##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 20-F/A





(Amendment
No. 1)



|☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------

OR



|☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended 31 December 2016

OR



|☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

OR



|☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------

Commission file number 1-14642





ING GROEP N.V.

(Exact
name of registrant as specified in its charter)





The
Netherlands

(Jurisdiction of incorporation or organisation)

ING Groep N.V.

Bijlmerplein 888

1102 MG
Amsterdam

P.O. Box 1800, 1000 BV Amsterdam

The Netherlands

(Address
of principal executive offices)



Norman Tambach

Telephone: +31 20 576 6160

E-mail: Norman.Tambach@ing.com

Bijlmerplein 888

1102 MG
Amsterdam

The Netherlands

(Name; Telephone, Email and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:



|                                                                 |  |                                          
|---------------------------------------------------------------- |  | -----------------------------------------
|Title of each class                                              |  | Name of each exchange on which
registered
|American Depositary Shares, each representing one Ordinary Share |  | New York Stock Exchange                  
|Ordinary Shares, nominal value EUR 0.01 per Ordinary Share*      |  | New York Stock Exchange                  
|6.20% ING Perpetual Debt Securities                              |  | New York Stock Exchange                  
|6.125% ING Perpetual Debt Securities                             |  | New York Stock Exchange                  
|6.375% ING Perpetual Debt Securities                             |  | New York Stock Exchange                  



|* | Listed, not for trading or quotation purposes, but only in connection with the registration of American Depositary Shares pursuant to the requirements of the Securities and Exchange Commission
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for
which there is a reporting obligation pursuant to Section 15(d) of the Act:

None





Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual
report.



|                                                           |  |  |               | 
|---------------------------------------------------------- |  |  | ------------- | 
|Ordinary Shares, nominal value EUR 0.01 per Ordinary Share |  |  | 3,878,483,623 | 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  ☒            ☐  No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.

Yes  ☐            ☒  No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ☒            ☐  No

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web sites, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files).*

Yes  ☐            ☐  No



|* | This requirement does not currently apply to the registrant.
|- | ------------------------------------------------------------



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act (Check one).

Large accelerated filer  ☒               
 Accelerated filer  ☐                Non-accelerated filer  ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



|             |  |                                                                                                          |  |         
|------------ |  | -------------------------------------------------------------------------------------------------------- |  | --------
|U.S. GAAP  ☐ |  | International Financial Reporting Standards as issued
by the International Accounting Standards Board  ☒ |  | Other  ☐

If Other has been checked in response to the previous question, indicate by check mark which financial statement
item the registrant has elected to follow.

☐  Item
17            Item 18  ☐

If this is an annual report, indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐            ☒  No









---

##### Table of Contents

EXPLANATORY NOTE

This Amendment No. 1 on Form 20-F/A (this Amendment) to the annual report on Form 20-F for the fiscal year ended December 31, 2016, filed by ING Groep N.V. (we) with the Securities and Exchange Commission on March 16, 2017 (the Annual Report on Form 20-F), is being filed solely to correct clerical errors, as a result of which (a) an inaccurate version of the report of KPMG Accountants N.V., omitting a paragraph and including typographical errors, was
included in our Annual Report on Form 20-F and (b) the report of Ernst & Young Accountants LLP included in our Annual Report on Form 20-F reflected errors
in the date and addressees of the report as well as a typographical error.

This Amendment speaks as of the date of the initial filing of our Annual
Report on Form 20-F, which is March 16, 2017. Other than as set forth above, this Amendment does not, nor does it purport to, amend, update or restate any other information or disclosure included in our
Annual Report on Form 20-F or reflect any events that have occurred after March 16, 2017.

As required by
Rule 12b-15 of the Securities and Exchange Act of 1934, as amended, we are also filing or furnishing, as indicated therein, the certifications required under Section 302 and Section 906 of the
Sarbanes-Oxley Act of 2002, as exhibits to this Amendment.



|Item 18. | Consolidated Financial Statements
|-------- | ---------------------------------

Reference is made to pages
F-1 to F-240 included herein.



|Item 19. | Exhibits
|-------- | --------

The following exhibits are filed as part of this Annual Report:



|            |  |                                                                                                                                                                                                                                                                                                                                           
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            | 
|Exhibit 1.1 |  | Amended and Restated Articles of Association of ING Groep N.V., dated 26 July 2016 (incorporated by
reference to ING Groep N.V.s Report on Form 6-K furnished on 6 January 2017)                                                                                                                                                         
|            | 
|Exhibit 2.1 |  | Subordinated Indenture, dated 18 July 2002, between the Company and The Bank of New York, (incorporated by reference to Exhibit 2.1 of ING Groep N.V.s Annual Report on Form 20-F for
the year ended 31 December 2002, File No. 1-14642 filed on 27 March 2003)                                                                          
|            | 
|Exhibit 2.2 |  | Third Supplemental Indenture, dated 28 October 2003, between the Company and The Bank of New York (incorporated by reference to Exhibit 2.4 of ING Groep N.V.s Annual Report on Form
20-F for the year ended 31 December 2003, File No. 1-14642 filed on 30 March 2004)                                                                  
|            | 
|Exhibit 2.3 |  | Fourth Supplemental Indenture, dated 26 September 2005, between the Company and The Bank of New York (incorporated by reference to Exhibit 4.2 of ING Groep N.V.s Report on Form 6-K
filed on 23 September 2005)                                                                                                                         
|            | 
|Exhibit 2.4 |  | Sixth Supplemental Indenture, dated 13 June 2007, between the Company and The Bank of New York (incorporated by reference to Exhibit 4.1 of ING Groep N.V.s Report on Form 6-K filed
on 12 June 2007)                                                                                                                                    
|            | 
|Exhibit 2.5 |  | First Supplemental Indenture between ING Groep N.V. and The Bank of New York Mellon, London Branch, as trustee, dated April 16, 2015, in respect of 6.000% Perpetual Additional Tier 1 Contingent Convertible Capital Securities
(incorporated by reference to Exhibit 4.2 of ING Groep N.V.s Report on Form 6-K filed on 16 April 2015) 
|            | 
|Exhibit 2.6 |  | Second Supplemental Indenture between ING Groep N.V. and The Bank of New York Mellon, London Branch, as trustee, dated April 16, 2015, in respect of 6.500% Perpetual Additional Tier 1 Contingent Convertible Capital Securities
(incorporated by reference to Exhibit 4.3 of ING Groep N.V.s Report on Form 6-K filed on 16 April 2015)



---

##### Table of Contents

|              |  |                                                                                                                                                                   
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              | 
|Exhibit 7*    |  | Statement regarding Computation of Ratio of Earnings to Fixed Charges                                                                                             
|              | 
|Exhibit 8*    |  | List of Subsidiaries of ING Groep N.V.                                                                                                                            
|              | 
|Exhibit 12.1 |  | Certification of the Registrants Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002                                               
|              | 
|Exhibit 12.2 |  | Certification of the Registrants Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                               
|              | 
|Exhibit 13.1 |  | Certification of the Registrants Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|              | 
|Exhibit 13.2 |  | Certification of the Registrants Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|              | 
|Exhibit 15.1* |  | Consent of Ernst & Young Accountants                                                                                                                              
|              | 
|Exhibit 15.2* |  | Consent of KPMG Accountants                                                                                                                                       



|* | Previously filed
|- | ----------------

| | Filed herewith
|- | --------------

| | Furnished herewith
|- | ------------------



---

##### Table of Contents

SIGNATURE

The registrant hereby certifies that it meets all the requirements for filing on Form 20-F and that it has duly caused
and authorised the undersigned to sign this annual report on its behalf.



ING Groep N.V.(Registrant)By:

/s/ P. FlynnP. FlynnChief Financial Officer


Date: 20 March 2017



---

##### Table of Contents



Contents



|                                                         |  |  |         | 
|-------------------------------------------------------- |  |  | ------- | 
|Report of independent registered public accounting firm  |  |  | F  2   | 
|                                                         | 
|Consolidated statement of financial position             |  |  | F  4   | 
|                                                         | 
|Consolidated statement of profit or loss                 |  |  | F  5   | 
|                                                         | 
|Consolidated statement of comprehensive income           |  |  | F  7   | 
|                                                         | 
|Consolidated statement of changes in equity              |  |  | F  8   | 
|                                                         | 
|Consolidated statement of cash flows                     |  |  | F  11  | 
|                                                         | 
|Notes to the consolidated annual accounts                |  |  | F  14  | 
|                                                         | 
|Accounting policies for the consolidated annual accounts |  |  | F  14  | 
|                                                         | 
|Risk management                                          |  |  | F  141 | 
|                                                         | 
|Capital management                                       |  |  | F  210 | 
|                                                         | 
|Supplemental information                                 |  |  | F  214 | 
|                                                         | 
|Glossary                                                 |  |  | F  230 | 



| |  |     |  |                                          
| |  | --- |  | -----------------------------------------
| |  | F-1 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Report of independent registered

public accounting firm





To: the Supervisory Board and shareholders of ING Groep
N.V.

We have audited the accompanying consolidated statement of financial position of ING Groep N.V. and subsidiaries as of 31 December 2016, and the
related consolidated statements of profit and loss, comprehensive income, cash flows and changes in equity for the year ended 31 December 2016. These consolidated financial statements are the responsibility of ING Groep N.V.s management.
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards
of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the financial position of ING Groep N.V. and subsidiaries as of December 31, 2016 and the results of their operations and their cash flows for the year ended 31 December 2016, in
conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited the adjustments
described in Note 1a and 1b that were applied to the 2015 and 2014 consolidated financial statements to retrospectively reflect the change in accounting for the offsetting of financial assets and financial liabilities and the changes in presentation
of the consolidated financial statements and related notes. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2015 and 2014 consolidated financial
statements of ING Groep N.V. and subsidiaries other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2015 and 2014 consolidated financial statements taken as a whole.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), ING Groep N.V.s internal control over
financial reporting as of 31 December 2016, based on criteria established in Internal Control  Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and our report dated 13 March 2017 expressed an unqualified opinion on the effectiveness of the Companys internal control over financial reporting.



|                           
|---------------------------
|/s/ KPMG Accountants N.V.  
|                           
|Amstelveen, the Netherlands
|                           
|13 March 2017              



|                                          |  |     |  | 
|----------------------------------------- |  | --- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-2 |  | 



---

##### Table of Contents

Report of independent registered

public accounting firm







To: the Supervisory Board and shareholders of ING Groep N.V.

We have audited, before the effects of the adjustments described in 1a and 1b of note 2.1.1 Notes to the accounting policies that were applied to the 2015
and 2014 consolidated financial statements to retrospectively reflect the change in accounting for offsetting of financial assets and financial liabilities and the changes in presentation of the consolidated annual accounts and related notes, the
accompanying consolidated statement of financial position of ING Groep N.V. and subsidiaries as of 31 December 2015 and 31 December 2014, and the related consolidated profit or loss, consolidated statements of comprehensive income, cash flows
and changes in equity for the years then ended (the 2015 and 2014 financial statements before the effects of the adjustments described in 1a and 1b of note 2.1.1 Notes to the accounting policies that were applied to the 2015 and 2014
consolidated financial statements to retrospectively reflect the change in accounting for offsetting of financial assets and financial liabilities and the changes in presentation of the consolidated annual accounts and related notes are not
presented herein). These consolidated financial statements are the responsibility of ING Groep N.V.s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above, before the effects of the adjustments described in 1a and 1b of note 2.1.1 Notes to
the accounting policies that were applied to the 2015 and 2014 consolidated financial statements to retrospectively reflect the change in accounting for offsetting of financial assets and financial liabilities and the changes in presentation
of the consolidated annual accounts and related notes, present fairly, in all material respects, the consolidated financial position of ING Groep N.V. and subsidiaries at 31 December 2015 and 31 December 2014 and the consolidated results
of their operations and their cash flows for the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We were not engaged to audit, review, or apply any procedures to the adjustments described in 1a and 1b of note 2.1.1 Notes to the accounting policies that
were applied to the 2015 and 2014 consolidated financial statements to retrospectively reflect the change in accounting for offsetting of financial assets and financial liabilities and the changes in presentation of the consolidated annual accounts
and related notes and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by KPMG Accountants N.V.



|                                 
|---------------------------------
|/s/ Ernst & Young Accountants LLP
|                                 
|Amsterdam, the Netherlands       
|                                 
|29 February 2016                 



| |  |     |  |                                          
| |  | --- |  | -----------------------------------------
| |  | F-3 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Consolidated statement of financial position





As at 31 December



|                                                              |  |      |         |  |      |  |           |      |  |  |           | 
|------------------------------------------------------------- |  | ---- | ------- |  | ---- |  | --------- | ---- |  |  | --------- | 
|in EUR million                                                |  | 2016 |         |  | 2015 |  |           | 2014 | 
|Assets                                                        |  |      |         |  |      |  |           |      |  |  |           | 
|Cash and balances with central banks 2                        |  |      | 18,144  |  |      |  | 21,458    |      |  |  | 12,233    | 
|Loans and advances to banks 3                                 |  |      | 28,858  |  |      |  | 29,988    |      |  |  | 37,119    | 
|Financial assets at fair value through profit or loss 4       |  |      |         |  |      |  |           |      |  |  |           | 
| trading assets                                              |  |      | 114,504 |  |      |  | 131,467   |      |  |  | 136,959   | 
| non-trading derivatives                                     |  |      | 2,490   |  |      |  | 3,347     |      |  |  | 4,384     | 
| designated as at fair value through profit or loss          |  |      | 5,099   |  |      |  | 3,234     |      |  |  | 2,756     | 
|Investments 5                                                 |  |      |         |  |      |  |           |      |  |  |           | 
|
available-for-sale                                          |  |      | 82,912  |  |      |  | 87,000    |      |  |  | 95,402    | 
|
held-to-maturity                                            |  |      | 8,751   |  |      |  | 7,826     |      |  |  | 2,239     | 
|Loans and advances to customers16                             |  |      | 560,154 |  |      |  | 696,893   |      |  |  | 698,234   | 
|Investments in associates and joint ventures 7                |  |      | 1,141   |  |      |  | 962       |      |  |  | 953       | 
|Property and equipment 8                                      |  |      | 2,002   |  |      |  | 2,027     |      |  |  | 2,100     | 
|Intangible assets 9                                           |  |      | 1,484   |  |      |  | 1,567     |      |  |  | 1,655     | 
|Current tax assets                                            |  |      | 314     |  |      |  | 322       |      |  |  | 289       | 
|Deferred tax assets 36                                        |  |      | 1,641   |  |      |  | 1,783     |      |  |  | 2,389     | 
|Other assets 10                                               |  |      | 14,722  |  |      |  | 12,261    |      |  |  | 12,612    | 
|Assets held for sale 11                                       |  |      |         |  |      |  | 2,153     |      |  |  | 165,427   | 
|                                                              |  |      |         |  |      |  |           |      |  |  |           | 
|Total assets                                                  |  |      | 842,216 |  |      |  | 1,002,288 |      |  |  | 1,174,751 | 
|Liabilities                                                   |  |      |         |  |      |  |           |      |  |  |           | 
|Deposits from banks 12                                        |  |      | 31,964  |  |      |  | 33,813    |      |  |  | 29,999    | 
|Customer deposits113                                          |  |      | 522,908 |  |      |  | 664,210   |      |  |  | 669,672   | 
|Financial liabilities at fair value through profit or loss 14 |  |      |         |  |      |  |           |      |  |  |           | 
| trading liabilities                                         |  |      | 83,167  |  |      |  | 88,807    |      |  |  | 97,091    | 
| non-trading derivatives                                     |  |      | 3,541   |  |      |  | 4,257     |      |  |  | 6,040     | 
| designated as at fair value through profit or loss          |  |      | 12,266  |  |      |  | 12,616    |      |  |  | 13,551    | 
|Current tax liabilities                                       |  |      | 546     |  |      |  | 590       |      |  |  | 450       | 
|Deferred tax liabilities 36                                   |  |      | 624     |  |      |  | 589       |      |  |  | 795       | 
|Provisions 15                                                 |  |      | 2,028   |  |      |  | 964       |      |  |  | 1,017     | 
|Other liabilities 16                                          |  |      | 16,852  |  |      |  | 13,132    |      |  |  | 13,919    | 
|Debt securities in issue 17                                   |  |      | 103,234 |  |      |  | 121,289   |      |  |  | 126,352   | 
|Subordinated loans 18                                         |  |      | 17,223  |  |      |  | 16,411    |      |  |  | 18,158    | 
|Liabilities held for sale                                     |  |      |         |  |      |  |           |      |  |  | 142,106   | 
|                                                              |  |      |         |  |      |  |           |      |  |  |           | 
|Total liabilities                                             |  |      | 794,353 |  |      |  | 956,678   |      |  |  | 1,119,150 | 
|Equity 19                                                     |  |      |         |  |      |  |           |      |  |  |           | 
|Share capital and share premium                               |  |      | 16,989  |  |      |  | 16,982    |      |  |  | 16,971    | 
|Other reserves                                                |  |      | 5,897   |  |      |  | 5,759     |      |  |  | 11,213    | 
|Retained earnings                                             |  |      | 24,371  |  |      |  | 22,231    |      |  |  | 19,370    | 
|                                                              |  |      |         |  |      |  |           |      |  |  |           | 
|Shareholders equity (parent)                                 |  |      | 47,257  |  |      |  | 44,972    |      |  |  | 47,554    | 
|Non-controlling interests                                     |  |      | 606     |  |      |  | 638       |      |  |  | 8,047     | 
|                                                              |  |      |         |  |      |  |           |      |  |  |           | 
|Total equity                                                  |  |      | 47,863  |  |      |  | 45,610    |      |  |  | 55,601    | 
|                                                              |  |      |         |  |      |  |           |      |  |  |           | 
|Total liabilities and equity                                  |  |      | 842,216 |  |      |  | 1,002,288 |      |  |  | 1,174,751 | 
|                                                              |  |      |         |  |      |  |           |      |  |  |           | 



|1 | Loans and advances to customers and Customer deposits, as at 31 December 2015 and 2014, are adjusted as a result of a change in accounting policies. Reference is made to Note 1 Accounting policies
 Changes in accounting policies in 2016. Deferred tax assets and Deferred tax liabilities as at 31 December 2015 and 2014 are adjusted.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

References relate to the accompanying notes. These form an integral part of the Consolidated annual accounts. Reference is made to Note 1 Accounting
policies for information on Changes in presentation of the Consolidated annual accounts and related notes.



|                                          |  |     |  | 
|----------------------------------------- |  | --- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-4 |  | 



---

##### Table of Contents

Consolidated statement of profit or loss





for the years ended 31 December



|                                                          |  |      |         |       |      |  |        |      |  |  |         |       |  |      |        |  |      |  |         |     |  |  |        | 
|--------------------------------------------------------- |  | ---- | ------- | ----- | ---- |  | ------ | ---- |  |  | ------- | ----- |  | ---- | ------ |  | ---- |  | ------- | --- |  |  | ------ | 
|in EUR million                                            |  | 2016 |         |       | 2016 |  |        | 2015 |  |  | 2015    |       |  | 2014 |        |  | 2014 | 
|Continuing operations                                     |  |      |         |       |      |  |        |      |  |  |         |       |  |      |        |  |      |  |         |     |  |  |        | 
|Interest income                                           |  |      | 44,182  |       |      |  |        |      |  |  | 46,321  |       |  |      |        |  |      |  | 48,169  |     |  |  |        | 
|Interest expense                                          |  |      | 30,941 |       |      |  |        |      |  |  | 33,760 |       |  |      |        |  |      |  | 35,865 |     |  |  |        | 
|                                                          |  |      |         |       |      |  |        |      |  |  |         |       |  |      |        |  |      |  |         |     |  |  |        | 
|Net interest income 20                                    |  |      |         |       |      |  | 13,241 |      |  |  |         |       |  |      | 12,561 |  |      |  |         |     |  |  | 12,304 | 
|Commission income                                         |  |      | 3,581   |       |      |  |        |      |  |  | 3,411   |       |  |      |        |  |      |  | 3,297   |     |  |  |        | 
|Commission expense                                        |  |      | 1,148  |       |      |  |        |      |  |  | 1,093  |       |  |      |        |  |      |  | 1,004  |     |  |  |        | 
|                                                          |  |      |         |       |      |  |        |      |  |  |         |       |  |      |        |  |      |  |         |     |  |  |        | 
|Net commission income 21                                  |  |      |         |       |      |  | 2,433  |      |  |  |         |       |  |      | 2,318  |  |      |  |         |     |  |  | 2,293  | 
|Valuation results and net trading income 22               |  |      |         |       |      |  | 1,545  |      |  |  |         |       |  |      | 2,445  |  |      |  |         |     |  |  | 49    | 
|Investment income 23                                      |  |      |         |       |      |  | 421    |      |  |  |         |       |  |      | 123    |  |      |  |         |     |  |  | 236    | 
|Share of result from associates and joint ventures 7      |  |      |         |       |      |  | 88     |      |  |  |         |       |  |      | 492    |  |      |  |         |     |  |  | 138    | 
|Result on disposal of group companies 24                  |  |      |         |       |      |  | 1      |      |  |  |         |       |  |      | 2      |  |      |  |         |     |  |  | 195    | 
|Other income 25                                           |  |      |         |       |      |  | 173    |      |  |  |         |       |  |      | 66     |  |      |  |         |     |  |  | 97     | 
|                                                          |  |      |         |       |      |  |        |      |  |  |         |       |  |      |        |  |      |  |         |     |  |  |        | 
|Total income                                              |  |      |         |       |      |  | 17,902 |      |  |  |         |       |  |      | 18,007 |  |      |  |         |     |  |  | 15,214 | 
|Addition to loan loss provisions 6                        |  |      |         |       |      |  | 974    |      |  |  |         |       |  |      | 1,347  |  |      |  |         |     |  |  | 1,594  | 
|Staff expenses 26                                         |  |      |         |       |      |  | 5,039  |      |  |  |         |       |  |      | 4,972  |  |      |  |         |     |  |  | 5,788  | 
|Other operating expenses 27                               |  |      |         |       |      |  | 5,575  |      |  |  |         |       |  |      | 4,354  |  |      |  |         |     |  |  | 4,471  | 
|                                                          |  |      |         |       |      |  |        |      |  |  |         |       |  |      |        |  |      |  |         |     |  |  |        | 
|Total expenses                                            |  |      |         |       |      |  | 11,588 |      |  |  |         |       |  |      | 10,673 |  |      |  |         |     |  |  | 11,853 | 
|                                                          |  |      |         |       |      |  |        |      |  |  |         |       |  |      |        |  |      |  |         |     |  |  |        | 
|Result before tax from continuing operations              |  |      |         |       |      |  | 6,314  |      |  |  |         |       |  |      | 7,334  |  |      |  |         |     |  |  | 3,361  | 
|Taxation 36                                               |  |      |         |       |      |  | 1,705  |      |  |  |         |       |  |      | 1,924  |  |      |  |         |     |  |  | 859    | 
|                                                          |  |      |         |       |      |  |        |      |  |  |         |       |  |      |        |  |      |  |         |     |  |  |        | 
|Net result from continuing operations                     |  |      |         |       |      |  | 4,609  |      |  |  |         |       |  |      | 5,410  |  |      |  |         |     |  |  | 2,502  | 
|Discontinued operations 28                                |  |      |         |       |      |  |        |      |  |  |         |       |  |      |        |  |      |  |         |     |  |  |        | 
|Net result from discontinued operations                   |  |      |         |       |      |  |        |      |  |  |         |       |  |      | 800    |  |      |  |         |     |  |  | 667    | 
|Net result from classification as discontinued operations |  |      |         |       |      |  |        |      |  |  |         |       |  |      | 3      |  |      |  |         |     |  |  | 470   | 
|Net result from disposal of discontinued operations       |  |      |         |       |      |  | 441    |      |  |  |         |       |  |      | 879   |  |      |  |         |     |  |  | 1,572 | 
|                                                          |  |      |         |       |      |  |        |      |  |  |         |       |  |      |        |  |      |  |         |     |  |  |        | 
|Total net result from discontinued operations             |  |      |         |       |      |  | 441    |      |  |  |         |       |  |      | 76    |  |      |  |         |     |  |  | 1,375 | 
|                                                          |  |      |         |       |      |  |        |      |  |  |         |       |  |      |        |  |      |  |         |     |  |  |        | 
|Net result (before non-controlling interests)             |  |      |         |       |      |  | 5,050  |      |  |  |         |       |  |      | 5,334  |  |      |  |         |     |  |  | 1,127  | 
|Net result attributable to Non-controlling
interests      |  |      |         | 75    |      |  |        |      |  |  |         | 408   |  |      |        |  |      |  |         | 164 | 
|                                                          |  |      |         |       |      |  |        |      |  |  |         |       |  |      |        |  |      |  |         |     |  |  |        | 
|Net result attributable to Equityholders of the parent    |  |      |         | 4,975 |      |  |        |      |  |  |         | 4,926 |  |      |        |  |      |  |         | 963 | 
|                                                          |  |      |         |       |      |  |        |      |  |  |         |       |  |      |        |  |      |  |         |     |  |  |        | 

References relate to the accompanying notes. These form an integral part of the Consolidated annual accounts.

Reference is made to Note 1 Accounting policies for information on Changes in presentation of the Consolidated annual accounts and related notes.



| |  |     |  |                                          
| |  | --- |  | -----------------------------------------
| |  | F-5 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Consolidated statement of profit or loss - continued







|                                                               |  |      |       |  |      |  |       |      |  |  |        | 
|-------------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ------ | 
|in EUR million                                                 |  | 2016 |       |  | 2015 |  |       | 2014 | 
|Net result attributable to Non-controlling interests           |  |      |       |  |      |  |       |      |  |  |        | 
| from continuing operations                                   |  |      | 75    |  |      |  | 69    |      |  |  | 79     | 
| from discontinued operations                                 |  |      |       |  |      |  | 339   |      |  |  | 85     | 
|                                                               |  |      |       |  |      |  |       |      |  |  |        | 
|                                                               |  |      | 75    |  |      |  | 408   |      |  |  | 164    | 
|Net result attributable to Equityholders of the parent         |  |      |       |  |      |  |       |      |  |  |        | 
| from continuing operations                                   |  |      | 4,534 |  |      |  | 5,341 |      |  |  | 2,423  | 
| from discontinued operations                                 |  |      | 441   |  |      |  | 415  |      |  |  | 1,460 | 
|                                                               |  |      |       |  |      |  |       |      |  |  |        | 
|                                                               |  |      | 4,975 |  |      |  | 4,926 |      |  |  | 963    | 
|                                                               |  |      |       |  |      |  |       |      |  |  |        | 
|                                                               |  |      |      
|in EUR                                                         |  | 2016 |       |  | 2015 |  |       | 2014 | 
|Earnings per ordinary share 29                                 |  |      |       |  |      |  |       |      |  |  |        | 
|Basic earnings per ordinary share                              |  |      | 1.28  |  |      |  | 1.28  |      |  |  | 0.06   | 
|Diluted earnings per ordinary share                            |  |      | 1.28  |  |      |  | 1.27  |      |  |  | 0.06   | 
|Earnings per ordinary share from continuing operations 29      |  |      |       |  |      |  |       |      |  |  |        | 
|Basic earnings per ordinary share from continuing operations   |  |      | 1.17  |  |      |  | 1.39  |      |  |  | 0.44   | 
|Diluted earnings per ordinary share from continuing operations |  |      | 1.17  |  |      |  | 1.38  |      |  |  | 0.43   | 
|Dividend per ordinary share 30                                 |  |      | 0.66  |  |      |  | 0.65  |      |  |  | 0.12   | 
|                                                               |  |      |       |  |      |  |       |      |  |  |        | 

References relate to the accompanying notes. These form an integral part of the Consolidated annual accounts.

Reference is made to Note 1 Accounting policies for information on Changes in presentation of the Consolidated annual accounts and related notes.



|                                          |  |     |  | 
|----------------------------------------- |  | --- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-6 |  | 



---

##### Table of Contents

Consolidated statement of

comprehensive income





for the years ended 31 December



|                                                                                      |  |      |       |  |      |  |       |      |  |  |        | 
|------------------------------------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ------ | 
|in EUR million                                                                        |  | 2016 |       |  | 2015 |  |       | 2014 | 
|Net result (before non-controlling interests)                                         |  |      | 5,050 |  |      |  | 5,334 |      |  |  | 1,127  | 
|Other comprehensive income                                                            |  |      |       |  |      |  |       |      |  |  |        | 
|Items that will not be reclassified to the statement of profit or loss:               |  |      |       |  |      |  |       |      |  |  |        | 
|Unrealised revaluations property in own use                                           |  |      | 5     |  |      |  | 35    |      |  |  | 30    | 
|Remeasurement of the net defined benefit asset/liability 35                           |  |      | 65   |  |      |  | 24    |      |  |  | 289   | 
|Items that may subsequently be reclassified to the statement of profit or loss:       |  |      |       |  |      |  |       |      |  |  |        | 
|Unrealised revaluations
available-for-sale investments and other revaluations         |  |      | 61    |  |      |  | 414  |      |  |  | 6,981  | 
|Realised gains/losses transferred to the statement of profit or loss                  |  |      | 146  |  |      |  | 92   |      |  |  | 139   | 
|Changes in cash flow hedge reserve                                                    |  |      | 77    |  |      |  | 724  |      |  |  | 2,394  | 
|Transfer to insurance liabilities/DAC                                                 |  |      |       |  |      |  | 601   |      |  |  | 2,146 | 
|Exchange rate differences                                                             |  |      | 254  |  |      |  | 1,697 |      |  |  | 2,374  | 
|Share of other comprehensive income of associates and joint ventures and other income |  |      | 14   |  |      |  | 5    |      |  |  | 43     | 
|                                                                                      |  |      |       |  |      |  |       |      |  |  |        | 
|Total comprehensive income                                                            |  |      | 4,714 |  |      |  | 6,456 |      |  |  | 10,315 | 
|Comprehensive income attributable to:                                                 |  |      |       |  |      |  |       |      |  |  |        | 
|Non-controlling interests                                                             |  |      |       |  |      |  | 534   |      |  |  | 1,266  | 
|Equityholders of the parent                                                           |  |      | 4,714 |  |      |  | 5,922 |      |  |  | 9,049  | 
|                                                                                      |  |      |       |  |      |  |       |      |  |  |        | 
|                                                                                      |  |      | 4,714 |  |      |  | 6,456 |      |  |  | 10,315 | 
|                                                                                      |  |      |       |  |      |  |       |      |  |  |        | 

References relate to the accompanying notes. These form an integral part of the Consolidated annual accounts.

Reference is made to Note 36 Taxation for the disclosure on the income tax effects on each component of the other comprehensive income.



| |  |     |  |                                          
| |  | --- |  | -----------------------------------------
| |  | F-7 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Consolidated statement of changes

in equity







|                                                                                      |  |                              |        |  |               |  |       |                  |  |  |                             |  |  |                          |        |  |             |  |     |  |  |  |        | 
|------------------------------------------------------------------------------------- |  | ---------------------------- | ------ |  | ------------- |  | ----- | ---------------- |  |  | --------------------------- |  |  | ------------------------ | ------ |  | ----------- |  | --- |  |  |  | ------ | 
|in EUR million                                                                        |  | Sharecapital andsharepremium |        |  | Otherreserves |  |       | Retainedearnings |  |  | Shareholdersequity(parent) |  |  | Non-controllinginterests |        |  | Totalequity | 
|Balance as at 1 January 2016                                                          |  |                              | 16,982 |  |               |  | 5,759 |                  |  |  | 22,231                      |  |  |                          | 44,972 |  |             |  | 638 |  |  |  | 45,610 | 
|Unrealised revaluations
available-for-sale investments and other revaluations         |  |                              |        |  |               |  | 80    |                  |  |  |                             |  |  |                          | 80     |  |             |  | 19 |  |  |  | 61     | 
|Realised gains/losses transferred to the statement of profit or loss                  |  |                              |        |  |               |  | 146  |                  |  |  |                             |  |  |                          | 146   |  |             |  |     |  |  |  | 146   | 
|Changes in cash flow hedge reserve                                                    |  |                              |        |  |               |  | 111   |                  |  |  |                             |  |  |                          | 111    |  |             |  | 34 |  |  |  | 77     | 
|Unrealised revaluations property in own use                                           |  |                              |        |  |               |  | 5     |                  |  |  |                             |  |  |                          | 5      |  |             |  |     |  |  |  | 5      | 
|Remeasurement of the net defined benefit asset/liability 35                           |  |                              |        |  |               |  | 65   |                  |  |  |                             |  |  |                          | 65    |  |             |  |     |  |  |  | 65    | 
|Exchange rate differences                                                             |  |                              |        |  |               |  | 232  |                  |  |  |                             |  |  |                          | 232   |  |             |  | 22 |  |  |  | 254   | 
|Share of other comprehensive income of associates and joint ventures and other income |  |                              |        |  |               |  | 251   |                  |  |  | 265                        |  |  |                          | 14    |  |             |  |     |  |  |  | 14    | 
|                                                                                      |  |                              |        |  |               |  |       |                  |  |  |                             |  |  |                          |        |  |             |  |     |  |  |  |        | 
|Total amount recognised directly in other comprehensive income                        |  |                              |        |  |               |  | 4     |                  |  |  | 265                        |  |  |                          | 261   |  |             |  | 75 |  |  |  | 336   | 
|Net result from continuing and discontinued operations                                |  |                              |        |  |               |  | 124   |                  |  |  | 4,851                       |  |  |                          | 4,975  |  |             |  | 75  |  |  |  | 5,050  | 
|                                                                                      |  |                              |        |  |               |  |       |                  |  |  |                             |  |  |                          |        |  |             |  |     |  |  |  |        | 
|Total comprehensive income                                                            |  |                              |        |  |               |  | 128   |                  |  |  | 4,586                       |  |  |                          | 4,714  |  |             |  |     |  |  |  | 4,714  | 
|Dividends 30                                                                          |  |                              |        |  |               |  |       |                  |  |  | 2,521                      |  |  |                          | 2,521 |  |             |  | 32 |  |  |  | 2,553 | 
|Changes in treasury shares                                                            |  |                              |        |  |               |  | 10    |                  |  |  |                             |  |  |                          | 10     |  |             |  |     |  |  |  | 10     | 
|Employee stock option and share plans                                                 |  |                              | 7      |  |               |  |       |                  |  |  | 75                          |  |  |                          | 82     |  |             |  |     |  |  |  | 82     | 
|Changes in the composition of the group and other changes                             |  |                              |        |  |               |  |       |                  |  |  |                             |  |  |                          |        |  |             |  |     |  |  |  |        | 
|                                                                                      |  |                              |        |  |               |  |       |                  |  |  |                             |  |  |                          |        |  |             |  |     |  |  |  |        | 
|Balance as at 31 December 2016                                                        |  |                              | 16,989 |  |               |  | 5,897 |                  |  |  | 24,371                      |  |  |                          | 47,257 |  |             |  | 606 |  |  |  | 47,863 | 
|                                                                                      |  |                              |        |  |               |  |       |                  |  |  |                             |  |  |                          |        |  |             |  |     |  |  |  |        | 

References relate to the accompanying notes. These form an integral part of the Consolidated annual accounts.

Changes in individual Reserve components are presented in Note 19 Equity.



|                                          |  |     |  | 
|----------------------------------------- |  | --- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-8 |  | 



---

##### Table of Contents

Consolidated statement of changes in equity - continued







|                                                                              |  |                              |        |  |               |  |        |                  |  |  |                             |  |  |                          |        |  |             |  |         |  |  |  |         | 
|----------------------------------------------------------------------------- |  | ---------------------------- | ------ |  | ------------- |  | ------ | ---------------- |  |  | --------------------------- |  |  | ------------------------ | ------ |  | ----------- |  | ------- |  |  |  | ------- | 
|in EUR million                                                                |  | Sharecapital andsharepremium |        |  | Otherreserves |  |        | Retainedearnings |  |  | Shareholdersequity(parent) |  |  | Non-controllinginterests |        |  | Totalequity | 
|Balance as at 1 January 2015                                                  |  |                              | 16,971 |  |               |  | 11,213 |                  |  |  | 19,370                      |  |  |                          | 47,554 |  |             |  | 8,047   |  |  |  | 55,601  | 
|Unrealised revaluations
available-for-sale investments and other revaluations |  |                              |        |  |               |  | 528   |                  |  |  |                             |  |  |                          | 528   |  |             |  | 114     |  |  |  | 414    | 
|Realised gains/losses transferred to the statement of profit or loss          |  |                              |        |  |               |  | 94    |                  |  |  |                             |  |  |                          | 94    |  |             |  | 2       |  |  |  | 92     | 
|Changes in cash flow hedge reserve                                            |  |                              |        |  |               |  | 715   |                  |  |  |                             |  |  |                          | 715   |  |             |  | 9      |  |  |  | 724    | 
|Unrealised revaluations property in own use                                   |  |                              |        |  |               |  | 35     |                  |  |  |                             |  |  |                          | 35     |  |             |  |         |  |  |  | 35      | 
|Remeasurement of the net defined benefit asset/liability 35                   |  |                              |        |  |               |  | 34     |                  |  |  |                             |  |  |                          | 34     |  |             |  | 10     |  |  |  | 24      | 
|Transfer to insurance liabilities/DAC                                         |  |                              |        |  |               |  | 609    |                  |  |  |                             |  |  |                          | 609    |  |             |  | 8      |  |  |  | 601     | 
|Exchange rate differences and other1                                          |  |                              |        |  |               |  | 1,662  |                  |  |  |                             |  |  |                          | 1,662  |  |             |  | 35      |  |  |  | 1,697   | 
|Share of other comprehensive income of associates and joint ventures          |  |                              |        |  |               |  | 7     |                  |  |  |                             |  |  |                          | 7     |  |             |  | 2       |  |  |  | 5      | 
|                                                                              |  |                              |        |  |               |  |        |                  |  |  |                             |  |  |                          |        |  |             |  |         |  |  |  |         | 
|Total amount recognised directly in other comprehensive income                |  |                              |        |  |               |  | 996    |                  |  |  |                             |  |  |                          | 996    |  |             |  | 126     |  |  |  | 1,122   | 
|Net result from continuing and discontinued operations                        |  |                              |        |  |               |  | 131    |                  |  |  | 4,795                       |  |  |                          | 4,926  |  |             |  | 408     |  |  |  | 5,334   | 
|                                                                              |  |                              |        |  |               |  |        |                  |  |  |                             |  |  |                          |        |  |             |  |         |  |  |  |         | 
|Total comprehensive income                                                    |  |                              |        |  |               |  | 1,127  |                  |  |  | 4,795                       |  |  |                          | 5,922  |  |             |  | 534     |  |  |  | 6,456   | 
|Impact of partial divestment of NN Group                                      |  |                              |        |  |               |  | 1,499 |                  |  |  | 258                        |  |  |                          | 1,757 |  |             |  | 3,030   |  |  |  | 1,273   | 
|Impact of deconsolidation of NN Group                                         |  |                              |        |  |               |  | 5,345 |                  |  |  |                             |  |  |                          | 5,345 |  |             |  | 10,768 |  |  |  | 16,113 | 
|Dividends 30                                                                  |  |                              |        |  |               |  |        |                  |  |  | 1,393                      |  |  |                          | 1,393 |  |             |  | 118    |  |  |  | 1,511  | 
|Coupon on Undated subordinated notes issued by NN Group                       |  |                              |        |  |               |  |        |                  |  |  | 19                         |  |  |                          | 19    |  |             |  | 15     |  |  |  | 34     | 
|Changes in treasury shares                                                    |  |                              |        |  |               |  | 28     |                  |  |  |                             |  |  |                          | 28     |  |             |  |         |  |  |  | 28      | 
|Employee stock option and share plans                                         |  |                              | 11     |  |               |  |        |                  |  |  | 105                         |  |  |                          | 116    |  |             |  | 1       |  |  |  | 117     | 
|Changes in the composition of the group and other changes                     |  |                              |        |  |               |  | 235    |                  |  |  | 369                        |  |  |                          | 134   |  |             |  | 73     |  |  |  | 207    | 
|                                                                              |  |                              |        |  |               |  |        |                  |  |  |                             |  |  |                          |        |  |             |  |         |  |  |  |         | 
|Balance as at 31 December 2015                                                |  |                              | 16,982 |  |               |  | 5,759  |                  |  |  | 22,231                      |  |  |                          | 44,972 |  |             |  | 638     |  |  |  | 45,610  | 
|                                                                              |  |                              |        |  |               |  |        |                  |  |  |                             |  |  |                          |        |  |             |  |         |  |  |  |         | 



|1 | Exchange rate differences and other include the transfer of Revaluation reserves to Other reserves due to the partial sale of NN Group in February 2015.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------

References relate to the accompanying notes. These form an integral part of the Consolidated annual accounts.

Changes in individual Reserve components are presented in Note 19 Equity.



| |  |     |  |                                          
| |  | --- |  | -----------------------------------------
| |  | F-9 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Consolidated statement of changes in equity - continued







|                                                                              |  |                              |        |  |               |  |        |                  |  |  |                             |  |  |                            |        |  |                          |  |        |             |  |  |        |  |  |  |        | 
|----------------------------------------------------------------------------- |  | ---------------------------- | ------ |  | ------------- |  | ------ | ---------------- |  |  | --------------------------- |  |  | -------------------------- | ------ |  | ------------------------ |  | ------ | ----------- |  |  | ------ |  |  |  | ------ | 
|in EUR million                                                                |  | Sharecapital andsharepremium |        |  | Otherreserves |  |        | Retainedearnings |  |  | Shareholdersequity(parent) |  |  | Non-votingequitysecurities |        |  | Non-controllinginterests |  |        | Totalequity | 
|Balance as at 1 January 2014                                                  |  |                              | 16,959 |  |               |  | 1,242  |                  |  |  | 24,074                      |  |  |                            | 42,275 |  |                          |  | 1,500  |             |  |  | 5,913  |  |  |  | 49,688 | 
|Unrealised revaluations
available-for-sale investments and other revaluations |  |                              |        |  |               |  | 5,503  |                  |  |  |                             |  |  |                            | 5,503  |  |                          |  |        |             |  |  | 1,478  |  |  |  | 6,981  | 
|Realised gains/losses transferred to the statement of profit or loss          |  |                              |        |  |               |  | 133   |                  |  |  |                             |  |  |                            | 133   |  |                          |  |        |             |  |  | 6     |  |  |  | 139   | 
|Changes in cash flow hedge reserve                                            |  |                              |        |  |               |  | 2,001  |                  |  |  |                             |  |  |                            | 2,001  |  |                          |  |        |             |  |  | 393    |  |  |  | 2,394  | 
|Unrealised revaluations property in own use                                   |  |                              |        |  |               |  | 30    |                  |  |  |                             |  |  |                            | 30    |  |                          |  |        |             |  |  |        |  |  |  | 30    | 
|Remeasurement of the net defined benefit asset/liability 35                   |  |                              |        |  |               |  | 254   |                  |  |  |                             |  |  |                            | 254   |  |                          |  |        |             |  |  | 35    |  |  |  | 289   | 
|Transfer to insurance liabilities/DAC                                         |  |                              |        |  |               |  | 1,428 |                  |  |  |                             |  |  |                            | 1,428 |  |                          |  |        |             |  |  | 718   |  |  |  | 2,146 | 
|Exchange rate differences and other                                           |  |                              |        |  |               |  | 2,384  |                  |  |  |                             |  |  |                            | 2,384  |  |                          |  |        |             |  |  | 10    |  |  |  | 2,374  | 
|Share of other comprehensive income of associates and joint ventures          |  |                              |        |  |               |  | 118   |                  |  |  | 161                         |  |  |                            | 43     |  |                          |  |        |             |  |  |        |  |  |  | 43     | 
|                                                                              |  |                              |        |  |               |  |        |                  |  |  |                             |  |  |                            |        |  |                          |  |        |             |  |  |        |  |  |  |        | 
|Total amount recognised in other comprehensive income                         |  |                              |        |  |               |  | 7,925  |                  |  |  | 161                         |  |  |                            | 8,086  |  |                          |  |        |             |  |  | 1,102  |  |  |  | 9,188  | 
|Net result from continuing and discontinued operations                        |  |                              |        |  |               |  | 83     |                  |  |  | 880                         |  |  |                            | 963    |  |                          |  |        |             |  |  | 164    |  |  |  | 1,127  | 
|                                                                              |  |                              |        |  |               |  |        |                  |  |  |                             |  |  |                            |        |  |                          |  |        |             |  |  |        |  |  |  |        | 
|Total comprehensive income                                                    |  |                              |        |  |               |  | 8,008  |                  |  |  | 1,041                       |  |  |                            | 9,049  |  |                          |  |        |             |  |  | 1,266  |  |  |  | 10,315 | 
|Impact of deconsolidation of Voya                                             |  |                              |        |  |               |  | 87     |                  |  |  |                             |  |  |                            | 87     |  |                          |  |        |             |  |  | 5,100 |  |  |  | 5,013 | 
|Impact of IPO NN Group                                                        |  |                              |        |  |               |  | 1,924 |                  |  |  | 1,327                      |  |  |                            | 3,251 |  |                          |  |        |             |  |  | 5,397  |  |  |  | 2,146  | 
|Repayment and premium on non-voting equity securities1                        |  |                              |        |  |               |  |        |                  |  |  | 750                        |  |  |                            | 750   |  |                          |  | 1,500 |             |  |  |        |  |  |  | 2,250 | 
|Dividends                                                                     |  |                              |        |  |               |  |        |                  |  |  |                             |  |  |                            |        |  |                          |  |        |             |  |  | 44    |  |  |  | 44    | 
|Impact of issuance Undated subordinated notes issued by NN Group              |  |                              |        |  |               |  |        |                  |  |  |                             |  |  |                            |        |  |                          |  |        |             |  |  | 986    |  |  |  | 986    | 
|Changes in treasury shares                                                    |  |                              |        |  |               |  | 14    |                  |  |  |                             |  |  |                            | 14    |  |                          |  |        |             |  |  |        |  |  |  | 14    | 
|Employee stock option and share plans                                         |  |                              | 12     |  |               |  |        |                  |  |  | 87                          |  |  |                            | 99     |  |                          |  |        |             |  |  | 13     |  |  |  | 112    | 
|Changes in the composition of the group and other changes                     |  |                              |        |  |               |  | 3,814  |                  |  |  | 3,755                      |  |  |                            | 59     |  |                          |  |        |             |  |  | 384   |  |  |  | 325   | 
|                                                                              |  |                              |        |  |               |  |        |                  |  |  |                             |  |  |                            |        |  |                          |  |        |             |  |  |        |  |  |  |        | 
|Balance as at 31 December 2014                                                |  |                              | 16,971 |  |               |  | 11,213 |                  |  |  | 19,370                      |  |  |                            | 47,554 |  |                          |  |       |             |  |  | 8,047  |  |  |  | 55,601 | 
|                                                                              |  |                              |        |  |               |  |        |                  |  |  |                             |  |  |                            |        |  |                          |  |        |             |  |  |        |  |  |  |        | 



|1 | In 2014, ING Group made the final repayment on the core Tier 1 securities of EUR 1.025 billion to the Dutch State. Including the final payment, the total amount paid to the Dutch State was EUR 13.5 billion,
which contained EUR 10 billion in principal and EUR 3.5 billion in interest and premiums and resulted in an annualised return of 12.7% for the Dutch State.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

References relate to the accompanying notes. These form an integral part of the Consolidated annual accounts.

Changes in individual components are presented in Note 19 Equity.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-10 |  | 



---

##### Table of Contents

Consolidated statement of cash flows





for the years ended 31 December



|                                                     |  |                                                                    |        |  |         |  |        |      |         |  |        |  |         | 
|---------------------------------------------------- |  | ------------------------------------------------------------------ | ------ |  | ------- |  | ------ | ---- | ------- |  | ------ |  | ------- | 
|in EUR million                                       |  | 2016                                                               |        |  | 2015    |  |        | 2014 |        
|Cash flows from operating activities                 |  |                                                                    |        |  |         |  |        |      |         |  |        | 
|Result before
tax1                                   |  |                                                                    |        |  | 6,753   |  |        |      | 7,403   |  |        |  | 2,231   | 
|Adjusted for:                                        |  |  depreciation                                                     |        |  | 536     |  |        |      | 634     |  |        |  | 692     | 
|                                                     |  |  change in provisions for insurance and investment contracts      |        |  |         |  |        |      | 1,499  |  |        |  | 3,527  | 
|                                                     |  |  addition to loan loss provisions                                 |        |  | 974     |  |        |      | 1,347   |  |        |  | 1,594   | 
|                                                     |  |  other7                                                           |        |  | 1,084   |  |        |      | 1,310  |  |        |  | 2,363   | 
|Taxation paid                                        |  |                                                                    | 1,603 |  |         |  | 1,450 |      |         |  | 1,073 | 
|Changes in:                                          |  |  loans and advances to banks, not available on demand             |        |  | 1,162  |  |        |      | 6,766   |  |        |  | 3,360   | 
|                                                     |  |  trading assets                                                   |        |  | 16,956  |  |        |      | 5,458   |  |        |  | 23,676 | 
|                                                     |  |  non-trading derivatives                                          |        |  | 1,812   |  |        |      | 303    |  |        |  | 3,022  | 
|                                                     |  |  other financial assets at fair value through profit or loss      |        |  | 3,401  |  |        |      | 256    |  |        |  | 553    | 
|                                                     |  |  loans and advances to customers2                                 |        |  | 29,656 |  |        |      | 23,030 |  |        |  | 13,901 | 
|                                                     |  |  other assets                                                     |        |  | 915    |  |        |      | 549     |  |        |  | 246     | 
|                                                     |  |  deposits from banks, not payable on demand                       |        |  | 342    |  |        |      | 5,179   |  |        |  | 3,353   | 
|                                                     |  |  customer deposits2                                               |        |  | 23,493  |  |        |      | 17,970  |  |        |  | 19,015  | 
|                                                     |  |  trading liabilities                                              |        |  | 5,634  |  |        |      | 8,276  |  |        |  | 23,855  | 
|                                                     |  |  other financial liabilities at fair value through profit or loss |        |  | 432    |  |        |      | 1,582  |  |        |  | 1,018  | 
|                                                     |  |  provisions and other liabilities7                                |        |  | 90      |  |        |      | 2,977   |  |        |  | 2,080   | 
|                                                     |  |                                                                    |        |  |         |  |        |      |         |  |        |  |         | 
|Net cash flow from/(used in) operating activities    |  |                                                                    | 8,553  |  |         |  | 10,577 |      |         |  | 12,019 | 
|Cash flows from investing activities                 |  |                                                                    |        |  |         |  |        |      |         |  |        | 
|Investments and advances:                            |  |  associates and joint ventures                                    |        |  | 49     |  |        |      | 40     |  |        |  | 528    | 
|                                                     |  |  available-for-sale
investments                                   |        |  | 27,003 |  |        |      | 47,858 |  |        |  | 85,799 | 
|                                                     |  |  held-to-maturity
investments                                     |        |  | 1,731  |  |        |      | 3,457  |  |        |  | 315    | 
|                                                     |  |  property and equipment                                           |        |  | 351    |  |        |      | 353    |  |        |  | 375    | 
|                                                     |  |  assets subject to operating leases                               |        |  | 64     |  |        |      | 37     |  |        |  | 34     | 
|                                                     |  |  investments for risk of policyholders                            |        |  |         |  |        |      | 2,417  |  |        |  | 20,598 | 
|                                                     |  |  other investments                                                |        |  | 288    |  |        |      | 648    |  |        |  | 6,831  | 
|Disposals and redemptions:                           |  |  group companies (including cash in company
disposed)3            |        |  |         |  |        |      | 6,926  |  |        |  | 1,216  | 
|                                                     |  |  associates and joint ventures4                                   |        |  | 1,071   |  |        |      | 1,175   |  |        |  | 2,505   | 
|                                                     |  |  available-for-sale
investments5                                  |        |  | 32,540  |  |        |      | 52,675  |  |        |  | 69,444  | 
|                                                     |  |  held-to-maturity
investments                                     |        |  | 630     |  |        |      | 1,219   |  |        |  | 1,172   | 
|                                                     |  |  property and equipment                                           |        |  | 63      |  |        |      | 74      |  |        |  | 55      | 
|                                                     |  |  assets subject to operating leases                               |        |  | 12      |  |        |      | 17      |  |        |  | 3       | 
|                                                     |  |  investments for risk of policyholders                            |        |  |         |  |        |      | 7,566   |  |        |  | 28,003  | 
|                                                     |  |  loans                                                            |        |  | 1,295   |  |        |      | 3,201   |  |        |  | 1,167   | 
|                                                     |  |  other investments                                                |        |  | 9       |  |        |      | 5       |  |        |  | 5,928   | 
|                                                     |  |                                                                    |        |  |         |  |        |      |         |  |        |  |         | 
|Net cash flow from/(used in) investing activities 31 |  |                                                                    | 6,134  |  |         |  | 4,196  |      |         |  | 7,419 | 
|                                                     |  |                                                                    |        |  |         |  |        |      |         |  |        |  |         | 



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-11 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Consolidated statement of cash flows - continued







|                                                             |  |      |          |  |      |  |          |      |  |  |          |  |  | 
|------------------------------------------------------------ |  | ---- | -------- |  | ---- |  | -------- | ---- |  |  | -------- |  |  | 
|in EUR million                                               |  | 2016 |          |  | 2015 |  |          | 2014 | 
|Net cash flow from/(used in) operating activities            |  |      | 8,553    |  |      |  | 10,577   |      |  |  | 12,019   | 
|Net cash flow from/(used in) investing activities 31         |  |      | 6,134    |  |      |  | 4,196    |      |  |  | 7,419   | 
|Cash flows from financing activities                         |  |      |          |  |      |  |          |      |  |  |          | 
|Proceeds from debt securities                                |  |      | 106,174  |  |      |  | 139,424  |      |  |  | 143,628  | 
|Repayments of debt securities                                |  |      | 123,748 |  |      |  | 147,337 |      |  |  | 149,604 | 
|Proceeds from issuance of subordinated loans                 |  |      | 2,070    |  |      |  | 3,159    |      |  |  | 4,211    | 
|Repayments of subordinated loans6                            |  |      | 1,042   |  |      |  | 6,092   |      |  |  | 3,367   | 
|Repayment and premium paid on non-voting equity
securities   |  |      |          |  |      |  |          |      |  |  | 2,250   | 
|Purchase/sale of treasury shares                             |  |      | 10       |  |      |  | 34       |      |  |  | 14      | 
|Proceeds from NN Group divestments and related transactions  |  |      |          |  |      |  | 1,040    |      |  |  | 2,733    | 
|Dividends paid 30                                            |  |      | 2,521   |  |      |  | 1,393   |      |  |  |          | 
|                                                             |  |      |          |  |      |  |          |      |  |  |          |  |  | 
|Net cash flow from/(used in) financing activities            |  |      | 19,057  |  |      |  | 11,165  |      |  |  | 4,663   | 
|                                                             |  |      |          |  |      |  |          |      |  |  |          |  |  | 
|Net cash flow                                                |  |      | 4,370   |  |      |  | 3,608    |      |  |  | 63      | 
|Cash and cash equivalents at beginning of year               |  |      | 20,379   |  |      |  | 17,113   |      |  |  | 17,180   | 
|Effect of exchange rate changes on cash and cash equivalents |  |      | 155      |  |      |  | 342     |      |  |  | 4       | 
|                                                             |  |      |          |  |      |  |          |      |  |  |          |  |  | 
|Cash and cash equivalents at end of year 32                  |  |      | 16,164   |  |      |  | 20,379   |      |  |  | 17,113   | 
|                                                             |  |      |          |  |      |  |          |      |  |  |          |  |  | 



|1 | Result before tax includes results from continuing operations of EUR 6,314 million (2015: EUR 7,334 million; 2014: EUR 3,361 million) as well as results from discontinued operations of EUR 439 million
(2015: EUR 69 million; 2014: EUR 1,130 million).
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | Changes in cash flows of Loans and advances to customers and Customer deposits are not impacted by the change in accounting policies, as described in Note 1 Accounting policies  Changes in accounting
policies in 2016, on the basis that the change in policy does not comprise a change in actual cash flows for the respective periods.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3 | In 2015, Disposals and redemptions  group companies included EUR 7,975 million and EUR 997 million related to cash and cash equivalents of NN Group and proceeds from the sale of shares of NN Group
resulting in loss of control at the end of May 2015 respectively. (2014: EUR 950 million proceeds from the sale of shares of Voya which resulted in loss of control in the first quarter of 2014).
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4 | Disposals and redemptions  associates and joint ventures includes EUR 1,016 million proceeds on the further sale of NN Group shares in January 2016 resulting in loss of significant influence over NN Group
(2015: EUR 995 million proceeds on the further sale of NN Group shares in September 2015; 2014: EUR 1,940 million proceeds from the sale of Voya shares in September and November 2014).
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5 | Disposals and redemptions  available-for-sale investments includes EUR 1,375 million proceeds on the divestment of the remaining
shareholding in NN Group in April 2016.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6 | Included in Repayment of subordinated loans is a cash outflow of EUR 128 million related to the third and final tranche of mandatory exchangeable subordinated notes from the Anchor investors into NN Group ordinary
shares in February 2016.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7 | The defined contribution payment for pension plans was previously presented in Adjusted for: other and is now presented in provisions and other liabilities. Comparatives have been adjusted
accordingly.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As at 31 December 2016, Cash and cash equivalents includes cash and balances with central banks of EUR 18,144 million (2015:
EUR 21,458 million; 2014: EUR 12,233 million). The decrease in cash and balances with central banks is as a result of the lowering of excess liquidity and negative interest rates. Reference is made to Note 32 Cash and cash
equivalents.

Comparison of the Consolidated cash flow statements between 2016, 2015 and 2014 is impacted by NN Group. Included in the 2015 and 2014 cash flow
statements respectively, are the NN Group cash flows for five months until deconsolidation at the end of May 2015 and NN Group cash flows for the year ended 31 December 2014, respectively.

References relate to the accompanying notes. These form an integral part of the Consolidated annual accounts.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-12 |  | 



---

##### Table of Contents

Consolidated statement of cash flows - continued







|                                        |  |      |         |  |      |  |         |      |  |  |         | 
|--------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|Interest and dividend received and paid |  |      |         |  |      |  |         |      | 
|                                        |  | 2016 |         |  | 2015 |  |         | 2014 | 
|Interest received                       |  |      | 44,470  |  |      |  | 46,884  |      |  |  | 51,301  | 
|Interest paid                           |  |      | 31,702 |  |      |  | 34,306 |      |  |  | 38,001 | 
|                                        |  |      |         |  |      |  |         |      |  |  |         | 
|                                        |  |      | 12,768  |  |      |  | 12,578  |      |  |  | 13,300  | 
|Dividend received                       |  |      | 123     |  |      |  | 116     |      |  |  | 61      | 
|Dividend paid                           |  |      | 2,521  |  |      |  | 1,393  |      |  |  |        | 
|                                        |  |      |         |  |      |  |         |      |  |  |         | 

Interest received, interest paid and dividends received are included in operating activities in the cash flow statement. Dividend paid
is included in financing activities in the cash flow statement.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-13 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements





amounts in millions of euros, unless stated otherwise

2.1. Notes to the
Consolidated financial statement

2.1.1 Notes to the accounting policies

Reporting entity

ING Groep N.V. is a company domiciled in Amsterdam, the
Netherlands. Commercial Register of Amsterdam, number 33231073. These Consolidated annual accounts, as at and for the year ended 31 December 2016, comprise ING Groep N.V. (the Parent company) and its subsidiaries, together referred to as ING
Group. ING Group is a global financial institution with a strong European base, offering a wide range of retail and wholesale banking services to customers in over 40 countries.

Authorisation of the Consolidated annual accounts

The ING Group Consolidated
annual accounts, for the year ended 31 December 2016, were authorised for issue in accordance with a resolution of the Executive Board on 13 March 2017. The Executive Board may decide to amend the annual accounts as long as these are not
adopted by the General Meeting of Shareholders. The General Meeting of Shareholders may decide not to adopt the annual accounts, but may not amend these.

Basis
of preparation of the Consolidated annual accounts

ING Group prepares financial information in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board for purposes of reporting with the U.S. Securities and Exchange Commission (SEC), including financial information contained in this Annual report on Form
20-F. The term IFRS-IASB is used to refer to International Financial Reporting Standards as issued by the International Accounting Standards Board, including the decisions ING Group made with
regard to the options available under IFRS-IASB.

IFRS-IASB provides several options in accounting policies. The key areas in which IFRS-IASB allows accounting
policy choices and the related ING accounting policy, are summarised as follows:



| |  | INGs accounting policy for Real estate investments is fair value, with changes in fair value reflected immediately in the profit and loss account; and
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | INGs accounting policy for Property for own use is fair value, with changes in fair value reflected in the revaluation reserve in equity (Other comprehensive income). A net negative revaluation on
individual properties is reflected immediately in the profit and loss account.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ING Groups accounting policies under IFRS-IASB and its decision
on the options available are included in the section Principles of valuation and determination of results below. Except for the options included above, the principles in section Principles of valuation and determination of
results are IFRS-IASB and do not include other significant accounting policy choices made by ING. The accounting policies that are most significant to ING are included in section Critical accounting policies.

1 Accounting policies

a) Changes in accounting
policies in 2016

ING Group has consistently applied its accounting policies to all periods presented in these Consolidated annual accounts. Other than the
change in accounting policy related to Offsetting of financial assets and liabilities, as described below, there were no changes in accounting policies, effective from 1 January 2016, that materially impact ING Group.

Offsetting of financial assets and financial liabilities

IAS 32
Financial Instruments: Presentation prescribes that a financial asset and a financial liability shall be offset when there is a legally enforceable right to set off and in addition an intention to settle on a net basis
simultaneously (IAS 32.42). ING has both the legally enforceable right (by contract) to set off the amounts under notional cash pooling arrangement as well as the intention to settle on a net basis. IFRS is principle based and does not prescribe how
the intention to settle on a net basis is evidenced.

In April 2016, an Agenda Rejection Notice (ARN) was published by the IFRS Interpretations Committee (IFRIC) on
balance sheet offsetting of notional Cash Pooling products. The issue in the ARN relates to the question whether certain cash pooling arrangements would meet the requirements for offsetting under IAS 32. The IFRIC provided further clarification that
the transfer of balances into a netting account should occur at the period end to demonstrate an intention to settle on a net basis.

As a result of the ARN, which
is applicable from 6 April 2016, ING has changed its accounting policy and practice, and therefore as a result performs physical transfers of cash balances of certain clients subject to cash pooling arrangements into a single netting account on
a period end basis to evidence the intention to settle net. This change in accounting policy is accounted for retrospectively. Comparative amounts are adjusted accordingly with further information as set out below.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-14 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Summary of impact of changes in accounting policies

The change in the accounting policy, as described above, has no impact on the Consolidated statements of profit or loss (including earnings and diluted earnings per
ordinary share), statements of comprehensive income, statements of cash flows and the statements of changes in equity.

Comparative amounts in the Consolidated
statements of financial position are impacted in the line items Loans and advances to customers, Total assets, Customer deposits and Total liabilities. These line items increase by EUR 163,464 million and EUR 185,801 million as at
31 December 2015 and 31 December 2014 respectively.

Reference is made to the Consolidated statement of financial position, Note 6 Loans and
advances to customers, Note 13 Customer deposits, Note 34 Information on geographical areas, Note 37 Fair value of assets and liabilities, Note 39 Assets by contractual maturities, Note 40
Liabilities by maturity and Note 43 Offsetting financial assets and liabilities.

b) Changes in presentation of the Consolidated annual
accounts and related notes

Following further restructuring and deconsolidation of the insurance business in 2014 and 2015, ING Group revised its presentation of
the Consolidated annual accounts to best present its core business and related results. Where relevant, comparative amounts are adjusted accordingly. The main changes in the presentation of the Consolidated annual accounts and related notes are as
follows:



| |  | The primary statements and other terms used in these statements are renamed as follows:
|- |  | ---------------------------------------------------------------------------------------



| |  |  | The Consolidated balance sheet is renamed to Consolidated statement of financial position;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | The line item Amounts due from banks is renamed to Loans and advances to banks:
| | - |  | -----------------------------------------------------------------------------------



| |  |  | The line item Amounts due to banks is renamed to Deposits from banks;
| | - |  | -------------------------------------------------------------------------



| |  |  | The line item Customer deposits and other funds on deposit is renamed to Customer deposits;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | The line item Minority interest is renamed to Non-controlling interest;
| | - |  | ---------------------------------------------------------------------------



| |  |  | The Consolidated profit and loss account is renamed to Consolidated statement of profit or loss; and
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | The naming of income and expense line items, specifically related to Interest and Commission, were simplified for further clarification.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  | The Consolidated statement of financial position is changed as follows:
|- |  | -----------------------------------------------------------------------



| |  |  | The order of line items presented is changed to present assets, liabilities and equity in order of liquidity;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | The line item Real estate investments is now included in the line item Other assets and renamed to Investment properties;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | Current and deferred tax assets andliabilities are now separately presented (previously included in the line items Other assets and -liabilities);
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Provisions, as previously included in the line item Other liabilities, are now separately presented;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | The line item Subordinated loans includes the line item Other borrowed funds (previously separately presented);
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | The presentation of equity is changed to more granularly present the components of Shareholders equity (parent); and
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | The asset line items Loans and advances to banks, Loans and advances to customers, and the liability line items Deposits from banks, Customer deposits, previously included amounts for Items to be settled. The Items to
be settled amounts are now included in Other assets and Other liabilities respectively. On the basis of materiality, comparative amounts as at 31 December 2015 and 2014 have not been adjusted.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Consolidated statement of profit or loss is changed as follows:
|- |  | -------------------------------------------------------------------



| |  |  | The order of line items presented is changed to present the components of Total income more in line with the core business of ING;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Valuation results on non-trading derivatives and Net trading income have been combined into one line;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | Interest income on trading portfolio has been split into two lines: Interest income on trading derivatives and Interest income on other trading portfolio; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Interest expense on trading liabilities has been split into two lines: Interest expense on trading derivatives and Interest expense on other trading portfolio.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Consolidated Statement of Cash Flows
|- |  | ----------------------------------------



| |  |  | The defined contribution payment for pension plans was previously presented in Adjusted for: other and is now presented in provisions and other liabilities. Comparatives have been adjusted
accordingly.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

c) Changes in IFRS effective in 2016

ING
Group has applied a number of interpretations and amendments to standards for the first time for the annual periods beginning on or after 1 January 2016. Apart from the accounting policy change described above, the implementation of these
changes had an insignificant impact on the consolidated financial position, net result, other comprehensive income and related disclosures of ING Group. ING Group has not early adopted any other standard, interpretation or amendment which has been
issued, but is not yet effective.

d) Upcoming changes in IFRS after 2016

Changes to IFRS effective in 2017

On 1 January 2017, amendments
to IFRS become effective. The implementation of these amendments will have no significant impact on ING Groups results or financial position.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-15 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The list of upcoming changes to IFRS, which are applicable for ING Group:



| |  | Amendments to IAS 12 Income Taxes: Recognition of Deferred Tax Assets for Unrealised;
|- |  | ---------------------------------------------------------------------------------------



| |  | Amendments to IAS 7 Statement of Cash Flows: Disclosure Initiative; and
|- |  | -------------------------------------------------------------------------



| |  | Annual improvement cycle 2014  2016
|- |  | ------------------------------------

IFRS 9 Financial Instruments

IFRS 9 Financial Instruments was issued by the IASB in July 2014. IFRS 9 will replace IAS 39 Financial Instruments: Recognition and Measurement
and includes requirements for classification and measurement of financial assets and liabilities, impairment of financial assets, and hedge accounting. The new requirements become effective as of 1 January 2018. ING Group has decided to apply
the classification, measurement and impairment requirements retrospectively by adjusting the opening balance sheet and opening equity at 1 January 2018, with no restatement of comparative periods. ING has also chosen not to early adopt changes
introduced by IFRS 9 for financial liabilities where movements in own credit for financial liabilities designated at fair value through profit or loss will be presented in other comprehensive income.

IFRS 9 Program governance and status

The structure of the IFRS 9
Program has been set-up based on the three pillars of the IFRS 9 standard: Classification and Measurement, Impairment, and Hedge Accounting. These central work streams consist of experts from Finance, Risk,
Bank Treasury, Operations and the business. The IFRS 9 Technical Board consists of the heads of various Finance and Risk functions supporting the IFRS 9 Steering Committee by reviewing the interpretations of IFRS 9, the central guidance and
instructions as prepared by the central work streams. The IFRS 9 Steering Committee is the key decision making body and consists of senior managers from Group Finance, Finance Operations, Retail Banking, Credit & Trading Risk, Risk
Operations, Bank Treasury, Balance Sheet Risk Management, and Wholesale Banking Lending Services. In addition, an international IFRS 9 network has been created within ING to connect all countries with the central team to ensure consistency in
implementation. The Management Banking Board and the Audit Committee are periodically updated about IFRS 9 and will be actively involved in future decisions.

The IFRS 9 Program is being implemented across functions, businesses and countries. The Group Accounting policies are being updated to align with IFRS 9. In 2017,
parallel runs will be performed to ensure IFRS 9 readiness on 1 January 2018.

Classification and Measurement

IFRS 9 is built on a single classification and measurement approach for financial assets that reflects the business model in which they are managed and their cash flow
characteristics. Financial assets are therefore classified in their entirety rather than being subject to complex bifurcation requirements.

Two criteria are used
to determine how financial assets should be classified and measured at Amortised Cost, Fair Value through Other Comprehensive Income (FVOCI) or Fair Value through Profit and Loss (FVPL):



|1. | The Business Model assessment is performed to determine how a portfolio of financial instruments as a whole is managed in order to classify it as Hold to Collect, Hold to Collect & Sell or Other Business Model;
and
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. | Contractual cash flow characteristics test is performed to determine whether the financial instruments give rise to cash flows that are analysed to check if they meet the Solely Payments of Principal and Interest (SPPI)
test.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In 2016, the central team finalised a Business Model Blueprint based on the structure of the organisation and all the entities across the Group
through discussions with various parties from the business, finance, and risk functions. The central team created and communicated the Business Model templates that were later tailored by local project teams to fit the local organisation as well as
local business structure and product offering.

The central team also finalised an approach for performing the SPPI test and is in the process of performing a
detailed analysis of the cash flow characteristics of our financial assets to detect whether they meet SPPI criteria. The SPPI test is performed on groups of assets that have a set of similar characteristics resulting in a homogenous population.
Where testing is being performed at a local level, these local teams are trained and supported by the central team to ensure IFRS 9 is understood and implemented consistently across the Group.

The focus in 2017 will be finalising SPPI testing and formalising the governance to embed the changes brought by IFRS 9 into everyday business and financial reporting
cycles to ensure ongoing compliance.

Impact

ING is currently
assessing the impact of IFRS 9 on the classification and measurement of its financial assets. The classification and measurement of financial liabilities remains essentially the same as under IAS 39.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-16 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Impairment

The
expected credit loss (ECL) model is more forward-looking, than the incurred loss model under IAS 39. The ECL estimates are required to be unbiased, probability-weighted, and should include supportable information about past events, current
conditions and forecasts of future economic conditions. The ECL should reflect multiple macroeconomic scenarios and include the time value of money. The ECL model applies to all on-balance financial assets
accounted for at amortised cost and FVOCI such as loans and debt securities, as well as off-balance items such as certain loan commitments, financial guarantees, and undrawn revolving credit facilities.

Three stage approach

ING Group will apply the IFRS 9 three stage approach to
measure expected credit losses:



| |  | Stage 1: 12 month ECL  performing
|- |  | ----------------------------------

Financial instruments that have not had a significant
increase in credit risk since initial recognition require, at initial recognition, a provision for ECL associated with the probability of default events occurring within the next 12 months (12 month ECL).



| |  | Stage 2: Lifetime ECL  under-performing
|- |  | ----------------------------------------

In the event of a significant increase in credit
risk since initial recognition, a provision is required for ECL resulting from all possible default events over the expected life of the financial instrument (Lifetime ECL).



| |  | Stage 3: Lifetime ECL  non-performing
|- |  | --------------------------------------

Financial
instruments that move into Stage 3 once credit impaired and purchases of credit impaired assets will require a Lifetime ECL provision.

Key concepts

ING Group aims to align the definition of credit impaired under IFRS 9 with the definition of default for prudential purposes and IAS 39 provisioning. ING Group
considers a financial asset credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred.

ING Group established a framework for whether an asset has a significant increase in credit risk. Each asset will be assessed at the reporting date on the triggers for
significant deterioration. ING Group intends to assess significant increase in credit risk using a delta in the lifetime default probability, forbearance status, watch list status, arrears and the more than 30 days past due backstop for stage 1 to
stage 2 transfers. The stage allocation will be implemented in the central credit risk systems. In 2017 analyses on the movements between stages in both directions will be performed.

Measurement

The calculation of ECL will be based on ING Groups
expected loss models (PD, LGD, EAD) currently used for regulatory capital, economic capital and collective provisions in the current IAS 39 framework. The IFRS 9 ECL model builds on existing IRB models, removes embedded prudential conservatism (such
as PD floors), and includes forward-looking point in time information based on macroeconomic indicators, such as unemployment rates and GDP growth. The expected loss parameters will be determined by using historical statistical relationships and
macroeconomic predictions. For the small portfolios outside the IRB approach, existing framework for loan loss provisions will be applied to set the parameters to measure credit risk. The lifetime risk assessment will be based on historical
observations enriched with forward looking information. The data series will be shorter compared to the assets under the IRB approach.

To measure ECL, ING
Group applies a PD x EAD x LGD approach. For stage 1 assets a forward-looking approach on a 12 month horizon will be applied. For stage 2 assets a lifetime view on the underlying parameters is taken. The Lifetime Expected Loss (LEL) is the
discounted sum of the portions of lifetime losses related to default events within each time window of 12 months. For stage three the PD equals 100% and the LGD and EAD represent a lifetime view of the characteristics of facilities that are in
default.

In 2016, enhanced data was collected from all source systems around within ING and significant progress has been made in the central implementation of
IFRS 9 concepts in the central credit risk system. Furthermore, ING Groups asset portfolios are split into a number of sub-portfolios based on asset class and jurisdiction (e.g. mortgages in the
Netherlands) in order to accurately measure ECL.

Impact

Based on the
IFRS 9 ECL model a more volatile impairment charge is expected on the back of macroeconomic predictions. Financial assets with high risk long maturity profiles are expected to be subject to the biggest impact. A
12-month ECL will be recognized for all financial assets that have not had a significant increase in credit risk. IFRS 9 requires to calculate lifetime ECL for those assets with a significant increase in
credit risk since initial recognition but are not credit impaired at the reporting date (i.e. Stage 2). This category did not exist under IAS 39. These factors combined with off-balance sheet items also in
scope of the ECL model will likely result in an increase in the total level of impairment allowances.

ING expects that any negative effect on equity may be partly
offset by the release of expected loss elements currently included in the calculation of regulatory capital (i.e. the regulatory shortfall). As the impact cannot be quantified reliably as of 31 December 2016, ING intends to quantify the
potential impact of IFRS 9 no later than in the Annual Report 2017.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-17 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Hedge Accounting

The
IFRS 9 hedge accounting requirements aim to simplify general hedge accounting requirements. Furthermore, IFRS 9 aims to align hedge accounting more closely with risk management. All micro hedge accounting strategies as well as the macro cash flow
hedge accounting are in scope of IFRS 9. Macro fair value hedging is not in scope of IFRS 9.

ING Group performed an assessment of the impact of the new hedge
accounting requirements. Based on the outcome of this assessment, ING Group has made a decision to continue applying IAS 39 for hedge accounting including the application of the EU carve out as explicitly permitted by IFRS 9. ING Group will
implement the revised hedge accounting disclosures as required by IFRS 7 Financial Instruments: Disclosures as per 1 January 2018.

IFRS 15
Revenue from Contracts with Customers

IFRS 15 Revenue from Contracts with Customers is effective for annual periods beginning on or
after 1 January. IFRS 15 introduces a Five-step approach for recognising revenue as and when the agreed performance obligations are satisfied. Agreed performance obligations are individual promises made to the customer that delivers benefit from the
customers perspective. Revenue should either be recognised at a point-in-time or over-time depending on the service being delivered to the customer. The standard may be
applied retrospectively, although transitional relief is available.. Fees related to the effective yield of the loan which is presented in Interest income and bank guarantee fees are not in the scope of IFRS 15. ING is currently assessing the
revenue stream commission income but no significant impact is expected.

IFRS 16 Leases

In January 2016, the IASB issued IFRS 16 Leases the new accounting standard for leases. The new standard is effective for annual periods beginning on or
after 1 January 2019 and will replace IAS 17 Leases and IFRIC 4 Determining whether an Arrangement contains a Lease. The new standard removes for lessee accounting, the distinction between operating or finance leases,
resulting in all leases being treated as finance leases. All leases will be recognised on the statement of financial position with the optional exceptions for short-term leases with a lease term of less than 12 months and leases of low-value assets (for example mobile phones or laptops). A lessee is required to recognise a right-of-use asset representing its right
to use the underlying leased asset and a lease liability representing its obligation to make lease payments. The main reason for this change is that this approach will result in a more comparable representation of a lessees assets and
liabilities in relation to other companies and, together with enhanced disclosures, will provide greater transparency of a lessees financial leverage and capital employed. The standard permits a lessee to choose either a full retrospective or
a modified retrospective transition approach. Furthermore the standard provides some practical options and exemptions to ease the costs of transition. Lessor accounting remains substantially unchanged. ING will adopt the standard at its effective
date and is currently assessing the impact of this standard.

Reconciliation between IFRS-EU and IFRS-IASB

The published 2015 Annual Accounts of ING Group are prepared in accordance with IFRS-EU.
IFRS-EU refers to International Financial Reporting Standards (IFRS) as adopted by the European Union (EU), including the decisions ING Group made with regard to the options available under IFRS as
adopted by the EU. IFRS-EU differs from IFRS-IASB in respect of certain paragraphs in IAS 39 Financial Instruments: Recognition and Measurement regarding hedge accounting for portfolio hedges of
interest rate risk.

Under IFRS-EU, ING Group applies fair value hedge accounting for portfolio hedges of interest rate risk
(fair value macro hedges) in accordance with the EU carve out version of IAS 39. Under the EU IAS 39 carve-out, hedge accounting may be applied, in respect of fair value macro hedges, to core deposits and
hedge ineffectiveness is only recognised when the revised estimate of the amount of cash flows in scheduled time buckets falls below the original designated amount of that bucket and is not recognised when the revised amount of cash flows in
scheduled time buckets is more than the original designated amount. Under IFRS-IASB, hedge accounting for fair value macro hedges cannot be applied to core deposits and ineffectiveness arises whenever the revised estimate of the amount of cash flows
in scheduled time buckets is either more or less than the original designated amount of that bucket.

This information is prepared by reversing the hedge accounting
impacts that are applied under the EU carve out version of IAS 39. Financial information under IFRS-IASB accordingly does not take account of the possibility that had ING Group applied IFRS-IASB as its primary accounting framework it
might have applied alternative hedge strategies where those alternative hedge strategies could have qualified for IFRS-IASB compliant hedge accounting. These decisions could have resulted in different shareholders equity and net result amounts
compared to those indicated in this Annual Report on Form 20-F.

NN Group has fair value macro hedges for which ING Group
applies fair value hedge accounting. As a result of this the impact sales of NN Group shares have on Equity and Result under IFRS-EU, differ from the impact these sales have on Equity and Result under
IFRS-IASB. Other than for SEC reporting, ING Group intends to continue to prepare its Consolidated Annual Accounts under IFRS-EU.

A reconciliation between IFRS-EU and IFRS-IASB is included below.

Both IFRS-EU and IFRS-IASB differ in several areas from accounting principles generally accepted in the United States of America
(US GAAP).



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-18 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                |  |              |        |  |      |  |        |      |  |  |        | 
|--------------------------------------------------------------- |  | ------------ | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|Reconciliation shareholders equity under IFRS-EU and IFRS-IASB |  |              |       
|                                                                |  | Total Equity |       
|                                                                |  | 2016         |        |  | 2015 |  |        | 2014 | 
|In accordance with IFRS-EU                                      |  |              | 49,793 |  |      |  | 47,832 |      |  |  | 51,344 | 
|Adjustment of the EU IAS 39 carve-out                           |  |              | 3,472 |  |      |  | 3,883 |      |  |  | 5,117 | 
|Tax effect of the adjustment                                    |  |              | 936    |  |      |  | 1,023  |      |  |  | 1,327  | 
|                                                                |  |              |        |  |      |  |        |      |  |  |        | 
|Effect of adjustment after tax                                  |  |              | 2,536 |  |      |  | 2,860 |      |  |  | 3,790 | 
|                                                                |  |              |        |  |      |  |        |      |  |  |        | 
|Shareholders equity                                            |  |              | 47,257 |  |      |  | 44,972 |      |  |  | 47,554 | 
|Non-voting equity securities                                    |  |              |        |  |      |  |        |      |  |  |        | 
|Non-controlling interests                                       |  |              | 606    |  |      |  | 638    |      |  |  | 8,047  | 
|                                                                |  |              |        |  |      |  |        |      |  |  |        | 
|In accordance with IFRS-IASB Total Equity                       |  |              | 47,863 |  |      |  | 45,610 |      |  |  | 55,601 | 
|                                                                |  |              |        |  |      |  |        |      |  |  |        | 



|                                                                               |  |            |       |  |      |  |       |      |  |  |       | 
|------------------------------------------------------------------------------ |  | ---------- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|Reconciliation net result under IFRS-EU and IFRS-IASB                          |  |            |      
|                                                                               |  | Net result |      
|                                                                               |  | 2016       |       |  | 2015 |  |       | 2014 | 
|In accordance with IFRS-EU                                                     |  |            | 4,651 |  |      |  | 4,010 |      |  |  | 1,251 | 
|Adjustment of the EU IAS 39 carve-out                                          |  |            | 411   |  |      |  | 1,205 |      |  |  | 419  | 
|Tax effect of the adjustment                                                   |  |            | 87   |  |      |  | 289  |      |  |  | 131   | 
|                                                                               |  |            |       |  |      |  |       |      |  |  |       | 
|Effect of adjustment after tax                                                 |  |            | 324   |  |      |  | 916   |      |  |  | 288  | 
|                                                                               |  |            |       |  |      |  |       |      |  |  |       | 
|In accordance with IFRS-IASB (attributable to the equityholders of the parent) |  |            | 4,975 |  |      |  | 4,926 |      |  |  | 963   | 
|Non-controlling interests                                                      |  |            | 75    |  |      |  | 408   |      |  |  | 164   | 
|                                                                               |  |            |       |  |      |  |       |      |  |  |       | 
|In accordance with IFRS-IASB Total net result                                  |  |            | 5,050 |  |      |  | 5,334 |      |  |  | 1,127 | 
|                                                                               |  |            |       |  |      |  |       |      |  |  |       | 

e) Critical accounting policies

ING Group
has identified the accounting policies that are most critical to its business operations and to the understanding of its results. These critical accounting policies are those which involve the most complex or subjective decisions or assessments, and
relate to loan loss provisions, goodwill impairments, provisions, and the determination of the fair values of financial assets and liabilities. In each case, the determination of these items is fundamental to the financial condition and results of
operations, and requires management to make complex judgements based on information and financial data that may change in future periods. As a result, determinations regarding these items involve the use of assumptions and subjective judgements as
to future events and are subject to change, as the use of different assumptions or data could produce significantly different results. For a further discussion of the application of these accounting policies, reference is made to the applicable
notes to the consolidated financial statements and the information in section f) Principles of valuation and determination of results.

Loan loss
provisions

Loan loss provisions are recognised based on an incurred loss model. Considerable judgement is exercised in determining the extent of the loan loss
provision (impairment) and is based on managements evaluation of the risk in the portfolio, current economic conditions, loss experience in recent years and credit, industry, geographical, and concentration trends. Changes in such judgements
and analyses may lead to changes in the loan loss provisions over time.

The identification of impairment and the determination of the recoverable amount are
inherently uncertain processes involving various assumptions and factors including the financial condition of the counterparty, expected future cash flows, observable market prices, and expected net selling prices.

Future cash flows in a portfolio of financial assets that are collectively evaluated for impairment, are estimated on the basis of the contractual cash flows of the
assets in the portfolio and historical loss experience for assets with credit risk characteristics similar to those in the portfolio. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current
conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist currently. Current observable data may include changes in unemployment
rates, property prices, and commodity prices. The methodology and assumptions used for estimating future cash flows are reviewed regularly to reduce any differences between loss estimates and actual loss experience.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-19 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Goodwill impairment

ING assesses at each reporting period, whether there is an indication that an intangible asset may be impaired. Irrespective of whether there is an indication of
impairment, intangible assets with an indefinite useful life, goodwill acquired in a business combination, and intangible assets not yet available for use, are tested annually for impairment. Goodwill is allocated to groups of CGUs (that is, the
group of cash generating units or CGUs) for the purpose of impairment testing. These groups of CGUs represent the lowest level at which goodwill is monitored for internal management purposes. Goodwill is tested for impairment by comparing the
carrying value of the group of CGUs to the best estimate of the recoverable amount of that group of CGUs. The carrying value is determined as the IFRS net asset value including goodwill. The recoverable amount is estimated as the higher of fair
value less costs of disposal and value in use. Several methodologies are applied to arrive at the best estimate of the recoverable amount. Impairment of goodwill, if applicable, is included in the statement of profit or loss in Other operating
expenses.

The identification and measurement of impairment is an inherently uncertain process involving various assumptions and factors, including financial
condition of the counterparty, expected future cash flows, statistical loss data, discount rates, observable market prices, etc. Estimates and assumptions are based on managements judgement and other information available prior to the issuance
of the financial statements. Significantly different results can occur as circumstances change and additional information becomes known.

Provisions

A provision involves a present obligation arising from past events, the settlement of which is expected to result in an outflow of resources embodying
economic benefits, however the timing or the amount is uncertain. Provisions are discounted when the effect of the time value of money is significant using a pre-tax discount rate. The recognition and
measurement of provisions is an inherently uncertain process involving determining when a present obligation exists and estimates regarding amounts and timing of cash flows. Even in consultation with legal experts, the amount provisioned can remain
sensitive to the assumptions used which may have a range of outcomes that is difficult to quantify.

Reorganisation provisions include employee termination benefits
when the Group is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal, or providing termination benefits as a result of an offer made to encourage
voluntary redundancy.

A liability is recognised for a levy when the activity that triggers payment, as identified by the relevant legislation, occurs. For a levy
that is triggered upon reaching a minimum threshold, the liability is recognised only upon reaching the specified minimum threshold.

Fair values of financial
assets and liabilities

All the financial assets and liabilities are recognised initially at fair value, whereas financial assets and liabilities classified as held-for-trading or designated at fair value through profit or loss and financial assets classified as
available-for-sale are subsequently measured at fair value in financial statements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. It uses the assumptions that market participants would use and takes into account the characteristics of the asset or liability that market participants would take into account when pricing the asset or liability. Fair values of
financial assets and liabilities are based on unadjusted quoted market prices where available. Such quoted market prices are primarily obtained from exchange prices for listed financial instruments. Where an exchange price is not available, quoted
prices in an active market may be obtained from independent market vendors, brokers, or market makers. In general, positions are valued at the bid price for a long position and at the offer price for a short position or are valued at the price
within the bid-offer spread that is most representative of fair value in the circumstances. In some cases where positions are marked at mid-market prices, a fair value
adjustment is calculated. When markets are less liquid there may be a range of prices for the same security from different price sources, selecting the most appropriate price requires judgement and could result in different estimates of fair value.

For certain financial assets and liabilities quoted market prices are not available. For these financial assets and liabilities, fair value is determined using
valuation techniques. These valuation techniques range from discounting of cash flows to various valuation models, where relevant pricing factors including the market price of underlying reference instruments, market parameters (volatilities,
correlations and credit ratings) and customer behaviour are taken into account. ING maximises the use of market observable inputs and minimises the use of unobservable input in determining the fair value. It can be subjective dependent on the
significance of the unobservable input to the overall valuation. All valuation techniques used are subject to internal review and approval. Most data used in these valuation techniques are validated on a daily basis.

When a group of financial assets and financial liabilities are managed on the basis of their net risk exposures, it measures the fair value of a group of financial
assets and liabilities on net portfolio basis.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-20 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







To include credit risk in the fair value, ING applies both credit and debit valuation adjustments (CVA, DVA). Own
issued debt and structured notes that are measured at fair value are adjusted for credit risk by means of a DVA. Additionally, derivatives valued at fair value are adjusted for credit risk by a CVA. The CVA is of a bilateral nature as both the
credit risk on the counterparty as well as the credit risk on ING are included in the adjustment. All input data that is used in the determination of the CVA is based on market implied data. Additionally,
wrong-way risk (when exposure to a counterparty is increasing and the credit quality of that counterparty deteriorates) and right-way risk (when exposure to a
counterparty is increasing and the credit quality of that counterparty improves) are taken into account in the measurement of the valuation adjustment. ING applies an additional funding valuation adjustment (FVA) based on the market
price of funding liquidity and is applied to the uncollateralised derivatives.

Valuation techniques are subjective in nature and significant judgement is involved
in establishing fair values for certain financial assets and liabilities. Valuation techniques involve various assumptions regarding pricing factors. The use of different valuation techniques and assumptions could produce significantly different
estimates of fair value.

Price testing is performed to assess whether the process of valuation has led to an appropriate fair value of the position and to an
appropriate reflection of these valuations in the statement of profit or loss. Price testing is performed to minimise the potential risks for economic losses due to incorrect or misused models.

Reference is made to Note 37 Fair value of assets and liabilities and the section Risk management  Market risk, paragraph Fair
values of financial assets and liabilities for the basis of the determination of the fair value of financial instruments and related sensitivities.

f)
Principles of valuation and determination of results

Consolidation

ING Group (the Group) comprises ING Groep N.V. (the Parent Company), ING Bank N.V. and all other subsidiaries. The consolidated financial statements of ING Group
comprise the accounts of ING Groep N.V. and all entities in which it either owns, directly or indirectly, more than half of the voting power or over which it has control of their operating and financial policies through situations including, but not
limited to:



| |  | Ability to appoint or remove the majority of the board of directors;
|- |  | --------------------------------------------------------------------



| |  | Power to govern such policies under statute or agreement; and
|- |  | -------------------------------------------------------------



| |  | Power over more than half of the voting rights through an agreement with other investors.
|- |  | -----------------------------------------------------------------------------------------

Control exists if ING Group
is exposed to variable returns and having the ability to affect those returns through power over the investee.

