ING Direct 2009 Annual Report Download - page 29

Banking
In 2009, ING Bank was comprised of Retail Banking, ING Direct
and Commercial Banking. It has a strong European footprint,
especially in its home markets in the Benelux, and promising
positions in the largest Central European countries: Poland,
Romania and Turkey. Beyond Europe, ING Bank has growth options
in Canada, Australia, India, China and Thailand.
ING Bank has a home market position in the Benelux markets:
ING is the number two retail bank in the Netherlands and ranks
fourth in Belgium. It has a strong Benelux Commercial Bank with
an international network. ING is the world’s leading direct bank.
It is the number three retail bank in Germany with ING-DiBa.
Underlying result before tax (excluding the impact of divestments
and special items) improved by 100.4% to EUR 900 million, despite
the continuing weakness in the US housing and real estate market.
This was supported by a strong improvement of the underlying
results before market impacts and risk costs in all three business
lines. Risk costs, however, increased significantly, as the credit
crisis affected the real economy. Retail Banking and Commercial
Banking remained profitable, while ING Direct reduced its loss to
EUR 666 million.
The total result before tax from banking operations declined to
a loss of EUR 826 million in 2009 from a profit of EUR 148 million
in 2008. The loss was driven by EUR 1,726 million of special items.
This was mainly related to additional payments on the Illiquid
Assets Back-up Facility and charges for the merger of the retail
banking activities in the Netherlands.
Underlying income rose 13.5% to EUR 13,312 million. The interest
result increased 13.1%, driven by higher margins at ING Direct and
Commercial Banking. In 2009, client balances rose by EUR 35 billion
to EUR 1,108 billion. The total interest margin improved to 1.32%
from 1.07% in 2008, supported by the deleveraging of the balance
sheet. Commission income decreased 7.5% driven by lower
management fees. Investment and other income was EUR –1,905
million compared with EUR –2,250 million in 2008, mainly due
to continued high impairments on debt securities and negative
revaluations on real estate.
Underlying operating expenses declined 5.6% to EUR 9,439 million,
driven by cost containment initiatives as part of the Back to Basics
programme. This decline was realised despite higher impairments
on real estate development projects, increased deposit insurance
premiums at ING Direct, and the provision taken for the deposits
guarantee scheme in the Netherlands following the bankruptcy of
DSB Bank.
The underlying cost/income ratio improved to 70.9% from 85.3%
in 2008, driven by higher income, excluding impairments and fair
value changes the cost/income ratio was 54.4% in 2009.
The underlying net addition to the provision for loan losses
increased to EUR 2,973 million from EUR 1,280 million in 2008.
Risk costs in 2009 were 102 basis points of average credit-risk-
weighted assets (compared with 48 basis points in 2008).
ING’s ambition is to be a leader in international retail, direct
and commercial banking with attractive growth options in
Central Europe, Turkey and selected markets throughout the
Asia/Pacific region.
Overview
Management Board Banking
on 1 January 2010
Jan Hommen
chief executive officer
Patrick Flynn
chief financial officer
Koos Timmermans
chief risk officer
Eric Boyer de la Giroday
vice-chairman and
CEO Commercial Banking
Hans van der Noordaa
CEO Retail Banking Benelux
Eli Leenaars
CEO Retail Banking Direct and International
ING Group Annual Report 2009 27