SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 6-K

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

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): 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)(7): o

     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)

The Press Release issued on August 11, 2010.

		CORPORATE COMMUNICATIONS
PRESS RELEASE		11 August 2010

ING posts 2Q underlying net profit of EUR 1,202 million

•

2Q underlying net profit rises to EUR 1,202 million from EUR 212 million in 2Q2009 and EUR 1,018 million in 1Q2010

	•		Net profit increases to EUR 1,090 million from EUR 71 million in the same quarter last year
	•		Divestments and special items total EUR -112 million for the second quarter
	•		Net profit per share increases to EUR 0.29 versus EUR 0.03 in 2Q2009
	•		Return on IFRS equity climbs to 11.7% for the first half of 2010
	•		First-half underlying net profit increases to EUR 2,220 million from EUR -23 million in 1H2009

•

Bank 2Q underlying profit before tax EUR 1,613 million vs. EUR -186 million in 2Q2009 and EUR 1,278 million in 1Q2010

	•		Income continues to increase, supported by volume growth at healthy margins and lower negative market impacts
	•		Cost/income ratio improves to 52.6%, approaching ambition of 50% by 2013
	•		Addition to loan loss provisions declined further to EUR 465 million or 55 bps of average risk-weighted assets
	•		Volumes increase: funds entrusted up EUR 13.6 billion, mortgage production EUR 6.1 billion, midcorps and SME up EUR 2.4 billion

•

Insurance 2Q underlying result before tax EUR -115 million vs. EUR 242 million in 2Q2009 and EUR 269 million in 1Q2010

	•		Operating result increases slightly from 1Q2010 but declines to EUR 419 million from EUR 482 million in 2Q2009
	•		Underlying result impacted by EUR -521 million DAC unlocking in US, mainly on closed block, as equity markets decline
	•		New sales increase 22.2% from year earlier, excluding FX and closed blocks, driven by Asia, US and Latin America

•

Shareholders’ equity increases by EUR 3.4 billion to EUR 41.6 billion or EUR 11.02 per share

	•		Bank core Tier 1 ratio improves to 8.6%, well above the 7.5% target
	•		Insurance Groups Directive Solvency I ratio improves to 267%
	•		Group debt/equity ratio improves to 11.3% and FiCo ratio increases to 167%
	•		ING will not pay an interim dividend over the first half of 2010

CHAIRMAN’S STATEMENT

“ING continued to build earnings momentum in the second quarter, particularly at the banking business, as commercial growth gained pace and market conditions further improved,” said Jan Hommen, CEO of ING Group. “The underlying net profit for the Group increased to EUR 1,202 million in the second quarter, up from EUR 212 million a year earlier when markets were more volatile. Underlying earnings also continued their upward trend compared with the strong first quarter, increasing 18% from EUR 1,018 million, despite concerns about economic recovery in the eurozone that dominated markets during the quarter.”

“Sovereign risk concerns, combined with fear of a ‘double dip’ scenario, had a significant impact on interbank markets in the euro area as well as on equity markets worldwide. The sharp decline in equity markets in the quarter severely impacted the results of our US insurance operations. However, the bank continued to benefit from its strong liquidity and funding profile, with lending growth funded entirely by customer deposits, and refinancing of long-term funding already completed for the year.”

“The Bank led the earnings improvement as commercial growth remained robust and negative market impacts continued to decline. Interest income was stable as margins on savings and lending remained healthy and volume growth picked up, offsetting a small decline from Financial Markets. Provisions for loan losses continued to trend lower as the US housing market stabilised and lower provisions were taken in Commercial Banking. However risk costs in the Benelux mid-corporate and SME segments remain elevated, reflecting a still weak economic environment. Efficiency at the bank improved further, reflecting the significant cuts made last year, and the cost/income ratio declined to 52.6%, approaching the target of 50% for 2013.”

“The measures taken over the past six quarters to strengthen our balance sheet have reduced vulnerability to market shocks. ING Bank comfortably passed the European Union’s stress test last month, and we are pleased that the increased disclosure from the industry appears to have helped stabilise markets and restore confidence in the sector. We also welcome the increased clarity around changes under Basel III, and the bank is well positioned for this new regulatory environment, with a healthy liquidity position and funding mix.”

“The decline in equity markets impacted underlying results from Insurance, particularly on the closed block in the US, however the operating profit from Insurance increased slightly from the first quarter. Compared with the second quarter last year, operating results were lower as investment margins remained under pressure in the low interest rate environment. Administrative expenses increased, due in part to investments to support growth initiatives and business improvement programmes. Insurance sales momentum continued, resulting in an increase of 22.2%, excluding currency effects and the closed blocks in Japan and the US.”

“Our commercial growth in the second quarter demonstrates the dedication of our employees and the resilience of both our banking and insurance franchises during a period of economic uncertainty as we strive to improve our service and put our customers at the centre of everything we do. Following the significant cost cuts achieved last year, we have shifted our focus to achieving operational excellence to secure a sustainable cost advantage in both the Bank and the Insurer.”