A list of principal subsidiaries is included in Note
47 Principal subsidiaries.

A list containing the information referred to in Section 379 (1), Book 2 of the Dutch Civil Code has been filed with
the office of the Commercial Register of Amsterdam, in accordance with Section 379 (5), Book 2 of the Dutch Civil Code.

The existence and effect of potential
voting rights that are currently exercisable or convertible are considered in assessing whether the Group controls another entity.

For interests in investment
vehicles, the existence of control is determined taking into account both ING Groups financial interests for own risk and its role as investment manager.

The
results of the operations and the net assets of subsidiaries are included in the statement of profit or loss and the statement of financial position from the date control is obtained until the date control is lost. On disposal, the difference
between the sales proceeds, net of directly attributable transaction costs, and the net assets is included in net result.

A subsidiary which ING Group has agreed
to sell but is still legally owned by ING Group may still be controlled by ING Group at the balance sheet date and therefore, still be included in the consolidation. Such a subsidiary may be presented as a held for sale disposal group if certain
conditions are met.

All intercompany transactions, balances and unrealised surpluses and deficits on transactions between group companies are eliminated to the
extent that there is no impairment. Where necessary, the accounting policies used by subsidiaries are changed to ensure consistency with group policies. In general, the reporting dates of subsidiaries are the same as the reporting date of ING Groep
N.V.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-21 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







ING Groep N.V. and its Dutch group companies are subject to legal restrictions regarding the amount of dividends they
can pay to their shareholders. The Dutch Civil Code contains the restriction that dividends can only be paid up to an amount equal to the excess of the companys own funds over the sum of the paid-up
capital and reserves required by law. Additionally, certain Group companies are subject to restrictions on the amount of funds they may transfer in the form of dividends, or otherwise, to the parent company.

Furthermore, in addition to the restrictions in respect of minimum capital requirements that are imposed by industry regulators in the countries in which the
subsidiaries operate, other limitations exist in certain countries.

Use of estimates and assumptions

The preparation of the consolidated financial statements necessitates the use of estimates and assumptions. These estimates and assumptions affect the reported amounts
of the assets and liabilities and the amounts of the contingent liabilities at the balance sheet date, as well as reported income and expenses for the year. The actual outcome may differ from these estimates.

The process of setting assumptions is subject to internal control procedures and approvals, and takes into account internal and external studies, industry statistics,
environmental factors and trends, and regulatory requirements.

Segment reporting

A segment is a distinguishable component of the Group, engaged in providing products or services, subject to risks and returns that are different from those of other
segments monitored by management. A geographical area is a distinguishable component of the Group engaged in providing products or services within a particular economic environment that is subject to risks and returns that are different from those
of segments operating in other economic environments. The geographical analyses are based on the location of the office from which the transactions are originated.

Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the Groups entities are measured using the currency of the primary economic environment in which
the entity operates (the functional currency). The consolidated financial statements are presented in euros, which is ING Groups presentation currency.

Transactions and balances

Foreign currency transactions are
translated into the functional currency using the exchange rate prevailing at the date of the transactions. Exchange rate differences resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of profit or loss, except when deferred in equity as part of qualifying cash flow
hedges or qualifying net investment hedges.

Exchange rate differences on non-monetary items, measured at fair value through
profit or loss, are reported as part of the fair value gain or loss. Non-monetary items are retranslated at the date fair value is determined. Exchange rate differences on
non-monetary items measured at fair value through the revaluation reserve are included in the revaluation reserve in equity.

Exchange rate differences in the statement of profit or loss are generally included in Valuation results and net trading income. Reference is made to Note 22
Valuation results and net trading income, which discloses the amounts included in the statement of profit or loss. Exchange rate differences relating to the disposal of
available-for-sale debt and equity securities are considered to be an inherent part of the capital gains and losses recognised in Investment income. As mentioned below,
in Group companies relating to the disposals of group companies, any exchange rate difference deferred in equity is recognised in the statement of profit or loss in Result on disposal of group companies. Reference is also made to Note 19
Equity, which discloses the amounts included in the statement of profit or loss.

Group companies

The results and financial positions of all group companies that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:



| |  | Assets and liabilities included in each statement of financial position are translated at the closing rate at the date of that statement of financial position;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Income and expenses included in each statement of profit or loss are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates of the transactions); and
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | All resulting exchange rate differences are recognised in a separate component of equity.
|- |  | -----------------------------------------------------------------------------------------



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|ING Group Annual Report on Form 20-F 2016 |  | F-22 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







On consolidation, exchange rate differences arising from the translation of a monetary item that forms part of the net
investment in a foreign operation, and of borrowings and other instruments designated as hedges of such investments, are taken to shareholders equity. When a foreign operation is sold, the corresponding exchange rate differences are recognised
in the statement of profit or loss as part of the gain or loss on sale.

Goodwill and fair value adjustments arising from the acquisition of a foreign operation are
treated as assets and liabilities of the foreign operation and translated at the exchange rate prevailing at the balance sheet date.

Recognition and
derecognition of financial instruments

Recognition of financial assets

All purchases and sales of financial assets classified at fair value through profit or loss,
held-to-maturity and available-for-sale that require delivery within the time frame
established by regulation or market convention (regular way purchases and sales) are recognised at trade date, which is the date on which the Group commits to purchase or sell the asset. Loans and receivables are recognised at settlement
date, which is the date on which the Group receives or delivers the asset.

Derecognition of financial assets

Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or where the Group has transferred substantially all risks
and rewards of ownership. If the Group neither transfers nor retains substantially all the risks and rewards of ownership of a financial asset, it derecognises the financial asset if it no longer has control over the asset.

Realised gains and losses on financial assets

For financial assets at
amortised cost, realised gains and losses on investments are determined as the difference between the sale proceeds and (amortised) cost. For available-for-sale
financial assets, the accumulated fair value adjustments in other comprehensive income are included in the statement of profit or loss when the asset is disposed. For equity securities, the cost is determined using a weighted average per portfolio.
For debt securities, the cost is determined by specific identification.

Recognition of financial liabilities

Financial liabilities are recognised on the date that the entity becomes a party to the contractual provisions of the instrument. Such contracts generally are not
recognised unless one of the parties has performed or the contract is a derivative contract not exempted from the scope of IAS 39.

Derecognition of financial
liabilities

Financial liabilities removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The
difference between the carrying amount of a financial liability that has been extinguished and the consideration paid is recognised in profit or loss.

Classification of financial instruments

Financial assets and
liabilities at fair value through profit or loss

Financial assets at fair value through profit or loss include equity securities, debt securities,
derivatives, loans and receivable, and other, and comprise the following sub-categories: trading assets, non-trading derivatives, and financial assets designated at fair
value through profit or loss by management. Financial liabilities at fair value through profit or loss comprise the following sub-categories: trading liabilities,
non-trading derivatives, and other financial liabilities designated at fair value through profit or loss by management. Trading liabilities include equity securities, debt securities, funds on deposit and
derivatives.

A financial asset or financial liability is classified at fair value through profit or loss if acquired principally for the purpose of selling in the
short term or if designated by management as such. Management will make this designation only if this eliminates a measurement inconsistency or if the related assets and liabilities are managed on a fair value basis.

Transaction costs on initial recognition are expensed as incurred. Interest income and expense from financial instruments is classified at fair value through profit or
loss is recognised in Interest income and Valuation results and net trading income in the statement of profit or loss, using the effective interest method.

Dividend income from equity instruments classified at fair value through profit or loss is generally recognised in Investment income in the statement of profit or loss
when the dividend has been declared. For derivatives reference is made to the Derivatives and hedge accounting section.



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| |  | F-23 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Investments

Investments (including loans quoted in active markets) are classified either as
held-to-maturity or available-for-sale and are initially recognised at fair value plus
transaction costs. Investment debt securities and loans quoted in active markets with fixed maturity where management has both the intent and the ability to hold to maturity are classified as held-to-maturity. Investment securities and actively traded loans intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates,
exchange rates or equity prices, are classified as available-for-sale financial assets.

Available-for-sale financial assets

Available-for-sale financial assets include available-for-sale debt securities and available-for-sale equity securities. Available-for-sale financial assets are initially recognised at fair value plus transaction costs. For available-for-sale debt
securities, the difference between cost and redemption value is amortised. Interest income is recognised using the effective interest method. Available-for-sale
financial assets are subsequently measured at fair value. Interest income from debt securities classified as available-for-sale is recognised in Interest income in the
statement of profit or loss. Dividend income from equity instruments classified as available-for-sale is recognised in Investment income in the statement of profit or
loss when the dividend has been declared. Unrealised gains and losses arising from changes in the fair value are recognised in equity and are recycled to the statement of profit or loss as Investment income when the asset is disposed. Investments in
prepayment sensitive securities such as Interest-Only and Principal-Only strips are generally classified as available-for-sale.

Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity for which the Group has the positive
intent and ability to hold to maturity and which are designated by management as held-to-maturity assets are initially recognised at fair value plus transaction costs.
Subsequently, they are carried at amortised cost using the effective interest method less any impairment losses. Interest income from debt securities classified as
held-to-maturity is recognised in Interest income in the statement of profit or loss using the effective interest method. Held-to-maturity investments include only debt securities.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market. They are initially recognised at fair value plus transaction costs. Subsequently, they are carried at amortised cost using the effective interest method less any impairment losses. Loans and receivables include Cash and balances with central
banks, Loans and advances to banks, Loans and advances to customers, and Other assets and are reflected in these line items in the statement of financial position. Interest income from loans and receivables is recognised in Interest income in the
statement of profit or loss using the effective interest method.

Credit risk management classification

Credit risk management disclosures are provided in the section Risk management  Credit risk paragraph Credit risk categories. The
relationship between credit risk classifications in that section and the consolidated statement of financial position classifications above is explained below:



| |  | Pre-settlement risk arises when a counterparty defaults on a transaction before settlement and ING Group has to replace the contract by a trade with another counterparty at the
then prevailing (possibly unfavourable) market price. The pre-settlement risk classification mainly relates to the statement of financial position classification Financial assets at fair value through profit
or loss (trading assets and non-trading derivatives) and to securities financing;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Money market risk arises when ING Group places short term deposits with a counterparty in order to manage excess liquidity and among others relates to the statement of financial position classifications Loans and
advances to banks and Loans and advances to customers;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Lending risk arises when ING Group grants a loan to a customer, or issues guarantees on behalf of a customer and mainly relates to the statement of financial position classification Loans and advances to customers and off-balance sheet items e.g. obligations under financial guarantees and letters of credit;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Investment risk comprises the credit default and migration risk that is associated with ING Groups investment portfolio and mainly relates to the statement of financial position classification Investments (available-for-sale and held-to-maturity); and
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Settlement risk arises when there is an exchange of value (funds, instruments or commodities) for the same or different value dates and receipt is not verified or expected until ING Group has paid or delivered its side
of the trade. Settlement risk mainly relates to the risk arising on disposal of financial instruments that are classified in the statement of financial position as Financial assets at fair value through profit or loss (trading assets and non-trading derivatives) and Investments (available-for-sale and
held-to-maturity).
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Maximum credit risk exposure

The maximum credit risk exposure for items in the statement of financial position is generally the carrying value for the relevant financial assets. For the off-balance sheet items the maximum credit exposure is the maximum amount that could be required to be paid. Reference is made to Note 44 Contingent liabilities and commitments for these off-balance sheet items. Collateral received is not taken into account when determining the maximum credit risk exposure.

The
manner in which ING Group manages credit risk and determines credit risk exposures for that purpose is explained in the section Risk management  Credit risk paragraph Credit Risk Appetite and Concentration Risk
Framework.



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|ING Group Annual Report on Form 20-F 2016 |  | F-24 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Financial liabilities at amortised cost

Financial liabilities at amortised cost include the following sub-categories: preference shares classified as debt, debt
securities in issue, subordinated loans, and deposits from banks and customer deposits.

Borrowings are recognised initially at their issue proceeds (fair value of
consideration received) net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between proceeds, net of transaction costs, and the redemption value is recognised in the statement of profit or loss
over the period of the borrowings using the effective interest method.

If the Group purchases its own debt, it is removed from the statement of financial position,
and the difference between the carrying amount of the liability and the consideration paid is included in the statement of profit or loss.

Financial
guarantee contracts

Financial guarantee contracts are contracts that require the issuer to make specified payments to reimburse the holder for a loss it
incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument. Such financial guarantees are initially recognised at fair value and subsequently measured at the higher of the discounted best
estimate of the obligation under the guarantee and the amount initially recognised less cumulative amortisation to reflect revenue recognition principles.

Derivatives and hedge accounting

Derivatives are initially recognised at
fair value on the date on which a derivative contract is entered into and are subsequently measured at fair value. Fair values are obtained from quoted market prices in active markets, including recent market transactions and valuation techniques
(such as discounted cash flow models and option pricing models), as appropriate. All derivatives are carried as assets when their fair value is positive and as liabilities when their fair values are negative.

Certain derivatives embedded in other contracts are measured as separate derivatives when their economic characteristics and risks are not closely related to those of
the host contract, the host contract is not carried at fair value through profit or loss, and if a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative. These embedded derivatives are measured
at fair value with changes in fair value recognised in the statement of profit or loss. An assessment is carried out when the Group first becomes party to the contract. A reassessment is carried out only when there is a change in the terms of the
contract that significantly modifies the expected cash flows.

The method of recognising the resulting fair value gain or loss depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as hedges of the fair value of recognised assets or liabilities or firm commitments (fair value hedge), hedges of highly
probable future cash flows attributable to a recognised asset or liability or a forecast transaction (cash flow hedge), or hedges of a net investment in a foreign operation. Hedge accounting is used for derivatives designated in this way provided
certain criteria are met.

At the inception of the transaction ING Group documents the relationship between hedging instruments and hedged items, its risk
management objective, together with the methods selected to assess hedge effectiveness. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are
highly effective in offsetting changes in fair values or cash flows of the hedged items.

Fair value hedges

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in the statement of profit or loss, together with fair value
adjustments to the hedged item attributable to the hedged risk. If the hedge relationship no longer meets the criteria for hedge accounting, the cumulative adjustment of the hedged item is, in the case of interest bearing instruments, amortised
through the statement of profit or loss over the remaining term of the original hedge or recognised directly when the hedged item is derecognised. For non-interest bearing instruments, the cumulative
adjustment of the hedged item is recognised in the statement of profit or loss only when the hedged item is derecognised.

Cash flow hedges

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in equity. The gain or loss relating
to the ineffective portion is recognised immediately in the statement of profit or loss. Amounts accumulated in equity are recycled to the statement of profit or loss in the periods in which the hedged item affects net result. When a hedging
instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised
in the statement of profit or loss. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is transferred immediately to the statement of profit or loss.



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| |  | F-25 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Net investment hedges

Hedges of net investments in foreign operations are accounted for in a similar way to cash flow hedges. Any gain or loss on the hedging instrument relating to the
effective portion of the hedge is recognised in equity and the gain or loss relating to the ineffective portion is recognised immediately in the statement of profit or loss. Gains and losses accumulated in equity are included in the statement of
profit or loss when the foreign operation is disposed.

Non-trading derivatives that do not qualify for hedge
accounting

Derivative instruments that are used by the Group as part of its risk management strategies, but which do not qualify for hedge accounting under
ING Groups accounting policies, are presented as non-trading derivatives. Non-trading derivatives are measured at fair value with changes in the fair value taken
to the statement of profit or loss.

Offsetting of financial assets and financial liabilities

Financial assets and financial liabilities are offset, and the net amount reported, in the statement of financial position when the Group has a current legally
enforceable right to set off the recognised amounts and intends to either settle on a net basis or to realise the asset and settle the liability simultaneously. Offsetting is applied to certain interest rate swaps for which the services of a central
clearing house are used. Offsetting is also applied to certain clients subject to cash pooling arrangements where the intention to settle net is demonstrated via a physical transfer of cash balances into a single netting account on a period end
basis.

Repurchase transactions and reverse repurchase transactions

Securities sold subject to repurchase agreements (repos) are retained in the consolidated financial statements. The counterparty liability is included in Deposits from
banks, Subordinated loans, Customer deposits, or Trading, as appropriate.

Securities purchased under agreements to resell (reverse repos) are recognised as Loans
and advances to customers, Loans and advances to banks, or Financial assets at fair value through profit or loss - Trading assets, as appropriate. The difference between the sale and repurchase price is treated as interest and amortised over the
life of the agreement using the effective interest method.

Impairments of financial assets at amortised cost

ING Group assesses periodically and at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. A
financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset, but
before the balance sheet date, (a loss event) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The following circumstances, among
others, are considered objective evidence that a financial asset or group of assets is impaired:



| |  | The borrower has sought or has been placed in bankruptcy or similar protection and this leads to the avoidance of or delays in repayment of the financial asset;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The borrower has failed in the repayment of principal, interest, or fees and the payment failure has remained unsolved for a certain period;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  | The borrower has demonstrated significant financial difficulty, to the extent that it will have a negative impact on the expected future cash flows of the financial asset;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The credit obligation has been restructured for non-commercial reasons. ING Group has granted concessions, for economic or legal reasons relating to the borrowers financial
difficulty, the effect of which is a reduction in the expected future cash flows of the financial asset; and
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Historical experience, updated for current events where necessary, provides evidence that a proportion of a group of assets is impaired although the related events that represent impairment triggers are not yet captured
by the Groups credit risk systems.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In certain circumstances ING grants borrowers postponement and/or reduction of loan principal and/or
interest payments for a temporary period of time to maximise collection opportunities, and if possible, avoid default, foreclosure, or repossession. When such postponement and/or reduction of loan principal and/or interest payments is executed based
on credit concerns it is also referred to as forbearance. In general, forbearance represents an impairment trigger under IFRS. In such cases, the net present value of the postponement and/or reduction of loan and/or interest payments is taken into
account in the determination of the appropriate level of Loan loss provisioning as described below. If the forbearance results in a substantial modification of the terms of the loan, the original loan is derecognised and a new loan is recognised at
its fair value at the modification date. The Group determines whether there has been a substantial modification using both quantitative and qualitative factors.

The Group does not consider events that may be expected to occur in the future as objective evidence, and consequently they are not used as a basis for concluding that
a financial asset or group of assets is impaired.



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|ING Group Annual Report on Form 20-F 2016 |  | F-26 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







In determining the impairment, expected future cash flows are estimated on the basis of the contractual cash flows of
the assets in the portfolio and historical loss experience for assets with credit risk characteristics similar to those in the portfolio. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of
current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not currently exist. Losses expected as a result of future events, no matter
how likely, are not recognised.

The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually
significant, and then individually or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant
or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or
continues to be recognised are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss on an asset carried at
amortised cost has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred)
discounted at the financial assets original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account (Loan loss provision) and the amount of the loss is recognised in the statement of profit
or loss under Addition to loan loss provision. If the asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

For the purposes of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit risk characteristics. Those characteristics are
relevant to the estimation of future cash flows for groups of such assets by being indicative of the debtors ability to pay all amounts due according to the contractual terms of the assets being evaluated. The collective evaluation of
impairment includes the application of a loss emergence period to default probabilities (also referred to as loss identification period). The loss emergence period is a concept which recognises that there is a period of time between the emergence of
impairment triggers and the point in time at which those events are captured by the Groups credit risk systems. Accordingly, the application of the loss emergence period ensures that impairments that are incurred but not yet identified are
adequately reflected in the Groups loan loss provision. Although the loss emergence periods are inherently uncertain, the Group applies estimates to sub-portfolios (e.g. large corporations, small and
medium size enterprises, and retail portfolios) that reflect factors such as the frequency with which customers in the sub-portfolio disclose credit risk sensitive information and the frequency with which they
are subject to review by the Groups account managers. Generally, the frequency increases in relation to the size of the borrower. Loss emergence periods are based on historical experience and are validated, and revised where necessary, through
regular back-testing to ensure that they reflect recent experience and current events.

If, in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtors credit rating), the previously recognised impairment loss is reversed by adjusting the provision. The
amount of the reversal is recognised in the statement of profit or loss.

When a loan is uncollectable, it is written off against the related loan loss provision.
Such loans are written off after all the necessary procedures have been completed and the amount of the loss has been determined. Subsequent recoveries of amounts previously written off are recognised in the statement of profit or loss.

In most Retail portfolios, ING Bank has a write-off policy that requires 100% provision for all retail exposure after two years
(three years for mortgages) following the last default date.

Impairments on other debt instruments (Loans and held-to-maturity investments) are part of the loan loss provision as described above.

Impairment of available for sale
financial assets

At each balance sheet date, the Group assesses whether there is objective evidence that a financial asset or a group of financial assets is
impaired. In the specific case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its
cost is considered in determining whether the assets are impaired. Significant and prolonged are interpreted on a case-by-case basis for specific equity securities;
generally 25% and six months are used as triggers. If any objective evidence exists for available-for-sale debt and equity investments, the cumulative loss 
measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in net result  is removed from equity and recognised in the statement of profit or loss.
Impairment losses recognised on equity instruments can never be reversed. If, in a subsequent period, the fair value of a debt instrument classified as
available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in the statement of profit or
loss, the impairment loss is reversed through the statement of profit or loss.



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| |  | F-27 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Investments in associates and joint ventures

Associates are all entities over which the Group has significant influence but not control. Significant influence generally results from a shareholding of between 20%
and 50% of the voting rights, but also is the ability to participate in the financial and operating policies through situations including, but not limited to one or more of the following:



| |  | Representation on the board of directors;
|- |  | -----------------------------------------



| |  | Participation in the policymaking process; and
|- |  | ----------------------------------------------



| |  | Interchange of managerial personnel.
|- |  | ------------------------------------

Joint ventures are entities over which the Group has joint control. Joint control
is the contractually agreed sharing of control over an arrangement or entity, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Joint control means that no party to the
agreement is able to act unilaterally to control the activity of the entity. The parties to the agreement must act together to control the entity and therefore exercise the joint control.

Investments in associates and joint ventures are initially recognised at cost and subsequently accounted for using the equity method of accounting.

The Groups investment in associates and joint ventures (net of any accumulated impairment loss) includes goodwill identified on acquisition. The Groups
share of its associates and joint ventures post-acquisition profits or losses is recognised in the statement of profit or loss, and its share of post-acquisition changes in reserves is recognised in equity. The cumulative post-acquisition changes
are adjusted against the carrying amount of the investment. When the Groups share of losses in an associate or joint venture equals or exceeds its interest in the associate or joint venture, including any other unsecured receivables, the Group
does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate or joint venture.

Unrealised gains on
transactions between the Group and its associates and joint ventures are eliminated to the extent of the Groups interest in the associates and joint ventures. Unrealised losses are also eliminated unless they provide evidence of an impairment
of the asset transferred. Accounting policies of associates and joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group. The reporting dates of all significant associates and joint ventures are
consistent with the reporting date of the Group.

Property and equipment

Property in own use

Land and buildings held for own use are stated at
fair value at the balance sheet date. Increases in the carrying amount arising on revaluation of land and buildings held for own use are credited to the revaluation reserve in shareholders equity. Decreases in the carrying amount that offset
previous increases of the same asset are charged against the revaluation reserve directly in equity; all other decreases are charged to the statement of profit or loss. Increases that reverse a revaluation decrease on the same asset previously
recognised in net result are recognised in the statement of profit or loss. Depreciation is recognised based on the fair value and the estimated useful life (in general 2050 years). Depreciation is calculated on a straight-line basis. On
disposal, the related revaluation reserve is transferred to retained earnings.

The fair values of land and buildings are based on regular appraisals by independent
qualified valuers or internally, similar to appraisals of real estate investments. Subsequent expenditure is included in the assets carrying amount when it is probable that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably.

Equipment

Equipment is stated at cost less accumulated depreciation and any impairment losses. The cost of the assets is depreciated on a straight line basis over their estimated
useful lives, which are generally as follows: for data processing equipment two to five years, and four to ten years for fixtures and fittings. Expenditure incurred on maintenance and repairs is recognised in the statement of profit or loss as
incurred. Expenditure incurred on major improvements is capitalised and depreciated.

Disposals

The difference between the proceeds on disposal and net carrying value is recognised in the statement of profit or loss under Other income.

Borrowing costs

Borrowing costs incurred for the construction of any
qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use. Borrowing costs are determined at the weighted average cost of capital of the project.

Leases

The determination of whether an arrangement is or contains a lease is
based on the substance of the arrangement at inception date.



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|ING Group Annual Report on Form 20-F 2016 |  | F-28 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







ING Group as the lessee

The leases entered into by ING Group are primarily operating leases. The total payments made under operating leases are recognised in the statement of profit or loss on
a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any penalty payment to be made to
the lessor is recognised as an expense in the period in which termination takes place.

ING Group as the lessor

When assets are held subject to a finance lease, the present value of the lease payments is recognised as a receivable under Loans and advances to customers or Loans and
advances to banks. The difference between the gross receivable and the present value of the receivable is unearned lease finance income. Lease income is recognised over the term of the lease using the net investment method (before tax), which
reflects a constant periodic rate of return. When assets are held subject to an operating lease, the assets are included under Assets under operating leases.

Assets under operating leases

Assets leased out under operating
leases in which ING Group is the lessor are stated at cost less accumulated depreciation and any impairment losses. The cost of the assets is depreciated on a straight-line basis over the lease term.

Acquisitions, goodwill and other intangible assets

Acquisitions and
goodwill

ING Groups acquisitions are accounted for using the acquisition method of accounting. The consideration for each acquisition is measured at
the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued in exchange for control of the acquiree. Goodwill, being the difference between the cost of the acquisition
(including assumed debt) and the Groups interest in the fair value of the acquired assets, liabilities and contingent liabilities as at the date of acquisition, is capitalised as an intangible asset. Goodwill is only capitalised on
acquisitions. The results of the operations of the acquired companies are included in the statement of profit or loss from the date control is obtained.

Where
applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value. Contingent consideration
arrangements classified as an asset or a liability, are subsequently measured at fair value. Changes in the fair value of the contingent consideration classified as equity, are not recognised.

Where a business combination is achieved in stages, ING Groups previously held interests in the assets and liabilities of the acquired entity are remeasured to
fair value at the acquisition date (i.e. the date ING Group obtains control) and the resulting gain or loss, if any, is recognised in the statement of profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that
have previously been recognised in other comprehensive income are reclassified to the statement of profit or loss, where such treatment would be appropriate if that interest were disposed of. Acquisition related costs are recognised in the statement
of profit or loss as incurred and presented in the statement of profit or loss as Other operating expenses.

Until 2009, before IFRS 3 Business
Combinations was revised, the accounting of previously held interests in the assets and liabilities of the acquired entity were not remeasured at the acquisition date and the acquisition related costs were considered to be part of the total
consideration.

The initial accounting for the fair value of the net assets of the companies acquired during the year may be determined only provisionally as the
determination of the fair value can be complex and the time between the acquisition and the preparation of the Annual Accounts can be limited. The initial accounting shall be completed within a year after acquisition. Adjustments to the fair value
as at the date of acquisition of acquired assets and liabilities, that are identified within one year after acquisition are recognised as an adjustment to goodwill; any subsequent adjustment is recognised as income or expense. On disposal of group
companies, the difference between the sale proceeds and carrying value (including goodwill) and the unrealised results (including the currency translation reserve in equity) is included in the statement of profit or loss.

Computer software

Computer software that has been purchased or
generated internally for own use is stated at cost less amortisation and any impairment losses. Amortisation is calculated on a straight-line basis over its useful life. This period will generally not exceed five years. Amortisation is included in
Other operating expenses.

Other intangible assets

Other
intangible assets are capitalised and amortised over their expected economic life, which is generally between three and ten years. Intangible assets with an indefinite life are not amortised.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-29 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Taxation

Income tax on the
result for the year comprises current and deferred tax. Income tax is recognised in the statement of profit or loss but it is recognised directly in equity if the tax relates to items that are recognised directly in equity.

Deferred income tax

Deferred income tax is provided in full, using
the liability method, on temporary differences arising between the tax basis of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates (and laws) that have been
enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets and liabilities are not discounted.

Deferred tax assets are recognised where it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred
income tax is provided on temporary differences arising from investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the difference will not
reverse in the foreseeable future. The tax effects of income tax losses available for carry forward are recognised as an asset where it is probable that future taxable profits will be available against which these losses can be utilised.

Deferred tax related to fair value remeasurement of available-for-sale investments and
cash flow hedges, which are recognised directly in equity, is also recognised directly in equity and is subsequently recognised in the statement of profit or loss together with the deferred gain or loss.

Uncertain tax positions are assessed continually by ING Group and in case it is probable that there will be a cash outflow; a current tax liability is recognised.

Other assets

Investment property

Investment properties are recognised at fair value at the balance sheet date. Changes in the carrying amount resulting from revaluations are recognised in the statement
of profit or loss. On disposal, the difference between the sale proceeds and carrying value is recognised in the statement of profit or loss.

Property
obtained from foreclosures

Property obtained from foreclosures is stated at the lower of cost and net realisable value. Net realisable value is the
estimated selling price, less applicable variable selling expenses. Property obtained from foreclosures is included in Other assets - Property development and obtained from foreclosures.

Property development

Property developed and under development for
which ING Group has the intention to sell the property after its completion is included in Other assets  Property development and obtained from foreclosures.

Property developed and under development for which ING Group has the intention to sell the property under development after its completion and where there is not yet a
specifically negotiated contract is measured at direct construction cost incurred up to the balance sheet date, including borrowing costs incurred during construction and ING Groups own directly attributable development and supervision
expenses less any impairment losses. Profit is recognised using the completed contract method (on sale date of the property). Impairment is recognised if the estimated selling price, less applicable variable selling expenses is lower than carrying
value.

Property under development for which ING Group has the intention to sell the property under development after its completion and where there is a
specifically negotiated contract is valued using the percentage of completion method (pro rata profit recognition). The stage of completion is measured by reference to costs incurred to date as percentage of total estimated costs for each contract.

Property under development is stated at fair value (with changes in fair value recognised in the statement of profit or loss) if ING Group has the intention to
recognise the property under development after completion as real estate investments.

Disposal groups held for sale and discontinued operations

Disposal groups (and groups of non-current assets) are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. This is only the case when the sale is highly probable and the disposal group (or group of assets) is available for immediate sale in its present condition; management must
be committed to the sale, which is expected to occur within one year from the date of classification as held for sale.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-30 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Upon classification as held for sale, the carrying amount of the disposal group (or group of assets) is compared to its
fair value less cost to sell. If the fair value less cost to sell is lower than the carrying value, this expected loss is recognised through a reduction of the carrying value of any goodwill related to the disposal group and the carrying value of
certain other non-current non-financial assets. Any excess of the expected loss over the reduction of the carrying amount of these relevant assets is not recognised upon
classification as held for sale, but is recognised as part of the result on disposal if and when a divestment transaction occurs.

When a group of assets that is
classified as held for sale represents a major line of business or geographical area the disposal group classifies as discontinued operations. Upon classification of a business as held for sale and discontinued operations the individual income and
expenses are classified to Total net result from discontinued operations instead of being presented in the usual line items in the Consolidated statement of profit or loss. All comparative years in the Consolidated statement of profit or loss are
restated and presented as discontinued operations for all periods presented. Furthermore, the individual assets and liabilities are presented in the Consolidated statement of financial position as Assets and liabilities held for sale and are no
longer included in the usual line items in the Consolidated statement of financial position. Changes in assets and liabilities as a result of classification as held for sale are included in the notes in the line Changes in composition of the group
and other changes.

Other liabilities

Defined benefit plans

The net defined benefit asset or liability recognised in the statement of financial position in respect of defined benefit pension plans is the fair value
of the plan assets less the present value of the defined benefit obligation at the balance sheet date.

Plan assets are measured at fair value at the balance sheet
date. For determining the pension expense, the return on plan assets is determined using a high quality corporate bond rate identical to the discount rate used in determining the defined benefit obligation.

Changes in plan assets that effect Shareholders equity and/or Net result, include mainly:



| |  | return on plan assets using a high quality corporate bond rate at the start of the reporting period which are recognised as staff costs in the statement of profit or loss; and
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | remeasurements which are recognised in Other comprehensive income (equity).
|- |  | ---------------------------------------------------------------------------

The defined benefit obligation is
calculated by internal and external actuaries through actuarial models and calculations using the projected unit credit method. This method considers expected future payments required to settle the obligation resulting from employee service in the
current and prior periods, discounted using a high quality corporate bond rate. Inherent in these actuarial models are assumptions including discount rates, rates of increase in future salary and benefit levels, mortality rates, trend rates in
health care costs, consumer price index and the expected level of indexation. The assumptions are based on available market data as well as management expectations and are updated regularly. The actuarial assumptions may differ significantly from
the actual results due to changes in market conditions, economic and mortality trends, and other assumptions. Any changes in these assumptions could have a significant impact on the defined benefit plan obligation and future pension costs.

Changes in the defined benefit obligation that effects Shareholders equity and/or Net result, include mainly:



| |  | service cost which are recognised as staff costs in the statement of profit or loss;
|- |  | ------------------------------------------------------------------------------------



| |  | interest expenses using a high quality corporate bond rate at the start of the period which are recognised as staff costs in the statement of profit or loss; and
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | remeasurements which are recognised in Other comprehensive income (equity).
|- |  | ---------------------------------------------------------------------------

Remeasurements recognised in other
comprehensive income are not recycled to profit or loss. Any past service cost relating to a plan amendment is recognised in profit or loss in the period of the plan amendment. Gains and losses on curtailments and settlements are recognised in the
statement of profit or loss when the curtailment or settlement occurs.

The recognition of a net defined benefit asset in the consolidated statement of financial
position is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans.

Defined contribution plans

For defined contribution plans, the Group
pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as
staff expenses in the profit or loss when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Other post-employment obligations

Some group companies provide
post-employment healthcare and other benefits to certain employees and former employees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum service
period. The expected costs of these benefits are accrued over the period of employment using an accounting methodology similar to that for defined benefit pension plans.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-31 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Income recognition

Interest

Interest income and expense are recognised in the statement
of profit or loss using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the
relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the
financial asset or financial liability. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit
losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Once a financial asset or a group
of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

All interest income and expenses from trading positions and non-trading derivatives are classified as interest income and
interest expenses in the statement of profit or loss. Changes in the clean fair value are included in Valuation results and net trading income.

Fees and commissions

Fees and commissions are generally recognised as
the service is provided. Loan commitment fees for loans that are likely to be drawn down are deferred (together with related direct costs) and recognised as an adjustment to the effective interest rate on the loan. Loan syndication fees are
recognised as income when the syndication has been completed and the Group has retained no part of the loan package for itself or has retained a part at the same effective interest rate as the other participants. Commission and fees arising from
negotiating, or participating in the negotiation of, a transaction for a third party  such as the arrangement of the acquisition of shares or other securities or the purchase or sale of businesses  are recognised on completion of the
underlying transaction. Portfolio and other management advisory and service fees are recognised based on the applicable service contracts as the service is provided. Asset management fees related to investment funds and investment contract fees are
recognised on a pro-rata basis over the period the service is provided. The same principle is applied for wealth management, financial planning and custody services that are continuously provided over an
extended period of time. Fees received and paid between banks for payment services are classified as commission income and expenses.

Lease income

The proceeds from leasing out assets under operating leases are recognised on a straight-line basis over the life of the lease agreement. Lease payments
received in respect of finance leases when ING Group is the lessor are divided into an interest component (recognised as interest income) and a repayment component.

Expense recognition

Expenses are recognised in the statement of profit or
loss as incurred or when a decrease in future economic benefits related to a decrease in an asset or an increase in a liability has arisen that can be measured reliably.

Share-based payments

Share-based payment expenses are recognised as a
staff expense over the vesting period. A corresponding increase in equity is recognised for equity-settled share-based payment transactions. A liability is recognised for cash-settled share-based payment transactions. The fair value of
equity-settled share-based payment transactions are measured at the grant date and the fair value of cash-settled share-based payment transactions are measured at each balance sheet date. Rights granted will remain valid until the expiry date, even
if the share based payment scheme is discontinued. The rights are subject to certain conditions, including a predetermined continuous period of service.

Government grants

Government grants are recognised where there is reasonable
assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, the grant is recognised over the period necessary to match the grant on a systematic basis to the expense that it
is intended to compensate. In such case, the grant is deducted from the related expense in the statement of profit or loss.

Earnings per ordinary share

Earnings per ordinary share is calculated on the basis of the weighted average number of ordinary shares outstanding. In calculating the weighted average number of
ordinary shares outstanding:



| |  | Own shares held by group companies are deducted from the total number of ordinary shares in issue;
|- |  | --------------------------------------------------------------------------------------------------



| |  | The computation is based on daily averages; and
|- |  | -----------------------------------------------



| |  | In case of exercised warrants, the exercise date is taken into consideration.
|- |  | -----------------------------------------------------------------------------



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-32 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







The non-voting equity securities are not ordinary shares, because their terms
and conditions (especially with regard to coupons and voting rights) are significantly different. Therefore, the weighted average number of ordinary shares outstanding during the period is not impacted by the
non-voting equity securities.

Diluted earnings per share data are computed as if all convertible instruments outstanding at
year-end were exercised at the beginning of the period. It is also assumed that ING Group uses the assumed proceeds thus received to buy its own shares against the average market price in the financial year.
The net increase in the number of shares resulting from the exercise is added to the average number of shares used to calculate diluted earnings per share.

Share
options with fixed or determinable terms are treated as options in the calculation of diluted earnings per share, even though they may be contingent on vesting. They are treated as outstanding on the grant date. Performance-based employee share
options are treated as contingently issuable shares because their issue is contingent upon satisfying specified conditions in addition to the passage of time.

Statement of cash flows

The statement of cash flows is prepared in
accordance with the indirect method, classifying cash flows as cash flows from operating, investing and financing activities. In the net cash flow from operating activities, the result before tax is adjusted for those items in the statement of
profit or loss and changes in items per the statement of financial position, which do not result in actual cash flows during the year.

For the purposes of the
statement of cash flows, Cash and cash equivalents comprise balances with less than three months maturity from the date of acquisition, including cash and balances with central banks, treasury bills and other eligible bills, amounts due from
other banks and deposits from banks. Investments qualify as a cash equivalent if they are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Cash flows arising from foreign currency transactions are translated into the functional currency using the exchange rates at the date of the cash flows.

The net cash flow shown in respect of Loans and advances to customers relates only to transactions involving actual payments or receipts. The Addition to loan loss
provision which is deducted from the item Loans and advances to customers in the statement of financial position has been adjusted accordingly from the result before tax and is shown separately in the statement of cash flows.

The difference between the net cash flow in accordance with the statement of cash flows and the change in Cash and cash equivalents in the statement of financial
position is due to exchange rate differences and is accounted for separately as part of the reconciliation of the net cash flow and the change in Cash and cash equivalents in the statement of financial position.

g) Parent company accounts

The parent company accounts of ING Groep N.V. are
prepared in accordance with the financial reporting requirements included in Part 9 of Book 2 of the Dutch Civil Code. In accordance with subsection 8 of section 362, Book 2 of the Dutch Civil Code, the recognition and measurement principles applied
in the Parent company accounts are the same as those applied in the Consolidated annual accounts.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-33 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







2.1.2 Notes to the Consolidated statement of financial position

Assets

2 Cash and balances with central banks



|                                     |  |      |        |  |      |  |        | 
|------------------------------------ |  | ---- | ------ |  | ---- |  | ------ | 
|Cash and balances with central banks |  |      |        |  |      | 
|                                     |  | 2016 |        |  | 2015 | 
|Amounts held at central banks        |  |      | 16,408 |  |      |  | 19,753 | 
|Cash and bank balances               |  |      | 1,736  |  |      |  | 1,705  | 
|                                     |  |      |        |  |      |  |        | 
|                                     |  |      | 18,144 |  |      |  | 21,458 | 
|                                     |  |      |        |  |      |  |        | 

In 2016, the decrease in Cash and balances with central banks is mainly as a result of the lowering of excess liquidity.

Amounts held at central banks reflect on demand balances.

Reference is made to
Note 41 Assets not freely disposable for restrictions on Cash balances with central banks.

3 Loans and advances to banks



|                                             |  |             |        |  |               |  |        |       |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 
|-------------------------------------------- |  | ----------- | ------ |  | ------------- |  | ------ | ----- |  |  | ------ |  |  | ---- | ------ |  | ---- |  | ------ |  |  |  | ------ | 
|Loans and advances to banks                  |  |             |        |  |               |  |        |       |  |  |        |  |  |      |        |  |      | 
|                                             |  | Netherlands |        |  | International |  |        | Total | 
|                                             |  | 2016        |        |  | 2015          |  |        | 2016  |  |  | 2015   |  |  | 2016 |        |  | 2015 | 
|Loans                                        |  |             | 10,381 |  |               |  | 11,549 |       |  |  | 18,483 |  |  |      | 17,497 |  |      |  | 28,864 |  |  |  | 29,046 | 
|Cash advances, overdrafts and other balances |  |             | 3      |  |               |  | 531    |       |  |  | 2      |  |  |      | 425    |  |      |  | 5      |  |  |  | 956    | 
|                                             |  |             |        |  |               |  |        |       |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 
|                                             |  |             | 10,384 |  |               |  | 12,080 |       |  |  | 18,485 |  |  |      | 17,922 |  |      |  | 28,869 |  |  |  | 30,002 | 
|Loan loss provisions                         |  |             |        |  |               |  |        |       |  |  | 11    |  |  |      | 14    |  |      |  | 11    |  |  |  | 14    | 
|                                             |  |             |        |  |               |  |        |       |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 
|                                             |  |             | 10,384 |  |               |  | 12,080 |       |  |  | 18,474 |  |  |      | 17,908 |  |      |  | 28,858 |  |  |  | 29,988 | 
|                                             |  |             |        |  |               |  |        |       |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 

Loans include balances (mainly short-term deposits) with central banks amounting to EUR 2,880 million (2015: EUR 1,104 million).

As at 31 December 2016, Loans include receivables related to securities in reverse repurchase transactions amounting to EUR 2,992 million (2015: EUR
1,092 million) and receivables related to finance lease contracts amounting to EUR 88 million (2015: EUR 114 million). Reference is made to Note 42 Transfer of financial assets for information on securities lending as well as sale
and repurchase transactions. Reference is made to Note 6 Loans and advances to customers for information on finance lease receivables.

As at
31 December 2016, the non-subordinated receivables amount to EUR 28,790 million (2015: EUR 29,924 million) and the subordinated receivables amount to EUR 68 million (2015: EUR 64 million).

Reference is made to Note 41 Assets not freely disposable for restrictions on Loans and advances to banks.

No individual loans and advances to banks has terms and conditions that significantly affect the amount, timing or certainty of consolidated cash flows of the Group.
For details on significant concentrations, refer to the section Risk management  Credit risk paragraph Credit Risk Appetite and Concentration Risk Framework.

4 Financial assets at fair value through profit or loss



|                                                      |  |      |         |  |      |  |         | 
|----------------------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | 
|Financial assets at fair value through profit or loss |  |      |         |  |      | 
|                                                      |  | 2016 |         |  | 2015 | 
|Trading assets                                        |  |      | 114,504 |  |      |  | 131,467 | 
|Non-trading derivatives                               |  |      | 2,490   |  |      |  | 3,347   | 
|Designated as at fair value through profit or loss    |  |      | 5,099   |  |      |  | 3,234   | 
|                                                      |  |      |         |  |      |  |         | 
|                                                      |  |      | 122,093 |  |      |  | 138,048 | 
|                                                      |  |      |         |  |      |  |         | 



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-34 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Reference is made to Note 42 Transfer of financial assets for information on securities lending as well as
sale and repurchase transactions.

Trading assets



|                       |  |      |         |  |      |  |         | 
|---------------------- |  | ---- | ------- |  | ---- |  | ------- | 
|Trading assets by type |  |      |         |  |      | 
|                       |  | 2016 |         |  | 2015 | 
|Equity securities      |  |      | 9,513   |  |      |  | 14,799  | 
|Debt securities        |  |      | 9,863   |  |      |  | 14,316  | 
|Derivatives            |  |      | 38,231  |  |      |  | 39,012  | 
|Loans and receivables  |  |      | 56,897  |  |      |  | 63,340  | 
|                       |  |      |         |  |      |  |         | 
|                       |  |      | 114,504 |  |      |  | 131,467 | 
|                       |  |      |         |  |      |  |         | 

In 2016, the decrease is mainly cause by lower market activities.

As at 31 December 2016, Trading assets include receivables of EUR 56,020 million (2015: EUR 62,221 million) with regard to reverse repurchase transactions.

Trading assets and trading liabilities include assets and liabilities that are classified under IFRS as Trading but are closely related to servicing the needs of
the clients of ING Group. ING offers institutional and corporate clients and governments products that are traded on the financial markets. A significant part of the derivatives in the trading portfolio are related to servicing corporate clients in
their risk management to hedge for example currency or interest rate exposures. In addition, ING provides its customers access to equity and debt markets for issuing their own equity or debt securities (securities underwriting). Although these are
presented as Trading under IFRS, these are directly related to services to INGs customers. Loans and receivables in the trading portfolio mainly relate to (reverse) repurchase agreements, which are comparable to collateralised lending. These
products are used by ING as part of its own regular treasury activities, but also relate to the role that ING plays as intermediary between different professional customers. Trading assets and liabilities held for INGs own risk are very
limited. From a risk perspective, the gross amount of trading assets must be considered together with the gross amount of trading liabilities, which are presented separately on the statement of financial position. However, IFRS does not allow
netting of these positions in the statement of financial position. Reference is made to Note 14 Financial liabilities at fair value through profit or loss for information on trading liabilities.

Non-trading derivatives



|                                                  |  |      |       |  |      |  |       | 
|------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | 
|Non-trading derivatives by type                   |  |      |       |  |      | 
|                                                  |  | 2016 |       |  | 2015 | 
|Derivatives used in                               |  |      |       |  |      |  |       | 
| fair value hedges                               |  |      | 787   |  |      |  | 800   | 
| cash flow hedges                                |  |      | 438   |  |      |  | 917   | 
| hedges of net investments in foreign operations |  |      | 73    |  |      |  | 72    | 
|Other non-trading derivatives                     |  |      | 1,192 |  |      |  | 1,558 | 
|                                                  |  |      |       |  |      |  |       | 
|                                                  |  |      | 2,490 |  |      |  | 3,347 | 
|                                                  |  |      |       |  |      |  |       | 

ING Group holds warrants for 35 million shares and 26 million shares in NN Group N.V. and Voya Financial Inc. respectively.

As at 31 December 2016, Other non-trading derivatives includes EUR 175 million (2015: EUR 103 million ) and
EUR 19 million (2015: EUR 58 million) related to warrants on the shares of Voya Financial Inc. and NN Group N.V. respectively. Reference is made to Note 22 Valuation results and net trading income.

Other non-trading derivatives mainly includes interest rate swaps and foreign currency swaps for which no hedge accounting is
applied.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-35 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Designated as at fair value through profit or loss



|                                                           |  |      |       |  |      |  |       | 
|---------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | 
|Designated as at fair value through profit or loss by type |  |      |       |  |      | 
|                                                           |  | 2016 |       |  | 2015 | 
|Equity securities                                          |  |      | 3     |  |      |  | 7     | 
|Debt securities                                            |  |      | 1,669 |  |      |  | 1,080 | 
|Loans and receivables                                      |  |      | 3,427 |  |      |  | 2,147 | 
|                                                           |  |      |       |  |      |  |       | 
|                                                           |  |      | 5,099 |  |      |  | 3,234 | 
|                                                           |  |      |       |  |      |  |       | 

Included in the Financial assets designated at fair value through profit or loss is a portfolio of loans and receivables which is
economically hedged by credit derivatives. The hedges do not meet the criteria for hedge accounting and the loans are recorded at fair value to avoid an accounting mismatch. The maximum credit exposure of the loans and receivables included in
Financial assets designated at fair value through profit or loss approximates its carrying value. The cumulative change in fair value of the loans attributable to changes in credit risk is not significant.

The notional value of the related credit derivatives is EUR 260 million (2015: EUR 215 million). The change in fair value of the credit derivatives attributable to
changes in credit risk since the loans were first designated, amounts to EUR 8 million (2015: EUR 9 million) and the change for the current year amounts to EUR 1 million (2015: nil).

The changes in fair value of the (designated) loans attributable to changes in credit risk have been calculated by determining the changes in credit spread implicit in
the fair value of bonds issued by entities with similar credit characteristics.

As at 31 December 2016, Loans and receivables designated at fair value through
profit or loss includes EUR 3,001 million (2015: EUR 1,766 million) with regard to reverse repurchase transactions.

5 Investments



|                                                                        |  |      |        |  |      |  |        | 
|----------------------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|Investments by type                                                     |  |      |        |  |      | 
|                                                                        |  | 2016 |        |  | 2015 | 
|Available-for-sale                                                      |  |      |        |  |      |  |        | 
| equity securities - shares in third party managed structured entities |  |      | 170    |  |      |  | 169    | 
| equity securities - other                                             |  |      | 3,854  |  |      |  | 4,265  | 
|                                                                        |  |      |        |  |      |  |        | 
|                                                                        |  |      | 4,024  |  |      |  | 4,434  | 
| debt securities                                                       |  |      | 78,888 |  |      |  | 82,566 | 
|                                                                        |  |      |        |  |      |  |        | 
|                                                                        |  |      | 82,912 |  |      |  | 87,000 | 
|Held-to-maturity                                                        |  |      |        |  |      |  |        | 
| debt securities                                                       |  |      | 8,751  |  |      |  | 7,826  | 
|                                                                        |  |      |        |  |      |  |        | 
|                                                                        |  |      | 8,751  |  |      |  | 7,826  | 
|                                                                        |  |      |        |  |      |  |        | 
|                                                                        |  |      | 91,663 |  |      |  | 94,826 | 
|                                                                        |  |      |        |  |      |  |        | 

Investments held-to-maturity increased by EUR
0.9 billion. The increase is attributable to a new investment in USD government bonds and bonds issued by financial institutions, offset by a decrease in covered bonds.

In June 2016, the VISA transaction closed. As a result of this transaction, the
Available-for-sale equity securities amounting to EUR 163 million, comprising ordinary shares held in VISA Europe Limited, were derecognised. As part of the upfront
consideration, ING received EUR 30 million preferred shares convertible into VISA Inc. class A ordinary shares. These preferred shares are classified as
Available-for-sale equity securities. Reference is made to Note 51 Other events.

In the fourth quarter of 2016, the merger between Equens SE (Equens) and Worldline was completed. The legal entity Equens ceased to exist and was renamed
equensWorldline SE. ING Group previously held 15.42% in Equens at EUR 34.7 million. As a result of the merger, ING Group now holds a shareholding of 5.9% in the combined company at EUR 64.9 million. Reference is made to Note 23
Investment income for further information on the results from the merger included in the statement of profit or loss.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-36 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







In October 2016 ING sold 2.5% of Kotak Mahindra Bank shares representing a carrying value of EUR 456 million.

Exposure to debt securities

ING Groups exposure to debt
securities is included in the following lines in the statement of financial position:



|                                                            |  |      |         |  |      |  |         | 
|----------------------------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | 
|Debt securities 1                                           |  |      |         |  |      | 
|                                                            |  | 2016 |         |  | 2015 | 
|Available-for-sale
investments                              |  |      | 78,888  |  |      |  | 82,566  | 
|Held-to-maturity
investments                                |  |      | 8,751   |  |      |  | 7,826   | 
|Loans and advances to customers                             |  |      | 7,471   |  |      |  | 9,625   | 
|Loans and advances to banks                                 |  |      | 952     |  |      |  | 1,857   | 
|                                                            |  |      |         |  |      |  |         | 
|Available-for-sale
investments and Assets at amortised cost |  |      | 96,062  |  |      |  | 101,874 | 
|Trading assets                                              |  |      | 9,863   |  |      |  | 14,316  | 
|Designated as at fair value through profit or loss          |  |      | 1,669   |  |      |  | 1,080   | 
|                                                            |  |      |         |  |      |  |         | 
|Financial assets at fair value through profit or loss       |  |      | 11,532  |  |      |  | 15,396  | 
|                                                            |  |      |         |  |      |  |         | 
|                                                            |  |      | 107,594 |  |      |  | 117,270 | 
|                                                            |  |      |         |  |      |  |         | 

ING Groups total exposure to debt securities included in
available-for-sale investments and assets at amortised cost of EUR 96,062 million (2015: EUR 101,874 million) is specified as follows by type of exposure:



|                                                                                                                                             |  |                               |        |  |                             |  |        |                               |  |  |                           |  |  |       |       |  |      |  |       |      |  |  |       |  |  |      |     |  |      |  |       |  |  |  |        |  |  |  |         | 
|-------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ------ |  | --------------------------- |  | ------ | ----------------------------- |  |  | ------------------------- |  |  | ----- | ----- |  | ---- |  | ----- | ---- |  |  | ----- |  |  | ---- | --- |  | ---- |  | ----- |  |  |  | ------ |  |  |  | ------- | 
|Debt securities by type and line items per the statement of financial position - Available-for-sale investments and Assets at
amortised cost | 
|                                                                                                                                             |  | Available-for-saleinvestments |        |  | Held-to-maturityinvestments |  |        | Loans andadvances tocustomers |  |  | Loans andadvances tobanks |  |  | Total |      
|                                                                                                                                             |  | 2016                          |        |  | 2015                        |  |        | 2016                          |  |  | 2015                      |  |  | 2016  |       |  | 2015 |  |       | 2016 |  |  | 2015  |  |  | 2016 |     |  | 2015 | 
|Government bonds                                                                                                                             |  |                               | 41,985 |  |                             |  | 46,104 |                               |  |  | 6,688                     |  |  |       | 5,500 |  |      |  | 858   |      |  |  | 874   |  |  |      |     |  |      |  |       |  |  |  | 49,531 |  |  |  | 52,478  | 
|Sub-sovereign, Supranationals and Agencies                                                                                                   |  |                               | 20,484 |  |                             |  | 20,337 |                               |  |  | 1,613                     |  |  |       | 1,619 |  |      |  | 267   |      |  |  | 297   |  |  |      |     |  |      |  |       |  |  |  | 22,364 |  |  |  | 22,253  | 
|Covered bonds                                                                                                                                |  |                               | 11,297 |  |                             |  | 11,949 |                               |  |  | 100                       |  |  |       | 350   |  |      |  | 1,820 |      |  |  | 2,119 |  |  |      | 882 |  |      |  | 1,787 |  |  |  | 14,099 |  |  |  | 16,205  | 
|Corporate bonds                                                                                                                              |  |                               | 1,345  |  |                             |  | 1,177  |                               |  |  |                           |  |  |       |       |  |      |  | 791   |      |  |  | 1,036 |  |  |      |     |  |      |  |       |  |  |  | 2,136  |  |  |  | 2,213   | 
|Financial institutions bonds                                                                                                                |  |                               | 2,020  |  |                             |  | 1,865  |                               |  |  |                           |  |  |       |       |  |      |  | 351   |      |  |  | 363   |  |  |      | 70  |  |      |  | 64    |  |  |  | 2,441  |  |  |  | 2,292   | 
|ABS portfolio                                                                                                                                |  |                               | 1,757  |  |                             |  | 1,134  |                               |  |  | 350                       |  |  |       | 357   |  |      |  | 3,384 |      |  |  | 4,936 |  |  |      |     |  |      |  | 6     |  |  |  | 5,491  |  |  |  | 6,433   | 
|                                                                                                                                             |  |                               |        |  |                             |  |        |                               |  |  |                           |  |  |       |       |  |      |  |       |      |  |  |       |  |  |      |     |  |      |  |       |  |  |  |        |  |  |  |         | 
|Bond portfolio                                                                                                                               |  |                               | 78,888 |  |                             |  | 82,566 |                               |  |  | 8,751                     |  |  |       | 7,826 |  |      |  | 7,471 |      |  |  | 9,625 |  |  |      | 952 |  |      |  | 1,857 |  |  |  | 96,062 |  |  |  | 101,874 | 
|                                                                                                                                             |  |                               |        |  |                             |  |        |                               |  |  |                           |  |  |       |       |  |      |  |       |      |  |  |       |  |  |      |     |  |      |  |       |  |  |  |        |  |  |  |         | 

Sub-sovereign Supranationals and Agencies (SSA) comprise amongst others, multilateral
development banks, regional governments, local authorities, and US agencies. Under certain conditions, SSA bonds may qualify as Level 1 High Quality Liquid Assets for the Liquidity Coverage Ratio (LCR).

Approximately 97% (2015: 91%) of the exposure in the ABS portfolio is externally rated AAA up to and including A-.

Borrowed debt securities are not recognised in the statement of financial position and amount to nil (2015: nil).

Reference is made to Note 42 Transfer of financial assets for information on securities lending as well as sale and repurchase transactions.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-37 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Changes in available-for-sale and
held-to-maturity investments



|                                                               |  |                                     |       |  |                                   |  |       |                  |  |  |         |  |  |      |         |  |      |  |       |      |  |  |        |  |  |  |         |  |  |  |         | 
|-------------------------------------------------------------- |  | ----------------------------------- | ----- |  | --------------------------------- |  | ----- | ---------------- |  |  | ------- |  |  | ---- | ------- |  | ---- |  | ----- | ---- |  |  | ------ |  |  |  | ------- |  |  |  | ------- | 
|Changes in available-for-sale and held-to-maturity
investments | 
|                                                               |  | Available-for-saleequity securities |       |  | Available-for-sale debtsecurities |  |       | Held-to-maturity |  |  | Total   | 
|                                                               |  | 2016                                |       |  | 2015                              |  |       | 2016             |  |  | 2015    |  |  | 2016 |         |  | 2015 |  |       | 2016 |  |  | 2015   | 
|Opening balance                                                |  |                                     | 4,434 |  |                                   |  | 2,718 |                  |  |  | 82,566  |  |  |      | 92,684  |  |      |  | 7,826 |      |  |  | 2,239  |  |  |  | 94,826  |  |  |  | 97,641  | 
|Additions                                                      |  |                                     | 80    |  |                                   |  | 1,279 |                  |  |  | 27,073  |  |  |      | 42,976  |  |      |  | 1,731 |      |  |  | 3,457  |  |  |  | 28,884  |  |  |  | 47,712  | 
|Amortisation                                                   |  |                                     |       |  |                                   |  |       |                  |  |  | 144    |  |  |      | 106    |  |      |  | 87   |      |  |  | 67    |  |  |  | 231    |  |  |  | 173    | 
|Transfers and reclassifications                                |  |                                     | 92   |  |                                   |  |       |                  |  |  |         |  |  |      | 3,499  |  |      |  |       |      |  |  | 3,499  |  |  |  | 92     |  |  |  |         | 
|Changes in unrealised revaluations                             |  |                                     | 363   |  |                                   |  | 743   |                  |  |  | 102    |  |  |      | 1,595  |  |      |  | 70   |      |  |  | 72    |  |  |  | 191     |  |  |  | 924    | 
|Impairments                                                    |  |                                     | 13   |  |                                   |  | 117  |                  |  |  |         |  |  |      | 17     |  |      |  |       |      |  |  |        |  |  |  | 13     |  |  |  | 134    | 
|Disposals and redemptions                                      |  |                                     | 682  |  |                                   |  | 216  |                  |  |  | 30,483 |  |  |      | 48,331 |  |      |  | 630  |      |  |  | 1,219 |  |  |  | 31,795 |  |  |  | 49,766 | 
|Exchange rate differences                                      |  |                                     | 72   |  |                                   |  | 27    |                  |  |  | 16     |  |  |      | 469     |  |      |  | 19   |      |  |  | 11    |  |  |  | 107    |  |  |  | 485     | 
|Changes in the composition of the group and other changes      |  |                                     | 6     |  |                                   |  |       |                  |  |  | 6      |  |  |      | 15     |  |      |  |       |      |  |  |        |  |  |  |         |  |  |  | 15     | 
|                                                               |  |                                     |       |  |                                   |  |       |                  |  |  |         |  |  |      |         |  |      |  |       |      |  |  |        |  |  |  |         |  |  |  |         | 
|Closing balance                                                |  |                                     | 4,024 |  |                                   |  | 4,434 |                  |  |  | 78,888  |  |  |      | 82,566  |  |      |  | 8,751 |      |  |  | 7,826  |  |  |  | 91,663  |  |  |  | 94,826  | 
|                                                               |  |                                     |       |  |                                   |  |       |                  |  |  |         |  |  |      |         |  |      |  |       |      |  |  |        |  |  |  |         |  |  |  |         | 

Reference is made to Note 23 Investment income for details on Impairments.

In 2016 Changes in the composition of the group and other changes includes the modification of an Available-for-sale debt security into newly issued shares.

Transfers and reclassifications of available-for-sale and held-to-maturity investments



|                                                                                       |  |                                     |     |  |                                   |  |   |                  |  |  |       |  |  |      |        |  |      |  |   |      |  |  |       |  |  |  |     |  |  |  |        | 
|-------------------------------------------------------------------------------------- |  | ----------------------------------- | --- |  | --------------------------------- |  | - | ---------------- |  |  | ----- |  |  | ---- | ------ |  | ---- |  | - | ---- |  |  | ----- |  |  |  | --- |  |  |  | ------ | 
|Transfers and reclassifications of available-for-sale and
held-to-maturity investments | 
|                                                                                       |  | Available-for-saleequity securities |     |  | Available-for-sale debtsecurities |  |   | Held-to-maturity |  |  | Total | 
|                                                                                       |  | 2016                                |     |  | 2015                              |  |   | 2016             |  |  | 2015  |  |  | 2016 |        |  | 2015 |  |   | 2016 |  |  | 2015  | 
|To/from
held-to-maturity                                                               |  |                                     |     |  |                                   |  |   |                  |  |  |       |  |  |      | 3,499 |  |      |  |   |      |  |  |       |  |  |  |     |  |  |  | 3,499 | 
|To/from
available-for-sale                                                             |  |                                     |     |  |                                   |  |   |                  |  |  |       |  |  |      |        |  |      |  |   |      |  |  | 3,499 |  |  |  |     |  |  |  | 3,499  | 
|To/from investment in associates and joint ventures                                    |  |                                     | 82 |  |                                   |  |   |                  |  |  |       |  |  |      |        |  |      |  |   |      |  |  |       |  |  |  | 82 |  |  |  |        | 
|To/from other assets/other liabilities                                                 |  |                                     | 10 |  |                                   |  |   |                  |  |  |       |  |  |      |        |  |      |  |   |      |  |  |       |  |  |  | 10 |  |  |  |        | 
|                                                                                       |  |                                     |     |  |                                   |  |   |                  |  |  |       |  |  |      |        |  |      |  |   |      |  |  |       |  |  |  |     |  |  |  |        | 
|                                                                                       |  |                                     | 92 |  |                                   |  |  |                  |  |  |      |  |  |      | 3,499 |  |      |  |  |      |  |  | 3,499 |  |  |  | 92 |  |  |  |       | 
|                                                                                       |  |                                     |     |  |                                   |  |   |                  |  |  |       |  |  |      |        |  |      |  |   |      |  |  |       |  |  |  |     |  |  |  |        | 

In 2015, EUR 3.5 billion of mainly Government bonds previously classified as Available-for-sale debt securities were classified as Held-to-maturity due to INGs intent and ability to hold these bonds
until maturity.



|                                                           |  |      |       |  |      |  |       | 
|---------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | 
|Available-for-sale equity securities - Listed and Unlisted | 
|                                                           |  | 2016 |       |  | 2015 | 
|Listed                                                     |  |      | 3,539 |  |      |  | 3,804 | 
|Unlisted                                                   |  |      | 485   |  |      |  | 630   | 
|                                                           |  |      |       |  |      |  |       | 
|                                                           |  |      | 4,024 |  |      |  | 4,434 | 
|                                                           |  |      |       |  |      |  |       | 



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-38 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







6 Loans and advances to customers



|                                                |  |                |         |  |                |  |         |       |  |  |         |  |  |      |         |  |      |  |         |  |  |  |         | 
|----------------------------------------------- |  | -------------- | ------- |  | -------------- |  | ------- | ----- |  |  | ------- |  |  | ---- | ------- |  | ---- |  | ------- |  |  |  | ------- | 
|Loans and advances to customers by type         | 
|                                                |  | Netherlands1,2 |         |  | International2 |  |         | Total | 
|                                                |  | 2016           |         |  | 2015           |  |         | 2016  |  |  | 2015    |  |  | 2016 |         |  | 2015 | 
|Loans to, or guaranteed by, public
authorities1 |  |                | 27,746  |  |                |  | 30,912  |       |  |  | 18,634  |  |  |      | 18,214  |  |      |  | 46,380  |  |  |  | 49,126  | 
|Loans secured by mortgages2                     |  |                | 124,001 |  |                |  | 125,199 |       |  |  | 191,123 |  |  |      | 179,510 |  |      |  | 315,124 |  |  |  | 304,709 | 
|Loans guaranteed by credit institutions1        |  |                | 201     |  |                |  | 4,795   |       |  |  | 944     |  |  |      | 191     |  |      |  | 1,145   |  |  |  | 4,986   | 
|Personal lending1                               |  |                | 4,376   |  |                |  | 5,636   |       |  |  | 18,722  |  |  |      | 17,041  |  |      |  | 23,098  |  |  |  | 22,677  | 
|Asset backed securities                         |  |                |         |  |                |  |         |       |  |  | 3,380   |  |  |      | 4,936   |  |      |  | 3,380   |  |  |  | 4,936   | 
|Corporate loans1,2                              |  |                | 38,530  |  |                |  | 197,069 |       |  |  | 137,675 |  |  |      | 119,162 |  |      |  | 176,205 |  |  |  | 316,231 | 
|                                                |  |                |         |  |                |  |         |       |  |  |         |  |  |      |         |  |      |  |         |  |  |  |         | 
|                                                |  |                | 194,854 |  |                |  | 363,611 |       |  |  | 370,478 |  |  |      | 339,054 |  |      |  | 565,332 |  |  |  | 702,665 | 
|Loan loss provisions                            |  |                | 2,349  |  |                |  | 2,900  |       |  |  | 2,829  |  |  |      | 2,872  |  |      |  | 5,178  |  |  |  | 5,772  | 
|                                                |  |                |         |  |                |  |         |       |  |  |         |  |  |      |         |  |      |  |         |  |  |  |         | 
|                                                |  |                | 192,505 |  |                |  | 360,711 |       |  |  | 367,649 |  |  |      | 336,182 |  |      |  | 560,154 |  |  |  | 696,893 | 
|                                                |  |                |         |  |                |  |         |       |  |  |         |  |  |      |         |  |      |  |         |  |  |  |         | 



|1 | The comparative amounts, as at 31 December 2015, are adjusted. Total Loans and advances to customers, as at 31 December 2015, increased by EUR 163.5 billion from EUR 533.4 billion to EUR
696.9 billion mostly as a result of an increase in Corporate loans by EUR 146.0 billion from EUR 170.2 billion to EUR 316.2 billion. Reference is made to Note 1 Accounting policies  Change in accounting policies
and Changes in presentation in 2016.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | In 2016, Loans and advances to customers by type as at 31 December 2015 are adjusted. Certain Corporate Loans have been reclassified to Loans secured by mortgages.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

The decrease in Loans and advances to customers compared to 2015 is primarily due to a change in accounting policies implemented in 2016. Reference is made to Note 1
Accounting policies  Changes in accounting policies in 2016.

As at 31 December 2016, Loans and advances to customers includes receivables
with regard to securities which have been acquired in reverse repurchase transactions amounting to EUR 47 million (2015: EUR 418 million).

Reference is made
to Note 42 Transfer of financial assets for information on securities lending as well as sale and repurchase transactions.



|                                                 |  |      |         |  |      |  |         | 
|------------------------------------------------ |  | ---- | ------- |  | ---- |  | ------- | 
|Loans and advances to customers by subordination |  |      |         |  |      | 
|                                                 |  | 2016 |         |  | 2015 | 
|Non-subordinated1                                |  |      | 558,857 |  |      |  | 695,596 | 
|Subordinated                                     |  |      | 1,297   |  |      |  | 1,297   | 
|                                                 |  |      |         |  |      |  |         | 
|                                                 |  |      | 560,154 |  |      |  | 696,893 | 
|                                                 |  |      |         |  |      |  |         | 



|1 | The comparative amounts, as at 31 December 2015, are adjusted as a result of a change in accounting policies and a reclassification for Items to be cleared. Total Loans and advances to customers, as at
31 December 2015, increased by EUR 163.5 billion from EUR 533.4 billion to EUR 696.9 billion. Reference is made to Note 1 Accounting policies  Change in accounting policies and Changes in presentation in 2016.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

No individual loan or advance has terms and conditions that significantly affect the amount, timing or certainty of the consolidated cash flows of
the Group. For details on significant concentrations, refer to the section Risk management  Credit risk paragraph Çredit Risk Appetite and Concentration Risk Framework.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-39 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Loans and advances to customers and Loans and advances to banks include finance lease receivables and are detailed as
follows:



|                                                            |  |      |        |  |      |  |        | 
|----------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|Finance lease receivables                                   |  |      |        |  |      | 
|                                                            |  | 2016 |        |  | 2015 | 
|Maturities of gross investment in finance lease receivables |  |      |        |  |      |  |        | 
| within 1 year                                             |  |      | 2,492  |  |      |  | 2,690  | 
| more than 1 year but less than 5 years                    |  |      | 6,282  |  |      |  | 6,004  | 
| more than 5 years                                         |  |      | 3,114  |  |      |  | 3,672  | 
|                                                            |  |      |        |  |      |  |        | 
|                                                            |  |      | 11,888 |  |      |  | 12,366 | 
|Unearned future finance income on finance leases            |  |      | 1,254 |  |      |  | 1,507 | 
|                                                            |  |      |        |  |      |  |        | 
|Net investment in finance leases                            |  |      | 10,634 |  |      |  | 10,859 | 
|Maturities of net investment in finance lease receivables   |  |      |        |  |      |  |        | 
| within 1 year                                             |  |      | 2,210  |  |      |  | 2,368  | 
| more than 1 year but less than 5 years                    |  |      | 5,635  |  |      |  | 5,246  | 
| more than 5 years                                         |  |      | 2,789  |  |      |  | 3,245  | 
|                                                            |  |      |        |  |      |  |        | 
|                                                            |  |      | 10,634 |  |      |  | 10,859 | 
|Included in Loans and advances to banks                     |  |      | 88     |  |      |  | 114    | 
|Included in Loans and advances to customers                 |  |      | 10,546 |  |      |  | 10,745 | 
|                                                            |  |      |        |  |      |  |        | 
|                                                            |  |      | 10,634 |  |      |  | 10,859 | 
|                                                            |  |      |        |  |      |  |        | 

The allowance for uncollectable finance lease receivables includes in the loan loss provisions an amount of EUR 282 million as at
31 December 2016 (2015: EUR 271 million).

No individual finance lease receivable has terms and conditions that significantly affect the amount, timing or
certainty of the consolidated cash flows of the Group.



|                                               |  |             |       |  |               |  |       |       |  |  |       |  |  |      |       |  |      |  |       |  |  |  |       | 
|---------------------------------------------- |  | ----------- | ----- |  | ------------- |  | ----- | ----- |  |  | ----- |  |  | ---- | ----- |  | ---- |  | ----- |  |  |  | ----- | 
|Loan loss provisions by type                   |  |             |       |  |               |  |       |       |  |  |       |  |  |      |       |  |      | 
|                                               |  | Netherlands |       |  | International |  |       | Total | 
|                                               |  | 2016        |       |  | 2015          |  |       | 2016  |  |  | 2015  |  |  | 2016 |       |  | 2015 | 
|Loans to, or guaranteed by, public authorities |  |             |       |  |               |  |       |       |  |  | 7     |  |  |      | 2     |  |      |  | 7     |  |  |  | 2     | 
|Loans secured by mortgages                     |  |             | 550   |  |               |  | 819   |       |  |  | 638   |  |  |      | 717   |  |      |  | 1,188 |  |  |  | 1,536 | 
|Loans guaranteed by credit institutions        |  |             | 2     |  |               |  | 1     |       |  |  | 12    |  |  |      | 15    |  |      |  | 14    |  |  |  | 16    | 
|Personal lending                               |  |             | 122   |  |               |  | 177   |       |  |  | 620   |  |  |      | 712   |  |      |  | 742   |  |  |  | 889   | 
|Asset backed securities                        |  |             |       |  |               |  |       |       |  |  | 2     |  |  |      | 2     |  |      |  | 2     |  |  |  | 2     | 
|Corporate loans and Credit Facilities          |  |             | 1,738 |  |               |  | 1,903 |       |  |  | 1,617 |  |  |      | 1,438 |  |      |  | 3,355 |  |  |  | 3,341 | 
|                                               |  |             |       |  |               |  |       |       |  |  |       |  |  |      |       |  |      |  |       |  |  |  |       | 
|                                               |  |             | 2,412 |  |               |  | 2,900 |       |  |  | 2,896 |  |  |      | 2,886 |  |      |  | 5,308 |  |  |  | 5,786 | 
|The closing balance is included in             |  |             |       |  |               |  |       |       |  |  |       |  |  |      |       |  |      |  |       |  |  |  |       | 
| Loans and advances to banks                  |  |             |       |  |               |  |       |       |  |  | 11    |  |  |      | 14    |  |      |  | 11    |  |  |  | 14    | 
| Loans and advances to customers              |  |             | 2,349 |  |               |  | 2,900 |       |  |  | 2,829 |  |  |      | 2,872 |  |      |  | 5,178 |  |  |  | 5,772 | 
| Other provisions other                       |  |             | 63    |  |               |  |       |       |  |  | 56    |  |  |      |       |  |      |  | 119   |  |  |  |       | 
|                                               |  |             |       |  |               |  |       |       |  |  |       |  |  |      |       |  |      |  |       |  |  |  |       | 
|                                               |  |             | 2,412 |  |               |  | 2,900 |       |  |  | 2,896 |  |  |      | 2,886 |  |      |  | 5,308 |  |  |  | 5,786 | 
|                                               |  |             |       |  |               |  |       |       |  |  |       |  |  |      |       |  |      |  |       |  |  |  |       | 



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-40 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                          |  |      |        |  |      |  |        | 
|--------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|Changes in loan loss provisions                           |  |      |        |  |      | 
|                                                          |  | 2016 |        |  | 2015 | 
|Opening balance                                           |  |      | 5,786  |  |      |  | 5,995  | 
|Write-offs                                                |  |      | 1,494 |  |      |  | 1,718 | 
|Recoveries                                                |  |      | 94     |  |      |  | 91     | 
|Increase in loan loss provisions                          |  |      | 974    |  |      |  | 1,347  | 
|Exchange rate differences                                 |  |      | 55    |  |      |  | 38     | 
|Changes in the composition of the group and other changes |  |      | 3      |  |      |  | 33     | 
|                                                          |  |      |        |  |      |  |        | 
|Closing balance                                           |  |      | 5,308  |  |      |  | 5,786  | 
|                                                          |  |      |        |  |      |  |        | 

The Increase in loan loss provisions is presented as Addition to loan loss provisions in the Consolidated statement of profit or loss.

7 Investments in associates and joint ventures



|                                                   |  |                  |    |  |                               |  |     |                   |  |  |             |  |  |                  |        |  |             |  |        |               |  |  |     |  |  |  |     | 
|-------------------------------------------------- |  | ---------------- | -- |  | ----------------------------- |  | --- | ----------------- |  |  | ----------- |  |  | ---------------- | ------ |  | ----------- |  | ------ | ------------- |  |  | --- |  |  |  | --- | 
|Investments in associates and joint ventures       | 
|2016                                               |  | Interestheld (%) |    |  | Fair valueof listedinvestment |  |     | Balancesheetvalue |  |  | Totalassets |  |  | Totalliabilities |        |  | Totalincome |  |        | Totalexpenses | 
|TMB Public Company Limited                         |  |                  | 30 |  |                               |  | 729 |                   |  |  | 861         |  |  |                  | 21,439 |  |             |  | 19,275 |               |  |  | 685 |  |  |  | 489 | 
|Other investments in associates and joint ventures |  |                  |    |  |                               |  |     |                   |  |  | 280         |  |  |                  |        |  |             |  |        |               |  |  |     |  |  |  |     | 
|                                                   |  |                  |    |  |                               |  |     |                   |  |  |             |  |  |                  |        |  |             |  |        |               |  |  |     |  |  |  |     | 
|                                                   |  |                  |    |  |                               |  |     |                   |  |  | 1,141       |  |  |                  |        |  |             |  |        |               |  |  |     |  |  |  |     | 
|                                                   |  |                  |    |  |                               |  |     |                   |  |  |             |  |  |                  |        |  |             |  |        |               |  |  |     |  |  |  |     | 



|                                                   |  |                  |    |  |                               |  |     |                   |  |  |             |  |  |                  |        |  |             |  |        |               |  |  |     |  |  |  |     | 
|-------------------------------------------------- |  | ---------------- | -- |  | ----------------------------- |  | --- | ----------------- |  |  | ----------- |  |  | ---------------- | ------ |  | ----------- |  | ------ | ------------- |  |  | --- |  |  |  | --- | 
|Investments in associates and joint ventures       | 
|2015                                               |  | Interestheld (%) |    |  | Fair valueof listedinvestment |  |     | Balancesheetvalue |  |  | Totalassets |  |  | Totalliabilities |        |  | Totalincome |  |        | Totalexpenses | 
|TMB Public Company Limited                         |  |                  | 30 |  |                               |  | 801 |                   |  |  | 732         |  |  |                  | 20,956 |  |             |  | 19,074 |               |  |  | 630 |  |  |  | 419 | 
|Other investments in associates and joint ventures |  |                  |    |  |                               |  |     |                   |  |  | 230         |  |  |                  |        |  |             |  |        |               |  |  |     |  |  |  |     | 
|                                                   |  |                  |    |  |                               |  |     |                   |  |  |             |  |  |                  |        |  |             |  |        |               |  |  |     |  |  |  |     | 
|                                                   |  |                  |    |  |                               |  |     |                   |  |  | 962         |  |  |                  |        |  |             |  |        |               |  |  |     |  |  |  |     | 
|                                                   |  |                  |    |  |                               |  |     |                   |  |  |             |  |  |                  |        |  |             |  |        |               |  |  |     |  |  |  |     | 

TMB Public Company Limited (TMB) is an associate in which ING Group holds a 30% ownership interest. TMB is a financial institution
providing products and services to Wholesale, Small and Medium Enterprise (SME) and Retail customers. TMB is domiciled in Bangkok, Thailand and is listed on the Stock Exchange of Thailand (SET).

Other investments in associates and joint ventures are mainly investment property funds or vehicles operating predominantly in Europe.

ING Group does not hold any interests in Investments in Associates and joint ventures that are individually significant to ING Group. Other investments in associates
and joint ventures represents a large number of associates and joint ventures with an individual statement of financial position value of less than EUR 50 million.

Significant influence for associates in which the interest held is below 20%, is based on the combination on ING Groups financial interest and other arrangements,
such as participation in the Board of Directors.

In general, the reporting dates of all significant associates and joint ventures are consistent with the reporting
date of the Group. However, the reporting dates of certain associates and joint ventures can differ from the reporting date of the Group, but by no more than three months.

Accumulated impairments of EUR 48 million (2015: EUR 24 million) have been recognised. The values presented in the tables above could differ from the values
presented in the individual annual accounts of the associates and joint ventures, due to the fact that the individual values have been brought in line with ING Groups accounting principles. Where the listed fair value is lower than the
statement of financial position value, an impairment review and an evaluation of the going concern basis has been performed.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-41 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The associates and joint ventures of ING are subject to legal and regulatory restrictions regarding the amount of
dividends it can pay to ING. These restrictions are for example dependant on the laws in the country of incorporation for declaring dividends or as a result of minimum capital requirements that are imposed by industry regulators in the countries in
which the associates and joint ventures operate. In addition, the associates and joint ventures also consider other factors in determining the appropriate levels of equity needed. These factors and limitations include, but are not limited to, rating
agency and regulatory views, which can change over time.



|                                                               |  |      |       |  |      |  |      | 
|-------------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ---- | 
|Changes in Investments in associates and joint ventures        |  |      |       |  |      | 
|                                                               |  | 2016 |       |  | 2015 | 
|Opening balance                                                |  |      | 962   |  |      |  | 953  | 
|Additions                                                      |  |      | 49    |  |      |  | 24   | 
|Transfers to and from Investments/Other assets and liabilities |  |      | 75    |  |      |  | 10  | 
|Revaluations                                                   |  |      | 38    |  |      |  | 5    | 
|Share of results                                               |  |      | 91    |  |      |  | 110  | 
|Dividends received                                             |  |      | 37   |  |      |  | 33  | 
|Disposals                                                      |  |      | 54   |  |      |  | 125 | 
|Impairments                                                    |  |      | 3    |  |      |  |      | 
|Exchange rate differences                                      |  |      | 20    |  |      |  | 20   | 
|Changes in the composition of the group and other changes      |  |      |       |  |      |  | 18   | 
|                                                               |  |      |       |  |      |  |      | 
|Closing balance                                                |  |      | 1,141 |  |      |  | 962  | 
|                                                               |  |      |       |  |      |  |      | 

Additions

In 2016 additions are
mainly due to several smaller investments in associates.

Transfers to and From Investments/Other assets and liabilities

In 2016 transfers included EUR 82 million reclassification from Available-for-sale
equity securities to associates and EUR 7 million reclassification from/to other assets and other liabilities.

Revaluations

In 2016, revaluations as presented in the table above of EUR 38 million includes, EUR 54 million relating to TMB, EUR 17 million relating to Equens SE,
and EUR 31 million is due to other revaluations.

Share of results

In 2016, Share of results from associates and joint ventures of EUR 88 million as presented in the statement of profit or loss, includes:



| |  | Share of results, as presented in the table above of EUR 91 million mainly attributable to results of TMB amounting to EUR 68 million and a gain of EUR 21 million on disposal of shares held in VISA Europe
Limited; and
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Impairments of investments in associates and joint ventures of EUR 3 million.
|- |  | ------------------------------------------------------------------------------

In 2015, Share of results from
associates and joint ventures of EUR 492 million as presented in the statement of profit or loss, included:



| |  | Share of results, as presented in the table above, of EUR 110 million mainly attributable to results of TMB amounting to EUR 75 million and gain on disposal of Ivy Retail SRL and Ontwikkelingscombinatie Overhoeks
C.V. amounting to EUR 10 million and EUR 5 million respectively;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | A net gain on Investments in associates held for sale of EUR 382 million, which comprised EUR 367 million from the merger of ING Vysya with Kotak and EUR 15 million on the sale of ING Nationale
Nederlanden PTE Polska, S.A.; and
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Impairments on investments in associates and joint ventures of nil.
|- |  | -------------------------------------------------------------------

Disposals

In 2016, Disposals of EUR 54 million is mainly attributable to the sale of Enterprise Center of EUR 40 million and capital repayment CBRE Asia Value Fund of
EUR 10 million.

In 2015, Disposals of EUR 125 million was mainly attributable to sale of Ivy Retail SRL and Ontwikkelingscombinatie Overhoeks C.V. as
referred to above.

Exchange rate differences

In 2016, Exchange
rate differences includes EUR 20 million, of which 28 million relates to TMB and EUR 9 million relates to Appia Group (2015: EUR 11 million related to TMB).



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-42 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







8 Property and equipment



|                               |  |      |       |  |      |  |       | 
|------------------------------ |  | ---- | ----- |  | ---- |  | ----- | 
|Property and equipment by type |  |      |       |  |      | 
|                               |  | 2016 |       |  | 2015 | 
|Property in own use            |  |      | 881   |  |      |  | 982   | 
|Equipment                      |  |      | 1,015 |  |      |  | 971   | 
|Assets under operating leases  |  |      | 106   |  |      |  | 74    | 
|                               |  |      |       |  |      |  |       | 
|                               |  |      | 2,002 |  |      |  | 2,027 | 
|                               |  |      |       |  |      |  |       | 

ING uses external valuers to value property in own use. All properties are typically appraised by external valuers once every five
years.



|                                                                   |  |      |       |  |      |  |       | 
|------------------------------------------------------------------ |  | ---- | ----- |  | ---- |  | ----- | 
|Changes in property in own use                                     |  |      |       |  |      | 
|                                                                   |  | 2016 |       |  | 2015 | 
|Opening balance                                                    |  |      | 982   |  |      |  | 1,020 | 
|Additions                                                          |  |      | 9     |  |      |  | 10    | 
|Reclassifications                                                  |  |      |       |  |      |  |       | 
|- Transfers to and from Investment properties                      |  |      | 8     |  |      |  | 1     | 
|- Transfers to and from Other assets                               |  |      |       |  |      |  | 4     | 
|                                                                   |  |      |       |  |      |  |       | 
|                                                                   |  |      | 8     |  |      |  | 5     | 
|Amounts recognised in the statement of profit or loss for the year |  |      |       |  |      |  |       | 
|- Depreciation                                                     |  |      | 15   |  |      |  | 16   | 
|- Impairments                                                      |  |      | 64   |  |      |  | 17   | 
|- Reversal of impairments                                          |  |      | 5     |  |      |  | 14    | 
|                                                                   |  |      |       |  |      |  |       | 
|                                                                   |  |      | 74   |  |      |  | 19   | 
|Revaluations recognised in equity during the year                  |  |      | 11    |  |      |  | 32    | 
|Disposals                                                          |  |      | 38   |  |      |  | 60   | 
|Exchange rate differences                                          |  |      | 17   |  |      |  | 6    | 
|                                                                   |  |      |       |  |      |  |       | 
|Closing balance                                                    |  |      | 881   |  |      |  | 982   | 
|Gross carrying amount as at 31 December                            |  |      | 1,656 |  |      |  | 1,823 | 
|Accumulated depreciation as at 31 December                         |  |      | 504  |  |      |  | 635  | 
|Accumulated impairments as at 31 December                          |  |      | 271  |  |      |  | 206  | 
|                                                                   |  |      |       |  |      |  |       | 
|Net carrying value as at 31 December                               |  |      | 881   |  |      |  | 982   | 
|Revaluation surplus                                                |  |      |       |  |      |  |       | 
|Opening balance                                                    |  |      | 273   |  |      |  | 219   | 
|Revaluation in the year                                            |  |      | 17   |  |      |  | 54    | 
|                                                                   |  |      |       |  |      |  |       | 
|Closing balance                                                    |  |      | 256   |  |      |  | 273   | 
|                                                                   |  |      |       |  |      |  |       | 

The cost or the purchase price amounted to EUR 1,400 million (2015: EUR 1,551 million). Cost or the purchase price less accumulated
depreciation and impairments would have been EUR 625 million (2015: EUR 710 million) had property in own use been valued at cost instead of at fair value.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-43 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                          |  |                           |       |  |                                          |  |       |       |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 
|--------------------------------------------------------- |  | ------------------------- | ----- |  | ---------------------------------------- |  | ----- | ----- |  |  | ------ |  |  | ---- | ------ |  | ---- |  | ------ |  |  |  | ------ | 
|Changes in equipment                                      | 
|                                                          |  | Data processing equipment |       |  | Fixtures and fittingsand other equipment |  |       | Total | 
|                                                          |  | 2016                      |       |  | 2015                                     |  |       | 2016  |  |  | 2015   |  |  | 2016 |        |  | 2015 | 
|Opening balance                                           |  |                           | 263   |  |                                          |  | 265   |       |  |  | 708    |  |  |      | 733    |  |      |  | 971    |  |  |  | 998    | 
|Additions                                                 |  |                           | 161   |  |                                          |  | 140   |       |  |  | 181    |  |  |      | 176    |  |      |  | 342    |  |  |  | 316    | 
|Disposals                                                 |  |                           | 5    |  |                                          |  | 6    |       |  |  | 20    |  |  |      | 7     |  |      |  | 25    |  |  |  | 13    | 
|Depreciation                                              |  |                           | 137  |  |                                          |  | 125  |       |  |  | 178   |  |  |      | 186   |  |      |  | 315   |  |  |  | 311   | 
|Exchange rate differences                                 |  |                           | 5    |  |                                          |  | 4    |       |  |  | 5     |  |  |      | 1     |  |      |  | 10    |  |  |  | 5     | 
|Changes in the composition of the group and other changes |  |                           | 46    |  |                                          |  | 7    |       |  |  | 6      |  |  |      | 7     |  |      |  | 52     |  |  |  | 14    | 
|                                                          |  |                           |       |  |                                          |  |       |       |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 
|Closing balance                                           |  |                           | 323   |  |                                          |  | 263   |       |  |  | 692    |  |  |      | 708    |  |      |  | 1,015  |  |  |  | 971    | 
|Gross carrying amount as at 31 December                   |  |                           | 1,274 |  |                                          |  | 1,092 |       |  |  | 2,432  |  |  |      | 2,482  |  |      |  | 3,706  |  |  |  | 3,574  | 
|Accumulated depreciation as at 31 December                |  |                           | 950  |  |                                          |  | 828  |       |  |  | 1,740 |  |  |      | 1,774 |  |      |  | 2,690 |  |  |  | 2,602 | 
|Accumulated impairments as at 31 December                 |  |                           | 1    |  |                                          |  | 1    |       |  |  |        |  |  |      |        |  |      |  | 1     |  |  |  | 1     | 
|                                                          |  |                           |       |  |                                          |  |       |       |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 
|Net carrying value as at 31 December                      |  |                           | 323   |  |                                          |  | 263   |       |  |  | 692    |  |  |      | 708    |  |      |  | 1,015  |  |  |  | 971    | 
|                                                          |  |                           |       |  |                                          |  |       |       |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 

9 Intangible assets



|                                                          |  |          |     |  |          |  |       |       |  |  |        |  |  |      |        |  |      |  |     |      |  |  |      |  |  |  |        |  |  |  |        | 
|--------------------------------------------------------- |  | -------- | --- |  | -------- |  | ----- | ----- |  |  | ------ |  |  | ---- | ------ |  | ---- |  | --- | ---- |  |  | ---- |  |  |  | ------ |  |  |  | ------ | 
|                                                         
|Changes in intangible assets                              | 
|                                                          |  | Goodwill |     |  | Software |  |       | Other |  |  | Total  | 
|                                                          |  | 2016     |     |  | 2015     |  |       | 2016  |  |  | 2015   |  |  | 2016 |        |  | 2015 |  |     | 2016 |  |  | 2015 | 
|Opening balance                                           |  |          | 985 |  |          |  | 1,061 |       |  |  | 567    |  |  |      | 574    |  |      |  | 15  |      |  |  | 20   |  |  |  | 1,567  |  |  |  | 1,655  | 
|Additions                                                 |  |          |     |  |          |  |       |       |  |  | 93     |  |  |      | 134    |  |      |  |     |      |  |  |      |  |  |  | 93     |  |  |  | 134    | 
|Capitalised expenses                                      |  |          |     |  |          |  |       |       |  |  | 195    |  |  |      | 122    |  |      |  |     |      |  |  |      |  |  |  | 195    |  |  |  | 122    | 
|Amortisation                                              |  |          |     |  |          |  |       |       |  |  | 182   |  |  |      | 265   |  |      |  | 5  |      |  |  | 5   |  |  |  | 187   |  |  |  | 270   | 
|Impairments                                               |  |          |     |  |          |  |       |       |  |  | 45    |  |  |      | 15    |  |      |  |     |      |  |  |      |  |  |  | 45    |  |  |  | 15    | 
|Exchange rate differences                                 |  |          | 82 |  |          |  | 70   |       |  |  | 1     |  |  |      |        |  |      |  |     |      |  |  | 1   |  |  |  | 83    |  |  |  | 71    | 
|Disposals                                                 |  |          |     |  |          |  |       |       |  |  | 9     |  |  |      | 1     |  |      |  |     |      |  |  |      |  |  |  | 9     |  |  |  | 1     | 
|Changes in the composition of the group and other changes |  |          |     |  |          |  | 6    |       |  |  | 47    |  |  |      | 18     |  |      |  |     |      |  |  | 1    |  |  |  | 47    |  |  |  | 13     | 
|                                                          |  |          |     |  |          |  |       |       |  |  |        |  |  |      |        |  |      |  |     |      |  |  |      |  |  |  |        |  |  |  |        | 
|Closing balance                                           |  |          | 903 |  |          |  | 985   |       |  |  | 571    |  |  |      | 567    |  |      |  | 10  |      |  |  | 15   |  |  |  | 1,484  |  |  |  | 1,567  | 
|Gross carrying amount as at 31 December                   |  |          | 903 |  |          |  | 985   |       |  |  | 1,756  |  |  |      | 1,706  |  |      |  | 29  |      |  |  | 29   |  |  |  | 2,688  |  |  |  | 2,720  | 
|Accumulated amortisation as at 31 December                |  |          |     |  |          |  |       |       |  |  | 1,147 |  |  |      | 1,128 |  |      |  | 17 |      |  |  | 12  |  |  |  | 1,164 |  |  |  | 1,140 | 
|Accumulated impairments as at 31 December                 |  |          |     |  |          |  |       |       |  |  | 38    |  |  |      | 11    |  |      |  | 2  |      |  |  | 2   |  |  |  | 40    |  |  |  | 13    | 
|                                                          |  |          |     |  |          |  |       |       |  |  |        |  |  |      |        |  |      |  |     |      |  |  |      |  |  |  |        |  |  |  |        | 
|Net carrying value as at 31 December                      |  |          | 903 |  |          |  | 985   |       |  |  | 571    |  |  |      | 567    |  |      |  | 10  |      |  |  | 15   |  |  |  | 1,484  |  |  |  | 1,567  | 
|                                                          |  |          |     |  |          |  |       |       |  |  |        |  |  |      |        |  |      |  |     |      |  |  |      |  |  |  |        |  |  |  |        | 



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-44 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Goodwill

Goodwill is
allocated to groups of CGUs as follows:



|                                     |  |                                  |                                 |  |              |  |       |                      |  |  |          |   |  |          |     |  |  |  |     | 
|------------------------------------ |  | -------------------------------- | ------------------------------- |  | ------------ |  | ----- | -------------------- |  |  | -------- | - |  | -------- | --- |  |  |  | --- | 
|Goodwill allocation to group of CGUs |  |                                  |                                 |  |              |  |       |                      |  |  |          |   |  |          |    
|                                     |  | Method usedfor recoverableamount |                                 |  | Discountrate |  |       | Long termgrowth rate |  |  | Goodwill |   |  | Goodwill |    
|Group of CGUs                       |  |                                  |                                 |  |              |  |       |                      |  |  | 2016     |   |  | 2015     |    
|Retail Belgium                       |  |                                  | Values in use                   |  |              |  | 8.64  | %                    |  |  | 0.45     | % |  |          | 50  |  |  |  | 50  | 
|Retail Germany                       |  |                                  | Values in use                   |  |              |  | 7.74  | %                    |  |  | 0.45     | % |  |          | 349 |  |  |  | 349 | 
|Retail Growth Markets1, 2            |  |                                  | Fair value lesscost of disposal |  |              |  | 12.48 | %                    |  |  | 3.19     | % |  |          | 375 |  |  |  | 427 | 
|Wholesale Banking2                   |  |                                  | Values in use                   |  |              |  | 8.80  | %                    |  |  | 0.96     | % |  |          | 129 |  |  |  | 159 | 
|                                     |  |                                  |                                 |  |              |  |       |                      |  |  |          |   |  |          |     |  |  |  |     | 
|                                     |  |                                  |                                 |  |              |  |       |                      |  |  |          |   |  |          | 903 |  |  |  | 985 | 
|                                     |  |                                  |                                 |  |              |  |       |                      |  |  |          |   |  |          |     |  |  |  |     | 



|1 | As of 2016, the group of CGUs Retail Central Europe is renamed to Retail Growth and enhanced with Asian stakes to align with segment reporting. This change has no impact on goodwill allocated to this group of CGUs in
2016 and 2015.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | Goodwill related to Growth Countries is allocated across two groups of CGUs EUR 375 million to Retail Growth and EUR 109 million to Wholesale Banking.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------

No goodwill impairment was recognised in 2016 (2015: nil). Changes in the goodwill per group of CGUs in 2016 is due to changes in currency exchange rates.

