ING Direct 2002 Annual Report Download - page 28

Annual Report 2002 · ING Group 25
Financial highlights
Capital base
ING was able to absorb substantial book value
losses caused by the continued fall of stock
markets indices without the capital base of both
the insurance and banking operations dropping
below their internal minimum levels. Nonetheless,
in November, ING announced a series of measures
to shore up the capital base in order to continue
to be able to sustain potential future volatility
of stocks and real estate. At year-end 2002,
USD 1.1 billion had been raised by the issue of
a subordinated perpetual loan and EUR 650
million by the sale of own shares. ING will
propose to the Annual General Meeting of
Shareholders in April 2003 to introduce optional
cash/stock dividend as from the final dividend
2002 and fully fund the cash element by issuing
and selling in the market the depositary receipts
that would have been issued if stock was chosen
instead of cash. The effect of this policy is that
the full annual result is added to shareholders’
equity. Various other measures such as reduction
of the risk-weighted assets of the banking
operations also improved capital adequacy
ratios. In addition, the risk of further negative
revaluation of equity investments has been
limited by hedging transactions to an amount of
EUR 3 billion and the sale of equities to an
amount of EUR 2 billion.
At the end of 2002, the capital base of ING
Verzekeringen N.V. amounted to EUR 14.7
billion, well in excess (169%) of the legally
required level of EUR 8.7 billion. The tier-1 ratio
and the BIS ratio of ING Bank N.V. ended the
year at 7.31% and 10.98% respectively, both
well above the regulatory required levels. Both
banking ratios improved considerably due to the
issue of USD 600 million additional tier-1
securities and a EUR 3.7 billion securitisation
programme. Total risk-weighted assets decreased
sharply from EUR 257.5 billion at the end of
September 2002 to EUR 247.3 billion at the end
of December 2002 (against EUR 243.2 billion at
year-end 2001).
Shareholders’ equity
Shareholders’ equity decreased by EUR 3.2
billion to EUR 18.3 billion (-15.2%). A negative
revaluation of the equity and real estate port-
folio impacted shareholders’ equity by EUR 3.4
billion. Realised capital gains transferred to the
profit and loss account, the write-off of goodwill
and exchange rate fluctuations taken together
detracted EUR 3.2 billion. Net profit for 2002,
after dividend paid in 2002, added EUR 2.5
billion and changes in ING Group shares EUR 0.8
billion.
Return on equity
The operational net return on equity increased
from 18.4% in 2001 to 21.6% in 2002 reflecting
the decrease in shareholders’ equity. The return
on equity of the insurance operations was
24.6% against 16.9% in 2001. The risk-adjusted
return on capital (RAROC) of ING’s banking
operations was 13.3% compared to 13.5% for
2001 (pre-tax and excluding ING Direct). Also
excluding the restructuring provision for inter-
national wholesale banking, RAROC was
14.2%.
 
Shareholders’ equity
decreased to EUR 18.3 billion
(-15.2%)
—
Return on equity increased
to 21.6%, reflecting the
decrease in shareholders’
equity
—
Capital base, insurance and
banking well in excess of
required levels
—
Dividend proposal EUR 0.97
per share, equal to 2001