“We continue to work towards the operational separation of our Banking and Insurance operations, with the aim to have the businesses operating on an arm’s-length, stand-alone basis by the end of this year. Good progress was made in the second quarter. We currently have 1,100 projects underway worldwide, with separation costs estimated at EUR 110-150 million for 2010, of which EUR 30 million was taken in the first half. At the same time we are working to improve the performance of the Insurance business, while reviewing our options so we will be ready to act when markets are favourable.”

KEY FIGURES

Group

		2Q2010				2Q2009				Change				1Q2010				Change				1H2010				1H2009				Change
Profit and loss data (in EUR million)
Underlying result before tax			1,498				56				n.a.				1,547				-3	%			3,044				-129
Underlying net result			1,202				212				467	%			1,018				18	%			2,220				-23
Divestments and special items			-112				-141								305								195				-699
Net result			1,090				71				n.a.				1,326				-18	%			2,416				-722
Balance sheet data (end of period, in EUR billion)
Total assets															1,236				3	%			1,273				1,188				7	%
Shareholders’ equity															38				9	%			42				22				87	%
Capital ratios (end of period)
ING Group debt/equity ratio															11.8	%							11.3	%			13.5	%
Bank core Tier 1 ratio															8.4	%							8.6	%			7.3	%
Insurance IGD Solvency I ratio															261	%							267	%			257	%
Share information
Net result per share (in EUR)1)			0.29				0.03				n.a.				0.35				-17	%			0.64				-0.36
Shareholders’ equity per share (end of period, in EUR)															10.10				9	%			11.02				10.99				0	%
Shares outstanding in the market (average over the period, in milion)			3,783				2,024				87	%			3,785				-0	%			3,783				2,024				87	%
Other data (end of period)
Underlying return on equity based on IFRS equity			12.0	%			4.1	%							11.3	%							11.7	%			-0.2	%
Employees (FTEs, end of period)															105,140				1	%			105,831				108,317				-2	%

Banking operations

		2Q2010				2Q2009				Change				1Q2010				Change				1H2010				1H2009				Change
Profit and loss data (in EUR million)
Interest result			3,247				3,165				3	%			3,254				-0	%			6,501				6,188				5	%
Total underlying income			4,384				2,900				51	%			4,176				5	%			8,560				6,663				28	%
Operating expenses			2,307				2,269				2	%			2,401				-4	%			4,708				4,581				3	%
Addition to loan loss provision			465				817				-43	%			497				-6	%			962				1,498				-36	%
Underlying result before tax			1,613				-186								1,278				26	%			2,890				583				396	%
Key figures
Interest margin			1.36	%			1.31	%							1.42	%							1.39	%			1.24	%
Underlying cost/income ratio			52.6	%			78.2	%							57.5	%							55.0	%			68.8	%
Underlying risk costs in bp of average RWA			55				96				-43	%			59				-7	%			57				88				-35	%
Risk-weighted assets (end of period, in EUR billion, adjusted for divestm.)															333				3	%			344				344				0	%
Underlying return on equity based on IFRS equity			14.3	%			-0.2	%							11.7	%							13.0	%			4.3	%
Underlying return on equity based on 7.5% core Tier 1 1)			18.7	%			-1.6	%							14.9	%							16.8	%			3.5	%

Insurance operations

		2Q2010				2Q2009				Change				1Q2010				Change				1H2010				1H2009				Change
Margin analysis (in EUR million)
Investment margin			367				356				3	%			329				12	%			696				654				6	%
Fees and premium-based revenues			1,212				1,055				15	%			1,200				1	%			2,412				2,136				13	%
Technical margin			177				300				-41	%			182				-3	%			360				473				-24	%
Income non-modelled life business			30				25				20	%			32				-6	%			62				52				19	%
Life & ING IM operating income			1,787				1,737				3	%			1,744				2	%			3,530				3,315				6	%
Administrative expenses			798				722				11	%			757				5	%			1,555				1,464				6	%
DAC amortisation & trail commissions			428				387				11	%			434				-1	%			861				799				8	%
Life & ING IM expenses			1,226				1,109				11	%			1,191				3	%			2,417				2,262				7	%
Life & ING IM operating result			561				628				-11	%			552				2	%			1,114				1,053				6	%
Non-life operating result			69				70				-1	%			48				44	%			117				104				13	%
Corporate Line operating result			-212				-216								-185								-397				-420
Operating result			419				482				-13	%			415				1	%			834				737				13	%
Non-operating items			-534				-239								-146								-680				-1,449
Underlying result before tax			-115				242				-148	%			269				-143	%			154				-712
Key figures
Administrative expenses / operating income (Life & ING IM)			44.7	%			41.6	%							43.4	%							44.1	%			44.2	%
Life general account assets (end of period, in EUR billion)															153				9	%			167				144				16	%
Investment margin / life general account assets 1) (in bps)			83				101								84
ING IM Assets under Management (end of period, in EUR billion)															362				4	%			376				322				17	%
Underlying return on equity based on IFRS equity 2)			1.1	%			8.9	%							3.0	%							2.0	%			-9.3	%

CONSOLIDATED RESULTS

ING Group posted an underlying net profit of EUR 1,202 million in the second quarter, up from EUR 212 million in the same quarter last year and EUR 1,018 million in the first quarter. Market conditions improved and the Bank continued to benefit from healthy interest margins, lower loan loss provisions and cost reductions. The operating results for Insurance rose slightly from the first quarter, but underlying results were affected by a write-down of deferred acquisition costs in the US due to the sharp decline of equity markets in the second quarter. The net profit for the Group was EUR 1,090 million, which included EUR -112 million from divestments and special items. The underlying net return on equity rose to 11.7% for the first half of 2010.

