ING Direct 2009 Annual Report Download - page 113

Fees and commissions
Fees and commissions are generally recognised as the service is 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 income when the syndication has been completed and the Group has retained no part of the loan
package for itself or has retained a part at the same effective interest rate as 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 as the service is provided. Asset
management fees related to investment funds and investment contract fees are recognised on a pro-rata basis 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. Fees received and paid between banks for payment services are classified as commission income
and expenses.
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 Group is the lessor are divided into an interest component (recognised
as interest income) and a repayment component.
EXPENSE RECOGNITION
Expenses are recognised in the profit and loss account as incurred or when a decrease in future economic benefits related to a decrease
in an asset or an increase in a liability has arisen that can be measured reliably.
Share-based payments
Share-based payment expenses are recognised as the employees provide the service. A corresponding increase in equity is recognised if
the services are received in an equity-settled share-based payment transaction. A liability is recognised if the services are acquired in a
cash-settled share-based payment transaction. The cost of acquiring the services is expensed as a staff expense. Prior to 2007, ING Group
generally provided equity-settled share-based payment transactions. However, since 2007, ING Group has generally provided cash-settled
share-based payment transactions. The fair value of equity-settled share-based payment transactions is measured at the grant date and
the fair value of cash-settled share-based payment transactions is measured at each balance sheet date.
GOVERNMENT GRANTS
Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will
be complied with. When the grant relates to an expense item, the grant is recognised over the period necessary to match the grant on
a systematic basis to the expense that it is intended to compensate. In such case, the grant is deducted from the related expense in the
profit and loss account.
EARNINGS PER ORDINARY SHARE
Earnings per ordinary share is calculated on the basis of the weighted average number of ordinary shares outstanding. In calculating the
weighted average number of ordinary shares outstanding:
Own shares held by group companies are deducted from the total number of ordinary shares in issue;•
The computation is based on daily averages;•
In case of exercised warrants, the exercise date is taken into consideration. •
The non-voting equity securities are not ordinary shares, because their terms and conditions (especially with regard to coupons and voting
rights) are significantly different. Therefore, the weighted average number of ordinary shares outstanding during the period is not
impacted by the non-voting equity securities.
Due to the rights issue in 2009, the 2008 and 2007 earnings per share figures have been restated. Reference is made to Note 49 ‘Earnings
per ordinary share’ for a further explanation on the nature and the effect of this restatement.
Diluted earnings per share data are computed as if all convertible instruments outstanding at year-end were exercised at the beginning of
the period. It is also assumed that ING Group uses the assumed proceeds thus received to buy its own shares against the average market
price in the financial year. The net increase in the number of shares resulting from the exercise is added to the average number of shares
used to calculate diluted earnings per share.
Share options with fixed or determinable terms are treated as options in the calculation of diluted earnings per share, even though they
may be contingent on vesting. They are treated as outstanding on the grant date. Performance-based employee share options are treated
as contingently issuable shares because their issue is contingent upon satisfying specified conditions in addition to the passage of time.
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.
2.1 Consolidated annual accounts
ING Group Annual Report 2009 111
Accounting policies for the consolidated balance sheet and profit and loss account of ING Group (continued)