ING Direct 2011 Annual Report Download - page 31

1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information
29ING Group Annual Report 2011
Banking overview continued
WHERE WE OPERATE*
ING Bank builds on its international network from its Northern European home markets, capitalising on its leadership
position in gathering savings, multi-channel distribution, simple propositions, cost leadership and marketing.
Retail Banking is the
leading bank in the Benelux;
also active in Central and
Eastern Europe
Retail Banking
isactive in China,
Indiaand Thailand
ING Direct
is active inAustralia
Commercial Banking
hasaninternational network in
40countries, with key positions
inStructured Finance and
FinancialMarkets
ING Direct
isactivein Canada
* ING completed the divestment
ofING Direct USA on
17 February 2012.
ING Direct
is active in Austria, France,
Germany, Italy, Spain and the UK
BUSINESS DEVELOPMENTS
In 2011, ING Bank continued to show solid results despite the
difficult macroeconomic environment and volatile financial markets.
In addition to these challenging circumstances the vulnerable
financial system remained a concern. The results were affected
bythe impairments on Greek government bonds. ING Bank
withstood the market instability by carefully managing its
exposureto sovereign bonds.
ING has delivered on its priorities to strengthen its financial
position, reduce risks, meet the restructuring requirements
asimposed by the European Commission and to build a
strongerbank.
ING Bank continued to make progress on meeting its Ambition
2013targets. These are business improvement programme targets,
mostly established in October 2009 and involve boosting underlying
income, lowering overall costs, reducing risk costs and lifting return
on equity.
In 2011, ING Bank’s underlying income was EUR 15,854 million,
underlying cost/income ratio was 59.6% and underlying return
onequity based on IFRS-EU equity was 10.0%.
Given the changing market circumstances, new regulatory
requirements and the fact that ING has realised to a large extent
itsAmbition 2013 goals, new performance goals have been set
for2015. These are: achieving a Return on (IFRS-EU) Equity of
10–13% under Basel III, while maintaining a core Tier 1 ratio of at
least 10%, and bringing our cost/income ratio down to 50–53%.
In 2011, ING Group proved its ability to generate capital by making
anet profit of EUR 5.8 billion. Capital generation is needed to repay
theDutch State and to improve capital ratios while making selective
investments to improve services to our clients.
ING comfortably passed the 2011 EU-wide stress test conducted by
the European Banking Authority (EBA) confirming the solid capital
position of ING Bank thanks to the actions taken to de-risk and
de-leverage the balance sheet.
ING’s capital position also met the new EBA capital target. By the end
of June 2012, European banks must meet a 9% threshold for their
core Tier 1 ratio under the EBA definition which includes valuing
sovereign bond holdings at market rates. ING Bank already met
the9% requirement in 2011. ING is well prepared to meet the new
capital requirements proposed by Basel III and also has focus on the
liquidity requirements to be met from 2013.
ING is on the Financial Stability Board’s list of Global Systemically
Important Financial Institutions (G-SIFIs) which means it will be forced
to hold more capital because of its importance to the global financial
system. The package of additional policy measures to address SIFIs
has been submitted for approval to the G20 in November 2011 by
the Financial Stability Board.
For more information see the chapters ‘Capital management’ and
‘Financial and regulatory environment’.
ING Bank continued to manage costs carefully. It is more necessary
than ever to reduce expenses to adapt to the leaner environment
and maintain our competitive position. Streamlining the
organisation and enhancing efficiency are therefore key.
Retail Banking Netherlands, for example, is taking steps to further
cut costs and improve efficiency through operational excellence.
Unfortunately this leads to substantial job cuts. We will effectuate
these with the utmost care. The strategic measures are focused on
further process improvements by reducing complexity and
streamlining workflow.