UNDERLYING NET RESULT (in EUR million)

Volumes continued to increase during the quarter in both Banking and Insurance. In Banking, funds entrusted grew by EUR 13.6 billion (excluding currency effects). Net mortgage production picked up compared with the first quarter, reaching EUR 6.1 billion in the second quarter. Other lending increased by EUR 2.4 billion, mainly due to midcorporate and SME clients in the Benelux. Demand for commercial lending remained subdued, reflecting the still fragile economic recovery. Excluding currency effects and the closed blocks in the US and Japan, Insurance sales advanced 22.2%, driven by Asia, the US and Latin America.

Negative market impacts diminished compared with the second quarter last year, particularly in the Bank. However, Insurance results were affected by the sharp decline in equity markets during the quarter. Credit losses and impairments on debt securities were EUR 191 million versus EUR 481 million in the second quarter last year and EUR 181 million in the previous quarter. Negative revaluations on real estate investments declined to EUR 58 million from EUR 584 million in the second quarter last year and were roughly in line with EUR 52 million in the first quarter as property markets showed signs of stabilising. Impairments on real estate development projects declined to EUR 84 million from EUR 151 million in the first quarter of 2010, but they increased from EUR 54 million in the second quarter of 2009. Equity market declines resulted in a DAC unlocking charge in the US of EUR –521 million in the second quarter versus a positive DAC unlocking of EUR 176 million in the second quarter last year.

Banking

ING’s banking results continued to improve in the second quarter, driven by volume growth at attractive margins, lower risk costs and cost containment. The underlying result before tax increased to EUR 1,613 million from EUR 1,278 million in the first quarter and a loss of EUR 186 million in the second quarter last year, when market-related impacts were substantial. The underlying return on equity for the bank increased to 13.0% in the first half, or 16.8% based on a 7.5% core Tier 1 ratio.

Total underlying income jumped 51.2% compared with the second quarter of 2009 and rose 5.0% from the first quarter of 2010. This was driven by higher interest results, higher commission income and positive market impacts versus significant negative market impacts in the second quarter of last year. Impairments on debt and equity securities and negative revaluations on real estate continued to diminish and were more than offset by capital gains on the sale of bonds and equities and positive fair value changes on part of ING Bank’s own Tier 2 debt.

The interest result increased 2.6%, mainly due to higher margins and growth in client balances. The total interest margin was 1.36%, up five basis points compared with the second quarter of 2009 but down six basis points from the first quarter, driven largely by lower interest results in Financial Markets. Margins on lending and savings remained stable.

Efficiency continued to improve, reflecting ongoing cost containment following last year’s significant cuts. Underlying operating expenses edged up 1.7% to EUR 2,307 million. Excluding currency effects and impairments on real estate development projects, expenses fell 2.6% from the second quarter last year. The cost/income ratio improved to 52.6%, or 51.8% excluding market-related impacts.

Risk costs continued to decline towards more normalised levels; this was mainly driven by improvements in Structured Finance, Real Estate Finance and the US mortgage book. Meanwhile, provisions remained elevated for mid-corporate and SME clients in the Benelux. ING Bank added EUR 465 million to the loan loss provisions in the second quarter, down from EUR 817 million in the second quarter of 2009 (adjusted for divestments) and EUR 497 million in the first quarter of 2010. Risk costs amounted to 55 basis points of average risk-weighted assets. In the coming quarters, ING expects net provisions to remain at around the level seen in the first half of 2010.

The underlying result before tax of Retail Banking more than tripled to EUR 944 million compared with the same quarter last year. It was up 8.9% from the first quarter, driven by strong income growth on higher margins across the Retail activities and lower impairments at ING Direct USA. The result of Retail Netherlands surged 77.1% to EUR 356 million and was on par with the strong first-quarter results, reflecting an improved margin on savings and lower operating expenses following the cost-savings initiatives taken in 2009. Retail Belgium’s result declined to EUR 140 million from EUR 189 million in

the second quarter last year and from EUR 174 million in the first quarter of 2010. This was mainly due to a lower interest result as reinvestment returns declined in the current low interest rate environment. ING Direct posted an underlying profit before tax of EUR 406 million, up from EUR 269 million in the first quarter and a loss of EUR 175 million in the second quarter last year. This improvement was driven by higher interest results, lower impairments, and lower loan loss provisions on the US mortgage portfolio. Retail Central Europe posted a profit of EUR 27 million, down from EUR 46 million in the second quarter last year and EUR 45 million in the first quarter of 2010. This decline was mainly due to higher expenses and risk costs. Retail Asia’s result was EUR 15 million, up from EUR 2 million in the same period last year, on higher income from ING Vysya Bank, a higher result from TMB Bank in Thailand and a dividend from Kookmin Bank.

