ING Direct 2007 Annual Report Download - page 22

U
nderlying profi t before tax declined
5.0% to EUR 2,399 million.
Higher profi ts were recorded in
General Lending and Payments and Cash
Management, Leasing and Factoring,
and ING Real Estate. Lower profi ts from
Structured Finance and Financial Markets
were related to turmoil in the fi nancial
markets. The underlying risk-adjusted
return on capital (RAROC) after tax stayed
almost fl at, at just above 20%.
Wholesale Banking performed well in 2007,
despite fi nancial markets experiencing
signifi cant turbulence, helped by our clearly
defi ned focus and position as a full-service
Benelux bank, a specialist products provider
and a growing force in emerging markets.
Wholesale Banking plays an important role
within ING as a generator of high-quality
assets and a vital source of market and
risk expertise.
Increased volumes
Concerted efforts in the Benelux and
growth initiatives in Central and Eastern
Europe delivered volume increases in both
General Lending and Payments and
Cash Management.
Structured Finance generally had a good
year with robust demand and solid revenue
growth in most product areas. The one
exception was Leveraged Finance, where
markets largely came to a halt in the
second half of the year due to concerns
about credit quality in the global
credit markets.
Leasing and Factoring saw large increases
in volume and income due to solid growth
in general leasing, despite pressure on
margins, and cross-selling of services to
corporate clients.
In a very challenging business
environment, Wholesale Banking achieved
resilient results and profi table growth
during 2007 by concentrating on client
needs and high value-added products,
while reducing expenses, improving capital
effi ciency and actively stimulating growth.
It’s not
about luck
Profi t and loss account* (underlying)
in EUR million 2007 2006 change
Total income 5,860 5,804 1.0%
Operating expenses 3,576 3,400 5.2%
Additions to loan loss provisions –115 –121
Underlying profi t before tax 2,399 2,525 –5.0%
Total profi t before tax** 2,261 2,481 –8.9%
** These numbers include the result from ING Real Estate, which reports to Wholesale Banking.
ING Real Estate is also discussed in the section on Asset management.
** Total profi t before tax is defi ned as profi t before tax including divestments and special items.
The truth of the headline in this recent
Wholesale advertisement (‘It’s not about
luck – winning the deal’) was amply
demonstrated in 2007 in the case of
Dutch telecoms giant KPN.
KPN turned to long-standing adviser ING
to acquire Dutch IT company Getronics
in July for EUR 1.2 billion, a transaction
involving close cooperation across several
Wholesale Banking businesses from
Corporate Finance to Debt Capital
Markets. In September, KPN again chose
ING for a EUR 1.25 billion loan for
standby and general purposes. The deal
team got its hat-trick two months later,
when chosen for a third KPN deal, this
time as joint bookrunner issuing a new
fi ve-year EUR 1.25 billion bond.
20 Our performance
Wholesale
Banking