Goodwill impairment testing

Impairment reviews with respect to
goodwill are performed at least annually and more frequently if events indicate that impairments may have occurred. Goodwill is tested for impairment at the lowest level at which it is monitored for internal management purposes and is referred to as
a Cash Generating Unit (CGU), or group of CGUs. Goodwill is tested for impairment by comparing the carrying value of the group of CGUs (that is, the group of cash generating units or CGUs) to the best estimate of the recoverable amount of that group
of CGUs. In compliance with IAS 36 Impairment of assets, the carrying value is determined on a basis that is consistent with the way in which the recoverable amount of the CGU is determined. The actual IFRS capital is the basis for
allocation of carrying value to CGUs, adjusted for Retail/Wholesale split using a solvency allocation key which is based on the CGUs share of risk-weighted assets.

Methodology

Several methodologies are applied to arrive at the best
estimate of the recoverable amount. In line with IFRS, the recoverable amount is determined as the higher of the fair value less costs of disposal and Value in Use (VIU). Fair value less costs of disposal is based on observable share prices (Level 1
inputs in the fair value hierarchy), observable Price-to-Book multiples of relevant peer banks (Level 2), or based on a discounted free cash flow model (Level 3). The
VIU calculation is based on a Dividend Discount model using five year management approved plans. When estimating the VIU of a CGU, local conditions and requirements determine the capital requirements, discount rates, and terminal growth rates. These
local conditions and requirements determine the ability to upstream excess capital and profits to ING Group. The discount rate calculation includes other inputs such as equity market premium, country risk premium, and long term inflation which are
based on market sources and managements judgement. The long term growth rate for EU-countries is based on long-term risk-free rate by reference to the yield of a composite index consisting of Euro
generic government bonds, with a maturity of 30 years. For other countries, the growth rate includes long term inflation rate obtained from market sources.

The
carrying value of the CGUs exceeds the recoverable amount for 2016 and 2015 and therefore no impairment is required.

Sensitivity of key assumptions

Key assumptions in the goodwill impairment test model are the Price to Book ratios, share price of listed subsidiaries and the local parameters for CET1,
discount rate, and long term growth rates. The model was tested for sensitivity by changing the key parameters in the model to more conservative values. The sensitivity analysis did not trigger additional impairment considerations.

Software

Software, includes internally developed software amounting
to EUR 395 million (2015: EUR 319 million).

As of 2016, the amortisation period for capitalised software is changed from three to five years. The change is
applied prospectively. The change results in a lower charge to the statement of profit or loss for the year. The change has no significant impact on the statement of profit or loss for the year ended 31 December 2016 and is not expected to have
a significant impact on the statement of profit or loss of ING Group in future years. Amortisation of software and other intangible assets is included in the statement of profit or loss in other operating expenses. Reference is made to Note 27
Other operating expenses.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-45 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







10 Other assets



|                                                    |  |      |        |  |      |  |        | 
|--------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|Other assets by type                                |  |      |        |  |      | 
|                                                    |  | 2016 |        |  | 2015 | 
|Net defined benefit assets                          |  |      | 609    |  |      |  | 643    | 
|Investment properties                               |  |      | 65     |  |      |  | 77     | 
|Property development and obtained from foreclosures |  |      | 184    |  |      |  | 212    | 
|Accrued interest and rents                          |  |      | 5,588  |  |      |  | 6,228  | 
|Other accrued assets                                |  |      | 884    |  |      |  | 717    | 
|Amounts to be settled                               |  |      | 4,815  |  |      |  | 2,087  | 
|Other                                               |  |      | 2,577  |  |      |  | 2,297  | 
|                                                    |  |      |        |  |      |  |        | 
|                                                    |  |      | 14,722 |  |      |  | 12,261 | 
|                                                    |  |      |        |  |      |  |        | 

Disclosures in respect of Net defined benefit assets are provided in Note 35 Pension and other post-employment benefits.

Property development and obtained from foreclosures



|                                                    |  |      |      |  |      |  |      | 
|--------------------------------------------------- |  | ---- | ---- |  | ---- |  | ---- | 
|Property development and obtained from foreclosures |  |      |      |  |      | 
|                                                    |  | 2016 |      |  | 2015 | 
|Property developed                                  |  |      | 109  |  |      |  | 141  | 
|Property obtained from foreclosures                 |  |      | 75   |  |      |  | 71   | 
|                                                    |  |      |      |  |      |  |      | 
|                                                    |  |      | 184  |  |      |  | 212  | 
|Gross carrying amount as at 31 December             |  |      | 469  |  |      |  | 531  | 
|Accumulated impairments as at 31 December           |  |      | 285 |  |      |  | 319 | 
|                                                    |  |      |      |  |      |  |      | 
|Net carrying value                                  |  |      | 184  |  |      |  | 212  | 
|                                                    |  |      |      |  |      |  |      | 

Accrued interest and rents

As at
31 December 2016, the line item includes accrued interest of EUR 1,939 million (2015: EUR 2,290 million) on trading derivative assets and EUR 2,773 million (2015: EUR 2,895 million) on loans and available-for-sale bonds. Accrued interest on trading derivative assets should be considered together with accrued interest on trading derivative liabilities as included in Other liabilities. Reference is
made to Note 16 Other liabilities. The remainder of the balance relates mainly to accrued interest on cash flow hedges, fair value hedges, and other non-trading derivatives.

Other accrued assets

In 2016, Other accrued assets increased by EUR
167 million, mainly due to card transactions.

Amounts to be settled

Amounts to be settled are primarily transactions not settled at the balance sheet date. They are short term in nature and are expected to settle shortly after the
balance sheet date. The increase in 2016 is partly attributable to the reclassification of Items to be settled in respect of securities transactions. Items to be settled in respect of securities transactions of nil, at 31 December 2016
(31 December 2015: EUR 1,499 million), were previously reported under Loans and advances to customers and Loans and advances to banks. On the basis of materiality, comparative amounts as at 31 December 2015 have not been adjusted.
Furthermore, the increased balance, as at 31 December 2016, is due to higher market activity compared to year end.

Other

Other assets - Other relates mainly to other receivables in the normal course of business.

11 Assets held for sale

As at 31 December 2015, Assets held for sale
related to the investment of 25.75% in the associate NN Group which amounted to EUR 2,153 million.

During 2016, ING Group sold its remaining shares in NN
Group resulting in a net profit of EUR 448 million which is recognised in the statement of profit or loss in the line Net result from disposal of discontinued operations.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-46 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Reference is made to Note 28 Discontinued operations and Note 51 Other events.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-47 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Liabilities

12 Deposits
from banks

Deposits from banks include non-subordinated debt from banks, except for amounts in the form of debt
securities.



|                            |  |             |        |  |               |  |        |       |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 
|--------------------------- |  | ----------- | ------ |  | ------------- |  | ------ | ----- |  |  | ------ |  |  | ---- | ------ |  | ---- |  | ------ |  |  |  | ------ | 
|Deposits from banks by type |  |             |        |  |               |  |        |       |  |  |        |  |  |      |       
|                            |  | Netherlands |        |  | International |  |        | Total | 
|                            |  | 2016        |        |  | 2015          |  |        | 2016  |  |  | 2015   |  |  | 2016 |        |  | 2015 | 
|Non-interest bearing        |  |             |        |  |               |  | 1,304  |       |  |  | 449    |  |  |      | 1,063  |  |      |  | 449    |  |  |  | 2,367  | 
|Interest bearing            |  |             | 13,778 |  |               |  | 12,331 |       |  |  | 17,737 |  |  |      | 19,115 |  |      |  | 31,515 |  |  |  | 31,446 | 
|                            |  |             |        |  |               |  |        |       |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 
|                            |  |             | 13,778 |  |               |  | 13,635 |       |  |  | 18,186 |  |  |      | 20,178 |  |      |  | 31,964 |  |  |  | 33,813 | 
|                            |  |             |        |  |               |  |        |       |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 

In 2016, ING participated in the new targeted longer-term refinancing operations (TLTRO II) of EUR 10.7 billion and early redeemed
the old TLTRO I tranches for EUR 8.7 billion.

The TLTRO aims to stimulate lending to the real economy in the Eurozone. The interest rate on the TLTROs
is fixed over the life of each operation at the benchmark rate of the European Central Bank.

Reference is made to Note 42 Transfer of financial assets
for information on securities lending as well as sale and repurchase transactions.

13 Customer deposits



|                                      |  |      |         |  |      |  |         | 
|------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | 
|Customer deposits                     |  |      |         |  |      | 
|                                      |  | 2016 |         |  | 2015 | 
|Savings accounts                      |  |      | 315,663 |  |      |  | 305,910 | 
|Credit balances on customer accounts1 |  |      | 173,230 |  |      |  | 316,717 | 
|Corporate deposits                    |  |      | 32,687  |  |      |  | 40,244  | 
|Other                                 |  |      | 1,328   |  |      |  | 1,339   | 
|                                      |  |      |         |  |      |  |         | 
|                                      |  |      | 522,908 |  |      |  | 664,210 | 
|                                      |  |      |         |  |      |  |         | 



|1 | The comparative amounts, as at 31 December 2015, are adjusted as a result of a change in accounting policies. Total Customer deposits, as at 31 December 2015, increased by EUR 163.5 billion from EUR
500.8 billion to EUR 664.2 billion as a result of an increase in Credit balances on customer accounts. Reference is made to Note 1 Accounting policies - Change in accounting policies and presentation in 2016.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                          |  |              |         |  |               |  |         |       |  |  |         |  |  |      |         |  |      |  |         |  |  |  |         | 
|------------------------- |  | ------------ | ------- |  | ------------- |  | ------- | ----- |  |  | ------- |  |  | ---- | ------- |  | ---- |  | ------- |  |  |  | ------- | 
|Customer deposits by type |  |              |         |  |               |  |         |       |  |  |         |  |  |      |         |  |      | 
|                          |  | Netherlands1 |         |  | International |  |         | Total | 
|                          |  | 2016         |         |  | 2015          |  |         | 2016  |  |  | 2015    |  |  | 2016 |         |  | 2015 | 
|Non-interest bearing      |  |              | 13,536  |  |               |  | 12,360  |       |  |  | 16,911  |  |  |      | 13,367  |  |      |  | 30,447  |  |  |  | 25,727  | 
|Interest bearing1         |  |              | 151,446 |  |               |  | 310,950 |       |  |  | 341,015 |  |  |      | 327,533 |  |      |  | 492,461 |  |  |  | 638,483 | 
|                          |  |              |         |  |               |  |         |       |  |  |         |  |  |      |         |  |      |  |         |  |  |  |         | 
|                          |  |              | 164,982 |  |               |  | 323,310 |       |  |  | 357,926 |  |  |      | 340,900 |  |      |  | 522,908 |  |  |  | 664,210 | 
|                          |  |              |         |  |               |  |         |       |  |  |         |  |  |      |         |  |      |  |         |  |  |  |         | 



|1 | The comparative amounts, as at 31 December 2015, are adjusted as a result of a change in accounting policies. Total Customer deposits, as at 31 December 2015, increased by EUR 163.5 billion from EUR
500.8 billion to EUR 664.2 billion. Reference is made to Note 1 Accounting policies - Change in accounting policies in 2016.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Savings accounts relate to the balances on savings accounts, savings books, savings deposits, and time deposits of personal customers. The interest payable on savings
accounts, which is contractually added to the accounts, is also included.

Reference is made to Note 42 Transfer of financial assets for information on
securities lending as well as sale and repurchase transactions.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-48 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







14 Financial liabilities at fair value through profit or loss



|                                                           |  |      |        |  |      |  |         | 
|---------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------- | 
|Financial liabilities at fair value through profit or loss |  |      |        |  |      | 
|                                                           |  | 2016 |        |  | 2015 | 
|Trading liabilities                                        |  |      | 83,167 |  |      |  | 88,807  | 
|Non-trading derivatives                                    |  |      | 3,541  |  |      |  | 4,257   | 
|Designated at fair value through profit or loss            |  |      | 12,266 |  |      |  | 12,616  | 
|                                                           |  |      |        |  |      |  |         | 
|                                                           |  |      | 98,974 |  |      |  | 105,680 | 
|                                                           |  |      |        |  |      |  |         | 

Trading liabilities



|                            |  |      |        |  |      |  |        | 
|--------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|Trading liabilities by type |  |      |        |  |      | 
|                            |  | 2016 |        |  | 2015 | 
|Equity securities           |  |      | 1,975  |  |      |  | 3,773  | 
|Debt securities             |  |      | 4,146  |  |      |  | 5,342  | 
|Funds on deposit            |  |      | 37,753 |  |      |  | 38,789 | 
|Derivatives                 |  |      | 39,293 |  |      |  | 40,903 | 
|                            |  |      |        |  |      |  |        | 
|                            |  |      | 83,167 |  |      |  | 88,807 | 
|                            |  |      |        |  |      |  |        | 

The decrease in the trading liabilities is mainly due to a reduction of short positions, expiring contracts, and changes in fair value
resulting from market interest rates and exchange rates. Reference is made to Note 4 Financial assets at fair value through profit or loss for information on trading assets.

Reference is made to Note 42 Transfer of financial assets for information on securities lending as well as sale and repurchase transactions.

Non-trading derivatives



|                                                  |  |      |       |  |      |  |       | 
|------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | 
|Non-trading derivatives by type                   |  |      |       |  |      | 
|                                                  |  | 2016 |       |  | 2015 | 
|Derivatives used in:                              |  |      |       |  |      |  |       | 
| fair value hedges                               |  |      | 672   |  |      |  | 988   | 
| cash flow hedges                                |  |      | 671   |  |      |  | 1,167 | 
| hedges of net investments in foreign operations |  |      | 33    |  |      |  | 52    | 
|Other non-trading derivatives                     |  |      | 2,165 |  |      |  | 2,050 | 
|                                                  |  |      |       |  |      |  |       | 
|                                                  |  |      | 3,541 |  |      |  | 4,257 | 
|                                                  |  |      |       |  |      |  |       | 

Other non-trading derivatives mainly includes interest rate swaps and foreign currency swaps for
which no hedge accounting is applied.

Designated as at fair value through profit or loss



|                                                           |  |      |        |  |      |  |        | 
|---------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|Designated as at fair value through profit or loss by type |  |      |        |  |      | 
|                                                           |  | 2016 |        |  | 2015 | 
|Debt securities                                            |  |      | 10,736 |  |      |  | 11,623 | 
|Funds entrusted                                            |  |      | 969    |  |      |  | 407    | 
|Subordinated liabilities                                   |  |      | 561    |  |      |  | 586    | 
|                                                           |  |      |        |  |      |  |        | 
|                                                           |  |      | 12,266 |  |      |  | 12,616 | 
|                                                           |  |      |        |  |      |  |        | 

In 2016, the change in the fair value of financial liabilities designated at fair value through profit or loss attributable to changes
in credit risk is EUR 50 million (2015: EUR 163 million) and EUR 170 million (2015: EUR 119 million) on a cumulative basis. This change has been determined as the amount of change in fair value of the financial liability that is not
attributable to changes in market conditions that gave rise to market risk (i.e. mainly interest rate risk based on yield curves).



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-49 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The amount that ING Group is contractually required to pay at maturity to the holders of financial liabilities
designated at fair value through profit or loss is EUR 11,720 million (2015: EUR 12,220 million).

15 Provisions



|                          |  |      |       |  |      |  |     | 
|------------------------- |  | ---- | ----- |  | ---- |  | --- | 
|Provisions by type        |  |      |       |  |      | 
|                          |  | 2016 |       |  | 2015 | 
|Reorganisation provisions |  |      | 1,482 |  |      |  | 670 | 
|Other provisions          |  |      | 546   |  |      |  | 294 | 
|                          |  |      |       |  |      |  |     | 
|                          |  |      | 2,028 |  |      |  | 964 | 
|                          |  |      |       |  |      |  |     | 

Reorganisation provisions



|                                                          |  |      |       |  |      |  |      | 
|--------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ---- | 
|Changes in reorganisation provisions                      |  |      |       |  |      | 
|                                                          |  | 2016 |       |  | 2015 | 
|Opening balance                                           |  |      | 670   |  |      |  | 728  | 
|Additions                                                 |  |      | 1,202 |  |      |  | 180  | 
|Unused amounts reversed                                   |  |      | 13   |  |      |  | 15  | 
|Utilised                                                  |  |      | 365  |  |      |  | 226 | 
|Exchange rate differences                                 |  |      | 5    |  |      |  | 5    | 
|Changes in the composition of the group and other changes |  |      | 7    |  |      |  | 2   | 
|                                                          |  |      |       |  |      |  |      | 
|Closing balance                                           |  |      | 1,482 |  |      |  | 670  | 
|                                                          |  |      |       |  |      |  |      | 

In 2016, ING Group recognised an additional reorganisation provision of EUR 1,032 million, for the intended workforce reductions per the
intended digital transformation programmes as announced on INGs Investor Day on 3 October. The intended initiatives are expected to result in a reduction of INGs workforce mainly in Belgium and the Netherlands during 2016 to 2021.

In 2015, Additions to reorganisation provisions was mainly attributable to existing reorganisation initiatives in Retail Netherlands and Belgium.

These initiatives are implemented over a period of several years and the estimate of the reorganisation provisions is inherently uncertain. The provision at the balance
sheet date represents the best estimate of the expected redundancy costs and are expected to be sufficient to cover these costs.

Other provisions



|                                                          |  |            |     |  |       |  |     |       |  |  |      |  |  |      |     |  |      |  |     |  |  |  |      | 
|--------------------------------------------------------- |  | ---------- | --- |  | ----- |  | --- | ----- |  |  | ---- |  |  | ---- | --- |  | ---- |  | --- |  |  |  | ---- | 
|Changes in other provisions                               |  |            |     |  |       |  |     |       |  |  |      |  |  |      |     |  |      | 
|                                                          |  | Litigation |     |  | Other |  |     | Total | 
|                                                          |  | 2016       |     |  | 2015  |  |     | 2016  |  |  | 2015 |  |  | 2016 |     |  | 2015 | 
|Opening balance                                           |  |            | 187 |  |       |  | 190 |       |  |  | 107  |  |  |      | 99  |  |      |  | 294 |  |  |  | 289  | 
|Additions                                                 |  |            | 235 |  |       |  | 105 |       |  |  | 120  |  |  |      | 8   |  |      |  | 355 |  |  |  | 113  | 
|Unused amounts reversed                                   |  |            | 46 |  |       |  | 81 |       |  |  | 6   |  |  |      | 24 |  |      |  | 52 |  |  |  | 105 | 
|Utilised                                                  |  |            | 28 |  |       |  | 17 |       |  |  | 19  |  |  |      | 2  |  |      |  | 47 |  |  |  | 19  | 
|Exchange rate differences                                 |  |            | 1  |  |       |  | 2  |       |  |  | 1   |  |  |      | 1  |  |      |  | 2  |  |  |  | 3   | 
|Changes in the composition of the group and other changes |  |            | 6   |  |       |  | 8  |       |  |  | 8   |  |  |      | 27  |  |      |  | 2  |  |  |  | 19   | 
|                                                          |  |            |     |  |       |  |     |       |  |  |      |  |  |      |     |  |      |  |     |  |  |  |      | 
|Closing balance                                           |  |            | 353 |  |       |  | 187 |       |  |  | 193  |  |  |      | 107 |  |      |  | 546 |  |  |  | 294  | 
|                                                          |  |            |     |  |       |  |     |       |  |  |      |  |  |      |     |  |      |  |     |  |  |  |      | 

In 2016, Other provisions  other changes include amounts related to Letters of Credit / Guarantees of EUR 119 million. In
general, Other provisions are of a short-term nature. As at 31 December 2016, amounts expected to be settled within twelve months, amount to EUR 322 million. The amounts included in other provisions are based on best estimates with regard
to amounts and timing of cash flows required to settle the obligation.

Included in Other provisions  Litigation in 2016 and 2015, is a provision related to
floating interest rate derivatives that were sold in the Netherlands. Reference is made to Note 27 Other operating expenses and Note 45 Legal proceedings.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-50 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Included in Other provisions  Litigation in 2016, is a provision related to medical insurance plan damages for
retired employees of ING Belgium. Reference is made to Note 27 Other operating expenses and Note 45 Legal proceedings.

16 Other
liabilities



|                                                 |  |      |        |  |      |  |        | 
|------------------------------------------------ |  | ---- | ------ |  | ---- |  | ------ | 
|Other liabilities by type                        |  |      |        |  |      | 
|                                                 |  | 2016 |        |  | 2015 | 
|Net defined benefit liability                    |  |      | 521    |  |      |  | 498    | 
|Other post-employment benefits                   |  |      | 87     |  |      |  | 98     | 
|Other staff-related liabilities                  |  |      | 498    |  |      |  | 349    | 
|Other taxation and social security contributions |  |      | 495    |  |      |  | 565    | 
|Accrued interest                                 |  |      | 4,394  |  |      |  | 5,156  | 
|Costs payable                                    |  |      | 2,242  |  |      |  | 1,874  | 
|Share-based payment plan liabilities             |  |      | 26     |  |      |  | 26     | 
|Amounts to be settled                            |  |      | 6,391  |  |      |  | 2,390  | 
|Other                                            |  |      | 2,198  |  |      |  | 2,176  | 
|                                                 |  |      |        |  |      |  |        | 
|                                                 |  |      | 16,852 |  |      |  | 13,132 | 
|                                                 |  |      |        |  |      |  |        | 

Disclosures in respect of Net defined benefit liabilities are provided in Note 35 Pension and other post-employment
benefits.

Other staff-related liabilities

Other
staff-related liabilities includes vacation leave provisions, variable compensation provisions, jubilee provisions and disability/illness provisions.

Amounts
to be settled

Amounts to be settled increased compared to 31 December 2015 as a result of reclassification of Items to be settled in respect of
securities transactions. The items to be settled in respect of securities transactions of EUR 3,571 million, at 31 December 2016 (31 December 2015: EUR 2,257 million), were previously reported under Customer deposits and Deposits from
banks.On the basis of materiality, comparative amounts as at 31 December 2015, have not been adjusted. Furthermore, the remaining increase, as at 31 December 2016, is due to higher market activity compared to year end.

Other

Other liabilities  Other relates mainly to year-end accruals. Included in Other liabilities - Other, are accruals related to INGs contributions to the Deposit Guarantee Scheme (DGS) and the Single Resolution Fund (SRF).



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-51 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







17 Debt securities in issue

Debt securities in issue relate to debentures and other issued debt securities with either fixed interest rates or interest rates based on floating interest rate levels,
such as certificates of deposit and accepted bills issued by ING Group, except for subordinated items. Debt securities in issue do not include debt securities presented as Financial liabilities at fair value through profit or loss. ING Group does
not have debt securities that are issued on terms other than those available in the normal course of business. The maturities of the debt securities are as follows:



|                                        |  |      |         |  |      |  |         | 
|--------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | 
|Debt securities in issue  maturities   |  |      |         |  |      | 
|                                        |  | 2016 |         |  | 2015 | 
|Fixed rate debt securities              |  |      |         |  |      |  |         | 
|Within 1 year                           |  |      | 27,208  |  |      |  | 40,728  | 
|More than 1 year but less than 2 years  |  |      | 12,151  |  |      |  | 7,807   | 
|More than 2 years but less than 3 years |  |      | 7,365   |  |      |  | 11,192  | 
|More than 3 years but less than 4 years |  |      | 7,893   |  |      |  | 6,068   | 
|More than 4 years but less than 5 years |  |      | 8,674   |  |      |  | 7,845   | 
|More than 5 years                       |  |      | 14,716  |  |      |  | 20,415  | 
|                                        |  |      |         |  |      |  |         | 
|Total fixed rate debt securities        |  |      | 78,007  |  |      |  | 94,055  | 
|Floating rate debt securities           |  |      |         |  |      |  |         | 
|Within 1 year                           |  |      | 13,278  |  |      |  | 10,483  | 
|More than 1 year but less than 2 years  |  |      | 2,724   |  |      |  | 6,056   | 
|More than 2 years but less than 3 years |  |      | 4,168   |  |      |  | 1,958   | 
|More than 3 years but less than 4 years |  |      | 793     |  |      |  | 2,827   | 
|More than 4 years but less than 5 years |  |      | 320     |  |      |  | 476     | 
|More than 5 years                       |  |      | 3,944   |  |      |  | 5,434   | 
|                                        |  |      |         |  |      |  |         | 
|Total floating rate debt securities     |  |      | 25,227  |  |      |  | 27,234  | 
|                                        |  |      |         |  |      |  |         | 
|Total debt securities                   |  |      | 103,234 |  |      |  | 121,289 | 
|                                        |  |      |         |  |      |  |         | 

In 2016, the decrease in Debt securities in issue of EUR 18.1 billion is mainly attributable to a decrease in long term maturity
bonds of EUR 9.1 billion, a decrease of EUR 6.5 billion in certificates of deposit, decrease of EUR 2.9 billion covered bonds, decrease in other debt securities in issue EUR 2.1 billion, partially offset by an increase in
commerical paper of EUR 2.5 billion.

As at 31 December 2016, ING Group has unused lines of credit available including the payment of commercial paper
borrowings relating to debt securities in issue of EUR 12,015 million (2015: EUR 14,646 million).

18 Subordinated loans



|                                      |  |      |        |  |      |  |        | 
|------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|Subordinated loans by group companies |  |      |        |  |      | 
|                                      |  | 2016 |        |  | 2015 | 
|ING Groep N.V.                        |  |      | 7,203  |  |      |  | 7,265  | 
|ING Group companies                   |  |      | 10,020 |  |      |  | 9,146  | 
|                                      |  |      |        |  |      |  |        | 
|                                      |  |      | 17,223 |  |      |  | 16,411 | 
|                                      |  |      |        |  |      |  |        | 

Subordinated loans issued by ING Groep N.V. have been issued to raise Tier 1 capital for ING Bank N.V. Under IFRS these bonds are
classified as liabilities and for regulatory purposes, they are considered capital. Subordinated loans issued by ING Group companies comprise, for the most part, subordinated loans which are subordinated to all current and future liabilities of ING
Bank N.V.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-52 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                    |  |      |        |  |      |  |        | 
|----------------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|Changes in subordinated loans       |  |      |        |  |      | 
|                                    |  | 2016 |        |  | 2015 | 
|Opening balance                     |  |      | 16,411 |  |      |  | 18,158 | 
|New issuances                       |  |      | 2,070  |  |      |  | 3,159  | 
|Repayments                          |  |      | 1,252 |  |      |  | 6,092 | 
|Exchange rate differences and other |  |      | 6     |  |      |  | 1,186  | 
|                                    |  |      |        |  |      |  |        | 
|Closing balance                     |  |      | 17,223 |  |      |  | 16,411 | 
|                                    |  |      |        |  |      |  |        | 

In April 2016, ING Bank N.V. issued EUR 1,000 million CRD IV-eligible Tier-2 instruments. The transaction had an issuer substitution option which gives ING the right to exchange these for subordinated Tier-2 notes issued by ING Groep N.V. ING
has classified this instrument as a financial liability because of the contractual interest payments and fixed maturity date.

In November 2016, ING Groep N.V.
issued USD 1,000 million securities that qualify as Additional Tier 1 capital under CRR/CRD IV. The issuance was in the form of 5 Year Callable USD denominated Perpetual Additional Tier 1 Contingent Convertible Securities, with coupon 6.875%.
The securities are subject to full conversion into ordinary shares of ING Groep N.V. in the event that INGs phased-in CET1 ratio would fall below 7%. ING has classified this instrument as a financial
liability because ING is obliged to deliver cash or another financial asset, or to otherwise settle the instrument in such a way that it would be a financial liability (e.g. by delivering a variable number of shares) upon the occurrence of an
uncertain future event (i.e. a trigger event) that is beyond the control of both the issuer and the holder.

In February, March, and September 2016 respectively,
ING Groep N.V. redeemed the final tranche of subordinated loans from the Anchor investors (EUR 338 million), GBP 66 million 5.14% Bond and the USD 800 million 7.05% ING Perpetual Debt Securities.

The average interest rate on subordinated loans is 4.94% (2015: 4.89%). The interest expense during the year 2016 was EUR 816 million (2015: EUR 901 million).

For additional information, reference is made to the Parent company annual accounts, Note 5 Subordinated loans.

ING Groep N.V. - Anchor investors

Subordinated loans issued by ING Groep
N.V. include subordinated notes issued by the Anchor investors amounting to nil (2015: EUR 337.5 million).

In 2014, EUR 1,125 million was received from three
external investors (Asian-based investment firms RRJ Capital, Temasek and Sea Town Holdings International) in relation to the IPO of NN Group. This funding, which bears a 4% interest rate, was to be repaid in three tranches of NN Group shares. The
number of shares in the repayment was variable, such that the fair value of the shares at repayment date equalled the notional repayment amount, taking into account a discount in the range of 1.5% to 3% of the market price.

In July 2014, a first tranche of EUR 450 million of the mandatorily exchangeable subordinated notes was exchanged into NN Group shares. In June 2015, a second
tranche of EUR 337.5 million of the mandatorily exchangeable subordinated notes was exchanged into 13.6 million NN Group ordinary shares and comprised a non-cash transaction. In February 2016, the
remaining tranche, of EUR 337.5 million, was mandatorily exchanged. For further information, reference is made to Note 51 Other events.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-53 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Equity

19 Equity



|                                                            |  |      |        |  |      |  |        |      |  |  |        | 
|----------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|Total equity                                                |  |      |        |  |      |  |        |      | 
|                                                            |  | 2016 |        |  | 2015 |  |        | 2014 | 
|Share capital and share premium                             |  |      |        |  |      |  |        |      |  |  |        | 
| Share capital                                             |  |      | 39     |  |      |  | 928    |      |  |  | 925    | 
| Share premium                                             |  |      | 16,950 |  |      |  | 16,054 |      |  |  | 16,046 | 
|                                                            |  |      |        |  |      |  |        |      |  |  |        | 
|                                                            |  |      | 16,989 |  |      |  | 16,982 |      |  |  | 16,971 | 
|Other reserves                                              |  |      |        |  |      |  |        |      |  |  |        | 
| Revaluation reserve:
Available-for-sale and other         |  |      | 3,830  |  |      |  | 3,896  |      |  |  | 6,838  | 
| Revaluation reserve: Cash flow hedge                      |  |      | 777    |  |      |  | 666    |      |  |  | 3,877  | 
| Revaluation reserve: Property in own use                  |  |      | 204    |  |      |  | 326    |      |  |  | 306    | 
| Net defined benefit asset/liability remeasurement reserve |  |      | 371   |  |      |  | 306   |      |  |  | 504   | 
| Currency translation reserve                              |  |      | 770   |  |      |  | 538   |      |  |  | 741   | 
| Share of associates, joint ventures and other reserves    |  |      | 2,235  |  |      |  | 1,733  |      |  |  | 1,483  | 
| Treasury shares                                           |  |      | 8     |  |      |  | 18    |      |  |  | 46    | 
|                                                            |  |      |        |  |      |  |        |      |  |  |        | 
|                                                            |  |      | 5,897  |  |      |  | 5,759  |      |  |  | 11,213 | 
|Retained earnings                                           |  |      | 24,371 |  |      |  | 22,231 |      |  |  | 19,370 | 
|                                                            |  |      |        |  |      |  |        |      |  |  |        | 
|Shareholders equity (parent)                               |  |      | 47,257 |  |      |  | 44,972 |      |  |  | 47,554 | 
|Non-controlling interests                                   |  |      | 606    |  |      |  | 638    |      |  |  | 8,047  | 
|                                                            |  |      |        |  |      |  |        |      |  |  |        | 
|Total equity                                                |  |      | 47,863 |  |      |  | 45,610 |      |  |  | 55,601 | 
|                                                            |  |      |        |  |      |  |        |      |  |  |        | 

Share capital and share premium

Share capital



|                         |  |                                      |            |  |        |  |            |      |  |  |            |  |  |      |     |  |      |  |       |  |  |  |       | 
|------------------------ |  | ------------------------------------ | ---------- |  | ------ |  | ---------- | ---- |  |  | ---------- |  |  | ---- | --- |  | ---- |  | ----- |  |  |  | ----- | 
|Share capital            |  |                                      |            |  |        |  |            |      |  |  |            |  |  |      |     |  |      | 
|                         |  | Ordinary shares (par value EUR 0.01) |           
|                         |  | Number x 1,000                       |            |  | Amount | 
|                         |  | 2016                                 |            |  | 2015   |  |            | 2014 |  |  | 2016       |  |  | 2015 |     |  | 2014 | 
|Authorised share capital |  |                                      | 14,729,000 |  |        |  | 14,500,000 |      |  |  | 14,500,000 |  |  |      | 147 |  |      |  | 3,480 |  |  |  | 3,480 | 
|Unissued share capital   |  |                                      | 10,850,516 |  |        |  | 10,629,817 |      |  |  | 10,641,138 |  |  |      | 108 |  |      |  | 2,552 |  |  |  | 2,555 | 
|                         |  |                                      |            |  |        |  |            |      |  |  |            |  |  |      |     |  |      |  |       |  |  |  |       | 
|Issued share capital     |  |                                      | 3,878,484  |  |        |  | 3,870,183  |      |  |  | 3,858,862  |  |  |      | 39  |  |      |  | 928   |  |  |  | 925   | 
|                         |  |                                      |            |  |        |  |            |      |  |  |            |  |  |      |     |  |      |  |       |  |  |  |       | 



|                                            |  |                                      |           |  |        |  |      | 
|------------------------------------------- |  | ------------------------------------ | --------- |  | ------ |  | ---- | 
|Changes in issued share capital             |  |                                      |           |  |        | 
|                                            |  | Ordinary shares (par value EUR 0.01) |          
|                                            |  | Number x 1,000                       |           |  | Amount | 
|Issued share capital as at 1 January 2014   |  |                                      | 3,840,894 |  |        |  | 921  | 
|Issue of shares                             |  |                                      | 17,968    |  |        |  | 4    | 
|                                            |  |                                      |           |  |        |  |      | 
|Issued share capital as at 31 December 2014 |  |                                      | 3,858,862 |  |        |  | 925  | 
|Issue of shares                             |  |                                      | 11,321    |  |        |  | 3    | 
|                                            |  |                                      |           |  |        |  |      | 
|Issued share capital as at 31 December 2015 |  |                                      | 3,870,183 |  |        |  | 928  | 
|Issue of shares                             |  |                                      | 8,301     |  |        |  | 2    | 
|Transfer to share premium                   |  |                                      |           |  |        |  | 891 | 
|                                            |  |                                      |           |  |        |  |      | 
|Issued share capital as at 31 December 2016 |  |                                      | 3,878,484 |  |        |  | 39   | 
|                                            |  |                                      |           |  |        |  |      | 



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-54 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







In 2016, ING Groep N.V. issued 8.3 million depositary receipts for ordinary shares (converted into ordinary shares
per 26 July 2016) (2015: 11.3 million and 2014: 18.0 million: depositary receipts for ordinary shares). These issues were made in order to fund obligations arising from share-based employee incentive programmes.

During the Annual General Meeting of Shareholders, held on 25 April 2016, it was decided to reduce the par value per ordinary share from EUR 0.24 (2015 and 2014)
to EUR 0.01. As a result of this, EUR 891 million is attributed to the Share premium. For further information, reference is made to the section Depository receipts for ordinary shares, below.

In 2016 and 2015 respectively, ING Groep N.V. issued USD 1,000 million and USD 2,250 million Perpetual Additional Tier 1 Contingent Convertible Capital
Securities which can, in accordance with their terms and conditions, convert by operation of law into ordinary shares if the conditions to such conversion are fulfilled. As a result of this conversion, the issued share capital can increase by no
more than 111 million and 250 million ordinary shares, respectively. Reference is made to Note 18 Subordinated loans and to the Parent company annual accounts, Note 5 Subordinated loans.

Ordinary shares

All ordinary shares are in registered form. No share
certificates have been issued. Ordinary shares may be transferred by means of a deed of transfer. A transfer of ordinary shares requires written acknowledgement by ING Groep N.V. Ordinary shares are listed on various stock exchanges. The par value
of ordinary shares is EUR 0.01 as of 26 July 2016, the date of amendment of the Articles of Association of ING Groep N.V. (2015 and 2014: EUR 0.24). The authorised ordinary share capital of ING Groep N.V. currently consists of
14,729 million ordinary shares. As at 31 December 2016, 3,878 million ordinary shares were issued and fully paid.

Depositary receipts for
ordinary shares

In 2016, ING Group proposed to the Annual General Meeting of Shareholders to amend the Articles of Association, which included the abolishment
of the depositary receipt structure via Stichting Aandelen (ING Trust Office).

Following the adoption of the amendments to the Articles of Association, by the
Annual General Meeting on 25 April 2016, the depositary receipt structure was abolished on 26 July 2016. As a result of the amendments to the Articles of Association, a holder of a depositary receipt became entitled to ordinary shares in
ING in exchange for depositary receipts previously held.

The conversion of ING Groep N.V. depositary receipts for shares into ING Groep N.V. ordinary shares took
place on 26 July 2016. On the same date, the related changes to the Articles of Association, including the reduction of the nominal value of the shares from EUR 0.24 to EUR 0.01, were implemented.

INGs American Depositary Receipts (ADRs), which are traded on the New York Stock Exchange, remain in place. Similarly, the separate arrangement with the ING
Continuity Foundation, regarding its call option to acquire preference shares in ING Group under certain circumstances, remains in place.

As per 26 July 2016,
more than 99.9% of the issued ordinary shares were held by Stichting ING Aandelen (ING Trust Office). In exchange for these shares, ING Trust Office issued depositary receipts. These depositary receipts were listed on various stock exchanges.
Depositary receipts could be exchanged upon request of the holders of depositary receipts for (non-listed) ordinary shares without any restriction, other than payment of an administrative fee of EUR 0.01 per
depositary receipt with a minimum of EUR 25 per exchange transaction.

The holder of a depositary receipt was entitled to receive from ING Trust Office payment of
dividends and distributions corresponding to the dividends and distributions received by ING Trust Office on an ordinary share.

Ordinary shares held by ING
Group (Treasury shares)

As at 31 December 2016, 0.0 million ordinary shares (2015: 1.5 million and 2014: 4.3 million - depositary receipts for
ordinary shares) of ING Groep N.V. with a par value of EUR 0.01 (2015 and 2014: EUR 0.24) are held by ING Groep N.V. or its subsidiaries. The obligations with regard to the existing stock option plan and the share plans will be funded either by cash
or by newly issued shares at the discretion of ING Group.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-55 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Share premium



|                                   |  |      |        |  |      |  |        |      |  |  |        | 
|---------------------------------- |  | ---- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|Share premium                      |  |      |        |  |      |  |        |      | 
|                                   |  | 2016 |        |  | 2015 |  |        | 2014 | 
|Opening balance                    |  |      | 16,054 |  |      |  | 16,046 |      |  |  | 16,038 | 
|Issue of shares                    |  |      | 5      |  |      |  | 8      |      |  |  | 8      | 
|Transfer from issued share capital |  |      | 891    |  |      |  |        |      |  |  |        | 
|                                   |  |      |        |  |      |  |        |      |  |  |        | 
|Closing balance                    |  |      | 16,950 |  |      |  | 16,054 |      |  |  | 16,046 | 
|                                   |  |      |        |  |      |  |        |      |  |  |        | 

The increase in share premium, as a result of the issue of ordinary shares, is related to share-based employee incentive programmes.

In 2016, the share premium increased by EUR 896 million, mainly as a result of a transfer from issued share capital as described above.

Other reserves

Revaluation reserve: Available-for-sale and other



|                                                                     |  |      |       |  |      |  |        |      |  |  |        | 
|-------------------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ------ | ---- |  |  | ------ | 
|Changes in revaluation reserve: Available-for-sale and other         |  |      |       |  |      |  |        |      | 
|                                                                     |  | 2016 |       |  | 2015 |  |        | 2014 | 
|Opening balance                                                      |  |      | 3,896 |  |      |  | 6,838  |      |  |  | 3,344  | 
|Unrealised revaluations                                              |  |      | 80    |  |      |  | 1,188  |      |  |  | 7,656  | 
|Realised gains/losses transferred to the statement of profit or loss |  |      | 146  |  |      |  | 94    |      |  |  | 133   | 
|Transfer to insurance liabilities/DAC                                |  |      |       |  |      |  | 254   |      |  |  | 2,658 | 
|Impact of deconsolidation of NN Group                                |  |      |       |  |      |  | 2,940 |      |  |  |        | 
|Impact of partial divestment of NN Group                             |  |      |       |  |      |  | 855   |      |  |  |        | 
|Impact of IPO NN Group                                               |  |      |       |  |      |  |        |      |  |  | 874   | 
|Changes in composition of the group and other changes                |  |      |       |  |      |  | 13     |      |  |  | 497   | 
|                                                                     |  |      |       |  |      |  |        |      |  |  |        | 
|Closing balance                                                      |  |      | 3,830 |  |      |  | 3,896  |      |  |  | 6,838  | 
|                                                                     |  |      |       |  |      |  |        |      |  |  |        | 

In 2016, the available-for-sale revaluation reserve
decreased by EUR 154 million related to the release of previously recognised revaluation reserves, included in the line Unrealised revaluations in 2015, on shares held in VISA Europe Limited. Reference is made to Note 5 Investments,
Note 37 Fair value of assets and liabilities and Note 51 Other events.

In 2015 and 2014, Transfer to insurance liabilities/DAC comprised the
change in insurance liabilities related to NN Group and Voya, until deconsolidation at the end of May 2015 and the end of March 2014 respectively.

In 2014, Changes
in composition of the group and other changes included EUR 502 million related to the deconsolidation of Voya. Reference is made to Note 51 Other events.

Revaluation reserve: Cash flow hedge



|                                                                     |  |      |     |  |      |  |        |      |  |  |        | 
|-------------------------------------------------------------------- |  | ---- | --- |  | ---- |  | ------ | ---- |  |  | ------ | 
|Changes in revaluation reserve: Cash flow hedge                      |  |      |     |  |      |  |        |      | 
|                                                                     |  | 2016 |     |  | 2015 |  |        | 2014 | 
|Opening balance                                                      |  |      | 666 |  |      |  | 3,877  |      |  |  | 1,879  | 
|Realised gains/losses transferred to the statement of profit or loss |  |      |     |  |      |  |        |      |  |  | 4     | 
|Changes in cash flow hedge reserve                                   |  |      | 111 |  |      |  | 65    |      |  |  | 3,105  | 
|Impact of deconsolidation of NN Group                                |  |      |     |  |      |  | 2,507 |      |  |  |        | 
|Impact of partial divestment of NN Group                             |  |      |     |  |      |  | 649   |      |  |  |        | 
|Impact of IPO NN Group                                               |  |      |     |  |      |  |        |      |  |  | 1,100 | 
|Changes in composition of the group and other changes                |  |      |     |  |      |  | 10     |      |  |  | 3     | 
|                                                                     |  |      |     |  |      |  |        |      |  |  |        | 
|Closing balance                                                      |  |      | 777 |  |      |  | 666    |      |  |  | 3,877  | 
|                                                                     |  |      |     |  |      |  |        |      |  |  |        | 



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-56 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Revaluation reserve: Property in own use



|                                                      |  |      |      |  |      |  |     |      |  |  |     | 
|----------------------------------------------------- |  | ---- | ---- |  | ---- |  | --- | ---- |  |  | --- | 
|Changes in revaluation reserve: Property in own use   |  |      |      |  |      |  |     |      | 
|                                                      |  | 2016 |      |  | 2015 |  |     | 2014 | 
|Opening balance                                       |  |      | 326  |  |      |  | 306 |      |  |  | 334 | 
|Unrealised revaluations                               |  |      | 5    |  |      |  | 38  |      |  |  | 28 | 
|Impact of deconsolidation of NN Group                 |  |      |      |  |      |  | 9  |      |  |  |     | 
|Impact of partial divestment of NN Group              |  |      |      |  |      |  | 3  |      |  |  |     | 
|Impact of IPO NN Group                                |  |      |      |  |      |  |     |      |  |  | 2  | 
|Changes in composition of the group and other changes |  |      | 127 |  |      |  | 6  |      |  |  | 2   | 
|                                                      |  |      |      |  |      |  |     |      |  |  |     | 
|Closing balance                                       |  |      | 204  |  |      |  | 326 |      |  |  | 306 | 
|                                                      |  |      |      |  |      |  |     |      |  |  |     | 

In 2016, the EUR 127 million is a transfer of revaluation reserve to retained earnings.

Reference is made to Note 51 Other events, for further information on NN Group divestment transactions.

Net defined benefit asset/liability remeasurement reserve

Reference
is made to Note 35 Pension and other post-employment benefits.

Currency translation reserve



|                                                                     |  |      |      |  |      |  |      |      |  |  |        | 
|-------------------------------------------------------------------- |  | ---- | ---- |  | ---- |  | ---- | ---- |  |  | ------ | 
|Changes in currency translation reserve                              |  |      |      |  |      |  |      |      | 
|                                                                     |  | 2016 |      |  | 2015 |  |      | 2014 | 
|Opening balance                                                      |  |      | 538 |  |      |  | 741 |      |  |  | 2,161 | 
|Unrealised revaluations                                              |  |      | 76  |  |      |  | 263 |      |  |  | 53    | 
|Realised gains/losses transferred to the statement of profit or loss |  |      |      |  |      |  |      |      |  |  | 481    | 
|Impact of deconsolidation of NN Group                                |  |      |      |  |      |  | 26   |      |  |  |        | 
|Impact of partial divestment of NN Group                             |  |      |      |  |      |  | 8    |      |  |  |        | 
|Impact of IPO NN Group                                               |  |      |      |  |      |  |      |      |  |  | 52     | 
|Exchange rate differences                                            |  |      | 156 |  |      |  | 432  |      |  |  | 940    | 
|                                                                     |  |      |      |  |      |  |      |      |  |  |        | 
|Closing balance                                                      |  |      | 770 |  |      |  | 538 |      |  |  | 741   | 
|                                                                     |  |      |      |  |      |  |      |      |  |  |        | 

Unrealised revaluations relates to changes in the value of hedging instruments that are designated as net investment hedges.

In 2014, Realised gains/losses transferred to the statement of profit or loss related to the deconsolidation of Voya at the end of March 2014.

Reference is made to Note 51 Other events, for further information on NN Group divestment transactions.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-57 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Share of associates, joint ventures and other reserves



|                                                                  |  |      |       |  |      |  |       |      |  |  |       | 
|----------------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|Changes in share of associates, joint ventures and other reserves |  |      |       |  |      |  |       |      | 
|                                                                  |  | 2016 |       |  | 2015 |  |       | 2014 | 
|Opening balance                                                   |  |      | 1,733 |  |      |  | 1,483 |      |  |  | 1,644 | 
|Result for the year                                               |  |      | 124   |  |      |  | 131   |      |  |  | 83    | 
|Transfer to/from retained earnings                                |  |      | 265   |  |      |  |       |      |  |  | 161  | 
|Changes in composition of the group and other changes             |  |      | 113   |  |      |  | 119   |      |  |  | 83   | 
|                                                                  |  |      |       |  |      |  |       |      |  |  |       | 
|Closing balance                                                   |  |      | 2,235 |  |      |  | 1,733 |      |  |  | 1,483 | 
|                                                                  |  |      |       |  |      |  |       |      |  |  |       | 

Treasury shares



|                           |  |        |     |  |        |  |     |      |  |  |      |  |  |      |           |  |      |  |            |  |  |  |           | 
|-------------------------- |  | ------ | --- |  | ------ |  | --- | ---- |  |  | ---- |  |  | ---- | --------- |  | ---- |  | ---------- |  |  |  | --------- | 
|Changes in treasury shares |  |        |     |  |        |  |     |      |  |  |      |  |  |      |           |  |      | 
|                           |  | Amount |     |  | Number | 
|                           |  | 2016   |     |  | 2015   |  |     | 2014 |  |  | 2016 |  |  | 2015 |           |  | 2014 | 
|Opening balance            |  |        | 18 |  |        |  | 46 |      |  |  | 32  |  |  |      | 1,464,025 |  |      |  | 4,302,122  |  |  |  | 3,994,055 | 
|Purchased/sold             |  |        | 10  |  |        |  | 28  |      |  |  | 6   |  |  |      | 863,391  |  |      |  | 2,810,775 |  |  |  | 351,252   | 
|Share-based payments       |  |        |     |  |        |  |     |      |  |  |      |  |  |      |           |  |      |  | 27,322    |  |  |  | 43,185   | 
|Other                      |  |        |     |  |        |  |     |      |  |  | 8   |  |  |      |           |  |      |  |            |  |  |  |           | 
|                           |  |        |     |  |        |  |     |      |  |  |      |  |  |      |           |  |      |  |            |  |  |  |           | 
|Closing balance            |  |        | 8  |  |        |  | 18 |      |  |  | 46  |  |  |      | 600,634   |  |      |  | 1,464,025  |  |  |  | 4,302,122 | 
|                           |  |        |     |  |        |  |     |      |  |  |      |  |  |      |           |  |      |  |            |  |  |  |           | 

Retained earnings



|                                                                 |  |      |        |  |      |  |        |      |  |  |        | 
|---------------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|Changes in retained earnings                                     |  |      |        |  |      |  |        |      | 
|                                                                 |  | 2016 |        |  | 2015 |  |        | 2014 | 
|Opening balance                                                  |  |      | 22,231 |  |      |  | 19,370 |      |  |  | 24,074 | 
|Transfer to/from share of associates and joint ventures reserves |  |      | 265   |  |      |  |        |      |  |  | 161    | 
|Result for the year                                              |  |      | 4,851  |  |      |  | 4,795  |      |  |  | 880    | 
|Impact of partial divestment of NN Group                         |  |      |        |  |      |  | 258   |      |  |  |        | 
|Dividend                                                         |  |      | 2,521 |  |      |  | 1,393 |      |  |  |        | 
|Coupon on Undated subordinated notes issued by NN Group          |  |      |        |  |      |  | 19    |      |  |  |        | 
|Repurchase premium                                               |  |      |        |  |      |  |        |      |  |  | 750   | 
|Impact of IPO NN Group                                           |  |      |        |  |      |  |        |      |  |  | 1,327 | 
|Employee stock options and share plans                           |  |      | 75     |  |      |  | 105    |      |  |  | 87     | 
|Changes in composition of the group and other changes            |  |      |        |  |      |  | 369   |      |  |  | 3,755 | 
|                                                                 |  |      |        |  |      |  |        |      |  |  |        | 
|Closing balance                                                  |  |      | 24,371 |  |      |  | 22,231 |      |  |  | 19,370 | 
|                                                                 |  |      |        |  |      |  |        |      |  |  |        | 

In 2016, a cash dividend of EUR 2,521 million was paid to the shareholders of ING Group.

In 2015, a cash dividend of EUR 1,393 million was paid to the shareholders of ING Group.

In 2015, the coupon on Undated subordinated notes issued by NN Group comprised coupon payments for the five months, until deconsolidation of NN Group at the end of May
2015.

In 2014, the repurchase premium of EUR 750 million was paid in relation to the repayment of the EUR 1,500 million
non-voting equity securities to the Dutch State.

In 2014, Impact of IPO NN Group related to the IPO of NN Group in July
2014.

In 2014, Changes in composition of the group and other changes included a decrease of EUR 3,279 million in Retained earnings as result of the transfer
of part of the Net defined benefit asset/liability remeasurement reserve due to the financial independence of the Dutch ING Pension Fund. Furthermore, Changes in composition of the group and other changes also included EUR 87 million related to
the deconsolidation of Voya.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-58 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







For further information, reference is made to Note 30 Dividend per ordinary share and Note 51 Other
events.

Non-controlling interests

In 2015, Non-controlling interests decreased with EUR 7,434 million and was mainly related to the deconsolidation of NN
Group. Reference is made to Note 51 Other events.

Ordinary shares - Restrictions with respect to dividend and repayment of capital

The following equity components cannot be freely distributed: Revaluation reserves (being Available for-sale and other, Cash flow
hedge and Property in own use), Currency translation reserve, Share of associates and joint ventures reserve, and the part of the Retained earnings that relate to the former Stichting Regio Bank and the former Stichting Vakbondsspaarbank SPN.

As at 31 December 2016, an amount of EUR 1,325 million (2015: EUR 1,201 million; 2014: EUR 1,070 million) related to the former Stichting Regio Bank and
the former Stichting Vakbondsspaarbank SPN is included.

ING Groep N.V. is subject to legal restrictions regarding the amount of dividends it can pay to the holders
of its ordinary shares. Pursuant to the Dutch Civil Code, dividends can only be paid up to an amount equal to the excess of the companys own funds over the sum of the paid-up capital, and reserves
required by law.

Moreover, ING Groep N.V.s ability to pay dividends is dependent on the dividend payment ability of its subsidiaries, associates and joint
ventures. ING Groep N.V. is legally required to create a non-distributable reserve insofar as profits of its subsidiaries, associates and joint ventures are subject to dividend payment restrictions which apply
to those subsidiaries, associates and joint ventures themselves. Such restrictions may among others be of a similar nature as the restrictions which apply to ING Groep N.V., including minimum capital requirements that are imposed by industry
regulators in the countries in which the subsidiaries, associates and joint ventures operate, or other limitations which may exist in certain countries.

Legally
distributable reserves, determined in accordance with the financial reporting requirements included in Part 9 of Book 2 of the Dutch Civil Code, from ING Groups subsidiaries, associates and joint ventures are as follows:



|                               |  |          |        |  |       |  |     |       |  |  |        | 
|------------------------------ |  | -------- | ------ |  | ----- |  | --- | ----- |  |  | ------ | 
|Legally distributable reserves |  |          |        |  |       |  |     |       | 
|2016                           |  | ING Bank |        |  | Other |  |     | Total | 
|Equity invested                |  |          | 41,004 |  |       |  | 171 |       |  |  | 41,175 | 
|Non-distributable reserves     |  |          | 7,310  |  |       |  | 69  |       |  |  | 7,379  | 
|                               |  |          |        |  |       |  |     |       |  |  |        | 
|Legally distributable reserves |  |          | 33,694 |  |       |  | 102 |       |  |  | 33,796 | 
|                               |  |          |        |  |       |  |     |       |  |  |        | 



|                               |  |          |        |  |       |  |     |       |  |  |        | 
|------------------------------ |  | -------- | ------ |  | ----- |  | --- | ----- |  |  | ------ | 
|Legally distributable reserves |  |          |        |  |       |  |     |       | 
|2015                           |  | ING Bank |        |  | Other |  |     | Total | 
|Equity invested                |  |          | 37,997 |  |       |  | 160 |       |  |  | 38,157 | 
|Non-distributable reserves     |  |          | 6,824  |  |       |  |     |       |  |  | 6,824  | 
|                               |  |          |        |  |       |  |     |       |  |  |        | 
|Legally distributable reserves |  |          | 31,173 |  |       |  | 160 |       |  |  | 31,333 | 
|                               |  |          |        |  |       |  |     |       |  |  |        | 



|                               |  |          |        |  |          |  |        |       |  |  |       |  |  |  |        | 
|------------------------------ |  | -------- | ------ |  | -------- |  | ------ | ----- |  |  | ----- |  |  |  | ------ | 
|Legally distributable reserves |  |          |        |  |          |  |        |       |  |  |       | 
|2014                           |  | ING Bank |        |  | NN Group |  |        | Other |  |  | Total | 
|Equity invested                |  |          | 34,328 |  |          |  | 13,495 |       |  |  | 122   |  |  |  | 47,945 | 
|Non-distributable reserves     |  |          | 7,411  |  |          |  | 6,134  |       |  |  |       |  |  |  | 13,545 | 
|                               |  |          |        |  |          |  |        |       |  |  |       |  |  |  |        | 
|Legally distributable reserves |  |          | 26,917 |  |          |  | 7,361  |       |  |  | 122   |  |  |  | 34,400 | 
|                               |  |          |        |  |          |  |        |       |  |  |       |  |  |  |        | 

Furthermore there are restrictions to the ability of subsidiaries, associates and joint ventures to distribute reserves to ING Groep
N.V. as a result of minimum capital requirements that are imposed by industry regulators in the countries in which the subsidiaries operate.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-59 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Minimum capital requirements for ING Groups subsidiaries, associates and joint ventures are as follows:



|                                                                           |  |          |        |  |       |  |     |       |  |  |        | 
|-------------------------------------------------------------------------- |  | -------- | ------ |  | ----- |  | --- | ----- |  |  | ------ | 
|Minimum capital requirements  subsidiaries, associates and joint ventures |  |          |        |  |       |  |     |       | 
|2016                                                                       |  | ING Bank |        |  | Other |  |     | Total | 
|Equity invested                                                            |  |          | 41,004 |  |       |  | 171 |       |  |  | 41,175 | 
|Total regulatory capital                                                   |  |          | 54,362 |  |       |  |     |       |  |  |        | 
|Required minimum total regulatory capital*                                 |  |          | 30,664 |  |       |  |     |       |  |  |        | 
|                                                                           |  |          |        |  |       |  |     |       |  |  |        | 
|                                                                           |  |          | 23,698 |  |       |  |    |       |  |  |       | 
|                                                                           |  |          |        |  |       |  |     |       |  |  |        | 



|* | Requirement is based on Pillar I only.
|- | --------------------------------------



|                                                                           |  |          |        |  |       |  |     |       |  |  |        | 
|-------------------------------------------------------------------------- |  | -------- | ------ |  | ----- |  | --- | ----- |  |  | ------ | 
|Minimum capital requirements  subsidiaries, associates and joint ventures |  |          |        |  |       |  |     |       | 
|2015                                                                       |  | ING Bank |        |  | Other |  |     | Total | 
|Equity invested                                                            |  |          | 37,997 |  |       |  | 160 |       |  |  | 38,157 | 
|Total regulatory capital                                                   |  |          | 51,052 |  |       |  |     |       |  |  |        | 
|Required minimum total regulatory capital*                                 |  |          | 29,243 |  |       |  |     |       |  |  |        | 
|                                                                           |  |          |        |  |       |  |     |       |  |  |        | 
|                                                                           |  |          | 21,809 |  |       |  |    |       |  |  |       | 
|                                                                           |  |          |        |  |       |  |     |       |  |  |        | 



|* | Requirement is based on Pillar I only.
|- | --------------------------------------



|                                                                           |  |          |        |  |          |  |        |       |  |  |       |  |  |  |        | 
|-------------------------------------------------------------------------- |  | -------- | ------ |  | -------- |  | ------ | ----- |  |  | ----- |  |  |  | ------ | 
|Minimum capital requirements  subsidiaries, associates and joint ventures |  |          |        |  |          |  |        |       |  |  |       | 
|2014                                                                       |  | ING Bank |        |  | NN Group |  |        | Other |  |  | Total | 
|Equity invested                                                            |  |          | 34,328 |  |          |  | 13,495 |       |  |  | 122   |  |  |  | 47,945 | 
|Total regulatory capital                                                   |  |          | 46,015 |  |          |  | 14,173 |       |  |  |       |  |  |  |        | 
|Required minimum total regulatory capital*                                 |  |          | 27,501 |  |          |  | 4,683  |       |  |  |       |  |  |  |        | 
|                                                                           |  |          |        |  |          |  |        |       |  |  |       |  |  |  |        | 
|                                                                           |  |          | 18,514 |  |          |  | 9,490  |       |  |  |      |  |  |  |       | 
|                                                                           |  |          |        |  |          |  |        |       |  |  |       |  |  |  |        | 



|* | Requirement is based on Pillar I only.
|- | --------------------------------------

In addition to the legal and regulatory restrictions on distributing dividends
from subsidiaries, associates and joint ventures to ING Groep N.V. there are various other considerations and limitations that are taken into account in determining the appropriate levels of equity in the Groups subsidiaries, associates and
joint ventures. These considerations and limitations include, but are not restricted to, rating agency and regulatory views, which can change over time; it is not possible to disclose a reliable quantification of these limitations. Reference is also
made to the Capital Management section.

Without prejudice to the authority of the Executive Board to allocate profits to reserves and to the fact that
the ordinary shares are the most junior securities issued by ING Groep N.V., no specific dividend payment restrictions with respect to ordinary shares exist.

Furthermore, ING Groep N.V. is subject to legal restrictions with respect to repayment of capital to holders of ordinary shares. Capital may be repaid to the holders of
ordinary shares pursuant to an amendment of ING Groep N.V.s Articles of Association whereby the ordinary shares are written down.

Pursuant to the Dutch Civil
Code, capital may only be repaid if none of ING Groep N.V.s creditors opposes such a repayment within two months following the announcement of a resolution to that effect.

Cumulative preference shares (not issued)

Pursuant to the Articles of
Association of ING Groep N.V. the authorised cumulative preference share capital consists of 4.6 billion cumulative preference shares, of which none have been issued. The par value of these cumulative preference shares is EUR 0.01.

The cumulative preference shares rank before the ordinary shares in entitlement to dividend and to distributions upon liquidation of ING Groep N.V.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-60 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The dividend on the cumulative preference shares will be equal to a percentage, calculated on the amount compulsorily
paid up or yet to be paid up. This percentage shall be equal to the average of the Euro OverNight Index Average (EONIA) as calculated by the European Central Bank during the financial year for which the distribution is made; this percentage being
weighted on the basis of the number of days for which it applies, and increased by 2.5 percentage points.

If and to the extent that the profit available for
distribution is not sufficient to pay the dividend referred to above in full, the shortfall will be made up from the reserves insofar as possible. If, and to the extent that, the dividend distribution cannot be made from the reserves, the profits
earned in subsequent years shall first be used to make up the shortfall before any distribution may be made on shares of any other category.

ING Groep N.V.s
Articles of Association make provision for the cancellation of cumulative preference shares. Upon cancellation of cumulative preference shares and upon liquidation of ING Groep N.V., the amount paid up on the cumulative preference shares will be
repaid together with the accrued dividend as well as any dividend shortfall in preceding years, insofar as this shortfall has not yet been made up.

Cumulative preference shares - Restrictions with respect to dividend and repayment of capital

ING Groep N.V. is subject to legal restrictions regarding the amount of dividends it can pay to the holders of its cumulative preference shares, when issued. Pursuant to
the Dutch Civil Code, dividends can only be paid up to an amount equal to the excess of the companys own funds over the sum of the paid-up capital, and reserves required by law.

Moreover, ING Groep N.V.s ability to pay dividends is dependent on the dividend payment ability of its subsidiaries, associates and joint ventures. ING Groep N.V.
is legally required to create a non-distributable reserve insofar as profits of its subsidiaries, associates and joint ventures are subject to dividend payment restrictions which apply to those subsidiaries,
associates and joint ventures themselves. Such restrictions may among others be of a similar nature as the restrictions which apply to ING Groep N.V., including minimum capital requirements that are imposed by industry regulators in the countries in
which the subsidiaries, associates and joint ventures operate, or other limitations which may exist in certain countries.

No specific dividend payment restrictions
with respect to the cumulative preference shares exist.

Furthermore, ING Groep N.V. is subject to legal restrictions with respect to repayment of capital to
holders of cumulative preference shares. Capital may be repaid to the holders of cumulative preference shares pursuant to (i) an amendment of ING Groep N.V.s Articles of Association whereby the cumulative preference shares are
written-down or (ii) a resolution to redeem and cancel the cumulative preference shares.

Pursuant to the Dutch Civil Code, capital may only be repaid if none
of ING Groep N.V.s creditors opposes such a repayment within two months following the announcement of a resolution to that effect.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-61 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Notes to the Consolidated statement of profit or loss

20 Net interest income



|                                                                  |  |      |        |  |      |  |        |      |  |  |        | 
|----------------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|Net interest income                                               |  |      |        |  |      |  |        |      | 
|                                                                  |  | 2016 |        |  | 2015 |  |        | 2014 | 
|Interest income on loans                                          |  |      | 18,407 |  |      |  | 19,185 |      |  |  | 20,131 | 
|Interest income on impaired loans                                 |  |      | 69     |  |      |  | 42     |      |  |  | 56     | 
|Negative interest on liabilities                                  |  |      | 175    |  |      |  | 64     |      |  |  | 6      | 
|                                                                  |  |      |        |  |      |  |        |      |  |  |        | 
|Total interest income on loans                                    |  |      | 18,651 |  |      |  | 19,291 |      |  |  | 20,193 | 
|Interest income on
available-for-sale securities                  |  |      | 1,659  |  |      |  | 1,785  |      |  |  | 2,008  | 
|Interest income on
held-to-maturity securities                    |  |      | 97     |  |      |  | 101    |      |  |  | 83     | 
|Interest income on trading derivatives                            |  |      | 16,081 |  |      |  | 17,130 |      |  |  | 17,476 | 
|Interest income on other trading portfolio                        |  |      | 728    |  |      |  | 677    |      |  |  | 851    | 
|Interest income on non-trading derivatives (no hedge
accounting)  |  |      | 623    |  |      |  | 788    |      |  |  | 1,520  | 
|Interest income on non-trading derivatives (hedge
accounting)     |  |      | 6,213  |  |      |  | 6,394  |      |  |  | 5,977  | 
|Other interest income                                             |  |      | 130    |  |      |  | 155    |      |  |  | 61     | 
|                                                                  |  |      |        |  |      |  |        |      |  |  |        | 
|Interest income                                                   |  |      | 44,182 |  |      |  | 46,321 |      |  |  | 48,169 | 
|Interest expense on deposits from banks                           |  |      | 283    |  |      |  | 302    |      |  |  | 338    | 
|Interest expense on customer deposits                             |  |      | 3,160  |  |      |  | 4,177  |      |  |  | 5,361  | 
|Interest expense on debt securities                               |  |      | 2,290  |  |      |  | 2,535  |      |  |  | 2,503  | 
|Interest expense on subordinated loans                            |  |      | 816    |  |      |  | 901    |      |  |  | 1,185  | 
|Interest expense on trading derivatives                           |  |      | 16,263 |  |      |  | 17,405 |      |  |  | 17,381 | 
|Interest expense on other trading portfolio                       |  |      | 210    |  |      |  | 207    |      |  |  | 329    | 
|Interest expense on non-trading derivatives (no hedge
accounting) |  |      | 652    |  |      |  | 652    |      |  |  | 1,255  | 
|Interest expense on non-trading derivatives (hedge
accounting)    |  |      | 6,720  |  |      |  | 7,181  |      |  |  | 7,123  | 
|Other interest expense                                            |  |      | 363    |  |      |  | 360    |      |  |  | 390    | 
|Negative interest on assets                                       |  |      | 184    |  |      |  | 40     |      |  |  |        | 
|                                                                  |  |      |        |  |      |  |        |      |  |  |        | 
|Interest expense                                                  |  |      | 30,941 |  |      |  | 33,760 |      |  |  | 35,865 | 
|                                                                  |  |      |        |  |      |  |        |      |  |  |        | 
|Net interest income                                               |  |      | 13,241 |  |      |  | 12,561 |      |  |  | 12,304 | 
|                                                                  |  |      |        |  |      |  |        |      |  |  |        | 

In 2016, the increase in total average assets (with the cash pool balances still calculated on a net basis in order to provide
consistent information), combined with an improvement of the net interest margin, lead to an increase of EUR 680 million in net interest income. The increase in total average assets was mainly attributable to an increase in customer lending,
partly offset by a decline in financial assets at fair value through profit or loss.

In 2015, the increase in total average assets (excluding Assets held for
sale), combined with a decline in the net interest margin lead to an increase of EUR 257 million in net interest income. The increase in total average assets (with the cash pool balances still calculated on a net basis) was partly attributable
to an increase in customer lending.

In 2014, the decrease in total average assets, combined with an improvement in the net interest margin lead to an increase of
EUR 603 million in net interest income. The decrease in total average assets (with the cash pool balances still calculated on a net basis) was partly attributable to the deconsolidation of ING Vysya and the additional transfers of assets of
WestlandUtrecht Bank to NN Group. In 2016, total interest income and total interest expense for non-trading derivatives used in hedge accounting and items not valued at fair value through profit or loss
amounts to EUR 26,652 million and EUR 13,498 million respectively (2015: EUR 27,682 million and EUR 15,207 million; 2014: EUR 28,270 million and EUR 16,569 million).



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-62 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







21 Net commission income



|                            |  |      |       |  |      |  |       |      |  |  |       | 
|--------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|Fee and commission income   |  |      |       |  |      |  |       |      | 
|                            |  | 2016 |       |  | 2015 |  |       | 2014 | 
|Funds transfer              |  |      | 1,103 |  |      |  | 1,014 |      |  |  | 1,006 | 
|Securities business         |  |      | 497   |  |      |  | 570   |      |  |  | 538   | 
|Insurance broking           |  |      | 181   |  |      |  | 185   |      |  |  | 172   | 
|Asset management fees       |  |      | 91    |  |      |  | 74    |      |  |  | 158   | 
|Brokerage and advisory fees |  |      | 477   |  |      |  | 436   |      |  |  | 370   | 
|Other                       |  |      | 1,232 |  |      |  | 1,132 |      |  |  | 1,053 | 
|                            |  |      |       |  |      |  |       |      |  |  |       | 
|                            |  |      | 3,581 |  |      |  | 3,411 |      |  |  | 3,297 | 
|                            |  |      |       |  |      |  |       |      |  |  |       | 

Included in Other, are commission fees of EUR 202 million (2015: EUR 171 million; 2014: EUR 163 million) in respect of bank
guarantees, commission fees of EUR 44 million (2015: EUR 30 million; 2014: EUR 23 million) in respect of underwriting syndication loans, structured finance fees of EUR 110 million (2015: EUR 87 million; 2014: EUR 89 million), and
collective instruments distributed but not managed by ING of EUR 145 million (2015: EUR 145 million; 2014: EUR 19 million).



|                            |  |      |       |  |      |  |       |      |  |  |       | 
|--------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|Fee and commission expenses |  |      |       |  |      |  |       |      | 
|                            |  | 2016 |       |  | 2015 |  |       | 2014 | 
|Funds transfer              |  |      | 403   |  |      |  | 385   |      |  |  | 355   | 
|Securities business         |  |      | 166   |  |      |  | 158   |      |  |  | 151   | 
|Insurance broking           |  |      | 8     |  |      |  | 18    |      |  |  | 14    | 
|Asset management fees       |  |      | 5     |  |      |  | 2     |      |  |  | 10   | 
|Brokerage and advisory fees |  |      | 166   |  |      |  | 140   |      |  |  | 87    | 
|Other                       |  |      | 400   |  |      |  | 390   |      |  |  | 407   | 
|                            |  |      |       |  |      |  |       |      |  |  |       | 
|                            |  |      | 1,148 |  |      |  | 1,093 |      |  |  | 1,004 | 
|                            |  |      |       |  |      |  |       |      |  |  |       | 

22 Valuation results and net trading income



|                                                                                                                |  |      |       |  |      |  |       |      |  |  |      | 
|--------------------------------------------------------------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ---- | 
|Valuation results and net trading income                                                                        |  |      |       |  |      |  |       |      | 
|                                                                                                                |  | 2016 |       |  | 2015 |  |       | 2014 | 
|Securities trading results                                                                                      |  |      | 369  |  |      |  | 1,352 |      |  |  | 673  | 
|Derivatives trading results                                                                                     |  |      | 706   |  |      |  | 600   |      |  |  | 386  | 
|Change in fair value of derivatives relating to                                                                 |  |      |       |  |      |  |       |      |  |  |      | 
| fair value hedges                                                                                             |  |      | 170  |  |      |  | 81    |      |  |  | 140 | 
| cash flow hedges (ineffective portion)                                                                        |  |      | 16   |  |      |  | 31    |      |  |  | 35   | 
| hedges of net investment in foreign entities (ineffective portion)                                            |  |      |       |  |      |  |       |      |  |  |      | 
| other non-trading derivatives                                                                                 |  |      | 2,103 |  |      |  | 830   |      |  |  | 143 | 
|Change in fair value of assets and liabilities (hedged items)                                                   |  |      | 244   |  |      |  | 67   |      |  |  | 190  | 
|Valuation results on assets and liabilities designated at fair value through profit or loss (excluding
trading) |  |      | 79   |  |      |  | 372   |      |  |  | 583 | 
|Foreign exchange transactions results                                                                           |  |      | 898  |  |      |  | 820  |      |  |  | 452 | 
|Other                                                                                                           |  |      | 24    |  |      |  | 66    |      |  |  | 15  | 
|                                                                                                                |  |      |       |  |      |  |       |      |  |  |      | 
|                                                                                                                |  |      | 1,545 |  |      |  | 2,445 |      |  |  | 49  | 
|                                                                                                                |  |      |       |  |      |  |       |      |  |  |      | 

Securities trading results includes the results of market making in instruments such as government securities, equity securities,
corporate debt securities, money-market instruments, and interest rate derivatives such as swaps, options, futures and forward contracts. Foreign exchange transactions results include gains and losses from spot and forward contracts, options,
futures, and translated foreign currency assets and liabilities.

The portion of trading gains and losses relating to trading securities still held as at
31 December 2016 amounts to EUR 232 million (2015: EUR 147 million; 2014: EUR 18 million).



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-63 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Net trading income relates to trading assets and trading liabilities which include assets and liabilities that are
classified under IFRS as Trading but are closely related to servicing the needs of the clients of ING. ING offers products that are traded on the financial markets to institutional clients, corporate client,s and governments. A
significant part of the derivatives in the trading portfolio are related to servicing corporate clients in their risk management to hedge for example currency or interest rate exposures. In addition, ING provides its customers access to equity and
debt markets for issuing their own equity or debt securities (securities underwriting). Although these are presented as Trading under IFRS, these are directly related to services to INGs customers. Loans and receivables in the trading
portfolio mainly relate to (reverse) repurchase agreements, which are comparable to collateralised borrowing (lending). These products are used by ING as part of its own regular treasury activities, but also relate to the role that ING plays as
intermediary between different professional customers. Trading assets and liabilities held for INGs own risk are very limited. From a risk perspective, the gross amount of trading assets must be considered together with the gross amount of
trading liabilities, which are presented separately on the statement of financial position. However, IFRS does not allow netting of these positions in the statement of financial position. Reference is made to Note 4 Financial assets at fair
value through profit or loss and Note 14 Financial liabilities at fair value through profit or loss for information on trading liabilities.

The
majority of the risks involved in security and currency trading is economically hedged with derivatives. The securities trading results are partly offset by results on these derivatives. The result of these derivatives is included in Derivatives
trading results.

ING Groups trading books are managed based on internal limits and comprise a mix of products with results which could be offset. The results
are presented in various lines within the statement of profit or loss. Reference is made to Note 20 Net interest income and Note 22 Valuation results and net trading income.

In 2016, Net trading income - Derivatives trading results includes EUR 36 million CVA/DVA adjustments on trading derivatives, compared with EUR 98 million
CVA/DVA adjustment in 2015 (2014: EUR 205 million).

Valuation results and net trading income includes the fair value movements on derivatives (used for both
hedge accounting and economically hedging exposures) as well as the changes in the fair value of assets and liabilities included in hedging relationships as hedged items. In addition, Valuation results and net trading income includes the results on
assets and liabilities designated as at fair value through profit or loss.

Included in the Valuation results and net trading income are the fair value movements on
derivatives used to economically hedge exposures, but for which no hedge accounting is applied. The fair value movements on the derivatives are influenced by changes in the market conditions, such as stock prices, interest rates and currency
exchange rates.

Valuation results and net trading income are reflected in the Consolidated statement of cash flows in the line Result before tax - Adjusted
for: other.

The Valuation results on assets and liabilities designated at fair value through profit or loss includes fair value changes on certain issued
debt securities. Valuation results on assets and liabilities designated at fair value through profit or loss were mainly due to changes in the fair value of financial liabilities driven by changes in market conditions and changes in own credit risk
as disclosed in Note 14 Financial liabilities at fair value through profit or loss. Market conditions include in particular credit spread developments.

In 2016, Valuation results on assets and liabilities designated at fair value through profit or loss (excluding trading) includes fair value adjustments on own issued
notes amounting to EUR 70 million (2015: EUR 404 million; 2014: EUR 632 million), of which DVA adjustment on own issued notes in 2016 amounted to EUR 50 million (2015: EUR 163 million; 2014: EUR 98
million).

In 2016, Valuation results and net trading income includes EUR 33 million related to warrants on the shares of Voya and NN Group (2015: EUR
19 million on Voya and NN Group; 2014: EUR 180 million on Voya). Reference is made to Note 4 Financial assets at fair value through profit or loss.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-64 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







23 Investment income



|                                                                 |  |      |     |  |      |  |      |      |  |  |     | 
|---------------------------------------------------------------- |  | ---- | --- |  | ---- |  | ---- | ---- |  |  | --- | 
|Investment income                                                |  |      |     |  |      |  |      |      | 
|                                                                 |  | 2016 |     |  | 2015 |  |      | 2014 | 
|Dividend income                                                  |  |      | 87  |  |      |  | 63   |      |  |  | 36  | 
|Realised gains/losses on disposal of debt securities             |  |      | 107 |  |      |  | 123  |      |  |  | 142 | 
|Impairments of
available-for-sale debt securities                |  |      |     |  |      |  | 17  |      |  |  |     | 
|Reversal of impairments of available-for-sale debt securities    |  |      |     |  |      |  |      |      |  |  | 1   | 
|                                                                 |  |      |     |  |      |  |      |      |  |  |     | 
|Realised gains/losses and impairments of debt securities         |  |      | 107 |  |      |  | 106  |      |  |  | 143 | 
|Realised gains/losses on disposal of equity securities           |  |      | 236 |  |      |  | 67   |      |  |  | 62  | 
|Impairments of
available-for-sale equity securities              |  |      | 13 |  |      |  | 117 |      |  |  | 14 | 
|                                                                 |  |      |     |  |      |  |      |      |  |  |     | 
|Realised gains/losses and impairments of equity securities       |  |      | 223 |  |      |  | 50  |      |  |  | 48  | 
|Income from and fair value gains/losses on investment properties |  |      | 4   |  |      |  | 4    |      |  |  | 9   | 
|                                                                 |  |      |     |  |      |  |      |      |  |  |     | 
|Investment income                                                |  |      | 421 |  |      |  | 123  |      |  |  | 236 | 
|                                                                 |  |      |     |  |      |  |      |      |  |  |     | 

In 2016, Dividend income includes EUR 16 million received as a result of the merger between Equens SE and Worldline. Reference is
made to Note 5 Investments.

In 2016, Realised gains/losses on disposal of equity securities includes mainly EUR 163 million comprising the gain on
disposal of the shares held in VISA Europe Limited. For further information on the disposal of shares held in VISA Europe Limited, reference is made to Note 51 Other events.

Impairments and reversals of impairments on investments are presented within Investment income, which is part of Total income.



|                                                                   |  |             |     |  |                         |  |      |      |  |  |      |  |  |      |   |  |      |  |   |  |  |  |   | 
|------------------------------------------------------------------ |  | ----------- | --- |  | ----------------------- |  | ---- | ---- |  |  | ---- |  |  | ---- | - |  | ---- |  | - |  |  |  | - | 
|Impairments and reversals of impairment on investments per segment |  |             |     |  |                         |  |      |      |  |  |      |  |  |      |   | 
|                                                                   |  | Impairments |     |  | Reversal of impairments | 
|                                                                   |  | 2016        |     |  | 2015                    |  |      | 2014 |  |  | 2016 |  |  | 2015 |   |  | 2014 | 
|Retail Belgium                                                     |  |             |     |  |                         |  | 5   |      |  |  |      |  |  |      |   |  |      |  |   |  |  |  |   | 
|Wholesale Banking                                                  |  |             | 8  |  |                         |  | 129 |      |  |  | 14  |  |  |      |   |  |      |  |   |  |  |  | 1 | 
|Corporate Line Banking                                             |  |             | 5  |  |                         |  |      |      |  |  |      |  |  |      |   |  |      |  |   |  |  |  |   | 
|                                                                   |  |             |     |  |                         |  |      |      |  |  |      |  |  |      |   |  |      |  |   |  |  |  |   | 
|                                                                   |  |             | 13 |  |                         |  | 134 |      |  |  | 14  |  |  |      |  |  |      |  |  |  |  |  | 1 | 
|                                                                   |  |             |     |  |                         |  |      |      |  |  |      |  |  |      |   |  |      |  |   |  |  |  |   | 

24 Result on disposal of group companies



|                                      |  |      |   |  |      |  |    |      |  |  |     | 
|------------------------------------- |  | ---- | - |  | ---- |  | -- | ---- |  |  | --- | 
|Result on disposal of group companies |  |      |   |  |      |  |    |      | 
|                                      |  | 2016 |   |  | 2015 |  |    | 2014 | 
|Baring Private Equity Partners        |  |      | 1 |  |      |  | 7  |      |  |  |     | 
|ING Lease UK                          |  |      |   |  |      |  | 5 |      |  |  |     | 
|ING Vysya                             |  |      |   |  |      |  |    |      |  |  | 202 | 
|Other                                 |  |      |   |  |      |  |    |      |  |  | 7  | 
|                                      |  |      |   |  |      |  |    |      |  |  |     | 
|                                      |  |      | 1 |  |      |  | 2  |      |  |  | 195 | 
|                                      |  |      |   |  |      |  |    |      |  |  |     | 

In 2015, the Result on disposal of group companies included EUR 7 million realised deferred profits on divestments in prior periods
related to Baring Private Equity Partners and a release of goodwill related to the disposal of the remaining portfolios of ING Lease (UK). Reference is made to Note 9 Intangible assets.

In 2016, 2015, and 2014 the result on divestments of NN Group and the divestment of Voya was not included above but included in Net result from disposal of discontinued
operations. Reference is made to Note 28 Discontinued operations, Note 46 Consolidated companies and businesses acquired and divested and Note 51 Other events.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-65 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







In 2014, Result on disposal of group companies included EUR 202 million profit on the deconsolidation of ING
Vysya. Reference is made to Note 7 Investments in associates and joint ventures, Note 33 Segments, Note 34 Information on geographical areas, Note 49 Related parties.

25 Other income



|                                                     |  |      |     |  |      |  |    |      |  |  |    | 
|---------------------------------------------------- |  | ---- | --- |  | ---- |  | -- | ---- |  |  | -- | 
|Other income                                         |  |      |     |  |      |  |    |      | 
|                                                     |  | 2016 |     |  | 2015 |  |    | 2014 | 
|Net operating lease income                           |  |      | 2   |  |      |  | 2  |      |  |  | 5  | 
|Income from investment property development projects |  |      | 1   |  |      |  | 8  |      |  |  |    | 
|Other                                                |  |      | 170 |  |      |  | 56 |      |  |  | 92 | 
|                                                     |  |      |     |  |      |  |    |      |  |  |    | 
|                                                     |  |      | 173 |  |      |  | 66 |      |  |  | 97 | 
|                                                     |  |      |     |  |      |  |    |      |  |  |    | 

Net operating lease income comprises income of EUR 21 million (2015: EUR 19 million; 2014: EUR 23 million) and depreciation of
EUR 19 million (2015: EUR 17 million; 2014: EUR 18 million).

In 2016, Other income  Other includes EUR 16 million related to the disposal of
shares held in VISA Europe Limited. For further information on the VISA transaction, reference is made to Note 51 Other events. The remainder of the Other income - Other is made up of a number of small items, which are individually
insignificant.

In 2015, Other income  Other was mainly impacted by positive results on the sale of loans and property, partly offset by non-recurring charges
related to increased prepayments and renegotiations of mortgages.

26 Staff expenses



|                                                    |  |      |       |  |      |  |       |      |  |  |       | 
|--------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|Staff expenses                                      |  |      |       |  |      |  |       |      | 
|                                                    |  | 2016 |       |  | 2015 |  |       | 2014 | 
|Salaries                                            |  |      | 3,224 |  |      |  | 3,221 |      |  |  | 3,149 | 
|Pension costs and other staff-related benefit costs |  |      | 344   |  |      |  | 275   |      |  |  | 1,218 | 
|Social security costs                               |  |      | 512   |  |      |  | 514   |      |  |  | 514   | 
|Share-based compensation arrangements               |  |      | 75    |  |      |  | 76    |      |  |  | 60    | 
|External employees                                  |  |      | 636   |  |      |  | 634   |      |  |  | 623   | 
|Education                                           |  |      | 70    |  |      |  | 68    |      |  |  | 57    | 
|Other staff costs                                   |  |      | 178   |  |      |  | 184   |      |  |  | 167   | 
|                                                    |  |      |       |  |      |  |       |      |  |  |       | 
|                                                    |  |      | 5,039 |  |      |  | 4,972 |      |  |  | 5,788 | 
|                                                    |  |      |       |  |      |  |       |      |  |  |       | 

In 2015, there was a new collective labour agreement in the Netherlands resulting in reduced rights to future benefits. The impact of
this was included in Pension and other staff-related benefits costs.