Commercial Banking excluding ING Real Estate posted an underlying profit before tax of EUR 568 million, a 30.0% increase from the second quarter last year but down 16.8% from the strong first quarter, reflecting lower income from Financial Markets due to reduced customer activity and less favourable market conditions. Results in the second quarter were supported by higher margins in General Lending and Structured Finance and a sharp decline in risk costs compared with the same period last year, although loan loss provisions increased from the first quarter. Expenses rose 4.7%, largely due to currency effects, but were down 5.0% compared with the first quarter. ING Real Estate’s loss narrowed to EUR 4 million from a loss of EUR 580 million in the second quarter last year as negative revaluations diminished to EUR 32 million. Impairments on development projects were EUR 84 million, down from EUR 151 million in the first quarter, but up from EUR 54 million in the second quarter last year.

The Corporate Line Banking reported an underlying profit before tax of EUR 105 million versus a loss of EUR 307 million in the second quarter last year due to a EUR 43 million positive fair value change on the Bank’s own Tier 2 debt, compared with a negative fair value change of EUR 168 million a year earlier, as well as an EUR 86 million capital gain on the sale of an equity stake.

Insurance

Operating results from ING’s Insurance operations increased slightly from the first quarter to EUR 419 million in the second, but were down from the second quarter last year, reflecting a lower technical margin and higher administrative expenses in the life business. The underlying result before tax was significantly affected by the sharp decline in equity markets in the second quarter, which adversely impacted the US legacy variable annuity business.

The operating result from Life Insurance and Investment Management fell to EUR 561 million from EUR 628 million in the second quarter of 2009, but increased slightly from the first quarter due to currency effects. The investment margin improved over the first quarter, supported by seasonally higher dividend income. But it was down 1.3% on a constant currency basis compared with the second quarter last year as investment spreads remained depressed.

The investment spread in the second quarter was 83 basis points of the life insurance general account compared with 84 basis points in the first quarter and 101 basis points in the second quarter of 2009. The life insurance general account portfolio grew to EUR 167 billion from EUR 153 billion at the end of the first quarter of 2010 and EUR 144 billion at the end of the second quarter of 2009. Currency effects contributed EUR 8 billion to the increase this quarter.

Fees and premium-based revenues grew 14.9%, or 6.1% excluding currency effects, to EUR 1,212 million. This was driven by higher premium-based revenues in Asia thanks to higher sales of corporate-owned life (COLI) products in Japan and endowment products in Hong Kong. Fees on assets under management increased, most notably at ING IM, as fund values increased.

The technical margin was EUR 177 million versus EUR 300 million in the second quarter of 2009. This decrease was largely due to lower mortality results in the US, lower surrender results in Central and Rest of Europe and a EUR 54 million one-off release of a morbidity provision in the Benelux in the second quarter of 2009. Compared with the first quarter of this year, the technical margin decreased slightly from EUR 182 million.

Life and ING IM administrative expenses rose 10.5%, or 4.0% excluding currency effects, reflecting higher compensation-related expenses and the roll-out of the wealth management strategy in Latin America. The ratio of Life and ING IM administrative expenses to operating income deteriorated from 41.6% in the second quarter of 2009 to 44.7%, against the overall Insurance target of 35% for 2013.

The Non-Life operating result of EUR 69 million was flat compared with the EUR 70 million in the second quarter of 2009, but it jumped 43.8% versus the first quarter of 2010 due to improved underwriting results in the Benelux and a higher result from ING’s stake in SulAmerica.

The EUR –212 million operating result for the Corporate Line Insurance was slightly better compared with the EUR -216 million in the second quarter of 2009. The improvement was mainly due to lower interest on hybrids.

Negative market impacts, particularly the decline of equity markets in the second quarter, continued to affect the underlying results of the Insurance operations. The total underlying result before tax for Insurance declined to EUR –115 million from EUR 242 million in the second quarter of 2009 and EUR 269 million in the first quarter of 2010. The loss was driven by EUR –521 million of DAC unlocking in the US, reflecting the 11.9% decline in the S&P 500 in the second quarter.

Gains/losses and impairments on investments worsened to EUR –143 million from EUR –34 million in the second quarter of 2009. Capital losses and impairments on debt securities in the US, the Benelux and Central and Rest of Europe were the primary drivers, with EUR 82 million of losses taken in the Benelux and Central and Rest of Europe on the sale of EUR 0.6 billion notional in Southern European bonds.

Revaluations improved to EUR 269 million from EUR -305 million in the second quarter of 2009. This year’s quarter benefited from EUR 88 million of positive revaluations on private equity and alternative assets as well as EUR 194 million of marked-to-market adjustments, mainly related to CMOs and interest rate hedges in the US and the Netherlands.

Insurance Benelux posted an operating result of EUR 210 million, a decline from EUR 281 million in the second quarter last year, due to changes in technical reserves in both periods. Compared with the first quarter, the operating result increased 39.1% driven by seasonally higher dividend income in the investment margin and lower operating expenses.

Insurance Central and Rest of Europe posted an operating result of EUR 75 million, down from EUR 84 million in the second quarter of last year and equal to the first quarter. This decrease was mainly driven by a lower investment margin as interest rates declined and a lower technical margin due to fewer surrenders.

