ING Direct 2008 Annual Report Download - page 175

49 PRIMARY REPORTING FORMAT – BUSINESS SEGMENTS
ING Group’s business segments relate to the internal segmentation by business lines. These include the business lines: Insurance Europe,
Insurance Americas, Insurance Asia/Pacific, Wholesale Banking, Retail Banking and ING Direct. Other mainly includes items not directly
attributable to the business lines.
Each business line is headed by a member of the Executive Board. The Executive Board sets the performance targets and approves and
monitors the budgets prepared by the business lines. Business lines formulate strategic, commercial and financial policies in conformity
with the strategy and performance targets set by the Executive Board.
The accounting policies of the business segments are the same as those described under Accounting policies for the consolidated balance
sheet and profit and loss account. Transfer prices for inter-segment transactions are set at arm’s length. Corporate expenses are allocated
to business lines based on time spent by head office personnel, the relative number of staff, or on the basis of income and/or assets of
the segment. With regard to investments in equity securities, a fixed return of 3% is allocated to the insurance business lines. The
differences between the actual dividend income, capital gains and impairments and the allocated return are included in Other.
ING applies a system of capital charging that makes the results of the banking business units globally comparable, irrespective of the
book equity they have and the currency they operate in. ING’s policy for the banking business units is that equity may only be invested
locally at the local risk free rate. Banking business units are charged by the Corporate Line for the income that they make on the invested
equity and are given a benefit based on the risk free euro rate on the economic capital they employ. Consequently, the results of the
businesses as disclosed are the local results after Group overhead charges while the investment returns on equity are based on the risk
free euro rate on economic capital.
ING Group evaluates the results of its business segments using a financial performance measure called underlying result before taxation.
Underlying result before taxation is defined as result before taxation excluding the impact of divestments and special items.
Segment reporting
amounts in millions of euros, unless stated otherwise
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ING Group Annual Report 2008