In 2014, a charge of EUR 871 million was recognised in Pensions costs related to the
Dutch defined benefit plan settlement which resulted in the ING Pension Fund being financially independent from ING. Reference is made to Note 35 Pension and other post-employment benefits for information on pensions.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-66 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                                    |  |             |        |  |               |  |        |       |  |  |        |  |  |       |        |  |      |  |        |      |  |  |        |  |  |      |        |  |  |  |        |  |  |  |        | 
|----------------------------------------------------------------------------------- |  | ----------- | ------ |  | ------------- |  | ------ | ----- |  |  | ------ |  |  | ----- | ------ |  | ---- |  | ------ | ---- |  |  | ------ |  |  | ---- | ------ |  |  |  | ------ |  |  |  | ------ | 
|Number of employees                                                                 | 
|                                                                                    |  | Netherlands |        |  | International |  |        | Total | 
|                                                                                    |  | 2016        |        |  | 20151         |  |        | 2014  |  |  | 2016   |  |  | 20151 |        |  | 2014 |  |        | 2016 |  |  | 20151  |  |  | 2014 |       
|Continuing operations - average number of employees at full time equivalent basis   |  |             | 13,660 |  |               |  | 14,586 |       |  |  | 15,209 |  |  |       | 38,283 |  |      |  | 38,134 |      |  |  | 40,736 |  |  |      | 51,943 |  |  |  | 52,720 |  |  |  | 55,945 | 
|Discontinued operations - average number of employees at full time equivalent basis |  |             |        |  |               |  | 2,652  |       |  |  | 6,851  |  |  |       |        |  |      |  | 2,181  |      |  |  | 5,635  |  |  |      |        |  |  |  | 4,833  |  |  |  | 12,486 | 
|                                                                                    |  |             |        |  |               |  |        |       |  |  |        |  |  |       |        |  |      |  |        |      |  |  |        |  |  |      |        |  |  |  |        |  |  |  |        | 
|Total average number of employees at full time equivalent basis                     |  |             | 13,660 |  |               |  | 17,238 |       |  |  | 22,060 |  |  |       | 38,283 |  |      |  | 40,315 |      |  |  | 46,371 |  |  |      | 51,943 |  |  |  | 57,553 |  |  |  | 68,431 | 
|                                                                                    |  |             |        |  |               |  |        |       |  |  |        |  |  |       |        |  |      |  |        |      |  |  |        |  |  |      |        |  |  |  |        |  |  |  |        | 



|1 | The average number of employees includes, on an average basis, employees of the discontinued operations of NN Group. NN Group was deconsolidated from ING Group at the end of May 2015. Staff expenses, for the five months
ended May 2015 was included in the Consolidated statement of profit or loss of ING Group in the line item Net result from discontinued operations. Reference is made to Note 28 Discontinued operations.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The decrease in the number of employees in 2016, compared to 2015, is mainly as a result of the deconsolidation of NN Group at the end of May 2015 and reorganisations.

Share-based compensation arrangements include EUR 69 million (2015: EUR 63 million; 2014: EUR 57 million) relating to equity-settled share-based payment
arrangements and EUR 6 million (2015: EUR 13 million; 2014: EUR 3 million) relating to cash-settled share-based payment arrangements.

Remuneration
of senior management, Executive Board and Supervisory Board

Reference is made to Note 49 Related parties.

Stock option and share plans

ING Groep N.V. has granted option rights
on ING Groep N.V. shares and conditional rights on shares to a number of senior executives (members of the Executive Board, general managers and other officers nominated by the Executive Board), and to a considerable number of employees of ING
Group. The purpose of the option and share schemes, apart from promoting a lasting growth of ING Group, is to attract, retain and motivate senior executives and staff.

ING grants three types of share awards, deferred shares, performance shares, and upfront shares. The entitlement to the share awards is granted conditionally. If the
participant remains in employment for an uninterrupted period between the grant date and the vesting date, the entitlement becomes unconditional. In addition to the employment condition, the performance shares contain a performance condition. The
number of ING shares that would ultimately be granted at the end of a performance period is dependent on INGs performance over that period. Upfront and deferred shares, with retention periods as soon as it becomes unconditional, were awarded
to the Management Board members of ING Bank and NN Group (in periods prior to 2015), as well as identified staff. ING has the authority to apply a hold back to awarded but unvested shares and a claw-back to vested shares.

The information presented below on stock options and share plans on ING Groep N.V. shares includes personnel employed by entities that are presented as continuing
operations as well as held for sale and discontinued operations.

In 2016, 61,532 share awards (2015: nil; 2014: nil) were granted to the members of the Executive
Board of ING Groep N.V., 170,749 share awards (2015: 106,013; 2014: 206,650 including NN Group) were granted to the Management Board of ING Bank. To senior management and other employees 6,590,039 share awards (2015: 6,088,240; 2014: 6,814,308
including NN Group) were granted. In 2014, all outstanding ING Groep N.V. share awards held by the Management Board, senior management and other employees of NN Group N.V. were converted into awards on NN Group N.V. shares. The conversion was
performed at an exchange factor such that the fair value of the outstanding awards was unchanged. The outstanding option awards on ING Groep N.V. shares which are fully vested, remained unchanged. As of 2014, new awards to the Management Board,
senior management and other employees of NN Group are all based on NN Group N.V. shares.

Every year, the ING Group Executive Board decides whether the option and
share schemes are to be continued and, if so, to what extent. In 2010, the Group Executive Board decided not to continue the option scheme as from 2011. The existing option schemes, up and until 2010, will be run off in the coming years.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-67 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The option rights are valid for a period of ten years. Option rights that are not exercised within this period, lapse.
Option rights granted will remain valid until the expiry date, even if the option scheme is discontinued. The option rights are subject to certain conditions, including a pre-determined continuous period of
service. The exercise prices of the options are the same as the quoted prices of ING Groep N.V. shares at the date on which the options are granted.

The
obligations with regard to the existing stock option plan and the share plans will be funded either by cash or by newly issued shares at the discretion of ING Group.



|                                     |  |                                  |            |  |                                            |  |             |      |  |  |             |  |  |      |       |  |      |  |       |  |  |  |       | 
|------------------------------------ |  | -------------------------------- | ---------- |  | ------------------------------------------ |  | ----------- | ---- |  |  | ----------- |  |  | ---- | ----- |  | ---- |  | ----- |  |  |  | ----- | 
|Changes in option rights outstanding | 
|                                     |  | Options outstanding (in numbers) |            |  | Weighted average exercise price (in euros) | 
|                                     |  | 2016                             |            |  | 2015                                       |  |             | 2014 |  |  | 2016        |  |  | 2015 |       |  | 2014 | 
|Opening balance                      |  |                                  | 37,311,131 |  |                                            |  | 52,559,607  |      |  |  | 68,292,442  |  |  |      | 17.54 |  |      |  | 16.95 |  |  |  | 16.02 | 
|Exercised                            |  |                                  | 1,583,072 |  |                                            |  | 3,251,420  |      |  |  | 4,796,012  |  |  |      | 5.40  |  |      |  | 5.97  |  |  |  | 5.97  | 
|Forfeited                            |  |                                  | 244,959   |  |                                            |  | 410,847    |      |  |  | 610,095    |  |  |      | 16.89 |  |      |  | 18.05 |  |  |  | 15.91 | 
|Expired                              |  |                                  | 9,908,188 |  |                                            |  | 11,586,209 |      |  |  | 10,326,728 |  |  |      | 24.67 |  |      |  | 18.13 |  |  |  | 16.35 | 
|                                     |  |                                  |            |  |                                            |  |             |      |  |  |             |  |  |      |       |  |      |  |       |  |  |  |       | 
|Closing balance                      |  |                                  | 25,574,912 |  |                                            |  | 37,311,131  |      |  |  | 52,559,607  |  |  |      | 15.53 |  |      |  | 17.54 |  |  |  | 16.95 | 
|                                     |  |                                  |            |  |                                            |  |             |      |  |  |             |  |  |      |       |  |      |  |       |  |  |  |       | 

As per 31 December 2016, total options outstanding consists of 16,861,694 options (2015: 27,657,794; 2014: 41,685,852) relating to
equity-settled share-based payment arrangements and 8,713,218 options (2015: 9,653,337; 2014: 10,873,755) relating to cash-settled share-based payment arrangements.

The weighted average share price at the date of exercise for options exercised during 2016 is EUR 10.43 (2015: 13.62; 2014: EUR 10.60).

All option rights are vested



|                                                     |  |                                                     |            |  |                                          |  |            |                               |  |  |            |  |  |      |      |  |      |  |      |      |  |  |      |  |  |      |       |  |  |  |       |  |  |  |       | 
|---------------------------------------------------- |  | --------------------------------------------------- | ---------- |  | ---------------------------------------- |  | ---------- | ----------------------------- |  |  | ---------- |  |  | ---- | ---- |  | ---- |  | ---- | ---- |  |  | ---- |  |  | ---- | ----- |  |  |  | ----- |  |  |  | ----- | 
|Summary of stock options outstanding and exercisable |  |                                                     |            |  |                                          |  |            |                               |  |  |            |  |  |      |      | 
|                                                     |  | Optionsoutstanding and exercisableas at 31 December |            |  | Weightedaverageremainingcontractual life |  |            | Weightedaverageexercise price | 
|Range of exercise price in euros                     |  | 2016                                                |            |  | 2015                                     |  |            | 2014                          |  |  | 2016       |  |  | 2015 |      |  | 2014 |  |      | 2016 |  |  | 2015 |  |  | 2014 |      
|0.00  5.00                                          |  |                                                     | 3,086,449  |  |                                          |  | 3,817,765  |                               |  |  | 4,893,647  |  |  |      | 2.21 |  |      |  | 3.22 |      |  |  | 3.76 |  |  |      | 2.88  |  |  |  | 2.89  |  |  |  | 2.88  | 
|5.00  10.00                                         |  |                                                     | 5,248,657  |  |                                          |  | 6,213,999  |                               |  |  | 8,527,415  |  |  |      | 3.21 |  |      |  | 4.21 |      |  |  | 5.21 |  |  |      | 7.37  |  |  |  | 7.37  |  |  |  | 7.38  | 
|10.00  15.00                                        |  |                                                     | 137,706    |  |                                          |  | 139,841    |                               |  |  | 145,974    |  |  |      | 1.71 |  |      |  | 2.72 |      |  |  | 3.71 |  |  |      | 14.35 |  |  |  | 14.35 |  |  |  | 14.35 | 
|15.00  20.00                                        |  |                                                     | 9,460,529  |  |                                          |  | 10,061,265 |                               |  |  | 21,003,814 |  |  |      | 1.21 |  |      |  | 2.21 |      |  |  | 1.54 |  |  |      | 16.83 |  |  |  | 16.87 |  |  |  | 17.33 | 
|20.00  25.00                                        |  |                                                     | 7,295,027  |  |                                          |  | 7,608,639  |                               |  |  | 8,117,391  |  |  |      | 0.23 |  |      |  | 1.24 |      |  |  | 1.79 |  |  |      | 24.62 |  |  |  | 24.62 |  |  |  | 24.57 | 
|25.00  30.00                                        |  |                                                     | 346,544    |  |                                          |  | 9,469,622  |                               |  |  | 9,871,366  |  |  |      | 0.38 |  |      |  | 0.30 |      |  |  | 1.29 |  |  |      | 25.42 |  |  |  | 25.17 |  |  |  | 25.18 | 
|                                                     |  |                                                     |            |  |                                          |  |            |                               |  |  |            |  |  |      |      |  |      |  |      |      |  |  |      |  |  |      |       |  |  |  |       |  |  |  |       | 
|                                                     |  |                                                     | 25,574,912 |  |                                          |  | 37,311,131 |                               |  |  | 52,559,607 |  |  |      |      |  |      |  |      |      |  |  |      |  |  |      |       |  |  |  |       |  |  |  |       | 
|                                                     |  |                                                     |            |  |                                          |  |            |                               |  |  |            |  |  |      |      |  |      |  |      |      |  |  |      |  |  |      |       |  |  |  |       |  |  |  |       | 

All options outstanding are exercisable. As at 31 December 2016, the aggregate intrinsic value of options outstanding and
exercisable is EUR 64 million (2015: EUR 68 million; 2014: EUR 68 million).

Cash received from stock option exercises for the year ended 31 December
2016 is EUR 7 million (2015: EUR 16 million; 2014: EUR 24 million).

The fair value of options granted is recognised as an expense under staff expenses
and is allocated over the vesting period of the options. The fair values of the option awards have been determined using a European Black Scholes formula. This model takes the risk free interest rate into account (2.02% to 4.62%), as well as the
lifetime of the options granted (5 to 9 years), the exercise price, the current share price (EUR 2.90  EUR 25.42), the expected volatility of the certificates of ING Groep N.V. shares (25%  84%) and the expected dividend yield (0.94% to
8.99%). The source for implied volatilities used for the valuation of the stock options is INGs trading system. The implied volatilities in this system are determined by INGs traders and are based on market data implied volatilities not
on historical volatilities.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-68 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                        |  |                           |            |  |                                                   |  |             |      |  |  |             |  |  |      |       |  |      |  |       |  |  |  |      | 
|----------------------- |  | ------------------------- | ---------- |  | ------------------------------------------------- |  | ----------- | ---- |  |  | ----------- |  |  | ---- | ----- |  | ---- |  | ----- |  |  |  | ---- | 
|Changes in share awards |  |                           |            |  |                                                   |  |             |      |  |  |             |  |  |      |       |  |      | 
|                        |  | Share awards (in numbers) |            |  | Weighted average grant date fair value (in euros) | 
|                        |  | 2016                      |            |  | 2015                                              |  |             | 2014 |  |  | 2016        |  |  | 2015 |       |  | 2014 | 
|Opening balance         |  |                           | 8,737,014  |  |                                                   |  | 12,706,264  |      |  |  | 25,059,992  |  |  |      | 10.04 |  |      |  | 7.37  |  |  |  | 7.23 | 
|Granted                 |  |                           | 6,822,320  |  |                                                   |  | 6,194,253   |      |  |  | 7,020,958   |  |  |      | 10.20 |  |      |  | 13.00 |  |  |  | 9.78 | 
|Performance effect      |  |                           | 543,891    |  |                                                   |  | 453,699     |      |  |  | 1,003,576   |  |  |      | 8.68  |  |      |  | 6.40  |  |  |  | 6.02 | 
|Vested                  |  |                           | 7,569,972 |  |                                                   |  | 10,374,131 |      |  |  | 19,444,374 |  |  |      | 9.65  |  |      |  | 8.38  |  |  |  | 8.01 | 
|Forfeited               |  |                           | 150,290   |  |                                                   |  | 243,071    |      |  |  | 933,888    |  |  |      | 10.58 |  |      |  | 8.91  |  |  |  | 6.83 | 
|                        |  |                           |            |  |                                                   |  |             |      |  |  |             |  |  |      |       |  |      |  |       |  |  |  |      | 
|Closing balance         |  |                           | 8,382,963  |  |                                                   |  | 8,737,014   |      |  |  | 12,706,264  |  |  |      | 10.44 |  |      |  | 10.04 |  |  |  | 7.37 | 
|                        |  |                           |            |  |                                                   |  |             |      |  |  |             |  |  |      |       |  |      |  |       |  |  |  |      | 

In July 2014, 2.8 million share awards of ING Group were converted in NN Group share awards, these are presented in the line
Vested.

As at 31 December 2016, the share awards consists of 7,294,633 share awards (2015: 7,485,634; 2014: 11,282,373) relating to equity-settled share-based
payment arrangements and 1,088,330 share awards (2015: 1,251,380; 2014: 1,423,891) relating to cash-settled share-based payment arrangements.

The fair value of
share awards granted is recognised as an expense under staff expenses and is allocated over the vesting period of the share awards. As of 2015, ING Group no longer has share awards containing a market based performance condition. Previously, the
fair values of share awards containing a market based performance condition have been determined using a Monte Carlo simulation based valuation model. The model takes into account the risk free interest rate, the current stock prices, expected
volatilities and current dividend yields of the performance peer group used to determine INGs Total Shareholder Return (TSR) ranking.

As at 31 December
2016, total unrecognised compensation costs related to share awards amount to EUR 41 million (2015: EUR 45 million; 2014: EUR 36 million). These costs are expected to be recognised over a weighted average period of 1.4 years (2015: 1.4
years; 2014: 1.3 years).

27 Other operating expenses



|                                                                                    |  |      |       |  |      |  |       |      |  |  |       | 
|----------------------------------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|Other operating expenses                                                            | 
|                                                                                    |  | 2016 |       |  | 2015 |  |       | 2014 | 
|Depreciation of property and equipment                                              |  |      | 330   |  |      |  | 327   |      |  |  | 326   | 
|Computer costs                                                                      |  |      | 740   |  |      |  | 753   |      |  |  | 705   | 
|Office expenses                                                                     |  |      | 580   |  |      |  | 618   |      |  |  | 620   | 
|Travel and accommodation expenses                                                   |  |      | 169   |  |      |  | 166   |      |  |  | 140   | 
|Advertising and public relations                                                    |  |      | 404   |  |      |  | 418   |      |  |  | 405   | 
|External advisory fees                                                              |  |      | 320   |  |      |  | 246   |      |  |  | 212   | 
|Audit and non-audit services                                                        |  |      | 19    |  |      |  | 18    |      |  |  | 18    | 
|Postal charges                                                                      |  |      | 48    |  |      |  | 56    |      |  |  | 59    | 
|Regulatory costs                                                                    |  |      | 845   |  |      |  | 620   |      |  |  | 712   | 
|Addition/(unused amounts reversed) of provision for reorganisations and relocations |  |      | 1,189 |  |      |  | 165   |      |  |  | 469   | 
|Intangible amortisation and (reversals of) impairments                              |  |      | 294   |  |      |  | 298   |      |  |  | 325   | 
|Other                                                                               |  |      | 637   |  |      |  | 669   |      |  |  | 480   | 
|                                                                                    |  |      |       |  |      |  |       |      |  |  |       | 
|                                                                                    |  |      | 5,575 |  |      |  | 4,354 |      |  |  | 4,471 | 
|                                                                                    |  |      |       |  |      |  |       |      |  |  |       | 

Other operating expenses include lease and sublease payments in respect of operating leases of EUR 310 million (2015: EUR
281 million; 2014: EUR 239 million) in which ING Group is the lessee. No individual operating lease has terms and conditions that significantly affect the amount, timing and certainty of the consolidated cash flows of the Group.

Audit and non-audit services

Audit and non-audit services include fees for services provided by the Groups auditors.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-69 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                         |  |      |    |  |       |  |    |       |  |  |    | 
|------------------------ |  | ---- | -- |  | ----- |  | -- | ----- |  |  | -- | 
|Fees of Groups auditors |  |      |    |  |       |  |    |       | 
|                         |  | 2016 |    |  | 20151 |  |    | 20141 | 
|Audit fees               |  |      | 15 |  |       |  | 16 |       |  |  | 16 | 
|Audit related fees       |  |      | 1  |  |       |  | 1  |       |  |  | 1  | 
|Tax fees                 |  |      |    |  |       |  | 1  |       |  |  | 1  | 
|                         |  |      |    |  |       |  |    |       |  |  |    | 
|Total2                   |  |      | 16 |  |       |  | 18 |       |  |  | 18 | 
|                         |  |      |    |  |       |  |    |       |  |  |    | 



|1 | Total Groups auditors fees for 2015, including charges related to NN Group until deconsolidation at the end of May 2015, amounted to EUR 24 million (2014: EUR 32 million).
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | The Group auditors did not provide any non-audit services except tax.
|- | ---------------------------------------------------------------------

Fees as
disclosed in the table above relate to the network of the Groups auditors and are the amounts related to the respective years, i.e. on an accrual basis. The amounts exclude Groups auditors fees for entities presented as held for sale and
discontinued operations.

Regulatory costs

Regulatory costs
represent contributions to the Deposit Guarantee Schemes (DGS), The Single Resolution Fund (SRF) and local bank taxes. As of 1 January 2016, the new ex-ante DGS in the Netherlands and the SRF came into
effect resulting in increased Regulatory costs for the period. Included in Regulatory costs for 2016, are contributions to DGS of EUR 316 million (2015: EUR 233 million; 2014: EUR 159 million) mainly related to the Netherlands, Germany,
Belgium, Poland, Turkey and Spain and contributions to the SRF of EUR 176 million (2015: EUR 143 million related to National Resolution Funds; 2014: nil).

In 2016 local bank taxes increased by EUR 108 million from EUR 243 million to EUR 351 million mainly due to a new Polish bank tax and higher taxes in
Belgium.

The nationalisation of SNS Reaal in 2013 had as a consequence, a one-time bank tax of EUR 1 billion to be
paid by ING Bank and other Dutch banks. In accordance with the relevant legislation, the bank tax was charged in three equal instalments. For ING, this resulted in a charge of EUR 304 million in 2014.

Addition/(unused amounts reversed) of provision for reorganisations and relocations

Included in Addition/(unused amounts reversed) of provision for reorganisations and relocations in 2016, is an amount of EUR 1,032 million comprising a pre-tax redundancy provision for the intended workforce reductions related to the intended digital transformation programmes as announced on INGs Investor Day on 3 October 2016. For further information on
Addition/(unused amounts reversed) of provision for reorganisations and relocations, reference is made to the disclosure on the reorganisation provision in Note 15 Provisions.

Intangible amortisation and (reversals of) impairments



|                                                       |  |                   |     |  |                          |  |    |       |  |  |      |  |  |      |    |  |      |  |     |      |  |  |      |  |  |      |     |  |  |  |     |  |  |  |     | 
|------------------------------------------------------ |  | ----------------- | --- |  | ------------------------ |  | -- | ----- |  |  | ---- |  |  | ---- | -- |  | ---- |  | --- | ---- |  |  | ---- |  |  | ---- | --- |  |  |  | --- |  |  |  | --- | 
|Intangible amortisation and (reversals of) impairments | 
|                                                       |  | Impairment losses |     |  | Reversals of impairments |  |    | Total | 
|                                                       |  | 2016              |     |  | 2015                     |  |    | 2014  |  |  | 2016 |  |  | 2015 |    |  | 2014 |  |     | 2016 |  |  | 2015 |  |  | 2014 |    
|Property and equipment                                 |  |                   | 65  |  |                          |  | 17 |       |  |  | 43   |  |  |      | 5 |  |      |  | 14 |      |  |  | 5   |  |  |      | 60  |  |  |  | 3   |  |  |  | 38  | 
|Property development                                   |  |                   | 3   |  |                          |  | 9  |       |  |  | 36   |  |  |      |    |  |      |  |     |      |  |  |      |  |  |      | 3   |  |  |  | 9   |  |  |  | 36  | 
|Software and other intangible assets                   |  |                   | 44  |  |                          |  | 15 |       |  |  | 1    |  |  |      |    |  |      |  |     |      |  |  |      |  |  |      | 44  |  |  |  | 15  |  |  |  | 1   | 
|                                                       |  |                   |     |  |                          |  |    |       |  |  |      |  |  |      |    |  |      |  |     |      |  |  |      |  |  |      |     |  |  |  |     |  |  |  |     | 
|(Reversals of) other impairments                       |  |                   | 112 |  |                          |  | 41 |       |  |  | 80   |  |  |      | 5 |  |      |  | 14 |      |  |  | 5   |  |  |      | 107 |  |  |  | 27  |  |  |  | 75  | 
|Amortisation of software and other intangible assets   |  |                   |     |  |                          |  |    |       |  |  |      |  |  |      |    |  |      |  |     |      |  |  |      |  |  |      | 187 |  |  |  | 271 |  |  |  | 250 | 
|                                                       |  |                   |     |  |                          |  |    |       |  |  |      |  |  |      |    |  |      |  |     |      |  |  |      |  |  |      |     |  |  |  |     |  |  |  |     | 
|                                                       |  |                   |     |  |                          |  |    |       |  |  |      |  |  |      |    |  |      |  |     |      |  |  |      |  |  |      | 294 |  |  |  | 298 |  |  |  | 325 | 
|                                                       |  |                   |     |  |                          |  |    |       |  |  |      |  |  |      |    |  |      |  |     |      |  |  |      |  |  |      |     |  |  |  |     |  |  |  |     | 

As of 2016, the amortisation period for capitalised software is changed from three to five years. The change is applied prospectively.
The change results in a lower charge to the statement of profit or loss. The change has no significant impact on the statement of profit or loss for the year ended 31 December 2016 and is not expected to have a significant impact on the
statement of profit or loss of ING Group in future years. Reference is made to Note 9 Intangible assets.

In 2016, impairment losses on software and
other intangible assets mainly include software that was impaired to its Value in Use, related to the announcements on INGs Investor Day on 3 October 2016.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-70 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Other

Included in
Other operating expenses  Other in 2016, is a net charge amounting to EUR 114 million ( 2015: EUR 76 million) for the provision recognised in relation to floating interest rate derivatives that were sold in the Netherlands. Also included
in this line, is a charge related to the provision recognised for medical insurance plan damages for retired employees of ING Belgium. Reference is made to Note 15 Provisions and Note 45 Legal proceedings.

28 Discontinued operations

Total net result from discontinued operations
comprises the results from NN Group and Voya.



|                                                                                 |  |      |     |  |      |  |        |      |  |  |        | 
|-------------------------------------------------------------------------------- |  | ---- | --- |  | ---- |  | ------ | ---- |  |  | ------ | 
|Total net result from discontinued operations                                    |  |      |     |  |      |  |        |      | 
|                                                                                 |  | 2016 |     |  | 2015 |  |        | 2014 | 
|NN Group                                                                         |  |      |     |  |      |  | 800    |      |  |  | 529    | 
|Voya                                                                             |  |      |     |  |      |  |        |      |  |  | 138    | 
|                                                                                 |  |      |     |  |      |  |        |      |  |  |        | 
|Net result from discontinued operations                                          |  |      |     |  |      |  | 800    |      |  |  | 667    | 
|NN Group                                                                         |  |      |     |  |      |  | 3      |      |  |  | 470   | 
|                                                                                 |  |      |     |  |      |  |        |      |  |  |        | 
|Net result from classification as discontinued operations                        |  |      |     |  |      |  | 3      |      |  |  | 470   | 
|NN Group                                                                         |  |      | 441 |  |      |  | 1,202 |      |  |  | 26    | 
|Voya                                                                             |  |      |     |  |      |  | 323    |      |  |  | 1,546 | 
|                                                                                 |  |      |     |  |      |  |        |      |  |  |        | 
|Net result from disposal of discontinued
operations1                             |  |      | 441 |  |      |  | 879   |      |  |  | 1,572 | 
|NN Group                                                                         |  |      | 441 |  |      |  | 399   |      |  |  | 33     | 
|Voya                                                                             |  |      |     |  |      |  | 323    |      |  |  | 1,408 | 
|                                                                                 |  |      |     |  |      |  |        |      |  |  |        | 
|Total net result from discontinued operations (before
non-controlling interests) |  |      | 441 |  |      |  | 76    |      |  |  | 1,375 | 
|                                                                                 |  |      |     |  |      |  |        |      |  |  |        | 

1 The tax effect on the result on disposal of discontinued operations in 2016 is EUR 2 million (2015: nil; 2014: EUR 114 million).

Net result from discontinued operations

Net result from
discontinued operations comprises the total net result (after tax) of the businesses classified as discontinued operations and is presented separately in the statement of profit or loss.

In 2015, the statement of profit or loss of ING Group included, in the line Net result from discontinued operations, the net result of NN Group until
deconsolidation at the end of May 2015 and a dividend of EUR 59 million received from NN Group.

In 2014, included in this line was the net result of NN Group
and the net result of Voya until the deconsolidation at the end of March 2014.

For further information, reference is made to Note 51 Other events.



|                                               |  |      |   |  |       |  |       |       |  |  |        | 
|---------------------------------------------- |  | ---- | - |  | ----- |  | ----- | ----- |  |  | ------ | 
|Net result from discontinued operations        |  |      |   |  |       |  |       |       | 
|                                               |  | 2016 |   |  | 20151 |  |       | 20142 | 
|Total income                                   |  |      |   |  |       |  | 6,824 |       |  |  | 14,254 | 
|Total expenses                                 |  |      |   |  |       |  | 5,879 |       |  |  | 13,456 | 
|                                               |  |      |   |  |       |  |       |       |  |  |        | 
|Result before tax from discontinued operations |  |      |  |  |       |  | 945   |       |  |  | 798    | 
|Taxation                                       |  |      |   |  |       |  | 145   |       |  |  | 131    | 
|                                               |  |      |   |  |       |  |       |       |  |  |        | 
|Net result from discontinued operations        |  |      |  |  |       |  | 800   |       |  |  | 667    | 
|                                               |  |      |   |  |       |  |       |       |  |  |        | 



|1 | NN Group.
|- | ---------

|2 | NN Group and Voya.
|- | ------------------



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-71 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Net result from classification as discontinued operations

In 2015, Net result from classification as discontinued operations comprised the impact on the statement of profit or loss of the change in non-current non-financial assets of NN Group presented as assets and liabilities held for sale, prior to deconsolidation at the end of May 2015.

In 2014, goodwill and certain other non-current non-financial assets of EUR
103 million and EUR 367 million respectively were written-off as the sale of NN Group was expected to be below the carrying value.

For further information, reference is made to Note 51 Other events.

Net result from disposal of discontinued operations

In 2016, ING
Group sold its remaining shares in NN Group resulting in a net profit of EUR 448 million which is recognised in the statement of profit or loss in the line Net result from disposal of discontinued operations. Also included in this
line, are deferred losses related to former insurance activities.

In 2015, Net result from disposal of discontinued operations included mainly a profit of EUR
323 million on the sale of the last Voya shares in March 2015 to reduce ING Groups stake in Voya from 18.9% (at 31 December 2014) to zero, a loss of EUR 1,224 million as a result of the further sale and deconsolidation of NN
Group at the end of May 2015 and a loss of EUR 15 million on the further divestments of ING Groups interest in NN Group in September 2015.

In 2014, Net
result from disposal of discontinued operations mainly included the total net divestment loss of EUR 1,546 million on the further sale of Voya.

Reference is made to Note 46 Consolidated companies and businesses acquired and divested and Note 51 Other events.

Net cash flows from discontinued operations

The table below
represents the net cash flows from businesses classified as discontinued operations, as included in the Consolidated statement of cash flows, until deconsolidation of the respective businesses:



|                                            |  |      |   |  |       |  |        |       |  |  |        | 
|------------------------------------------- |  | ---- | - |  | ----- |  | ------ | ----- |  |  | ------ | 
|Net cash flows from discontinued operations |  |      |   |  |       |  |        |       | 
|                                            |  | 2016 |   |  | 20151 |  |        | 20142 | 
|Operating cash flow                         |  |      |   |  |       |  | 1,409 |       |  |  | 4,006 | 
|Investing cash flow                         |  |      |   |  |       |  | 2,619  |       |  |  | 1,295  | 
|Financing cash flow                         |  |      |   |  |       |  | 526    |       |  |  | 3,834  | 
|                                            |  |      |   |  |       |  |        |       |  |  |        | 
|Net cash flow                               |  |      |  |  |       |  | 1,736  |       |  |  | 1,123  | 
|                                            |  |      |   |  |       |  |        |       |  |  |        | 



|1 | NN Group.
|- | ---------

|2 | NN Group and Voya.
|- | ------------------

Proportional interest held and key information

The proportional interest held and key information on NN Group, until deconsolidation at the end of May 2015, are included in the tables below.



|                                            |  |                  |        |  |                                       |  |       |                                         |  |  |                                      |  |  |             |   |  |                          |  |     |  |  |  |     | 
|------------------------------------------- |  | ---------------- | ------ |  | ------------------------------------- |  | ----- | --------------------------------------- |  |  | ------------------------------------ |  |  | ----------- | - |  | ------------------------ |  | --- |  |  |  | --- | 
|NN Group N.V. - Statement of profit or loss |  |                  |        |  |                                       |  |       |                                         |  |  |                                      |  | 
|2015                                        |  | Interest held(%) |        |  | Total incomefrom continuingoperations |  |       | Total expensesfrom continuingoperations |  |  | Net resultfromdiscontinuedoperations |  |  | Net result3 |   |  | Non-controllinginterests | 
|NN Group - total1                           |  |                  | 100.00 |  |                                       |  | 6,764 |                                         |  |  | 6,041                                |  |  |             |  |  |                          |  | 723 |  |  |  |    | 
|ING Groups share2                          |  |                  | 54.77  |  |                                       |  |       |                                         |  |  |                                      |  |  |             |   |  |                          |  | 390 |  |  |  | 333 | 



|1 | NN Group statement of profit or loss, until deconsolidation at the end of May 2015.
|- | -----------------------------------------------------------------------------------

|2 | ING Groups share of NN Group statement of profit or loss, until deconsolidation at the end of May 2015.
|- | --------------------------------------------------------------------------------------------------------

|3 | Net result, excluding NN Groups non-controlling interest.
|- | ----------------------------------------------------------



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-72 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                     |  |                  |        |  |                     |  |       |                          |  |  |     | 
|------------------------------------ |  | ---------------- | ------ |  | ------------------- |  | ----- | ------------------------ |  |  | --- | 
|NN Group N.V. - Comprehensive income |  |                  |        |  |                     |  |       |                          | 
|2015                                 |  | Interest held(%) |        |  | Comprehensiveincome |  |       | Non-controllinginterests | 
|NN Group - total1                    |  |                  | 100.00 |  |                     |  | 1,718 |                          |  |  |    | 
|ING Groups share2                   |  |                  | 54.77  |  |                     |  | 941   |                          |  |  | 777 | 



|1 | NN Groups comprehensive income, until deconsolidation at the end of May 2015.
|- | ------------------------------------------------------------------------------

|2 | ING Groups share of NN Group comprehensive income, until deconsolidation at the end of May 2015.
|- | -------------------------------------------------------------------------------------------------



|                                                |  |                  |        |  |             |  |         |                   |  |  |             |  |  |                          |        |  |  |  |       | 
|----------------------------------------------- |  | ---------------- | ------ |  | ----------- |  | ------- | ----------------- |  |  | ----------- |  |  | ------------------------ | ------ |  |  |  | ----- | 
|NN Group N.V. - Statement of financial position |  |                  |        |  |             |  |         |                   |  |  |             |  |  |                          |       
|2014                                            |  | Interest held(%) |        |  | Totalassets |  |         | Total liabilities |  |  | Totalequity |  |  | Non-controllinginterests |       
|NN Group - total                                |  |                  | 100.00 |  |             |  | 165,481 |                   |  |  | 144,064     |  |  |                          | 21,417 |  |  |  |      | 
|ING Groups share                               |  |                  | 68.14  |  |             |  |         |                   |  |  |             |  |  |                          | 13,870 |  |  |  | 7,547 | 



|                                            |  |                  |        |  |                                       |  |        |                                         |  |  |                                      |  |  |             |     |  |                          |  |     |  |  |  |     | 
|------------------------------------------- |  | ---------------- | ------ |  | ------------------------------------- |  | ------ | --------------------------------------- |  |  | ------------------------------------ |  |  | ----------- | --- |  | ------------------------ |  | --- |  |  |  | --- | 
|NN Group N.V. - Statement of profit or loss |  |                  |        |  |                                       |  |        |                                         |  |  |                                      |  | 
|2014                                        |  | Interest held(%) |        |  | Total incomefrom continuingoperations |  |        | Total expensesfrom continuingoperations |  |  | Net resultfromdiscontinuedoperations |  |  | Net result1 |     |  | Non-controllinginterests | 
|NN Group - total                            |  |                  | 100.00 |  |                                       |  | 13,545 |                                         |  |  | 12,918                               |  |  |             | 16 |  |                          |  | 611 |  |  |  |    | 
|ING Groups share                           |  |                  | 68.14  |  |                                       |  |        |                                         |  |  |                                      |  |  |             |     |  |                          |  | 416 |  |  |  | 195 | 



|1 | Net result, excluding NN Groups non-controlling interest.
|- | ----------------------------------------------------------



|                                     |  |                  |        |  |                     |  |       |                          |  |  |       | 
|------------------------------------ |  | ---------------- | ------ |  | ------------------- |  | ----- | ------------------------ |  |  | ----- | 
|NN Group N.V. - Comprehensive income |  |                  |        |  |                     |  |       |                          | 
|2014                                 |  | Interest held(%) |        |  | Comprehensiveincome |  |       | Non-controllinginterests | 
|NN Group - total                     |  |                  | 100.00 |  |                     |  | 5,698 |                          |  |  |      | 
|ING Groups share                    |  |                  | 68.14  |  |                     |  | 3,883 |                          |  |  | 1,815 | 

In 2015 and 2014, Total income and Total expenses of NN Group, to which the non-controlling
interest in NN Group related, were all presented in the Consolidated statement of profit or loss in the line Net result from discontinued operations.

As per 31 December 2014, Total assets and Total liabilities of NN Group as presented above, to which the minority interest in NN Group related, are all presented
in the Consolidated statement of financial position in Assets held for sale and Liabilities held for sale, respectively.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-73 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







29 Earnings per ordinary share



|                                             |  |                        |       |  |                                                                                      |  |       |                            |  |  |      |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 
|-------------------------------------------- |  | ---------------------- | ----- |  | ------------------------------------------------------------------------------------ |  | ----- | -------------------------- |  |  | ---- |  |  | ---- | ------- |  | ---- |  | ------- | ---- |  |  | ------- |  |  | ---- | ---- |  |  |  | ---- |  |  |  | ---- | 
|Earnings per ordinary share                  |  |                        |       |  |                                                                                      |  |       |                            |  |  |      |  |  |      |         | 
|                                             |  | Amount(in EUR million) |       |  | Weighted average number of ordinaryshares outstanding during the period(in millions) |  |       | Per ordinary share(in EUR) | 
|                                             |  | 2016                   |       |  | 2015                                                                                 |  |       | 2014                       |  |  | 2016 |  |  | 2015 |         |  | 2014 |  |         | 2016 |  |  | 2015    |  |  | 2014 |     
|Net result                                   |  |                        | 4,975 |  |                                                                                      |  | 4,926 |                            |  |  | 963  |  |  |      | 3,875.0 |  |      |  | 3,864.8 |      |  |  | 3,849.7 |  |  |      |      |  |  |  |      |  |  |  |      | 
|Attribution to non-voting equity securities1 |  |                        |       |  |                                                                                      |  |       |                            |  |  | 750 |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 
|                                             |  |                        |       |  |                                                                                      |  |       |                            |  |  |      |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 
|Basic earnings                               |  |                        | 4,975 |  |                                                                                      |  | 4,926 |                            |  |  | 213  |  |  |      | 3,875.0 |  |      |  | 3,864.8 |      |  |  | 3,849.7 |  |  |      | 1.28 |  |  |  | 1.28 |  |  |  | 0.06 | 
|Effect of dilutive instruments:              |  |                        |       |  |                                                                                      |  |       |                            |  |  |      |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 
|Stock option and share plans                 |  |                        |       |  |                                                                                      |  |       |                            |  |  |      |  |  |      | 3.5     |  |      |  | 5.5     |      |  |  | 6.3     |  |  |      |      |  |  |  |      |  |  |  |      | 
|                                             |  |                        |       |  |                                                                                      |  |       |                            |  |  |      |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 
|                                             |  |                        |       |  |                                                                                      |  |       |                            |  |  |      |  |  |      | 3.5     |  |      |  | 5.5     |      |  |  | 6.3     |  |  |      |      |  |  |  |      |  |  |  |      | 
|                                             |  |                        |       |  |                                                                                      |  |       |                            |  |  |      |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 
|Diluted earnings                             |  |                        | 4,975 |  |                                                                                      |  | 4,926 |                            |  |  | 213  |  |  |      | 3,878.5 |  |      |  | 3,870.3 |      |  |  | 3,856.0 |  |  |      | 1.28 |  |  |  | 1.27 |  |  |  | 0.06 | 
|                                             |  |                        |       |  |                                                                                      |  |       |                            |  |  |      |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 



|1 | Until the repayment of the final tranche in November 2014, the Attribution to non-voting equity securities represented the amount that would be payable on the non-voting equity securities if and when the entire net result for the period would be distributed as dividend. This amount was only included for the purpose of determining earnings per share under IFRS and did not
represent a payment (neither actual nor proposed) to the holders of the non-voting equity securities.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dilutive instruments

Diluted earnings per share is calculated as if
the stock options and share plans outstanding at the end of the period had been exercised at the beginning of the period and assuming that the cash received from exercised stock options and share plans is used to buy own shares against the average
market price during the period. The net increase in the number of shares resulting from exercising stock options and share plans is added to the average number of shares used for the calculation of diluted earnings per share.

In 2014, the potential conversion of the non-voting equity securities had an anti-dilutive effect on the earnings per share
calculation (the diluted earnings per share becoming higher or less negative than the basic earnings per share). Therefore, the potential conversion was not taken into account in the calculation of diluted earnings per share.



|                                                       |  |                        |       |  |                                                                                      |  |       |                            |  |  |        |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 
|------------------------------------------------------ |  | ---------------------- | ----- |  | ------------------------------------------------------------------------------------ |  | ----- | -------------------------- |  |  | ------ |  |  | ---- | ------- |  | ---- |  | ------- | ---- |  |  | ------- |  |  | ---- | ---- |  |  |  | ---- |  |  |  | ---- | 
|Earnings per ordinary share from continuing operations |  |                        |       |  |                                                                                      |  |       |                            |  |  |        |  |  |      |         | 
|                                                       |  | Amount(in EUR million) |       |  | Weighted average number of ordinaryshares outstanding during the period(in millions) |  |       | Per ordinary share(in EUR) | 
|                                                       |  | 2016                   |       |  | 2015                                                                                 |  |       | 2014                       |  |  | 2016   |  |  | 2015 |         |  | 2014 |  |         | 2016 |  |  | 2015    |  |  | 2014 |     
|Basic earnings                                         |  |                        | 4,975 |  |                                                                                      |  | 4,926 |                            |  |  | 213    |  |  |      | 3,875.0 |  |      |  | 3,864.8 |      |  |  | 3,849.7 |  |  |      |      |  |  |  |      |  |  |  |      | 
|Less: Total net result from discontinued operations    |  |                        | 441   |  |                                                                                      |  | 415  |                            |  |  | 1,460 |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 
|                                                       |  |                        |       |  |                                                                                      |  |       |                            |  |  |        |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 
|Basic earnings from continuing operations              |  |                        | 4,534 |  |                                                                                      |  | 5,341 |                            |  |  | 1,673  |  |  |      | 3,875.0 |  |      |  | 3,864.8 |      |  |  | 3,849.7 |  |  |      | 1.17 |  |  |  | 1.39 |  |  |  | 0.44 | 
|Effect of dilutive instruments:                        |  |                        |       |  |                                                                                      |  |       |                            |  |  |        |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 
|Stock option and share plans                           |  |                        |       |  |                                                                                      |  |       |                            |  |  |        |  |  |      | 3.5     |  |      |  | 5.5     |      |  |  | 6.3     |  |  |      |      |  |  |  |      |  |  |  |      | 
|                                                       |  |                        |       |  |                                                                                      |  |       |                            |  |  |        |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 
|                                                       |  |                        |       |  |                                                                                      |  |       |                            |  |  |        |  |  |      | 3.5     |  |      |  | 5.5     |      |  |  | 6.3     |  |  |      |      |  |  |  |      |  |  |  |      | 
|                                                       |  |                        |       |  |                                                                                      |  |       |                            |  |  |        |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 
|Diluted earnings from continuing operations            |  |                        | 4,534 |  |                                                                                      |  | 5,341 |                            |  |  | 1,673  |  |  |      | 3,878.5 |  |      |  | 3,870.3 |      |  |  | 3,856.0 |  |  |      | 1.17 |  |  |  | 1.38 |  |  |  | 0.43 | 
|                                                       |  |                        |       |  |                                                                                      |  |       |                            |  |  |        |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |      |  |  |  |      | 



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-74 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                          |  |                        |     |  |                                                                                      |  |      |                            |  |  |        |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |       |  |  |  |       | 
|--------------------------------------------------------- |  | ---------------------- | --- |  | ------------------------------------------------------------------------------------ |  | ---- | -------------------------- |  |  | ------ |  |  | ---- | ------- |  | ---- |  | ------- | ---- |  |  | ------- |  |  | ---- | ---- |  |  |  | ----- |  |  |  | ----- | 
|Earnings per ordinary share from discontinued operations  |  |                        |     |  |                                                                                      |  |      |                            |  |  |        |  |  |      |         | 
|                                                          |  | Amount(in EUR million) |     |  | Weighted average number of ordinaryshares outstanding during the period(in millions) |  |      | Per ordinary share(in EUR) | 
|                                                          |  | 2016                   |     |  | 2015                                                                                 |  |      | 2014                       |  |  | 2016   |  |  | 2015 |         |  | 2014 |  |         | 2016 |  |  | 2015    |  |  | 2014 |     
|Net result from discontinued operations                   |  |                        |     |  |                                                                                      |  | 462  |                            |  |  | 424    |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |       |  |  |  |       | 
|Net result from classification as discontinued operations |  |                        |     |  |                                                                                      |  | 2    |                            |  |  | 320   |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |       |  |  |  |       | 
|Net result from disposal of discontinued operations       |  |                        | 441 |  |                                                                                      |  | 879 |                            |  |  | 1,564 |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |       |  |  |  |       | 
|                                                          |  |                        |     |  |                                                                                      |  |      |                            |  |  |        |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |       |  |  |  |       | 
|Total net result from discontinued operations             |  |                        | 441 |  |                                                                                      |  | 415 |                            |  |  | 1,460 |  |  |      | 3,875.0 |  |      |  | 3,864.8 |      |  |  | 3,849.7 |  |  |      |      |  |  |  |       |  |  |  |       | 
|                                                          |  |                        |     |  |                                                                                      |  |      |                            |  |  |        |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |       |  |  |  |       | 
|Basic earnings from discontinued operations               |  |                        | 441 |  |                                                                                      |  | 415 |                            |  |  | 1,460 |  |  |      | 3,875.0 |  |      |  | 3,864.8 |      |  |  | 3,849.7 |  |  |      | 0.11 |  |  |  | 0.11 |  |  |  | 0.37 | 
|Effect of dilutive instruments:                           |  |                        |     |  |                                                                                      |  |      |                            |  |  |        |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |       |  |  |  |       | 
|Stock option and share plans                              |  |                        |     |  |                                                                                      |  |      |                            |  |  |        |  |  |      | 3.5     |  |      |  | 5.5     |      |  |  | 6.3     |  |  |      |      |  |  |  |       |  |  |  |       | 
|                                                          |  |                        |     |  |                                                                                      |  |      |                            |  |  |        |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |       |  |  |  |       | 
|                                                          |  |                        |     |  |                                                                                      |  |      |                            |  |  |        |  |  |      | 3.5     |  |      |  | 5.5     |      |  |  | 6.3     |  |  |      |      |  |  |  |       |  |  |  |       | 
|                                                          |  |                        |     |  |                                                                                      |  |      |                            |  |  |        |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |       |  |  |  |       | 
|Diluted earnings from discontinued operations             |  |                        | 441 |  |                                                                                      |  | 415 |                            |  |  | 1,460 |  |  |      | 3,878.5 |  |      |  | 3,870.3 |      |  |  | 3,856.0 |  |  |      | 0.11 |  |  |  | 0.11 |  |  |  | 0.36 | 
|                                                          |  |                        |     |  |                                                                                      |  |      |                            |  |  |        |  |  |      |         |  |      |  |         |      |  |  |         |  |  |      |      |  |  |  |       |  |  |  |       | 

30 Dividend per ordinary share



|                                                |  |                          |      |  |                      |  |       | 
|----------------------------------------------- |  | ------------------------ | ---- |  | -------------------- |  | ----- | 
|Dividends to shareholders of the parent         |  |                          |      |  |                      | 
|                                                |  | Perordinaryshare(in EUR) |      |  | Total(in EURmillion) | 
|Dividends on ordinary shares:                   |  |                          |      |  |                      |  |       | 
|In respect of 2014                              |  |                          |      |  |                      |  |       | 
| Final dividend, paid in cash in May 2015      |  |                          | 0.12 |  |                      |  | 464   | 
|In respect of 2015                              |  |                          |      |  |                      |  |       | 
| Interim dividend, paid in cash in August 2015 |  |                          | 0.24 |  |                      |  | 929   | 
| Final dividend, paid in cash in May 2016      |  |                          | 0.41 |  |                      |  | 1,590 | 
|                                                |  |                          |      |  |                      |  |       | 
|Total dividend in respect of 2015               |  |                          | 0.65 |  |                      |  | 2,519 | 
|In respect of 2016                              |  |                          |      |  |                      |  |       | 
| Interim dividend, paid in cash in August 2016 |  |                          | 0.24 |  |                      |  | 931   | 
| Final dividend                                |  |                          | 0.42 |  |                      |  | 1,629 | 
|                                                |  |                          |      |  |                      |  |       | 
|Total dividend in respect of 2016               |  |                          | 0.66 |  |                      |  | 2,560 | 
|                                                |  |                          |      |  |                      |  |       | 

ING Groep N.V. is required to withhold tax of 15% on dividends paid.

No dividend was paid in 2014.

Notes to the consolidated statement of cash flows

31 Net cash flow from investing activities

Information on the impact
of companies acquired or disposed is presented in Note 46 Consolidated companies and businesses acquired and divested.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-75 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







32 Cash and cash equivalents



|                                                                                   |  |      |         |  |      |  |         |      |  |  |         | 
|---------------------------------------------------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|Cash and cash equivalents                                                          |  |      |         |  |      |  |         |      | 
|                                                                                   |  | 2016 |         |  | 2015 |  |         | 2014 | 
|Treasury bills and other eligible bills                                            |  |      | 512     |  |      |  | 363     |      |  |  | 677     | 
|Deposits from banks/Loans and advances to banks                                    |  |      | 2,492  |  |      |  | 1,442  |      |  |  | 2,036  | 
|Cash and balances with central banks                                               |  |      | 18,144  |  |      |  | 21,458  |      |  |  | 12,233  | 
|Cash and cash equivalents classified as Assets held for sale                       |  |      |         |  |      |  |         |      |  |  | 6,239   | 
|                                                                                   |  |      |         |  |      |  |         |      |  |  |         | 
|Cash and cash equivalents at end of year                                           |  |      | 16,164  |  |      |  | 20,379  |      |  |  | 17,113  | 
|                                                                                   |  |      |         |  |      |  |         |      |  |  |         | 
|                                                                                   |  |      |        
|Treasury bills and other eligible bills included in cash and cash equivalents      |  |      |         |  |      |  |         |      | 
|                                                                                   |  | 2016 |         |  | 2015 |  |         | 2014 | 
|Treasury bills and other eligible bills included in trading assets                 |  |      | 126     |  |      |  | 228     |      |  |  | 457     | 
|Treasury bills and other eligible bills included in available-for-sale investments |  |      | 386     |  |      |  | 135     |      |  |  | 220     | 
|                                                                                   |  |      |         |  |      |  |         |      |  |  |         | 
|                                                                                   |  |      | 512     |  |      |  | 363     |      |  |  | 677     | 
|                                                                                   |  |      |         |  |      |  |         |      |  |  |         | 
|                                                                                   |  |      |        
|Deposits from banks/Loans and advances to banks                                    |  |      |         |  |      |  |         |      | 
|                                                                                   |  | 2016 |         |  | 2015 |  |         | 2014 | 
|Included in cash and cash equivalents:                                             |  |      |         |  |      |  |         |      |  |  |         | 
| deposits from banks                                                              |  |      | 9,809  |  |      |  | 10,312 |      |  |  | 11,825 | 
| loans and advances to banks                                                      |  |      | 7,317   |  |      |  | 8,870   |      |  |  | 9,789   | 
|                                                                                   |  |      |         |  |      |  |         |      |  |  |         | 
|                                                                                   |  |      | 2,492  |  |      |  | 1,442  |      |  |  | 2,036  | 
|Not included in cash and cash equivalents:                                         |  |      |         |  |      |  |         |      |  |  |         | 
| deposits from banks                                                              |  |      | 22,155 |  |      |  | 23,501 |      |  |  | 18,174 | 
| loans and advances to banks                                                      |  |      | 21,541  |  |      |  | 21,118  |      |  |  | 27,330  | 
|                                                                                   |  |      |         |  |      |  |         |      |  |  |         | 
|                                                                                   |  |      | 614    |  |      |  | 2,383  |      |  |  | 9,156   | 
|Total as included in the statement of financial position:                          |  |      |         |  |      |  |         |      |  |  |         | 
| deposits from banks                                                              |  |      | 31,964 |  |      |  | 33,813 |      |  |  | 29,999 | 
| loans and advances to banks                                                      |  |      | 28,858  |  |      |  | 29,988  |      |  |  | 37,119  | 
|                                                                                   |  |      |         |  |      |  |         |      |  |  |         | 
|                                                                                   |  |      | 3,106  |  |      |  | 3,825  |      |  |  | 7,120   | 
|                                                                                   |  |      |         |  |      |  |         |      |  |  |         | 

Cash and cash equivalents includes deposits from banks and loans and advances to banks that are on demand.

Included in Cash and cash equivalents, are minimum mandatory reserve deposits to be held with various central banks. Reference is made to Note 41 Assets not
freely disposable for restrictions on Cash and balances with central banks.

ING Groups risk management (including liquidity) is explained in the
section Risk management  Funding and liquidity risk.

Segment reporting

33 Segments

a. General

ING Groups segments are based on the internal reporting structures by lines of business.

The Executive Board of ING Group and the Management Board of ING Bank set the performance targets, approve and monitor the budgets prepared by the business lines.
Business lines formulate strategic, commercial, and financial policy in conformity with the strategy and performance targets set by the Executive Board of ING Group and the Management Board of ING Bank.

Recognition and measurement of segment results are in line with the accounting policies as described in Note 1 Accounting policies. Corporate expenses are
allocated to business lines based on time spent by head office personnel, the relative number of staff, or on the basis of income, expenses and/or assets of the segment.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-76 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The following table specifies the segments by line of business and the main sources of income of each of the segments:



|                                                                                        |  |                                                                                                                                                                                                                                                           
|--------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Specification of the main sources of income of each of the segments by line of business
|Segments of the Banking results by line of business                                     |  | Main source of income                                                                                                                                                                                                                                     
|Retail Netherlands (Market Leaders)                                                     |  | Income from retail and private banking activities in the Netherlands, including the SME and mid-corporate segments. The main products offered are current and savings accounts, business
lending, mortgages and other consumer lending in the Netherlands.
|                                                                                        | 
|Retail Belgium (Market Leaders)                                                         |  | Income from retail and private banking activities in Belgium, including the SME and mid-corporate segments. The main products offered are similar to those in the Netherlands.                                                                            
|                                                                                        | 
|Retail Germany (Challengers and Growth Markets)                                         |  | Income from retail and private banking activities in Germany. The main products offered are current and savings accounts, mortgages and other customer lending.                                                                                           
|                                                                                        | 
|Retail Other (Challengers and Growth Markets)                                           |  | Income from retail banking activities in the rest of the world, including the SME and mid-corporate segments in specific countries. The main products offered are similar to those in the
Netherlands.                                                    
|                                                                                        | 
|Wholesale Banking                                                                       |  | Income from wholesale banking activities (a full range of products is offered from cash management to corporate finance), real estate and le ase.                                                                                                         

As of 1 January 2016, Czech Republic, previously fully reported within Wholesale Banking is now segmented to both Retail and
Wholesale Banking. The presentation of previously reported underlying profit or loss amounts has been adjusted to reflect this change.

The geographical segments
for the Banking results are presented on page F-82.



|                                       |  |                                                                                          
|-------------------------------------- |  | -----------------------------------------------------------------------------------------
|Specification of geographical segments |  |                                                                                          
|Geographical segments                  |  | Main countries                                                                           
|Netherlands                            |  |                                                                                          
|                                       | 
|Belgium                                |  | Including Luxembourg                                                                     
|                                       | 
|Germany                                |  | Including Austria                                                                        
|                                       | 
|Other Challengers                      |  | Australia, France, Italy, Spain, Portugal, Czech Republic and UK Legacy run-off portfolio
|                                       | 
|Growth Markets                         |  | Poland, Romania, Turkey and Asian bank stakes                                            
|                                       | 
|Wholesale Banking Rest of World        |  | UK, Americas, Asia and other countries in Central and Eastern Europe                     
|                                       | 
|Other                                  |  | Corporate Line Banking and the run-off portfolio of Real Estate                          

ING Group evaluates the results of its banking segments using a financial performance measure called underlying result. Underlying
result is used to monitor the performance of ING Group at a consolidated level and by segment. The Executive Board and Management Board of ING Bank consider this measure to be relevant to an understanding of the Groups financial performance,
because it allows investors to understand the primary method used by management to evaluate the Groups operating performance and make decisions about allocating resources. In addition, ING Group believes that the presentation of underlying net
result helps investors compare its segment performance on a meaningful basis by highlighting result before tax attributable to ongoing operations and the underlying profitability of the segment businesses. Underlying result is derived by excluding
from IFRS the following: special items; the impact of divestments and Legacy Insurance.

Special items include items of income or expense that are significant and
arise from events or transactions that are clearly distinct from the regular operating activities. Disclosures on comparative periods also reflect the impact of current periods divestments. Legacy Insurance consists of the intercompany
eliminations between ING Bank and NN Group until deconsolidation at the end of May 2015, the results from Insurance Other and the results from discontinued operations. Insurance Other reflects (former) insurance related activities that are not part
of the discontinued operations.

In addition to the segments by business line as described above, ING Group reconciles the total segment results to the total result
of Banking using Corporate Line Banking. The Corporate Line Banking is a reflection of capital management activities and certain expenses that are not allocated to the banking businesses. ING Group applies a system of capital charging for its
banking operations in order to create a comparable basis for the results of business units globally, irrespective of the business units book equity and the currency they operate in.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-77 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Underlying result as presented below is a non-GAAP financial measure and is not
a measure of financial performance under IFRS. Because underlying result is not determined in accordance with IFRS, underlying result as presented by ING may not be comparable to other similarly titled measures of performance of other companies. The
underlying result of INGs segments is reconciled to the Net result as reported in the IFRS Consolidated statement of profit or loss below. The information presented in this note is in line with the information presented to the Executive Board
and Management Board of ING Bank N.V.

This note does not provide information on the revenue specified to each product or service as this is not reported internally
and is therefore not readily available.

b. ING Group



|                                                            |  |              |        |  |               |  |     |               |  |  |                  |  |  |       |     |  |  |  |        | 
|----------------------------------------------------------- |  | ------------ | ------ |  | ------------- |  | --- | ------------- |  |  | ---------------- |  |  | ----- | --- |  |  |  | ------ | 
|ING Group Total                                             |  |              |        |  |               |  |     |               |  |  |                  |  |  |       |    
|2016                                                        |  | INGBank N.V. |        |  | OtherBanking1 |  |     | Total Banking |  |  | Legacy Insurance |  |  | Total |    
|Underlying income                                           |  |              |        |  |               |  |     |               |  |  |                  |  |  |       |     |  |  |  |        | 
| Net interest income                                       |  |              | 13,317 |  |               |  | 76 |               |  |  | 13,241           |  |  |       |     |  |  |  | 13,241 | 
| Net commission income                                     |  |              | 2,434  |  |               |  |     |               |  |  | 2,433            |  |  |       |     |  |  |  | 2,433  | 
| Total investment and other income                         |  |              | 2,174  |  |               |  | 21  |               |  |  | 2,196            |  |  |       |     |  |  |  | 2,196  | 
|                                                            |  |              |        |  |               |  |     |               |  |  |                  |  |  |       |     |  |  |  |        | 
|Total underlying income                                     |  |              | 17,925 |  |               |  | 56 |               |  |  | 17,869           |  |  |       |     |  |  |  | 17,869 | 
|Underlying expenditure                                      |  |              |        |  |               |  |     |               |  |  |                  |  |  |       |     |  |  |  |        | 
| Operating expenses                                        |  |              | 9,445  |  |               |  | 11  |               |  |  | 9,456            |  |  |       |     |  |  |  | 9,456  | 
| Additions to loan loss provision                          |  |              | 974    |  |               |  |     |               |  |  | 974              |  |  |       |     |  |  |  | 974    | 
|                                                            |  |              |        |  |               |  |     |               |  |  |                  |  |  |       |     |  |  |  |        | 
|Total underlying expenses                                   |  |              | 10,419 |  |               |  | 11  |               |  |  | 10,430           |  |  |       |     |  |  |  | 10,430 | 
|                                                            |  |              |        |  |               |  |     |               |  |  |                  |  |  |       |     |  |  |  |        | 
|Underlying result before taxation                           |  |              | 7,506  |  |               |  | 67 |               |  |  | 7,439            |  |  |       |     |  |  |  | 7,439  | 
|Taxation                                                    |  |              | 2,080  |  |               |  | 17 |               |  |  | 2,064            |  |  |       |     |  |  |  | 2,064  | 
|Non-controlling interests                                   |  |              | 75     |  |               |  |     |               |  |  | 75               |  |  |       |     |  |  |  | 75     | 
|                                                            |  |              |        |  |               |  |     |               |  |  |                  |  |  |       |     |  |  |  |        | 
|Underlying net result                                       |  |              | 5,350  |  |               |  | 50 |               |  |  | 5,300            |  |  |       |     |  |  |  | 5,300  | 
|Divestments                                                 |  |              |        |  |               |  |     |               |  |  |                  |  |  |       |     |  |  |  |        | 
|Special items2                                              |  |              | 799   |  |               |  |     |               |  |  | 799             |  |  |       |     |  |  |  | 799   | 
|Insurance Other3                                            |  |              |        |  |               |  |     |               |  |  |                  |  |  |       | 33  |  |  |  | 33     | 
|                                                            |  |              |        |  |               |  |     |               |  |  |                  |  |  |       |     |  |  |  |        | 
|Net result IFRS (continuing operations)                     |  |              | 4,551  |  |               |  | 50 |               |  |  | 4,501            |  |  |       | 33  |  |  |  | 4,534  | 
|Total net result from discontinued operations NN Group      |  |              |        |  |               |  |     |               |  |  |                  |  |  |       | 441 |  |  |  | 441    | 
|                                                            |  |              |        |  |               |  |     |               |  |  |                  |  |  |       |     |  |  |  |        | 
|Net result IFRS attributable to equity holder of the parent |  |              | 4,551  |  |               |  | 50 |               |  |  | 4,501            |  |  |       | 474 |  |  |  | 4,975  | 
|                                                            |  |              |        |  |               |  |     |               |  |  |                  |  |  |       |     |  |  |  |        | 



|1 | Comprises for the most part the funding charges of ING Groep N.V. (Holding).
|- | ----------------------------------------------------------------------------

|2 | Special items in 2016 primarily comprise restructuring charges and impairments related to the intended digital transformation programmes as announced on INGs Investor Day on 3 October 2016.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3 | Insurance Other comprises mainly the net result relating to warrants on the shares of Voya Financial and NN Group.
|- | ------------------------------------------------------------------------------------------------------------------



|                                                                           |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  |       | 
|-------------------------------------------------------------------------- |  | ------ | ------ |  | -------- |  | ------ | -------- |  |  | ------------------------ |  |  | ----------- | -- |  |  |  | ----- | 
|Reconciliation between Underlying and IFRS income, expenses and net result | 
|2016                                                                       |  | Income |        |  | Expenses |  |        | Taxation |  |  | Non-Controllinginterests |  |  | Net result1 |   
|Underlying                                                                 |  |        | 17,869 |  |          |  | 10,430 |          |  |  | 2,064                    |  |  |             | 75 |  |  |  | 5,300 | 
|Divestments                                                                |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  |       | 
|Special items2                                                             |  |        |        |  |          |  | 1,157  |          |  |  | 358                     |  |  |             |    |  |  |  | 799  | 
|Insurance Other                                                            |  |        | 33     |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  | 33    | 
|                                                                           |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  |       | 
|IFRS (continuing operations)                                               |  |        | 17,902 |  |          |  | 11,588 |          |  |  | 1,705                    |  |  |             | 75 |  |  |  | 4,534 | 
|Total net result from discontinued operations                              |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  | 441   | 
|                                                                           |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  |       | 
|Net result IFRS attributable to equity holder of the parent                |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  | 4,975 | 
|                                                                           |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  |       | 



|1 | Net result, after tax and non-controlling interests.
|- | ----------------------------------------------------

|2 | Special items in 2016 primarily comprise restructuring charges and impairments related to the intended digital transformation programmes as announced on INGs Investor Day on 3 October 2016.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-78 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







For information on discontinued operations, reference is made to Note 28 Discontinued operations.



|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |      |  |  |  |        | 
|----------------------------------------------------------- |  | ------------ | ------ |  | ------------- |  | ---- | ------------- |  |  | ---------------- |  |  | ----- | ---- |  |  |  | ------ | 
|ING Group Total                                             |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |     
|2015                                                        |  | INGBank N.V. |        |  | OtherBanking1 |  |      | Total Banking |  |  | Legacy Insurance |  |  | Total |     
|Underlying income                                           |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |      |  |  |  |        | 
| Net interest income                                       |  |              | 12,744 |  |               |  | 154 |               |  |  | 12,590           |  |  |       |      |  |  |  | 12,590 | 
| Net commission income                                     |  |              | 2,320  |  |               |  |      |               |  |  | 2,320            |  |  |       |      |  |  |  | 2,320  | 
| Total investment and other income                         |  |              | 2,800  |  |               |  | 3    |               |  |  | 2,803            |  |  |       |      |  |  |  | 2,803  | 
|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |      |  |  |  |        | 
|Total underlying income                                     |  |              | 17,864 |  |               |  | 151 |               |  |  | 17,713           |  |  |       |      |  |  |  | 17,713 | 
|Underlying expenditure                                      |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |      |  |  |  |        | 
| Operating expenses                                        |  |              | 9,231  |  |               |  | 15   |               |  |  | 9,246            |  |  |       |      |  |  |  | 9,246  | 
| Additions to loan loss provision                          |  |              | 1,347  |  |               |  |      |               |  |  | 1,347            |  |  |       |      |  |  |  | 1,347  | 
|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |      |  |  |  |        | 
|Total underlying expenses                                   |  |              | 10,578 |  |               |  | 15   |               |  |  | 10,593           |  |  |       |      |  |  |  | 10,593 | 
|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |      |  |  |  |        | 
|Underlying result before taxation                           |  |              | 7,286  |  |               |  | 166 |               |  |  | 7,120            |  |  |       |      |  |  |  | 7,120  | 
|Taxation                                                    |  |              | 1,988  |  |               |  | 35  |               |  |  | 1,953            |  |  |       |      |  |  |  | 1,953  | 
|Non-controlling interests                                   |  |              | 72     |  |               |  |      |               |  |  | 72               |  |  |       |      |  |  |  | 72     | 
|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |      |  |  |  |        | 
|Underlying net result                                       |  |              | 5,226  |  |               |  | 131 |               |  |  | 5,095            |  |  |       |      |  |  |  | 5,095  | 
|Divestments2                                                |  |              | 367    |  |               |  |      |               |  |  | 367              |  |  |       |      |  |  |  | 367    | 
|Special items3                                              |  |              | 58    |  |               |  |      |               |  |  | 58              |  |  |       |      |  |  |  | 58    | 
|Intercompany eliminations between ING Bank and NN
Group4    |  |              |        |  |               |  |      |               |  |  |                  |  |  |       | 20  |  |  |  | 20    | 
|Insurance Other5                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       | 42  |  |  |  | 42    | 
|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |      |  |  |  |        | 
|Net result IFRS (continuing operations)                     |  |              | 5,535  |  |               |  | 131 |               |  |  | 5,404            |  |  |       | 63  |  |  |  | 5,341  | 
|Total net result from discontinued operations NN Group      |  |              |        |  |               |  |      |               |  |  |                  |  |  |       | 738 |  |  |  | 738   | 
|Total net result from discontinued operations Voya          |  |              |        |  |               |  |      |               |  |  |                  |  |  |       | 323  |  |  |  | 323    | 
|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |      |  |  |  |        | 
|Net result IFRS attributable to equity holder of the parent |  |              | 5,535  |  |               |  | 131 |               |  |  | 5,404            |  |  |       | 477 |  |  |  | 4,926  | 
|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |      |  |  |  |        | 



|1 | Comprised for the most part the funding charges of ING Groep N.V. (Holding).
|- | ----------------------------------------------------------------------------

|2 | Divestments in 2015 reflected the result from the merger between ING Vysya and Kotak Mahindra Bank.
|- | ---------------------------------------------------------------------------------------------------

|3 | Special items in 2015 comprised additional charges related to previously announced restructuring programmes in Retail Netherlands.
|- | ----------------------------------------------------------------------------------------------------------------------------------

|4 | Intercompany eliminations between ING Bank and NN Group, prior to deconsolidation at the end of May 2015.
|- | ---------------------------------------------------------------------------------------------------------

|5 | Insurance Other comprised mainly the net result relating to warrants on the shares of Voya Financial and NN Group.
|- | ------------------------------------------------------------------------------------------------------------------



|                                                                           |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  |       | 
|-------------------------------------------------------------------------- |  | ------ | ------ |  | -------- |  | ------ | -------- |  |  | ------------------------ |  |  | ----------- | -- |  |  |  | ----- | 
|Reconciliation between Underlying and IFRS income, expenses and net result | 
|2015                                                                       |  | Income |        |  | Expenses |  |        | Taxation |  |  | Non-Controllinginterests |  |  | Net result1 |   
|Underlying                                                                 |  |        | 17,713 |  |          |  | 10,593 |          |  |  | 1,953                    |  |  |             | 72 |  |  |  | 5,095 | 
|Divestments                                                                |  |        | 367    |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  | 367   | 
|Special items                                                              |  |        |        |  |          |  | 77     |          |  |  | 19                      |  |  |             |    |  |  |  | 58   | 
|Intercompany eliminations between ING Bank and NN Group                    |  |        | 28    |  |          |  | 1     |          |  |  | 7                       |  |  |             |    |  |  |  | 20   | 
|Insurance Other                                                            |  |        | 45    |  |          |  | 4      |          |  |  | 5                       |  |  |             | 2 |  |  |  | 42   | 
|                                                                           |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  |       | 
|IFRS (continuing operations)                                               |  |        | 18,007 |  |          |  | 10,673 |          |  |  | 1,924                    |  |  |             | 69 |  |  |  | 5,341 | 
|Total net result from discontinued operations                              |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  | 415  | 
|                                                                           |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  |       | 
|Net result IFRS attributable to equity holder of the parent                |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  | 4,926 | 
|                                                                           |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  |       | 



|1 | Net result, after tax and non-controlling interests.
|- | ----------------------------------------------------

For information on
discontinued operations, reference is made to Note 28 Discontinued operations.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-79 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |        |  |  |  |        | 
|----------------------------------------------------------- |  | ------------ | ------ |  | ------------- |  | ---- | ------------- |  |  | ---------------- |  |  | ----- | ------ |  |  |  | ------ | 
|ING Group Total                                             |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |       
|2014                                                        |  | INGBank N.V. |        |  | OtherBanking1 |  |      | Total Banking |  |  | Legacy Insurance |  |  | Total |       
|Underlying income                                           |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |        |  |  |  |        | 
| Net interest income                                       |  |              | 12,606 |  |               |  | 230 |               |  |  | 12,376           |  |  |       |        |  |  |  | 12,376 | 
| Net commission income                                     |  |              | 2,290  |  |               |  |      |               |  |  | 2,290            |  |  |       |        |  |  |  | 2,290  | 
| Total investment and other income                         |  |              | 228    |  |               |  | 56   |               |  |  | 285              |  |  |       |        |  |  |  | 285    | 
|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |        |  |  |  |        | 
|Total underlying income                                     |  |              | 15,125 |  |               |  | 175 |               |  |  | 14,951           |  |  |       |        |  |  |  | 14,951 | 
|Underlying expenditure                                      |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |        |  |  |  |        | 
| Operating expenses                                        |  |              | 8,965  |  |               |  | 14   |               |  |  | 8,979            |  |  |       |        |  |  |  | 8,979  | 
| Additions to loan loss provision                          |  |              | 1,594  |  |               |  |      |               |  |  | 1,594            |  |  |       |        |  |  |  | 1,594  | 
|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |        |  |  |  |        | 
|Total underlying expenses                                   |  |              | 10,559 |  |               |  | 14   |               |  |  | 10,573           |  |  |       |        |  |  |  | 10,573 | 
|Underlying result before taxation                           |  |              | 4,567  |  |               |  | 189 |               |  |  | 4,378            |  |  |       |        |  |  |  | 4,378  | 
|Taxation                                                    |  |              | 1,158  |  |               |  | 50  |               |  |  | 1,108            |  |  |       |        |  |  |  | 1,108  | 
|Non-controlling interests                                   |  |              | 79     |  |               |  |      |               |  |  | 79               |  |  |       |        |  |  |  | 79     | 
|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |        |  |  |  |        | 
|Underlying net result                                       |  |              | 3,329  |  |               |  | 138 |               |  |  | 3,191            |  |  |       |        |  |  |  | 3,191  | 
|Divestments2                                                |  |              | 202    |  |               |  |      |               |  |  | 202              |  |  |       |        |  |  |  | 202    | 
|Special items3                                              |  |              | 1,021 |  |               |  |      |               |  |  | 1,021           |  |  |       |        |  |  |  | 1,021 | 
|Intercompany eliminations between ING Bank and NN Group     |  |              |        |  |               |  |      |               |  |  |                  |  |  |       | 55    |  |  |  | 55    | 
|Insurance Other4                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       | 107    |  |  |  | 107    | 
|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |        |  |  |  |        | 
|Net result IFRS (continuing operations)                     |  |              | 2,511  |  |               |  | 138 |               |  |  | 2,373            |  |  |       | 52     |  |  |  | 2,423  | 
|Total net result from discontinued operations NN Group      |  |              |        |  |               |  |      |               |  |  |                  |  |  |       | 11     |  |  |  | 11     | 
|Total net result from discontinued operations Voya          |  |              |        |  |               |  |      |               |  |  |                  |  |  |       | 1,471 |  |  |  | 1,471 | 
|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |        |  |  |  |        | 
|Net result IFRS attributable to equity holder of the parent |  |              | 2,511  |  |               |  | 138 |               |  |  | 2,373            |  |  |       | 1,410 |  |  |  | 963    | 
|                                                            |  |              |        |  |               |  |      |               |  |  |                  |  |  |       |        |  |  |  |        | 



|1 | Comprised for the most part the funding charges of ING Groep N.V. (Holding).
|- | ----------------------------------------------------------------------------

|2 | Divestments in 2014 reflected the result on the deconsolidation of ING Vysya following changes to the governance structure.
|- | ---------------------------------------------------------------------------------------------------------------------------

|3 | Special items in 2014 included the impact (after tax) of the charges for making the Dutch Defined Benefit pension fund financially independent, the bank tax related to the SNS Reaal nationalisation and additional
charges related to the restructuring programmes in Retail Netherlands announced before 2013.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4 | Insurance Other comprised mainly the net result relating to warrants on the shares of Voya Financial and the net result on the sale of SulAmérica S.A.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                           |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  |        | 
|-------------------------------------------------------------------------- |  | ------ | ------ |  | -------- |  | ------ | -------- |  |  | ------------------------ |  |  | ----------- | -- |  |  |  | ------ | 
|Reconciliation between Underlying and IFRS income, expenses and net result | 
|2014                                                                       |  | Income |        |  | Expenses |  |        | Taxation |  |  | Non-Controllinginterests |  |  | Net result1 |   
|Underlying                                                                 |  |        | 14,951 |  |          |  | 10,573 |          |  |  | 1,108                    |  |  |             | 79 |  |  |  | 3,191  | 
|Divestments                                                                |  |        | 202    |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  | 202    | 
|Special items                                                              |  |        |        |  |          |  | 1,259  |          |  |  | 239                     |  |  |             |    |  |  |  | 1,021 | 
|Intercompany eliminations between ING Bank and NN Group                    |  |        | 70    |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  | 70    | 
|Insurance Other                                                            |  |        | 132    |  |          |  | 21     |          |  |  | 11                      |  |  |             |    |  |  |  | 121    | 
|                                                                           |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  |        | 
|IFRS (continuing operations)                                               |  |        | 15,214 |  |          |  | 11,853 |          |  |  | 859                      |  |  |             | 79 |  |  |  | 2,423  | 
|Total net result from discontinued operations                              |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  | 1,460 | 
|                                                                           |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  |        | 
|Net result IFRS attributable to equity holder of the parent                |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  | 963    | 
|                                                                           |  |        |        |  |          |  |        |          |  |  |                          |  |  |             |    |  |  |  |        | 



|1 | Net result, after tax and non-controlling interests.
|- | ----------------------------------------------------

For information on
discontinued operations, reference is made to Note 28 Discontinued operations.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-80 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







c. Banking activities



|                                     |  |                   |       |  |               |  |       |               |  |  |             |  |  |                  |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
|------------------------------------ |  | ----------------- | ----- |  | ------------- |  | ----- | ------------- |  |  | ----------- |  |  | ---------------- | ----- |  | --------------------- |  | ----- | ------------ |  |  | ---- |  |  |  | ------ | 
|Segments Banking by line of business | 
|2016                                 |  | RetailNetherlands |       |  | RetailBelgium |  |       | RetailGermany |  |  | RetailOther |  |  | WholesaleBanking |       |  | CorporateLine Banking |  |       | TotalBanking | 
|Underlying income                    |  |                   |       |  |               |  |       |               |  |  |             |  |  |                  |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
| Net interest income                |  |                   | 3,653 |  |               |  | 1,936 |               |  |  | 1,689       |  |  |                  | 2,107 |  |                       |  | 3,750 |              |  |  | 106  |  |  |  | 13,241 | 
| Net commission income              |  |                   | 546   |  |               |  | 385   |               |  |  | 183         |  |  |                  | 320   |  |                       |  | 1,003 |              |  |  | 3   |  |  |  | 2,433  | 
| Total investment and other income  |  |                   | 237   |  |               |  | 253   |               |  |  | 51          |  |  |                  | 432   |  |                       |  | 1,266 |              |  |  | 44  |  |  |  | 2,196  | 
|                                     |  |                   |       |  |               |  |       |               |  |  |             |  |  |                  |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
|Total underlying income              |  |                   | 4,436 |  |               |  | 2,573 |               |  |  | 1,923       |  |  |                  | 2,859 |  |                       |  | 6,019 |              |  |  | 59   |  |  |  | 17,869 | 
|Underlying expenditure               |  |                   |       |  |               |  |       |               |  |  |             |  |  |                  |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
| Operating expenses                 |  |                   | 2,560 |  |               |  | 1,438 |               |  |  | 886         |  |  |                  | 1,723 |  |                       |  | 2,572 |              |  |  | 278  |  |  |  | 9,456  | 
| Additions to loan loss provision   |  |                   | 171   |  |               |  | 175   |               |  |  | 18         |  |  |                  | 278   |  |                       |  | 368   |              |  |  |      |  |  |  | 974    | 
|                                     |  |                   |       |  |               |  |       |               |  |  |             |  |  |                  |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
|Total underlying expenses            |  |                   | 2,731 |  |               |  | 1,613 |               |  |  | 868         |  |  |                  | 2,001 |  |                       |  | 2,940 |              |  |  | 278  |  |  |  | 10,430 | 
|                                     |  |                   |       |  |               |  |       |               |  |  |             |  |  |                  |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
|Underlying result before taxation    |  |                   | 1,705 |  |               |  | 961   |               |  |  | 1,055       |  |  |                  | 858   |  |                       |  | 3,079 |              |  |  | 219 |  |  |  | 7,439  | 
|Taxation                             |  |                   | 422   |  |               |  | 306   |               |  |  | 315         |  |  |                  | 178   |  |                       |  | 840   |              |  |  | 2    |  |  |  | 2,064  | 
|Non-controlling interests            |  |                   |       |  |               |  | 1     |               |  |  | 2           |  |  |                  | 60    |  |                       |  | 11    |              |  |  |      |  |  |  | 75     | 
|                                     |  |                   |       |  |               |  |       |               |  |  |             |  |  |                  |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
|Underlying net result                |  |                   | 1,282 |  |               |  | 653   |               |  |  | 738         |  |  |                  | 620   |  |                       |  | 2,227 |              |  |  | 221 |  |  |  | 5,300  | 
|Divestments                          |  |                   |       |  |               |  |       |               |  |  |             |  |  |                  |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
|Special items                        |  |                   | 192  |  |               |  | 418  |               |  |  |             |  |  |                  | 12   |  |                       |  | 149  |              |  |  | 27  |  |  |  | 799   | 
|                                     |  |                   |       |  |               |  |       |               |  |  |             |  |  |                  |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
|Net result IFRS                      |  |                   | 1,090 |  |               |  | 235   |               |  |  | 738         |  |  |                  | 608   |  |                       |  | 2,078 |              |  |  | 248 |  |  |  | 4,501  | 
|                                     |  |                   |       |  |               |  |       |               |  |  |             |  |  |                  |       |  |                       |  |       |              |  |  |      |  |  |  |        | 



|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
|------------------------------------ |  | ----------------- | ----- |  | ------------- |  | ----- | ------------- |  |  | ------------ |  |  | ----------------- | ----- |  | --------------------- |  | ----- | ------------ |  |  | ---- |  |  |  | ------ | 
|Segments Banking by line of business | 
|2015                                 |  | RetailNetherlands |       |  | RetailBelgium |  |       | RetailGermany |  |  | RetailOther1 |  |  | WholesaleBanking1 |       |  | CorporateLine Banking |  |       | TotalBanking | 
|Underlying income                    |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
| Net interest income                |  |                   | 3,683 |  |               |  | 1,953 |               |  |  | 1,634        |  |  |                   | 1,935 |  |                       |  | 3,538 |              |  |  | 153 |  |  |  | 12,590 | 
| Net commission income              |  |                   | 515   |  |               |  | 397   |               |  |  | 172          |  |  |                   | 278   |  |                       |  | 962   |              |  |  | 4   |  |  |  | 2,320  | 
| Total investment and other income  |  |                   | 205   |  |               |  | 195   |               |  |  | 104          |  |  |                   | 195   |  |                       |  | 2,231 |              |  |  | 127 |  |  |  | 2,803  | 
|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
|Total underlying income              |  |                   | 4,403 |  |               |  | 2,546 |               |  |  | 1,910        |  |  |                   | 2,408 |  |                       |  | 6,731 |              |  |  | 285 |  |  |  | 17,713 | 
|Underlying expenditure               |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
| Operating expenses                 |  |                   | 2,475 |  |               |  | 1,532 |               |  |  | 842          |  |  |                   | 1,594 |  |                       |  | 2,559 |              |  |  | 245  |  |  |  | 9,246  | 
| Additions to loan loss provision   |  |                   | 433   |  |               |  | 169   |               |  |  | 57           |  |  |                   | 210   |  |                       |  | 478   |              |  |  |      |  |  |  | 1,347  | 
|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
|Total underlying expenses            |  |                   | 2,908 |  |               |  | 1,701 |               |  |  | 899          |  |  |                   | 1,804 |  |                       |  | 3,036 |              |  |  | 245  |  |  |  | 10,593 | 
|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
|Underlying result before taxation    |  |                   | 1,495 |  |               |  | 845   |               |  |  | 1,012        |  |  |                   | 604   |  |                       |  | 3,694 |              |  |  | 530 |  |  |  | 7,120  | 
|Taxation                             |  |                   | 391   |  |               |  | 255   |               |  |  | 328          |  |  |                   | 142   |  |                       |  | 961   |              |  |  | 125 |  |  |  | 1,953  | 
|Non-controlling interests            |  |                   |       |  |               |  | 6     |               |  |  | 2            |  |  |                   | 48    |  |                       |  | 16    |              |  |  |      |  |  |  | 72     | 
|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
|Underlying net result                |  |                   | 1,104 |  |               |  | 583   |               |  |  | 681          |  |  |                   | 414   |  |                       |  | 2,717 |              |  |  | 404 |  |  |  | 5,095  | 
|Divestments                          |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   | 367   |  |                       |  |       |              |  |  |      |  |  |  | 367    | 
|Special items                        |  |                   | 58   |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |      |  |  |  | 58    | 
|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |      |  |  |  |        | 
|Net result IFRS                      |  |                   | 1,046 |  |               |  | 583   |               |  |  | 681          |  |  |                   | 781   |  |                       |  | 2,717 |              |  |  | 404 |  |  |  | 5,404  | 
|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |      |  |  |  |        | 



|1 | Amounts are adjusted for comparison purposes. Czech Republic, previously fully reported within Wholesale Banking is now segmented to both Retail and Wholesale Banking.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-81 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |        |  |  |  |        | 
|------------------------------------ |  | ----------------- | ----- |  | ------------- |  | ----- | ------------- |  |  | ------------ |  |  | ----------------- | ----- |  | --------------------- |  | ----- | ------------ |  |  | ------ |  |  |  | ------ | 
|Segments Banking by line of business | 
|2014                                 |  | RetailNetherlands |       |  | RetailBelgium |  |       | RetailGermany |  |  | RetailOther1 |  |  | WholesaleBanking1 |       |  | CorporateLine Banking |  |       | TotalBanking | 
|Underlying income                    |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |        |  |  |  |        | 
| Net interest income                |  |                   | 3,778 |  |               |  | 1,998 |               |  |  | 1,500        |  |  |                   | 1,832 |  |                       |  | 3,508 |              |  |  | 240   |  |  |  | 12,376 | 
| Net commission income              |  |                   | 464   |  |               |  | 376   |               |  |  | 143          |  |  |                   | 331   |  |                       |  | 979   |              |  |  | 2     |  |  |  | 2,290  | 
| Total investment and other income  |  |                   | 87    |  |               |  | 243   |               |  |  | 27          |  |  |                   | 197   |  |                       |  | 37    |              |  |  | 253   |  |  |  | 285    | 
|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |        |  |  |  |        | 
|Total underlying income              |  |                   | 4,330 |  |               |  | 2,617 |               |  |  | 1,615        |  |  |                   | 2,359 |  |                       |  | 4,525 |              |  |  | 496   |  |  |  | 14,951 | 
|Underlying expenditure               |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |        |  |  |  |        | 
| Operating expenses                 |  |                   | 2,678 |  |               |  | 1,524 |               |  |  | 773          |  |  |                   | 1,496 |  |                       |  | 2,392 |              |  |  | 116    |  |  |  | 8,979  | 
| Additions to loan loss provision   |  |                   | 714   |  |               |  | 142   |               |  |  | 72           |  |  |                   | 165   |  |                       |  | 500   |              |  |  |        |  |  |  | 1,594  | 
|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |        |  |  |  |        | 
|Total underlying expenses            |  |                   | 3,392 |  |               |  | 1,667 |               |  |  | 845          |  |  |                   | 1,661 |  |                       |  | 2,893 |              |  |  | 116    |  |  |  | 10,573 | 
|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |        |  |  |  |        | 
|Underlying result before taxation    |  |                   | 938   |  |               |  | 951   |               |  |  | 771          |  |  |                   | 698   |  |                       |  | 1,632 |              |  |  | 611   |  |  |  | 4,378  | 
|Taxation                             |  |                   | 243   |  |               |  | 256   |               |  |  | 230          |  |  |                   | 140   |  |                       |  | 357   |              |  |  | 117   |  |  |  | 1,108  | 
|Non-controlling interests            |  |                   |       |  |               |  | 1     |               |  |  | 1            |  |  |                   | 51    |  |                       |  | 26    |              |  |  |        |  |  |  | 79     | 
|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |        |  |  |  |        | 
|Underlying net result                |  |                   | 694   |  |               |  | 693   |               |  |  | 540          |  |  |                   | 508   |  |                       |  | 1,250 |              |  |  | 494   |  |  |  | 3,191  | 
|Divestments                          |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   | 202   |  |                       |  |       |              |  |  |        |  |  |  | 202    | 
|Special items                        |  |                   | 63   |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  | 957   |  |  |  | 1,021 | 
|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |        |  |  |  |        | 
|Net result IFRS                      |  |                   | 631   |  |               |  | 693   |               |  |  | 540          |  |  |                   | 710   |  |                       |  | 1,250 |              |  |  | 1,451 |  |  |  | 2,373  | 
|                                     |  |                   |       |  |               |  |       |               |  |  |              |  |  |                   |       |  |                       |  |       |              |  |  |        |  |  |  |        | 



|1 | Amounts are adjusted for comparison purposes. Czech Republic, previously fully reported within Wholesale Banking is now segmented to both Retail and Wholesale Banking.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                    |  |             |       |  |         |  |       |         |  |  |                  |  |  |               |       |  |                              |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
|----------------------------------- |  | ----------- | ----- |  | ------- |  | ----- | ------- |  |  | ---------------- |  |  | ------------- | ----- |  | ---------------------------- |  | ----- | ----- |  |  | ------------ |  |  |  | ---- |  |  |  | ------ | 
|Geographical segments Banking       | 
|2016                                |  | Netherlands |       |  | Belgium |  |       | Germany |  |  | OtherChallengers |  |  | GrowthMarkets |       |  | WholesaleBankingRest ofWorld |  |       | Other |  |  | TotalBanking | 
|Underlying income                   |  |             |       |  |         |  |       |         |  |  |                  |  |  |               |       |  |                              |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
| Net interest income               |  |             | 4,699 |  |         |  | 2,183 |         |  |  | 2,025            |  |  |               | 1,373 |  |                              |  | 1,274 |       |  |  | 1,579        |  |  |  | 107  |  |  |  | 13,241 | 
| Net commission income             |  |             | 779   |  |         |  | 482   |         |  |  | 241              |  |  |               | 171   |  |                              |  | 309   |       |  |  | 452          |  |  |  | 2   |  |  |  | 2,433  | 
| Total investment and other income |  |             | 967   |  |         |  | 462   |         |  |  | 21              |  |  |               | 136   |  |                              |  | 460   |       |  |  | 202          |  |  |  | 12  |  |  |  | 2,196  | 
|                                    |  |             |       |  |         |  |       |         |  |  |                  |  |  |               |       |  |                              |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
|Total underlying income             |  |             | 6,445 |  |         |  | 3,128 |         |  |  | 2,245            |  |  |               | 1,681 |  |                              |  | 2,043 |       |  |  | 2,233        |  |  |  | 94   |  |  |  | 17,869 | 
|Underlying expenditure              |  |             |       |  |         |  |       |         |  |  |                  |  |  |               |       |  |                              |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
| Operating expenses                |  |             | 3,301 |  |         |  | 1,796 |         |  |  | 987              |  |  |               | 951   |  |                              |  | 1,103 |       |  |  | 1,029        |  |  |  | 290  |  |  |  | 9,456  | 
| Additions to loan loss provision  |  |             | 310   |  |         |  | 215   |         |  |  | 13              |  |  |               | 120   |  |                              |  | 240   |       |  |  | 103          |  |  |  |      |  |  |  | 974    | 
|Total underlying expenses           |  |             | 3,610 |  |         |  | 2,010 |         |  |  | 973              |  |  |               | 1,071 |  |                              |  | 1,343 |       |  |  | 1,132        |  |  |  | 290  |  |  |  | 10,430 | 
|                                    |  |             |       |  |         |  |       |         |  |  |                  |  |  |               |       |  |                              |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
|Underlying result before taxation   |  |             | 2,835 |  |         |  | 1,118 |         |  |  | 1,272            |  |  |               | 610   |  |                              |  | 700   |       |  |  | 1,101        |  |  |  | 197 |  |  |  | 7,439  | 
|                                    |  |             |       |  |         |  |       |         |  |  |                  |  |  |               |       |  |                              |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
|Taxation                            |  |             | 705   |  |         |  | 319   |         |  |  | 395              |  |  |               | 174   |  |                              |  | 125   |       |  |  | 335          |  |  |  | 10   |  |  |  | 2,064  | 
|Non-controlling interests           |  |             |       |  |         |  | 1     |         |  |  | 2                |  |  |               |       |  |                              |  | 71    |       |  |  |              |  |  |  |      |  |  |  | 75     | 
|                                    |  |             |       |  |         |  |       |         |  |  |                  |  |  |               |       |  |                              |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
|Underlying net result               |  |             | 2,130 |  |         |  | 797   |         |  |  | 875              |  |  |               | 436   |  |                              |  | 504   |       |  |  | 766          |  |  |  | 207 |  |  |  | 5,300  | 
|Divestments                         |  |             |       |  |         |  |       |         |  |  |                  |  |  |               |       |  |                              |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
|Special items                       |  |             | 268  |  |         |  | 491  |         |  |  |                  |  |  |               | 13   |  |                              |  |       |       |  |  |              |  |  |  | 27  |  |  |  | 799   | 
|                                    |  |             |       |  |         |  |       |         |  |  |                  |  |  |               |       |  |                              |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
|Net result IFRS                     |  |             | 1,863 |  |         |  | 306   |         |  |  | 875              |  |  |               | 423   |  |                              |  | 504   |       |  |  | 766          |  |  |  | 234 |  |  |  | 4,501  | 
|                                    |  |             |       |  |         |  |       |         |  |  |                  |  |  |               |       |  |                              |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-82 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
|----------------------------------- |  | ----------- | ----- |  | ------- |  | ----- | ------- |  |  | ----------------- |  |  | ------------- | ----- |  | ----------------------------- |  | ----- | ----- |  |  | ------------ |  |  |  | ---- |  |  |  | ------ | 
|Geographical segments Banking       | 
|2015                                |  | Netherlands |       |  | Belgium |  |       | Germany |  |  | OtherChallengers1 |  |  | GrowthMarkets |       |  | WholesaleBankingRest ofWorld1 |  |       | Other |  |  | TotalBanking | 
|Underlying income                   |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
| Net interest income               |  |             | 4,677 |  |         |  | 2,287 |         |  |  | 1,812             |  |  |               | 1,268 |  |                               |  | 1,147 |       |  |  | 1,551        |  |  |  | 153 |  |  |  | 12,590 | 
| Net commission income             |  |             | 754   |  |         |  | 497   |         |  |  | 215               |  |  |               | 156   |  |                               |  | 267   |       |  |  | 435          |  |  |  | 4   |  |  |  | 2,320  | 
| Total investment and other income |  |             | 1,428 |  |         |  | 402   |         |  |  | 83                |  |  |               | 14    |  |                               |  | 330   |       |  |  | 580          |  |  |  | 33  |  |  |  | 2,803  | 
|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
|Total underlying income             |  |             | 6,861 |  |         |  | 3,185 |         |  |  | 2,109             |  |  |               | 1,439 |  |                               |  | 1,743 |       |  |  | 2,566        |  |  |  | 189 |  |  |  | 17,713 | 
|Underlying expenditure              |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
| Operating expenses                |  |             | 3,220 |  |         |  | 1,943 |         |  |  | 917               |  |  |               | 840   |  |                               |  | 1,061 |       |  |  | 1,003        |  |  |  | 262  |  |  |  | 9,246  | 
| Additions to loan loss provision  |  |             | 654   |  |         |  | 166   |         |  |  | 77                |  |  |               | 99    |  |                               |  | 176   |       |  |  | 175          |  |  |  |      |  |  |  | 1,347  | 
|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
|Total underlying expenses           |  |             | 3,875 |  |         |  | 2,109 |         |  |  | 994               |  |  |               | 938   |  |                               |  | 1,237 |       |  |  | 1,178        |  |  |  | 262  |  |  |  | 10,593 | 
|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
|Underlying result before taxation   |  |             | 2,985 |  |         |  | 1,075 |         |  |  | 1,115             |  |  |               | 501   |  |                               |  | 506   |       |  |  | 1,387        |  |  |  | 451 |  |  |  | 7,120  | 
|Taxation                            |  |             | 779   |  |         |  | 304   |         |  |  | 370               |  |  |               | 172   |  |                               |  | 79    |       |  |  | 367          |  |  |  | 117 |  |  |  | 1,953  | 
|Non-controlling interests           |  |             |       |  |         |  | 6     |         |  |  | 2                 |  |  |               |       |  |                               |  | 64    |       |  |  |              |  |  |  |      |  |  |  | 72     | 
|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
|Underlying net result               |  |             | 2,206 |  |         |  | 765   |         |  |  | 743               |  |  |               | 329   |  |                               |  | 363   |       |  |  | 1,021        |  |  |  | 334 |  |  |  | 5,094  | 
|Divestments                         |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  | 367   |       |  |  |              |  |  |  |      |  |  |  | 367    | 
|Special items                       |  |             | 58   |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |      |  |  |  | 58    | 
|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 
|Net result IFRS                     |  |             | 2,148 |  |         |  | 765   |         |  |  | 743               |  |  |               | 329   |  |                               |  | 730   |       |  |  | 1,021        |  |  |  | 334 |  |  |  | 5,404  | 
|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |      |  |  |  |        | 



|1 | Amounts are adjusted for comparison purposes. Czech Republic, previously fully reported within Wholesale Banking Rest of the World is now reported under Other Challengers.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |        |  |  |  |        | 
|----------------------------------- |  | ----------- | ----- |  | ------- |  | ----- | ------- |  |  | ----------------- |  |  | ------------- | ----- |  | ----------------------------- |  | ----- | ----- |  |  | ------------ |  |  |  | ------ |  |  |  | ------ | 
|Geographical segments Banking       |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       | 
|2014                                |  | Netherlands |       |  | Belgium |  |       | Germany |  |  | OtherChallengers1 |  |  | GrowthMarkets |       |  | WholesaleBankingRest ofWorld1 |  |       | Other |  |  | TotalBanking | 
|Underlying income                   |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |        |  |  |  |        | 
| Net interest income               |  |             | 4,699 |  |         |  | 2,447 |         |  |  | 1,616             |  |  |               | 1,158 |  |                               |  | 1,072 |       |  |  | 1,625        |  |  |  | 241   |  |  |  | 12,376 | 
| Net commission income             |  |             | 730   |  |         |  | 464   |         |  |  | 171               |  |  |               | 148   |  |                               |  | 333   |       |  |  | 447          |  |  |  | 1     |  |  |  | 2,290  | 
| Total investment and other income |  |             | 20    |  |         |  | 34    |         |  |  | 17               |  |  |               | 96    |  |                               |  | 266   |       |  |  | 123          |  |  |  | 238   |  |  |  | 285    | 
|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |        |  |  |  |        | 
|Total underlying income             |  |             | 5,449 |  |         |  | 2,944 |         |  |  | 1,770             |  |  |               | 1,401 |  |                               |  | 1,671 |       |  |  | 2,194        |  |  |  | 479   |  |  |  | 14,951 | 
|Underlying expenditure              |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |        |  |  |  |        | 
| Operating expenses                |  |             | 3,403 |  |         |  | 1,931 |         |  |  | 837               |  |  |               | 723   |  |                               |  | 1,018 |       |  |  | 905          |  |  |  | 161    |  |  |  | 8,979  | 
| Additions to loan loss provision  |  |             | 947   |  |         |  | 146   |         |  |  | 67                |  |  |               | 185   |  |                               |  | 125   |       |  |  | 123          |  |  |  |        |  |  |  | 1,594  | 
|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |        |  |  |  |        | 
|Total underlying expenses           |  |             | 4,350 |  |         |  | 2,078 |         |  |  | 904               |  |  |               | 908   |  |                               |  | 1,143 |       |  |  | 1,028        |  |  |  | 161    |  |  |  | 10,573 | 
|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |        |  |  |  |        | 
|Underlying result before taxation   |  |             | 1,098 |  |         |  | 867   |         |  |  | 866               |  |  |               | 493   |  |                               |  | 528   |       |  |  | 1,166        |  |  |  | 641   |  |  |  | 4,378  | 
|Taxation                            |  |             | 272   |  |         |  | 191   |         |  |  | 266               |  |  |               | 141   |  |                               |  | 96    |       |  |  | 275          |  |  |  | 133   |  |  |  | 1,108  | 
|Non-controlling interests           |  |             |       |  |         |  | 2     |         |  |  | 1                 |  |  |               |       |  |                               |  | 77    |       |  |  |              |  |  |  |        |  |  |  | 79     | 
|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |        |  |  |  |        | 
|Underlying net result               |  |             | 827   |  |         |  | 674   |         |  |  | 599               |  |  |               | 352   |  |                               |  | 356   |       |  |  | 891          |  |  |  | 508   |  |  |  | 3,191  | 
|Divestments                         |  |             |       |  |         |  |       |         |  |  |                   |  |  |               | 2    |  |                               |  | 204   |       |  |  |              |  |  |  |        |  |  |  | 202    | 
|Special items                       |  |             | 63   |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  | 957   |  |  |  | 1,021 | 
|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |        |  |  |  |        | 
|Net result IFRS                     |  |             | 764   |  |         |  | 674   |         |  |  | 599               |  |  |               | 350   |  |                               |  | 560   |       |  |  | 891          |  |  |  | 1,465 |  |  |  | 2,373  | 
|                                    |  |             |       |  |         |  |       |         |  |  |                   |  |  |               |       |  |                               |  |       |       |  |  |              |  |  |  |        |  |  |  |        | 



|1 | Amounts are adjusted for comparison purposes. Czech Republic, previously fully reported within Wholesale Banking Rest of the World is now reported under Other Challengers.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-83 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







IFRS statements of financial position by segment are not reported internally to, and not managed by, the chief
operating decision maker.