Operating profit from Insurance US declined to EUR 121 million from EUR 173 million a year earlier, primarily due to a decline in the technical margin due to adverse mortality results in Individual Life as well as higher administrative expenses.

Insurance Latin America’s operating result improved to EUR 72 million from EUR 48 million in the second quarter of last year. This was supported by higher fee income from pension funds and an improvement in the investment margin.

Operating profit from Insurance Asia/Pacific increased to EUR 120 million from EUR 75 million in the second quarter last year, driven by higher fees and premium-based revenues and an improvement in the investment margin.

ING Investment Management’s operating profit slipped to EUR 33 million from EUR 38 million in the second quarter last year. An increase in fees on assets under management was more than offset by higher operating expenses due to compensation-related expenses and investments to support the growth of the business.

Excluding the closed books and currency effects, new sales (APE) from the on-going businesses grew 22.2%, driven by growth in Asia/ Pacific, the US, and Latin America. In Asia/Pacific, new sales advanced 36.9% (excluding closed blocks and currency effects) thanks to continued strong COLI sales in Japan and the introduction of new products in Hong Kong. In the US, new sales rose 29.5% (excluding the closed block and currency effects), driven by higher sales of stable value retirement plans and individual retirement accounts, whereas sales of fixed annuities and term life fell. In Latin America, sales grew 31.7% excluding currency effects, driven by increased pension sales in Mexico, the inclusion of tax-favoured voluntary pension sales in Colombia and mutual fund sales in Chile, which were not included in the sales figures prior to 2010. In the Benelux, sales declined 4.4% due to competitive pressure in the Netherlands and lower sales of the Optima product in Belgium. New sales in Central and Rest of Europe fell 17.5% excluding currency effects, as a consequence of the difficult economic circumstances.

Net profit

Net profit for ING Group was EUR 1,090 million, up from EUR 71 million in the second quarter of 2009. Net results in the second quarter this year included EUR -106 million in special items related to various restructuring programmes as well as EUR -6 million in results from divested units.

NET RESULT

The underlying effective tax rate decreased to 18.4% from 33.0% in the first quarter, mainly caused by the high tax benefit for the pre-tax loss in Insurance.

Return on equity

The underlying net return on equity for the Group improved to 11.7% for the first half from 11.3% in the first quarter and -0.2% in the first half of last year. The underlying return on equity for the Bank increased to 13.0%, or 16.8% based on a 7.5% core Tier 1 ratio. The underlying return on equity for Insurance was 2.0% in the first half of 2010, up from -9.3% a year earlier.

RETURN ON EQUITY (year-to-date)

BALANCE SHEET

ING Group’s balance sheet increased by EUR 36 billion in the second quarter to EUR 1,273 billion at the end of the June 2010, due almost entirely to foreign exchange movements. Shareholders’ equity increased EUR 3.4 billion to EUR 41.6 billion (or EUR 11.02 per share) driven by EUR 2.4 billion in currency effects and EUR 1.1 billion net result.

At the Banking business, loans and advances to customers increased to EUR 586 billion, up EUR 23 billion compared with the end of March 2010, of which EUR 12 billion was due to currency effects. Excluding currency changes, residential mortgages increased by EUR 7 billion, mainly at ING Direct and Retail Benelux. Lending to (mid)-corporates, SMEs and other also increased by EUR 2 billion, while securities at amortised costs and the IABF decreased by EUR 3 billion.

Investments on the Bank balance sheet decreased to EUR 112 billion, down EUR 2 billion despite EUR 2 billion of positive currency effects, driven by the ongoing shift from investments to loans and

receivables in the Bank’s asset mix. Net redemptions and disposals amounted to EUR 4 billion, mainly at ING Direct.

On the interbank markets, ING Bank remained a net receiver of deposits. Amounts due from banks amounted to EUR 56 billion, down EUR 6 billion in the second quarter (despite a EUR 1 billion increase due to currency effects), mainly driven by EUR 5 billion lower unsettled balances from securities transactions. Amounts due to banks amounted to EUR 86 billion, a decline of EUR 11 billion, as EUR 7 billion lower unsettled balances from securities transactions and a EUR 6 billion decrease in bank deposits taken were partly compensated by currency impacts.

Financial assets at fair value through P&L were up EUR 9 billion of which EUR 4 billion from currency effects. The remaining increase was mainly attributable to EUR 14 billion higher trading and non-trading derivatives due to higher derivatives values following interest rate changes. This was in part offset by EUR 8 billion of lower securities borrowing and other money market activities. These developments are largely mirrored in the financial liabilities at fair value through P&L.

Customer deposits and other funds on deposits of the Banking operations increased by EUR 26 billion to EUR 523 billion, of which EUR 9 billion was due to currency exchange differences. Excluding currency effects, individual savings increased by EUR 3 billion and current account balances increased by EUR 7 billion, mainly in the Benelux. Corporate deposits grew by EUR 3 billion.

