strategy Investment Management (ING IM)
1. Build on global manufacturing capabilities, scale and (cross) regional distribution strength
2. Continue successful innovation to meet client needs (e.g. closed-end funds)
3. Capitalize on improved investment engines in US, Europe and Asia/Pacific
Asia/Pacific• Increase penetration of ING funds in insurance products
• Intensify banking distribution partnerships
Europe• Take advantage open architecture and growth in pension assets (demographics and pension reforms)
Americas• Increase penetration of ING funds in insurance products
• Capital market linked products (closed-end funds) and alternative assets
Strong growth due
to net inflows,
mitigated by significant weakening
dollar
CAGR 19%
Full year 2005 results 32
ING Real Estate
Major portfolio acquisitions 2005
• Gables Residential Trust EUR 2.3 bn
• Abbey National portfolio EUR 1.7 bn
• Coop Norden portfolio EUR 442m
Strategic priorities
• Investment Management: Europe + Asia
• Finance: ongoing international diversification
• Development: Europe, controlled growth Australia and United States
Global ranking (based on AuM)*
1. ING Real Estate
2. Prudential Real Estate
3. RREEF / Deutsche Bank Real Estate
4. TIAA – CREF
5. Principal Real Estate
* Source: Pensions&Investment, data 30 June 2005
Total business portfolio (in EUR bn)
0
10
20
30
40
50
60
70
80
2000 2001 2002 2003 2004 2005
Investment Management Finance Development
70
26
CAGR 22%
Full year 2005 results 33
Managing for value• 7000 senior managers trained
• Phased roll-out to all business units
• Value metrics included in business planning
Capital Management• Centralised team to manage capital
• Allocation to most value creating business
• Increased efficiency in Group funding costs
Risk analytics• Central team to monitor Group-wide risks
• Risk Dashboard
• Clear benefit of diversification
Compliance
• Increased external regulatory requirements
• Significant upgrade compliance organisation
• Performance culture
• Customer centricity
Changing culture Changing processes
Group priorities / initiatives
Full year 2005 results 34
Looking forward 2006
• Interest environment will remain challenging
• Risk costs and non-life claims expected to return gradually to more
normal levels
• Expected effective tax rate in the range 20%-25% for the coming years
• Confidence in growth of underlying business
• Confidence in ability to continue to create value for shareholders
Full year 2005 results 35
Changes Executive Board proposed to AGM April
ING Group
Chairman, Michel Tilmant
Vice-Chairman and CFO, Cees Maas
Insurance Europe
Jacques de Vaucleroy
Insurance Americas
Tom McInerney
ING Direct
Dick Harryvan
Retail Banking
Eli Leenaars
Wholesale Banking
Eric Boyer de la Giroday
Insurance Asia/Pacific
Hans van der Noordaa
Full year 2005 results 36
• Strategy is delivering value
• Strong underlying top-line growth
• Better returns and improved efficiency
• Confidence in growth underlying business
Key points
16 February 2006
Full Year 2005 Results
Delivering value through higher returns and profitable growth
Full year 2005 results 38
Appendix
Full year 2005 results 39
Underlying profit before tax
in EUR million 2005 2004 %change
Insurance 3,975 3,564 11.5
Europe 2,021 1,612 25.4
Americas 1,979 1,601 23.6
Asia / Pacific 447 475 -5.9
Other* -472 -124
Banking 4,531 3,561 27.2
Wholesale Banking 2,276 2,092 8.8
Retail Banking 1,815 1,168 55.4
ING Direct 617 435 41.8
Other** -177 -134
Total ING Group 8,506 7,125 19.4
Contribution of business lines 2005*
*) Excludes component ‘Other‘ in banking and insurance
*) Other insurance results is mainly interest on core debt, USD hedge 2004 and gains on equity investments that are not allocated to the three business lines
**) Other banking results consist mainly of interest expenses that are not allocated to the business lines
Profit distribution
InsuranceEuropeInsuranceAmericasInsuranceAsia/Pacific
22%
22%
5%24%
20%
7%
WholesaleBankingRetailBanking
ING Direct
Full year 2005 results 40
31/12/05 30/06/05 01/01/05(*)
ING GROUP
Balance sheet total (EUR bn) 1,159 1,107 965 Capital and reserves (EUR bn) 36.7 35.3 28.2 Capital and reserves per share (EUR) 16.96 16.27 12.95
Debt/equity ratio Group 9.3% 9.8% 11.9%
Net revaluation reserve (EUR bn)• Shares 4.2 3.3
2.4 • Fixed income securities 5.8 8.8 6.0
INSURANCEDebt/equity ratio insurance 13.2% 14.3% 14.3%Capital Coverage ratio 259% 228% 200%
BANKINGBIS ratio 10.86% 10.55% 10.46%Tier-1 ratio 7.32% 7.20% 6.92%RWAs (EUR bn) 319.7 305.5 274.1
Capital position
(*) restated to IFRS accounting
Full year 2005 results 41
Recurring expenses Insurance
2 Reorganisation provision and new IT systems3 Strategic projects include enhanced web capabilities/platforms
1 Includes sale ING Re US, Life of Georgia, P&C Chile, Australia non-life and acquisition Allianz Canada
(In EUR million) 2005 2004
Total operating expenses Insurance 5,195 4,746 9.5%
Impact divestments / special items¹ 119 157
Release healthcare provisions / pensions -47Reorganisation Nationale-Nederlanden² 94 21Reorganisation Ops/IT 23Restructuring US 25 13Broker initiative Canada 27Strategic projects/SOX/Mutual fund optimal. US³ 83 35Release tax wage provision Asia -30Other 40 19
Total non-recurring items 245 58
FX impact -77
Total recurring expenses Insurance 4,831 4,608 4.9%
%change
Full year 2005 results 42
Recurring expenses Banking
2 Impact acquisition Mercator Bank and sale ING Securities Bank France (Ferri) and Banque Baring Brother Suisse1 Includes sale BHF-Bank, CenE Bankiers, Baring Asset Management and Asian cash equity business; in 2004 restr.provision Wholesale
(In EUR million) 2005 2004
Total operating expenses Banking 8,844 8,795 0.6%
Impact divestments / special items¹ 55 774
Release healthcare provisions / pensions -119Consolidation Postkantoren BV 168Impairments ING Real Estate 78Reorganisation Ops/IT 47 15Accelerated software depreciation 27Provision Williams de Broë 81Mercator Bank / Ferri / Banque Baring Br.Suisse² 92 56Other³ 134 148
Total non-recurring items 508 219
FX impact -51
Total recurring expenses Banking 8,281 7,853 5.5%
%change
3 One-time payment Collective Labour agreement, provisions legal claims, acquisition Abbey National, redundancy provisions
Full year 2005 results 43
Certain of the statements contained herein are statements of future expectations and other forward-looking statements. These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those in such statements due to, among other things, (i) general economic conditions, in particular economic conditions in ING’s core markets, (ii) performance of financial markets, including emerging markets, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) interest rate levels, (vii) currency exchange rates (viii) general competitive factors, (ix) changes in laws and regulations, (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.
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