34 Information on geographical areas

ING
Groups business lines operate in seven main geographical areas: the Netherlands, Belgium, Rest of Europe, North America, Latin America, Asia and Australia. A geographical area is a distinguishable component of the Group engaged in providing
products or services within a particular economic environment that is subject to risks and returns that are different from those of geographical areas operating in other economic environments. The geographical analyses are based on the location of
the office from which the transactions are originated. The Netherlands is ING Groups country of domicile.

The tables below provide additional information,
for the years 2016 and 2015 respectively, on names of principal subsidiaries and branches, nature of main activities and average number of employees on a full time equivalent basis by country.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-84 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                  |  |                      |  |                                |  |                                  |  |                                                      |        |  |             |  |        |             |  |  |                  |  |  |          |       |  |  |  |       | 
|--------------------------------- |  | -------------------- |  | ------------------------------ |  | -------------------------------- |  | ---------------------------------------------------- | ------ |  | ----------- |  | ------ | ----------- |  |  | ---------------- |  |  | -------- | ----- |  |  |  | ----- | 
|Additional information by country |  |                      |  |                                |  |                                  |  |                                                      |        |  |             |  |        |             |  |  |                 
|2016                              |  |                      |  |                                |  |                                  |  |                                                      |        |  |             |  |        |             |  |  |                  |  |  |          |       |  |  |  |       | 
|Geographicalarea                  |  | Country              |  | Name of
principal subsidiary   |  | Main activity                    |  | Averagenumber ofemployeesat full timeequivalentbasis |        |  | TotalIncome |  |        | Totalassets |  |  | Resultbefore tax |  |  | Taxation |      
|Netherlands                       |  | Netherlands          |  | ING Bank N.V.                  |  | Wholesale banking/Retail banking |  |                                                      | 13,660 |  |             |  | 6,367  |             |  |  | 292,255          |  |  |          | 1,941 |  |  |  | 493   | 
|Belgium                           |  | Belgium              |  | ING België N.V.                |  | Wholesale banking/Retail banking |  |                                                      | 9,348  |  |             |  | 3,057  |             |  |  | 131,431          |  |  |          | 457   |  |  |  | 109   | 
|                                  |  | Luxembourg           |  | ING Luxembourg S.A.            |  | Wholesale banking/Retail banking |  |                                                      | 793    |  |             |  | 274    |             |  |  | 10,783           |  |  |          | 138   |  |  |  | 32    | 
|Rest of Europe                    |  | Poland               |  | ING Bank Slaski S.A.           |  | Wholesale banking/Retail banking |  |                                                      | 8,735  |  |             |  | 992    |             |  |  | 26,581           |  |  |          | 379   |  |  |  | 90    | 
|                                  |  | Germany              |  | ING DiBa A.G.                  |  | Wholesale banking/Retail banking |  |                                                      | 4,341  |  |             |  | 2,117  |             |  |  | 134,902          |  |  |          | 1,187 |  |  |  | 377   | 
|                                  |  | Romania              |  | Branch of ING Bank N.V.        |  | Wholesale banking/Retail banking |  |                                                      | 1,806  |  |             |  | 288    |             |  |  | 5,456            |  |  |          | 123   |  |  |  | 21    | 
|                                  |  | Spain                |  | Branch of ING Bank N.V.        |  | Wholesale banking/Retail banking |  |                                                      | 1,116  |  |             |  | 498    |             |  |  | 23,309           |  |  |          | 197   |  |  |  | 51    | 
|                                  |  | Italy                |  | Branch of ING Bank N.V.        |  | Wholesale banking/Retail banking |  |                                                      | 833    |  |             |  | 376    |             |  |  | 15,920           |  |  |          | 100   |  |  |  | 33    | 
|                                  |  | UK                   |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 599    |  |             |  | 504    |             |  |  | 29,830           |  |  |          | 290   |  |  |  | 154   | 
|                                  |  | France1              |  | Branch of ING Bank N.V.        |  | Wholesale banking/Retail banking |  |                                                      | 613    |  |             |  | 280    |             |  |  | 8,614            |  |  |          | 56    |  |  |  | 18    | 
|                                  |  | Russia               |  | ING Bank (Eurasia) Z.A.O.      |  | Wholesale banking                |  |                                                      | 276    |  |             |  | 118    |             |  |  | 2,008            |  |  |          | 69    |  |  |  | 7     | 
|                                  |  | Czech Republic       |  | Branch of ING Bank N.V.        |  | Wholesale banking/Retail banking |  |                                                      | 220    |  |             |  | 77     |             |  |  | 3,653            |  |  |          | 40    |  |  |  | 8     | 
|                                  |  | Hungary              |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 152    |  |             |  | 37     |             |  |  | 1,358            |  |  |          | 1    |  |  |  | 3     | 
|                                  |  | Slovakia             |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 400    |  |             |  | 14     |             |  |  | 715              |  |  |          | 3     |  |  |  | 1     | 
|                                  |  | Ukraine              |  | PJSC ING Bank Ukraine          |  | Wholesale banking                |  |                                                      | 111    |  |             |  | 59     |             |  |  | 622              |  |  |          | 47    |  |  |  | 7     | 
|                                  |  | Austria              |  | Branch of ING DiBa A.G.        |  | Wholesale banking/Retail banking |  |                                                      | 196    |  |             |  | 86     |             |  |  | 360              |  |  |          | 37    |  |  |  | 4    | 
|                                  |  | Bulgaria             |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 76     |  |             |  | 9      |             |  |  | 274              |  |  |          |       |  |  |  |       | 
|                                  |  | Ireland              |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 42     |  |             |  | 53     |             |  |  | 1,910            |  |  |          | 54    |  |  |  | 7     | 
|                                  |  | Portugal             |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 11     |  |             |  | 14     |             |  |  | 642              |  |  |          | 10    |  |  |  | 3     | 
|                                  |  | Switzerland          |  | Branch of ING België N.V.      |  | Wholesale banking                |  |                                                      | 192    |  |             |  | 187    |             |  |  | 9,150            |  |  |          | 122   |  |  |  | 33    | 
|North America                     |  | Canada               |  | Belgian Overseas Agencies Ltd. |  | Wholesale banking                |  |                                                      |        |  |             |  |        |             |  |  | 1                |  |  |          |       |  |  |  |       | 
|                                  |  | USA                  |  | ING Financial Holdings         |  | Wholesale banking                |  |                                                      | 519    |  |             |  | 732    |             |  |  | 42,571           |  |  |          | 377   |  |  |  | 110   | 
|Latin America                     |  | Brazil               |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 70     |  |             |  | 43     |             |  |  | 2,097            |  |  |          | 13    |  |  |  |       | 
|                                  |  | Colombia             |  | ING Capital Colombia S.A.S.    |  | Wholesale banking                |  |                                                      | 2      |  |             |  |        |             |  |  | 1                |  |  |          |       |  |  |  |       | 
|                                  |  | Mexico               |  | ING Consulting, S.A. de C.V.   |  | Wholesale banking                |  |                                                      | 7      |  |             |  | 1      |             |  |  | 2                |  |  |          | 1    |  |  |  |       | 
|Asia                              |  | China                |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 72     |  |             |  | 36     |             |  |  | 2,049            |  |  |          | 7     |  |  |  | 2    | 
|                                  |  | Japan                |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 33     |  |             |  | 36     |             |  |  | 3,702            |  |  |          | 22    |  |  |  | 9     | 
|                                  |  | Singapore            |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 502    |  |             |  | 194    |             |  |  | 25,780           |  |  |          | 22    |  |  |  | 5     | 
|                                  |  | Hong Kong            |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 106    |  |             |  | 80     |             |  |  | 5,964            |  |  |          | 40    |  |  |  | 7     | 
|                                  |  | Philippines          |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 423    |  |             |  | 17     |             |  |  | 402              |  |  |          | 4     |  |  |  | 2    | 
|                                  |  | South Korea          |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 87     |  |             |  | 46     |             |  |  | 4,107            |  |  |          | 14    |  |  |  | 1    | 
|                                  |  | Taiwan               |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 32     |  |             |  | 15     |             |  |  | 2,484            |  |  |          | 3     |  |  |  | 1     | 
|                                  |  | Indonesia            |  | PT ING Securities              |  | Wholesale banking                |  |                                                      |        |  |             |  |        |             |  |  |                  |  |  |          |       |  |  |  |       | 
|                                  |  |                      |  | Indonesia                      |  |                                  |  |                                                      | 5      |  |             |  | 1      |             |  |  | 7                |  |  |          |       |  |  |  |       | 
|                                  |  | Malaysia             |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 5      |  |             |  |        |             |  |  | 3                |  |  |          |       |  |  |  |       | 
|                                  |  | India                |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      |        |  |             |  |        |             |  |  | 2                |  |  |          |       |  |  |  |       | 
|                                  |  | Turkey               |  | ING Bank A.S.                  |  | Wholesale banking/Retail banking |  |                                                      | 5,497  |  |             |  | 757    |             |  |  | 15,864           |  |  |          | 225   |  |  |  | 45    | 
|                                  |  | United Arab Emirates |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 10     |  |             |  |        |             |  |  | 1                |  |  |          | 2    |  |  |  |       | 
|Australia                         |  | Australia            |  | ING Bank (Australia) Ltd.      |  | Retail banking                   |  |                                                      | 1,053  |  |             |  | 505    |             |  |  | 36,691           |  |  |          | 309   |  |  |  | 90    | 
|Other                             |  | Mauritius            |  | ING Mauritius                  |  | Investment management            |  |                                                      |        |  |             |  | 32     |             |  |  | 715              |  |  |          | 32    |  |  |  |       | 
|                                  |  |                      |  |                                |  |                                  |  |                                                      |        |  |             |  |        |             |  |  |                  |  |  |          |       |  |  |  |       | 
|Total                             |  |                      |  |                                |  |                                  |  |                                                      | 51,943 |  |             |  | 17,902 |             |  |  | 842,216          |  |  |          | 6,314 |  |  |  | 1,705 | 
|                                  |  |                      |  |                                |  |                                  |  |                                                      |        |  |             |  |        |             |  |  |                  |  |  |          |       |  |  |  |       | 



|1 | Public subsidies received, as defined in article 89 of the CRD IV, amounts to EUR 1 million (2015: EUR 3 million; 2014: EUR 2 million).
|- | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-85 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The UK has a high tax charge due to changes in tax law and prior year adjustments.

Russia, China, Philippines and South Korea all have lower tax charges due to prior year adjustments.

Austria has an inverse tax charge due to the recognition of a tax asset for previously unrecognised tax losses.

Brazil has a low tax charge due to the combination of relatively high exempt income with a decreased profit.

Mauritius has no tax charge as the partial sale of Kotak Mahindra Bank shares in September 2016 was tax exempt.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-86 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                  |  |                      |  |                                |  |                                  |  |                                                      |        |  |             |  |        |                |  |  |                  |  |  |          |       |  |  |  |       | 
|--------------------------------- |  | -------------------- |  | ------------------------------ |  | -------------------------------- |  | ---------------------------------------------------- | ------ |  | ----------- |  | ------ | -------------- |  |  | ---------------- |  |  | -------- | ----- |  |  |  | ----- | 
|Additional information by country |  |                      |  |                                |  |                                  |  |                                                      |        |  |             |  |        |                | 
|2015                              |  |                      |  |                                |  |                                  |  |                                                      |        |  |             |  |        |                |  |  |                  |  |  |          |       |  |  |  |       | 
|Geographicalarea                  |  | Country              |  | Name of principal
subsidiary   |  | Main activity                    |  | Averagenumber ofemployeesat full timeequivalentbasis |        |  | TotalIncome |  |        | Totalassets2,3 |  |  | Resultbefore tax |  |  | Taxation |      
|Netherlands                       |  | Netherlands2,3       |  | ING Bank N.V.                  |  | Wholesale banking/Retail banking |  |                                                      | 14,586 |  |             |  | 6,427  |                |  |  | 468,505          |  |  |          | 2,060 |  |  |  | 678   | 
|Belgium                           |  | Belgium              |  | ING België N.V.                |  | Wholesale banking/Retail banking |  |                                                      | 9,645  |  |             |  | 3,091  |                |  |  | 130,916          |  |  |          | 1,109 |  |  |  | 329   | 
|                                  |  | Luxembourg           |  | ING Luxembourg S.A.            |  | Wholesale banking/Retail banking |  |                                                      | 774    |  |             |  | 298    |                |  |  | 9,331            |  |  |          | 166   |  |  |  | 35    | 
|Rest of Europe                    |  | Poland               |  | ING Bank Slaski S.A.           |  | Wholesale banking/Retail banking |  |                                                      | 8,713  |  |             |  | 903    |                |  |  | 25,666           |  |  |          | 317   |  |  |  | 60    | 
|                                  |  | Germany              |  | ING DiBa A.G.                  |  | Wholesale banking/Retail banking |  |                                                      | 4,052  |  |             |  | 2,000  |                |  |  | 126,171          |  |  |          | 1,044 |  |  |  | 353   | 
|                                  |  | Romania              |  | Branch of ING Bank N.V.        |  | Wholesale banking/Retail banking |  |                                                      | 1,596  |  |             |  | 221    |                |  |  | 4,685            |  |  |          | 78    |  |  |  | 13    | 
|                                  |  | Spain                |  | Branch of ING Bank N.V.        |  | Wholesale banking/Retail banking |  |                                                      | 1,076  |  |             |  | 423    |                |  |  | 24,457           |  |  |          | 144   |  |  |  | 52    | 
|                                  |  | Italy                |  | Branch of ING Bank N.V.        |  | Wholesale banking/Retail banking |  |                                                      | 824    |  |             |  | 202    |                |  |  | 15,828           |  |  |          | 87   |  |  |  | 15   | 
|                                  |  | UK                   |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 642    |  |             |  | 556    |                |  |  | 32,156           |  |  |          | 362   |  |  |  | 19   | 
|                                  |  | France1              |  | Branch of ING Bank N.V.        |  | Wholesale banking/Retail banking |  |                                                      | 625    |  |             |  | 256    |                |  |  | 7,489            |  |  |          | 67    |  |  |  | 23    | 
|                                  |  | Russia               |  | ING Bank (Eurasia) Z.A.O.      |  | Wholesale banking                |  |                                                      | 288    |  |             |  | 185    |                |  |  | 2,520            |  |  |          | 131   |  |  |  | 32    | 
|                                  |  | Czech Republic       |  | Branch of ING Bank N.V.        |  | Wholesale banking/Retail banking |  |                                                      | 211    |  |             |  | 64     |                |  |  | 2,519            |  |  |          | 30    |  |  |  | 5     | 
|                                  |  | Hungary              |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 162    |  |             |  | 46     |                |  |  | 1,129            |  |  |          | 13    |  |  |  | 5     | 
|                                  |  | Slovakia             |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 265    |  |             |  | 13     |                |  |  | 573              |  |  |          | 8     |  |  |  | 2     | 
|                                  |  | Ukraine              |  | PJSC ING Bank Ukraine          |  | Wholesale banking                |  |                                                      | 120    |  |             |  | 46     |                |  |  | 616              |  |  |          | 27    |  |  |  | 5     | 
|                                  |  | Austria              |  | Branch of ING DiBa A.G.        |  | Retail banking                   |  |                                                      | 169    |  |             |  | 93     |                |  |  | 321              |  |  |          | 51    |  |  |  | 9     | 
|                                  |  | Bulgaria             |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 76     |  |             |  | 10     |                |  |  | 267              |  |  |          | 2    |  |  |  |       | 
|                                  |  | Ireland              |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 39     |  |             |  | 64     |                |  |  | 1,697            |  |  |          | 36    |  |  |  | 5     | 
|                                  |  | Portugal             |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 2      |  |             |  | 3      |                |  |  | 616              |  |  |          | 3     |  |  |  | 1     | 
|                                  |  | Switzerland          |  | Branch of ING België N.V.      |  | Wholesale banking                |  |                                                      | 177    |  |             |  | 187    |                |  |  | 6,927            |  |  |          | 105   |  |  |  | 30    | 
|North America                     |  | Canada               |  | Belgian Overseas Agencies Ltd. |  | Wholesale banking                |  |                                                      |        |  |             |  |        |                |  |  |                  |  |  |          |       |  |  |  |       | 
|                                  |  | USA                  |  | ING Financial Holdings         |  | Wholesale banking                |  |                                                      | 492    |  |             |  | 720    |                |  |  | 47,784           |  |  |          | 423   |  |  |  | 122   | 
|Latin America                     |  | Brazil               |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 56     |  |             |  | 48     |                |  |  | 1,496            |  |  |          | 32    |  |  |  | 12    | 
|                                  |  | Mexico               |  | ING Consulting, S.A. de C.V.   |  | Wholesale banking                |  |                                                      | 8      |  |             |  |        |                |  |  | 1                |  |  |          |       |  |  |  |       | 
|Asia                              |  | China                |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 59     |  |             |  | 39     |                |  |  | 1,551            |  |  |          | 16    |  |  |  | 10    | 
|                                  |  | Japan                |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 30     |  |             |  | 31     |                |  |  | 6,772            |  |  |          | 20    |  |  |  | 9     | 
|                                  |  | Singapore            |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 472    |  |             |  | 386    |                |  |  | 19,111           |  |  |          | 230   |  |  |  | 30    | 
|                                  |  | Hong Kong            |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 103    |  |             |  | 85     |                |  |  | 5,052            |  |  |          | 49    |  |  |  | 1     | 
|                                  |  | Philippines          |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 249    |  |             |  | 22     |                |  |  | 436              |  |  |          | 5     |  |  |  | 3     | 
|                                  |  | South Korea          |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 68     |  |             |  | 53     |                |  |  | 3,642            |  |  |          | 23    |  |  |  | 6     | 
|                                  |  | Taiwan               |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 34     |  |             |  | 23     |                |  |  | 1,744            |  |  |          | 12    |  |  |  | 1     | 
|                                  |  | Indonesia            |  | PT ING Securities Indonesia    |  | Wholesale banking                |  |                                                      | 5      |  |             |  | 1      |                |  |  | 7                |  |  |          |       |  |  |  |       | 
|                                  |  | Malaysia             |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 4      |  |             |  |        |                |  |  | 4                |  |  |          |       |  |  |  |       | 
|                                  |  | India                |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      |        |  |             |  |        |                |  |  | 2                |  |  |          |       |  |  |  |       | 
|                                  |  | Turkey               |  | ING Bank A.S.                  |  | Wholesale banking/Retail banking |  |                                                      | 6,070  |  |             |  | 641    |                |  |  | 17,544           |  |  |          | 155   |  |  |  | 34    | 
|                                  |  | United Arab Emirates |  | Branch of ING Bank N.V.        |  | Wholesale banking                |  |                                                      | 7      |  |             |  |        |                |  |  |                  |  |  |          | 1    |  |  |  |       | 
|Australia                         |  | Australia            |  | ING Bank (Australia) Ltd.      |  | Retail banking                   |  |                                                      | 1,021  |  |             |  | 490    |                |  |  | 33,507           |  |  |          | 328   |  |  |  | 92    | 
|Other                             |  | Mauritius            |  | ING Mauritius                  |  | Investment management            |  |                                                      |        |  |             |  | 380    |                |  |  | 1,186            |  |  |          | 380   |  |  |  |       | 
|                                  |  |                      |  |                                |  |                                  |  |                                                      |        |  |             |  |        |                |  |  |                  |  |  |          |       |  |  |  |       | 
|Total                             |  |                      |  |                                |  |                                  |  |                                                      | 52,720 |  |             |  | 18,007 |                |  |  | 1,002,228        |  |  |          | 7,334 |  |  |  | 1,924 | 
|                                  |  |                      |  |                                |  |                                  |  |                                                      |        |  |             |  |        |                |  |  |                  |  |  |          |       |  |  |  |       | 



|1 | Public subsidies received, as defined in article 89 of the CRD IV, amounted to EUR 3 million in 2015.( 2014: EUR 2 million).
|- | ----------------------------------------------------------------------------------------------------------------------------

|2 | Included in Total assets  Netherlands, is EUR 2,153 million related to the Investment in associate held for sale, NN Group.
|- | ----------------------------------------------------------------------------------------------------------------------------

|3 | Total assets, as at 31 December 2015, is adjusted as a result of a change in accounting policies. Reference is made to Note 1 Accounting policies  Changes in accounting policies in 2016.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-87 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The Netherlands has a high tax charge, partly due to the non-deductible Dutch
bank tax and partly due to the recognition of a deferred tax liability regarding previously deducted (UK) branch losses.

The UK has a low tax charge due to the
recognition of previously unrecognised tax losses carried forward.

Mauritius has no tax charge, due to an unrealised tax exempt result, following the merger of ING
Vysya with Kotak in April 2015.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-88 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Additional notes to the Consolidated annual accounts

35 Pension and other post-employment benefits

ING Group maintains defined
contribution and defined benefit plans. In 2016 and 2015, the defined benefit plans of the Group are mainly within the United Kingdom and Belgium.

Statement
of financial position - Net defined benefit asset/liability



|                                                      |  |      |       |  |      |  |       | 
|----------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | 
|Summary of net defined benefit asset/liability        |  |      |       |  |      | 
|                                                      |  | 2016 |       |  | 2015 | 
|Fair value of plan assets                             |  |      | 3,337 |  |      |  | 3,141 | 
|Defined benefit obligation                            |  |      | 3,249 |  |      |  | 2,996 | 
|                                                      |  |      |       |  |      |  |       | 
|Funded status (Net defined benefit asset/(liability)) |  |      | 88    |  |      |  | 145   | 
|Presented as:                                         |  |      |       |  |      |  |       | 
| Other assets                                        |  |      | 609   |  |      |  | 643   | 
| Other liabilities                                   |  |      | 521  |  |      |  | 498  | 
|                                                      |  |      |       |  |      |  |       | 
|                                                      |  |      | 88    |  |      |  | 145   | 
|                                                      |  |      |       |  |      |  |       | 

ING Group maintains defined benefit retirement plans in some countries. These plans provide benefits that are related to the
remuneration and service of employees upon retirement. The benefits in some of these plans are subject to various forms of indexation. The indexation is, in some cases, at the discretion of management; in other cases it is dependent upon the
sufficiency of plan assets.

Annual contributions are paid to the funds at a rate necessary to adequately finance the accrued liabilities of the plans calculated in
accordance with local legal requirements. Plans in all countries comply with applicable local regulations governing investments and funding levels.

ING Group
provides other post-employment employee benefits to certain employees and former employees. These are primarily post-employment healthcare benefits and discounts on ING products provided to employees and former employees.

The most recent (actuarial) valuations of the plan assets and the present value of the defined benefit obligation were carried out as at 31 December 2016. The
present value of the defined benefit obligation, and the related current service cost and past service cost, were determined using the projected unit credit method.

Changes in the fair value of plan assets for the period were as follows:



|                                                                                    |  |      |       |  |      |  |       | 
|----------------------------------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | 
|Changes in fair value of plan assets                                                |  |      |       |  |      | 
|                                                                                    |  | 2016 |       |  | 2015 | 
|Opening balance                                                                     |  |      | 3,141 |  |      |  | 2,703 | 
|Interest income                                                                     |  |      | 87    |  |      |  | 93    | 
|Remeasurements: Return on plan assets excluding amounts included in interest income |  |      | 467   |  |      |  | 333   | 
|Employers contribution                                                             |  |      | 76    |  |      |  | 34    | 
|Participants contributions                                                          |  |      | 2     |  |      |  | 13    | 
|Benefits paid                                                                       |  |      | 137  |  |      |  | 170  | 
|Exchange rate differences                                                           |  |      | 299  |  |      |  | 135   | 
|                                                                                    |  |      |       |  |      |  |       | 
|Closing balance                                                                     |  |      | 3,337 |  |      |  | 3,141 | 
|                                                                                    |  |      |       |  |      |  |       | 

Other

The actual return on the plan assets
amounts to EUR 554 million (2015: EUR 426 million).

No plan assets are expected to be returned to ING Group during 2017.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-89 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Changes in the present value of the defined benefit obligation and other post-employment benefits for the period were
as follows:



|                                                                                           |  |                            |       |  |                                |  |       |      |  |  |      |  |  |  |     | 
|------------------------------------------------------------------------------------------ |  | -------------------------- | ----- |  | ------------------------------ |  | ----- | ---- |  |  | ---- |  |  |  | --- | 
|Changes in defined benefit obligation and other post-employment benefits                   |  |                            |       | 
|                                                                                           |  | Defined benefit obligation |       |  | Other post-employment benefits | 
|                                                                                           |  | 2016                       |       |  | 2015                           |  |       | 2016 |  |  | 2015 | 
|Opening balance                                                                            |  |                            | 2,996 |  |                                |  | 2,790 |      |  |  | 98   |  |  |  | 101 | 
|Current service cost                                                                       |  |                            | 32    |  |                                |  | 34    |      |  |  | 25  |  |  |  | 7  | 
|Interest cost                                                                              |  |                            | 79    |  |                                |  | 84    |      |  |  | 3    |  |  |  | 1   | 
|Remeasurements: Actuarial gains and losses arising from changes in demographic assumptions |  |                            | 17   |  |                                |  | 55   |      |  |  | 10   |  |  |  | 8   | 
|Remeasurements: Actuarial gains and losses arising from changes in financial assumptions   |  |                            | 498   |  |                                |  | 218   |      |  |  |      |  |  |  |     | 
|Participants contributions                                                                |  |                            | 1     |  |                                |  | 1     |      |  |  |      |  |  |  | 2   | 
|Benefits paid                                                                              |  |                            | 148  |  |                                |  | 175  |      |  |  | 1   |  |  |  | 2  | 
|Past service cost                                                                          |  |                            | 2     |  |                                |  | 11   |      |  |  |      |  |  |  |     | 
|Effect of curtailment or settlement                                                        |  |                            | 2    |  |                                |  | 3    |      |  |  |      |  |  |  | 9  | 
|Exchange rate differences                                                                  |  |                            | 192  |  |                                |  | 111   |      |  |  | 2    |  |  |  | 4   | 
|Changes in the composition of the group and other changes                                  |  |                            |       |  |                                |  | 2     |      |  |  |      |  |  |  |     | 
|                                                                                           |  |                            |       |  |                                |  |       |      |  |  |      |  |  |  |     | 
|Closing balance                                                                            |  |                            | 3,249 |  |                                |  | 2,996 |      |  |  | 87   |  |  |  | 98  | 
|                                                                                           |  |                            |       |  |                                |  |       |      |  |  |      |  |  |  |     | 

Amounts recognised directly in Other comprehensive income (equity) were as follows:



|                                                                           |  |      |      |  |      |  |      | 
|-------------------------------------------------------------------------- |  | ---- | ---- |  | ---- |  | ---- | 
|Changes in the net defined benefit assets/liability remeasurement reserve  |  |      |      |  |      | 
|                                                                           |  | 2016 |      |  | 2015 | 
|Opening balance                                                            |  |      | 306 |  |      |  | 515 | 
|Remeasurement of plan assets                                               |  |      | 467  |  |      |  | 119 | 
|Actuarial gains and losses arising from changes in demographic assumptions |  |      | 17   |  |      |  | 59   | 
|Actuarial gains and losses arising from changes in financial assumptions   |  |      | 498 |  |      |  | 86   | 
|Transfer to Other reserves                                                 |  |      |      |  |      |  | 16   | 
|Taxation                                                                   |  |      | 51  |  |      |  | 18  | 
|                                                                           |  |      |      |  |      |  |      | 
|Total Other comprehensive income movement for the year                     |  |      | 65  |  |      |  | 24   | 
|Changes in the composition of the group and other changes                  |  |      |      |  |      |  | 185  | 
|                                                                           |  |      |      |  |      |  |      | 
|Closing balance                                                            |  |      | 371 |  |      |  | 306 | 
|                                                                           |  |      |      |  |      |  |      | 

The change in the remeasurement of the net defined benefit asset/liability in 2015 is mainly as a result of deconsolidation of NN Group
and an increase in discount rates.

In 2016, EUR 467 million Remeasurement of plan assets and EUR -498 million Actuarial gains and losses arising from
changes in financial assumptions are mainly due to a decrease in discount rates.

The accumulated amount of remeasurements recognised directly in Other
comprehensive income (equity) is EUR -483 million (EUR -371 million after tax) as at 31 December 2016 (2015: EUR -507 million, EUR -306 million after tax).



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-90 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Information on plan assets and defined benefit obligation per country

The defined benefit obligation per country and the plan assets per country can be specified as follows:



|                                                       |  |             |       |  |                            |  |       |      |  |  |       |  |  |  |       | 
|------------------------------------------------------ |  | ----------- | ----- |  | -------------------------- |  | ----- | ---- |  |  | ----- |  |  |  | ----- | 
|Plan assets and defined benefit obligation per country |  |             |       |  |                            |  |       |      |  |  |       | 
|                                                       |  | Plan assets |       |  | Defined benefit obligation | 
|                                                       |  | 2016        |       |  | 2015                       |  |       | 2016 |  |  | 2015  | 
|The Netherlands                                        |  |             | 414   |  |                            |  | 373   |      |  |  | 576   |  |  |  | 516   | 
|United States                                          |  |             | 182   |  |                            |  | 132   |      |  |  | 243   |  |  |  | 212   | 
|United Kingdom                                         |  |             | 1,983 |  |                            |  | 1,906 |      |  |  | 1,377 |  |  |  | 1,265 | 
|Belgium                                                |  |             | 641   |  |                            |  | 601   |      |  |  | 776   |  |  |  | 731   | 
|Other countries                                        |  |             | 117   |  |                            |  | 129   |      |  |  | 277   |  |  |  | 272   | 
|                                                       |  |             |       |  |                            |  |       |      |  |  |       |  |  |  |       | 
|                                                       |  |             | 3,337 |  |                            |  | 3,141 |      |  |  | 3,249 |  |  |  | 2,996 | 
|                                                       |  |             |       |  |                            |  |       |      |  |  |       |  |  |  |       | 

As at 31 December 2016 the various defined benefit plans did not hold any direct investments in ING Groep N.V. (2015: nil).

Determination of the net defined benefit asset/liability

The table provides
the key assumptions used in the determination of the Net defined benefit asset/liability and the Other post- employment benefits.



|                                                                               |  |                                     |      |  |                                |  |      |      |  |  |      |  |  |  |      | 
|------------------------------------------------------------------------------ |  | ----------------------------------- | ---- |  | ------------------------------ |  | ---- | ---- |  |  | ---- |  |  |  | ---- | 
|Weighted averages of basic actuarial assumptions in annual % as at 31 December | 
|                                                                               |  | Net defined benefit asset/liability |      |  | Other post-employment benefits | 
|                                                                               |  | 2016                                |      |  | 2015                           |  |      | 2016 |  |  | 2015 | 
|Discount rates                                                                 |  |                                     | 2.10 |  |                                |  | 3.00 |      |  |  | 3.50 |  |  |  | 3.20 | 
|Mortality rates                                                                |  |                                     | 0.90 |  |                                |  | 0.80 |      |  |  | 0.70 |  |  |  | 0.80 | 
|Expected rates of salary increases (excluding promotion increases)             |  |                                     | 3.40 |  |                                |  | 3.70 |      |  |  |      |  |  |  |      | 
|Indexation                                                                     |  |                                     | 2.50 |  |                                |  | 2.60 |      |  |  | 2.00 |  |  |  | 2.00 | 

The assumptions above are weighted by defined benefit obligations. The rates used for salary developments, interest discount factors,
and other adjustments reflect country-specific conditions.

The discount rate is the weighted average of the discount rates that are applied in different regions
where the Group has defined benefit pension plans. The discount rate is based on a methodology that uses market yields on high quality corporate bonds of the specific regions with durations matching the pension liabilities as key input. Market
yields of high quality corporate bonds reflect the yield on corporate bonds with an AA rating for durations where such yields are available. An extrapolation is applied in order to determine the yield to the longer durations for which no AA-rated corporate bonds are available. As a result of the limited availability of long-duration AA-rated corporate bonds, extrapolation is an important element of the
determination of the discount rate.

The discount rate is approximately 2.1% on 31 December 2016 (2015: 3.0%). The discount rate used by ING is based on AA-rated corporate bonds. Discussions were ongoing, both in the industry and at the IASB, on the definition of the discount rate for defined benefit pension liabilities and ING would reconsider the methodology for
setting the discount rate if and when appropriate.

As at 31 December 2016, the actuarial assumption for Indexation for inflation is 2.5% (2015: 2.6%). The
percentage for 2016 was mainly based on the expected inflation and the best estimate assumption for future indexation in the pension plans in the United Kingdom, Belgium, the Netherlands, the United States, and Germany.

Sensitivity analysis of key assumptions

The sensitivity analysis of the most
significant assumptions has been determined based on changes of the assumptions occurring at the end of the reporting period that are deemed reasonably possible.

The table discloses the financial impact on the defined benefit obligation if the weighted averages of each significant actuarial assumption would increase or decrease
if all other assumptions were held constant. In practice, this is unlikely to occur, and some changes of the assumptions may be correlated.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-91 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                                                                          |  |                            |      |  |                            |  |      |      |  |  |      |  |  |  |     | 
|------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ---- |  | -------------------------- |  | ---- | ---- |  |  | ---- |  |  |  | --- | 
|Sensitivity analysis  financial impact of changes in significant actuarial
assumptions on the defined benefit obligation | 
|                                                                                                                          |  | Financialimpact ofincrease |      |  | Financialimpact ofdecrease | 
|                                                                                                                          |  | 2016                       |      |  | 2015                       |  |      | 2016 |  |  | 2015 | 
|Discount rates  increase/decrease of 1%                                                                                  |  |                            | 506 |  |                            |  | 451 |      |  |  | 662  |  |  |  | 554 | 
|Mortality  increase/decrease of 1 year                                                                                   |  |                            | 102  |  |                            |  | 82   |      |  |  | 103 |  |  |  | 82 | 
|Expected rates of salary increases (excluding promotion increases)  increase/decrease of
0.25%                           |  |                            | 24   |  |                            |  | 25   |      |  |  | 23  |  |  |  | 23 | 
|Indexation  increase/decrease 0.25%                                                                                      |  |                            | 79   |  |                            |  | 75   |      |  |  | 85  |  |  |  | 74 | 

Expected cash flows

Annual
contributions are paid to the funds at a rate necessary to adequately finance the accrued liabilities of the plans calculated in accordance with local legal requirements. Plans in all countries comply with applicable local regulations governing
investments and funding levels. ING Groups subsidiaries should fund the cost of the entitlements expected to be earned on a yearly basis.

For 2017 the
expected contributions to pension plans are EUR 71 million.

The following benefit payments, which reflect expected future service as appropriate, are expected
to be made by the plan:



|                  |  |                          |     |  |                               |  |    | 
|----------------- |  | ------------------------ | --- |  | ----------------------------- |  | -- | 
|Benefit payments  |  |                          |     |  |                               | 
|                  |  | Definedbenefitobligation |     |  | Other post-employmentbenefits | 
|2017              |  |                          | 102 |  |                               |  | 4  | 
|2018              |  |                          | 105 |  |                               |  | 4  | 
|2019              |  |                          | 108 |  |                               |  | 4  | 
|2020              |  |                          | 123 |  |                               |  | 4  | 
|2021              |  |                          | 128 |  |                               |  | 4  | 
|Years 2022  2026 |  |                          | 448 |  |                               |  | 18 | 

The average duration of the benefit obligation at the end of the reporting period is 17 years (2015: 17 years). This number can be
subdivided into the duration related to:



| |  | active members: 16 years (2015: 15 years);
|- |  | ------------------------------------------



| |  | inactive members: 24 years (2015: 23 years); and
|- |  | ------------------------------------------------



| |  | retired members: 13 years (2015: 13 years).
|- |  | -------------------------------------------

Statement of profit or loss  Pension and other
staff-related benefit costs



|                                              |  |                                    |    |  |                               |  |     |       |  |  |       |  |  |      |     |  |      |  |     |      |  |  |      |  |  |      |    |  |      |  |     |      |  |  |      |  |  |  |     |  |  |  |     |  |  |  |       | 
|--------------------------------------------- |  | ---------------------------------- | -- |  | ----------------------------- |  | --- | ----- |  |  | ----- |  |  | ---- | --- |  | ---- |  | --- | ---- |  |  | ---- |  |  | ---- | -- |  | ---- |  | --- | ---- |  |  | ---- |  |  |  | --- |  |  |  | --- |  |  |  | ----- | 
|Pension and other staff-related benefit costs | 
|                                              |  | Net defined benefitasset/liability |    |  | Other post-employmentbenefits |  |     | Other |  |  | Total | 
|                                              |  | 2016                               |    |  | 2015                          |  |     | 2014  |  |  | 2016  |  |  | 2015 |     |  | 2014 |  |     | 2016 |  |  | 2015 |  |  | 2014 |    |  | 2016 |  |     | 2015 |  |  | 2014 | 
|Current service cost                          |  |                                    | 32 |  |                               |  | 34  |       |  |  | 36    |  |  |      | 25 |  |      |  | 7  |      |  |  | 6   |  |  |      | 11 |  |      |  | 8  |      |  |  | 20   |  |  |  | 18  |  |  |  | 19  |  |  |  | 50    | 
|Past service cost                             |  |                                    | 2  |  |                               |  | 11 |       |  |  | 3    |  |  |      |     |  |      |  |     |      |  |  |      |  |  |      |    |  |      |  |     |      |  |  |      |  |  |  | 2   |  |  |  | 11 |  |  |  | 3    | 
|Net Interest cost                             |  |                                    | 8 |  |                               |  | 9  |       |  |  | 3     |  |  |      | 3   |  |      |  | 1   |      |  |  | 3    |  |  |      | 2  |  |      |  | 2   |      |  |  | 4    |  |  |  | 3  |  |  |  | 6  |  |  |  | 10    | 
|Effect of curtailment or settlement           |  |                                    | 2 |  |                               |  | 3  |       |  |  | 871   |  |  |      |     |  |      |  | 9  |      |  |  |      |  |  |      |    |  |      |  | 52 |      |  |  |      |  |  |  | 2  |  |  |  | 64 |  |  |  | 871   | 
|Other                                         |  |                                    |    |  |                               |  |     |       |  |  |       |  |  |      |     |  |      |  |     |      |  |  |      |  |  |      |    |  |      |  | 13  |      |  |  | 12  |  |  |  |     |  |  |  | 13  |  |  |  | 12   | 
|                                              |  |                                    |    |  |                               |  |     |       |  |  |       |  |  |      |     |  |      |  |     |      |  |  |      |  |  |      |    |  |      |  |     |      |  |  |      |  |  |  |     |  |  |  |     |  |  |  |       | 
|Defined benefit plans                         |  |                                    | 24 |  |                               |  | 11  |       |  |  | 907   |  |  |      | 22 |  |      |  | 15 |      |  |  | 3   |  |  |      | 13 |  |      |  | 45 |      |  |  | 12   |  |  |  | 15  |  |  |  | 49 |  |  |  | 916   | 
|Defined contribution plans                    |  |                                    |    |  |                               |  |     |       |  |  |       |  |  |      |     |  |      |  |     |      |  |  |      |  |  |      |    |  |      |  |     |      |  |  |      |  |  |  | 329 |  |  |  | 324 |  |  |  | 302   | 
|                                              |  |                                    |    |  |                               |  |     |       |  |  |       |  |  |      |     |  |      |  |     |      |  |  |      |  |  |      |    |  |      |  |     |      |  |  |      |  |  |  |     |  |  |  |     |  |  |  |       | 
|                                              |  |                                    |    |  |                               |  |     |       |  |  |       |  |  |      |     |  |      |  |     |      |  |  |      |  |  |      |    |  |      |  |     |      |  |  |      |  |  |  | 344 |  |  |  | 275 |  |  |  | 1,218 | 
|                                              |  |                                    |    |  |                               |  |     |       |  |  |       |  |  |      |     |  |      |  |     |      |  |  |      |  |  |      |    |  |      |  |     |      |  |  |      |  |  |  |     |  |  |  |     |  |  |  |       | 



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-92 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Defined benefit plans

In
2014, a charge of EUR 871 million was recognised in Effect of curtailment or settlement related to the Dutch defined benefit plan settlement which resulted in the ING Pension Fund being financially independent from ING.

Defined contribution plans

Most group companies sponsor defined contribution
pension plans. The assets of all ING Groups defined contribution plans are held in independently administered funds. Contributions are generally determined as a percentage of remuneration. For the defined contribution scheme in the
Netherlands, the premium paid is also dependant on the interest rate developments and DNBs methodology for determining the ultimate forward rate. These plans do not give rise to provisions in the statement of financial position, other than
relating to short-term timing differences included in other assets/liabilities.

36 Taxation

Statement of financial position - Deferred tax

Deferred taxes are
recognised on all temporary differences under the liability method using tax rates applicable in the jurisdictions in which ING Group is subject to taxation.



|                                                                      |  |                                    |       |  |                      |  |     |                         |  |  |                          |  |  |                                                        |     |  |                                    |  |     |  |  |  |       | 
|--------------------------------------------------------------------- |  | ---------------------------------- | ----- |  | -------------------- |  | --- | ----------------------- |  |  | ------------------------ |  |  | ------------------------------------------------------ | --- |  | ---------------------------------- |  | --- |  |  |  | ----- | 
|Changes in deferred tax                                               | 
|2016                                                                  |  | Net liability ()Net asset (+)2015 |       |  | Changethrough equity |  |     | Changethrough netresult |  |  | Exchange ratedifferences |  |  | Changes in thecomposition ofthe group andother changes |     |  | Net liability ()Net asset (+)2016 | 
|Investments                                                           |  |                                    | 780  |  |                      |  | 74  |                         |  |  | 82                      |  |  |                                                        | 10 |  |                                    |  | 1  |  |  |  | 799  | 
|Investment properties                                                 |  |                                    | 2    |  |                      |  |     |                         |  |  | 3                       |  |  |                                                        |     |  |                                    |  |     |  |  |  | 5    | 
|Financial assets and liabilities at fair value through profit or loss |  |                                    | 739   |  |                      |  |     |                         |  |  | 58                      |  |  |                                                        | 16  |  |                                    |  |     |  |  |  | 697   | 
|Depreciation                                                          |  |                                    | 46   |  |                      |  |     |                         |  |  | 13                       |  |  |                                                        |     |  |                                    |  |     |  |  |  | 33   | 
|Cash flow hedges                                                      |  |                                    | 192  |  |                      |  | 51 |                         |  |  |                          |  |  |                                                        | 4   |  |                                    |  | 1   |  |  |  | 238  | 
|Pension and post-employment benefits                                  |  |                                    | 201   |  |                      |  | 20 |                         |  |  | 84                      |  |  |                                                        | 15  |  |                                    |  |     |  |  |  | 112   | 
|Other provisions                                                      |  |                                    | 24    |  |                      |  |     |                         |  |  | 228                      |  |  |                                                        | 2   |  |                                    |  | 1   |  |  |  | 255   | 
|Receivables                                                           |  |                                    | 441   |  |                      |  |     |                         |  |  | 120                      |  |  |                                                        | 9   |  |                                    |  |     |  |  |  | 570   | 
|Loans and advances to customers                                       |  |                                    | 788   |  |                      |  |     |                         |  |  | 248                     |  |  |                                                        | 7  |  |                                    |  | 42 |  |  |  | 491   | 
|Unused tax losses carried forward                                     |  |                                    | 118   |  |                      |  |     |                         |  |  | 34                      |  |  |                                                        | 24 |  |                                    |  | 3  |  |  |  | 57    | 
|Other                                                                 |  |                                    | 97   |  |                      |  | 1  |                         |  |  | 32                      |  |  |                                                        | 40  |  |                                    |  |     |  |  |  | 90   | 
|                                                                      |  |                                    |       |  |                      |  |     |                         |  |  |                          |  |  |                                                        |     |  |                                    |  |     |  |  |  |       | 
|                                                                      |  |                                    | 1,194 |  |                      |  | 2   |                         |  |  | 180                     |  |  |                                                        | 45  |  |                                    |  | 44 |  |  |  | 1,017 | 
|Presented in the statement of financial position as:                  |  |                                    |       |  |                      |  |     |                         |  |  |                          |  |  |                                                        |     |  |                                    |  |     |  |  |  |       | 
| deferred tax liabilities                                            |  |                                    | 589  |  |                      |  |     |                         |  |  |                          |  |  |                                                        |     |  |                                    |  |     |  |  |  | 624  | 
| deferred tax assets                                                 |  |                                    | 1,783 |  |                      |  |     |                         |  |  |                          |  |  |                                                        |     |  |                                    |  |     |  |  |  | 1,641 | 
|                                                                      |  |                                    |       |  |                      |  |     |                         |  |  |                          |  |  |                                                        |     |  |                                    |  |     |  |  |  |       | 
|                                                                      |  |                                    | 1,194 |  |                      |  |     |                         |  |  |                          |  |  |                                                        |     |  |                                    |  |     |  |  |  | 1,017 | 
|                                                                      |  |                                    |       |  |                      |  |     |                         |  |  |                          |  |  |                                                        |     |  |                                    |  |     |  |  |  |       | 



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-93 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                      |  |                                    |        |  |                      |  |     |                         |  |  |                          |  |  |                                                        |    |  |                                    |  |     |  |  |  |       | 
|--------------------------------------------------------------------- |  | ---------------------------------- | ------ |  | -------------------- |  | --- | ----------------------- |  |  | ------------------------ |  |  | ------------------------------------------------------ | -- |  | ---------------------------------- |  | --- |  |  |  | ----- | 
|Changes in deferred tax                                               |  |                                    |        |  |                      |  |     |                         |  |  |                          |  |  |                                                        |    |  |                                    | 
|2015                                                                  |  | Net liability ()Net asset (+)2014 |        |  | Changethrough equity |  |     | Changethrough netresult |  |  | Exchange ratedifferences |  |  | Changes in thecomposition ofthe group andother changes |    |  | Net liability ()Net asset (+)2015 | 
|Investments                                                           |  |                                    | 1,064 |  |                      |  | 111 |                         |  |  | 152                      |  |  |                                                        | 3  |  |                                    |  | 18  |  |  |  | 780  | 
|Investment properties                                                 |  |                                    | 2     |  |                      |  |     |                         |  |  |                          |  |  |                                                        |    |  |                                    |  |     |  |  |  | 2    | 
|Financial assets and liabilities at fair value through profit or loss |  |                                    | 1,112  |  |                      |  |     |                         |  |  | 373                     |  |  |                                                        |    |  |                                    |  |     |  |  |  | 739   | 
|Depreciation                                                          |  |                                    | 46    |  |                      |  |     |                         |  |  | 4                        |  |  |                                                        | 4 |  |                                    |  |     |  |  |  | 46   | 
|Cash flow hedges                                                      |  |                                    | 233   |  |                      |  | 24  |                         |  |  |                          |  |  |                                                        | 17 |  |                                    |  |     |  |  |  | 192  | 
|Pension and post-employment benefits                                  |  |                                    | 213    |  |                      |  | 13 |                         |  |  | 5                       |  |  |                                                        | 6  |  |                                    |  |     |  |  |  | 201   | 
|Other provisions                                                      |  |                                    | 42     |  |                      |  |     |                         |  |  | 22                      |  |  |                                                        | 4  |  |                                    |  |     |  |  |  | 24    | 
|Receivables                                                           |  |                                    | 258    |  |                      |  |     |                         |  |  | 180                      |  |  |                                                        | 3  |  |                                    |  |     |  |  |  | 441   | 
|Loans and advances to customers                                       |  |                                    | 1,173  |  |                      |  |     |                         |  |  | 387                     |  |  |                                                        | 1  |  |                                    |  |     |  |  |  | 788   | 
|Unused tax losses carried forward                                     |  |                                    | 330    |  |                      |  |     |                         |  |  | 215                     |  |  |                                                        | 3  |  |                                    |  |     |  |  |  | 118   | 
|Other                                                                 |  |                                    | 189   |  |                      |  | 7  |                         |  |  | 113                      |  |  |                                                        | 2 |  |                                    |  | 12 |  |  |  | 97   | 
|                                                                      |  |                                    |        |  |                      |  |     |                         |  |  |                          |  |  |                                                        |    |  |                                    |  |     |  |  |  |       | 
|                                                                      |  |                                    | 1,594  |  |                      |  | 115 |                         |  |  | 553                     |  |  |                                                        | 31 |  |                                    |  | 6   |  |  |  | 1,194 | 
|Presented in the statement of financial position as:                  |  |                                    |        |  |                      |  |     |                         |  |  |                          |  |  |                                                        |    |  |                                    |  |     |  |  |  |       | 
| deferred tax liabilities                                            |  |                                    | 795   |  |                      |  |     |                         |  |  |                          |  |  |                                                        |    |  |                                    |  |     |  |  |  | 589  | 
| deferred tax assets                                                 |  |                                    | 2,389  |  |                      |  |     |                         |  |  |                          |  |  |                                                        |    |  |                                    |  |     |  |  |  | 1,783 | 
|                                                                      |  |                                    |        |  |                      |  |     |                         |  |  |                          |  |  |                                                        |    |  |                                    |  |     |  |  |  |       | 
|                                                                      |  |                                    | 1,594  |  |                      |  |     |                         |  |  |                          |  |  |                                                        |    |  |                                    |  |     |  |  |  | 1,194 | 
|                                                                      |  |                                    |        |  |                      |  |     |                         |  |  |                          |  |  |                                                        |    |  |                                    |  |     |  |  |  |       | 



|                                                                         |  |      |       |   |      |  |       |  
|------------------------------------------------------------------------ |  | ---- | ----- | - | ---- |  | ----- | -
|Deferred tax in connection with unused tax losses carried forward        | 
|                                                                         |  | 2016 |       |   | 2015 | 
|Total unused tax losses carried forward                                  |  |      | 1,292 |   |      |  | 1,560 |  
|Unused tax losses carried forward not recognised as a deferred tax asset |  |      | 973   |   |      |  | 969   |  
|                                                                         |  |      |       |   |      |  |       |  
|Unused tax losses carried forward recognised as a deferred tax asset     |  |      | 319   |   |      |  | 591   |  
|Average tax rate                                                         |  |      | 17.8  | % |      |  | 20.0  | %
|Deferred tax asset                                                       |  |      | 57    |   |      |  | 118   |  

The following tax losses carried forward and tax credits will expire as follows as at 31 December:



|                                                                 |  |                                  |     |  |                               |  |     |      |  |  |      |  |  |  |     | 
|---------------------------------------------------------------- |  | -------------------------------- | --- |  | ----------------------------- |  | --- | ---- |  |  | ---- |  |  |  | --- | 
|Total unused tax losses carried forward analysed by expiry terms | 
|                                                                 |  | No deferred tax asset recognised |     |  | Deferred tax asset recognised | 
|                                                                 |  | 2016                             |     |  | 2015                          |  |     | 2016 |  |  | 2015 | 
|Within 1 year                                                    |  |                                  | 2   |  |                               |  | 41  |      |  |  | 2    |  |  |  |     | 
|More than 1 year but less than 5 years                           |  |                                  | 383 |  |                               |  | 190 |      |  |  | 56   |  |  |  | 7   | 
|More than 5 years but less than 10 years                         |  |                                  | 30  |  |                               |  | 118 |      |  |  |      |  |  |  | 1   | 
|More than 10 years but less than 20 years                        |  |                                  | 18  |  |                               |  | 34  |      |  |  |      |  |  |  |     | 
|Unlimited                                                        |  |                                  | 540 |  |                               |  | 586 |      |  |  | 261  |  |  |  | 583 | 
|                                                                 |  |                                  |     |  |                               |  |     |      |  |  |      |  |  |  |     | 
|                                                                 |  |                                  | 973 |  |                               |  | 969 |      |  |  | 319  |  |  |  | 591 | 
|                                                                 |  |                                  |     |  |                               |  |     |      |  |  |      |  |  |  |     | 

Deferred tax assets are recognised for temporary deductible differences, for tax losses carried forward and unused tax credits only to
the extent that realisation of the related tax benefit is probable.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-94 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                      |  |      |     |  |      |  |     | 
|--------------------------------------------------------------------- |  | ---- | --- |  | ---- |  | --- | 
|Breakdown of certain net deferred tax asset positions by jurisdiction |  |      |     |  |      | 
|                                                                      |  | 2016 |     |  | 2015 | 
|Luxembourg                                                            |  |      |     |  |      |  | 8   | 
|Netherlands                                                           |  |      |     |  |      |  | 132 | 
|Italy                                                                 |  |      | 113 |  |      |  | 129 | 
|                                                                      |  |      |     |  |      |  |     | 
|                                                                      |  |      | 113 |  |      |  | 269 | 
|                                                                      |  |      |     |  |      |  |     | 

The table above includes a breakdown of certain net deferred tax asset positions by jurisdiction for which the utilisation is dependent
on future taxable profits whilst the related entities have incurred losses in either the current or the preceding year. In 2016, the aggregate amount for the most significant entities is EUR 113 million (2015: EUR 269 million).

Recognition is based on the fact that it is probable that the entity will have taxable profits and/or can utilise tax planning opportunities before expiration of the
deferred tax assets. Changes in circumstances in future periods may adversely impact the assessment of the recoverability. The uncertainty of the recoverability is taken into account in establishing the deferred tax assets.

As at 31 December 2016 and 31 December 2015, ING Group N.V. had no significant temporary differences associated with the parent companys investments in
subsidiaries as any economic benefit from those investments will not be taxable at parent company level.

Statement of profit or loss - Taxation



|                  |  |             |     |  |               |  |     |       |  |  |      |  |  |      |       |  |      |  |       |      |  |  |       |  |  |      |       |  |  |  |       |  |  |  |       | 
|----------------- |  | ----------- | --- |  | ------------- |  | --- | ----- |  |  | ---- |  |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- |  |  | ---- | ----- |  |  |  | ----- |  |  |  | ----- | 
|Taxation by type  | 
|                  |  | Netherlands |     |  | International |  |     | Total | 
|                  |  | 2016        |     |  | 2015          |  |     | 2014  |  |  | 2016 |  |  | 2015 |       |  | 2014 |  |       | 2016 |  |  | 2015  |  |  | 2014 |      
|Current taxation  |  |             | 150 |  |               |  | 42 |       |  |  | 58  |  |  |      | 1,375 |  |      |  | 1,413 |      |  |  | 1,099 |  |  |      | 1,525 |  |  |  | 1,371 |  |  |  | 1,041 | 
|Deferred taxation |  |             | 343 |  |               |  | 694 |       |  |  | 239 |  |  |      | 163  |  |      |  | 141  |      |  |  | 57    |  |  |      | 180   |  |  |  | 553   |  |  |  | 182  | 
|                  |  |             |     |  |               |  |     |       |  |  |      |  |  |      |       |  |      |  |       |      |  |  |       |  |  |      |       |  |  |  |       |  |  |  |       | 
|                  |  |             | 493 |  |               |  | 652 |       |  |  | 297 |  |  |      | 1,212 |  |      |  | 1,272 |      |  |  | 1,156 |  |  |      | 1,705 |  |  |  | 1,924 |  |  |  | 859   | 
|                  |  |             |     |  |               |  |     |       |  |  |      |  |  |      |       |  |      |  |       |      |  |  |       |  |  |      |       |  |  |  |       |  |  |  |       | 

The deferred tax charge in 2016 in the Netherlands has decreased and the current tax charge has increased as a result of the full
utilisation of prior year tax losses.



|                                                                                                          |  |      |       |   |      |  |       |      |  |  |       |  
|--------------------------------------------------------------------------------------------------------- |  | ---- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|Reconciliation of the weighted average statutory income tax rate to ING Groups effective income tax rate | 
|                                                                                                          |  | 2016 |       |   | 2015 |  |       | 2014 | 
|Result before tax from continuing operations                                                              |  |      | 6,314 |   |      |  | 7,334 |      |  |  | 3,361 |  
|Weighted average statutory tax rate                                                                       |  |      | 27.1  | % |      |  | 26.9  | %    |  |  | 29.2  | %
|                                                                                                          |  |      |       |   |      |  |       |      |  |  |       |  
|Weighted average statutory tax amount                                                                     |  |      | 1,708 |   |      |  | 1,975 |      |  |  | 983   |  
|Participation exemption                                                                                   |  |      | 72   |   |      |  | 34   |      |  |  | 70   |  
|Other income not subject to tax                                                                           |  |      | 123  |   |      |  | 162  |      |  |  | 169  |  
|Expenses not deductible for tax purposes                                                                  |  |      | 177   |   |      |  | 154   |      |  |  | 187   |  
|Impact on deferred tax from change in tax rates                                                           |  |      | 1    |   |      |  | 12    |      |  |  | 2    |  
|Deferred tax benefit from previously unrecognised amounts                                                 |  |      | 18   |   |      |  | 54    |      |  |  | 38    |  
|Current tax benefit from previously unrecognised amounts                                                  |  |      | 22   |   |      |  | 63   |      |  |  | 58   |  
|Write-off/reversal of deferred tax assets                                                                 |  |      | 33    |   |      |  | 18    |      |  |  | 1     |  
|Adjustment to prior periods                                                                               |  |      | 23    |   |      |  | 30   |      |  |  | 51   |  
|Effective tax amount                                                                                      |  |      | 1,705 |   |      |  | 1,924 |      |  |  | 859   |  
|                                                                                                          |  |      |       |   |      |  |       |      |  |  |       |  
|Effective tax rate                                                                                        |  |      | 27.0  | % |      |  | 26.2  | %    |  |  | 25.6  | %
|                                                                                                          |  |      |       |   |      |  |       |      |  |  |       |  

The weighted average statutory tax rate in 2016 does not significantly differ compared to 2015.

The weighted average statutory tax rate in 2015 was lower compared to 2014. This was mainly caused by the increase in the result in 2015 in the Netherlands.

The effective tax rate in 2016 is 27.0%.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-95 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The effective tax rate in 2016 is almost equal to the weighted average statutory tax rate. This is mainly caused by the
fact the non-taxable income and the recognition of tax benefits from previously unrecognised amounts are almost fully offset by non-deductible expenses, the write-off of deferred tax assets and the adjustments to prior periods.

The effective tax rate in 2015 was lower than the weighted
average statutory tax rate. This was mainly caused by non-taxable income, the recognition of tax benefits from previously unrecognised amounts and prior year adjustments which were only partly offset by non-deductible items.

The effective tax rate in 2014 was lower than the weighted average statutory tax rate. This was mainly
caused by non-taxable income, the recognition of tax benefits from previously unrecognised amounts and prior year adjustments which were only partly offset by
non-deductible items.

Tax exempt income (participation exemption) mainly includes
non-taxable income on divestments, tax exempt share in result from associates and joint ventures, and tax exempt gains on financial assets.

Equity - Other comprehensive income



|                                                                                                                       |  |      |     |  |      |  |     |      |  |  |        | 
|---------------------------------------------------------------------------------------------------------------------- |  | ---- | --- |  | ---- |  | --- | ---- |  |  | ------ | 
|Income tax related to components of other comprehensive income                                                         |  |      |     |  |      |  |     |      | 
|                                                                                                                       |  | 2016 |     |  | 2015 |  |     | 2014 | 
|Unrealised revaluations
available-for-sale investments and other revaluations                                          |  |      | 17  |  |      |  | 111 |      |  |  | 1,719 | 
|Realised gains/losses transferred to the statement of profit or loss (reclassifications from equity to
profit or loss) |  |      | 57  |  |      |  | 39  |      |  |  | 49     | 
|Changes in cash flow hedge reserve                                                                                     |  |      | 51 |  |      |  | 24  |      |  |  | 910   | 
|Remeasurement of the net defined benefit asset/liability                                                               |  |      | 20 |  |      |  | 13 |      |  |  | 137    | 
|Exchange rate differences and other                                                                                    |  |      |     |  |      |  | 46 |      |  |  | 644    | 
|Changes in composition of the group and other changes                                                                  |  |      | 1  |  |      |  |     |      |  |  |        | 
|                                                                                                                       |  |      |     |  |      |  |     |      |  |  |        | 
|Total income tax related to components of other comprehensive income                                                   |  |      | 2   |  |      |  | 115 |      |  |  | 1,799 | 
|                                                                                                                       |  |      |     |  |      |  |     |      |  |  |        | 

Tax Contingency

The contingent
liability in connection with taxation in the Netherlands refers to a possible obligation arising from the deduction from Dutch taxable profit of losses incurred by ING Bank in the United Kingdom in previous years. The existence of this obligation
will be confirmed only by the occurrence of future profits in the United Kingdom.



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-96 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







37 Fair value of assets and liabilities

a) FinanciaI assets and liabilities

The following table presents the
estimated fair values of ING Groups financial assets and liabilities. Certain items per the statement of financial position are not included in the table, as they do not meet the definition of a financial asset or liability. The aggregation of
the fair values presented below does not represent, and should not be construed as representing, the underlying value of ING Group.



|                                                           |  |                      |         |  |                                      |  |           |      |  |  |         |  |  |  |         | 
|---------------------------------------------------------- |  | -------------------- | ------- |  | ------------------------------------ |  | --------- | ---- |  |  | ------- |  |  |  | ------- | 
|Fair value of financial assets and liabilities             |  |                      |         |  |                                      |  |           |      |  |  |         | 
|                                                           |  | Estimated fair value |         |  | Statement offinancial position value | 
|                                                           |  | 2016                 |         |  | 2015                                 |  |           | 2016 |  |  | 2015    | 
|Financial assets                                           |  |                      |         |  |                                      |  |           |      |  |  |         |  |  |  |         | 
|Cash and balances with central banks                       |  |                      | 18,144  |  |                                      |  | 21,458    |      |  |  | 18,144  |  |  |  | 21,458  | 
|Loans and advances to banks1                               |  |                      | 28,940  |  |                                      |  | 30,132    |      |  |  | 28,858  |  |  |  | 29,988  | 
|Financial assets at fair value through profit or loss      |  |                      |         |  |                                      |  |           |      |  |  |         |  |  |  |         | 
| trading assets                                           |  |                      | 114,504 |  |                                      |  | 131,467   |      |  |  | 114,504 |  |  |  | 131,467 | 
| non-trading derivatives                                  |  |                      | 2,490   |  |                                      |  | 3,347     |      |  |  | 2,490   |  |  |  | 3,347   | 
| designated as at fair value through profit or loss       |  |                      | 5,099   |  |                                      |  | 3,234     |      |  |  | 5,099   |  |  |  | 3,234   | 
|Investments                                                |  |                      |         |  |                                      |  |           |      |  |  |         |  |  |  |         | 
|
available-for-sale                                       |  |                      | 82,912  |  |                                      |  | 87,000    |      |  |  | 82,912  |  |  |  | 87,000  | 
|
held-to-maturity                                         |  |                      | 8,809   |  |                                      |  | 7,855     |      |  |  | 8,751   |  |  |  | 7,826   | 
|Loans and advances to customers1                           |  |                      | 578,596 |  |                                      |  | 711,771   |      |  |  | 560,154 |  |  |  | 696,893 | 
|Other assets1,2                                            |  |                      | 13,709  |  |                                      |  | 11,329    |      |  |  | 13,709  |  |  |  | 11,329  | 
|                                                           |  |                      |         |  |                                      |  |           |      |  |  |         |  |  |  |         | 
|                                                           |  |                      | 853,203 |  |                                      |  | 1,007,593 |      |  |  | 834,621 |  |  |  | 992,542 | 
|Financial liabilities                                      |  |                      |         |  |                                      |  |           |      |  |  |         |  |  |  |         | 
|Deposits from banks1                                       |  |                      | 32,352  |  |                                      |  | 34,334    |      |  |  | 31,964  |  |  |  | 33,813  | 
|Customer deposits1                                         |  |                      | 523,850 |  |                                      |  | 664,833   |      |  |  | 522,908 |  |  |  | 664,210 | 
|Financial liabilities at fair value through profit or loss |  |                      |         |  |                                      |  |           |      |  |  |         |  |  |  |         | 
| trading liabilities                                      |  |                      | 83,167  |  |                                      |  | 88,807    |      |  |  | 83,167  |  |  |  | 88,807  | 
| non-trading derivatives                                  |  |                      | 3,541   |  |                                      |  | 4,257     |      |  |  | 3,541   |  |  |  | 4,257   | 
| designated as at fair value through profit or loss       |  |                      | 12,266  |  |                                      |  | 12,616    |      |  |  | 12,266  |  |  |  | 12,616  | 
|Other liabilities1,3                                       |  |                      | 15,247  |  |                                      |  | 11,622    |      |  |  | 15,247  |  |  |  | 11,622  | 
|Debt securities in issue                                   |  |                      | 103,559 |  |                                      |  | 121,770   |      |  |  | 103,234 |  |  |  | 121,289 | 
|Subordinated loans                                         |  |                      | 17,253  |  |                                      |  | 16,267    |      |  |  | 17,223  |  |  |  | 16,411  | 
|                                                           |  |                      |         |  |                                      |  |           |      |  |  |         |  |  |  |         | 
|                                                           |  |                      | 791,235 |  |                                      |  | 954,506   |      |  |  | 789,550 |  |  |  | 953,025 | 
|                                                           |  |                      |         |  |                                      |  |           |      |  |  |         |  |  |  |         | 



|1 | Loans and advances to customers and Customer deposits, as at 31 December 2015, are adjusted as a result of a changes in accounting policies. Reference is made to Note 1 Accounting policies 
Changes in accounting policies and Changes in presentation in 2016.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | Other assets do not include, among others: net defined benefit asset.
|- | ---------------------------------------------------------------------

|3 | Other liabilities do not include, among others: net defined benefit and related employee benefit liabilities, and other taxation and social security contributions.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

Valuation Methods

The estimated fair values represent the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is a market-based measurement, which is based on assumptions that market participants would use and
takes into account the characteristics of the asset or liability that market participants would take into account when pricing the asset or liability. Fair values of financial assets and liabilities are based on quoted prices in active market where
available. When such quoted prices are not available, the fair value is determined by using valuation techniques.

ING uses unadjusted quotes where available.
Unadjusted quoted prices are primarily obtained from exchange prices for listed financial instruments. Where an exchange price is not available, quoted market prices in active markets may be obtained from independent market vendors, brokers, or
market makers. In general, positions are valued at the bid price for a long position and at the offer price for a short position or are valued at the price within the bid-offer spread that is most
representative of fair value at the date of valuation.

For certain financial assets and liabilities quoted market prices are not available. For these financial
assets and liabilities, fair value is determined using valuation techniques. These valuation techniques range from discounting of cash flows to various valuation models, where relevant pricing factors including the market price of underlying
reference instruments, market parameters (volatilities, correlations and credit ratings), and customer behaviour are taken into account. ING maximises the use of market observable inputs and minimises the use of unobservable input in determining the
fair value. The fair value can be subjective dependent on the significance of the unobservable input to the overall valuation. All valuation techniques used are subject to internal review and approval. Most data used in these valuation techniques
are validated on a daily basis.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-97 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







When a group of financial assets and financial liabilities are managed on the basis of their net risk exposures, it
measures the fair value of a group of financial assets and liabilities on net portfolio basis.

Control framework

To determine whether the valuations based upon data inputs have led to an appropriate fair and prudent value, the process of independent price verification
(IPV) or price testing is applied. This is done to ensure the appropriate reflection of these valuations in balance sheet and the profit and loss accounts. IPV tests and confirms the reliability of the market data used in these
valuations and can lead to adjustments in valuation where data is found to be unreliable. The IPV process is performed at least monthly or more frequently depending on the nature of the market or trading activity. Multiple data sources are used to
the extent that such prices are available and taking into account cost-benefit ratio of retrieving such prices. Valuation differences between primary and secondary source data are assessed. When differences resulting from price testing exceed pre-approved thresholds, adjustments to the profit and loss shall be made. Differences and adjustments must be assessed individually, approved by the Local Parameter Committee, and reported back in the meeting
minutes. In case a material difference in value is found through the IPV process, it must be fully understood what the underlying cause is for the difference, and if a systematic change is required (e.g. change of source). Pricing and price testing
is applied at individual trade level and is organised at a desk level.

Valuation processes are governed by various governance bodies, which include Local Parameter
Committees (LPC), Global Price Testing Committee (GP&IC), Market Data Committee (MDC), Trading Pricing Model Committee (TPMC) and others. All relevant committees meet on a quarterly basis or more frequent as required. Key valuation controls
including product approval, IPV, valuation adjustments, and model use is monitored on a monthly basis

The Global Price Testing Committee is responsible for the use
of appropriate models and inputs related to fair valued positions. It oversees the quality and coherence of valuation methodologies and processes. Local Parameter Committees monitor the appropriateness of (quoted) pricing, any other relevant market
info, as well as that of pricing models themselves related to the fair valued positions to which they are applied. LPC executes valuation methodology and processes at a local level. Global Price Testing Committee oversees market data sources and
market data set up / points used for official valuation of positions for fair value. Trading Pricing Model Committee approve and review all pricing models and methodologies for the calculation of market parameters.

Valuation Adjustments

Valuation adjustments are integral part of the
fair value. They are included as part of the fair value to provide better estimation of market exit value on measurement date. ING applies various valuation adjustments including Bid-Offer adjustments, Credit
Valuation Adjustments (CVA), Debt Valuation Adjustments (DVA), Model Risk Valuation Adjustments, Collateral Valuation Adjustment (CollVA) and Funding Valuation Adjustment (FVA). The combination of Credit Valuation adjustments is called Bilateral
Valuation Adjustment (BVA).



| |  | Bid-Offer adjustments are required to adjust mid-market values to appropriate bid or offer value in order to best represent the exit value,
and therefore fair value. It is applicable to financial assets and liabilities that are valued at mid-price initially. If financial assets or liabilities have been quoted at bid and offer price, then no Bid-Offer adjustment is necessary. In practice this adjustment accounts for the difference in valuation from mid to bid and mid to offer for long and short exposures respectively. In principle assets are valued at
the bid prices and liabilities are valued at the offer price. For certain assets or liabilities, where market quoted price is not available, the price within the bid-offer spread that is most representative of
fair value is used.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Credit Valuation Adjustment (CVA) is the valuation component for counterparty credit risk of the derivative contracts. It has bilateral nature, where both counterpartys credit risk and ING own credit risks are
taken into account. The calculation is based on the estimation of the expected exposure, counterparties risk of default, and taking into account the collateral agreements as well as netting agreements. The counterparties risk of default
is measured by probability of default and expected loss given default, which is based on market information including credit default swap (CDS) spread. Where counterparty CDS spreads are not available, relevant proxy spreads are used. Additionally, wrong-way risk (when exposure to a counterparty is increasing and the credit quality of that counterparty deteriorates) and right-way risk (when exposure to a counterparty is
increasing and the credit quality of that counterparty improves) are included in the adjustment.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | ING applies Debt Valuation Adjustment (DVA) to own issued financial liabilities that are measured at fair value through profit or loss, if the credit risk component has not been included in the prices. In the DVA
calculation, the default probability of the institution are estimated based on the ING Funding spread.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Model risk occurs in a valuation model when the model does not produce the correct valuation due to mis-specification, mis- application, or
incorrect implemention of the model. Potential adjustments are determined during new product approval or model review process.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Collateral Valuation Adjustment (CollVA) is a derivative valuation adjustment capturing specific features of CSA (Credit Swap Annex) with a counterparty that the regular OIS (Overnight Index Swap) discounting framework
does not capture. Non-standard CSA features may include deviations in relation to the currency in which ING posts or receives collateral, deviations in remuneration rate on collateral which may pay lower or
higher rate than overnight rate or even no interest at all. Other deviations can be posting securities rather than cash as collateral.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                          |  |      |  | 
|----------------------------------------- |  | ---- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-98 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







| |  | ING applies an additional funding valuation adjustment (FVA) to address the funding costs associated with the collateral funding asymmetry on uncollateralized or partially collateralized
derivatives in the portfolio. This adjustment is based on the expected exposure profiles of the uncollateralized or partially collateralized OTC derivatives and market-based funding spreads.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The following methods and assumptions were used by ING Group to estimate the fair value of the financial instruments:

a.1) Financial assets

Cash and balances with central banks

The carrying amount of cash approximates its fair value.

Loans and
advances to banks

The fair values of receivables from banks are generally based on quoted market prices or, if unquoted, on estimates based on discounting
future cash flows using available market interest rates including appropriate spreads offered for receivables with similar characteristics, similar to Loans and advances to customers described below.

Financial assets at fair value through profit or loss and Investments

Derivatives

Derivatives contracts can either be exchange-traded or over the counter
(OTC). The fair value of exchange-traded derivatives is determined using quoted market prices in an active market and those derivatives are classified in Level 1 of the fair value hierarchy. For those instruments not actively traded, fair
values are estimated based on valuation techniques. OTC derivatives and derivatives trading in an inactive market are valued using valuation techniques because quoted market prices in an active market are not available for such instruments. The
valuation techniques and inputs depend on the type of derivative and the nature of the underlying instruments. The principal techniques used to value these instruments are based on discounted cash flows, Black-Scholes option models and Monte Carlo
simulation. These valuation models calculate the present value of expected future cash flows, based on no-arbitrage principles. These models are commonly used in the financial industry. Inputs to
valuation models are determined from observable market data where possible. Certain inputs may not be observable in the market directly, but can be determined from observable prices via valuation model calibration procedures. The inputs used include
prices available from exchanges, dealers, brokers or providers of pricing, yield curves, credit spreads, default rates, recovery rates, dividend rates, volatility of underlying interest rates, equity prices and foreign currency exchange rates. These
inputs are determined with reference to quoted prices, recently executed trades, independent market quotes and consensus data, where available.

For
uncollateralised OTC derivatives, ING applies Credit Valuation Adjustment to correctly reflect the counterparty credit risk in the valuation. The technique for calculating CVA is based on Monte Carlo simulation and uses various input including
counterparty credit spread, market interest rates, and market exchanges rates. The counterparty credit spreads are based on counterparty CDS spread where available. Otherwise, the indexed proxy CDS spreads are used.

Equity securities

The fair values of publicly traded equity securities are based on
quoted market prices when available. Where no quoted market prices are available, fair value is determined based on quoted prices for similar securities or other valuation techniques.

The fair value of private equity is based on quoted market prices, if available. In the absence of quoted prices in an active market, fair value is estimated on the
basis of an analysis of the investees financial position and results, risk profile, prospects, price, earnings comparisons and revenue multiples, and by reference to market valuations for similar entities quoted in an active market.

Debt securities

Fair values for debt securities are based on quoted market prices,
where available. Quoted market prices may be obtained from an exchange, dealer, broker, industry group, pricing service, or regulatory service. The quoted prices from non-exchange sources are assessed to
determine if they are tradable prices or consensus prices derived from in-house models utilising a variety of inputs. This distinction determines where it falls in the fair value hierarchy.

If quoted prices in an active market are not available, fair value is based on an analysis of available market inputs, which may include values obtained from one or
more pricing services or by a valuation technique that discounts expected future cash flows using a market interest rate curves, referenced credit spreads, maturity of the investment, and estimated prepayment rates where applicable.

Loans and receivables

Reference is made to Loans and advances to customers below.



| |  |      |  |                                          
| |  | ---- |  | -----------------------------------------
| |  | F-99 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Loans and advances to customers

For loans and advances that are repriced frequently and have had no significant changes in credit risk, carrying amounts represent a reasonable estimate of the fair
value. The fair value of other loans is estimated by discounting expected future cash flows using a discount rate that reflects credit risk, liquidity, and other current market conditions. The fair value of mortgage loans is estimated by taking into
account prepayment behaviour. Loans with similar characteristics are aggregated for calculation purposes.

Other assets

The other assets are stated at their carrying value which is not significantly different from their fair value.

a.2) Financial liabilities

Deposits from banks

The fair values of payables to banks are generally based on quoted market prices or, if not available, on estimates based on discounting future cash flows using
available market interest rates and credit spreads for payables to banks with similar characteristics.

Customer deposits

The carrying values of customer deposits with an immediate on demand features approximate their fair values. The fair values of deposits with fixed contractual terms
have been estimated based on discounting future cash flows using the interest rates currently applicable to deposits of similar maturities.

Financial
liabilities at fair value through profit or loss

The fair values of securities in the trading portfolio and other liabilities at fair value through profit or
loss are based on quoted market prices, where available. For those securities not actively traded, fair values are estimated based on internal discounted cash flow valuation techniques using interest rates and credit spreads that apply to similar
instruments. Reference is made to Financial assets at fair value through profit or loss above.

Other liabilities

The other liabilities are stated at their carrying value which is not significantly different from their fair value.

Debt securities in issue

The fair value of debt securities in issue is
generally based on quoted market prices, or if not available, on estimated prices by discounting expected future cash flows using a current market interest rate and credit spreads applicable to the yield, credit quality and maturity.

Subordinated loans

The fair value of publicly traded subordinated loans are
based on quoted market prices when available. Where no quoted market prices are available, fair value of the subordinated loans is estimated using discounted cash flows based on interest rates and credit spreads that apply to similar instruments.

a.3) Fair value hierarchy

ING Group has categorised its
financial instruments that are either measured in the statement of financial position at fair value or of which the fair value is disclosed, into a three level hierarchy based on the priority of the inputs to the valuation. The fair value hierarchy
gives the highest priority to (unadjusted) quoted prices in active markets for identical assets or liabilities and the lowest priority to valuation techniques supported by unobservable inputs. An active market for the asset or liability is a market
in which transactions for the asset or liability occur with sufficient frequency and volume to provide reliable pricing information on an ongoing basis. The fair value hierarchy consists of three levels, depending upon whether fair values were
determined based on (unadjusted) quoted prices in an active market (Level 1), valuation techniques with observable inputs (Level 2) or valuation techniques that incorporate inputs which are unobservable and which have a more than insignificant
impact on the fair value of the instrument (Level 3). Financial assets in Level 3 include for example illiquid debt securities, complex derivatives, certain complex loans (for which current market information about similar assets to use as
observable, corroborated data for all significant inputs into a valuation model is not available), and asset backed securities for which there is no active market and a wide dispersion in quoted prices.

Observable inputs reflect market data obtained from independent sources. Unobservable inputs are inputs which are based on the Groups own assumptions about the
factors that market participants would use in pricing an asset or liability, developed based on the best information available in the market. Unobservable inputs may include volatility, correlation, spreads to discount rates, default rates and
recovery rates, prepayment rates, and certain credit spreads. Transfers into and transfers out of fair value hierarchy levels are recognised as of the date of the event or change in circumstances that caused the transfer.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-100 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Level 1 - (Unadjusted) quoted prices in active markets

This category includes financial instruments whose fair value is determined directly by reference to (unadjusted) quoted prices in an active market that ING Group can
access. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer markets, brokered markets, or principal to principal markets. Those prices represent actual and
regularly occurring market transactions with sufficient frequency and volume to provide pricing information on an ongoing basis. Transfers out of Level 1 into Level 2 or Level 3 occur when ING Group establishes that markets are no
longer active and therefore (unadjusted) quoted prices no longer provide reliable pricing information.

Level 2 - Valuation technique supported by
observable inputs

This category includes financial instruments whose fair value is based on market observables other than (unadjusted) quoted prices. The fair
value for financial instruments in this category can be determined by reference to quoted prices for similar instruments in active markets, but for which the prices are modified based on other market observable external data or reference to quoted
prices for identical or similar instruments in markets that are not active. These prices can be obtained from a third party pricing service. ING analyses how the prices are derived and determines whether the prices are liquid tradable prices or
model based consensus prices taking various data as inputs.

For financial instruments that do not have a reference price available, fair value is determined using
a valuation technique (e.g. a model), where inputs in the model are taken from an active market or are observable, such as interest rates and yield curves observable at commonly quoted intervals, implied volatilities, and credit spreads.

If certain inputs in the model are unobservable, the instrument is still classified in this category, provided that the impact of those unobservable inputs on the
overall valuation is insignificant. The notion of significant is particularly relevant for the distinction between Level 2 and Level 3 assets and liabilities. ING Group has chosen to align the definition of significant with the 90%
confidence range as captured in the prudent value definition by EBA. Unobservable parameters are shifted down and upwards to reach this 90% confidence range. The same 90% confidence range is applied to model uncertainty. If the combined change in
asset value resulting from the shift of the unobservable parameters and the model uncertainty exceeds the threshold, the asset is classified as Level 3. A value change below the threshold results in a Level 2 classification.