At the Insurance business, Investments available for sale grew by EUR 11 billion to EUR 124 billion. Of the increase, EUR 6 billion was due to currency effects, EUR 2 billion was due to positive revaluations and EUR 3 billion additions across all business lines. Investments for risk policyholders increased by EUR 2 billion due to positive FX changes of 9 billion, and negative revaluations due to lower market values of EUR 7 billion. On the liability side, insurance and investment contracts increased to EUR 272 billion, up EUR 13 billion, of which EUR 17 billion was due to currency effects, EUR 3 billion was due to an increase in life insurance provisions, offset by a decrease in provisions for risk of policyholders of EUR 7 billion due to lower market values.

CAPITAL MANAGEMENT

ING’s capital position further strengthened in the second quarter, supported by strong organic capital generation and currency effects. The core Tier 1 ratio of ING Bank increased from 8.4% to 8.6%, well above the 7.5% target as available core Tier 1 capital increased by EUR 1.8 billion. Risk-weighted assets increased 3.4% to EUR 343.9 billion due almost entirely to currency effects, however FX has a very limited impact on ING Bank’s core Tier 1 ratio due to ING’s hedging policy.

The Insurance Groups Directive (IGD) ratio for Insurance improved from 261% at the end of the first quarter to 267% at the end of the second. This was mainly due to currency effects. ING Group’s debt/ equity ratio decreased from 11.8% to 11.3%, driven by a strong increase in the adjusted equity of ING Group. The Financial Conglomerates Directive (FiCo) ratio for ING Group increased to 167% at the end of the second quarter from 162% at the end of the first quarter.

It is ING’s policy to pay dividends in relation to the long-term underlying development of cash earnings. Given the uncertain financial environment, ING has decided not to pay an interim dividend on ordinary shares over the first half of 2010.

APPENDIX 1 ING GROUP: CONSOLIDATED PROFIT AND LOSS ACCOUNT

ING Group: Consolidated profit and loss account

		Total Group1								Total Banking								Total Insurance
in EUR million		2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009
Gross premium income			6,796				7,192												6,796				7,192
Interest result Banking operations			3,218				3,126				3,247				3,165
Commission income			1,124				1,061				658				629				466				432
Total investment & other income			4,120				-1,384				480				-894				3,672				-447
Total underlying income			15,257				9,995				4,384				2,900				10,934				7,177
Underwriting expenditure			9,817				5,725												9,817				5,725
Staff expenses			1,864				1,736				1,322				1,259				542				477
Other expenses			1,332				1,401				879				944				453				457
Intangibles amortisation and impairments			106				66				106				66
Operating expenses			3,302				3,203				2,307				2,269				995				934
Interest expenses Insurance operations			159				177												220				259
Addition to loan loss provision			465				817				465				817
Other			17				17												17				17
Total underlying expenditure			13,759				9,939				2,772				3,086				11,048				6,935
Underlying result before tax			1,498				56				1,613				-186				-115				242
Taxation			276				-72				427				-85				-151				13
Minority interests			19				-83				17				-86				2				3
Underlying net result			1,202				212				1,169				-15				33				227
Net gains/losses on divestments							8																8
Net result from divested units			-6				12								-12				-6				24
Special items after tax			-106				-161				-62				-93				-44				-68
Net result			1,090				71				1,106				-120				-16				191

APPENDIX 2 ING GROUP: CONSOLIDATED BALANCE SHEET

ING Group: Consolidated balance sheet

		ING Group								ING Bank NV								ING Verzekeringen NV								Holdings/eliminations
in EUR million		30 June 2010				31 March 2010				30 June 2010				31 March 2010				30 June 2010				31 March 2010				30 June 2010				31 March 2010
Cash and balances with central banks			13,365				17,957				9,963				14,421				9,464				9,956				-6,062				-6,420
Amounts due from banks			56,109				61,624				56,109				61,624
Financial assets at fair value through P&L			274,374				262,536				150,125				141,391				125,918				121,833				-1,669				-688
Investments			237,113				227,497				112,197				113,754				124,916				113,743
Loans and advances to customers			612,753				590,316				585,824				563,055				34,134				29,925				-7,205				-2,664
Reinsurance contracts			6,394				5,937												6,394				5,937
Investments in associates			3,829				3,865				1,480				1,496				2,537				2,549				-188				-180
Real estate investments			3,709				3,683				2,368				2,343				1,069				1,065				272				275
Property and equipment			6,160				6,099				5,614				5,544				547				555
Intangible assets			6,295				6,186				2,440				2,401				4,105				4,026				-250				-241
Deferred acquisition costs			11,944				12,110												11,944				12,110
Assets held for sale			313				307								9				313				298
Other assets			40,238				38,101				29,178				26,735				10,701				10,756				359				610
Total assets			1,272,595				1,236,218				955,297				932,772				332,042				312,754				-14,744				-9,307
Shareholders’ equity			41,623				38,235				33,400				32,139				20,636				18,416				-12,413				-12,320
Minority interests			1,011				997				1,122				1,095				87				81				-198				-179
Non-voting equity securities			5,000				5,000																				5,000				5,000
Total equity			47,634				44,232				34,522				33,234				20,723				18,497				-7,611				-7,500
Subordinated loans			11,333				10,535				22,584				22,796				6,151				5,906				-17,402				-18,167
Debt securities in issue			124,020				129,628				113,406				119,150				3,988				3,888				6,626				6,591
Other borrowed funds			27,050				25,173												11,498				7,825				15,552				17,348
Insurance and investment contracts			271,592				258,825												271,592				258,825
Amounts due to banks			85,542				96,564				85,542				96,564
Customer deposits and other funds on deposits			511,263				488,076				522,655				496,560												-11,392				-8,484
Financial liabilities at fair value through P&L			152,919				142,811				150,877				139,212				3,848				4,258				-1,806				-659
Liabilities held for sale			253				227								2				253				225
Other liabilities			40,990				40,147				25,710				25,253				13,990				13,330				1,290				1,564
Total liabilities			1,224,961				1,191,986				920,774				899,537				311,319				294,257				-7,132				-1,808
Total equity and liabilities			1,272,595				1,236,218				955,297				932,772				332,042				312,754				-14,744				-9,307

