May 11, 2006 01:40 ET

ING posts 28.7% increase in underlying net profit in 1st quarter


* Net profit up 3.3% to EUR 2,006 million: growth compensates for
divestment gains in 2005
- Underlying net profit rises 28.7% to EUR 1,976 million [1]
- Earnings per share increase 4.1% to EUR 0.93 from EUR 0.89
- Life premium income up 14.4%, led by Asia, U.S. and Central Europe
- Banking income rises 12.0%, driven by strong growth in Retail
Banking, ING Direct and ING Real Estate
* Emphasis on value creation and pricing discipline leads to higher
- Risk-adjusted return on capital after tax from banking rises to
24.0% from 19.8%
- Internal rate of return on new life insurance business increases to
14.0% from 12.6%
- Value of new life insurance business rises 31.9% to EUR 248 million
* Efficiency improves due to continued focus on execution
- Cost/income ratio of banking operations improves to 60.4% from
- Outsourcing and streamlining of the Operations & IT organisation is
on plan
- Restructuring at Nationale-Nederlanden remains on track
Chairman's Statement

"The first quarter marked a strong start to the year, with an increase in underlying net profit of 28.7% to a record EUR 1,976 million. Net profit rose to EUR 2,006 million, an increase of 3.3%, as a strong underlying performance more than compensated for about EUR 400 million of divestment gains that boosted net profit in the first quarter last year," said Michel Tilmant, Chairman of ING Group.

"ING's three key growth engines - ING Direct, retirement services, and life insurance in developing markets - continued their strong performance and Retail Banking posted a record quarter, with underlying profit before tax up 43.7%."

"Our emphasis on value creation has led to increased returns from both insurance and banking as business units sharpen their focus on product pricing and capital efficiency.

The risk-adjusted return on capital for the banking operations increased to 24.0% and the internal rate of return on new life insurance sales increased to 14.0%. This performance was achieved as the Executive Board continues to allocate more capital to businesses with strong growth potential and the highest returns."

"Expenses have remained under control as we continue to improve execution and increase efficiency, despite continuing investments to increase customer satisfaction and strengthen compliance. The efficiency programme at our Dutch life insurance business is on track and programmes announced last year to streamline and outsource parts of the Operations & IT organisation are progressing on plan."

"The banking activities continue to benefit from low loan losses. While we see no sign yet of a deterioration in our credit portfolio, loan losses are expected to return gradually to more normalised levels over the coming years. Looking forward, ING remains confident in the growth prospects of its underlying businesses and in its ability to continue to create value for shareholders in the year ahead."

[1]. Underlying profit excludes the impact of divestments and special items as specified in Appendix 2.

The full report including tables can be downloaded from the following link:

The following documents can be downloaded from around 08.00 am CET from the following links:

Analyst (pdf):

Analyst additional (pdf):

US Statistical Supplement (pdf):


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