Valuation techniques used for Level 2 assets and liabilities range from discounting of cash flows to various industry standard valuation models such as option
pricing model and Monte Carlo simulation model, where relevant pricing factors including the market price of underlying reference instruments, market parameters (volatilities, correlations and credit ratings) and customer behaviour are taken into
account.

Level 3 - Valuation technique supported by unobservable inputs

This category includes financial instruments whose fair value is determined using a valuation technique (e.g. a model) for which more than an insignificant part of the
inputs in terms of the overall valuation are not market observable. This category also includes financial assets and liabilities whose fair value is determined by reference to price quotes but for which the market is considered inactive.
Level 3 Trading assets, Non-trading derivatives, Assets designated at fair value through profit or loss, and Level 3 Financial liabilities at fair value through profit or loss include financial
instruments with different characteristics and nature, which are valued on the basis of valuation techniques that feature one or more significant inputs that are unobservable. An instrument in its entirety is classified as Level 3 if a
significant portion of the instruments fair value is driven by unobservable inputs. Unobservable in this context means that there is little or no current market data available from which to derive a price that an unrelated, informed buyer
would purchase the asset or liability at.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-101 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Financial instruments at fair value

The fair values of the financial instruments were determined as follows:



|                                                                                                       |  |         |        |  |         |  |         |         |  |  |       |  |  |  |         | 
|------------------------------------------------------------------------------------------------------ |  | ------- | ------ |  | ------- |  | ------- | ------- |  |  | ----- |  |  |  | ------- | 
|Methods applied in determining fair values of financial assets and liabilities (carried at fair value) | 
|2016                                                                                                   |  | Level 1 |        |  | Level 2 |  |         | Level 3 |  |  | Total | 
|Financial Assets                                                                                       |  |         |        |  |         |  |         |         |  |  |       |  |  |  |         | 
|Trading assets                                                                                         |  |         | 17,652 |  |         |  | 95,629  |         |  |  | 1,223 |  |  |  | 114,504 | 
|Non-trading derivatives                                                                                |  |         | 3      |  |         |  | 2,231   |         |  |  | 256   |  |  |  | 2,490   | 
|Financial assets designated as at fair value through profit or loss                                    |  |         | 502    |  |         |  | 4,141   |         |  |  | 456   |  |  |  | 5,099   | 
|Available-for-sale
investments                                                                         |  |         | 76,238 |  |         |  | 6,153   |         |  |  | 521   |  |  |  | 82,912  | 
|                                                                                                       |  |         |        |  |         |  |         |         |  |  |       |  |  |  |         | 
|                                                                                                       |  |         | 94,395 |  |         |  | 108,154 |         |  |  | 2,456 |  |  |  | 205,005 | 
|Financial liabilities                                                                                  |  |         |        |  |         |  |         |         |  |  |       |  |  |  |         | 
|Trading liabilities                                                                                    |  |         | 6,139  |  |         |  | 75,650  |         |  |  | 1,378 |  |  |  | 83,167  | 
|Non-trading derivatives                                                                                |  |         |        |  |         |  | 3,517   |         |  |  | 24    |  |  |  | 3,541   | 
|Financial liabilities designated as at fair value through profit or loss                               |  |         | 1,348  |  |         |  | 10,795  |         |  |  | 123   |  |  |  | 12,266  | 
|                                                                                                       |  |         |        |  |         |  |         |         |  |  |       |  |  |  |         | 
|                                                                                                       |  |         | 7,487  |  |         |  | 89,962  |         |  |  | 1,525 |  |  |  | 98,974  | 
|                                                                                                       |  |         |        |  |         |  |         |         |  |  |       |  |  |  |         | 

Main changes in fair value hierarchy in 2016

In 2016, the decrease in Level 2 financial assets and liabilities is mainly due to decreased (reverse) repo balances.

There were no significant transfers between Level 1 and Level 2.

There
were no changes in the valuation techniques during the year.



|                                                                                                       |  |         |         |  |         |  |         |         |  |  |       |  |  |  |         | 
|------------------------------------------------------------------------------------------------------ |  | ------- | ------- |  | ------- |  | ------- | ------- |  |  | ----- |  |  |  | ------- | 
|Methods applied in determining fair values of financial assets and liabilities (carried at fair value) | 
|2015                                                                                                   |  | Level 1 |         |  | Level 2 |  |         | Level 3 |  |  | Total | 
|Financial Assets                                                                                       |  |         |         |  |         |  |         |         |  |  |       |  |  |  |         | 
|Trading assets                                                                                         |  |         | 27,126  |  |         |  | 103,195 |         |  |  | 1,146 |  |  |  | 131,467 | 
|Non-trading derivatives                                                                                |  |         | 4       |  |         |  | 3,175   |         |  |  | 168   |  |  |  | 3,347   | 
|Financial assets designated as at fair value through profit or loss                                    |  |         | 242     |  |         |  | 2,654   |         |  |  | 338   |  |  |  | 3,234   | 
|Available-for-sale
investments                                                                         |  |         | 81,640  |  |         |  | 4,667   |         |  |  | 693   |  |  |  | 87,000  | 
|                                                                                                       |  |         |         |  |         |  |         |         |  |  |       |  |  |  |         | 
|                                                                                                       |  |         | 109,012 |  |         |  | 113,691 |         |  |  | 2,345 |  |  |  | 225,048 | 
|Financial liabilities                                                                                  |  |         |         |  |         |  |         |         |  |  |       |  |  |  |         | 
|Trading liabilities                                                                                    |  |         | 9,037   |  |         |  | 78,531  |         |  |  | 1,239 |  |  |  | 88,807  | 
|Non-trading derivatives                                                                                |  |         |         |  |         |  | 4,256   |         |  |  | 1     |  |  |  | 4,257   | 
|Financial liabilities designated as at fair value through profit or loss                               |  |         | 1,578   |  |         |  | 10,840  |         |  |  | 198   |  |  |  | 12,616  | 
|                                                                                                       |  |         |         |  |         |  |         |         |  |  |       |  |  |  |         | 
|                                                                                                       |  |         | 10,615  |  |         |  | 93,627  |         |  |  | 1,438 |  |  |  | 105,680 | 
|                                                                                                       |  |         |         |  |         |  |         |         |  |  |       |  |  |  |         | 

Main changes in fair value hierarchy in 2015

There were no significant transfers between Level 1 and Level 2.

In 2015,
there were changes in the valuation techniques driven by current market conditions, with LIBOR being negative.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-102 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                      |  |               |       |  |                        |  |     |                                                                  |  |  |                               |  |  |       |      |  |  |  |       | 
|--------------------------------------------------------------------- |  | ------------- | ----- |  | ---------------------- |  | --- | ---------------------------------------------------------------- |  |  | ----------------------------- |  |  | ----- | ---- |  |  |  | ----- | 
|Changes in Level 3 Financial assets                                   |  |               |       |  |                        |  |     |                                                                  |  |  |                               |  |  |       |      |  |  |  |       | 
|2016                                                                  |  | Tradingassets |       |  | Non-tradingderivatives |  |     | Financial assetsdesignated asat fair valuethrough profitand loss |  |  | Available-for-saleinvestments |  |  | Total |     
|Opening balance                                                       |  |               | 1,146 |  |                        |  | 168 |                                                                  |  |  | 338                           |  |  |       | 693  |  |  |  | 2,345 | 
|Amounts recognised in the statement of profit or loss during the year |  |               | 226   |  |                        |  | 34 |                                                                  |  |  | 76                            |  |  |       | 200  |  |  |  | 468   | 
|Revaluation recognised in equity during the year                      |  |               |       |  |                        |  |     |                                                                  |  |  |                               |  |  |       | 144 |  |  |  | 144  | 
|Purchase of assets                                                    |  |               | 77    |  |                        |  | 5   |                                                                  |  |  | 193                           |  |  |       | 68   |  |  |  | 343   | 
|Sale of assets                                                        |  |               | 71   |  |                        |  | 4  |                                                                  |  |  | 76                           |  |  |       | 183 |  |  |  | 334  | 
|Maturity/settlement                                                   |  |               | 135  |  |                        |  |     |                                                                  |  |  |                               |  |  |       | 9   |  |  |  | 144  | 
|Reclassifications                                                     |  |               |       |  |                        |  |     |                                                                  |  |  |                               |  |  |       | 92  |  |  |  | 92   | 
|Transfers into Level 3                                                |  |               | 21    |  |                        |  | 62  |                                                                  |  |  |                               |  |  |       | 5    |  |  |  | 88    | 
|Transfers out of Level 3                                              |  |               | 43   |  |                        |  |     |                                                                  |  |  | 75                           |  |  |       |      |  |  |  | 118  | 
|Exchange rate differences                                             |  |               | 3     |  |                        |  |     |                                                                  |  |  |                               |  |  |       | 8    |  |  |  | 11    | 
|Changes in the composition of the group and other changes             |  |               | 1    |  |                        |  | 59  |                                                                  |  |  |                               |  |  |       | -25  |  |  |  | 33    | 
|                                                                      |  |               |       |  |                        |  |     |                                                                  |  |  |                               |  |  |       |      |  |  |  |       | 
|Closing balance                                                       |  |               | 1,223 |  |                        |  | 256 |                                                                  |  |  | 456                           |  |  |       | 521  |  |  |  | 2,456 | 
|                                                                      |  |               |       |  |                        |  |     |                                                                  |  |  |                               |  |  |       |      |  |  |  |       | 

In 2016, financial assets were transferred out of Level 3 on the basis that the valuation is not significantly impacted by
unobservable inputs.

Included in Amounts recognised in the statement of profit or loss during the year, is EUR 163 million related to the release of
revaluation reserves on shares held in VISA Europe Limited. For further information on the VISA transaction, reference is made to Note 51 Other events.



|                                                                      |  |                |       |  |                        |  |      |                                                                  |  |  |                               |  |  |       |      |  |  |  |       | 
|--------------------------------------------------------------------- |  | -------------- | ----- |  | ---------------------- |  | ---- | ---------------------------------------------------------------- |  |  | ----------------------------- |  |  | ----- | ---- |  |  |  | ----- | 
|Changes in Level 3 Financial assets                                   | 
|2015                                                                  |  | Trading assets |       |  | Non-tradingderivatives |  |      | Financial assetsdesignated asat fair valuethrough profitand loss |  |  | Available-for-saleinvestments |  |  | Total |     
|Opening balance                                                       |  |                | 810   |  |                        |  | 310  |                                                                  |  |  | 90                            |  |  |       | 573  |  |  |  | 1,783 | 
|Amounts recognised in the statement of profit or loss during the year |  |                | 146   |  |                        |  | 163 |                                                                  |  |  | 55                           |  |  |       | 30   |  |  |  | 42   | 
|Revaluation recognised in equity during the year                      |  |                |       |  |                        |  |      |                                                                  |  |  |                               |  |  |       | 171  |  |  |  | 171   | 
|Purchase of assets                                                    |  |                | 356   |  |                        |  | 4    |                                                                  |  |  | 467                           |  |  |       | 125  |  |  |  | 952   | 
|Sale of assets                                                        |  |                | 76   |  |                        |  |      |                                                                  |  |  | 148                          |  |  |       | 209 |  |  |  | 433  | 
|Maturity/settlement                                                   |  |                | 46   |  |                        |  | 1   |                                                                  |  |  | 16                           |  |  |       | 5   |  |  |  | 68   | 
|Transfers into Level 3                                                |  |                | 11    |  |                        |  |      |                                                                  |  |  |                               |  |  |       |      |  |  |  | 11    | 
|Transfers out of Level 3                                              |  |                | 61   |  |                        |  |      |                                                                  |  |  |                               |  |  |       |      |  |  |  | 61   | 
|Exchange rate differences                                             |  |                | 6     |  |                        |  | 18   |                                                                  |  |  |                               |  |  |       | 23   |  |  |  | 47    | 
|Changes in the composition of the group and other changes             |  |                |       |  |                        |  |      |                                                                  |  |  |                               |  |  |       | 15  |  |  |  | 15   | 
|                                                                      |  |                |       |  |                        |  |      |                                                                  |  |  |                               |  |  |       |      |  |  |  |       | 
|Closing balance                                                       |  |                | 1,146 |  |                        |  | 168  |                                                                  |  |  | 338                           |  |  |       | 693  |  |  |  | 2,345 | 
|                                                                      |  |                |       |  |                        |  |      |                                                                  |  |  |                               |  |  |       |      |  |  |  |       | 

In 2015, there were no significant transfers into or out of Level 3.

Included in Revaluation recognised in equity during the year, was an amount of EUR 154 million related to available-for-sale equity securities held in VISA Europe Limited. References is made to Note 5 Investments, Note 19 Equity and Note 51 Other events.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-103 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                      |  |                    |       |  |                        |  |     |                                                                     |  |  |       |  |  |  |       | 
|--------------------------------------------------------------------- |  | ------------------ | ----- |  | ---------------------- |  | --- | ------------------------------------------------------------------- |  |  | ----- |  |  |  | ----- | 
|Changes in Level 3 Financial liabilities                              | 
|2016                                                                  |  | Tradingliabilities |       |  | Non-tradingderivatives |  |     | Financialliabilitiesdesignated asat fair valuethrough profitor loss |  |  | Total | 
|Opening balance                                                       |  |                    | 1,239 |  |                        |  | 1   |                                                                     |  |  | 198   |  |  |  | 1,438 | 
|Amounts recognised in the statement of profit or loss during the year |  |                    | 277   |  |                        |  | 12  |                                                                     |  |  | 3    |  |  |  | 286   | 
|Issue of liabilities                                                  |  |                    | 53    |  |                        |  | 11  |                                                                     |  |  | 4     |  |  |  | 68    | 
|Early repayment of liabilities                                        |  |                    | 62   |  |                        |  | 11 |                                                                     |  |  | 13   |  |  |  | 86   | 
|Maturity/settlement                                                   |  |                    | 62   |  |                        |  |     |                                                                     |  |  |       |  |  |  | 62   | 
|Transfers into Level 3                                                |  |                    | 16    |  |                        |  | 11  |                                                                     |  |  |       |  |  |  | 27    | 
|Transfers out of Level 3                                              |  |                    | 86   |  |                        |  |     |                                                                     |  |  | 63   |  |  |  | 149  | 
|Exchange rate differences                                             |  |                    | 6     |  |                        |  |     |                                                                     |  |  |       |  |  |  | 6     | 
|Changes in the composition of the group and other changes             |  |                    | 3    |  |                        |  |     |                                                                     |  |  |       |  |  |  | 3    | 
|                                                                      |  |                    |       |  |                        |  |     |                                                                     |  |  |       |  |  |  |       | 
|Closing balance                                                       |  |                    | 1,378 |  |                        |  | 24  |                                                                     |  |  | 123   |  |  |  | 1,525 | 
|                                                                      |  |                    |       |  |                        |  |     |                                                                     |  |  |       |  |  |  |       | 

In 2016, financial liabilities were transferred out of Level 3 mainly due to the valuation not being significantly impacted by
unobservable inputs.



|                                                                      |  |                    |       |  |                        |  |     |                                                                     |  |  |       |  |  |  |       | 
|--------------------------------------------------------------------- |  | ------------------ | ----- |  | ---------------------- |  | --- | ------------------------------------------------------------------- |  |  | ----- |  |  |  | ----- | 
|Changes in Level 3 Financial liabilities                              | 
|2015                                                                  |  | Tradingliabilities |       |  | Non-tradingderivatives |  |     | Financialliabilitiesdesignated asat fair valuethrough profitor loss |  |  | Total | 
|Opening balance                                                       |  |                    | 997   |  |                        |  | 16  |                                                                     |  |  | 323   |  |  |  | 1,336 | 
|Amounts recognised in the statement of profit or loss during the year |  |                    | 120   |  |                        |  | 15 |                                                                     |  |  | 83   |  |  |  | 22    | 
|Issue of liabilities                                                  |  |                    | 244   |  |                        |  |     |                                                                     |  |  | 121   |  |  |  | 365   | 
|Early repayment of liabilities                                        |  |                    | 54   |  |                        |  |     |                                                                     |  |  | 31   |  |  |  | 85   | 
|Maturity/settlement                                                   |  |                    | 24   |  |                        |  |     |                                                                     |  |  | 15   |  |  |  | 39   | 
|Transfers into Level 3                                                |  |                    | 12    |  |                        |  |     |                                                                     |  |  |       |  |  |  | 12    | 
|Transfers out of Level 3                                              |  |                    | 65   |  |                        |  |     |                                                                     |  |  | 117  |  |  |  | 182  | 
|Exchange rate differences                                             |  |                    | 9     |  |                        |  |     |                                                                     |  |  |       |  |  |  | 9     | 
|                                                                      |  |                    |       |  |                        |  |     |                                                                     |  |  |       |  |  |  |       | 
|Closing balance                                                       |  |                    | 1,239 |  |                        |  | 1   |                                                                     |  |  | 198   |  |  |  | 1,438 | 
|                                                                      |  |                    |       |  |                        |  |     |                                                                     |  |  |       |  |  |  |       | 

In 2015, financial liabilities of EUR 182 million were transferred out of Level 3 mainly due to the valuation not being
significantly impacted by unobservable inputs.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-104 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                                |  |                           |     |  |                             |  |     |       |  |  |     | 
|------------------------------------------------------------------------------- |  | ------------------------- | --- |  | --------------------------- |  | --- | ----- |  |  | --- | 
|Amounts recognised in the statement of profit or loss during the year (Level 3) | 
|2016                                                                            |  | Held at balancesheet date |     |  | Derecognisedduring the year |  |     | Total | 
|Financial assets                                                                |  |                           |     |  |                             |  |     |       |  |  |     | 
|Trading assets                                                                  |  |                           | 226 |  |                             |  |     |       |  |  | 226 | 
|Non-trading derivatives                                                         |  |                           | 34 |  |                             |  |     |       |  |  | 34 | 
|Financial assets designated at fair value through profit or loss                |  |                           | 76  |  |                             |  |     |       |  |  | 76  | 
|Available-for-sale
investments                                                  |  |                           | 3  |  |                             |  | 203 |       |  |  | 200 | 
|                                                                                |  |                           |     |  |                             |  |     |       |  |  |     | 
|                                                                                |  |                           | 265 |  |                             |  | 203 |       |  |  | 468 | 
|Financial liabilities                                                           |  |                           |     |  |                             |  |     |       |  |  |     | 
|Trading liabilities                                                             |  |                           | 277 |  |                             |  |     |       |  |  | 277 | 
|Non-trading derivatives                                                         |  |                           | 12  |  |                             |  |     |       |  |  | 12  | 
|Financial liabilities designated at fair value through profit or loss           |  |                           | 3  |  |                             |  |     |       |  |  | 3  | 
|                                                                                |  |                           |     |  |                             |  |     |       |  |  |     | 
|                                                                                |  |                           | 286 |  |                             |  |    |       |  |  | 286 | 
|                                                                                |  |                           |     |  |                             |  |     |       |  |  |     | 



|                                                                                |  |                           |      |  |                             |  |    |       |  |  |      | 
|------------------------------------------------------------------------------- |  | ------------------------- | ---- |  | --------------------------- |  | -- | ----- |  |  | ---- | 
|Amounts recognised in the statement of profit or loss during the year (Level 3) | 
|2015                                                                            |  | Held at balancesheet date |      |  | Derecognisedduring the year |  |    | Total | 
|Financial assets                                                                |  |                           |      |  |                             |  |    |       |  |  |      | 
|Trading assets                                                                  |  |                           | 146  |  |                             |  |    |       |  |  | 146  | 
|Non-trading derivatives                                                         |  |                           | 163 |  |                             |  |    |       |  |  | 163 | 
|Financial assets designated at fair value through profit or loss                |  |                           | 55  |  |                             |  |    |       |  |  | 55  | 
|Available-for-sale
investments                                                  |  |                           | 34  |  |                             |  | 64 |       |  |  | 30   | 
|                                                                                |  |                           |      |  |                             |  |    |       |  |  |      | 
|                                                                                |  |                           | 106 |  |                             |  | 64 |       |  |  | 42  | 
|Financial liabilities                                                           |  |                           |      |  |                             |  |    |       |  |  |      | 
|Trading liabilities                                                             |  |                           | 120  |  |                             |  |    |       |  |  | 120  | 
|Non-trading derivatives                                                         |  |                           | 15  |  |                             |  |    |       |  |  | 15  | 
|Financial liabilities designated at fair value through profit or loss           |  |                           | 83  |  |                             |  |    |       |  |  | 83  | 
|                                                                                |  |                           |      |  |                             |  |    |       |  |  |      | 
|                                                                                |  |                           | 22   |  |                             |  |   |       |  |  | 22   | 
|                                                                                |  |                           |      |  |                             |  |    |       |  |  |      | 

Recognition of unrealised gains and losses in Level 3

Amounts recognised in the statement of profit or loss relating to unrealised gains and losses during the year that relates to Level 3 assets and liabilities are
included in the statement of profit or loss as follows:



| |  | Results on trading assets and trading liabilities are included in Valuation results and net trading income;
|- |  | -----------------------------------------------------------------------------------------------------------



| |  | Non-trading derivatives are included in Valuation results and net trading income; and
|- |  | -------------------------------------------------------------------------------------



| |  | Financial assets and liabilities designated at fair value through profit or loss are included in Valuation results and net trading income - Valuation results on assets and liabilities designated at fair value through
profit or loss (excluding trading).
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Unrealised gains and losses that relate to
Available-for-sale investments recognised in Other comprehensive income are included in the Revaluation reserve  Available-for-sale reserve and other.

Level 3 Financial assets and liabilities

Financial assets measured at fair value in the statement of financial position as at 31 December 2016 of EUR 205 billion includes an amount of EUR
2.5 billion (1.2%) which is classified as Level 3 (31 December 2015: EUR 2.3 billion, being 1.0%). Changes in Level 3 from 31 December 2015 to 31 December 2016 are disclosed above in the table Changes in
Level 3 Financial assets.

Financial liabilities measured at fair value in the statement of financial position as at 31 December 2016 of EUR
99 billion includes an amount of EUR 1.5 billion (1.5%) which is classified as Level 3 (31 December 2015: EUR 1.4 billion, being 1.3%). Changes in Level 3 from 31 December 2015 to 31 December 2016 are
disclosed above in the table Changes in Level 3 Financial liabilities.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-105 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Financial assets and liabilities in Level 3 include both assets and liabilities for which the fair value was
determined using valuation techniques that incorporate unobservable inputs and assets and liabilities for which the fair value was determined using quoted prices, but have been adjusted to reflect that the market was not actively trading at or
around the balance sheet date. Unobservable inputs are inputs which are based on INGs own assumptions about the factors that market participants would use in pricing an asset or liability, developed based on the best information available in
the circumstances. Unobservable inputs may include volatility, correlation, spreads to discount rates, default rates and recovery rates, prepayment rates, and certain credit spreads. Valuation techniques that incorporate unobservable inputs are
sensitive to the inputs used.

Of the total amount of financial assets classified as Level 3 as at 31 December 2016 of EUR 2.5 billion
(31 December 2015: EUR 2.3 billion), an amount of EUR 1.0 billion (42%) (31 December 2015: EUR 0.9 billion, being 39%) is based on unadjusted quoted prices in inactive markets. As ING does not generally adjust quoted prices using
its own inputs, there is no significant sensitivity to INGs own unobservable inputs.

Furthermore, Level 3 financial assets includes approximately EUR
0.5 billion (31 December 2015: EUR 0.3 billion) which relates to financial assets that are part of structures that are designed to be fully neutral in terms of market risk. Such structures include various financial assets and liabilities
for which the overall sensitivity to market risk is insignificant. Whereas the fair value of individual components of these structures may be determined using different techniques and the fair value of each of the components of these structures may
be sensitive to unobservable inputs, the overall sensitivity is by design not significant.

The remaining EUR 1.0 billion (31 December 2015: EUR 1.1
billion) of the fair value classified in Level 3 financial assets is established using valuation techniques that incorporates certain inputs that are unobservable. This relates mainly to assets that are classified as Available-for-sale investments, for which changes in fair value are recognised in shareholders equity and do not directly impact profit or loss.

Of the total amount of financial liabilities classified as Level 3 as at 31 December 2016 of EUR 1.5 billion (31 December 2015: EUR 1.4 billion), an
amount of EUR 0.9 billion (59%) (31 December 2015: EUR 0.7 billion, being 50%) is based on unadjusted quoted prices in inactive markets. As ING does not generally adjust quoted prices using its own inputs, there is no significant
sensitivity to INGs own unobservable inputs.

Furthermore, Level 3 financial liabilities includes approximately EUR 0.1 billion (31 December
2015: EUR 0.2 billion) which relates to financial liabilities that are part of structures that are designed to be fully neutral in terms of market risk. As explained above, the fair value of each of the components of these structures may be
sensitive to unobservable inputs, but the overall sensitivity is by design not significant.

The remaining EUR 0.5 billion (31 December 2015: EUR 0.5
billion) of the fair value classified in Level 3 financial liabilities is established using valuation techniques that incorporates certain inputs that are unobservable.

The table below provides a summary of the valuation techniques, key unobservable inputs and the lower and upper range of such unobservable inputs, by type of
Level 3 asset/liability. The lower and upper range mentioned in the overview represent the lowest and highest variance of the respective valuation input as actually used in the valuation of the different financial instruments. Amounts and
percentages stated are unweighted. The range can vary from period to period subject to market movements and change in Level 3 position. Lower and upper bounds reflect the variability of Level 3 positions and their underlying valuation
inputs in the portfolio, but do not adequately reflect their level of valuation uncertainty. For valuation uncertainty assessment, reference is made to section Sensitivity analysis of unobservable inputs (Level 3).



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-106 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            |                                |  |            |      |   |  |  |       |  
|--------------------------------------------------------------- |  | ------ | ----- |  | ----------- |  | ----- | -------------------- |  |  | ------------------------------- |  | ---------- | ------------------------------ |  | ---------- | ---- | - |  |  | ----- | -
|Valuation techniques and range of unobservable inputs (Level 3) | 
|2016                                                            |  | Assets |       |  | Liabilities |  |       | Valuation techniques |  |  | Significant
unobservable inputs |  | Lowerrange |                                |  | Upperrange |     
|At fair value through profit or loss                            |  |        |       |  |             |  |       |                      |  |  |                                 |  |            |                                |  |            |      |   |  |  |       |  
|Debt securities                                                 |  |        | 180   |  |             |  |       |                      |  |  | Price based                     |  |            | Price (%)                      |  |            | 0    | % |  |  | 122   | %
|                                                                |  |        |       |  |             |  |       |                      |  |  | Net assetvalue                  |  |            | Price (%)                      |  |            | 10   | % |  |  | 19    | %
|Equity securities                                               |  |        | 4     |  |             |  |       |                      |  |  | Price based                     |  |            | Price (%)                      |  |            | 0    | % |  |  | 0     | %
|Loans and advances                                              |  |        | 326   |  |             |  | 3     |                      |  |  | Price based                     |  |            | Price (%)                      |  |            | 60   | % |  |  | 101   | %
|                                                                |  |        |       |  |             |  |       |                      |  |  | Presentvaluetechniques          |  |            | Credit spread (bps)            |  |            | 130  |   |  |  | 150   |  
|Structured notes                                                |  |        | 6     |  |             |  | 125   |                      |  |  | Price based                     |  |            | Price (%)                      |  |            | 52   | % |  |  | 111   | %
|                                                                |  |        |       |  |             |  |       |                      |  |  | Net assetvalue                  |  |            | Price (%)                      |  |            | 19   | % |  |  | 19    | %
|                                                                |  |        |       |  |             |  |       |                      |  |  | Optionpricingmodel              |  |            | Equity volatility (%)          |  |            | 16   | % |  |  | 34    | %
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Equity/Equity correlation      |  |            | 0.0  |   |  |  | 0.8   |  
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Equity/FX correlation          |  |            | 0.4 |   |  |  | 0.1   |  
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Dividend yield (%)             |  |            | 1    | % |  |  | 5     | %
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Interest rate volatility (%)   |  |            | n.a  |   |  |  | n.a   |  
|                                                                |  |        |       |  |             |  |       |                      |  |  | Presentvaluetechniques          |  |            | Implied correlation            |  |            | 0.7  |   |  |  | 0.7   |  
|Derivatives                                                     |  |        |       |  |             |  |       |                      |  |  |                                 |  |            |                                |  |            |      |   |  |  |       |  
| Rates                                                         |  |        | 486   |  |             |  | 457   |                      |  |  | Optionpricingmodel              |  |            | Interest rate volatility (bps) |  |            | 22   |   |  |  | 300   |  
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Interest rate correlation      |  |            | n.a  |   |  |  | n.a.  |  
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | IR/INF correlation             |  |            | 0.5  |   |  |  | 0.5   |  
|                                                                |  |        |       |  |             |  |       |                      |  |  | Presentvaluetechniques          |  |            | Reset spread (%)               |  |            | 2    | % |  |  | 2     | %
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Prepayment rate (%)            |  |            | 5    | % |  |  | 10    | %
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Inflation rate (%)             |  |            | 2    | % |  |  | 4     | %
| FX                                                            |  |        | 642   |  |             |  | 688   |                      |  |  | Presentvaluetechniques          |  |            | Inflation rate (%)             |  |            | 2    | % |  |  | 3     | %
| Credit                                                        |  |        | 33    |  |             |  | 43    |                      |  |  | Presentvaluetechniques          |  |            | Credit spread (bps)            |  |            | 0    |   |  |  | 1,596 |  
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Implied correlation            |  |            | 0.7  |   |  |  | 1.0   |  
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Jump rate (%)                  |  |            | 12   | % |  |  | 12    | %
|                                                                |  |        |       |  |             |  |       |                      |  |  | Price based                     |  |            | Price (%)                      |  |            | 99   | % |  |  | 99    | %
| Equity                                                        |  |        | 258   |  |             |  | 208   |                      |  |  | Optionpricingmodel              |  |            | Equity volatility (%)          |  |            | 0    | % |  |  | 140   | %
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Equity/Equity correlation      |  |            | 0.1 |   |  |  | 1.0   |  
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Equity/FX correlation          |  |            | 0.9 |   |  |  | 0.6   |  
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Dividend yield (%)             |  |            | 0    | % |  |  | 13    | %
| Other                                                         |  |        |       |  |             |  | 1     |                      |  |  | Optionpricingmodel              |  |            | Commodity volatility (%)       |  |            | 13   | % |  |  | 55    | %
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Com/Com correlation            |  |            | 0.0  |   |  |  | 0.9   |  
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Com/FX correlation             |  |            | 0.5 |   |  |  | 0.0   |  
|Available for sale                                              |  |        |       |  |             |  |       |                      |  |  |                                 |  |            |                                |  |            |      |   |  |  |       |  
| Debt                                                          |  |        | 55    |  |             |  |       |                      |  |  | Price based                     |  |            | Price (%)                      |  |            | 0    | % |  |  | 99    | %
|                                                                |  |        |       |  |             |  |       |                      |  |  | Presentvaluetechniques          |  |            | Credit spread (bps)            |  |            | 339  |   |  |  | 400   |  
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            | Weighted average life (yr)     |  |            | 1.6  |   |  |  | 3.2   |  
| Equity                                                        |  |        | 466   |  |             |  |       |                      |  |  | Discountedcash flow             |  |            | Financial Statements           |  |            | n.a  |   |  |  | n.a   |  
|                                                                |  |        |       |  |             |  |       |                      |  |  | Multipliermethod                |  |            | Observable market factors      |  |            | n.a  |   |  |  | n.a   |  
|                                                                |  |        |       |  |             |  |       |                      |  |  | Comparabletransactions          |  |            |                                |  |            | n.a  |   |  |  | n.a   |  
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            |                                |  |            |      |   |  |  |       |  
|Total                                                           |  |        | 2,456 |  |             |  | 1,525 |                      |  |  |                                 |  |            |                                |  |            |      |   |  |  |       |  
|                                                                |  |        |       |  |             |  |       |                      |  |  |                                 |  |            |                                |  |            |      |   |  |  |       |  



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-107 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  |                                |  |  |            |   |  |  |        |  
|--------------------------------------------------------------- |  | ------ | ----- |  | ----------- |  | ----- | -------------------- |  | ------------------------------- |  | ------------------------------ |  |  | ---------- | - |  |  | ------ | -
|Valuation techniques and range of unobservable inputs (Level 3) | 
|2015                                                            |  | Assets |       |  | Liabilities |  |       | Valuation techniques |  | Significant
unobservable inputs |  | Lowerrange                     |  |  | Upperrange |  
|At fair value through profit or loss                            |  |        |       |  |             |  |       |                      |  |                                 |  |                                |  |  |            |   |  |  |        |  
|Debt securities                                                 |  |        | 72    |  |             |  |       |                      |  | Price based                     |  | Price (%)                      |  |  | 1          | % |  |  | 115    | %
|                                                                |  |        |       |  |             |  |       |                      |  | Net asset value                 |  | Price (%)                      |  |  | 15         | % |  |  | 33     | %
|Loans and advances                                              |  |        | 356   |  |             |  | 7     |                      |  | Price based                     |  | Price (%)                      |  |  | 0          | % |  |  | 100    | %
|                                                                |  |        |       |  |             |  |       |                      |  | Present value techniques        |  | Credit spread (bps)            |  |  | 130        |   |  |  | 135    |  
|Structured notes                                                |  |        |       |  |             |  | 198   |                      |  | Price based                     |  | Price (%)                      |  |  | 0          | % |  |  | 111    | %
|                                                                |  |        |       |  |             |  |       |                      |  | Net asset value                 |  | Price (%)                      |  |  | 33         | % |  |  | 33     | %
|                                                                |  |        |       |  |             |  |       |                      |  | Option pricing model            |  | Equity volatility (%)          |  |  | 10         | % |  |  | 109    | %
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Equity/Equity correlation      |  |  | 0.6        |   |  |  | 0.9    |  
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Equity/FX correlation          |  |  | 0.5       |   |  |  | 0.3    |  
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Dividend yield (%)             |  |  | 1          | % |  |  | 5      | %
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Interest rate volatility (%)   |  |  | n.a        |   |  |  | n.a    |  
|                                                                |  |        |       |  |             |  |       |                      |  | Present value techniques        |  | Implied correlation            |  |  | 0.7        |   |  |  | 0.9    |  
|Derivatives                                                     |  |        |       |  |             |  |       |                      |  |                                 |  |                                |  |  |            |   |  |  |        |  
| Rates                                                         |  |        | 480   |  |             |  | 602   |                      |  | Option pricing model            |  | Interest rate volatility (bps) |  |  | 21         |   |  |  | 93     |  
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Interest rate correlation      |  |  | 0.9        |   |  |  | 0.9    |  
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | IR/INF correlation             |  |  | 0.5        |   |  |  | 0.5    |  
|                                                                |  |        |       |  |             |  |       |                      |  | Present value techniques        |  | Reset spread (%)               |  |  | 3          | % |  |  | 3      | %
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Prepayment rate (%)            |  |  | 5          | % |  |  | 5      | %
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Inflation rate (%)             |  |  | 2          | % |  |  | 4      | %
| FX                                                            |  |        | 412   |  |             |  | 359   |                      |  | Present value techniques        |  | Inflation rate (%)             |  |  | 1          | % |  |  | 3      | %
| Credit                                                        |  |        | 42    |  |             |  | 50    |                      |  | Present value techniques        |  | Credit spread (bps)            |  |  | 3          |   |  |  | 16,704 |  
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Implied correlation            |  |  | 0.6        |   |  |  | 1.0    |  
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Jump rate (%)                  |  |  | 12         | % |  |  | 12     | %
| Equity                                                        |  |        | 289   |  |             |  | 222   |                      |  | Option pricing model            |  | Equity volatility (%)          |  |  | 0          | % |  |  | 136    | %
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Equity/Equity correlation      |  |  | 0.1       |   |  |  | 1.0    |  
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Equity/FX correlation          |  |  | 1.0       |   |  |  | 1.0    |  
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Dividend yield (%)             |  |  | 0          | % |  |  | 13     | %
| Other                                                         |  |        | 1     |  |             |  |       |                      |  | Option pricing model            |  | Commodity volatility (%)       |  |  | 17         | % |  |  | 82     | %
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Com/Com correlation            |  |  | 0.3        |   |  |  | 1.0    |  
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Com/FX correlation             |  |  | 0.8       |   |  |  | 0.6    |  
|Available for sale                                              |  |        |       |  |             |  |       |                      |  |                                 |  |                                |  |  |            |   |  |  |        |  
| Debt                                                          |  |        | 63    |  |             |  |       |                      |  | Price based                     |  | Price (%)                      |  |  | 0          | % |  |  | 98     | %
|                                                                |  |        |       |  |             |  |       |                      |  | Present value techniques        |  | Credit spread (bps)            |  |  | 204        |   |  |  | 400    |  
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  | Weighted average life (yr)     |  |  | 1.6        |   |  |  | 3.3    |  
| Equity                                                        |  |        | 630   |  |             |  |       |                      |  | Discounted cash flow            |  | Financial Statements           |  |  | n.a        |   |  |  | n.a    |  
|                                                                |  |        |       |  |             |  |       |                      |  | Multiplier method               |  | Observable market factors      |  |  | n.a        |   |  |  | n.a    |  
|                                                                |  |        |       |  |             |  |       |                      |  | Comparable transactions         |  |                                |  |  | n.a        |   |  |  | n.a    |  
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  |                                |  |  |            |   |  |  |        |  
|Total                                                           |  |        | 2,345 |  |             |  | 1,438 |                      |  |                                 |  |                                |  |  |            |   |  |  |        |  
|                                                                |  |        |       |  |             |  |       |                      |  |                                 |  |                                |  |  |            |   |  |  |        |  

Non-listed equity investments

Level 3 equity securities mainly include corporate investments, fund investments, real estate positions, and other equity securities which are not traded in active
markets. In the absence of an active market, fair values are estimated on the basis of the analysis of fund managers reports, companys financial position, future prospects, and other factors, considering valuations of similar positions or by
the reference to acquisition cost of the position. For equity securities best market practice will be applied using the most relevant valuation method.

All non-listed equity investments, including investments in private equity funds, are subject to a standard review framework which ensures that valuations reflect fair values.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-108 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Price

For securities where
market prices are not available fair value is measured by comparison with observable pricing data from similar instruments. Prices of 0% are distressed to the point that no recovery is expected, while prices significantly in excess of 100% or par
are expected to pay a good yield.

Credit spreads

Credit spread is the
premium above a benchmark interest rate, typically LIBOR or relevant Treasury instrument, required by the market participant to accept a lower credit quality. Higher credit spreads indicate lower credit quality and a lower value of an asset.

Volatility

Volatility is a measure for variation of the price of a financial
instrument or other valuation input over time. Volatility is one of the key inputs in option pricing models. Typically, the higher the volatility, the higher value of the option. Volatility varies by the underlying reference (equity, commodity,
foreign currency and interest rates), by strike, and maturity of the option. The minimum level of volatility is 0% and there is no theoretical maximum.

Correlation

Correlation is a measure of dependence between two underlying
references which is relevant for valuing derivatives and other instruments which have more than one underlying reference. For example, correlation between underlying equity names may be a relevant input parameter for basket equity option pricing
models. High positive correlation (close to 1) indicates strong positive (statistical) relationship between underlyings, implying they typically move in the same direction. High negative correlation, on the other hand, implies that underlyings
typically move in opposite directions.

Interest rates

Prepayment rate
and reset spread are key inputs to mortgage linked prepayment swaps valuation. Prepayment rate is the estimated rate at which mortgage borrowers will repay their mortgages early, e.g. 5% per year. Reset spread is the future spread at which mortgages
will re-price at interest rate reset dates.

Inflation rate is a key input to inflation linked instruments. Inflation linked
instruments protect against price inflation and are denominated and indexed to investment units. Interest payments would be based on the inflation index and nominal rate in order to receive/pay the real rate of return. A rise in nominal coupon
payments is a result of an increase in inflation expectations, real rates, or both. As markets for these inflation linked derivatives are illiquid, the valuation parameters become unobservable.

Dividend yield

Dividend yield is an important input for equity option
pricing models showing how much dividends a company pays out each year relative to its share price. Dividend yields are generally expressed as an annualised percentage of share price.

Sensitivity analysis of unobservable inputs (Level 3)

Where the fair value
of a financial instrument is determined using inputs which are unobservable and which have a more than insignificant impact on the fair value of the instrument, the actual value of those inputs at the balance date may be drawn from a range of
reasonably possible alternatives. In line with market practice the upper and lower bounds of the range of alternative input values reflect a 90% level of valuation certainty. The actual levels chosen for the unobservable inputs in preparing the
financial statements are consistent with the valuation methodology used for fair valued financial instruments.

If ING had used input values from the upper and
lower bound of this range of reasonable possible alternative input values when valuing these instruments as of 31 December 2016, then the impact would have been higher or lower as indicated below. The purpose of this disclosure is to present
the possible impact of a change of unobservable inputs in the fair value of financial instruments where unobservable inputs are significant to the valuation.

As
ING has chosen to apply a 90% confidence level already for its IFRS valuation of fair valued financial instruments as of end of 2014, the downward valuation uncertainty has become immaterial, whereas the potential upward valuation uncertainty,
reflecting a potential profit, has increased. Specifically for the AFS Debt positions the upward valuation uncertainty decreased.

For more detail on the valuation
of fair valued instruments, refer to the section Risk Management  Market risk, paragraph Fair values of financial assets and liabilities in this document.

In practice valuation uncertainty is measured and managed per exposure to individual valuation inputs (i.e. risk factors) at portfolio level across different product
categories. Where the disclosure looks at individual Level 3 inputs the actual valuation adjustments may also reflect the benefits of portfolio offsets.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-109 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Because of the approach taken, the valuation uncertainty in the table below is broken down by related risk class rather
than by product.

In reality some valuation inputs are interrelated and it would be unlikely that all unobservable inputs would ever be simultaneously at the limits
of their respective ranges of reasonably possible alternatives. Therefore it can be assumed that the estimates in the table below show a greater fair value uncertainty than the realistic position at year end assuming normal circumstances/normal
markets.

Also, this disclosure does not attempt to indicate or predict future fair value movement. The numbers in isolation give limited information as in most
cases these Level 3 assets and liabilities should be seen in combination with other instruments (for example as a hedge) that are classified as Level 2.



|                                                                      |  |                                                                     |     |  |                                                                     |  |    | 
|--------------------------------------------------------------------- |  | ------------------------------------------------------------------- | --- |  | ------------------------------------------------------------------- |  | -- | 
|Sensitivity analysis of Level 3 instruments                           |  |                                                                     |     |  |                                                                     | 
|2016                                                                  |  | Positive fairvaluemovementsfrom usingreasonablepossiblealternatives |     |  | Negativefair valuemovementsfrom usingreasonablepossiblealternatives | 
|Fair value through profit or loss                                     |  |                                                                     |     |  |                                                                     |  |    | 
|Equity (equity derivatives, structured notes)                         |  |                                                                     | 262 |  |                                                                     |  |    | 
|Interest rates (Rates derivatives, FX derivatives)                    |  |                                                                     | 80  |  |                                                                     |  |    | 
|Credit (Debt securities, Loans, structured notes, credit derivatives) |  |                                                                     | 33  |  |                                                                     |  |    | 
|Available-for-sale                                                    |  |                                                                     |     |  |                                                                     |  |    | 
|Equity                                                                |  |                                                                     | 8   |  |                                                                     |  | 14 | 
|Debt                                                                  |  |                                                                     | 2   |  |                                                                     |  |    | 
|                                                                      |  |                                                                     |     |  |                                                                     |  |    | 
|                                                                      |  |                                                                     | 385 |  |                                                                     |  | 14 | 
|                                                                      |  |                                                                     |     |  |                                                                     |  |    | 
|                                                                      |  |                                                                    
|Sensitivity analysis of Level 3 instruments                           |  |                                                                     |     |  |                                                                     | 
|2015                                                                  |  | Positive fairvaluemovementsfrom usingreasonablepossiblealternatives |     |  | Negativefair valuemovementsfrom usingreasonablepossiblealternatives | 
|Fair value through profit or loss                                     |  |                                                                     |     |  |                                                                     |  |    | 
|Equity (equity derivatives, structured notes)                         |  |                                                                     | 246 |  |                                                                     |  |    | 
|Interest rates (Rates derivatives, FX derivatives)                    |  |                                                                     | 83  |  |                                                                     |  |    | 
|Credit (Debt securities, Loans, structured notes, credit derivatives) |  |                                                                     | 39  |  |                                                                     |  |    | 
|Available-for-sale                                                    |  |                                                                     |     |  |                                                                     |  |    | 
|Equity                                                                |  |                                                                     | 9   |  |                                                                     |  | 14 | 
|Debt                                                                  |  |                                                                     | 15  |  |                                                                     |  |    | 
|                                                                      |  |                                                                     |     |  |                                                                     |  |    | 
|                                                                      |  |                                                                     | 392 |  |                                                                     |  | 14 | 
|                                                                      |  |                                                                     |     |  |                                                                     |  |    | 



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-110 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Other financial instruments

The fair values of the financial instruments carried at amortised cost in the statement of financial position, but for which fair values are disclosed are determined as
follows:



|                                                                                                           |  |         |        |  |         |  |        |         |  |  |         |  |  |  |         | 
|---------------------------------------------------------------------------------------------------------- |  | ------- | ------ |  | ------- |  | ------ | ------- |  |  | ------- |  |  |  | ------- | 
|Methods applied in determining fair values of financial assets and liabilities (carried at amortised cost) | 
|2016                                                                                                       |  | Level 1 |        |  | Level 2 |  |        | Level 3 |  |  | Total   | 
|Financial assets                                                                                           |  |         |        |  |         |  |        |         |  |  |         |  |  |  |         | 
|Loans and advances to banks                                                                                |  |         | 3,534  |  |         |  | 11,135 |         |  |  | 14,271  |  |  |  | 28,940  | 
|Held-to-maturity
investments                                                                               |  |         | 6,983  |  |         |  | 1,749  |         |  |  | 77      |  |  |  | 8,809   | 
|Loans and advances to customers                                                                            |  |         | 5,121  |  |         |  | 21,611 |         |  |  | 551,864 |  |  |  | 578,596 | 
|                                                                                                           |  |         |        |  |         |  |        |         |  |  |         |  |  |  |         | 
|                                                                                                           |  |         | 15,638 |  |         |  | 34,495 |         |  |  | 566,212 |  |  |  | 616,345 | 
|Financial liabilities                                                                                      |  |         |        |  |         |  |        |         |  |  |         |  |  |  |         | 
|Deposits from banks1                                                                                       |  |         |        |  |         |  | 14,447 |         |  |  | 8,096   |  |  |  | 22,543  | 
|Customer deposits1                                                                                         |  |         |        |  |         |  | 5,876  |         |  |  | 58,872  |  |  |  | 64,748  | 
|Debt securities in issue                                                                                   |  |         | 41,145 |  |         |  | 48,097 |         |  |  | 14,317  |  |  |  | 103,559 | 
|Subordinated loans                                                                                         |  |         | 14,967 |  |         |  | 2,188  |         |  |  | 98      |  |  |  | 17,253  | 
|                                                                                                           |  |         |        |  |         |  |        |         |  |  |         |  |  |  |         | 
|                                                                                                           |  |         | 56,112 |  |         |  | 70,608 |         |  |  | 81,383  |  |  |  | 208,103 | 
|                                                                                                           |  |         |        |  |         |  |        |         |  |  |         |  |  |  |         | 



|1 | Financial assets and liabilities that are on demand are excluded from the fair value hierarchy as their fair value approximates the carrying value.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                                                           |  |         |        |  |         |  |        |         |  |  |         |  |  |  |         | 
|---------------------------------------------------------------------------------------------------------- |  | ------- | ------ |  | ------- |  | ------ | ------- |  |  | ------- |  |  |  | ------- | 
|Methods applied in determining fair values of financial assets and liabilities (carried at amortised cost) | 
|2015                                                                                                       |  | Level 1 |        |  | Level 2 |  |        | Level 3 |  |  | Total   | 
|Financial assets                                                                                           |  |         |        |  |         |  |        |         |  |  |         |  |  |  |         | 
|Loans and advances to banks1                                                                               |  |         | 5,197  |  |         |  | 12,572 |         |  |  | 12,363  |  |  |  | 30,132  | 
|Held-to-maturity
investments                                                                               |  |         | 5,739  |  |         |  | 1,951  |         |  |  | 165     |  |  |  | 7,855   | 
|Loans and advances to customers1                                                                           |  |         | 4,793  |  |         |  | 16,703 |         |  |  | 526,811 |  |  |  | 548,307 | 
|                                                                                                           |  |         |        |  |         |  |        |         |  |  |         |  |  |  |         | 
|                                                                                                           |  |         | 15,729 |  |         |  | 31,226 |         |  |  | 539,339 |  |  |  | 586,294 | 
|Financial liabilities                                                                                      |  |         |        |  |         |  |        |         |  |  |         |  |  |  |         | 
|Deposits from banks1,2                                                                                     |  |         |        |  |         |  | 15,984 |         |  |  | 8,038   |  |  |  | 24,022  | 
|Customer deposits1,2                                                                                       |  |         |        |  |         |  | 23,439 |         |  |  | 55,947  |  |  |  | 79,386  | 
|Debt securities in issue                                                                                   |  |         | 56,768 |  |         |  | 51,443 |         |  |  | 13,559  |  |  |  | 121,770 | 
|Subordinated loans                                                                                         |  |         | 15,737 |  |         |  | 183    |         |  |  | 347     |  |  |  | 16,267  | 
|                                                                                                           |  |         |        |  |         |  |        |         |  |  |         |  |  |  |         | 
|                                                                                                           |  |         | 72,505 |  |         |  | 91,049 |         |  |  | 77,891  |  |  |  | 241,445 | 
|                                                                                                           |  |         |        |  |         |  |        |         |  |  |         |  |  |  |         | 



|1 | Loans and advances to customers and Customer deposits, as at 31 December 2015, are adjusted as a result of a changes in accounting policies. Reference is made to Note 1 Accounting policies 
Changes in accounting policies and Changes in presentation in 2016.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | Financial assets and liabilities that are on demand are excluded from the fair value hierarchy as their fair value approximates the carrying value, comparative figures have been restated.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

b) Non-financial assets and liabilities

ING Groups non-financial assets comprise Investments in associates and joint ventures, Property in own use, and Investment
properties as included in the Statement of financial position in the line items Investments in associates and joint ventures, Property and equipment, and Other assets respectively.

Investments in associates and joint ventures are accounted for using the equity method. For further information, reference is made to Note 7 Investments in
associates and joint ventures.

Other non-financial assets are recognised at fair value at the balance sheet date. For
the methods and assumptions used by ING Group to estimate the fair value of these non-financial assets, reference is made to Note 1 Accounting policies, sections Property in own use and
Investment properties.

As at 31 December 2016, the estimated fair value of Property in own use and Investment properties amounts to EUR
881.0 million (2015: 982 million) and EUR 65 million (2015: EUR 77 million) respectively and is categorised as Level 3 (2015: Level 3) of the fair value hierarchy on the basis of methods applied in determining the fair values.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-111 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Amounts recognised in the statement of profit or loss relating to unrealised gains and losses during the year that
relate to Level 3 assets and liabilities are included in the statement of profit or loss as follows:



| |  | Impairments on Property in own use are included in Other operating expenses - Intangible amortisation and (reversals) of impairments; and
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  | Changes in the fair value of Investment properties are included in Investment income.
|- |  | -------------------------------------------------------------------------------------

Unrealised gains and losses on
Property in own use are included in the Revaluation reserve  Property in own use reserve.

For amounts recognised in the Statement of profit or loss and other
changes in non-financial assets during the year, reference is made to Note 8 Property and equipment and Note 10 Other assets.

As at 31 December 2016, ING Group has no non-financial liabilities (2015: none).

38 Derivatives and hedge accounting

Use of derivatives and hedge
accounting

As described in the sections Risk management  Credit risk and Market risk, ING Group uses derivatives (principally interest
rate swaps and cross currency interest rate swaps) for economic hedging purposes in the management of its asset and liability portfolios and structural positions. The objective of economic hedging is to enter into positions with an opposite risk
profile to an identified exposure to reduce that exposure. The objective of ING Groups hedging activities is to optimise the overall cost to the Group of accessing debt capital markets and to mitigate the market risk which would otherwise
arise from structural imbalances in the duration and other profiles of its assets and liabilities. In addition, hedging activities are undertaken to hedge against the interest rate risk in the mortgage offer period in relation to retail mortgages
and to lock in the interest margin in relation to interest bearing assets and the related funding.

The accounting treatment of hedge transactions varies according
to the nature of the instrument hedged and whether the hedge qualifies under the IFRS hedge accounting rules. Derivatives that qualify for hedge accounting under IFRS are classified and accounted for in accordance with the nature of the instrument
hedged and the type of IFRS hedge model that is applicable. The three models applicable under IFRS are: fair value hedge accounting, cash flow hedge accounting, and net investment hedge accounting. These are described under the relevant headings
below. The companys detailed accounting policies for these three hedge models are set out in Note 1 Accounting policies in the section Principles of valuation and determination of results.

To qualify for hedge accounting under IFRS, strict criteria must be met. Certain hedges that are economically effective from a risk management perspective do not
qualify for hedge accounting under IFRS. The fair value changes of derivatives relating to such non-qualifying hedges are taken to the statement of profit or loss. However, in certain cases, the Group
mitigates the statement of profit or loss volatility by designating hedged assets and liabilities at fair value through profit or loss. If hedge accounting is applied under IFRS, it is possible that during the hedge a hedge relationship no longer
qualifies for hedge accounting and hedge accounting cannot be continued, even if the hedge remains economically effective. As a result, the volatility arising from undertaking economic hedging in the statement of profit or loss may be higher than
would be expected from an economic point of view.

With respect to exchange rate and interest rate derivative contracts, the notional or contractual amount of these
instruments is indicative of the nominal value of transactions outstanding at the balance sheet date; however they do not represent amounts at risk. ING Group uses credit derivatives to manage its exposure to credit risk, including total return
swaps and credit default swaps, to sell or buy protection for credit risk exposures in the loan, investment, and trading portfolios. Hedge accounting is not applied in relation to credit derivatives.

Fair value hedge accounting

ING Groups fair value hedges
principally consist of interest rate swaps and cross-currency interest rate swaps that are used to protect against changes in the fair value of fixed-rate instruments due to movements in market interest rates.

Gains and losses on derivatives designated under fair value hedge accounting are recognised in the statement of profit or loss. The effective portion of the fair value
change on the hedged item is also recognised in the statement of profit or loss. As a result, only the net accounting ineffectiveness has an impact on the net result.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-112 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Statement of profit or loss  Valuation results and net trading income



|                                                                               |  |      |      |  |      |  |     | 
|------------------------------------------------------------------------------ |  | ---- | ---- |  | ---- |  | --- | 
|Fair value changes on derivatives designated under fair value hedge accounting |  |      |      |  |      | 
|                                                                               |  | 2016 |      |  | 2015 | 
|Change in fair value of derivatives                                            |  |      | 170 |  |      |  | 81  | 
|Change in fair value of assets and liabilities (hedged items)                  |  |      | 244  |  |      |  | 67 | 
|                                                                               |  |      |      |  |      |  |     | 
|Net accounting ineffectiveness recognised in the Statement of profit or loss   |  |      | 74   |  |      |  | 14  | 
|                                                                               |  |      |      |  |      |  |     | 

The fluctuation in balances between 2015 and 2016 relate to the volatility in interest rate movements.

Statement of financial position  Financial assets and liabilities at fair value through profit or loss



|                                                                                    |  |      |        |  |      |  |        | 
|----------------------------------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|Fair values of outstanding derivatives designated under fair value hedge accounting |  |      |        |  |      | 
|                                                                                    |  | 2016 |        |  | 2015 | 
|Positive fair values outstanding (Non-trading derivative
assets)                    |  |      | 1,012  |  |      |  | 1,010  | 
|Negative fair values outstanding (Non-trading derivative
liabilities)               |  |      | 5,394 |  |      |  | 2,411 | 
|                                                                                    |  |      |        |  |      |  |        | 
|                                                                                    |  |      | 4,382 |  |      |  | 1,401 | 
|                                                                                    |  |      |        |  |      |  |        | 

Cash flow hedge accounting

ING
Groups cash flow hedges principally consist of (forward) interest rate swaps and cross-currency interest rate swaps that are used to protect against its exposure to variability in future interest cash flows on
non-trading assets and liabilities that bear interest at variable rates or are expected to be refunded or reinvested in the future. The amounts and timing of future cash flows, representing both principal and
interest flows, are projected for each portfolio of financial assets and liabilities, based on contractual terms and other relevant factors including estimates of prepayments and defaults. The aggregate principal balances and interest cash flows for
the respective portfolios form the basis for identifying the notional amount subject to interest rate risk that is designated under cash flow hedge accounting.

Gains and losses on the effective portions of derivatives designated under cash flow hedge accounting are recognised in Shareholders equity. Interest cash flows
on these derivatives are recognised in the statement of profit or loss in net interest income consistent with the manner in which the forecast cash flows affect net result. The gains and losses on ineffective portions of such derivatives are
recognised immediately in the statement of profit or loss.

Statement of changes in equity  Cash flow hedge reserve



|                                                                                         |  |      |       |  |      |  |     | 
|---------------------------------------------------------------------------------------- |  | ---- | ----- |  | ---- |  | --- | 
|Cash flow hedge reserve                                                                  |  |      |       |  |      | 
|                                                                                         |  | 2016 |       |  | 2015 | 
|Effective portion of fair value changes on derivatives under cash flow hedges, after tax |  |      | 111   |  |      |  | 65 | 
|Cash flow hedge reserve as at 31 December, gross                                         |  |      | 1,015 |  |      |  | 859 | 
|Cash flow hedge reserve as at 31 December, after deferred tax                            |  |      | 777   |  |      |  | 666 | 
|                                                                                         |  |      |       |  |      |  |     | 

This cash flow hedge reserve will fluctuate with the fair value changes of the underlying derivatives and will be reflected in the
statement of profit or loss under Interest income/expense over the remaining term of the underlying hedged items. The cash flow hedge reserve relates to a large number of derivatives and hedged items with varying maturities, up to 28 years, with the
largest concentrations in the range of 3 to 4 years.

Statement of financial position  Financial assets and liabilities at fair value through profit or
loss



|                                                                                   |  |      |      |  |      |  |        | 
|---------------------------------------------------------------------------------- |  | ---- | ---- |  | ---- |  | ------ | 
|Fair values of outstanding derivatives designated under cash flow hedge accounting |  |      |      |  |      | 
|                                                                                   |  | 2016 |      |  | 2015 | 
|Positive fair values outstanding (Non-trading derivative
assets)                   |  |      | 438  |  |      |  | 917    | 
|Negative fair values outstanding (Non-trading derivative
liabilities)              |  |      | 671 |  |      |  | 1,167 | 
|                                                                                   |  |      |      |  |      |  |        | 
|                                                                                   |  |      | 233 |  |      |  | 250   | 
|                                                                                   |  |      |      |  |      |  |        | 

As at 31 December 2016, the fair value of outstanding non-derivatives designated as hedging
instruments for cash flow hedge accounting purposes was EUR 0 million (2015: nil).



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-113 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Statement of profit or loss  Net interest income



|                                                   |  |      |        |  |      |  |        | 
|-------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|Net interest income on cash flow hedge derivatives |  |      |        |  |      | 
|                                                   |  | 2016 |        |  | 2015 | 
|Interest income on cash flow hedge derivatives     |  |      | 2,654  |  |      |  | 2,876  | 
|Interest expense on cash flow hedge derivatives    |  |      | 2,181 |  |      |  | 2,475 | 
|                                                   |  |      |        |  |      |  |        | 
|                                                   |  |      | 473    |  |      |  | 401    | 
|                                                   |  |      |        |  |      |  |        | 

Accounting ineffectiveness on derivatives designated under cash flow hedge accounting resulted in a loss of EUR 16 million (2015:
EUR 31 million gain) which was recognised in the statement of profit or loss, in the line Valuation results and net trading income.

Hedges of net
investments in foreign operations

ING Groups net investment hedges principally consist of derivatives (including currency forwards and swaps) and non-derivative financial instruments such as foreign currency denominated funding that are used to protect against foreign currency exposures on foreign subsidiaries.

Gains and losses on the effective portions of derivatives designated under net investment hedge accounting are recognised in Shareholders equity. The balance in
equity is recognised in the statement of profit or loss when the related foreign subsidiary is disposed. The gains and losses on ineffective portions are recognised immediately in the statement of profit or loss.

Statement of financial position  Financial assets and liabilities at fair value through profit or loss



|                                                                                        |  |      |     |  |      |  |     | 
|--------------------------------------------------------------------------------------- |  | ---- | --- |  | ---- |  | --- | 
|Fair values of outstanding derivatives designated under net investment hedge accounting |  |      |     |  |      | 
|                                                                                        |  | 2016 |     |  | 2015 | 
|Positive fair values outstanding (Non-trading derivative
assets)                        |  |      | 73  |  |      |  | 72  | 
|Negative fair values outstanding (Non-trading derivative
liabilities)                   |  |      | 33 |  |      |  | 52 | 
|                                                                                        |  |      |     |  |      |  |     | 
|                                                                                        |  |      | 40  |  |      |  | 20  | 
|                                                                                        |  |      |     |  |      |  |     | 

As at 31 December 2016, the fair value of outstanding non-derivatives designated under net
investment hedge accounting was EUR 0 million (2015: EUR 1,288 million).

Accounting ineffectiveness recognised in the statement of profit or loss for the year
ended 31 December 2016 on derivatives and non-derivatives designated under net investment hedge accounting was EUR 0 million (2015: nil).



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-114 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







39 Assets by contractual maturity

Amounts presented in these tables by contractual maturity are the amounts as presented in the statement of financial position and are discounted cash flows. Reference is
made to the section Risk Management  Funding and liquidity risk.



|                                                            |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |         |  |                        |  |         |       |  |  |       |  |  |  |         | 
|----------------------------------------------------------- |  | ----------------- | ------- |  | --------- |  | ------ | ---------- |  |  | -------- |  |  | ----------- | ------- |  | ---------------------- |  | ------- | ----- |  |  | ----- |  |  |  | ------- | 
|Assets by contractual maturity                              |  |                   |         |  |           |  |        |            |  |  |          |  | 
|2016                                                        |  | Less than1 month1 |         |  | 1-3months |  |        | 3-12months |  |  | 1-5years |  |  | Over 5years |         |  | Maturity notapplicable |  |         | Total | 
|Cash and balances with central banks                        |  |                   | 18,144  |  |           |  |        |            |  |  |          |  |  |             |         |  |                        |  |         |       |  |  |       |  |  |  | 18,144  | 
|Loans and advances to banks                                 |  |                   | 14,638  |  |           |  | 4,373  |            |  |  | 5,414    |  |  |             | 3,779   |  |                        |  | 654     |       |  |  |       |  |  |  | 28,858  | 
|Financial assets at fair value through profit or loss       |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |         |  |                        |  |         |       |  |  |       |  |  |  |         | 
| trading assets                                            |  |                   | 47,218  |  |           |  | 19,236 |            |  |  | 13,722   |  |  |             | 16,967  |  |                        |  | 17,361  |       |  |  |       |  |  |  | 114,504 | 
| non-trading derivatives                                   |  |                   | 28      |  |           |  | 29     |            |  |  | 85       |  |  |             | 793     |  |                        |  | 1,555   |       |  |  |       |  |  |  | 2,490   | 
| designated as at fair value through profit or loss        |  |                   | 326     |  |           |  | 1,440  |            |  |  | 1,996    |  |  |             | 769     |  |                        |  | 568     |       |  |  |       |  |  |  | 5,099   | 
|Investments                                                 |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |         |  |                        |  |         |       |  |  |       |  |  |  |         | 
|
available-for-sale                                        |  |                   | 2,713   |  |           |  | 3,543  |            |  |  | 6,020    |  |  |             | 36,838  |  |                        |  | 29,775  |       |  |  | 4,023 |  |  |  | 82,912  | 
|
held-to-maturity                                          |  |                   |         |  |           |  | 166    |            |  |  | 2,374    |  |  |             | 3,360   |  |                        |  | 2,851   |       |  |  |       |  |  |  | 8,751   | 
|Loans and advances to customers                             |  |                   | 56,151  |  |           |  | 17,187 |            |  |  | 42,515   |  |  |             | 162,805 |  |                        |  | 281,496 |       |  |  |       |  |  |  | 560,154 | 
|Intangible assets                                           |  |                   |         |  |           |  |        |            |  |  | 145      |  |  |             | 290     |  |                        |  |         |       |  |  | 1,049 |  |  |  | 1,484   | 
|Other assets2                                               |  |                   | 10,580  |  |           |  | 1,671  |            |  |  | 2,721    |  |  |             | 855     |  |                        |  | 850     |       |  |  |       |  |  |  | 16,677  | 
|Remaining assets (for which maturities are not applicable)3 |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |         |  |                        |  |         |       |  |  | 3,143 |  |  |  | 3,143   | 
|                                                            |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |         |  |                        |  |         |       |  |  |       |  |  |  |         | 
|Total assets                                                |  |                   | 149,798 |  |           |  | 47,645 |            |  |  | 74,992   |  |  |             | 226,456 |  |                        |  | 335,110 |       |  |  | 8,215 |  |  |  | 842,216 | 
|                                                            |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |         |  |                        |  |         |       |  |  |       |  |  |  |         | 



|1 | Includes assets on demand.
|- | --------------------------

|2 | Includes Other assets and Current and Deferred tax assets as presented in the Consolidated statement of financial position.
|- | ---------------------------------------------------------------------------------------------------------------------------

|3 | Included in remaining assets for which maturities are not applicable are property and equipment, and investments in associates. Due to their nature remaining assets consist mainly of assets expected to be recovered
after more than 12 months.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-115 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                            |  |                   |         |  |           |  |        |            |  |  |           |  |  |             |         |  |                        |  |         |       |  |  |        |  |  |  |           | 
|----------------------------------------------------------- |  | ----------------- | ------- |  | --------- |  | ------ | ---------- |  |  | --------- |  |  | ----------- | ------- |  | ---------------------- |  | ------- | ----- |  |  | ------ |  |  |  | --------- | 
|Assets by contractual maturity                              |  |                   |         |  |           |  |        |            |  |  |           |  |  |             |         | 
|2015                                                        |  | Less than1 month1 |         |  | 1-3months |  |        | 3-12months |  |  | 1-5 years |  |  | Over 5years |         |  | Maturity notapplicable |  |         | Total | 
|Cash and balances with central banks                        |  |                   | 21,458  |  |           |  |        |            |  |  |           |  |  |             |         |  |                        |  |         |       |  |  |        |  |  |  | 21,458    | 
|Loans and advances to banks                                 |  |                   | 16,228  |  |           |  | 4,141  |            |  |  | 5,152     |  |  |             | 3,502   |  |                        |  | 965     |       |  |  |        |  |  |  | 29,988    | 
|Financial assets at fair value through profit or loss       |  |                   |         |  |           |  |        |            |  |  |           |  |  |             |         |  |                        |  |         |       |  |  |        |  |  |  |           | 
| trading assets                                            |  |                   | 53,181  |  |           |  | 19,042 |            |  |  | 17,244    |  |  |             | 19,845  |  |                        |  | 22,155  |       |  |  |        |  |  |  | 131,467   | 
| non-trading derivatives                                   |  |                   | 7       |  |           |  | 63     |            |  |  | 253       |  |  |             | 787     |  |                        |  | 2,237   |       |  |  |        |  |  |  | 3,347     | 
| designated as at fair value through profit or loss        |  |                   | 256     |  |           |  | 963    |            |  |  | 1,112     |  |  |             | 540     |  |                        |  | 363     |       |  |  |        |  |  |  | 3,234     | 
|Investments                                                 |  |                   |         |  |           |  |        |            |  |  |           |  |  |             |         |  |                        |  |         |       |  |  |        |  |  |  |           | 
|
available-for-sale                                        |  |                   | 1,187   |  |           |  | 1,532  |            |  |  | 7,622     |  |  |             | 37,648  |  |                        |  | 34,577  |       |  |  | 4,434  |  |  |  | 87,000    | 
|
held-to-maturity                                          |  |                   | 1       |  |           |  | 249    |            |  |  | 12        |  |  |             | 5,456   |  |                        |  | 2,108   |       |  |  |        |  |  |  | 7,826     | 
|Loans and advances to customers2                            |  |                   | 219,782 |  |           |  | 14,457 |            |  |  | 37,665    |  |  |             | 153,002 |  |                        |  | 271,987 |       |  |  |        |  |  |  | 696,893   | 
|Intangible assets                                           |  |                   |         |  |           |  |        |            |  |  | 189       |  |  |             | 378     |  |                        |  |         |       |  |  | 1,000  |  |  |  | 1,567     | 
|Other assets3                                               |  |                   | 8,071   |  |           |  | 1,802  |            |  |  | 2,714     |  |  |             | 337     |  |                        |  | 1,442   |       |  |  |        |  |  |  | 14,366    | 
|Assets held for sale4                                       |  |                   |         |  |           |  |        |            |  |  |           |  |  |             |         |  |                        |  |         |       |  |  | 2,153  |  |  |  | 2,153     | 
|Remaining assets (for which maturities are not applicable)5 |  |                   |         |  |           |  |        |            |  |  |           |  |  |             |         |  |                        |  |         |       |  |  | 2,989  |  |  |  | 2,989     | 
|                                                            |  |                   |         |  |           |  |        |            |  |  |           |  |  |             |         |  |                        |  |         |       |  |  |        |  |  |  |           | 
|Total assets                                                |  |                   | 320,171 |  |           |  | 42,249 |            |  |  | 71,963    |  |  |             | 221,495 |  |                        |  | 335,834 |       |  |  | 10,576 |  |  |  | 1,002,288 | 
|                                                            |  |                   |         |  |           |  |        |            |  |  |           |  |  |             |         |  |                        |  |         |       |  |  |        |  |  |  |           | 



|1 | Includes assets on demand.
|- | --------------------------

|2 | Loans and advances to customers, as at 31 December 2015, is adjusted as a result of a changes in accounting policies. Reference is made to Note 1 Accounting policies  Changes in accounting
policies and Changes in presentation in 2016.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3 | Includes Other assets and Current and Deferred tax assets as presented in the Consolidated statement of financial position.
|- | ---------------------------------------------------------------------------------------------------------------------------

|4 | Assets held for sale consist of the assets of the disposal groups classified as held for sale as disclosed in Note 11 Assets held for sale. For these assets, the underlying contractual maturities are no
longer relevant for ING. For businesses for which a binding sale agreement exists, all related assets held for sale are classified in accordance with the agreed or expected closing date. For other businesses, for which no sale agreement exists,
assets held for sale are included in Maturity not applicable.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5 | Included in remaining assets for which maturities are not applicable are property and equipment, investment properties and investments in associates. Due to their nature remaining assets consist mainly of assets
expected to be recovered after more than 12 months.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-116 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







40 Liabilities by maturity

The tables below include all financial liabilities by maturity based on contractual, undiscounted cash flows. Furthermore, the undiscounted future coupon interest on
financial liabilities payable is included in a separate line and in the relevant maturity bucket. Derivative liabilities are included on a net basis if cash flows are settled net. For other derivative liabilities the contractual gross cash flow
payable is included.

Non-financial liabilities are included based on a breakdown of the amounts per the statement of
financial position, by expected maturity. Reference is made to the liquidity risk paragraph in the section Risk Management  Funding and liquidity risk for a description on how liquidity risk is managed.



|                                                           |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 
|---------------------------------------------------------- |  | ----------------- | ------- |  | --------- |  | ------ | ---------- |  |  | -------- |  |  | ----------- | ------ |  | ---------------------- |  | ------ | ----------- |  |  | ----- |  |  |  | ------ |  |  |  | ------- | 
|Liabilities by maturity                                    |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |       
|2016                                                       |  | Less than1 month1 |         |  | 1-3months |  |        | 3-12months |  |  | 1-5years |  |  | Over 5years |        |  | Maturity notapplicable |  |        | Adjustment2 |  |  | Total | 
|Deposits from banks                                        |  |                   | 11,874  |  |           |  | 506    |            |  |  | 2,060    |  |  |             | 14,324 |  |                        |  | 3,200  |             |  |  |       |  |  |  |        |  |  |  | 31,964  | 
|Customer deposits                                          |  |                   | 476,373 |  |           |  | 16,521 |            |  |  | 20,698   |  |  |             | 6,720  |  |                        |  | 2,583  |             |  |  |       |  |  |  | 13     |  |  |  | 522,908 | 
|Financial liabilities at fair value through profit or loss |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 
| other trading liabilities                                |  |                   | 26,101  |  |           |  | 12,334 |            |  |  | 1,096    |  |  |             | 1,910  |  |                        |  | 1,908  |             |  |  |       |  |  |  | 525    |  |  |  | 43,874  | 
| trading derivatives                                      |  |                   | 3,172   |  |           |  | 3,153  |            |  |  | 7,495    |  |  |             | 13,785 |  |                        |  | 11,602 |             |  |  |       |  |  |  | 86     |  |  |  | 39,293  | 
| non-trading derivatives                                  |  |                   | 378     |  |           |  | 192    |            |  |  | 700      |  |  |             | 1,844  |  |                        |  | 1,478  |             |  |  |       |  |  |  | 1,051 |  |  |  | 3,541   | 
| designated at fair value through profit or loss          |  |                   | 381     |  |           |  | 505    |            |  |  | 1,627    |  |  |             | 4,485  |  |                        |  | 5,170  |             |  |  |       |  |  |  | 98     |  |  |  | 12,266  | 
|Debt securities in issue                                   |  |                   | 3,171   |  |           |  | 14,965 |            |  |  | 22,350   |  |  |             | 44,089 |  |                        |  | 20,522 |             |  |  |       |  |  |  | 1,863 |  |  |  | 103,234 | 
|Subordinated loans                                         |  |                   |         |  |           |  | 1,043  |            |  |  | 749      |  |  |             | 2,010  |  |                        |  | 5,985  |             |  |  | 7,204 |  |  |  | 232    |  |  |  | 17,223  | 
|                                                           |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 
|Financial liabilities                                      |  |                   | 521,450 |  |           |  | 49,219 |            |  |  | 56,775   |  |  |             | 89,167 |  |                        |  | 52,448 |             |  |  | 7,204 |  |  |  | 1,960 |  |  |  | 774,303 | 
|Other liabilities3                                         |  |                   | 10,403  |  |           |  | 1,943  |            |  |  | 4,428    |  |  |             | 2,201  |  |                        |  | 1,075  |             |  |  |       |  |  |  |        |  |  |  | 20,050  | 
|                                                           |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 
|Non-financial liabilities                                  |  |                   | 10,403  |  |           |  | 1,943  |            |  |  | 4,428    |  |  |             | 2,201  |  |                        |  | 1,075  |             |  |  |       |  |  |  |        |  |  |  | 20,050  | 
|                                                           |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 
|Total liabilities                                          |  |                   | 531,853 |  |           |  | 51,162 |            |  |  | 61,203   |  |  |             | 91,368 |  |                        |  | 53,523 |             |  |  | 7,204 |  |  |  | 1,960 |  |  |  | 794,353 | 
|Coupon interest due on financial liabilities               |  |                   | 1,081   |  |           |  | 1,160  |            |  |  | 3,355    |  |  |             | 10,948 |  |                        |  | 5,818  |             |  |  |       |  |  |  |        |  |  |  | 22,362  | 
|                                                           |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 



|1 | Includes liabilities on demand.
|- | -------------------------------

|2 | This column reconciles the contractual undiscounted cash flows on financial liabilities to the statement of financial position values. The adjustments mainly relate to the impact of discounting, and for derivatives, to
the fact the contractual cash flows are presented on a gross basis (unless the cash flows are actually settled net).
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3 | Includes Other liabilities, Current and deferred tax liabilities, and Provisions as presented in the Consolidated statement of financial position.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-117 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                           |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 
|---------------------------------------------------------- |  | ----------------- | ------- |  | --------- |  | ------ | ---------- |  |  | -------- |  |  | ----------- | ------ |  | ---------------------- |  | ------ | ----------- |  |  | ----- |  |  |  | ------ |  |  |  | ------- | 
|Liabilities by maturity                                    |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 
|2015                                                       |  | Less than1 month1 |         |  | 1-3months |  |        | 3-12months |  |  | 1-5years |  |  | Over 5years |        |  | Maturity notapplicable |  |        | Adjustment2 |  |  | Total | 
|Deposits from banks3                                       |  |                   | 14,840  |  |           |  | 1,094  |            |  |  | 2,370    |  |  |             | 11,021 |  |                        |  | 4,488  |             |  |  |       |  |  |  |        |  |  |  | 33,813  | 
|Customer deposits3                                         |  |                   | 607,885 |  |           |  | 23,375 |            |  |  | 21,600   |  |  |             | 8,892  |  |                        |  | 2,431  |             |  |  |       |  |  |  | 27     |  |  |  | 664,210 | 
|Financial liabilities at fair value through profit or loss |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 
| other trading liabilities                                |  |                   | 35,168  |  |           |  | 6,806  |            |  |  | 800      |  |  |             | 1,645  |  |                        |  | 2,703  |             |  |  |       |  |  |  | 782    |  |  |  | 47,904  | 
| trading derivatives                                      |  |                   | 2,471   |  |           |  | 2,580  |            |  |  | 7,983    |  |  |             | 16,314 |  |                        |  | 17,232 |             |  |  |       |  |  |  | 5,677 |  |  |  | 40,903  | 
| non-trading derivatives                                  |  |                   | 431     |  |           |  | 129    |            |  |  | 808      |  |  |             | 2,151  |  |                        |  | 134    |             |  |  |       |  |  |  | 604    |  |  |  | 4,257   | 
| designated at fair value through profit or loss          |  |                   | 207     |  |           |  | 452    |            |  |  | 1,374    |  |  |             | 4,835  |  |                        |  | 6,089  |             |  |  |       |  |  |  | 341   |  |  |  | 12,616  | 
|Debt securities in issue                                   |  |                   | 8,772   |  |           |  | 25,308 |            |  |  | 17,133   |  |  |             | 44,228 |  |                        |  | 22,927 |             |  |  |       |  |  |  | 2,921  |  |  |  | 121,289 | 
|Subordinated loans                                         |  |                   |         |  |           |  |        |            |  |  | 338      |  |  |             | 117    |  |                        |  | 8,602  |             |  |  | 6,927 |  |  |  | 427    |  |  |  | 16,411  | 
|                                                           |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 
|Financial liabilities                                      |  |                   | 669,774 |  |           |  | 59,744 |            |  |  | 52,406   |  |  |             | 89,203 |  |                        |  | 64,606 |             |  |  | 6,927 |  |  |  | 1,257 |  |  |  | 941,403 | 
|Other liabilities3,4                                       |  |                   | 6,761   |  |           |  | 2,030  |            |  |  | 4,591    |  |  |             | 730    |  |                        |  | 1,163  |             |  |  |       |  |  |  |        |  |  |  | 15,275  | 
|Liabilities held for sale                                  |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 
|                                                           |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 
|Non-financial liabilities                                  |  |                   | 6,761   |  |           |  | 2,030  |            |  |  | 4,591    |  |  |             | 730    |  |                        |  | 1,163  |             |  |  |      |  |  |  |       |  |  |  | 15,275  | 
|                                                           |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 
|Total liabilities                                          |  |                   | 676,535 |  |           |  | 61,774 |            |  |  | 56,997   |  |  |             | 89,933 |  |                        |  | 65,769 |             |  |  | 6,927 |  |  |  | 1,257 |  |  |  | 956,678 | 
|Coupon interest due on financial liabilities               |  |                   | 3,033   |  |           |  | 1,482  |            |  |  | 4,595    |  |  |             | 13,892 |  |                        |  | 8,798  |             |  |  |       |  |  |  |        |  |  |  | 31,800  | 
|                                                           |  |                   |         |  |           |  |        |            |  |  |          |  |  |             |        |  |                        |  |        |             |  |  |       |  |  |  |        |  |  |  |         | 



|1 | Includes liabilities on demand.
|- | -------------------------------

|2 | This column reconciles the contractual undiscounted cash flows on financial liabilities to the statement of financial position values. The adjustments mainly relate
to the impact of discounting, and for derivatives, to the fact the contractual cash flows are presented on a gross basis (unless the cash flows are actually settled net).
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3 | Customer deposits, as at 31 December 2015, is adjusted as a result of a changes in accounting policies. Reference is made to Note 1 Accounting policies - Changes in accounting policies and Changes in
presentation in 2016.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4 | Includes Other liabilities, Current and deferred tax liabilities, and Provisions as presented in the Consolidated statement of financial position.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------

41 Assets not freely disposable

The assets not freely disposable consist
primarily of Loans and advances to customers pledged to secure Debt securities in issue, deposits from De Nederlandsche Bank (the Dutch Central Bank) and other banks and serve to secure margin accounts and are used for other purposes required by
law. The assets not freely disposable are as follows:



|                                                      |  |      |        |  |       |  |        | 
|----------------------------------------------------- |  | ---- | ------ |  | ----- |  | ------ | 
|Assets not freely disposable                          |  |      |        |  |       | 
|                                                      |  |     
|                                                      |  | 2016 |        |  | 20151 | 
|Banks                                                 |  |      |        |  |       |  |        | 
| Cash and balances with central banks                |  |      | 1,353  |  |       |  | 1,899  | 
| Loans and advances to banks                         |  |      | 6,054  |  |       |  | 7,806  | 
|Financial assets at fair value through profit or loss |  |      | 447    |  |       |  | 550    | 
|Investments                                           |  |      | 825    |  |       |  | 726    | 
|Loans and advances to customers                       |  |      | 70,457 |  |       |  | 74,506 | 
|Other assets                                          |  |      | 935    |  |       |  | 675    | 
|                                                      |  |      |        |  |       |  |        | 
|                                                      |  |      | 80,071 |  |       |  | 86,162 | 
|                                                      |  |      |        |  |       |  |        | 



|1 | Excludes assets classified as held for sale.
|- | --------------------------------------------

In some jurisdictions ING Bank N.V. has an obligation to maintain a
reserve with central banks. As at 31 December 2016, the minimum mandatory reserve deposits with various central banks amount to EUR 9,055 million (2015: EUR 8,929 million).

Loans and advances to customers that have been pledged as collateral for Debt securities in issue and for liquidity purposes, amount in the Netherlands to EUR
49 billion (2015: EUR 53 billion), in Germany to EUR 12 billion (2015: EUR 13 billion), in Belgium EUR 5 billion (2015: EUR 5 billion), in Australia to EUR 2 billion (2015: EUR 3 billion) and in the United States to EUR
1 billion (2015: nil).



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-118 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The table does not include assets relating to securities lending as well as sale and repurchase transactions. Reference
is made to Note 42 Transfer of financial assets.

42 Transfer of financial assets

The majority of INGs financial assets that have been transferred, but do not qualify for derecognition are debt instruments used in securities lending or sale and
repurchase transactions. Reference is made to Note 48 Structured entities.



|                                                              |  |                    |       |  |                     |  |     |        |  |  |       |  |  |  |       | 
|------------------------------------------------------------- |  | ------------------ | ----- |  | ------------------- |  | --- | ------ |  |  | ----- |  |  |  | ----- | 
|Transfer of financial assets not qualifying for derecognition |  |                    |       |  |                     |  |    
|                                                              |  | Securities lending |       |  | Sale and repurchase | 
|2016                                                          |  | Equity             |       |  | Debt                |  |     | Equity |  |  | Debt  | 
|Transferred assets at carrying amount                         |  |                    |       |  |                     |  |     |        |  |  |       |  |  |  |       | 
|Financial assets at fair value through profit or loss         |  |                    | 1,428 |  |                     |  |     |        |  |  | 4,106 |  |  |  | 8,965 | 
|Investments                                                   |  |                    | 2     |  |                     |  |     |        |  |  |       |  |  |  | 1,427 | 
|Loans and advances to customers                               |  |                    |       |  |                     |  |     |        |  |  |       |  |  |  | 25    | 
|Associated liabilities at carrying amount                     |  |                    |       |  |                     |  |     |        |  |  |       |  |  |  |       | 
|Deposits from banks                                           |  |                    | n.a   |  |                     |  | n.a |        |  |  |       |  |  |  |       | 
|Customer deposits                                             |  |                    | n.a   |  |                     |  | n.a |        |  |  |       |  |  |  |       | 
|Financial liabilities at fair value through profit or loss    |  |                    | 1,443 |  |                     |  |     |        |  |  | 4,635 |  |  |  | 4,280 | 



|                                                              |  |                    |     |  |                     |  |     |        |  |  |       |  |  |  |       | 
|------------------------------------------------------------- |  | ------------------ | --- |  | ------------------- |  | --- | ------ |  |  | ----- |  |  |  | ----- | 
|Transfer of financial assets not qualifying for derecognition |  |                    |     |  |                     |  |    
|                                                              |  | Securities lending |     |  | Sale and repurchase | 
|2015                                                          |  | Equity             |     |  | Debt                |  |     | Equity |  |  | Debt  | 
|Transferred assets at carrying amount                         |  |                    |     |  |                     |  |     |        |  |  |       |  |  |  |       | 
|Loans and advances to banks                                   |  |                    |     |  |                     |  |     |        |  |  |       |  |  |  | 18    | 
|Financial assets at fair value through profit or loss         |  |                    |     |  |                     |  |     |        |  |  | 4,339 |  |  |  | 7,892 | 
|Investments                                                   |  |                    |     |  |                     |  |     |        |  |  |       |  |  |  | 2,502 | 
|Associated liabilities at carrying amount                     |  |                    |     |  |                     |  |     |        |  |  |       |  |  |  |       | 
|Deposits from banks                                           |  |                    | n.a |  |                     |  | n.a |        |  |  |       |  |  |  |       | 
|Customer deposits                                             |  |                    | n.a |  |                     |  | n.a |        |  |  |       |  |  |  |       | 
|Financial liabilities at fair value through profit or loss    |  |                    |     |  |                     |  |     |        |  |  | 4,384 |  |  |  | 3,966 | 

The tables above include the associated liabilities which are reported after offsetting, compared to the gross positions of the
encumbered assets.

Included in the tables above, are the carrying amounts of transferred assets under repurchase agreements and securities lending that do not
qualify for derecognition.

The tables above do not include assets transferred to consolidated securitisation entities as the related assets remain recognised in
the consolidated statement of financial position.