APPENDIX 3 RETAIL BANKING: CONSOLIDATED PROFIT AND LOSS ACCOUNT

Retail Banking: Consolidated profit and loss account

										Retail Banking Benelux																Retail Direct & International
		Total Retail Banking								Netherlands								Belgium								ING Direct								Central Europe								Asia
in EUR million		2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009
Interest result			2,498				2,208				937				769				392				428				948				813				177				172				44				27
Commission income			343				336				123				123				93				98				41				44				73				64				13				8
Investment income			-45				-340				3				0				-2				7				-53				-351				1				3				5				1
Other income			15				-27				-5				36				30				21				-6				-80				-7				-13				2				10
Total underlying income			2,810				2,177				1,058				928				513				554				931				425				244				225				65				45
Staff and other expenses			1,570				1,572				569				619				329				323				434				428				196				167				43				35
Intangibles amortisation and impairments			13				3				10				-1				0				0				3				3				0				0				0				0
Operating expenses			1,583				1,574				579				618				329				323				436				431				196				167				43				35
Gross result			1,228				602				480				310				184				230				494				-5				48				57				22				10
Addition to loan loss provision			283				339				124				108				44				41				88				170				20				11				7				9
Underlying result before tax			944				264				356				201				140				189				406				-175				27				46				15				2
Client balances (in EUR billion)
Residential Mortgages			302.7				272.3				134.8				130.6				24.2				22.1				139.7				116.6				3.3				2.5				0.6				0.5
Other Lending			87.0				87.5				43.8				44.2				26.9				27.2				3.4				3.0				10.1				8.1				2.9				4.9
Funds Entrusted			436.2				401.6				108.4				106.7				69.0				69.3				237.5				203.1				18.0				16.2				3.4				6.3
AUM/Mutual Funds			54.5				62.8				16.1				14.0				26.0				32.7				10.2				7.4				1.8				0.9				0.4				7.9
Profitability and efficiency 1
Cost/income ratio			56.3	%			72.3	%			54.7	%			66.6	%			64.1	%			58.4	%			46.9	%			101.2	%			80.5	%			74.4	%			65.7	%			76.8	%
Return on Equity 2			20.4	%			8.0	%			26.8	%			16.4	%			32.6	%			38.8	%			18.7	%			-6.8	%			5.2	%			10.8	%			7.9	%			0.1	%
Risk1
Risk costs in bp of average RWA			63				84				95				88				92				85				45				101				37				25				32				43
Risk-weighted assets (end of period)			183,281				167,619				52,837				51,356				19,781				18,347				79,253				70,385				22,304				19,515				9,107				8,016

APPENDIX 4 COMMERCIAL BANKING: CONSOLIDATED PROFIT AND LOSS ACCOUNT

Commercial Banking: Consolidated profit and loss account

		Total Commercial								GL &								Structured								Leasing &								Financial								Other								Total Commercial
		Banking								PCM								Finance								Factoring								Markets								products								Banking excl. RE								ING Real Estate
in EUR million		2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009
Interest result			819				1,020				231				224				277				234				48				41				177				435				-10				-3				723				932				96				88
Commission income			317				294				52				101				94				71				8				7				15				-31				57				67				225				215				92				79
Investment income			17				-270				-4				3				1				-1				0				0				12				-16				-1				-3				7				-16				10				-254
Other income			304				-49				6				20				-31				-28				58				53				240				146				21				15				294				205				10				-254
Total underlying income			1,457				994				284				348				340				277				114				102				445				534				66				75				1,250				1,335				207				-341
Staff and other expenses			626				603				134				129				84				79				55				49				181				169				61				65				514				490				113				113
Intangibles amortisation and impairments			85				55				0				0				0				0				0				0				0				0				0				0				0				0				85				55
Operating expenses			712				659				134				129				84				79				55				49				181				169				61				65				514				491				197				168
Gross result			745				336				151				219				256				198				59				52				264				365				5				10				735				845				10				-509
Addition to loan loss provision			181				478				77				150				71				214				20				40				0				3				-2				0				167				408				14				70
Underlying result before tax			564				-143				74				69				185				-16				38				13				264				362				7				10				568				437				-4				-580
Client balances (in EUR billion)
Residential Mortgages
Other Lending			140.9				143.9				36.8				43.6				49.5				45.1				16.7				16.9				2.9				2.3				0.1				0.2				106.0				108.1				34.9				35.8
Funds Entrusted			62.0				55.0				33.1				30.2				3.9				3.0				0.0				0.1				24.3				21.1				0.7				0.7				62.0				55.0
AUM/Mutual Funds			71.1				64.7																																																				71.1				64.7
Profitability and efficiency1
Underlying cost/income ratio			48.9	%			66.3	%			46.9	%			37.1	%			24.7	%			28.4	%			48.4	%			48.4	%			40.6	%			31.6	%			92.3	%			86.2	%			41.2	%			36.7	%			95.2	%			n.a.
Return on Equity2			14.7	%			-3.5	%			6.2	%			2.6	%			19.0	%			-0.1	%			16.1	%			4.1	%			30.1	%			39.3	%			1.1	%			54.8	%			17.0	%			12.7	%			-1.8	%			-127.9	%
Risk1
Risk costs in bp of average RWA			47				109				70				105				68				196				98				153				0				3				-14				2				49				105				30				139
Risk-weighted assets (end of period)			155,698				172,325				44,509				57,373				42,309				42,762				8,490				10,402				37,600				37,402				4,892				4,225				137,799				152,164				17,899				20,161

