ING Direct 2002 Annual Report Download - page 25

Annual Report 2002 · ING Group22
Report of the Executive Board
Income
Total income increased by 3.2% to EUR 76.5 billion.
The organic increase (excluding acquisitions/
divestments and exchange rate fluctuations) was
4.7%. Insurance income rose 3.6% to EUR 65.3
billion (organically +5.7%). Life premiums
increased organically by 4.6% to EUR 44.4
billion. Premium income from non-life insurance
advanced by 34.1% to EUR 7.9 billion, mainly
due to the acquisition of ING Comercial América
in Mexico. The organic increase was 19.0%. Total
income from banking increased 0.8% to
EUR 11.2 billion. A healthy rise in the interest
result just outstripped a strong decrease in other
income.
Efficiency
Total operating expenses decreased by 3.1%
(organically -3.3%) as a result of restructuring,
integration and tight cost control. The total
number of staff rose by 2,700 to 115,800 full-time
equivalents due to several consolidations such
as ING Vysya Bank in India, DiBa in Germany and
Toplease in the Netherlands, and the divestment
of ING Life Philippines. Excluding these changes,
the total number of staff was reduced by 2,700.
This decrease mainly reflects restructuring of the
US life operations and international wholesale
banking.
Operating expenses in insurance decreased
organically by 8.8% with the US operations
achieving a 17.5% reduction. The difference
between the premium growth and the expense
growth was +16.1%-points (excluding GICs and
the impact of the joint venture with ANZ in
Australia), well above the target of at least
+2%-points.
Total operating expenses in banking
increased by 1.4% (organically +0.1%). Excluding
the fast expanding activities of ING Direct and a
restructuring provision for international whole-
sale banking, operating expenses were 2.9%
lower. The efficiency ratio of the banking
operations (excluding ING Direct and the
restructuring provision) improved to 71.0% from
71.7% in 2001.
Profit development
At EUR 4,253 million, total operational net
profit in 2002 equalled 2001’s high result of EUR
4,252 million. Operational profit before taxation
decreased by 1.7% to EUR 5,641 million. Excluding
the strong impact of risk costs in banking and
investment losses in insurance, the gross result
improved by 15.3% to EUR 7,629 million. The
effective tax rate decreased from 20.3% to
18.7%, among others due to tax-exempt realised
gains and the release of a tax provision.
Operational net profit from insurance was
19.5% higher at EUR 3,358 million. Results in the
Netherlands, North America, Asia and Australia
improved. Cost control, leading to an overall
reduction in expenses, contributed significantly
to the improvement. The result includes a
EUR 222 million gain in operational after-tax
profit on the formation of the joint venture
with ANZ, the release of EUR 106 million from
contingent provisions associated with prior
FINANCIAL HIGHLIGHTS
2002 PROFIT EQUAL
TO STRONG 2001 RESULT
Despite the extremely difficult economic and political environ-
ment ING’s operational profit for 2002 of EUR 4,253 million
matched the strong result of 2001. ING responded to the new
realities of the market by sharpening its focus on core businesses
and strengths, for instance on savings and guaranteed products,
pensions and developing markets. The capital base ratios
remained on the safe side of internal targets, which are far
more conservative than the regulatory minimum levels.
REPORT OF THE EXECUTIVE BOARD
GEOGRAPHICAL DISTRIBUTION
OF GROSS PREMIUM INCOME
in millions of euros
6,786
2,335
1,618
33,397
595
6,035
1,763
-245
52,284
The Netherlands 13%
Belgium 4%
Rest of Europe 3%
North America 64%
South America 1%
Asia 12%
Australia 3%
Other
Total
 
Operational net profit
EUR 4.3 billion, equal to 2001
—
Operational net profit from
insurance EUR 3.4 billion
(+19.5%)
—
Operational net profit from
banking EUR 0.9 billion
(-37.9%)
—
Total operating expenses
EUR 13.2 billion (-3.1%)