43 Offsetting financial assets and liabilities

The following tables include information about rights to offset and the related arrangements. The amounts included consist of all recognised financial instruments that
are presented net in the statement of financial position under the IFRS offsetting requirements (legal right to offset and intention to net settle) and amounts presented gross in the statement of financial position but subject to enforceable master
netting arrangements or similar arrangement.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-119 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |          |                                                                           |  |  |                                                                 |  |  |                                                   |        |  |           |  |        |  |  |  |       | 
|------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------- |  | --------------------------------------- | ------- |  | --------------------------------------------------------------------------------------- |  | -------- | ------------------------------------------------------------------------- |  |  | --------------------------------------------------------------- |  |  | ------------------------------------------------- | ------ |  | --------- |  | ------ |  |  |  | ----- | 
|Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |          |                                                                           |  |  | Related amounts notoffset in the statement offinancial position |  |  |                                                   |       
|2016                                                                                                   |  |                                                                 |  | Grossamountsofrecognisedfinancialassets |         |  | Grossamounts ofrecognisedfinancialliabilitiesoffset in thestatementof financialposition |  |          | Netamounts offinancialassetspresented inthe statementof financialposition |  |  | Financialinstruments                                            |  |  | Cash andfinancialinstrumentsreceived ascollateral |        |  | Netamount | 
|Statement of financial position line item                                                              |  | Financial instrument                                            |  |                                         |         |  |                                                                                         |  |          |                                                                           |  |  |                                                                 |  |  |                                                   |        |  |           |  |        |  |  |  |       | 
|Loans and advances to banks                                                                            |  | Reverse repurchase, securities borrowing and similar agreements |  |                                         | 173     |  |                                                                                         |  | 95      |                                                                           |  |  | 78                                                              |  |  |                                                   |        |  |           |  | 78     |  |  |  |       | 
|                                                                                                       |  | Other                                                           |  |                                         | 3       |  |                                                                                         |  | 3       |                                                                           |  |  |                                                                 |  |  |                                                   |        |  |           |  |        |  |  |  |       | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |          |                                                                           |  |  |                                                                 |  |  |                                                   |        |  |           |  |        |  |  |  |       | 
|                                                                                                       |  |                                                                 |  |                                         | 176     |  |                                                                                         |  | 98      |                                                                           |  |  | 78                                                              |  |  |                                                   |       |  |           |  | 78     |  |  |  |      | 
|Financial assets at fair value through profit or loss                                                  |  |                                                                 |  |                                         |         |  |                                                                                         |  |          |                                                                           |  |  |                                                                 |  |  |                                                   |        |  |           |  |        |  |  |  |       | 
|Trading assets                                                                                         |  | Derivatives                                                     |  |                                         | 28,511  |  |                                                                                         |  | 913     |                                                                           |  |  | 27,598                                                          |  |  |                                                   | 25,532 |  |           |  | 147    |  |  |  | 1,919 | 
|                                                                                                       |  | Reverse repurchase, securities borrowing and similar agreements |  |                                         | 61,245  |  |                                                                                         |  | 19,413  |                                                                           |  |  | 41,832                                                          |  |  |                                                   | 36     |  |           |  | 41,555 |  |  |  | 241   | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |          |                                                                           |  |  |                                                                 |  |  |                                                   |        |  |           |  |        |  |  |  |       | 
|                                                                                                       |  |                                                                 |  |                                         | 89,756  |  |                                                                                         |  | 20,326  |                                                                           |  |  | 69,430                                                          |  |  |                                                   | 25,568 |  |           |  | 41,702 |  |  |  | 2,160 | 
|Non-trading derivatives                                                                                |  | Derivatives                                                     |  |                                         | 57,384  |  |                                                                                         |  | 55,687  |                                                                           |  |  | 1,697                                                           |  |  |                                                   | 1,499  |  |           |  | 5     |  |  |  | 203   | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |          |                                                                           |  |  |                                                                 |  |  |                                                   |        |  |           |  |        |  |  |  |       | 
|                                                                                                       |  |                                                                 |  |                                         | 57,384  |  |                                                                                         |  | 55,687  |                                                                           |  |  | 1,697                                                           |  |  |                                                   | 1,499  |  |           |  | 5     |  |  |  | 203   | 
|Loans and advances to customers                                                                        |  | Other                                                           |  |                                         | 191,453 |  |                                                                                         |  | 186,963 |                                                                           |  |  | 4,490                                                           |  |  |                                                   |        |  |           |  | 387    |  |  |  | 4,103 | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |          |                                                                           |  |  |                                                                 |  |  |                                                   |        |  |           |  |        |  |  |  |       | 
|                                                                                                       |  |                                                                 |  |                                         | 191,453 |  |                                                                                         |  | 186,963 |                                                                           |  |  | 4,490                                                           |  |  |                                                   |       |  |           |  | 387    |  |  |  | 4,103 | 
|Other items where offsetting is applied in the statement of financial position                         |  |                                                                 |  |                                         | 6,326   |  |                                                                                         |  | 5,846   |                                                                           |  |  | 480                                                             |  |  |                                                   | 15     |  |           |  |        |  |  |  | 465   | 
|Impact of enforceable master netting arrangements or similar arrangements1                             |  | Derivatives                                                     |  |                                         |         |  |                                                                                         |  |          |                                                                           |  |  |                                                                 |  |  |                                                   | 7,300 |  |           |  | 4,743  |  |  |  | 2,557 | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |          |                                                                           |  |  |                                                                 |  |  |                                                   |        |  |           |  |        |  |  |  |       | 
|                                                                                                       |  |                                                                 |  |                                         |        |  |                                                                                         |  |         |                                                                           |  |  |                                                                |  |  |                                                   | 7,300 |  |           |  | 4,743  |  |  |  | 2,557 | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |          |                                                                           |  |  |                                                                 |  |  |                                                   |        |  |           |  |        |  |  |  |       | 
|Total financial assets                                                                                 |  |                                                                 |  |                                         | 345,095 |  |                                                                                         |  | 268,920 |                                                                           |  |  | 76,175                                                          |  |  |                                                   | 19,782 |  |           |  | 46,905 |  |  |  | 9,488 | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |          |                                                                           |  |  |                                                                 |  |  |                                                   |        |  |           |  |        |  |  |  |       | 



|1 | The line Impact of enforceable master netting agreements or similar arrangements contains derivative positions under the same master netting arrangements being presented in different statement of financial
position line items.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-120 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |         |                                                                          |  |  |                                                                 |  |  |                                                   |         |  |           |  |        |  |  |  |        | 
|------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------- |  | --------------------------------------- | ------- |  | --------------------------------------------------------------------------------------- |  | ------- | ------------------------------------------------------------------------ |  |  | --------------------------------------------------------------- |  |  | ------------------------------------------------- | ------- |  | --------- |  | ------ |  |  |  | ------ | 
|Financial assets subject to offsetting, enforceable master netting arrangements and similar agreements | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |         |                                                                          |  |  | Related amounts notoffset in the statement offinancial position |  |  |                                                   |        
|2015                                                                                                   |  |                                                                 |  | Grossamountsofrecognisedfinancialassets |         |  | Grossamounts ofrecognisedfinancialliabilitiesoffset in thestatementof financialposition |  |         | Netamounts offinancialassetspresentedin thestatementof financialposition |  |  | Financialinstruments                                            |  |  | Cash andfinancialinstrumentsreceived ascollateral |         |  | Netamount | 
|Statement of financial position line item                                                              |  | Financial instrument                                            |  |                                         |         |  |                                                                                         |  |         |                                                                          |  |  |                                                                 |  |  |                                                   |         |  |           |  |        |  |  |  |        | 
|Loans and advances to banks                                                                            |  | Reverse repurchase, securities borrowing and similar agreements |  |                                         | 151     |  |                                                                                         |  |         |                                                                          |  |  | 151                                                             |  |  |                                                   |         |  |           |  | 151    |  |  |  |        | 
|                                                                                                       |  | Other                                                           |  |                                         | 3       |  |                                                                                         |  | 3      |                                                                          |  |  |                                                                 |  |  |                                                   |         |  |           |  |        |  |  |  |        | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |         |                                                                          |  |  |                                                                 |  |  |                                                   |         |  |           |  |        |  |  |  |        | 
|                                                                                                       |  |                                                                 |  |                                         | 154     |  |                                                                                         |  | 3      |                                                                          |  |  | 151                                                             |  |  |                                                   |        |  |           |  | 151    |  |  |  |       | 
|Financial assets at fair value through profit or loss                                                  |  |                                                                 |  |                                         |         |  |                                                                                         |  |         |                                                                          |  |  |                                                                 |  |  |                                                   |         |  |           |  |        |  |  |  |        | 
|Trading assets                                                                                         |  | Derivatives                                                     |  |                                         | 28,362  |  |                                                                                         |  | 815    |                                                                          |  |  | 27,547                                                          |  |  |                                                   | 25,204  |  |           |  | 104    |  |  |  | 2,239  | 
|                                                                                                       |  | Reverse repurchase, securities borrowing and similar agreements |  |                                         | 65,854  |  |                                                                                         |  | 22,569 |                                                                          |  |  | 43,285                                                          |  |  |                                                   | 242     |  |           |  | 42,597 |  |  |  | 446    | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |         |                                                                          |  |  |                                                                 |  |  |                                                   |         |  |           |  |        |  |  |  |        | 
|                                                                                                       |  |                                                                 |  |                                         | 94,216  |  |                                                                                         |  | 23,384 |                                                                          |  |  | 70,832                                                          |  |  |                                                   | 25,446  |  |           |  | 42,701 |  |  |  | 2,685  | 
|Non-trading derivatives                                                                                |  | Derivatives                                                     |  |                                         | 70,226  |  |                                                                                         |  | 67,843 |                                                                          |  |  | 2,383                                                           |  |  |                                                   | 2,138   |  |           |  | 3     |  |  |  | 248    | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |         |                                                                          |  |  |                                                                 |  |  |                                                   |         |  |           |  |        |  |  |  |        | 
|                                                                                                       |  |                                                                 |  |                                         | 70,226  |  |                                                                                         |  | 67,843 |                                                                          |  |  | 2,383                                                           |  |  |                                                   | 2,138   |  |           |  | 3     |  |  |  | 248    | 
|Loans and advances to
customers 1                                                                      |  | Reverse repurchase, securities borrowing and similar agreements |  |                                         | 74      |  |                                                                                         |  |         |                                                                          |  |  | 74                                                              |  |  |                                                   | 74      |  |           |  |        |  |  |  |        | 
|                                                                                                       |  | Other                                                           |  |                                         | 172,530 |  |                                                                                         |  | 2,873  |                                                                          |  |  | 169,657                                                         |  |  |                                                   | 163,464 |  |           |  | 397    |  |  |  | 5,796  | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |         |                                                                          |  |  |                                                                 |  |  |                                                   |         |  |           |  |        |  |  |  |        | 
|                                                                                                       |  |                                                                 |  |                                         | 172,604 |  |                                                                                         |  | 2,873  |                                                                          |  |  | 169,731                                                         |  |  |                                                   | 163,538 |  |           |  | 397    |  |  |  | 5,796  | 
|Other items where offsetting is applied in the statement of financial position                         |  |                                                                 |  |                                         | 3,576   |  |                                                                                         |  | 3,477  |                                                                          |  |  | 99                                                              |  |  |                                                   | 4       |  |           |  |        |  |  |  | 95     | 
|Impact of enforceable master netting arrangements or similar arrangements2                             |  | Derivatives                                                     |  |                                         |         |  |                                                                                         |  |         |                                                                          |  |  |                                                                 |  |  |                                                   | 7,104  |  |           |  | 3,791  |  |  |  | 3,313  | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |         |                                                                          |  |  |                                                                 |  |  |                                                   |         |  |           |  |        |  |  |  |        | 
|                                                                                                       |  |                                                                 |  |                                         |        |  |                                                                                         |  |        |                                                                          |  |  |                                                                |  |  |                                                   | 7,104  |  |           |  | 3,791  |  |  |  | 3,313  | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |         |                                                                          |  |  |                                                                 |  |  |                                                   |         |  |           |  |        |  |  |  |        | 
|Total financial assets                                                                                 |  |                                                                 |  |                                         | 340,776 |  |                                                                                         |  | 97,580 |                                                                          |  |  | 243,196                                                         |  |  |                                                   | 184,022 |  |           |  | 47,037 |  |  |  | 12,137 | 
|                                                                                                       |  |                                                                 |  |                                         |         |  |                                                                                         |  |         |                                                                          |  |  |                                                                 |  |  |                                                   |         |  |           |  |        |  |  |  |        | 



|1 | Loans and advances to customers, as at 31 December 2015, is adjusted as a result of a change in accounting policies. Reference is made to Note 1 Accounting policies  Changes in accounting policies
in 2016.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | The line Impact of enforceable master netting agreements or similar arrangements contains derivative positions under the same master netting arrangements being presented in different statement of financial
position line items.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-121 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                                                            |  |                                                       |  |                                               |         |  |                                                                                    |  |          |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|----------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------- |  | --------------------------------------------- | ------- |  | ---------------------------------------------------------------------------------- |  | -------- | ------------------------------------------------------------------------------ |  |  | --------------------------------------------------------------- |  |  | ------------------------------------------------ | ------- |  | --------- |  | ------ |  |  |  | ------ | 
|Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements | 
|                                                                                                            |  |                                                       |  |                                               |         |  |                                                                                    |  |          |                                                                                |  |  | Related amounts notoffset in the statement offinancial position |  |  |                                                  |        
|2016                                                                                                        |  |                                                       |  | Grossamounts ofrecognisedfinancialliabilities |         |  | Grossamounts ofrecognisedfinancialassetsoffset inthe statementof financialposition |  |          | Netamounts offinancialliabilitiespresented inthe statementof financialposition |  |  | Financialinstruments                                            |  |  | Cash andfinancialinstrumentspledged ascollateral |         |  | Netamount | 
|Statement of financial position line item                                                                   |  | Financial instrument                                  |  |                                               |         |  |                                                                                    |  |          |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|Deposits from banks                                                                                         |  | Repurchase, securities lending and similar agreements |  |                                               | 102     |  |                                                                                    |  | 95      |                                                                                |  |  | 7                                                               |  |  |                                                  |         |  |           |  |        |  |  |  | 7      | 
|                                                                                                            |  | Other                                                 |  |                                               | 23      |  |                                                                                    |  | 3       |                                                                                |  |  | 20                                                              |  |  |                                                  |         |  |           |  |        |  |  |  | 20     | 
|                                                                                                            |  |                                                       |  |                                               |         |  |                                                                                    |  |          |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|                                                                                                            |  |                                                       |  |                                               | 125     |  |                                                                                    |  | 98      |                                                                                |  |  | 27                                                              |  |  |                                                  |        |  |           |  |       |  |  |  | 27     | 
|Customer deposits                                                                                           |  | Repurchase, securities lending and similar agreements |  |                                               | 36      |  |                                                                                    |  |          |                                                                                |  |  | 36                                                              |  |  |                                                  | 36      |  |           |  |        |  |  |  |        | 
|                                                                                                            |  | Corporate deposits                                    |  |                                               | 11,773  |  |                                                                                    |  | 8,595   |                                                                                |  |  | 3,178                                                           |  |  |                                                  |         |  |           |  |        |  |  |  | 3,178  | 
|                                                                                                            |  | Other                                                 |  |                                               | 189,496 |  |                                                                                    |  | 178,368 |                                                                                |  |  | 11,128                                                          |  |  |                                                  |         |  |           |  |        |  |  |  | 11,128 | 
|                                                                                                            |  |                                                       |  |                                               |         |  |                                                                                    |  |          |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|                                                                                                            |  |                                                       |  |                                               | 201,305 |  |                                                                                    |  | 186,963 |                                                                                |  |  | 14,342                                                          |  |  |                                                  | 36      |  |           |  |       |  |  |  | 14,306 | 
|Financial liabilities at fair value through profit or loss                                                  |  |                                                       |  |                                               |         |  |                                                                                    |  |          |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|Trading liabilities                                                                                         |  | Derivatives                                           |  |                                               | 30,102  |  |                                                                                    |  | 997     |                                                                                |  |  | 29,105                                                          |  |  |                                                  | 27,852  |  |           |  | 146    |  |  |  | 1,107  | 
|                                                                                                            |  | Repurchase, securities lending and similar agreements |  |                                               | 46,695  |  |                                                                                    |  | 19,415  |                                                                                |  |  | 27,280                                                          |  |  |                                                  | 36      |  |           |  | 27,102 |  |  |  | 142    | 
|                                                                                                            |  |                                                       |  |                                               |         |  |                                                                                    |  |          |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|                                                                                                            |  |                                                       |  |                                               | 76,797  |  |                                                                                    |  | 20,412  |                                                                                |  |  | 56,385                                                          |  |  |                                                  | 27,888  |  |           |  | 27,248 |  |  |  | 1,249  | 
|Non-trading derivatives                                                                                     |  | Derivatives                                           |  |                                               | 59,510  |  |                                                                                    |  | 56,975  |                                                                                |  |  | 2,535                                                           |  |  |                                                  | 2,343   |  |           |  | 153   |  |  |  | 345    | 
|Other items where offsetting is applied in the statement of financial position                              |  |                                                       |  |                                               | 5,041   |  |                                                                                    |  | 4,472   |                                                                                |  |  | 569                                                             |  |  |                                                  | 28      |  |           |  |        |  |  |  | 541    | 
|Impact of enforceable master netting arrangements or similar arrangements1                                  |  | Derivatives                                           |  |                                               |         |  |                                                                                    |  |          |                                                                                |  |  |                                                                 |  |  |                                                  | 10,513 |  |           |  | 8,047  |  |  |  | 2,466  | 
|                                                                                                            |  |                                                       |  |                                               |         |  |                                                                                    |  |          |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|                                                                                                            |  |                                                       |  |                                               |        |  |                                                                                    |  |         |                                                                                |  |  |                                                                |  |  |                                                  | 10,513 |  |           |  | 8,047  |  |  |  | 2,466  | 
|                                                                                                            |  |                                                       |  |                                               |         |  |                                                                                    |  |          |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|Total financial liabilities                                                                                 |  |                                                       |  |                                               | 342,778 |  |                                                                                    |  | 268,920 |                                                                                |  |  | 73,858                                                          |  |  |                                                  | 19,782  |  |           |  | 35,142 |  |  |  | 18,934 | 
|                                                                                                            |  |                                                       |  |                                               |         |  |                                                                                    |  |          |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 



|1 | The line Impact of enforceable master netting agreements or similar arrangements contains derivative positions under the same master netting arrangements being presented in different statement of financial
position line items.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-122 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                                                            |  |                                                       |  |                                              |         |  |                                                                                    |  |         |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|----------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------- |  | -------------------------------------------- | ------- |  | ---------------------------------------------------------------------------------- |  | ------- | ------------------------------------------------------------------------------ |  |  | --------------------------------------------------------------- |  |  | ------------------------------------------------ | ------- |  | --------- |  | ------ |  |  |  | ------ | 
|Financial liabilities subject to offsetting, enforceable master netting arrangements and similar agreements | 
|                                                                                                            |  |                                                       |  |                                              |         |  |                                                                                    |  |         |                                                                                |  |  | Related amounts notoffset in the statement offinancial position |  |  |                                                  |        
|2015                                                                                                        |  |                                                       |  | Grossamountsofrecognisedfinancialliabilities |         |  | Grossamounts ofrecognisedfinancialassetsoffset in thestatementof financialposition |  |         | Netamounts offinancialliabilitiespresented inthe statementof financialposition |  |  | Financialinstruments                                            |  |  | Cash andfinancialinstrumentspledged ascollateral |         |  | Netamount | 
|Statement of financial position line item                                                                   |  | Financial instrument                                  |  |                                              |         |  |                                                                                    |  |         |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|Deposits from banks                                                                                         |  | Repurchase, securities lending and similar agreements |  |                                              | 678     |  |                                                                                    |  |         |                                                                                |  |  | 678                                                             |  |  |                                                  |         |  |           |  | 677    |  |  |  | 1      | 
|                                                                                                            |  | Other                                                 |  |                                              | 3       |  |                                                                                    |  | 3      |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|                                                                                                            |  |                                                       |  |                                              |         |  |                                                                                    |  |         |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|                                                                                                            |  |                                                       |  |                                              | 681     |  |                                                                                    |  | 3      |                                                                                |  |  | 678                                                             |  |  |                                                  |        |  |           |  | 677    |  |  |  | 1      | 
|Customer deposits 1                                                                                         |  | Repurchase, securities lending and similar agreements |  |                                              | 301     |  |                                                                                    |  |         |                                                                                |  |  | 301                                                             |  |  |                                                  | 74      |  |           |  | 227    |  |  |  |        | 
|                                                                                                            |  | Corporate deposits                                    |  |                                              | 14,761  |  |                                                                                    |  | 10,486 |                                                                                |  |  | 4,275                                                           |  |  |                                                  |         |  |           |  |        |  |  |  | 4,275  | 
|                                                                                                            |  | Other                                                 |  |                                              | 166,768 |  |                                                                                    |  | 7,613   |                                                                                |  |  | 174,381                                                         |  |  |                                                  | 163,464 |  |           |  |        |  |  |  | 10,917 | 
|                                                                                                            |  |                                                       |  |                                              |         |  |                                                                                    |  |         |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|                                                                                                            |  |                                                       |  |                                              | 181,830 |  |                                                                                    |  | 2,873  |                                                                                |  |  | 178,957                                                         |  |  |                                                  | 163,538 |  |           |  | 227    |  |  |  | 15,192 | 
|Financial liabilities at fair value through profit or loss                                                  |  |                                                       |  |                                              |         |  |                                                                                    |  |         |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|Trading liabilities                                                                                         |  | Derivatives                                           |  |                                              | 31,317  |  |                                                                                    |  | 930    |                                                                                |  |  | 30,387                                                          |  |  |                                                  | 30,153  |  |           |  | 104    |  |  |  | 130    | 
|                                                                                                            |  | Repurchase, securities lending and similar agreements |  |                                              | 53,508  |  |                                                                                    |  | 22,569 |                                                                                |  |  | 30,939                                                          |  |  |                                                  | 242     |  |           |  | 30,570 |  |  |  | 127    | 
|                                                                                                            |  |                                                       |  |                                              |         |  |                                                                                    |  |         |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|                                                                                                            |  |                                                       |  |                                              | 84,825  |  |                                                                                    |  | 23,499 |                                                                                |  |  | 61,326                                                          |  |  |                                                  | 30,395  |  |           |  | 30,674 |  |  |  | 257    | 
|Non-trading derivatives                                                                                     |  | Derivatives                                           |  |                                              | 72,562  |  |                                                                                    |  | 69,031 |                                                                                |  |  | 3,531                                                           |  |  |                                                  | 3,307   |  |           |  | 236   |  |  |  | 460    | 
|Other items where offsetting is applied in the statement of financial position                              |  |                                                       |  |                                              | 2,201   |  |                                                                                    |  | 2,174  |                                                                                |  |  | 27                                                              |  |  |                                                  | 25      |  |           |  |        |  |  |  | 2      | 
|Impact of enforceable master netting arrangements or similar arrangements2                                  |  | Derivatives                                           |  |                                              |         |  |                                                                                    |  |         |                                                                                |  |  |                                                                 |  |  |                                                  | 13,231 |  |           |  | 7,457  |  |  |  | 5,774  | 
|                                                                                                            |  | Other                                                 |  |                                              |         |  |                                                                                    |  |         |                                                                                |  |  |                                                                 |  |  |                                                  | 12     |  |           |  |        |  |  |  | 12     | 
|                                                                                                            |  |                                                       |  |                                              |         |  |                                                                                    |  |         |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|                                                                                                            |  |                                                       |  |                                              |        |  |                                                                                    |  |        |                                                                                |  |  |                                                                |  |  |                                                  | 13,243 |  |           |  | 7,457  |  |  |  | 5,786  | 
|                                                                                                            |  |                                                       |  |                                              |         |  |                                                                                    |  |         |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 
|Total financial liabilities                                                                                 |  |                                                       |  |                                              | 342,099 |  |                                                                                    |  | 97,580 |                                                                                |  |  | 244,519                                                         |  |  |                                                  | 184,022 |  |           |  | 38,799 |  |  |  | 21,698 | 
|                                                                                                            |  |                                                       |  |                                              |         |  |                                                                                    |  |         |                                                                                |  |  |                                                                 |  |  |                                                  |         |  |           |  |        |  |  |  |        | 



|1 | Customer deposits, as at 31 December 2015, is adjusted as a result of a change in accounting policies. Reference is made to Note 1 Accounting policies  Changes in accounting policies in 2016.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | The line Impact of enforceable master netting agreements or similar arrangements contains derivative positions under the same master netting arrangements being presented in different statement of financial
position line items.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-123 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







44 Contingent liabilities and commitments

In the normal course of business, ING Group is party to activities where risks are not reflected in whole or in part in the consolidated financial statements. In
response to the needs of its customers, the Group offers financial products related to loans. These products include traditional off-balance sheet credit-related financial instruments.



|                                       |  |                  |        |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  |        |       |  |  |   |  |  |  |         | 
|-------------------------------------- |  | ---------------- | ------ |  | --------- |  | ----- | ---------- |  |  | -------- |  |  | ----------- | ------ |  | ---------------------- |  | ------ | ----- |  |  | - |  |  |  | ------- | 
|Contingent liabilities and commitments |  |                  |        |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  |        |       | 
|2016                                   |  | Less than1 month |        |  | 1-3months |  |       | 3-12months |  |  | 1-5years |  |  | Over 5years |        |  | Maturity notapplicable |  |        | Total | 
|Contingent liabilities in respect of   |  |                  |        |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  |        |       |  |  |   |  |  |  |         | 
| discounted bills                     |  |                  |        |  |           |  |       |            |  |  | 1        |  |  |             |        |  |                        |  |        |       |  |  |   |  |  |  | 1       | 
| guarantees                           |  |                  | 18,536 |  |           |  | 677   |            |  |  | 965      |  |  |             | 1,167  |  |                        |  | 3,526  |       |  |  |   |  |  |  | 24,871  | 
| irrevocable letters of credit        |  |                  | 6,583  |  |           |  | 5,973 |            |  |  | 824      |  |  |             | 154    |  |                        |  | 12     |       |  |  |   |  |  |  | 13,546  | 
| other                                |  |                  | 39     |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  | 309    |       |  |  |   |  |  |  | 348     | 
|                                       |  |                  |        |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  |        |       |  |  |   |  |  |  |         | 
|                                       |  |                  | 25,158 |  |           |  | 6,650 |            |  |  | 1,790    |  |  |             | 1,321  |  |                        |  | 3,847  |       |  |  |  |  |  |  | 38,766  | 
|Guarantees issued by ING Groep N.V.    |  |                  |        |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  | 404    |       |  |  |   |  |  |  | 404     | 
|Irrevocable facilities                 |  |                  | 59,214 |  |           |  | 2,587 |            |  |  | 4,832    |  |  |             | 22,606 |  |                        |  | 9,315  |       |  |  |   |  |  |  | 98,554  | 
|                                       |  |                  |        |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  |        |       |  |  |   |  |  |  |         | 
|                                       |  |                  | 84,372 |  |           |  | 9,237 |            |  |  | 6,622    |  |  |             | 23,927 |  |                        |  | 13,566 |       |  |  |  |  |  |  | 137,724 | 
|                                       |  |                  |        |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  |        |       |  |  |   |  |  |  |         | 
|                                       |  |                  |        |  |           |  |      
|Contingent liabilities and commitments |  |                  |        |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  |        |       | 
|20151                                  |  | Less than1 month |        |  | 1-3months |  |       | 3-12months |  |  | 1-5years |  |  | Over 5years |        |  | Maturity notapplicable |  |        | Total | 
|Contingent liabilities in respect of   |  |                  |        |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  |        |       |  |  |   |  |  |  |         | 
| guarantees                           |  |                  | 16,813 |  |           |  | 494   |            |  |  | 465      |  |  |             | 1,121  |  |                        |  | 3,736  |       |  |  |   |  |  |  | 22,629  | 
| irrevocable letters of credit        |  |                  | 7,447  |  |           |  | 2,065 |            |  |  | 1,393    |  |  |             | 251    |  |                        |  | 6      |       |  |  |   |  |  |  | 11,162  | 
| other                                |  |                  | 244    |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  |        |       |  |  |   |  |  |  | 244     | 
|                                       |  |                  |        |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  |        |       |  |  |   |  |  |  |         | 
|                                       |  |                  | 24,504 |  |           |  | 2,559 |            |  |  | 1,858    |  |  |             | 1,372  |  |                        |  | 3,742  |       |  |  |  |  |  |  | 34,035  | 
|Guarantees issued by ING Groep N.V.    |  |                  |        |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  | 436    |       |  |  |   |  |  |  | 436     | 
|Irrevocable facilities                 |  |                  | 49,133 |  |           |  | 1,458 |            |  |  | 6,407    |  |  |             | 36,255 |  |                        |  | 5,125  |       |  |  |   |  |  |  | 98,378  | 
|                                       |  |                  |        |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  |        |       |  |  |   |  |  |  |         | 
|                                       |  |                  | 73,637 |  |           |  | 4,017 |            |  |  | 8,265    |  |  |             | 37,627 |  |                        |  | 9,303  |       |  |  |  |  |  |  | 132,849 | 
|                                       |  |                  |        |  |           |  |       |            |  |  |          |  |  |             |        |  |                        |  |        |       |  |  |   |  |  |  |         | 



|1 | Excludes commitments and contingent liabilities related to assets classified as held for sale, being NN Group.
|- | --------------------------------------------------------------------------------------------------------------

Guarantees relate both to credit and non-credit substitute guarantees. Credit substitute guarantees are guarantees given by ING
Group in respect of credit granted to customers by a third party. Many of them are expected to expire without being drawn on and therefore do not necessarily represent future cash outflows. In addition to the items included in contingent
liabilities, ING Group has issued guarantees as a participant in collective arrangements of national industry bodies and as a participant in government required collective guarantee schemes which apply in different countries.

Irrevocable letters of credit mainly secure payments to third parties for a customers foreign and domestic trade transactions in order to finance a shipment of
goods. ING Groups credit risk in these transactions is limited since these transactions are collateralised by the commodity shipped and are of a short duration.

Other contingent liabilities include acceptances of bills and are of a short-term nature. Other contingent liabilities also include contingent liabilities resulting
from the operations of the Real Estate business including obligations under development and construction contracts. Furthermore other contingent liabilities include a contingent liability in connection with a possible Dutch tax obligation that
relates to the deduction from Dutch taxable profit of losses incurred by ING Bank in the United Kingdom in previous years. The existence of this obligation will be confirmed only by the occurrence of future profits in the United Kingdom.

Reference is made to Parent company annual accounts  Notes to the parent company annual accounts, Note 13 Other for further information on Guarantees
issued by ING Groep N.V.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-124 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Irrevocable facilities mainly constitute unused portions of irrevocable credit facilities granted to corporate clients.
Many of these facilities are for a fixed duration and bear interest at a floating rate. ING Groups credit risk and interest rate risk in these transactions is limited. The unused portion of irrevocable credit facilities is partly secured by
customers assets or counter-guarantees by the central governments and exempted bodies under the regulatory requirements. Irrevocable facilities also include commitments made to purchase securities to be issued by governments and private
issuers.

Furthermore, ING Group leases assets from third parties under operating leases as lessee. The future rental commitments to be paid under non-cancellable operating leases are as follows:



|                                                        |  |      |     |  |       |  |     | 
|------------------------------------------------------- |  | ---- | --- |  | ----- |  | --- | 
|Future rental commitments for operating lease contracts |  |      |     |  |       | 
|                                                        |  | 2016 |     |  | 20151 | 
|2016                                                    |  |      |     |  |       |  | 310 | 
|2017                                                    |  |      | 307 |  |       |  | 160 | 
|2018                                                    |  |      | 179 |  |       |  | 143 | 
|2019                                                    |  |      | 151 |  |       |  | 122 | 
|2020                                                    |  |      | 129 |  |       |  | 109 | 
|Years after 2020                                        |  |      | 476 |  |       |  | 404 | 



|1 | Excludes future rental commitments related to businesses classified as held for sale.
|- | -------------------------------------------------------------------------------------

45 Legal proceedings

ING Groep N.V. and its consolidated subsidiaries are involved in governmental, regulatory, arbitration and legal proceedings and investigations in the Netherlands and in
a number of foreign jurisdictions, including the U.S., involving claims by and against them which arise in the course of their businesses, including in connection with their activities as lenders, broker-dealers, underwriters, issuers of securities
and investors and their position as employers and taxpayers. In certain of such proceedings, very large or indeterminate amounts are sought, including punitive and other damages. While it is not feasible to predict or determine the ultimate outcome
of all pending or threatened governmental, regulatory, arbitration and legal proceedings and investigations, ING is of the opinion that some of the proceedings and investigations set out below may have or have in the recent past had a significant
effect on the financial position, profitability or reputation of ING and/or ING and its consolidated subsidiaries.

Because of the geographic spread of its
business, ING may be subject to tax audits, investigations and procedures in numerous jurisdictions at any point in time. Although ING believes that it has adequately provided for all its tax positions, the ultimate resolution of these audits,
investigations and procedures may result in liabilities which are different from the amounts recognised. ING has also recently identified issues in connection with its US tax information reporting and withholding obligations in respect of prior
periods. A review of such issues is ongoing, and at this time it is not possible to estimate any financial or other consequences thereof.

Proceedings in which ING
is involved include complaints and lawsuits concerning the performance of certain interest sensitive products that were sold by a former subsidiary of ING in Mexico. Further, a complaint has been filed against ING Bank in January 2015 in the New
York District Court by Alfredo and Gustavo Villoldo and the executor of their fathers estate (Villoldo). Villoldo holds two judgments against the Cuban government and other Cuban entities in the aggregate amount of USD 2.9 billion. Those
judgments remain outstanding and uncollected. The complaint against ING Bank alleges that if ING Bank had complied with the applicable US sanction laws, Cuban assets would have been frozen by OFAC and available for execution and seizure by Villoldo.
The complaint alleges that the acts set out in INGs settlement with OFAC in 2012 constitute wire fraud, money laundering and fraudulent transfer and that Villoldo is therefore entitled to actual damages in the amount to be believed no less
than USD 1.654 billion and treble damages of not less than USD 4.962 billion. In July 2015 the New York District Court dismissed all claims with prejudice. The Court of Appeals affirmed this judgment in April 2016. This judgement is now
final.

In July 2016, investors in derivatives tied to the Singapore Interbank Offer Rate (SIBOR) filed a U.S. class action complaint in the New York District Court
alleging that several banks, including ING, conspired to rig the prices of derivatives tied to SIBOR and the Singapore Swap Offer Rate (SOR). The lawsuit refers to investigations by the Monetary Authority of Singapore (MAS) and other regulators,
including the U.S. Commodity Futures Trading Commission (CFTC), in relation to rigging prices of SIBOR and SOR-based derivatives. Currently, it is not possible to provide an estimate of the (potential)
financial effect of this claim.

ING Bank Turkey has received various claims from (former) customers of legal predecessors of ING Bank Turkey. The claims are based
on offshore accounts held with these banks, which banks were seized by the Savings Deposit Insurance Fund (SDIF) prior to the acquisition of ING Bank Turkey in 2007 from Oyak. SDIF has also filed various lawsuits against ING Bank Turkey to claim
compensation from ING Bank Turkey, with respect to amounts paid out to offshore account holders so far. ING Bank N.V. has initiated an arbitration procedure against OYAK in which ING Bank seeks to be held harmless for these claims. At this moment it
is not possible to assess the outcome of these procedures nor to provide an estimate of the (potential) financial effect of these claims.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-125 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







In January 2011, the Dutch Association of Stockholders (Vereniging van Effectenbezitters, VEB)
issued a writ alleging that investors were misled by the prospectus that was issued with respect to the September 2007 rights issue of Fortis N.V. (now Ageas N.V.) against Ageas N.V., the underwriters of such rights issue, including ING Bank N.V.,
and former directors of Fortis N.V. According to the VEB the prospectus shows substantive incorrect and misleading information. The VEB stated that the impact and the risks of the sub-prime crisis for Fortis
and Fortis liquidity position were reflected incorrectly in the prospectus. The VEB requested a declaratory decision stating that the summoned parties acted wrongfully and are therefore responsible for the damages suffered by the investors in
Fortis. In March 2016, Ageas, VEB and certain other claimants announced that the claim in relation to Fortis has been settled. Ageas has agreed to pay 1.2 billion to investors as
compensation, provided that the Amsterdam Court of Appeal declares the settlement to be binding. According to the settlement documentation, as filed by Ageas with the Court of Appeal in May 2016, the settlement agreement contains a third-party
clause by which the banks will also be released from the claims made by VEB and certain other claimants, if the settlement becomes unconditional.

A number of
retired employees of ING Belgium have initiated legal proceedings against ASCEL (a non-profit organisation established by ING Belgium that provided medical insurance coverage to current and retired employees
till the beginning of 2015 via a subdivision of ASCEL: FMC) and ING Belgium following the decision to externalise this medical insurance coverage which resulted in an increase of premium. Following a summary proceedings in which the initial claim of
the retired employees was rejected, proceedings at the Court of first instance have been initiated aiming to either uphold the former insurance coverage or reimburse the increase of premium. In a decision of September 2016, the Court has considered
that FMC has validly been closed but that, as the medical coverage qualifies as an insurance contract not linked with the professional activity of the claimants, ING could not unilaterally terminate the agreement between FMC and the pensioners. The
Court has yet to determine the amount of damages. The Court decision is subject to appeal. A provision has been taken.

ING is involved in several legal proceedings
in the Netherlands with respect to interest rate derivatives that were sold to clients in connection with floating interest rate loans in order to hedge the interest rate risk of the loans. These proceedings are based on several legal grounds,
depending on the facts and circumstances of each specific case, inter alia alleged breach of duty of care, insufficient information provided to the clients on the product and its risks and other elements related to the interest rate
derivatives that were sold to clients. In some cases, the court has ruled in favour of the claimants and awarded damages, annulled the interest rate derivative or ordered repayment of certain amounts to the claimants. The total amounts that need to
be repaid or compensated in some cases still need to be determined. ING may decide to appeal against adverse rulings. Although the outcome of the pending litigation and similar cases that may be brought in the future is uncertain, it is possible
that the courts may ultimately rule in favour of the claimants in some or all of such cases. A provision has been taken. However, the aggregate financial impact of the current and future litigation could become material.

As requested by the AFM, ING has reviewed a significant part of the files of clients who bought interest rate derivatives. In December 2015, the AFM concluded that
Dutch banks had to re-assess certain client files, potentially including derivative contracts that were terminated prior to April 2014 or other client files. As advised by the AFM, the Minister of Finance
appointed a Committee of independent experts (the Committee) which has established a uniform recovery framework for Dutch SME clients with interest rate derivatives. ING has adopted this recovery framework and will reassess individual files against
this framework. ING has taken an additional provision for the financial consequences of the recovery framework.

ING Bank is the subject of criminal investigations
by Dutch authorities regarding various requirements related to the on-boarding of clients, money laundering and corrupt practices. ING Groep has also received related information requests from U.S.
authorities. ING Groep and ING Bank are cooperating with such ongoing investigations and requests. It is currently not feasible to determine how the ongoing investigations and requests may be resolved or the timing of any such resolution, nor to
estimate reliably the possible timing, scope or amounts of any resulting fines, penalties and/or other outcome, which could be significant.

46 Consolidated
companies and business acquired and divested

Acquisitions

There were no significant acquisitions in 2016, 2015 and 2014.

Divestments
effective in 2016

There were no significant divestments of consolidated companies in 2016.

Other

For information on transactions related to ING Groups
shareholding in NN Group, reference is made to Note 11 Assets held for sale, Note 28 Discontinued operations, Note 49 Related parties and Note 51 Other events.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-126 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Divestments effective in 2015

NN Group

A number of divestment transactions resulted in a further decrease
in the ownership of ING Group in NN Group to 25.75% from 68.14% at 31 December 2014. NN Group was deconsolidated and accounted for as an Investment in associate held for sale. Reference is made to Note 28 Discontinued operations and Note
51 Other events.

Other

For details on the transactions in
2015 with regard to INGs interest in ING Vysya, reference is made to Note 7 Investments in associates and joint ventures, Note 49 Related parties.

Divestments effective in 2014

Asia - INGs Taiwanese
investment management business

In January 2014, ING agreed to sell ING Investment Management (IM) Taiwan, its Taiwanese asset management business, to
Japan-based Nomura Asset Management in partnership with a group of investors. The transaction did not have a significant impact on ING Group results. The transaction closed on 18 April 2014.

Asia - Joint venture ING-BOB Life

In
July 2013, the 50% interest in the Chinese insurance joint venture ING-BOB Life Insurance Company was agreed to be sold to BNP Paribas Cardif, the insurance arm of BNP Paribas. The transaction closed on
30 December 2014 and did not have a significant impact on the NN Group or ING Group results.

Voya

In 2014, ING Group reduced its stake in Voya from 56.5% at 31 December 2013 to 18.9% at 31 December 2014 through a number of transactions during the
year. Voya was deconsolidated at the end of March 2014 and was accounted for as an available-for-sale investment held for sale as at 31 December 2014. Reference is
made to Note 51 Other events.

NN Group

Following the IPO of
NN Group in July 2014, ING Groups stake reduced to 68.14% . As from 30 September 2014, NN Group was presented as Assets and liabilities held for sale and discontinued operations. Reference is made to Note 51 Other events.

In addition to the above mentioned transactions, the interest in the joint venture ING Financial Services Private Limited was sold to Hathaway investments.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-127 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Most significant companies divested in 2015 and 20141



|                                                           |  |          |           |   |      |  |           |  
|---------------------------------------------------------- |  | -------- | --------- | - | ---- |  | --------- | -
|                                                           |  | 2015     |           |   | 2014 | 
|                                                           |  | NN Group |           |   | Voya | 
|General                                                    |  |          |           |   |      |  |           |  
|Primary line of business                                   |  |          | Insurance |   |      |  | Insurance |  
|Sales proceeds                                             |  |          |           |   |      |  |           |  
|Cash proceeds 2                                            |  |          | 1,148     |   |      |  | 950       |  
|Investment retained in NN Group and Voya respectively
3    |  |          | 3,612     |   |      |  | 2,914     |  
|                                                           |  |          |           |   |      |  |           |  
|Sales proceeds                                             |  |          | 4,760     |   |      |  | 3,864     |  
|Assets                                                     |  |          |           |   |      |  |           |  
|Cash and cash equivalents                                  |  |          | 9,238     |   |      |  | 1,901     |  
|Financial assets at fair value through profit or loss      |  |          | 46,425    |   |      |  | 79,339    |  
|Available-for-sale
investments                             |  |          | 76,529    |   |      |  | 54,250    |  
|Loans and advances to customers                            |  |          | 28,617    |   |      |  | 8,245     |  
|Reinsurance contracts                                      |  |          | 266       |   |      |  | 4,359     |  
|Intangible assets                                          |  |          | 177       |   |      |  | 727       |  
|Deferred acquisition costs                                 |  |          | 1,509     |   |      |  | 4,211     |  
|Miscellaneous other assets                                 |  |          | 6,204     |   |      |  | 2,667     |  
|Liabilities                                                |  |          |           |   |      |  |           |  
|Insurance and investment contracts                         |  |          | 121,721   |   |      |  | 135,971   |  
|Financial liabilities at fair value through profit or loss |  |          | 2,105     |   |      |  | 2,280     |  
|Miscellaneous other liabilities                            |  |          | 24,135    |   |      |  | 7,288     |  
|                                                           |  |          |           |   |      |  |           |  
|Net assets                                                 |  |          | 21,004    |   |      |  | 10,160    |  
|% disposed 3                                               |  |          | 54.8      | % |      |  | 56.5      | %
|                                                           |  |          |           |   |      |  |           |  
|Net assets disposed                                        |  |          | 11,510    |   |      |  | 5,740     |  
|Loss on disposal 4,5                                       |  |          | 1,185    |   |      |  | 2,005    |  



|1 | This table includes the disposal transactions that resulted in the loss of control of NN Group and Voya which took place in May 2015 and March 2014 respectively.
Reference is made to Note 51 Other events for the earlier and subsequent transactions related to NN Group and Voya.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | Cash outflow/inflow on group companies in the cash flow statement included, in addition to the cash amounts in this table, also cash outflows/inflows on individually
insignificant disposals.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3 | IFRS required the derecognition of the subsidiary and the recognition of the respective retained investments in NN Group of 42.43% and Voya of 43.2% at the fair value on the date of disposal.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4 | The loss on disposal only reflects the impact on the statement of profit or loss of the transaction that resulted in derecognition of the company and includes the sales proceeds, the net assets disposed, the expenses
directly related to the disposal and the realisation of unrealised reserves.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5 | The portion of the loss attributable to measuring the retained investment in NN Group and Voya at its fair value amounted to EUR 5,412 million and EUR 1,467 million respectively.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

47 Principal subsidiaries, investments in associates and joint ventures

For
the majority of INGs principal subsidiaries, ING Bank N.V. has control because it either directly or indirectly owns more than half of the voting power. For subsidiaries in which the interest held is below 50%, control exists based on the
combination of INGs financial interest and its rights from other contractual arrangements which result in control over the operating and financial policies of the entity.

For each of the subsidiaries listed, the voting rights held equal the proportion of ownership interest and consolidation by ING is based on the majority of ownership.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-128 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







For the principal investments in associates ING Group has significant influence but not control. Significant influence
generally results from a shareholding of between 20% and 50% of the voting rights, but also is the ability to participate in the financial and operating policies through situations including, but not limited to one or more of the following:



| |  | Representation on the board of directors;
|- |  | -----------------------------------------



| |  | Participation in the policymaking process; and
|- |  | ----------------------------------------------



| |  | Interchange of managerial personnel.
|- |  | ------------------------------------

The principal subsidiaries, investments in associates and joint ventures of ING
Groep N.V. and their statutory place of incorporation or primary place of business are as follows:



|                                                                     |  |                                  |  |                          |  |                                                       |     |   |      |  |     |  
|-------------------------------------------------------------------- |  | -------------------------------- |  | ------------------------ |  | ----------------------------------------------------- | --- | - | ---- |  | --- | -
|Principal subsidiaries, investments in associates and joint ventures | 
|                                                                     |  |                                  |  |                          |  | Proportion of ownershipand interest held by the Group |    
|                                                                     |  |                                  |  |                          |  | 2016                                                  |     |   | 2015 | 
|Subsidiary                                                           |  | Statutory place of Incorporation |  | Country of operation     |  |                                                       |     |   |      | 
|ING Bank N.V.                                                        |  | Amsterdam                        |  | The Netherlands          |  |                                                       | 100 | % |      |  | 100 | %
|Bank Mendes Gans N.V.                                                |  | Amsterdam                        |  | The Netherlands          |  |                                                       | 100 | % |      |  | 100 | %
|ING Lease (Nederland) B.V.                                           |  | Amsterdam                        |  | The Netherlands          |  |                                                       | 100 | % |      |  | 100 | %
|ING Corporate Investments B.V.                                       |  | Amsterdam                        |  | The Netherlands          |  |                                                       | 100 | % |      |  | 100 | %
|ING België N.V.                                                      |  | Brussels                         |  | Belgium                  |  |                                                       | 100 | % |      |  | 100 | %
|ING Luxembourg S.A.                                                  |  | Luxembourg City                  |  | Luxembourg               |  |                                                       | 100 | % |      |  | 100 | %
|ING-DiBa AG                                                          |  | Frankfurt am Main                |  | Germany                  |  |                                                       | 100 | % |      |  | 100 | %
|ING Bank Slaski S.A.                                                 |  | Katowice                         |  | Poland                   |  |                                                       | 75  | % |      |  | 75  | %
|ING Financial Holdings Corporation                                   |  | Delaware                         |  | United States of America |  |                                                       | 100 | % |      |  | 100 | %
|ING Bank A.S.                                                        |  | Istanbul                         |  | Turkey                   |  |                                                       | 100 | % |      |  | 100 | %
|ING Bank (Australia) Ltd                                             |  | Sydney                           |  | Australia                |  |                                                       | 100 | % |      |  | 100 | %
|ING Bank (Eurasia) Joint stock company                               |  | Moscow                           |  | Russia                   |  |                                                       | 100 | % |      |  | 100 | %
|Investments in associates                                            |  |                                  |  |                          |  |                                                       |     |   |      |  |     |  
|TMB Public Company Limited                                           |  | Bangkok                          |  | Thailand                 |  |                                                       | 30  | % |      |  | 30  | %

48 Structured entities

ING Groups
activities involve transactions with various structured entities (SE) in the normal course of its business. A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls
the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. ING Groups involvement in these entities varies and includes both debt financing and
equity financing of these entities as well as other relationships. Based on its accounting policies, as disclosed in the section Principles of valuation and determination of results of these financial statements, ING establishes whether
these involvements result in no significant influence, significant influence, joint control or control over the structured entity.

The structured entities over
which ING can exercise control are consolidated. ING may provide support to these consolidated structured entities as and when appropriate. However, this is fully reflected in the consolidated financial statements of ING Group as all assets and
liabilities of these entities are included and off-balance sheet commitments are disclosed.

INGs activities involving
structured entities are explained below in the following categories:

1 Consolidated ING originated Liquidity management securitisation programmes (Lions);

2 Consolidated ING originated Covered bond programme (CBC);

3 Consolidated ING
sponsored Securitisation programme (Mont Blanc);

4 Unconsolidated Securitisation programme; and

5 Other structured entities.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-129 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







1. Consolidated ING originated Liquidity management securitisation programmes (Lions)

ING Group enters into liquidity management securitisation programmes in order to obtain funding and improve liquidity. Within the programme ING Group sells ING
originated assets to a structured entity. The underlying exposures include residential mortgages in the Netherlands, Germany, Belgium, Spain, Italy, and Australia.

The structured entity issues securitised notes (traditional securitisations) which are eligible collateral for central bank liquidity purposes. In most programmes ING
Group acts as investor of the securitised notes. ING Group continues to consolidate these structured entities if it is deemed to control the entities.

The
structured entity issues securitisation notes in two tranches, one subordinated tranche and one senior tranche, rated AAA by a rating agency. The AAA tranche can subsequently be used by ING Group as collateral in the money market for secured
borrowings.

ING Bank originated various securitisations with, at 31 December 2016, approximately EUR 77.0 billion (2015: EUR 78.5 billion) of AAA rated
notes and subordinated notes, of which approximately EUR 7.2 billion (2015: EUR 7.4 billion) are held by third parties. The underlying exposures are residential mortgages and SME loans. Apart from the third party funding, these securitisations
did not impact ING Banks consolidated statement of financial position and profit or loss.

In 2016, there are no
non-controlling interests as part of the securitisation structured entities that are significant to ING Group. ING Group for the majority of the securitisation vehicles provides the funding for the entity
except for EUR 7.2 billion (2015: EUR 7.4 billion) which are funded by third parties.

2. Consolidated ING originated Covered bond programme (CBC)

ING Group has entered into a covered bond programme. Under the covered bond programme ING issues bonds. The payment of interest and principal is guaranteed
by an ING administered structured entity, Covered Bond Company B.V. (CBC). In order for CBC to fulfil its guarantee, ING legally transfers mainly Dutch mortgage loans originated by ING to CBC. Furthermore ING offers CBC protection against
deterioration of the mortgage loans. CBC is consolidated by ING Group.



|                                      |  |                                  |        |  |                               |  |        |      |  |  |      |  |  |  |     | 
|------------------------------------- |  | -------------------------------- | ------ |  | ----------------------------- |  | ------ | ---- |  |  | ---- |  |  |  | --- | 
|Covered bond programme                |  |                                  |        |  |                               | 
|                                      |  | Fair value pledgedmortgage loans |        |  | Cash balancestructured entity | 
|                                      |  | 2016                             |        |  | 2015                          |  |        | 2016 |  |  | 2015 | 
|ING Covered Bond Company B.V. (CBC) |  |                                  | 43,931 |  |                               |  | 43,684 |      |  |  | 39   |  |  |  | 754 | 
|                                      |  |                                  |        |  |                               |  |        |      |  |  |      |  |  |  |     | 
|                                      |  |                                  | 43,931 |  |                               |  | 43,684 |      |  |  | 39   |  |  |  | 754 | 
|                                      |  |                                  |        |  |                               |  |        |      |  |  |      |  |  |  |     | 

In general, the third-party investors in securities issued by the structured entity have recourse only to the assets of the entity and
not to the assets of ING Group.

3. Consolidated ING sponsored Securitisation programme (Mont Blanc)

In the normal course of business, ING Group structures financing transactions for its clients by assisting them in obtaining sources of liquidity by selling (also
referred to as factoring) the clients receivables or other financial assets to an ING sponsored SPE.

The transactions are funded by the ING Group
administered multi seller Asset Backed Commercial Paper (ABCP) conduit Mont Blanc Capital Corporation (Mont Blanc), which funds itself in the ABCP market. Mont Blanc does not have non-controlling interests
that are significant to ING Group. ING Group facilitates these transactions by providing structuring, accounting, funding and operations services.

The types of
assets currently in Mont Blanc include trade receivables, consumer finance receivables, credit card receivables, motor vehicle loans, and residential mortgage backed securities (RMBS).

ING Group supports the commercial paper programmes by providing the SPE with short-term liquidity facilities. These liquidity facilities primarily cover temporary
disruptions in the commercial paper market. Once drawn these facilities bear normal credit risk. A number of programmes are supported by granting structured liquidity facilities to the SPE, in which ING Group covers at least some of the credit risk
incorporated in these programmes itself (in addition to normal liquidity facilities), and might suffer credit losses as a consequence. Furthermore, under a Programme Wide Credit Enhancement ING Group guarantees to a limited amount all remaining
losses incorporated in the SPE to the commercial paper investors.

The liquidity facilities, including programme wide enhancements, provided to Mont Blanc are EUR
812.0 million (2015: EUR 1,072 million). The drawn liquidity amount is EUR 0.0 million as at 31 December 2016 (2015: EUR 276 million).



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-130 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The normal non-structured standby liquidity facilities and the structured
facilities are reported under irrevocable facilities. All facilities, which vary in risk profile, are granted to the SPE subject to normal ING Group credit and liquidity risk analysis procedures. The fees received for services provided and for
facilities are charged subject to market conditions.

4. Unconsolidated Securitisation programme

In 2013 ING transferred financial assets (mortgages loans) for an amount of approximately EUR 2 billion to a newly established special purpose entity (SPE). The
transaction resulted in full derecognition of the financial assets from INGs statement of financial position. The derecognition did not have a significant impact on net result. Following this transfer ING continues to have two types of on-going involvement in the transferred assets: as counterparty to the SPE of a non-standard interest rate swap and as servicer of the transferred assets. ING has an option to
unwind the transaction by redeeming all notes at their principal outstanding amount, in the unlikely event of changes in accounting and/or regulatory requirements that significantly impact the transaction. The fair value of the swap as at
31 December 2016 amounted to EUR 4.6 million (2015: EUR 1.3 million); fair value changes on this swap recognised in the statement of profit or loss in 2016 were EUR 5.9 million (2015: EUR 32.4 million). Fee income
recognised in the statement of profit or loss in 2016 amounted to EUR 0.0 million (2015: nil).

5. Other structured entities

In the normal course of business, ING Group enters into transactions with structured entities as counterparty. Predominantly in its structured finance operations, ING
can be instrumental in facilitating the creation of these structured entity counterparties. These entities are generally not included in the consolidated financial statements of ING Group, as ING facilitates these transactions as administrative
agent by providing structuring, accounting, funding, lending, and operation services.

ING Bank offers various investment fund products to its clients. ING Bank
does not invest in these investment funds for its own account nor acts as the fund manager.

49 Related parties

In the normal course of business, ING Group enters into various transactions with related parties. Parties are considered to be related if one party has the ability to
control or exercise significant influence over the other party in making financial or operating decisions. Related parties of ING Group include, among others, its subsidiaries, associates, joint ventures, key management personnel, and various
defined benefit and contribution plans. Transactions between related parties include rendering or receiving of services, leases, transfers under finance arrangements and provisions of guarantees or collateral. There are no significant provisions for
doubtful debts or individually significant bad debt expenses recognised on outstanding balances with related parties.

Subsidiaries



|                                                |  |               |        |  |               |  |        |      |  |  |       |  |  |  |    | 
|----------------------------------------------- |  | ------------- | ------ |  | ------------- |  | ------ | ---- |  |  | ----- |  |  |  | -- | 
|Transactions with ING Groups main subsidiaries |  |               |        |  |               | 
|                                                |  | ING Bank N.V. |        |  | NN Group N.V. | 
|                                                |  | 2016          |        |  | 2015          |  |        | 2016 |  |  | 20151 | 
|Assets                                          |  |               | 14,903 |  |               |  | 15,608 |      |  |  |       |  |  |  |    | 
|Liabilities                                     |  |               | 70     |  |               |  | 286    |      |  |  |       |  |  |  |    | 
|Income received                                 |  |               | 384    |  |               |  | 297    |      |  |  |       |  |  |  | 28 | 
|Expenses paid                                   |  |               |        |  |               |  |        |      |  |  |       |  |  |  | 8  | 



|1 | Transactions with NN Group until deconsolidation at the end of May 2015.
|- | ------------------------------------------------------------------------

Transactions between ING Groep N.V. and its subsidiaries are eliminated on consolidation. Reference is made to Note 47 Principal subsidiaries for a list of
principal subsidiaries and their statutory place of incorporation.

In 2015, a number of divestment transactions reduced ING Groups interest in NN Group,
resulting in ING Group losing control over NN Group. NN Group was deconsolidated at the end of May 2015 and accounted for as an Investment in associate held for sale. For further information on transactions with NN Group, reference is made to
Associates and joint ventures below and Note 51 Other events.

Assets from ING Bank N.V. mainly comprise long-term funding. Liabilities to ING Bank N.V.
mainly comprise short-term deposits.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-131 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Associates and joint ventures



|                                                                 |  |            |    |  |                |  |       |      |  |  |      |  |  |  |   | 
|---------------------------------------------------------------- |  | ---------- | -- |  | -------------- |  | ----- | ---- |  |  | ---- |  |  |  | - | 
|Transactions with ING Groups main associates and joint ventures |  |            |    |  |                |  |       |      |  |  |      | 
|                                                                 |  | Associates |    |  | Joint ventures | 
|                                                                 |  | 20161      |    |  | 20152          |  |       | 2016 |  |  | 2015 | 
|Assets                                                           |  |            | 27 |  |                |  | 2,629 |      |  |  | 12   |  |  |  | 5 | 
|Liabilities                                                      |  |            | 16 |  |                |  | 616   |      |  |  | 59   |  |  |  |   | 
|Off-balance sheet commitments                                    |  |            | 34 |  |                |  | 66    |      |  |  | 2    |  |  |  |   | 
|Income received                                                  |  |            | 9  |  |                |  | 199  |      |  |  |      |  |  |  |   | 
|Expenses paid                                                    |  |            | 1  |  |                |  |       |      |  |  |      |  |  |  |   | 



|1 | Includes transactions with NN Group until we lost significant influence in January 2016.
|- | ----------------------------------------------------------------------------------------

|2 | Includes transactions with ING Vysya until the merger with Kotak Mahindra Bank (Kotak) in April 2015 and transactions with NN Group after deconsolidation at the end of May 2015.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Assets, liabilities, commitments and income related to Associates and joint ventures result from transactions which are executed as part of the normal Banking business.

In January 2016, ING Group sold shares in NN Group and lost significant influence resulting in NN Group no longer being a related party of ING Group. Prior to this
sale, since deconsolidation at the end of May 2015, NN Group was accounted for as an Investment in associate held for sale and transactions with ING Group were included as Associates in the table above.

In 2015, Assets to Associates included Subordinated loans receivable from NN Group N.V. and amounted to EUR 823 million.

In 2015, included in off-balance sheet commitments, is a EUR 63 million facility to NN Bank which allows NN Bank an
unconditional right to draw down additional Tier 1 capital at prevailing market terms, until 31 December 2018.

For further information on the NN Group
divestment transactions, reference is made to Note 51 Other events.

In April 2015, the merger between ING Vysya and Kotak was completed and the legal
entity ING Vysya Bank ceased to exist. As a result of this transaction, ING holds a stake in the combined company, which operates under the Kotak brand. As of April 2015, ING Vysya was no longer a related party of ING Group. Reference is made to
Note 7 Investments in associates and joint ventures.

Key management personnel compensation

Transactions with key management personnel (Executive Board, Management Board and Supervisory Board) and post-employment benefit plans are transactions with related
parties. These transactions are disclosed in more detail as required by Part 9 Book 2 of the Dutch Civil Code in the remuneration report included in the annual report. The relevant sections of the remuneration report therefore form part of the
annual accounts. For post-employment benefit plans, reference is made to Note 35 Pension and other postemployment benefits.

In 2016 and 2015, three
members of the Executive Board of ING Groep N.V. were also members of the Management Board Banking. The members of the Management Board Banking are considered to be key management personnel and their compensation is therefore included in the tables
below.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-132 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                             |  |                                  |       |  |                                      |  |        |       |  |  |        | 
|---------------------------------------------------------------------------- |  | -------------------------------- | ----- |  | ------------------------------------ |  | ------ | ----- |  |  | ------ | 
|Key management personnel compensation (Executive Board and Management Board) |  |                                  |       |  |                                      |  |        |       | 
|2016
in EUR thousands                                                        |  | ExecutiveBoard of INGGroep N.V.1 |       |  | ManagementBoard of INGBank N.V.1,2,3 |  |        | Total | 
|Fixed Compensation                                                           |  |                                  |       |  |                                      |  |        |       |  |  |        | 
| Base salary                                                                |  |                                  | 4,070 |  |                                      |  | 4,111  |       |  |  | 8,181  | 
| Collective fixed allowances4                                               |  |                                  | 1,167 |  |                                      |  | 1,167  |       |  |  | 2,334  | 
| Pension costs                                                              |  |                                  | 78    |  |                                      |  | 108    |       |  |  | 186    | 
| Severance benefits                                                         |  |                                  |      |  |                                      |  | 918    |       |  |  | 918    | 
|Variable compensation                                                        |  |                                  |       |  |                                      |  |        |       |  |  |        | 
| Upfront cash                                                               |  |                                  |      |  |                                      |  | 485    |       |  |  | 485    | 
| Upfront shares                                                             |  |                                  | 300   |  |                                      |  | 572    |       |  |  | 872    | 
| Deferred cash                                                              |  |                                  |      |  |                                      |  | 727    |       |  |  | 727    | 
| Deferred shares                                                            |  |                                  | 449   |  |                                      |  | 857    |       |  |  | 1,306  | 
| Other                                                                      |  |                                  |      |  |                                      |  | 1,184  |       |  |  | 1,184  | 
|                                                                             |  |                                  |       |  |                                      |  |        |       |  |  |        | 
|Total compensation                                                           |  |                                  | 6,064 |  |                                      |  | 10,129 |       |  |  | 16,193 | 
|                                                                             |  |                                  |       |  |                                      |  |        |       |  |  |        | 



|1 | Includes their compensation earned in the capacity as Board members.
|- | --------------------------------------------------------------------

|2 | Excluding members that are also members of the Executive Board of ING Groep N.V.
|- | --------------------------------------------------------------------------------

|3 | In 2016, one new member joined and one member retired
|- | -----------------------------------------------------

|4 | The collective fixed allowances consist of two savings allowances applicable to employees in the Netherlands; an individual savings allowance of 3.5% and a collective savings allowance to compensate for loss of pension
benefits with respect to salary in excess of EUR 101,519.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                             |  |                                  |       |  |                                      |  |       |       |  |  |        | 
|---------------------------------------------------------------------------- |  | -------------------------------- | ----- |  | ------------------------------------ |  | ----- | ----- |  |  | ------ | 
|Key management personnel compensation (Executive Board and Management Board) |  |                                  |       |  |                                      |  |       |       | 
|2015
in EUR thousands                                                        |  | ExecutiveBoard of INGGroep N.V.1 |       |  | ManagementBoard of INGBank N.V.1,2,3 |  |       | Total | 
|Fixed Compensation                                                           |  |                                  |       |  |                                      |  |       |       |  |  |        | 
| Base salary                                                                |  |                                  | 3,990 |  |                                      |  | 3,505 |       |  |  | 7,495  | 
| Collective fixed allowances4                                               |  |                                  | 1,115 |  |                                      |  | 1,045 |       |  |  | 2,160  | 
| Pension costs                                                              |  |                                  | 75    |  |                                      |  | 90    |       |  |  | 165    | 
|Variable compensation                                                        |  |                                  |       |  |                                      |  |       |       |  |  |        | 
| Upfront cash                                                               |  |                                  |      |  |                                      |  | 390   |       |  |  | 390    | 
| Upfront shares                                                             |  |                                  | 254   |  |                                      |  | 466   |       |  |  | 720    | 
| Deferred cash                                                              |  |                                  |      |  |                                      |  | 585   |       |  |  | 585    | 
| Deferred shares                                                            |  |                                  | 382   |  |                                      |  | 698   |       |  |  | 1,080  | 
| Other                                                                      |  |                                  |      |  |                                      |  | 830   |       |  |  | 830    | 
|                                                                             |  |                                  |       |  |                                      |  |       |       |  |  |        | 
|Total compensation                                                           |  |                                  | 5,816 |  |                                      |  | 7,609 |       |  |  | 13,425 | 
|                                                                             |  |                                  |       |  |                                      |  |       |       |  |  |        | 



|1 | Included their compensation earned in the capacity as Board members.
|- | --------------------------------------------------------------------

|2 | Excluded members that are also members of the Executive Board of ING Groep N.V.
|- | -------------------------------------------------------------------------------

|3 | In 2015, one new member joined.
|- | -------------------------------

|4 | The collective fixed allowances consisted of two savings allowances applicable to employees in the Netherlands; an individual savings allowance of 3.5% and a collective savings allowance to compensate for loss of
pension benefits with respect to salary in excess of EUR 100,000.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                          |  |      |       |  |      |  |     | 
|--------------------------------------------------------- |  | ---- | ----- |  | ---- |  | --- | 
|Key management personnel compensation (Supervisory Board) |  |      |       |  |      | 
|                                                          |  |     
|in EUR thousands                                          |  | 2016 |       |  | 2015 | 
|Total compensation                                        |  |      | 1,088 |  |      |  | 835 | 
|                                                          |  |      |       |  |      |  |     | 

The table above shows the fixed remuneration, expense allowances and attendance fees for the Supervisory Board for 2016 and 2015.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-133 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                               |  |                               |       |  |                        |  |       |            |  |  |      |   |  |      |     |   |      |  |     |  |  |  |    | 
|---------------------------------------------- |  | ----------------------------- | ----- |  | ---------------------- |  | ----- | ---------- |  |  | ---- | - |  | ---- | --- | - | ---- |  | --- |  |  |  | -- | 
|Loans and advances to key management personnel | 
|                                               |  | Amountoutstanding 31 December |       |  | Average interest rate1 |  |       | Repayments | 
|in EUR thousands                               |  | 2016                          |       |  | 2015                   |  |       | 2016       |  |  | 2015 |   |  | 2016 |     |   | 2015 | 
|Executive Board members                        |  |                               | 2,849 |  |                        |  | 2,999 |            |  |  | 2.6  | % |  |      | 2.4 | % |      |  | 150 |  |  |  | 0  | 
|Management Board members of ING Bank N.V.      |  |                               | 532   |  |                        |  | 532   |            |  |  | 3.8  | % |  |      | 2.6 | % |      |  |    |  |  |  | 68 | 
|Supervisory Board members                      |  |                               |      |  |                        |  |      |            |  |  |     |   |  |      |    |   |      |  |    |  |  |  |   | 
|                                               |  |                               |       |  |                        |  |       |            |  |  |      |   |  |      |     |   |      |  |     |  |  |  |    | 
|Total                                          |  |                               | 3,381 |  |                        |  | 3,531 |            |  |  |      |   |  |      |     |   |      |  | 150 |  |  |  | 68 | 
|                                               |  |                               |       |  |                        |  |       |            |  |  |      |   |  |      |     |   |      |  |     |  |  |  |    | 



|1 | Dutch legislation changed in 2016. Employee mortgage interest rate discount is no longer deducted from the interest rate but compensated via base salary compensation.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                              |  |                       |         |  |                                       |  |         |      |  |  |         |  |  |  |         | 
|----------------------------------------------------------------------------- |  | --------------------- | ------- |  | ------------------------------------- |  | ------- | ---- |  |  | ------- |  |  |  | ------- | 
|Number of ING Groep N.V. shares and stock options to key management personnel | 
|                                                                              |  | ING Groep N.V. shares |         |  | Stock options onING Groep N.V. shares | 
|in numbers                                                                    |  | 2016                  |         |  | 2015                                  |  |         | 2016 |  |  | 2015    | 
|Executive Board members                                                       |  |                       | 261,684 |  |                                       |  | 244,973 |      |  |  | 95,921  |  |  |  | 116,146 | 
|Management Board members of ING Bank N.V.                                     |  |                       | 120,646 |  |                                       |  | 216,211 |      |  |  | 123,237 |  |  |  | 216,568 | 
|Supervisory Board members                                                     |  |                       | 172,734 |  |                                       |  | 172,734 |      |  |  | 226,864 |  |  |  | 319,848 | 
|                                                                              |  |                       |         |  |                                       |  |         |      |  |  |         |  |  |  |         | 
|Total number of shares and stock options                                      |  |                       | 555,064 |  |                                       |  | 633,918 |      |  |  | 446,022 |  |  |  | 652,562 | 
|                                                                              |  |                       |         |  |                                       |  |         |      |  |  |         |  |  |  |         | 

Key management personnel compensation is generally included in Staff expenses in the statement of profit or loss, except for key
management personnel employed by entities that are presented as held for sale and discontinued operations in which case their compensation is included in the Total net result from discontinued operations.

For post-employment benefit plans, reference is made to Note 35 Pension and other postemployment benefits.

Remuneration of the Executive Board and Management Board Bank is recognised in the statement of profit or loss in Staff expenses as part of Total expenses. The total
remuneration of the Executive Board and Management Board Bank as disclosed in the table above includes all variable remuneration related to the performance year 2016. Under IFRS, certain components of variable remuneration are not recognised in the
statement of profit or loss directly, but are allocated over the vesting period of the award. The comparable amount recognised in Staff expenses in 2016 and included in Total expenses in 2016, relating to the fixed expenses of 2016 and the vesting
of variable remuneration of earlier performance years, is EUR 16 million. Remuneration in respect of NN Group is reflected in Net result from discontinued operations and does not impact the Total expenses. Total compensation of the Supervisory-
and Management Boards of NN Group, for the period until deconsolidation at the end of May 2015, amounted to EUR 3.0 million. These amounts are included in the 2015 statement of profit or loss of ING Group in the line item Net result from
discontinued operations.

Relationship agreement and other agreements NN Group N.V.

In 2014, in connection with the initial public offering of NN Group N.V., ING Groep N.V. and NN Group N.V. entered into a Relationship Agreement. The Relationship
Agreement contains certain arrangements regarding the continuing relationship between ING Groep N.V. and NN Group N.V. In addition, ING Groep N.V. entered into several other agreements with NN Group N.V. such as a transitional intellectual property
license agreement, a joinder agreement, an equity administration agreement, an indemnification and allocation agreement and a Risk Management Programme (RMP) indemnity agreement. In addition, ING Groep N.V. and ING Bank N.V. entered into a
Settlement Agreement and an Outsourcing Agreement with NN Re (Netherlands) N.V., a subsidiary of NN Group N.V.

Master claim agreement

In 2012, ING Groep N.V., Voya Financial Inc. (formerly ING U.S., Inc.) and ING Insurance Eurasia N.V. entered into a master claim agreement to a) allocate existing
claims between these three parties and b) agree on criteria for how to allocate future claims between the three parties. The master claim agreement contains further details on claim handling, conduct of litigation and dispute resolution.



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|ING Group Annual Report on Form 20-F 2016 |  | F-134 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Indemnification and allocation agreement with NN Group N.V.

ING Groep N.V. and NN Group N.V. have entered into an indemnification and allocation agreement, in which ING Group has agreed to indemnify NN Group N.V. for certain
liabilities that relate to the business of or control over certain (former) U.S. and Latin American subsidiaries of the Company in the period until 30 September 2013 or, if the relevant subsidiary was divested by NN Group N.V. after
30 September 2013, such later date of divestment. These liabilities mainly include contingent liabilities that may arise as a result of the initial public offering of Voya Financial Inc. (such as prospectus liability) and the sales of the Latin
American businesses (such as claims under warranties and other buyer protection clauses).

Risk Management Programme (RMP) Agreement

The RMP Agreement has been in operation since 2003. RMP means the self-insured risk management program of ING Group encompassing professional liability, fidelity/crime,
and employment practices liability exposures. Local insurance policies have been issued by a third party insurer to the subsidiaries of ING Groep N.V., which provide coverage for professional liability, fidelity/crime, and employment practices
liability risks. The third party insurer has transferred 100% of the RMP liabilities to the reinsurer NN Re (Netherlands) N.V. In 2011, the RMP was split into the RMP Insurance (including the former subsidiaries Voya Financial, Inc. and the LatAm
subsidiaries) and the RMP Bank. As of the initial public offering of NN Group N.V. has been responsible for administering the RMP Insurance, excluding Voya Financial, Inc. and the LatAm subsidiaries, for NN Group N.V. pursuant to the Relationship
Agreement. The exposures with respect to and arising from the RMP Insurance, excluding Voya and the LatAm Entities, have stayed within NN Re (Netherlands) N.V. and have not be transferred to or taken over by ING Groep N.V.. As ING Groep N.V. has
exposure, arising under the Indemnity Agreement agreed upon with the third party insurer, to certain claims under the RMP relating to NN Group Entities, ING Groep N.V. and NN Group N.V. have agreed to enter into this RMP Indemnity Agreement in
respect of those claims.

Risk Management Programme (RMP) Settlement Agreement and Outsourcing Agreement

ING Groep N.V. and ING Bank N.V. and NN Re (Netherlands) N.V. have entered into an RMP Settlement Agreement which has a purpose to remove from the reinsurer its economic
exposure to losses resulting from the RMP claims of the RMP Bank, Voya Financial, Inc. and the LatAm subsidiaries. The Reinsurer and ING Groep N.V. agreed on the Outsourcing Agreement to provide claims handling services in connection with the claims
relating to the Voya Entities, the LatAm Entities and RMP Bank. The reinsurer and ING Groep N.V. have agreed that ING Bank N.V. handles the relevant claims on the terms set out in this RMP Settlement Agreement. The terms and conditions for this
claims handling have been included in the Outsourcing Agreement.

50 The European Commission Restructuring Plan

INGs Restructuring, which began in 2009, has come to an end with the sale of the companys remaining stake in NN Group on 14 April 2016. Due to the
restructuring INGs has transformed from a diversified financial services company into a standalone, leading European bank.

INGs Restructuring

2008  2016

In 2008 and 2009, as a consequence of the
financial crisis, ING Group, like other major financial institutions in Europe, received state aid from the Dutch State. In order to receive approval from the European Commission (EC) for the Dutch State aid, ING Group together with the Dutch State
were required in 2009 to develop and submit a restructuring plan to the EC that included the divestment of ING Groups insurance and investment management businesses across the world. The sale of ING Direct USA was also included in the package
of restructuring measures. This Restructuring Plan was initially approved by the EC in November 2009. Subsequently, the insurance and investment management businesses of ING Group were operationally separated from ING as of 31 December 2010 for
the purpose of divesting it. The Restructuring Plan was amended and re-approved by the EC in 2012 and 2013.

In line with
the Restructuring Plan, ING Group divested a number of businesses around the world from 2011 to 2013, including divestments of insurance and investment management businesses in the United States, Latin America and Asia/Pacific (other than Japan).
ING Group had indicated in 2012 that the intended base case for divestment of its European insurance and investment management businesses was through an Initial Public Offering (IPO), while keeping all other options open. In November 2013, ING Group
expanded the scope of this intended base case IPO with the inclusion of the Japan Life and Japan Closed Block VA businesses.

On the banking front, ING Direct USA
was sold in 2012, meeting a key requirement of the EC Restructuring Plan.

In the course of the continued streamlining of the companys business portfolio, ING
also made other major divestments including ING Direct Canada (2012), ING Direct UK (2012) and ING Car Lease (2011).

In May 2013, ING listed its US insurance
and investment management business, Voya Financial, on the New York Stock Exchange and divested 25% of its stake. Following a number of follow-on transactions, the remaining stake was sold by March 2015.
Following this transaction, ING Group had effectively eliminated its core debt (group leverage), meeting one of our key commitments in the EC Restructuring Plan.



| |  |       |  |                                          
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| |  | F-135 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







In July 2014, NN Group, INGs former European/Japanese insurance and investment management business, was listed on
the Euronext Amsterdam stock exchange. Through the listing, INGs stake in NN Group was reduced to 68.1%. Through a series of follow-on transactions, ING reduced its shareholding to 25.8% by 30 June
2015. INGs minority stake was deconsolidated in line with IFRS accounting rules. With the divestment of more than 50% of its stake in NN Group and its deconsolidation, ING achieved compliance with the EC divestment conditions before the
committed deadline of year-end 2015. In addition, after the deconsolidation of NN Group, the restrictions on acquisitions and on price leadership from the original 2009 Restructuring Plan, and amended in a
restructuring agreement with the EC in 2012, no longer applied.

ING announced the sale of its remaining 14.1% stake in NN Group on 14 April 2016, fulfilling
the terms of the revised restructuring agreement with the EC as amended in 2012, whereby ING was required to fully divest its shareholding in NN Group before the end of 2016. In the course of 2016, the European Commission confirmed that INGs
Restructuring was completed.

State Aid

INGs total State
aid was repaid in a number of tranches between 2009 and 2014.

On 7 November 2014, ING made the final repayment. This was achieved six months ahead of the
repayment schedule agreed with the European Commission in 2012. Total repayments on the aid amounted to EUR 13.5 billion, resulting in an annualised return of 12.7% for the Dutch State.

In 2009, ING agreed to transfer/sell a portfolio of US mortgage securities to the Dutch State. The unwinding of this facility, also known as the Illiquid Assets Back-up Facility (IABF), was completed in early 2014, when the Dutch State sold the remaining securities in the market. This generated a EUR 1.4 billion cash profit for the Dutch State.

Also, in 2009 ING issued Government Guaranteed Notes, which all have been redeemed in full and for which ING paid a total of EUR 0.4 billion in fees to the Dutch
State.

The total gross financial benefit to the Dutch State for INGs support was approximately EUR 5.3 billion.



|                                          |  |       |  | 
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|ING Group Annual Report on Form 20-F 2016 |  | F-136 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







51 Other events

NN
Group



|                                            |  |                                  |        |   |                             |  |        |                                 |  |  |                       |   |  |                                   |       |  |                              |  |       |                                  |  |  |                       |  |  |                                |         |  |  |  |         |  |  |  |        | 
|------------------------------------------- |  | -------------------------------- | ------ | - | --------------------------- |  | ------ | ------------------------------- |  |  | --------------------- | - |  | --------------------------------- | ----- |  | ---------------------------- |  | ----- | -------------------------------- |  |  | --------------------- |  |  | ------------------------------ | ------- |  |  |  | ------- |  |  |  | ------ | 
|Summary of NN Group divestment transactions |  |                                  |        |   |                             |  |        |                                 |  |  |                       |   |  |                                   |       |  |                              |  |      
|Date                                        |  | Interest %held beforetransaction |        |   | Portion ofinterest (change) |  |        | Interest %held aftertransaction |  |  | Price pershare in EUR |   |  | Grosstransactionvalue EURmillions |       |  | Impact onShareholdersequity |  |       | Impact onNon-controllinginterest |  |  | Impact onTotal equity |  |  | Impact onprofit (+) orloss (-) |        
|July 20141                                  |  |                                  | 100.00 | % |                             |  | 31.86 | %                               |  |  | 68.14                 | % |  |                                   | 20.00 |  |                              |  | 2,197 |                                  |  |  | 3,251                |  |  |                                | 5,397   |  |  |  | 2,146   |  |  |  |       | 
|February 20152                              |  |                                  | 68.14  | % |                             |  | 13.56 | %                               |  |  | 54.58                 | % |  |                                   | 24.00 |  |                              |  | 1,240 |                                  |  |  | 1,757                |  |  |                                | 3,030   |  |  |  | 1,273   |  |  |  |       | 
|May 20153                                   |  |                                  | 54.58  | % |                             |  | 0.19   | %                               |  |  | 54.77                 | % |  |                                   | 26.16 |  |                              |  | 57   |                                  |  |  |                      |  |  |                                |        |  |  |  |        |  |  |  |       | 
|May 20154                                   |  |                                  | 54.77  | % |                             |  | 12.34 | %                               |  |  | 42.43                 | % |  |                                   | 25.46 |  |                              |  | 1,148 |                                  |  |  | 5,345                |  |  |                                | 10,768 |  |  |  | 16,113 |  |  |  | 1,185 | 
|June 20155                                  |  |                                  | 42.43  | % |                             |  | 4.20  | %                               |  |  | 38.23                 | % |  |                                   | 24.78 |  |                              |  | 352   |                                  |  |  |                      |  |  |                                |        |  |  |  |        |  |  |  | 1      | 
|June 20156                                  |  |                                  | 38.23  | % |                             |  | 0.62  | %                               |  |  | 37.61                 | % |  |                                   | 24.95 |  |                              |  | 53    |                                  |  |  |                      |  |  |                                |        |  |  |  |        |  |  |  |       | 
|September 20156                             |  |                                  | 37.61  | % |                             |  | 0.49  | %                               |  |  | 37.12                 | % |  |                                   | 26.78 |  |                              |  | 45    |                                  |  |  |                      |  |  |                                |        |  |  |  |        |  |  |  | 2      | 
|September 20157                             |  |                                  | 37.12  | % |                             |  | 11.36 | %                               |  |  | 25.76                 | % |  |                                   | 25.00 |  |                              |  | 1,000 |                                  |  |  |                      |  |  |                                |        |  |  |  |        |  |  |  | 17    | 
|January 20168,9                             |  |                                  | 25.75  | % |                             |  | 9.53  | %                               |  |  | 16.22                 | % |  |                                   | 31.00 |  |                              |  | 1,030 |                                  |  |  |                      |  |  |                                |        |  |  |  |        |  |  |  | 522    | 
|February 201610                             |  |                                  | 16.22  | % |                             |  | 2.13  | %                               |  |  | 14.09                 | % |  |                                   | 30.34 |  |                              |  | 210   |                                  |  |  |                      |  |  |                                |        |  |  |  |        |  |  |  | 8     | 
|April 201611,9                              |  |                                  | 14.08  | % |                             |  | 14.08 | %                               |  |  | 0                     | % |  |                                   | 30.15 |  |                              |  | 1,406 |                                  |  |  |                      |  |  |                                |        |  |  |  |        |  |  |  | 66    | 



|1 | Initial public offering (IPO).
|- | ------------------------------

|2 | Further divestment of NN Group.
|- | -------------------------------

|3 | Capital injection into NN Group.
|- | --------------------------------

|4 | Deconsolidation of NN Group; remaining investment in NN Group accounted for as an Investment in associate held for sale.
|- | ------------------------------------------------------------------------------------------------------------------------

|5 | Second tranche exchange of subordinated notes: Anchor investors.
|- | ----------------------------------------------------------------

|6 | NN Group share repurchase.
|- | --------------------------

|7 | Further divestment of NN Group in September 2015.
|- | -------------------------------------------------

|8 | Loss of significant influence over NN Group.
|- | --------------------------------------------

|9 | The dilution of ING Groups ownership in NN Group, to 25.75% and 14.08% respectively, was as a result of shares issued by NN Group as part of its internal stock options and share plans.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10 | Final tranche exchange of subordinated notes: Anchor investors.
|-- | ---------------------------------------------------------------

|11 | Divestment of remaining shareholding in NN Group.
|-- | -------------------------------------------------

July 2014  Initial public offering (IPO)

On 2 July 2014, ING sold 77 million existing ordinary shares in the initial public offering of NN Group at EUR 20.00 per share. On 10 July 2014, the joint
global coordinators, on behalf of the underwriters, exercised an over-allotment option to purchase 11.55 million of additional existing shares in NN Group at the same price. At the time of the IPO, a first tranche of EUR 450 million of the
mandatorily exchangeable subordinated notes (the pre-IPO investments from the three Asian-based investment firms RRJ Capital, Temasek and SeaTown Holdings International) was exchanged into NN Group shares. The
remaining two tranches (each for an aggregate amount of EUR 337.5 million) were mandatorily exchangeable into NN Group shares from 2015 onwards.

Total gross
proceeds from the NN Group IPO, including the exchange of the first tranche of subordinated notes into NN Group shares and the over-allotment option, amounted to EUR 2.2 billion.

As a result of the above, INGs ownership in NN Group declined from 100% to 68.14% in 2014. This transaction did not impact the statement of profit or loss of ING
Group, as NN Group continued to be fully consolidated by ING Group. In 2014, the transactions had a negative impact on shareholders equity of ING Group of EUR 3,251 million. This amount included:



| |  | EUR 2,590 million, being the difference between the net proceeds of the IPO to ING and the IFRS carrying value of the stake in NN Group divested in the IPO (including the exercise of the over-allotment option) and
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | EUR 661 million, being the difference between the market value of the NN Group shares exchanged for the first tranche of the mandatorily exchangeable subordinated notes and the related IFRS carrying value.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |       |  |                                          
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| |  | F-137 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







In September 2014, NN Group was classified as held for sale and discontinued operations. Upon classification, the
carrying amount of the disposal group (or group of assets) was compared to NN Groups fair value less cost to sell. The fair value less cost to sell was lower than the carrying value of the disposal group and as a result goodwill and certain
other non-current non-financial assets totalling EUR 470 million were written-off in 2014 and recognised in the statement of
profit or loss in the line Net result from classification as discontinued operations. As at 31 December 2014, the subsidiary NN Group was presented as Assets and liabilities held for sale and discontinued operations.

February 2015  Further divestment of NN Group

In February 2015, ING
Group sold 52 million ordinary shares of NN Group. As part of the transaction, NN Group repurchased 8.3 million ordinary shares. The gross proceeds to ING Group from the offering, including the repurchase by NN Group, amounted to EUR
1.2 billion. The transaction reduced the ownership of ING in NN Group from 68.14% (at 31 December 2014) to 54.58%. The transaction did not impact the statement of profit or loss of ING Group as NN Group continued to be fully consolidated.
The transaction had a negative impact of EUR 1,757 million on the shareholders equity of ING Group, being the difference between the net proceeds of the transaction and the IFRS carrying value per the transaction date of the equity stake
sold.

May 2015  Capital injection into NN Group

In May 2015, in
order to fulfil its commitment to the European Commission (EC), ING Group made a capital injection into NN Group by subscribing for newly issued shares for an aggregate amount of EUR 57 million. The transaction increased the
ownership of ING in NN Group from 54.58% to 54.77%. As part of this transaction, ING provided a EUR 63 million facility to NN Bank which allows NN Bank an unconditional right to draw down additional Tier 1 capital at prevailing market terms,
until 31 December 2018. With this provision of capital, ING Group fulfilled its commitment to the EC pertaining to the capitalisation of NN Bank, per the EC decision of 16 November 2012. These transactions had no material impact on the
capital position of ING Group and no impact on the capital position of ING Bank.

May 2015  Deconsolidation of NN Group

On 26 May 2015, ING Group announced a further sale of 45 million ordinary shares of NN Group. As part of the transaction, NN Group repurchased 5.9 million
ordinary shares. The gross proceeds to ING Group from the offering, including the repurchase by NN Group, amounted to EUR 1.1 billion. This transaction reduced the ownership of ING in NN Group to 42.43%, resulting in ING Group losing control
over NN Group. The share sale and deconsolidation of NN Group resulted in an after tax loss of EUR 1,185 million in 2015 and was recognised in the statement of profit or loss in the line Net result from disposal of discontinued
operations. The transaction had a negative impact of EUR 6,569 million, including the aforementioned loss, on the shareholders equity of ING Group. The statement of profit or loss of ING Group included, in the line Net result from
discontinued operations, the result of NN Group until deconsolidation at the end of May 2015.

With deconsolidation of NN Group, ING Group fulfilled its commitment
to the EC pertaining to the divestment of NN Group, per the EC decision of 16 November 2012. The restrictions from this decision regarding acquisition and price leadership no longer applied to ING Group.

June 2015  Second tranche exchange of subordinated notes: Anchor investors

On 10 June 2015, ING announced the exchange of the second tranche of EUR 337.5 million mandatorily exchangeable subordinated notes into 13.6 million NN
Group ordinary shares. The exchange price was set at a 3% discount to the NN Group closing price on 4 June 2015, resulting in an exchange price of EUR 24.78 per share. Accrued interest on these notes of approximately EUR 14.6 million were
settled in an additional 0.6 million NN Group ordinary shares as per the terms of the investment. The transaction was settled on 15 June 2015 and resulted in a further decrease of the ownership of ING in NN Group from 42.43% to 38.23%. The
transaction did not have a material impact on the statement of profit or loss of ING Group. Reference is made to Note 18 Subordinated loans.

June
2015  NN Group share repurchase

On 30 June 2015, NN Group repurchased 2.1 million ordinary shares from ING Group. This transaction reduced ING
Groups remaining interest in NN Group to 37.61%.

September 2015  NN Group share repurchase

In September 2015, NN Group repurchased 1.7 million ordinary shares from ING Group. This transaction reduced INGs remaining interest in NN Group to 37.12%.

September 2015  Further divestment of NN Group

On
30 September 2015, ING Group sold 40 million ordinary shares of NN Group. As part of the transaction, NN Group repurchased 6 million ordinary shares. The gross proceeds to ING Group, including the repurchase by NN Group, amounted to
EUR 1 billion. The transaction reduced INGs interest in NN Group to 25.76%. The transaction resulted in a loss of EUR 17 million in 2015 and was recognised in the statement of profit or loss in the line Net result from disposal of
discontinued operations. The transaction was settled on 5 October 2015.



|                                          |  |       |  | 
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|ING Group Annual Report on Form 20-F 2016 |  | F-138 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







As at 31 December 2015, ING Group no longer had nominees in the Supervisory Board of NN Group. As at
31 December 2015, the remaining interest in NN Group of 25.75% was recognised as an Investment in associate held for sale at EUR 2,153 million.

January 2016  Loss of significant influence over NN Group

On
5 January 2016, ING sold a further 33 million ordinary shares of NN Group. As part of the transaction, NN Group repurchased 8 million ordinary shares. The gross proceeds to ING Group from the offering, including the repurchase by NN
Group, amounted to EUR 1 billion. The transaction reduced the ownership of ING in NN Group from 25.75% (as at 31 December 2015) to 16.22%. As a result of the transaction, together with ING Group no longer having any nominees on NN
Groups Supervisory Board as of 14 December 2015, ING Group no longer had significant influence over NN Group and accounted for its remaining stake in NN Group as an
available-for-sale investment. The sale transaction, together with the revaluation of the remaining stake, resulted in a net profit of EUR 522 million and is
recognised in the statement of profit or loss in the line Net result from disposal of discontinued operations.

February 2016  Final tranche exchange of
subordinated notes: Anchor investors

On 2 February 2016, ING settled the exchange of the third and final tranche of EUR 337.5 million mandatory
exchangeable subordinated notes which were issued in 2014 as part of the Anchor investment in NN Group. EUR 210 million of the notes were exchanged into 6.9 million NN Group ordinary shares with the three Anchor investors. EUR
128 million of notes were settled in cash with RRJ Capital. This transaction reduced INGs remaining stake in NN Group from 16.22% to 14.09%. The transaction did not have a material impact on the shareholders equity or the statement
of profit or loss of ING Group.

April 2016  Divestment of remaining shareholding in NN Group

On 14 April 2016, ING Group sold its remaining shares in NN Group. The transaction involved the sale of 45.7 million ordinary shares of NN Group at gross
proceeds of EUR 1,406 million and resulted in a net loss of EUR 66 million which is recognised in the statement of profit or loss, in the line Net result from disposal of discontinued operations.

Reference is made to Note 4 Financial assets at fair value through profit or loss, Note 11 Assets held for sale, Note 19 Equity,
Note 28 Discontinued operations and Note 49 Related parties.

Reference is made to Note 50 The European Commission Restructuring
Plan for an overview of INGs restructuring.

In 2016, the combined profit related to the sale of NN Group shares amounted to EUR 448 million.

VISA

In 2015, VISA announced a definitive agreement for VISA Inc. to
acquire VISA Europe. This announcement, together with letters received by ING Bank and its subsidiaries from VISA which detailed INGs share in the transfer proceeds, provided the basis for reassessment of the fair value of shares held by ING
Bank and its subsidiaries. The shares are recognised as Investment in available-for-sale equity securities. The fair value of the shares, EUR 154 million as at
31 December 2015, was determined by taking into account the upfront consideration, consisting of cash and preferred shares, the earn-out consideration and any uncertain factors that could affect the
upfront and earn-out consideration. The increase in fair value of EUR 154 million was recognised in Equity in 2015. The transaction was subject to regulatory approvals.