     

APPENDIX 5 INSURANCE: MARGIN ANALYSIS AND KEY FIGURES

Insurance: Margin analysis and Key figures

																		Insurance Central																Insurance								Insurance
		Total Insurance								Insurance Benelux								& Rest of Europe								Insurance US								Latin America								Asia/Pacific1								ING IM								Corporate Line
In EUR million		2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009				2Q2010				2Q2009
Investment margin			367				356				141				152				18				20				173				161				23				15				12				2				1				6				9				0
Fees and premium-based revenues			1,212				1,055				140				141				131				130				286				280				97				75				335				253				222				176				-0				0
Technical margin			177				300				46				126				31				46				52				79				8				3				41				45				—				—				—				—
Income non-modelled life business			30				25				8				8				4				3				-0				0				0				-5				18				19				-0				0				-208				-177
Life & ING IM operating income			1,787				1,737				334				428				184				200				512				521				128				88				406				319				223				181				-200				-177
Administrative expenses			798				722				121				148				61				58				258				227				56				44				112				102				189				143				23				18
DAC amortisation and trail commissions			428				387				50				53				50				57				132				121				20				12				175				143				1				1				-10				29
Life & ING IM expenses			1,226				1,109				172				201				111				115				391				348				75				56				287				245				190				143				13				48
Life & ING IM operating result			561				628				163				227				74				84				121				173				53				32				118				74				33				38				-212				-224
Non-life operating result			70				70				48				54				1				-0				—				—				19				15				1				1				—				—				1				8
Corporate Line operating result			-212				-216
Operating result			419				482				210				281				75				84				121				173				72				48				120				75				33				38				-212				-216
Gains/losses and impairments			-143				-34				-59				-26				-19				-6				-84				-13				0				-1				13				17				5				1				-0				-6
Revaluations			269				-305				7				-293				—				—				286				92				0				22				-4				-2				3				-29				-23				-96
Market & other impacts			-660				100				110				82				—				—				-795				-68				—				—				-12				6				—				—				37				80
Underlying result before tax			-115				242				268				44				56				78				-472				183				73				69				117				96				41				10				-198				-238
Life Insurance — New business figures
Single premiums			4,748				2,964				727				487				164				134				3,229				1,715				522				281				106				346				—				—				—				—
Annual premiums			773				716				58				88				68				84				221				265				106				76				320				203				—				—				—				—
New sales (APE)			1,248				1,013				131				137				85				98				544				437				158				104				330				237				—				—				—				—
Key figures
Gross premium income			6,796				7,192				1,600				1,680				522				486				3,020				3,342				37				52				1,609				1,625				—				—				8				7
Adm. expenses / operating income (Life & ING IM)			44.7	%			41.6	%			36.2	%			34.6	%			33.2	%			29.0	%			50.4	%			43.6	%			43.8	%			50.0	%			27.6	%			32.0	%			84.8	%			79.0	%			-11.5	%			-10.2	%
Life general account assets (end of period, in EUR billion)			167				144				60				54				8				7				73				61				3				5				22				16				1				0				—				—
Investment margin / Life general account asset (in bps)2			83				101				69				90				95				130				103				130				260				125				17				2				241				130
Provision for life insurance & investm. contracts for risk policyholder (end of period)			116,983				100,469				22,824				17,950				3,420				2,812				68,701				54,742				112				76				21,925				24,889				—				—				—				—
Net production client balances (in EUR billion)			-3.8				-2.6				-0.3				0.1				0.4				0.4				-1.4				-1.0				0.4				0.3				0.5				0.7				-3.4				-3.2				—				—
Client balances (end of period, in EUR billion)			435.6				391.4				69.9				66.0				25.5				21.0				134.4				113.5				44.1				33.3				42.7				47.6				119.0				109.9				—				—
Administrative expenses (total)			918				843				215				246				62				60				258				227				56				44				113				102				189				143				25				21