ING Direct 2011 Annual Report Download - page 18

Creating stronger businesses and earning trust
from all stakeholders
> Financial position strengthened despite
difficultmarket conditions
> Group restructuring on track
> Portfolio streamlined as more divestments
weremade
> Further progress on building stronger
bankingand insurance/investment
management businesses
> Earning trust remains a top priority
2011 saw a marked deterioration in the debt and equity markets
amid a slowdown of the macroeconomic environment and a
deepening of the sovereign debt crisis in Europe. ING Group
continued to take a prudent approach to risk, increasing hedging
topreserve capital and selectively reducing exposure to southern
Europe. In this challenging environment ING’s earnings remained
resilient, and our strong funding position enabled us to continue to
increase lending to support our customers in these uncertain times.
We were also able to make good progress on the strategic priorities
of ING Group, which are strengthening the financial position,
restructuring, streamlining the portfolio, repayment of state aid and
building stronger banking and insurance/investment management
businesses. Apart from these measures, earning trust remained at
the top of our strategic agenda. The past few years have made it
clear that it is of crucial importance for financial institutions such
asING to rebuild the trust and confidence of all their stakeholders,
first and foremost those of their customers. Webelieve that trust
isand remains the most important licence tooperate for every
financial institution.
STRENGTHENING THE FINANCIAL POSITION
ING Group’s underlying net profit rose 15% to EUR 3,675million in
2011. This result was reached despite the impact of volatile financial
markets, a weakening of the macroeconomic environment, a
charge for the Insurance USClosed Block Variable Annuity and
impairments on Greek sovereign debt as discussed in the ‘Financial
and regulatory environment’ chapter in this Annual Report.
Both ING Bank and ING Insurance/Investment Management
(INGInsurance/IM) showed clear progress on their respective
performance improvement programmes. Despite the far-reaching
restructuring that ING Group is going through, we have continued
to show solid commercial growth across our franchises, which is a
testimony to the dedication and professionalism of our staff as we
endeavour to maintain the loyalty of our customers.
ING Bank’s results benefited from a healthy interest margin, higher
client balances, lower risk costs and focus on cost control. The
capital position of the Bank remained strong, with the core Tier 1
ratio stable at 9.6% after absorbing the impact of higher capital
requirements under the Capital Requirements Directive III (CRD III)
which came into effect at year-end, and despite repaying EUR 3
billion to the Dutch State in 2011.
ING Insurance/IM’s operating results mostly showed improvement
throughout 2011, reflecting higher fees and premium-based
revenues, robust sales growth, an improvement in the investment
margin and cost control. A significant earnings charge was taken
ofEUR 1.1 billion against fourth-quarter results for the Insurance
USClosed Block Variable Annuity (VA), a legacy business that
wasclosed in 2009 – primarily on revised assumptions for
policyholderbehaviour.
Going forward, ING Group will strive to further strengthen its
financial position by improving operating performance, boosting
income and lowering risk and overall costs.
RESTRUCTURING AND STREAMLINING THE PORTFOLIO
The restructuring of the Group is on track, based on our work
towards the separation of the banking and insurance/investment
management activities and the execution of divestments.
16 ING Group Annual Report 2011
Strategy