ING Direct 2011 Annual Report Download - page 30

MANAGEMENT
BOARD BANKING
on 31 December 2011
28 ING Group Annual Report 2011
Banking overview
Financial overview*
in EUR million 2011 2010
Total underlying income 15,854 16,816
Underlying operating expenses 9,447 9,336
Underlying additions to loan loss provisions 1,667 1,742
Underlying result before tax 4,740 5,738
Interest margin 1.41% 1.42%
Underlying cost/income ratio 59.6% 55.5%
Underlying cost/income ratio (excl. market
impacts) 55.4% 53.7%
Net production client balances (EUR billion) 45 49
Underlying risk costs in bp of average RWA 52 53
Risk-weighted assets (year-end, EUR billion,
adjusted for divestments) 330 319
Underlying Return on Equity based on IFRS
equity 10.0% 12.9%
Underlying Return on Equity based on 10%
core Tier 1** 10.9% 13.1%
Employees (FTEs, year-end, adjusted for
divestments) 70,580 70,073
* Underlying numbers are derived from IFRS-EU, excluding the impact of
divestments and special items.
** Underlying after tax return divided by average equity based on 10% core
Tier1 ratio.
Underlying income
in EUR million 2011 2010
Retail Banking 10,903 11, 4 02
Commercial Banking 5,023 5,349
Corporate Line banking –72 65
Total 15,854 16,816
Underlying result before tax
in EUR million 2011 2010
Retail Banking 2,944 3,601
Commercial Banking 2,020 2,217
Corporate Line banking –224 –80
Total 4,740 5,738
Jan Hommen
chief executive officer
Koos Timmermans (from 1 October 2011)
vice-chairman
Patrick Flynn
chief financial officer
Wilfred Nagel (from 5 October 2011)
chief risk officer
William Connelly
CEO Commercial Banking
Eli Leenaars
CEO Retail Banking Direct andInternational
Hans van der Noordaa
CEO Retail Banking Benelux
ING Bank is a large international player with an extensive global
network in over 40 countries. It has leading banking positions in its
home markets of the Netherlands, Belgium, Luxembourg, Germany
and Poland. Furthermore, ING has key positions in other Western,
Central and Eastern European countries and Turkey. This is coupled
with options outside of Europe which will give ING Bank interesting
growth potential in the long-term.
The retail banking operations are focused on delivering simple
andtransparent retail products at low costs through a multi-channel
distribution approach. Commercial Banking supports its global
clients through an extensive international network and offers core
banking solutions and provides tailored solutions.
Since January 2011, ING Bank has been operating as a stand-alone
business under the umbrella of ING Group.
FINANCIAL DEVELOPMENTS
Underlying result before tax (excluding the impact of divestments
and special items) dropped 17.4% to EUR 4,740 million from
EUR 5,738 million in 2010, mainly reflecting the impact of the
sovereign debt crisis in Europe. The decline was mainly due to
EUR 588 million of impairments on Greek government bonds
andEUR 181 million of losses on selective de-risking at ING Direct,
while the previous year included EUR 275 million of capital gains
onthe sale of two Asian equity stakes. Excluding these items,
underlying result before tax rose slightly by 0.8%.
Total underlying income declined 5.7% to EUR 15,854 million in
2011 from EUR 16,816 million in 2010. The underlying net interest
result was practically stable at EUR 13,562 million, despite a small
increase in volumes. The total interest margin, however, declined
slightly to 1.41% from 1.42% in 2010. Commission income
remained flat on 2010, as increases in Commercial Banking (mainly
Structured Finance) were offset by declines in Retail Banking. Total
investment and other income dropped to EUR 37 million compared
with EUR 1,008 million in 2010. This decline was due to EUR 588
million of impairments on Greek government bonds and EUR 181
million of losses on selective de-risking at ING Direct taken in 2011,
while 2010 included EUR 275 million of capital gains on the sale of
two Asian equity stakes.
Underlying operating expenses increased by 1.2% to EUR 9,447
million, mainly due to specific investments in the business and a
modest year-on-year increase in staff costs. This was largely offset
by stringent cost control and lower impairments on real estate
development projects. The underlying cost/income ratio increased
to 59.6% from 55.5% in 2010, mainly driven by lower income.
Excluding market-related impacts, the cost/income ratio was
55.4% in 2011.
The underlying net addition to the provision for loan losses declined
4.3% to EUR 1,667 million from EUR 1,742 million in 2010. Risk
costs in 2011 were 52 basis points of average risk-weighted assets
compared with 53 basis points in 2010.
The underlying return on IFRS-EU equity was 10.0% in 2011,
downfrom 12.9% in 2010.