Following an amendment to the agreement in April 2016, the transaction closed on 21 June 2016. The
available-for-sale equity securities are derecognised from the statement of financial position with a corresponding release of the revaluation reserve recognised in
Equity. The transaction resulted in a net profit of EUR 200 million and is recognised in the statement of profit or loss, in the line items Investment income, Share of results of associates and joint ventures and Other income. Reference is made
to Note 5 Investments, Note 7 Share of results of associates and joint ventures, Note 19 Equity, Note 23 Investment income, Note 25 Other income and Note 37 Fair value of financial
assets and liabilities.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-139 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Voya

The table below
provides a summary of the various Voya divestment transactions which occurred in 2013, 2014 and 2015:



|                                        |  |                                 |       |   |                         |  |       |                                 |  |  |                       |   |  |                                 |       |  |                              |  |       |                                  |  |  |                       |  |  |                                |        |  |  |  |        |  |  |  |        | 
|--------------------------------------- |  | ------------------------------- | ----- | - | ----------------------- |  | ----- | ------------------------------- |  |  | --------------------- | - |  | ------------------------------- | ----- |  | ---------------------------- |  | ----- | -------------------------------- |  |  | --------------------- |  |  | ------------------------------ | ------ |  |  |  | ------ |  |  |  | ------ | 
|Summary of Voya divestment transactions | 
|Date                                    |  | Interest%held beforetransaction |       |   | Portion ofinterest sold |  |       | Interest %held aftertransaction |  |  | Price pershare in USD |   |  | Gross Salesproceeds EURmillions |       |  | Impact onShareholdersequity |  |       | Impact inNon-controllinginterest |  |  | Impact onTotal equity |  |  | Impact onprofit (+) orloss (-) |       
|May 2013                                |  |                                 | 100.0 | % |                         |  | 28.8 | %                               |  |  | 71.2                  | % |  |                                 | 19.50 |  |                              |  | 1,061 |                                  |  |  | 1,894                |  |  |                                | 2,954  |  |  |  | 1,060  |  |  |  |       | 
|October 2013                            |  |                                 | 71.2  | % |                         |  | 14.6 | %                               |  |  | 56.5                  | % |  |                                 | 29.50 |  |                              |  | 786   |                                  |  |  | 632                  |  |  |                                | 1,394  |  |  |  | 762    |  |  |  |       | 
|March 20141                             |  |                                 | 56.5  | % |                         |  | 13.3 | %                               |  |  | 43.2                  | % |  |                                 | 35.23 |  |                              |  | 950   |                                  |  |  | 87                    |  |  |                                | 5,100 |  |  |  | 5,013 |  |  |  | 2,005 | 
|September 2014                          |  |                                 | 43.2  | % |                         |  | 10.8 | %                               |  |  | 32.5                  | % |  |                                 | 38.85 |  |                              |  | 888   |                                  |  |  |                      |  |  |                                |       |  |  |  |       |  |  |  | 40     | 
|November 20142                          |  |                                 | 32.5  | % |                         |  | 13.5 | %                               |  |  | 18.9                  | % |  |                                 | 39.15 |  |                              |  | 1,068 |                                  |  |  |                      |  |  |                                |       |  |  |  |       |  |  |  | 418    | 
|March 2015                              |  |                                 | 18.9  | % |                         |  | 18.9 | %                               |  |  | 0                     | % |  |                                 | 44.20 |  |                              |  | 1,802 |                                  |  |  | 77                   |  |  |                                |       |  |  |  | 77    |  |  |  | 323    | 



|1 | Deconsolidation of Voya; remaining investment in Voya accounted for as an Investment in associate held for sale at fair value of EUR 2,914 million.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|2 | Loss of significant influence over Voya; remaining investment accounted for as an available-for-sale equity investment held for sale.
|- | -------------------------------------------------------------------------------------------------------------------------------------

In March 2015, ING Group sold 45.6 million ordinary shares of Voya. ING Group sold 32 million Voya shares in the public offering and in
addition to this, ING Group sold 13.6 million shares to Voya. The gross proceeds to ING Group from the public offering and the concurrent repurchase by Voya amounted to EUR 1.8 billion (USD 2.0 billion).

The sale of the total 45.6 million shares from the combined transactions reduced ING Groups stake in Voya from 18.9% (at 31 December 2014) to zero. The
transactions resulted in a profit of EUR 323 million as was recognised in the statement of profit or loss in the line Net result from disposal of discontinued operations.

Reference is made to Note 4 Financial assets at fair value through profit or loss and Note 28 Discontinued operations.

52 Subsequent events

There are no subsequent events to report.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-140 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







2.2.1 Risk management

amounts in millions of euros, unless stated otherwise

ING Group Risk Management

Taking measured risks is the core of ING Groups business. As a global financial institution with a strong European base, offering banking services, ING
Group is exposed to a variety of risks. ING Group operates through a comprehensive risk management framework and integrates risk management in its daily business activities and strategic planning. This ensures the identification, measurement and
control of risks at all levels of the organisation so that ING Groups financial strength is safeguarded.

Risk management supports the Executive Board in
formulating the risk appetite, strategies, policies, limits and provides a review, oversight and support function throughout ING Group on risk-related items. The main financial risks ING Group is exposed to are credit risk (including transfer risk),
market risk (including interest rate, equity, real estate, credit spread, and foreign exchange risks), funding & liquidity risk and business risk. Furthermore, ING Group is also exposed to
non-financial risks, e.g. operational and compliance risks. The way ING Group manages these risks on a day-to-day basis is
described in this Risk Management section. The Risk management section in the Integrated Annual Report is an integral part of the audited consolidated annual accounts.

In line with the Restructuring Plan agreed with the European Commission after the financial crisis, ING Group divested all its insurance and investment management
businesses around the world. On 14 April 2016, ING Group announced the sale of its remaining 14.1% stake in NN Group and therefore fulfilling the terms of the European Commission restructuring agreement, whereby ING Group was required to fully
divest its shareholding in NN Group before the end of 2016.

The ING Group Chief Risk Officer (CRO) is also the CRO of ING Bank. Therefore, he is responsible for
the day-to-day Risk Management of the Group and the Bank. The remaining risk functions and processes that are specific for the Group function have been delegated to ING
Bank.

ING Bank risk management

Introduction

The Risk Management section describes the key risks that arise from ING Banks business model. It explains how the risk management function is embedded within the
organisation based on the three lines of defence. This includes front office as first line of defence, independent risk management as the second line of defence and the internal audit function as the third
line of defence. The key risks resulting from the banks business model are managed by dedicated and specific risk management departments that each covers its own area of expertise. ING Banks risk management disclosures provide
qualitative and quantitative disclosures about credit, market, liquidity and funding, business and non-financial risks.

The
risk management section is in line with the accounting standards relating to the nature and the extent of the risks as required by IFRS7 Financial Instruments: Disclosures as adopted by the European Union and covered by an opinion of the
External Auditors as part of the notes to the consolidated financial statements.

Navigation map

The index below enables the readers to track the main risk items through the various risk disclosures.



|                                                       |                                            |                              |       |                
|------------------------------------------------------ | ------------------------------------------ | ---------------------------- | ----- | ---------------
|Risk management                                        |                                            |                              |       |                
|                                                       |                                            | Subjects                     |       | Risk Management
|These sections show INGs approach to risk management. |                                            | Introduction to risk section |       | F-141          
|                                                       | Purpose and business model                 |                              | F-143
|                                                       | Risk governance                            |                              | F-143
|                                                       | Risk management function and risk culture  |                              | F-145
|                                                       | Risk profile                               |                              | F-147
|                                                       | Risk appetite framework and stress testing |                              | F-149
|                                                       | Economic and Regulatory Capital            |                              | F-153
|                                                       | Regulatory environment                     |                              | F-153
|                                                       | Top and emerging risks                     |                              | F-154



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-141 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                       |                                                                                                                                |       |                          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | ----- | -------------------------
|Credit risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                       |                                                                                                                                |       |                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                       | Subjects                                                                                                                       |       | Risk Management          
|Credit risk is the risk of potential loss due to default by ING Banks debtors (including bond issuers) or trading counterparties.                                                                                                                                                                                                                                                                                                                                              |                                                       | Governance and credit risk definitions                                                                                         |       | F-155                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Credit risk appetite and concentration risk framework |                                                                                                                                | F-157
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Environmental and Social Risk Framework               |                                                                                                                                | F-159
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | RWA comparison                                        |                                                                                                                                | F-160
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Credit risk capital and measurement (SA & AIRB)       |                                                                                                                                | F-160
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Credit risk tools                                     |                                                                                                                                | F-165
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Credit risk portfolio                                 |                                                                                                                                | F-166
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Credit risk mitigation                                |                                                                                                                                | F-170
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Credit quality                                        |                                                                                                                                | F-177
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                       | Securitisations                                                                                                                |       | F-183                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                       |                                                                                                                               
|Market risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                       |                                                                                                                                |       |                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                       | Subjects                                                                                                                       |       | Risk Management          
|Market risk is the risk of potential loss due to adverse movements in market variables.                                                                                                                                                                                                                                                                                                                                                                                         |                                                       | Governance                                                                                                                     |       | F-184                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Economic Capital                                      |                                                                                                                                | F-184
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Market risk in banking books                          |                                                                                                                                | F-185
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Market risk in trading books                          |                                                                                                                                | F-192
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                       |                                                                                                                               
|Funding and liquidity risk                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                       |                                                                                                                                |       |                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                       | Subjects                                                                                                                       |       | Risk Management          
|Funding and liquidity risk is the risk that ING Bank or one of its subsidiaries cannot meet the financial liabilities when they come due, at reasonable cost and in a timely manner.                                                                                                                                                                                                                                                                                            |                                                       | Governance                                                                                                                     |       | F-199                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Management                                            |                                                                                                                                | F-200
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Funding and Liquidity profile                         |                                                                                                                                | F-202
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Regulatory developments                               |                                                                                                                                | F-203
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                       |                                                                                                                               
|Non-financial risk                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                       |                                                                                                                                |       |                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                       | Subjects                                                                                                                       |       | Risk Management          
|Operational risk is the risk of direct or indirect loss returning from inadequate or failed internal processes, people and systems or from external
events.  Compliance risk is the risk of impairment of ING Banks integrity, leading to
damage to INGs reputation, legal or regulatory sanctions, or financial loss, as a result of failure (or perceived failure) to comply with applicable laws, regulations, ING Bank policies and minimum standards and the ING Values. |                                                       | Governance Framework
Operational risk and main developments Compliance risk and main developments
Non-financial risk awareness |       | F-203F-203F-205F-206F-208
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                       |                                                                                                                               
|Business risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                       |                                                                                                                                |       |                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                       | Subjects                                                                                                                       |       | Risk Management          
|Business risk is the exposure to value loss due to fluctuations in volumes, margins and costs, as well as customers behaviour risk.                                                                                                                                                                                                                                                                                                                                            |                                                       | Analysis business risk                                                                                                         |       | F-209                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Governance                                            |                                                                                                                                | F-209
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                       |                                                                                                                                |      



|                                          |  |       |  | 
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|ING Group Annual Report on Form 20-F 2016 |  | F-142 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Purpose and business model

The purpose of ING Banks risk management function is to support the ambition of ING Bank to be the primary bank for our customers, empowering the business through
an integrated, state of the art, enterprise-wide risk management platform. The following principles support this purpose:



| |  | The risk management function is embedded in all levels of ING Banks organisation and is part of the daily business activities and strategic planning to have a sustainable competitive advantage;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Products and portfolios are structured, underwritten, priced, approved and managed properly and compliance with internal and external rules is monitored;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Delegated authorities are consistent with the overall Bank strategy and risk appetite; and
|- |  | ------------------------------------------------------------------------------------------



| |  | Transparent communication to internal and external stakeholders on risk management.
|- |  | -----------------------------------------------------------------------------------

Risk governance

Effective risk management requires a firm-wide risk governance. ING Banks risk and control structure is based on the three lines of defence governance
model, whereby each line has a specific role and defined responsibilities in such a way that the execution of tasks is separated from the control of the same tasks. At the same time, they have to work closely together to identify, assess and
mitigate risks. This governance framework ensures that risk is managed in line with the risk appetite as approved by the Management Board Bank (MBB) and the Supervisory Board (SB), and is cascaded throughout ING Bank.

The head of INGs line of business and their delegates form the first line of defence and have primary accountability for the performance, operations, compliance
and effective control of risks affecting their respective businesses. They originate loans, deposits and other products within applicable frameworks and limits, they know our customers well and are well-positioned to act in both the customers
and INGs best interest. The COO is responsible and accountable for proper security and controls on global applications and IT-platforms servicing the Bank.

The second line of defence consists of oversight functions with a major role for the risk management organisation headed by the Chief Risk Officer (CRO), the ultimate
responsible officer. Risk Management at corporate level is responsible for (i) the development of overall policies and guidance, (ii) objectively challenge the execution, management and control processes and (iii) coordinate the
reporting of risks and controls by the first line of defence. It also has an escalation/veto power in relation to business activities that are judged to present unacceptable risks to ING Bank.

The internal audit function forms the third line of defence. It provides an on-going independent (i.e. outside of the businesses
and the risk organisation) and objective assessment of the effectiveness of internal controls of the first two lines, including financial and non-financial risk management.

The graph below illustrates the different key senior management level committees in place in the risk governance structure.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-143 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







LOGO

Board level risk oversight

ING Bank has a
two-tier board structure consisting of the Management Board Banking (MBB) and the Supervisory Board (SB); both tiers play an important role in managing and monitoring the risk management framework.



| |  | The SB is responsible for supervising the policy of the MBB, the general course of affairs of ING Bank and its business (including its financial policies and corporate structure). For risk management purposes the SB is
assisted by two sub-committees:
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Audit Committee, which assists the SB in monitoring the integrity of the financial statements of ING Bank, in monitoring the compliance with legal and regulatory requirements, and in monitoring the independence and
performance of INGs internal and external auditors; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Risk Committee, which assists and advises the SB in monitoring the risk profile of the company as well as the structure and operation of the internal risk management and control systems.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The MBB is responsible for managing risks associated with all activities of ING Bank. The MBBs responsibilities include ensuring that internal risk management and control systems are effective and that ING Bank
complies with relevant legislation and regulations. On a regular basis, the MBB reports on these issues and discusses the internal risk management and control systems with the SB. On a quarterly basis, the MBB reports on the Banks risk profile
versus its risk appetite to the Risk Committee, explaining changes in the risk profile.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As a member of the MBB, the CRO ensures that risk management issues are heard and discussed at the highest level, thus establishing the appropriate tone at the top. The
CRO steers a functional, independent risk organisation both at head-office and business-unit level, which supports the commercial departments in their decision-making, but at the same time has sufficient countervailing power to keep the risk profile
within the risk tolerance. Every quarter, the CRO reports to the board committees on ING Banks risk appetite levels and on ING Banks risk profile. In addition, the CRO briefs the board committees on developments in internal and external
risk related issues and ensures the board committees understand specific risk concepts.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-144 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







As part of the integration of risk management into the annual strategic planning process, the MBB annually issues a
Planning Letter which provides the corporate strategic direction and addresses key risk issues. Based on the Planning Letter, the business lines and business units develop their business plans which align with the Banks strategic direction.
The process includes a qualitative and quantitative assessment of the risks involved. As part of the process, strategic limits and risk appetite levels are explicitly discussed. Based on the business plans, the MBB formulates the Strategic Plan
which is submitted to the SB for approval.

Executive level

The ING Bank
Finance and Risk Committee (BF&RC) is a platform for the CRO and the Chief Financial Officer (CFO), along with their respective direct reports, to coordinate issues that relate to both the finance and risk domains. On reporting level, BF&RC
has the responsibility to coordinate finance and risk decisions that have an impact on internal and/or external reporting.

The key risk committees described below
act within the overall risk policy and delegated authorities granted by the MBB:



| |  | Global Credit & Trading Policy Committee (GCTP), former Global Credit Committee Policy or GCC (P): Discusses and approves policies, methodologies and procedures related to credit, trading, country and
reputation (ESR) risks within ING Bank. The GCTP meets on a monthly basis;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Global Credit Committee  Transaction Approval (GCC(TA)): Discusses and approves transactions which entail taking credit risk (including investment risk), country, legal and ESR risk. The GCC(TA) meets twice a
week;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Asset and Liability Committee Bank (ALCO Bank): Discusses and approves on a monthly basis the overall risk profile of all ING Banks market risks that occur in its activities. ALCO Bank defines the policy regarding
funding, liquidity, interest rate mismatch and solvency for ING Bank; and
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Non-Financial Risk Committee Bank (NFRC Bank): Accountable for the design and maintenance of the Non-Financial Risk Management Framework
including Operational Risk Management, Compliance and Legal policies, minimum standards, procedures and guidelines; the NFRC structure; development of tools, methods and key parameters (incl. major changes) for risk identification, measurement and
monitoring/ reporting. The minimum frequency of the NFRC Bank is at least quarterly.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Regional and business unit level

The CRO is supported by regional and/or business unit CROs focussing on specific risks in the geographical and/or business areas of their responsibilities. ING
Banks regional and/or business unit management have primary responsibility for the management of risks (credit, market, funding and liquidity, operational, legal and compliance risks) that arise in their daily operations. They are accountable
for the implementation and execution of appropriate risk frameworks affecting their businesses to ensure compliance with procedures and processes at Corporate level. The implementation is adapted if necessary to local requirements.

The local (regional and BU) CRO is responsible for the analysis, control and management of risks across the whole value chain (from front to back office), based on
which a robust control structure is maintained. The regional and business unit CROs report both to the ING Banks CRO and to the head of their regional area and business unit. This dual reporting system aims to ensure that the local risk
management function is independent from the operating functions and that it is aligned with the corporate risk policies and goals.

Risk management function

Organisational structure

Based on the three lines of defence, an
independent risk management function has oversight in all levels of ING Banks organisation. The CRO, a MBB member, bears primary overall responsibility for the risk management function and reports directly to the Chief Executive Officer. The
CRO is responsible for the management and control of risk on a consolidated level to ensure that ING Banks risk profile is consistent with its financial resources and the risk appetite. The CRO is also responsible for establishing and
maintaining a robust organisational basis for the management of risk throughout the organisation.



The Global Risk Management function consists further of corporate risk departments headed by General Managers directly reporting to the CRO. The corporate risk
departments support the CRO to set the Banks risk appetite, develop the corporate policies, rules and global procedures and infrastructures. The General Managers bear direct responsibility for risk (mitigating) decisions at Bank level. The
General Managers and the CRO are responsible for the harmonisation and standardisation of risk management practices.

Over the past years, banks have been faced
with regulatory and public pressure with regard to their risk management policies, processes and systems. New requirements and regulations have been introduced and implemented. To be able to effectively address these internal and external (market
and regulatory) developments and challenges, ING Bank started to redesign the set-up of its risk-management organisation in 2015. This in order to better support the Banks Think Forward strategy and
enhance the interconnection of the business units risk oversight responsibilities on one hand, and the global risk functions on the other hand.

In 2016, the
position of Head of NFR cessed to exist resulting in a direct report of the Heads of Corporate Operational Risk Management (CORM) and Bank Compliance Risk Management (BCRM) to the CRO. ING Bank is looking at a new structure for the validation of
Risk Models in a broader perspective. Setting up a new Model Risk Management function is of significant strategic importance to the Risk Organisation.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-145 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







The global Risk function is composed of the following departments: Credit & Trading Risk, Balance Sheet Risk,
Corporate Operational Risk, Bank Compliance Risk and Risk Services. In addition, there is one staff department in place:



| |  | Risk & Capital Integration: a staff department that reports functionally to the CRO and is responsible for overarching risk topics as risk appetite, disclosures, recovery and resolution planning and stress
testing as well as capital planning. Risk & Capital Integration reports directly to the Head of Capital Management.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The organisation chart
below illustrates the current reporting lines within ING Bank global risk organisation:



LOGO

As announced in October 2016, ING is accelerating its Think Forward strategy. Therefore, ING has introduced a number of initiatives
to further improve the customer experience, further grow primary customers and lending, and increase efficiency. For Risk, it has initiated a Target Operating Model (TOM) programme to enable further convergence of our operations, which resulted in a
new risk organisation to start on 1 March 2017.

Risk policies, procedures and standards

ING Bank has a framework of risk management policies, procedures and minimum standards in place to create consistency throughout the organisation, and to define
requirements that are binding to all business units. The governance framework of the local business units aligns with ING Banks framework and meets local (regulatory) requirements. Senior management is responsible to ensure policies,
procedures and standards are implemented and adhered to. Policies, procedures and standards are regularly reviewed and updated via the relevant risk committees to reflect changes in markets, products and practices.

Risk model governance and validation

Risk models are built according to the
internal risk modelling methodology standards and model life cycle, in line with regulatory requirements. After thorough review and documentation of the model by the modelling and Model Validation (MV) departments, specific model risk
committees for each risk type approve new models. After approval by the specific risk committee, and where necessary the regulator, a new risk model is implemented and entitled for usage. In addition, MV validates each model on a regular basis.
Validation results and its capital impact are reported on a quarterly basis to senior management, the risk committee and to the supervisor.

An independent MV
department is one of the cornerstones of ING Banks risk model governance. It consists of the process of determining that a model is appropriate for its intended use. It is an on-going process whereby the
reliability of the model is verified at different stages during its lifecycle: at conception, before approval, periodically after implementation, and when significant changes to the model are made. The validation process contains a mix of
developmental evidence, process verification and outcome analysis.

The MV department backtests all existing risk models. In addition to (i) evaluating the
underlying model parameters, (ii) ensuring continued applicability of the models for the relevant portfolios, and (iii) discussing the model performance with front office and risk users of the models, MV also (iv) tests the observed
performance of a model (and its components) with the predicted level. A model where the observed results deviate from the predicted results becomes a candidate for either re-calibration or re-development.

Risk culture

The risk
management framework based on the three lines of defence governance model is effective when a sound and consistent risk culture is present throughout the whole organisation. The reputation and integrity of ING Banks organisation are considered
key requirements to operate successfully in the financial world. It promotes awareness of collectively shared values, ideas and goals but also of potential threats and it ensures alignment of individual performance objectives with the short- and
long-term strategy. By making INGs risk responsibilities transparent within the different levels of the organisation and holding every employee accountable for his/her acts, the risk culture and awareness are embedded in the organisation. This
leads to effective risk management.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-146 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Commonly seen as norms and traditions of behaviour of individuals and of groups within an organisation, risk culture
determines the way in which employees identify, understand, discuss, and act on the risks the organisation is confronted with and the risks it takes. This is a continuous long-term commitment and journey. In this respect, The Orange Code has been
set as a declaration of who we are. It describes what we can expect from each other when we turn up to work each day. A set of standards that we collectively value, strive to live up to, and invite others to measure us by.

The Orange Code is the sum of two parts, the ING Values and ING Behaviours, with integrity being an important principle. The ING Values (being honest, prudent and
responsible) are designed to be non-negotiable promises we make to the world, principles we seek to stick to, no matter what. The ING Behaviours (take it on and make it happen, help others to be successful,
and be always a step ahead) represent our way to differentiate ourselves. The Orange Code is embedded in commitments we make to each other and the standards by which we will measure each others performance.

To support the embedding of risk culture into the business practices, ING Bank has initiated different programmes and issued several guidelines. Risk awareness is to be
alert on potential threats that can occur during day-to-day business, which can be specific to the sector, the region or the clients ING Bank is doing business with.
Part of the training curriculum to increase risk awareness is the Promoting Integrity Programme (PIP), which is a long-term, global, educational and behavioural change programme supported by the MBB for all ING Bank employees. With the programme,
ING Bank gains a sound risk culture and ensures that every employee in every part of the organisation understands how his/her actions and behaviour can help earn and retain customer and stakeholder trust. Recently, additional modules with current
topics, were added to the programme, among others on integrity and cybersecurity. To enhance risk awareness, these topics are discussed between managers and employees through dialogue sessions that managers organise within their teams to create
clear and consistent understanding. The endorsement from the executive level and the emphasis in the communication strengthen the culture.

In the Netherlands,
employees of all financial institutions  and that includes ING Bank  are required to take the Bankers Oath. This legal requirement came into force on 1 April 2015 as part of the joint approach from all banks, known as
Future-oriented Banking. With the introduction of a social regulation, the revision of the Dutch Banking Code and the implementation of a bankers oath (with the associated rules of conduct and disciplinary law), the banks want to
show the society what they stand for and what they can be held accountable for, both as individual banks and the banking sector as a whole.

Lastly, ING Bank makes
sure that the remuneration policy is properly aligned with its risk profile and the interests of all stakeholders. For more information on INGs compensation and benefits policies and its relation to the risk taken, please refer to the
Capital Requirements Regulation (CRR) Remuneration disclosure published on the corporate website ing.com. https://www.ing.com/About-us/Annual-reporting-suite.htm

Risk profile

As a global financial institution with a strong European base
offering banking services, ING Bank is exposed, to varying degrees of a variety of risks. The main financial risks ING Bank is exposed to can be divided into credit risk (including transfer risk), market risk (including interest rate, equity, real
estate, credit spread, and foreign exchange risks), funding & liquidity risk and business risk. Furthermore, ING Bank is exposed to non-financial risks, e.g. operational and compliance risks.

Key risk categories

The table below presents the key risk categories
(financial as well as non-financial risks) that are associated with ING Banks business activities.



LOGO



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Financial risks:



| |  | Credit risk: the risk of potential loss due to default and/or credit rating deterioration by ING Banks debtors (including bond issuers) or trading counterparties;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Market risk: the risk of potential loss due to adverse movements in market variables. Market risks include interest rate, credit spread, equity, real estate and foreign exchange risks;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Funding and liquidity risk: the risk that ING Bank or one of its subsidiaries cannot meet its financial liabilities when they come due, at reasonable cost and in a timely manner. Liquidity risk can materialise both
through trading and non-trading positions;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Business risk: the exposure to value loss due to fluctuations in volumes, margins and expenses, as well as customer behaviour risk. These fluctuations can occur because of internal, industry, or wider market factors. It
is the risk inherent to strategy decisions and internal efficiency, and as such strategic risk is included in business risk.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Non-financial risks:



| |  | Operational risk: the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events. It includes reputational risk, as well as legal risk;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Compliance risk: the risk of impairment of ING Banks integrity as a result of failure (or perceived failure) to comply with applicable laws, regulations, ING Bank policies and minimum standards and the ING Values
as part of the Orange Code.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The chart below provides, in EUR billion, high level information on the risks arising from the Banks business
activities. The RWAs illustrate the relative size of the risks incurred in respect of each business from a regulatory perspective.





LOGO

Risk cycle process

ING uses a step-by-step risk management approach to monitor, mitigate and manage its financial and non-financial risks. The approach consists of a
cycle of five recurrent activities: risk identification, risk assessment, risk control, risk monitoring and risk reporting. In short, this implies: determine what the risks are, assess which of those risks can really do harm, take mitigating
measures to control these risks, monitor the development of the risk and if measures taken are effective and report the findings to management at all relevant levels to enable them to take action when needed.



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The recurrence is twofold. One: identification, assessment and review, and update of mitigating measures are done
periodically. Two: the periodical monitoring exercise may indicate that new risks are arising, known risks are changing, assessed risk levels are changing, or control measures are not effective enough. Further analyses of these findings may result
in renewed and more frequent risk identification, and/or assessment, and/or change of mitigating measures.





LOGO

Risk identification

Risk
identification is a joint effort of the commercial business and the risk management functions. Its goal is to detect potential new risks and determine changes in known risks. Regular risk identification is essential for both the effectiveness and
efficiency of risk management. Potential risks that are not identified, will not be controlled and monitored and may lead to surprises later. Known risks may have changed over time and as a consequence the existing mitigating measures and monitoring
may be inadequate or obsolete.

Risk identification is performed periodically. In case of material internal or external change, additional ad-hoc risk identification can be performed.

Risk assessment and control

Each identified risk is assessed to determine the importance, or risk level, of the risk for the ING Bank entity in scope. This enables the entity to decide which of the
identified risks need control measures and how strict or tolerant these measures must be. Known risks are re-assessed to either confirm the risk level or detect change.

The importance of a risk is assessed based on the likelihood the risk materialises and the subsequent financial or reputational impact should the risk occur. Unlikely
risks with a potentially high impact need to be controlled. For a risk that is likely to happen regularly, but is expected to have a modest financial impact, business management may decide to not mitigate and accept the consequences when it happens.

Risks can be controlled by mitigating measures that either lower the likelihood the risk occurs, or measures that lower the impact when they occur. The ultimate
measure to lower risk is to stop the activity or service that causes the risk (risk avoidance). Risk controlling/mitigating measures are defined and maintained at both Bank wide and local level.

Monitoring and reporting

With the monitoring of the risk control
measures, ING Bank continuously checks if they are executed, complied with, have the expected mitigating effects and follow the development of the risks and their risk levels. Adequate risk reporting provides senior and local management with the
information they need to manage risk.

Risk Appetite Framework

ING uses
an integrated risk management approach for its banking activities. The MBB uses the Risk Appetite Framework (RAF) to set both boundaries for the Medium Term Plan (MTP) budget process and to monitor and manage the actual risk profile in relation to
the risk appetite.



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Process

The RAF is
focused on setting the risk appetite at the consolidated level and across the different risk categories, and provides the principles for cascading this risk appetite down into the organisation. The RAF is approved by the SB on an annual basis, or
more frequently if necessary based on their quarterly review in the MBB and SB. It is therefore essentially a top-down process, which bases itself on the ambition of the bank in terms of its risk profile and
is a function of the capital and liquidity levels and ambitions, the regulatory environment and the economic context. The process is set up according to the following steps:





LOGO

Step 1. Identify & assess INGs key risks

Setting the RAF starts with a multi-dimensional step to identify & assess the risks ING is facing when executing its strategy. This step includes the following
actions that are performed on an annual basis:



| |  | detect unidentified risks that are not yet controlled within ING Banks risk management function & assess their potential impact;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  | benchmark current risk framework versus regulatory developments;
|- |  | ----------------------------------------------------------------



| |  | re-assess known risks to confirm risk level or detect potential changes; and
|- |  | ----------------------------------------------------------------------------



| |  | reflect on the current set of Risk Appetite Statements.
|- |  | -------------------------------------------------------

This annual Risk Assessment serves as input when defining the
global risk appetite which - in line with its business model and risk ambition - is currently formulated as follows: ING Bank has the ambition to be and remain a strong bank, able to address possible adverse events on its own strengths and
resources.

In order to achieve this risk ambition, ING has the following targets:



| |  | Have a rating ambition which is in line with the strongest among its peer group;
|- |  | --------------------------------------------------------------------------------



| |  | Be able to restore the capital and liquidity position following a stress situation on its own strength;
|- |  | -------------------------------------------------------------------------------------------------------



| |  | Be in a position to meet current and forthcoming regulatory requirements and targets; and
|- |  | -----------------------------------------------------------------------------------------



| |  | Have a risk profile that compares favourably to its main banking peers.
|- |  | -----------------------------------------------------------------------

Step 2. Set Risk Appetite Framework

Based on INGs risk assessment and risk ambition, specific targets are set for both financial and non-financial risks:



Financial risk

For financial risks, ING expresses its risk appetite as a tolerance allowed to key ratios deviating from their target levels. Therefore, the high level risk ambition is
translated into quantitative targets for solvency risk, funding & liquidity risk and for concentration risk.

The solvency risk appetite is
closely aligned with capital management activities and policies. ING has determined tolerances for its risk-weighted solvency position (CET1 ratio), for non-risk-weighted solvency (leverage ratio) and for a
more economic value based solvency (economic capital utilisation expressed via the Overall Supervisory Review and Evaluation Process (SREP) Capital Requirement). These statements are complemented with a specific statement regarding profitability.
The CET1 ratio and leverage solvency risk appetite statements as well as profitability statement are not only compared to the actual reported level, but also include the potential impact of a standardised and
pre-determined 1-in-10-year stress event (i.e. at a 90% confidence level with a 1-year horizon). Based on this mild stress scenario, the impact on ING Banks earnings, revaluation reserve and risk-weighted assets (RWA) is calculated (these are labelled earnings-at-risk, revaluation reserve-at-risk and
RWA-at-risk). These stressed figures are used as input for a two-year simulation which depicts the developments of INGs
solvency level versus its risk appetite.



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Funding and liquidity risk management has two dimensions: liquidity risk management focuses on having a
sufficient buffer to cope with the short-term situation, funding risk management ensures long-term compliance with both internal and external targets. Managing funding and liquidity risk focuses both on business as usual (based on the run-off profile to show the stickiness of deposits combined with the run-off of assets without new production) and on a stressed situation. For liquidity risk, we use the time
to survive under specific scenario, while for funding risk we focus on having a stable funding profile.

The concentration risk appetite set at consolidated
level are directly translated into corresponding limits in the underlying risk appetite statements for profitability risk, credit risk, market risk and funding & liquidity risk.

Non-financial risk

For non-financial risks, levels are set according to what ING is willing to tolerate in pursuit of the strategic objectives of the bank, to ensure that the organisations actual risk exposure is commensurate with
its strategic objectives and that exposure moving beyond the tolerance risk levels is timely identified and acted upon.

ING measures and monitors its
exposure to non-financial risk on an ongoing basis by assessing risks, analysing scenarios and mitigating actions as a result of audit and risk assessment findings. The aggregation of the assessed risk levels
is expressed in an expected loss figure on non-financial risk, which is compared to the tolerance levels as captured in the NFR Risk Appetite Statements (RAS) based on a percentage of the operational income.
The overall non-financial risk levels and tolerance breaches are periodically reported through the Non-Financial Risk Dashboard (NFRD). The NFRD consists of
comprehensive and integrated NFR information on a quarterly basis. Changes in capital are monitored and reported in the NFRD as well. In case risk events cause ING to move towards or beyond the tolerance level, management is required to undertake
action.

In particular to compliance risk: ING must meet its compliance obligations, seek to adhere to the spirit as well as to the letter of applicable laws
and regulations, ING policies and minimum standards, the values and behaviours as defined in the Orange Code, and to act upon identified compliance breaches immediately and diligently.

Step 3. Cascade into statements per risk type and business unit

The risk
appetite is translated per risk type, which is further cascaded down into the organisation to the lowest level .The risk appetite statements are then translated into dedicated underlying risk limits which are used for
day-to-day monitoring and management of ING Banks risks.

For financial risks,
a sequence of different risk appetite frameworks is implemented to address the most significant risks. This implies that a whole framework of credit risk limits is in place that monitors the overall quality of the ING Bank credit portfolio and that
of all the underlying portfolios as well. In addition, specific concentration risk appetites are defined on product level, geographic level and (single name) counterparty level which are cascaded down into the organisation. The risk appetite for the
trading book activities within Financial Markets is accompanied by a risk appetite framework for market risks in the banking books. For both types of market risk, limits at Bank level are translated into the organisation. The funding &
liquidity risk appetite statements that are defined on ING Bank level are translated into the organisation, taking the funding & liquidity specific situation of each (solo) unit into account. The risk appetite for non-financial risk is cascaded to the divisions and business units through a set of quantitative and qualitative statements. The risk appetite at ING Bank level is applicable to all divisions and business units. The
suite of risk appetite statements serves as input for the Medium Term Planning process as well as for the establishment of key performance indicators and targets for senior management.

Step 4. Monitor and manage underlying risk limits

In order to verify that it
remains within the risk appetite framework as it is executing its budget, ING reports its risk positions vis-à-vis its limits on a regular basis towards senior
management committees. The Risk and Capital Management Report reflecting the exposure of ING against the risk appetite targets is submitted quarterly to the MBB and to the (Risk Committee of the) SB.

Stress testing

Stress testing is an important risk management tool that
provides input for strategic decisions and capital planning. The purpose of stress testing is to assess the impact of plausible but severe stress scenarios on INGs capital and liquidity position. Stress test analyses provide insights in the
vulnerabilities of certain portfolios, w.r.t. adverse macroeconomic circumstances, stressed financial markets and changes in the (geo)political climate.



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Types of stress tests

Within ING, different types of stress tests are performed. The most comprehensive type of stress tests are the firm-wide scenario analyses, which involve setting
scenario assumptions for all the relevant macroeconomic and financial market variables in all countries relevant to ING. These assumptions usually follow a qualitative narrative that provides background to the scenario. In addition to firm-wide
scenario analyses, ING executes scenario analyses for a specific country or portfolio. Furthermore, sensitivity analyses are performed, which focus on stressing one or more risk drivers; usually without an underlying scenario narrative. The 1-in-10-year stress scenario used in the risk appetite framework is an example of a sensitivity analysis. Finally, ING performs reverse stress tests, which aim to determine
scenarios that could lead to a pre-defined severe adverse outcome.

Process

The stress testing process of ING consists of several stages, which are summarised in below diagram.





LOGO

Step 1. Risk assessment & scenario selection

ING formally determines its main risks on an annual basis through the execution of a so called risk assessment. Senior management, business representatives and risk
specialists are involved in this process which covers risks in the macroeconomic circumstances, political and regulatory developments as well as portfolio specific risks. Based on the risk assessment, scenarios are selected to be evaluated in the
remainder of the year The results of the risk assessment and scenario selection are discussed and endorsed in the Stress Testing Steering Committee (STSC). All stakeholders are represented in the STSC, such as representatives of the different
Corporate Risk departments, Capital Management, Finance and the Global Research organisation. The STSC submits the results of the risk assessment and scenario selection to the BF&RC for endorsement.

Step 2. Scenario parameter setting

After determination of the high level
scenarios, further elaboration of them is necessary. Scope, assumptions and input parameters such as GDP growth, unemployment rates, interest rates and real estate price changes are defined for the countries involved in the exercise. The parameters
are discussed and endorsed in the STSC and subsequently in the BF&RC.

Step 3. Data processing & proposal mitigating actions

When the scenario parameters have been finalised, the impact of the scenario on the solvency and liquidity position is determined. Based on the scenario values for the
relevant macro-economic and financial market variables, the impact on amongst others P&L, revaluation reserves, RWA and liquidity buffers are calculated. These outcomes are subsequently used to calculate the evolution of relevant solvency and
liquidity ratios, such as the common equity Tier-1 (CET1) capital ratio, the leverage ratio and the net liquidity position.



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LOGO

As for the previous steps, the calculated impacts of the scenario are first discussed and endorsed in the STSC followed by the
BF&RC. Depending on the outcomes of the stress test and the likelihood of the scenario, mitigating actions may be proposed. Approval of these mitigating actions takes place in the MBB.

Step 4. Execution of mitigating actions

After the MBB has approved the
mitigating actions, they need to be executed. Mitigating actions may include, but are not limited to, sales or transfers of assets, reductions of risk limits, intensification of our contacts with regulators or other authorities.

Methodology

For the calculation of the impact of the scenarios on
P&L, RWA, revaluation reserves, etc., detailed and comprehensive models are used. In these models, statistical analysis is combined with expert opinion to make sure that the results adequately reflect the scenario assumptions. The methodologies
are granular and portfolio-specific and use different macro-economic and market variables as input variables. The stress testing models are subject to a thorough review by the Model Validation department.

Economic and Regulatory Capital

Economic Capital (EC) and Regulatory Capital
(RC) are the main sources of capital allocation within ING Bank. Both of these capital metrics are used to determine the amount of capital that a transaction or business unit requires to support the economic and regulatory-based risks it faces. The
concept of EC differs from RC in the sense that RC is the mandatory amount of capital that is defined under Pillar I while EC is the best estimate of Pillar II capital that ING Bank uses internally to manage its own risk. EC is a non-accounting measure that is inherently subject to dynamic changes and updated as a result of ING Banks portfolio mix and general market developments. ING Bank continuously recalibrates the underlying
assumptions behind its economic capital model which may have an impact on the values of EC going forward.

EC is defined as the amount of capital that a transaction
or business unit requires in order to support the economic risks it takes. In general, EC is measured as the unexpected loss above the expected loss at a given confidence level. This economic capital definition is in line with the net market value
(or surplus) definition. The EC calculation is used as part of the CRR/CRD IV Pillar II Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP) that is performed regularly by the supervisor.

The following fundamental principles and definitions have been established for the model:



| |  | ING Bank uses a one-sided confidence level of 99.95% and a one-year time horizon to calculate EC;
|- |  | -------------------------------------------------------------------------------------------------



| |  | It is assumed that all currently known measurable sources of risk are included;
|- |  | -------------------------------------------------------------------------------



| |  | The best estimate risk assumptions are as objective as possible and based on proper analysis of statistical data.;
|- |  | ------------------------------------------------------------------------------------------------------------------



| |  | The EC calculation is based on fair value principles. Where complete and efficient markets exist, fair value is equal to market value;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  | The EC calculations reflect known embedded options and the influence of customer behaviour in banking products;
|- |  | ---------------------------------------------------------------------------------------------------------------



| |  | The EC calculations are on a before tax basis and do not consider the effect of regulatory accounting and solvency requirements on capital levels; and
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The framework does not include any franchise value of the business, discretionary management intervention or future business volumes and margins.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------

Regulatory environment

After the turmoil in the financial markets and the
subsequent need for governments to provide aid to financial institutions, financial institutions have been under more scrutiny from the public, supervisors and regulators. This has resulted in more stringent regulations intended to avoid future
crises in the financial system and taxpayers aid in the future.



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Basel III revisions, CRR/CRD IV and upcoming regulations

On 23 November 2016, the European Commission published legislative proposals to amend and supplement certain provisions of the Capital Requirements Directive (CRD),
the Capital Requirements Regulation (CRR), the Bank Recovery and Resolution Directive (BRRD) and the Single Resolution Mechanism Regulation (the SRM Regulation). The proposals are wide-ranging and may have significant effects on ING, including with
regard to the total loss absorbing capacity (TLAC) or the minimum requirement own funds and eligible liabilities (MREL) it must maintain. It is uncertain when the proposals will come into effect, and if so, whether that will be in their current
form.

On Basel III revisions (Basel 3.5), several changes to the regulatory framework are being considered by regulators. These may have an impact on the strategy
of ING, especially as they often amplify each other. The proposals and their potential impact are monitored via semi-annual monitoring exercises in which ING Bank participates. As a result of such monitoring exercises and ongoing discussions within
the regulatory environment, revisions have been made to the original Basel III proposals as was the case with the revised Liquidity Coverage Ratio in January 2013 and the revised Net Stable Funding Ratio and Leverage Ratio in January 2014. In
January 2017, the BCBS announced that it expected to complete finalisation of all revisions to the Basel III framework, including the calibration of an aggregate capital floors framework and a leverage ratio minimum requirement.

Principles for Effective Risk Data Aggregation and Risk Reporting

In January
2013, the Basel Committee published Principles for Effective Risk Data Aggregation and Risk Reporting (also known as BCBS239). BCBS239 consists of fourteen principles to strengthen a banks risk data aggregation and risk reporting practices.
Collectively implementing these principles will enhance risk management and decision-making processes at banks. Banks indicated as G-SIBs  including ING Bank  were required to implement the
principles by 2016.

The past years a dedicated team within the risk and finance functions, supported by the CFO and COO domain, has implemented BCBS239 across the
key risk types. The implementation has covered all key BCBS239 principles, resulting in improvements across the data management and reporting chain. By incorporating the BCBS239 principles in INGs internal control Framework, the principles
have become a key driver of INGs data aggregation and risk reporting practices. Also in todays continuously changing environment, ING will ensure that key risk data aggregation and reporting practices remain aligned with the BCBS239
principles.

Top and emerging risks

The risks listed below are defined
as material existing and emerging risks that may have a potentially significant impact on our financial position or our business model. They may have a material impact on the reputation of the company, introduce volatility in future results of
operations or impact INGs middle and long-term strategy including the ability to pay dividends, maintain appropriate levels of capital or meet capital and leverage ratio targets. An emerging risk is defined as a risk that has the potential to
have a significant negative effect on our performance, but currently difficult to quantify the impact on the organisation than for other risk factors that are not identified as emerging risks.

The topics have emerged either as part of the annual Risk Assessment that is performed as part of the Stress Testing Framework or from the Risk Appetite Framework. The
sequence in which the risks are presented below is not indicative of their likelihood of occurrence or the potential magnitude of their financial consequences.

During 2016, two changes to our top and emerging risks were made. Climate change risk was added as a new emerging risk, reflecting the impact a
deterioration of the climate may have for the reputation of ING. Business lending Benelux was removed as the credit quality improved and the risk costs reduced following the gradual improvement of the economy. Further, Impact of
low interest rate environment moved into Macroeconomic developments.

Macroeconomic developments

In 2016, ING Banks operating environment was characterized by continuously challenging market conditions with amongst others the persistent low interest rates and
geopolitical risks.

The sustained low interest rate environment in Europe, where central banks held their rates at very low and even negative levels in some
countries, negatively impacted short-term as well as long-term market rates. The typical interest rate position at ING Bank is that the duration of the assets is slightly higher than the duration of the liabilities. Given this mismatch, decreasing
interest rates are under normal circumstances favourable for the interest income of ING Bank: liabilities reprice more quickly than assets, and therefore the average interest rates paid on liabilities should adapt more quickly to lower market
interest rates.

However, given the current unusual situation with persistent low interest rates, ING Bank actively manages its interest-rate risk exposure and
successfully maintained the Net Interest Margin (NIM) on its core lending in 2016. On mortgages, ING is confronted with higher than expected prepayment rates because of the difference between the rates of the existing mortgage portfolio and the
prevailing market rates. On savings, NII and NIM are decreasing due to a further decline in yields on assets, while room for further reduction of client rates on savings deposits has diminished.



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In June 2016, the United Kingdoms intention to leave the European Union (Brexit) was a major
political and economic event that impacted sentiment. After the announcement, sovereign bond yields dropped as investors fled to safe haven assets due to increased uncertainty and the potential economic
fall-out from Brexit. Therefore, the impact was primarily noticeable via a strong increase in volatility in a variety of asset classes, including currencies, equities and bonds. Although ING has activities in
the UK through the Wholesale banking business line, no material asset quality deterioration following the Brexit referendum has appeared. But, as the terms of the exit are yet to be negotiated, ING will continuously monitor the developments.

Another element which can affect the real economy and gives rise to geopolitical risk is the instability in international relationships. In this perspective, ING Bank
continued to carefully monitor the international developments.

Cybercrime

Cybercrime is a continuous threat to companies in general and to financial institutions specifically. Both the frequency and the intensity of attacks increase on a
global scale. Threats from Distributed Denial of Service (DDoS), targeted attacks (also called Advanced Persistent Threats) and Ransomware intensify worldwide. ING Bank builds on its cybercrime resilience, further enhancing the control environment
to protect, detect and respond to e-banking fraud, DDoS and targeted attacks. Additional controls continue to be embedded in the organisation as part of the overall internal control framework and are
continuously re-assessed against existing and new threats. During 2016 ING did not experience any cyber incident that can be classified as material. ING provides continuous reporting on cyber incidents to the
ECB.

ING Bank also works on strengthening its global cybercrime resilience including strong collaboration against cybercrime with the financial industry, law
enforcement authorities, government (e.g. National Cyber Security Center) and Internet Service Providers (ISPs).

Climate change risk

The climate is changing and that is an unparalleled challenge for our world. The causes and the solutions to these challenges are complex, but we realise that it is
attributed directly or indirectly to human activity that alters the composition of the global atmosphere, in addition to natural climate variability. As a financial institution, we too have a responsibility and it may ultimately affect our results
if our customers are affected.

In general, ING has an impact on the environment and society directly through the consumption of natural resources and its
relationship with stakeholders, and indirectly through our financing. Therefore, climate change as a risk continues to intensify, looking at the public, regulatory and political concerns around its integration into the financial sectors
operations and strategy.

We can play a role in trying to find solutions. We have been climate neutral since 2007, adapting the organisation to the new world and
taking effective measures to mitigate our impacts. We are aware that our greatest impact however, is through our financing portfolio. INGs decision to end financing new coal fired power plants and coal mines, and continued reduction of our
coal portfolio, demonstrates climate change risk is part of our ESR framework and applies to all financial products and services offered by ING.

Finally, we also
participate in a number of climate change initiatives. For instance, we currently participate within the Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosures (TCFD), which is developing voluntary, consistent
climate-related financial risk disclosures for use by companies in providing information to stakeholders.

Credit risk

Introduction

Credit risk is the risk of loss from the default and/or credit
rating deterioration of counterparties. Credit risks arise in ING Banks lending, financial market and investment activities. The credit risk section provides information on how ING Bank manages, measures and monitors credit risk and gives an
insight into the ING Bank portfolio from a credit risk perspective.

Governance

Credit risk within ING Bank is part of the second line of defence (the front office being the first, internal audit the third) and is managed within the
Credit & Trading Risk (C&TR) function. C&TR is responsible for reviewing and managing credit risk including environmental and social risk (ESR) for all types of counterparties. It consists of credit risk managers who are responsible
for credit approvals and managing the specific credit risks in their portfolios and credit risk experts who provide support by means of credit risk systems, policies, models and reporting. To ensure the independence of the risk function, the
C&TR general manager is functionally responsible for the global network of credit risk staff.

ING Banks credit risk strategy is to maintain an
internationally diversified loan and bond portfolio, avoiding large risk concentrations. The emphasis is on managing business developments within the business lines by means of a top-down risk appetite
framework, which sets concentration limits for countries, individual counterparties, counterparty groups and investment activities. The aim is to support relationship-banking activities, while maintaining internal risk/reward guidelines and
controls.



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Credit analysis at portfolio level is monitored using metrics such as economic capital, regulatory capital, exposure at
default (EAD), probability of default (PD) and loss given default (LGD). To ensure efficient use of ING Banks capital, the risk appetite is monitored and managed at portfolio level by risk and finance together. Credit analysis at transactional
level focuses on the risk amount, tenor, structure of the facility and profile of the borrower. ING Banks credit risk managers make use of publicly available information, information provided by the counterparty, peer group comparisons,
industry comparisons and quantitative techniques.

Within ING Bank, the ultimate approval authority for credit proposals resides with the MBB. The MBB has delegated
authorities based on amounts, tenors and risk ratings to lower levels in the organisation. Transactions are approved via a dual signatory approval system that requires an individual sign-off from both front
office and credit risk management. For larger and higher risk credits a committee structure exists whereby the credit risk chair takes the final decision with support of the respective committee members, thereby ensuring accountability. Retail
business units have delegated authority to decide within policies and mandates approved by credit risk. Any decisions outside those policies or above the delegated mandate require a specific credit risk approval.

The credit risk role encompasses the following activities:



| |  | Measuring, monitoring and managing credit risks in the Banks portfolio;
|- |  | ------------------------------------------------------------------------



| |  | Challenging and approving new and modified transactions and borrower reviews;
|- |  | -----------------------------------------------------------------------------



| |  | Managing the levels of provisioning and risk costs, and advising on impairments; and
|- |  | ------------------------------------------------------------------------------------



| |  | Providing consistent credit risk policies, systems and tools to manage the credit lifecycle of all activities.
|- |  | --------------------------------------------------------------------------------------------------------------

The
following committees are in place to review and approve transactions and policies from a credit risk point of view:



| |  | The Global Credit Committee for Transaction Approval (GCC(TA)) is mandated to approve transactions with credit risks.
|- |  | ---------------------------------------------------------------------------------------------------------------------



| |  | The Global Credit & Trading Committee Policy (GCTP) which is authorised to approve policies, methodologies and procedures related to credit, trading, country and reputation risks on a high level for ING Bank.
GTCP consists of MBB members.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Credit & Trading Risk Committee (CTRC) is authorised to approve policies, methodologies and procedures related to credit & trading risk on more detailed and operational level (with the exception of
issues which are mandated to GCTP) within ING Bank. CTRC consists of MT members of C&TR, Risk Services and Wholesale Banking Lending Services.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Models Development Committee (MDC) serves as a technical advisor to CTRC and is a planning body for future model development. The MDC has a delegated mandate to approve credit risk models which cover smaller
portfolios.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The ING Bank Provisioning Committee (IPC) is the approval authority for loan loss provisions (LLP) for all ING Bank entities.
|- |  | -----------------------------------------------------------------------------------------------------------------------------

Credit risk categories

Credit risk uses risk categories to differentiate
between the different types of credit risk. All products within ING Bank are aggregated to one of the following risk categories:



| |  | Pre-settlement (PS) risk: arises when a counterparty defaults on a transaction before settlement and ING Bank has to replace the contract by a trade with another
counterparty at the then prevailing (possibly unfavourable) market price. The pre-settlement risk is the (potential or expected risk) cost of ING Bank replacing a trade in the market. This credit risk category
is associated with dealing room products such as options, swaps, and securities financing transactions. Where there is a mutual exchange of value, the amount of credit risk outstanding is generally based on the replacement value (mark-to-market) plus a potential future volatility concept, using a 3-7 year historical time horizon and a 97.5% confidence level.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Money market (MM)risk: arises when ING Bank places short-term deposits with a counterparty in order to manage excess liquidity. As such, money market deposits tend to be short-term in nature.
In the event of a counterparty default, ING Bank may lose the deposit placed. Money market risk is measured as the accounting value of the deposit, excluding any accrued and unpaid interest or the effect of any impairment.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Lending risk: arises when ING Bank grants a loan to a counterparty, or issues guarantees on behalf of a counterparty. This includes term loans, mortgages, revolving credits, overdrafts, guarantees, letters of
credit, etc. The risk is measured as the accounting value of the financial obligation that the counterparty has to repay to ING Bank, excluding any accrued and unpaid interest, discount/premium amortisations or impairments.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Investment risk: is the credit default and risk rating migration risk that is associated with ING Banks investments in bonds, commercial paper, securitisations, and other similar publicly traded securities.
This can be viewed as the worst-case loss that ING Bank may incur as a result of holding a position in underlying securities whose Issuers credit quality deteriorates or defaults. All investments in the banking book are classified in the
investment risk category. The primary purpose of ING Banks investments in the banking books is for liquidity management.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Settlement risk: is the risk that arises when there is an exchange of value (funds or instruments) for the same value date or different value dates and receipt is not verified or expected until after ING has
given irrevocable instructions to pay or has paid or delivered its side of the trade. The risk is that ING Bank delivers but does not receive delivery from its counterparty. ING manages settlement risk in the same way as other risks including a risk
limit structure per borrower. Due to the short term nature (1 day), ING Bank does not hold provisions or capital for specific settlement risk. Although a relatively low risk, ING increasingly uses DVP (Delivery versus Payment) and FITO (First In
Then Out) payment techniques to reduce settlement risk.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For the reconciliation between credit risk outstanding categories and financial assets we
refer to the section Credit risk management classification as included in Note 1 Accounting policies.



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|ING Group Annual Report on Form 20-F 2016 |  | F-156 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Credit Risk Appetite and Concentration Risk Framework

The credit risk appetite and concentration risk framework enables ING to prevent undesired high levels of credit risk and credit concentrations within various levels of
the ING portfolio. Concentration risk is measured based on the credit risk exposure amount. Credit risk exposure is the total amount of outstanding plus the unused portion of commitments. It can be measured on various levels, such as customer, legal
or economic one obligor group, product, portfolio, customer type, industry, and country. Where applicable a level is broken down from the consolidated ING Bank level to a local branch/unit level.

Credit risk appetite statements boundaries and concentration limits are set and reviewed on an annual basis. The bank-wide credit risk boundaries and concentration
limits are approved by the Risk Committee of the Supervisory Board and GCTP, respectively.



LOGO

Credit risk appetite statements

Credit risk appetite is the maximum level of credit risk ING Bank is willing to accept for growth and value creation. This credit risk appetite is linked to the overall
Bank-wide risk appetite framework. The credit risk appetite is expressed in quantitative and qualitative measures. Having a credit risk appetite achieves:



| |  | Clarity about the credit risks that ING Bank is prepared to assume, target setting and prudent risk management;
|- |  | ---------------------------------------------------------------------------------------------------------------



| |  | Consistent communication to different stakeholders;
|- |  | ---------------------------------------------------



| |  | Guidelines how to align reporting and monitoring tools with the organisational structure and strategy; and
|- |  | ----------------------------------------------------------------------------------------------------------



| |  | Alignment of business strategies and key performance indicators of business units with ING Banks credit risk appetite by means of the MTP.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------

Credit risk appetite is present across different levels within ING Bank, at portfolio level as well as transaction level. The various credit risk appetite components at
portfolio and transaction level together result in the credit risk appetite framework.

Credit risk appetite statements are defined
top-down across the credit risk categories (pre-settlement, money market, lending, investment), and connected to ING Bank high-level risk appetite across all risk types
(solvency, credit, liquidity and funding, market, and non-financial risk). They consist of a set of high-level credit risk metrics: expected loss, economic capital, risk-weighted assets (RWA) and exposure at
default. For each credit risk metric a boundary is set that is cascaded down and monitored on a monthly basis. The adherence to the boundaries and the pro-active approach to manage the portfolio within the
risk appetite boundaries are part of the key performance indicators of the business line managers.

Country risk concentration

Country risk is the risk that arises due to events in a specific country (or group of countries). Country risk is the risk of loss for ING Bank associated with lending, pre-settlement, money market and investment transactions as a result of country risk events. A country risk event can be described as economic, financial and political shocks and transfer or exchange restrictions,
affecting all counterparties in a specific country. The occurrence of a country risk event may cause all counterparties in a country to be unable to ensure timely payments, despite their willingness to meet their contractual debt obligations. As
such, country risk is an additional factor to be taken into account in the credit approval process of individual customers, as the country risk event probability may impact the default probability of individual counterparties.



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| |  | F-157 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







For every country where ING has exposure, a country limit is set. Country limits are reviewed monthly and updated when
needed. The country limit is a function of various factors including INGs risk appetite for the country, amount of capital consumption, GDP of the country, internal rating, and amount of funds entrusted generated. In case the limit utilisation
is above 90%, the respective credit risk manager is expected to take action to bring the utilisation below 90% or to submit to the relevant approval mandate holders a country limit review requesting a higher limit to accommodate the increasing
exposure. In case of countries with elevated levels of geo-political or severe economic cycle risk the monitoring is performed on a more frequent basis with strict pipeline and exposure management to protect
ING Bank from adverse impacts.

Single name and sector concentration

ING
Bank has established a concentration risk framework in order to identify, measure and monitor concentrations at country, portfolio and/or counterparty level. It consists of:



| |  | Single name concentration: losses due to the unexpected default of a single counterparty. These single name concentrations are capped both at individual single name level and aggregated
top-5 single name level. The LGD of a single name concentration is measured against a maximum LGD amount. Large Exposures monitoring and reporting is one of the components of the single name framework.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Sector concentration (systemic risk): substantial increase of the ING Bank risk profile (expressed in risk-weighted assets at risk) due to the joint deterioration of a group of correlated counterparty/transactions,
sensitive to the same external (macro-economic) factor(s) related to their geographic location and exposure class.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Scenarios and stress tests

Stress testing evaluates ING Banks financial stability under severe but plausible stress scenarios and supports in decision-making that assures ING Bank
remains a financially-healthy going concern even after a severe event occurs. In addition to the bank-wide stress test framework as described in the Risk Management - Risk profile section, the credit risk department performs stress tests on a
monthly basis in order to continually assess the portfolio risks and concentrations. These monthly stress tests are consistent with the stress scenario as established in the ING Bank wide credit risk appetite framework. The monthly stress tests are
reviewed in the Risk and Capital Integration team and potential management actions are proposed if necessary.

ING Bank performs periodical stress tests based on a
standardised and pre-determined 1-in-10 year-stress event (i.e. at 90% confidence level and 1 year horizon) which is similar to
the one applied in the solvency risk appetite. Based on this confidence level, a through the cycle rating migration for the entire portfolio is simulated. For this simulated portfolio, provisions, RWA and Economic Capital are recalculated to assess
what the combined impact of such a year would be. The additional CRWA that ING should allocate in such an event is named CRWA-at-Risk.

Next to the periodical pre-determined stress test related to
CRWA-at-Risk, credit risk performs ad-hoc stress tests based on severe but plausible scenarios. These stress tests can be for
internal purposes or at the request of the regulators and are input for future Credit Risk Appetite setting. Stress testing is used as an additional safety net within credit risk. In addition to the Pillar I and Pillar II capital calculations, based
on the results of various stress tests, ING Bank ensures that adequate levels of capital (and liquidity) are available to sustain such severe but plausible scenarios.

Product approvals

Across ING Bank a robust product approval and
review process ensures effective management of risks associated with the introduction of new or modified products. It ensures that sound due diligence is performed by relevant stakeholders to ensure that all relevant risks (credit, operational,
legal, etc.) are adequately mitigated in the Product Approval and Review Process (PARP).

Risk programs

Within ING Bank, risk programs are detailed analyses of defined products and/or industries that identify the major risk drivers and mitigants, the internal business
mandate, and propose the minimum risk (including business) parameters  and potentially the maximum product and/or portfolio limit - to undertake that business. A risk program is always prepared by the front office responsible for the internal
business mandate and requires an approval from an approval authority. Risk programs may carry various names and/or may have geographical and/or business limitations (e.g. local vs global).

Reference benchmarks

A reference benchmark is the maximum appetite
for credit risk per legal one obligor group. It is expressed as a (benchmark) exposure at the concentration risk level, which corresponds to a (maximum) internal capital consumption for credit risk. It is used as a reference amount in the credit
approval process and can be waived on the basis of proper arguments.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-158 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Credit approval process

The credit approval process ensures that individual transactions are assessed on a
name-by-name basis. For each type of counterparty (corporates, banks/financial institutions, structured products clients) there is a dedicated process with credit risk
managers specialised along the business lines of ING Bank. The credit approval process is supported by a risk rating system and exposure monitoring system. Ratings are used to indicate a counterpartys creditworthiness translated into a
probability of default and is used as input to determine the maximum risk appetite that ING Bank has for a given type of counterparty (reference benchmark). The determination of the delegated authority (the amount that can be approved at various
levels of the organisation) is a function of the risk rating of the client and INGs credit risk exposure on the client.

Given the nature of the retail
business, roles and responsibilities of the local credit risk policy are delegated to the local retail credit risk management. However, the global head retail risk needs to be informed on all local retail risk policies so as to monitor that the
local policies do not conflict with any C&TR policies. This framework serves to ensure more global alignment while preserving existing empowerment of local units. As such, approval authorities differ depending on the materiality of the deviation
between the local policy and the global policy.

Environmental and Social Risk Framework

ING Bank makes a positive contribution to global economic growth and more sustainable development by promoting responsible lending and investment practices. The
environmental and social risk (ESR) policy framework incorporates assessment tools that are used in INGs mainstream processes and systems. It is therefore fully integrated into regular client and transaction reviews.

The ESR policy framework is reviewed every three years on the basis of significant changes identified in the sectors that are more vulnerable to environmental and
social risks and impacts. In addition, environmental and social risks for all lending transactions are reviewed on a yearly basis following annual credit reviews. ESR transactions where funds will be used for asset based finance may require enhanced
ESR due diligence e.g. application of the Equator Principles. Such enhanced ESR evaluation is also required for any high-risk transaction, such as those that impact indigenous people etc.

The snapshot of INGs ESR Framework is as follows:



LOGO



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| |  | F-159 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







The ESR policy framework is fully embedded in ING mainstream approval processes and requires involvement of the
following areas globally:

Client Assessment:



| |  | Customer Domain Units (CDU): verify compliance with the applicable ESR policy. CDUs are responsible to assure that information in the Client ESR Assessment has been duly completed.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Transaction Assessment:



| |  | Front Office: departments that originate transactions and have direct contact with the client or project sponsors;
|- |  | ------------------------------------------------------------------------------------------------------------------



| |  | Risk Management: departments that provide control over front office activities and generally sign off on the environmental and social impacts for Low Risk or Medium Risk transactions;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Environmental and social risk department within risk management fully dedicated to assessing environmental and social impacts associated with High Risk transactions. Negative advice from the ESR department
can only be waived by INGs highest credit committee or the Managing Board Banking (MBB). In practice such waivers are very exceptional.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ESR
Policy Development and Governance:



| |  | MBB/Global Credit Committee: Ultimate approval authority for approving new and updated ESR policies.
|- |  | ----------------------------------------------------------------------------------------------------

As the risk
assessment processes are decentralized each front-office team must be highly familiar with INGs environmental and social framework. Hence, ING makes significant investment in internal training programs to help CDUs, front office and risk
management staff in assessing the environmental and social risks. In 2016, 545 colleagues have been specifically trained on the ESR policy framework worldwide.

Credit risk capital and measurement

Credit risk capital

Regulatory capital is a law based prudent measure defined by regulators and serves as the minimum amount of common equity Tier-1,
additional Tier-1 and Tier-2 capital required to absorb unexpected losses. Regulatory capital is the minimum amount of capital (based on 99.90% confidence level) that
ING Bank must hold from a regulatory perspective as a cushion to be able to survive large unexpected losses.

RWA comparison

Comparison of RWA and risk weights across institutions is inherently challenging. Differences in RWA among banks have been classified by the Bank for International
Settlements (BIS) in 3 categories:



|1. | Risk based drivers that stem from the differences in underlying risk at the exposure/portfolio level and in business models/ strategies including asset class mix;
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. | Practice-based drivers including approaches to risk management and risk measurement; and
|-- | ----------------------------------------------------------------------------------------



|3. | Regulatory environment such as supervisory practices, implementing laws and regulations including national discretion and accounting standards.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------

Risk based drivers

ING Banks portfolio is dominated by secured lending
especially in the areas of residential mortgages, leasing and commercial real estate. Secured lending tends to have a much lower LGD, given the collateral involved, which is a key driver of RWA calculation. Another important element of the ING
business model is the focus on retail exposures collateralised by residential property. INGs retail portfolio is mainly comprised of residential mortgages. The regulatory formula for this exposure class tends to result in lower RWA, all other
factors being equal.

Practice based drivers

ING Bank has a conservative
approach to troubled exposures. Non-performing exposures are recognized early based on unlikely to pay triggers. ING typically classifies default based on a borrower rating and not a facility rating which
means that a customer will only have one PD (probability of default) regardless of the type(s) of transactions done with ING Bank. As a consequence, if one facility is in default, usually all facilities of the client are in default. Non-performing clients which were granted forbearance measures need to stay non-performing for a minimum of one year starting from the moment they are classified as forborne.
Eligibility for a migration back to performing is possible only after this probation period of one year.

Regulatory environment

ING Banks primary supervising entity is the ECB, who is supported by many host supervisors. The ECB supervises adherence to the regulatory rules: the regulatory
framework defined in CRR/CRDIV, European Bank Authority (EBA) standards and ECB guidance. The ECB requires all significant changes in internal models (PD, LGD and EAD) and policies to be reviewed and approved by the ECB.

Comparing capital levels across banks is a challenging exercise because of different risk profiles, differences in risk based drivers, practice based drivers and
regulatory environment (e.g. advanced internal rating based approach or the standardised approach). These factors have a substantial impact on the regulatory capital/RWA of a financial institution. ING Bank continues to work with industry groups and
strives to adhere to the latest BCBS and EBA recommendations to improve the transparent reporting of our capital calculations.



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|ING Group Annual Report on Form 20-F 2016 |  | F-160 |  | 



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Notes to the Consolidated financial statements - continued







Economic capital

Economic
capital reflects ING Banks own view on credit risk, which allows it to be used in decision making processes at transaction level, counterparty level and (sub) portfolio levels. Credit risk and transfer risk capital are calculated on all
portfolios which contain credit or transfer risk, including investment portfolios. Economic capital is the minimum amount of capital required to cover unexpected losses within a 99.95% confidence level and a 12 months time horizon. It is used
throughout ING Bank in the decision making process (mainly wholesale banking), in risk adjusted counterparty and portfolio profitability measurement tools (wholesale and retail banking), in investment and divestment decisions, in the country risk
framework and in concentration risk management such as risk appetite statements (RAS), single name concentration and the systemic risk reports (sector concentration report).

An important characteristic of the credit risk infrastructure and framework is that models are built for several purposes, including economic capital, regulatory
capital and loan loss provision. These rating models are used throughout the ING Bank organisation which is compliant with the Basel Use Test requirement and ensures active feedback on the risk parameters by business units.

Economic capital is calculated using the economic values of rating models (PD, EAD and LGD). In line with regulatory requirements,
so-called significant changes to these rating models are communicated to the regulator for approval. Significant changes depend on the impact on credit RWA (Pillar I) or on the significance (size)
of the model for the ING Bank portfolio.

Credit risk measurement

There
are two ways to measure credit risk within ING Banks portfolio, depending on whether the exposure is booked under an ING office which is permitted by the ECB to use the advanced internal rating based (AIRB) approach, or if it falls under the
standardised approach (SA).

Standardised approach

The
standardised approach applies a fixed risk weight to each asset as dictated by the CRR, and is based on the exposure class to which the exposure is assigned. As such, the Standardised Approach is the least sophisticated of the regulatory capital
methodologies and is not as sensitive as the risk-based approach. Where external rating agency ratings are available, they may be used as a substitute to using the fixed risk weightings assigned by the Financial Supervisory Authorities. Because the
underlying obligors are relatively small for exposures treated under SA, the underlying obligors tend not to have external ratings.

Advanced internal rating
based approach

There are five main elements that drive the determination of risk-weighted assets under the AIRB approach.



| |  | Probability of Default (PD): The first is the counterpartys probability of default, which measures a counterpartys creditworthiness in terms of likelihood to go into default. It attempts to measure
the senior, unsecured standalone creditworthiness of an organisation without consideration of structural elements of the underlying transactions, such as collateral, pricing, or maturity. Each borrower has a rating which translates into a specific
PD.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Exposure at Default (EAD): The second element is the counterpartys exposure at default. EAD models are intended to estimate the outstanding amount or obligation at the moment of default in the future. Since
the fact that a counterparty will go into default is not known, and the level of outstanding that may occur on that date is also not known, ING Bank uses a combination of statistical and hybrid models to estimate the EAD. With the exception of
guarantees and letters of credit, the EAD is always equal to or higher than the associated credit risk outstanding, under the assumption that counterparties tend to absorb liquidity from available credit resources before financial problems become
apparent to the counterpartys creditors. The EAD is largely a function of the type of credit facility (revolving, overdraft, term) offered to the borrower.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Loss Given Default (LGD): The third element is the loss given default. LGD models are intended to estimate the amount ING Bank would lose from liquidating collateral pledged in association with a given loan or
financial obligation, or alternatively, from liquidating the company as a whole as part of a workout process. LGD models are based on cover types, estimated recovery rates given orderly liquidation, and (in)direct cost of liquidation.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Maturity (M): The fourth element is the time to the maturity of the underlying financial obligation. Regulatory requirements (CRR/CRDIV) floor the maturity element at one year and cap it at five years.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Exposure Class:The fifth element is the exposure class (a regulatory prescribed grouping of a common obligor type or product type) which is a driver for the correlation factor. To calculate risk-weighted assets
the default correlation between a transaction and all other transactions in the portfolio is taken into account. The correlation factor determines which portion of the standalone risk of a transaction is retained when the transaction is included in
the portfolio and the portfolio diversification benefits are taken into consideration.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  | F-161 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







The expected loss (EL) provides a measure of the value of the credit losses that ING Bank may reasonably expect to
incur on its portfolio. In its basic form, the expected loss can be represented as:

EL = PD * EAD * LGD

Securitisations

ING Bank has implemented the AIRB approach for credit
risk. As a consequence, ING Bank uses the rating based approach (RBA) for investments in tranches of asset-backed securities (ABS) and mortgage-backed securities (MBS) which have been rated by external rating agencies. Rating agencies which are used
by ING Bank under the RBA include: Standard & Poors, Fitch and Moodys.

Under the RBA, the RWA are determined by multiplying the amount of the
exposure by the appropriate regulatory risk weights, which depend on:



| |  | The external rating or an available inferred rating;
|- |  | ----------------------------------------------------



| |  | The seniority of the position; and
|- |  | ----------------------------------



| |  | The granularity of the position.
|- |  | --------------------------------

ING Bank uses the internal assessment approach for the support facilities it provides
to asset backed commercial paper (ABCP) conduit Mont Blanc Capital Corp., based on externally published rating agency methodologies.

Credit risk models

Within ING Bank internal Basel compliant models are used to determine the PD, EAD and LGD for regulatory and economic capital. Bank wide, ING Bank has implemented over
80 models, including various sub models that may be applicable for a specific portfolio. There are two main types of modelling which form the foundation of these PD, EAD and LGD models used throughout the Bank:



| |  | Statistical modelsare created where a large set of default or detailed loss data is available. They are characterised by a sufficient number of data points that facilitate meaningful statistical estimation of
the model parameters. The model parameters are estimated with statistical techniques based on the data set available;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Hybrid modelscontain characteristics of statistical models combined with knowledge and experience of experts from both risk management and front office staff and literature from rating agencies, supervisors and
academics. These models are especially appropriate for Low Default Portfolios, where limited historical defaults exist.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Next to the model
choice, the definition of default is an important starting point for model building. ING Bank uses a framework that integrates elements of the regulatory definition of Default and the loan loss provisioning indicators under IAS 39. The
rationale is that several indicators are very close to the indications of an obligors unlikeliness to pay under European regulation (CRR/CRDIV) and similar regulations. Integration of both frameworks further enhances ING
Banks compliance with the CRR/CRDIV use test. Key differences between the parameters used for loan loss provisioning and regulatory capital calculations are that regulatory capital parameters are typically through the cycle while
loan loss parameters are more point in time. Additionally, the LGD for regulatory capital calculations is based on a down-turn LGD and a Loss Emergence Period is applied on the 1 year Default Probability to obtain Incurred losses.

Pre-settlement measurement models

For regulatory capital the pre-settlement (PS) exposure is calculated using a marked to market (MtM) plus regulatory-based add-on. Depending on the location and relevant system capabilities, for internal capital purposes ING Bank uses one of the below mentioned methodologies to calculate its PS exposures:



| |  | MtM plus model based add-on approach: In this approach, the PS risk is calculated as the sum of the MtM of the trade and a model-based
add-on. The MtM fluctuates through the life of the contract. The model-based add-on is product-specific, and takes into account the remaining time to maturity, profiling
per time-buckets etc. Add-ons are updated with a frequency that takes into account major market changes. This methodology is used for pre-deal exposure assessment of all
ING Bank financial markets products. Furthermore, it is used for post-deal risk calculations in the case of financial markets portfolios that do not justify the computational efforts and costs associated with implementation of a Scenario Simulation
approach; and
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Scenario Simulation approach (Monte Carlo approach): Scenario Simulation approach is the most complex of the methods for PS risk calculations. This approach takes into account daily market conditions, including
correlations between the risk factors and portfolio benefits. This Monte Carlo approach is currently used in ING Bank for the largest volume of derivative products such as FX and interest rate derivatives.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ING recognises that the above approaches are insufficiently accurate for certain trading products such as highly structured or exotic derivative transactions. For the
assessment of risk exposures of such complex products a bespoke calculation is made.



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|ING Group Annual Report on Form 20-F 2016 |  | F-162 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







The figure below provides a high level summary of the application of model outcomes (PD, EAD and LGD).



LOGO

Credit risk model governance

All
PD, EAD and LGD models are built according to ING Banks internal credit risk modelling methodology standards and model life cycle. After thorough review of the documentation by the Model Development Committee (MDC) and Model Validation
(MV), the Credit & Trading Risk Committee (CTRC) approves the models. For certain local models, the approval authority is delegated by the CTRC to the MDC. Each model has both a credit risk and a front office
co-sponsor. Both the MDC and the CTRC have participation from credit risk officers as well as the front office to ensure maximum acceptance by the organisation. The capital impact from the implementation of
approved models is reported to the ECB in a quarterly report. In addition, MV validates each model on an annual basis. During such periodical validation the model performance is analysed via amongst others back-testing and performance assessment. A
five-grade colour footprint is assigned to each model during this periodical validation. If a model is considered insufficiently robust or if the back-testing indicates insufficient performance, then the model is
re-calibrated or re-developed.



LOGO

Credit risk rating process

In
principle all risk ratings are based on a Risk Rating (PD) Model that complies with the minimum requirements detailed in the CRDIV, the ECB Supervisory Rules and EBA guidelines. This concerns all counterparty types and segments, including countries.

ING Banks PD rating models are based on a 1-22 scale (1=highest rating; 22=lowest rating) referred to as the
Master scale, which roughly corresponds to the same rating grades that are assigned by external rating agencies, such as Standard & Poors, Moodys and Fitch. For example, an ING Bank rating of 1 corresponds to an
S&P/Fitch rating of AAA and a Moodys rating of Aaa; an ING Bank rating of 2 corresponds to an S&P/Fitch rating of AA+ and a Moodys rating of Aa1, and so on.

The 22 grades are composed of the following categories:



| |  | Investment grade (Risk Rating 1-10);
|- |  | ------------------------------------



| |  | Non-investment grade (Risk Rating 11-17);
|- |  | -----------------------------------------



| |  | Sub-standard (Risk Rating 18-19); and
|- |  | -------------------------------------



| |  | Non-performing (Risk Rating 20-22).
|- |  | -----------------------------------

The
three first categories (1-19) are risk ratings for performing loans. They are calculated in ING Bank IT systems with internally developed models based on data either manually or automatically fed. Under
certain conditions, the outcome of a manually fed model can be challenged through a clearly defined rating appeal process. Risk ratings for non-performing individually significant loans (20-22) are set by the global or regional restructuring. For securitisation portfolios, the external ratings of the tranche in which ING Bank has invested are leading.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-163 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Risk ratings assigned to counterparties are regularly, at least annually, reviewed, and the performance of the
underlying models regularly monitored. Over 95% of ING Banks credit risks have been rated using one of the in-house developed PD rating models. Within the AIRB Portfolio, the level of Regulatory
compliant ratings exceeds 99% coverage by exposure. Some of these models are global in nature, such as models for Large Corporates, Commercial Banks, Insurance Companies, Central Governments, Local Governments, Funds, Fund Managers, Project Finance
and Leveraged Companies. While other models are more regional or country specific, such as PD models for Small Medium Enterprise (SME) companies in Central Europe, the Netherlands, Belgium, Luxembourg, as well as residential mortgage and consumer
loan models in the various retail markets.

Rating Models for retail counterparties are predominantly statistically driven and automated, such that ratings can be
updated on a monthly or bi-monthly basis. Models for SME companies, and larger corporates, institutions and banks are manually updated, and are individually monitored on at least an annual basis.

Exposure classes

The BCBS (Basel Committee) has developed the concept of
Exposure Classes which has been transposed into CRR/CRDIV. These are essentially groupings of credit risks associated with a common counterparty type, product type and/or cover type. For the AIRB Approach, most of the exposure classes
have subcategories. ING Bank has applied the following definitions to determine Exposure Classes:



| |  | Sovereignsinclude Sovereign Government entities, Central Banks and recognised Local / Regional Authorities as well as Supranational Organisations;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Institutionsinclude Commercial Banks, non-Bank Financial Institutions, such as Funds and Fund Managers, and Insurance Companies, as well as local and regional government
entities not classified as governments;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Corporatesincludes all legal entities, that are not considered to be Governments, Institutions or Retail Other;
|- |  | ---------------------------------------------------------------------------------------------------------------



| |  | Retailincludes the following classes:
|- |  | -------------------------------------



| |  |  | Retail  Secured by immovable property non-SME(hereafter Residential Mortgages) includes all retail loans which are covered by residential properties
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Retail  Secured by immovable property SME(included in tables with Other Retail) includes all retail loans which are covered by commercial properties.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other Retailincludes all other credit obligations related to Retail SMEs (such as partnerships and one-man businesses) and private individuals (such as consumer loans, car
loans and credit cards). Under these exposure class definitions, it is possible for a private individual to be included under both residential mortgages and retail other.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Securitisationsinclude securitisation programs for which ING Bank acts as an investor, sponsor or originator.
|- |  | -------------------------------------------------------------------------------------------------------------

Models used for exposure classes

ING Bank has developed PD, EAD and LGD
models for Wholesale Banking and Retail Banking portfolios. PD, EAD and LGD models are subject to CTRC (or in some delegated cases: MDC) approval and changes which significantly impact the results require approval from the regulator before
implementation. By nature, the above described exposure classes have different, specific characteristics. To capture these specific characteristics and to have suitable valuations and analyses in place, credit risk department is continuously
updating and developing models within each exposure class. In total, the credit risk department makes use of over 90 different internal models.

ING
distinguishes four types of post default scenarios:



| |  |  | No Loss  Cure: the borrower pays all overdue amounts (to the extent ING Bank is legally entitled to) and the asset becomes non- defaulted again. ING Bank does not
experience any loss in the process. The relationship is not terminated and the borrower returns back to performing;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | No Loss  Exit without loss: ING Bank (or the borrower) liquidates collaterals and calls guarantees in order to recover the exposure or the borrower fully repays. Thereafter the relationship is terminated.
ING Bank does not experience any loss in the process;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Loss  Exit with loss: ING Bank (or the borrower) liquidates collaterals and calls guarantees in order to recover the exposure. Thereafter the relationship is terminated. ING Bank suffers loss in the
process; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Loss  Distressed Restructuring: ING Bank restructures the loan agreement so as to recover the exposure after allowing some discount. The relationship with the borrower continues after the restructuring. ING
Bank suffers (some) loss in the process.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Changes in 2016 to credit risk models

Model changes were in 2016 partly driven by regulatory guidance and thereby resulted in a EUR 13 billion increase of RWA. This increase resulted from several
changes in different portfolios. An RWA add-on for the SME portfolios in the Netherlands and Belgium was implemented through LGD model updates which increased RWA by EUR 6.1 billion. Further, RWA add-ons were implemented on Belgian mortgages and Small Business Finance (SBF) portfolios through model updates, which increased RWA by EUR 1.9 billion. The RWA impact of all these add-ons were reported as an ONCOA item in 2015. For the Project Finance and ING Direct Spain mortgages LGD models risk-weight multipliers were added, increasing RWA by EUR 4.0 billion and EUR 0.7 billion,
respectively. Next to these model updates, the model approach for the Dutch healthcare portfolio changed from AIRB to SA which increased RWA by EUR 1.0 billion.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-164 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Credit risk tools

Credit risk policies

ING Banks credit risk policies provide for
generic rules and roles and responsibilities that always prevail within the organisation. While allowance is given for discretionary variation to comply with local regulations, such variations must always comply with the content of a global ING Bank
wide credit risk policy and approved by (local) credit risk. All credit risk policies are created according to the policy development standards and reviewed on a regular basis. Each policy has a credit risk sponsor and is created in close
consultation with the various stakeholders within credit risk, front office and where applicable other corporate departments. All policies require approval by the Credit & Trading Risk Committee (CTRC) and where applicable by the Global
Credit & Trading Policy Committee (GCTP).

Credit risk systems and data standards

The acceptance, maintenance, measurement, management and reporting of credit risks at all levels of ING Bank is accomplished through promotion of single, common credit
risk data standards and the integration into common credit risk tools that support standardised and transparent credit risk practices. ING has chosen to develop the credit risk tools centrally. The philosophy is to
re-use the same data for all purposes, in an integrated approach that overlaps the three key areas of ING Bank policy, the regulatory environment in which we operate, and the daily processes which are active
throughout the group. Overlapping these three areas is the essential requirement to ensure data quality standards and discipline remains high.

The customer-centric
data model conforms strongly to the three core business needs of ING Bank:



| |  | To transact efficiently with our counterparties;
|- |  | ------------------------------------------------



| |  | To be compliant with our internal and external obligations; and
|- |  | ---------------------------------------------------------------



| |  | To monitor the risks we undertake.
|- |  | ----------------------------------

The customer-centric approach ensures that ING Bank can react quickly to changing
regulations, business needs and best practices in our dealings with our clients and prospects.

Data Governance and Data Quality

ING Bank recognises that information and the underlying data are assets that are key (together with people, processes and IT systems) to become the next generation
digital bank. Cooperation and mutual agreement on global data management roles and responsibilities in ING are critical success factors to meet this objective. As such ING Bank has embraced multiple data management and governance initiatives
triggered by internal and external stakeholders (e.g. Principles for Effective Risk Data Aggregation and Risk Reporting). In the Credit Risk and Risk Services departments, these principles are embedded into the credit risk data management and
enshrined within the Data Governance framework. The framework outlines roles and responsibilities relevant for the credit risk lifecycle and data quality assurance.

Credit risk data lifecycle

The credit risk data governance framework used by
ING is based on the credit risk data lifecycle. The governance related to the data delivery and exchange is described in various data agreements between data users and data suppliers.

The scope of credit risk data is the data set determined and assigned for the Banks external and internal reporting requirements and credit risk modelling
requirements. Principally, data can be categorised into one of the two following types:



| |  | Atomic data: the lowest level of detail and provides the base data for all data transformations. The guiding principles are that each data element is only input once, and have a clear data owner and
home system or database which is leading throughout all uses of that data element. From the data home, the data may then be redistributed to other systems or databases that may require that data in an automated Straight
through Processing (STP) method. Depending on the need, the data may be transferred in real time, near real time, daily, weekly or monthly.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Derived data: data derived from other data elements (atomic or derived) as a result of data transformations such as credit risk models, calculations and aggregation. Derived data is hosted in the central credit
risk system (Vortex).
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

A key component of the credit risk data is that this data is continuously used throughout all the stages of the credit risk
management cycle. By using and re-using data, there is, a continuous incentive for all data providers and users to assure up to standard data quality with regards to data delivery and data usage.

The credit risk data lifecycle describes the interlinked stages of the lifecycle from data definition to data usage as shown in the figure below:



LOGO



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-165 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







| |  | Data Definitions: this process step ensures that atomic and derived credit risk data terms have a single definition and definition owner throughout the organization. It also ensures that defined data is fit for
the purpose it will be used for.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Capture:ensures that atomic data is captured by business units and is available for exchange according to pre-agreed standards and specifications.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Exchange:ensures data exchange is executed as agreed between data owner and data user.
|- |  | --------------------------------------------------------------------------------------



| |  | Processing& Calculation:processes delivered atomic data and uses it to calculate credit risk derived data. The outcome of this stage is used as input for credit risk data aggregation in
for example risk reporting.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Data Usage:ensures data aggregation and usage fit for multiple purposes for example modelling, regulatory and statutory reporting. Ensures that data usage or distribution is according to agreed purpose and data
confidentiality, protection, security and retention rules.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Data Quality Assurance:establishes data quality management with the primary focus how credit risk data quality is managed throughout the credit risk data lifecycle. It covers the data quality cycle, data quality
criteria and relevant activities through the stages.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The data quality cycle consists of four stages: define, implement, monitor and
improve. During the data definitions step, data quality rules are determined. Having set the definitions, local data quality rules are implemented in the source systems, and both successively and simultaneously, data quality rules are implemented in
the central credit risk system. The next stage consists of data validations, monitoring and control activities performed early in the data exchange and after data processing and calculations stage. The last stage is the continuous improvement of
data quality which can be split into two categories:



| |  |  | One off issues and re-occurring issues that are identified, prioritised and subject to solution;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | The periodical review of the data quality rules and improvements based on lessons learned from solving issues, audits and best practices.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------

After the last stage, the data quality cycle resumes from the start, ultimately leading to up to standard credit risk data quality.

Credit risk portfolio

ING Banks credit exposure is mainly related to
traditional lending to individuals and businesses followed by investments in bonds and securitised assets. Loans to individuals are mainly mortgage loans secured by residential property. Loans (including guarantees issued) to businesses are often
collateralised, but can be unsecured based on internal analysis of the borrowers creditworthiness. Bonds in the investment portfolio are generally unsecured. Securitised assets such as mortgage backed securities and asset backed securities are
secured by the pro rata portion of the underlying diversified pool of assets (commercial or residential mortgages, car loans and/or other assets) held by the securitys issuer. The last major credit risk source involves pre-settlement exposures which arise from trading activities, including derivatives, repurchase transactions and securities lending/borrowing and foreign exchange transactions.

The portfolio breakdown of ING Bank per exposure class and per risk category, based on regulatory Exposure at Default (READ) is shown below. The figures shown in the
Credit Risk section are including loans to Group, unless stated otherwise:



|                                                                                    |  |         |      |   |            |  |     |              |  |  |                |   |  |       |     |   |             |  |     |      |  |  |     |   |  |      |     |   |    |  |     |           |  |  |      |   |  |  |     |   |  |  |       |  
|----------------------------------------------------------------------------------- |  | ------- | ---- | - | ---------- |  | --- | ------------ |  |  | -------------- | - |  | ----- | --- | - | ----------- |  | --- | ---- |  |  | --- | - |  | ---- | --- | - | -- |  | --- | --------- |  |  | ---- | - |  |  | --- | - |  |  | ----- | -
|Exposure classes ING Bank portfolio per risk category, as % of total regulatory EAD | 
|                                                                                    |  | Lending |      |   | Investment |  |     | Money Market |  |  | Pre-Settlement |   |  | Total |     |   | Total (ALL) | 
|2016                                                                                |  | AIRB    |      |   | SA         |  |     | AIRB         |  |  | SA             |   |  | AIRB  |     |   | SA          |  |     | AIRB |  |  | SA  |   |  | AIRB |     |   | SA |  |     | AIRB + SA | 
|Sovereigns                                                                          |  |         | 2.2  | % |            |  | 0.0 | %            |  |  | 7.9            | % |  |       | 0.1 | % |             |  | 1.7 | %    |  |  | 0.2 | % |  |      | 0.2 | % |    |  | 0.0 | %         |  |  | 12.0 | % |  |  | 0.3 | % |  |  | 12.3  | %
|Institutions                                                                        |  |         | 3.1  | % |            |  | 0.3 | %            |  |  | 1.8            | % |  |       | 0.0 | % |             |  | 0.4 | %    |  |  | 0.0 | % |  |      | 4.9 | % |    |  | 0.1 | %         |  |  | 10.2 | % |  |  | 0.3 | % |  |  | 10.5  | %
|Corporate                                                                           |  |         | 32.8 | % |            |  | 1.4 | %            |  |  | 0.4            | % |  |       | 0.0 | % |             |  | 0.1 | %    |  |  | 0.0 | % |  |      | 1.7 | % |    |  | 0.0 | %         |  |  | 35.0 | % |  |  | 1.5 | % |  |  | 36.5  | %
|Residential mortgages                                                               |  |         | 33.4 | % |            |  | 0.9 | %            |  |  | 0.0            | % |  |       | 0.0 | % |             |  | 0.0 | %    |  |  | 0.0 | % |  |      | 0.0 | % |    |  | 0.0 | %         |  |  | 33.4 | % |  |  | 0.9 | % |  |  | 34.3  | %
|Other retail                                                                        |  |         | 4.2  | % |            |  | 1.4 | %            |  |  | 0.0            | % |  |       | 0.0 | % |             |  | 0.0 | %    |  |  | 0.0 | % |  |      | 0.0 | % |    |  | 0.0 | %         |  |  | 4.2  | % |  |  | 1.4 | % |  |  | 5.6   | %
|Securitisation                                                                      |  |         | 0.1  | % |            |  | 0.0 | %            |  |  | 0.6            | % |  |       | 0.0 | % |             |  | 0.0 | %    |  |  | 0.0 | % |  |      | 0.1 | % |    |  | 0.0 | %         |  |  | 0.8  | % |  |  | 0.0 | % |  |  | 0.8   | %
|                                                                                    |  |         |      |   |            |  |     |              |  |  |                |   |  |       |     |   |             |  |     |      |  |  |     |   |  |      |     |   |    |  |     |           |  |  |      |   |  |  |     |   |  |  |       |  
|Total (ALL)                                                                         |  |         | 75.8 | % |            |  | 4.0 | %            |  |  | 10.8           | % |  |       | 0.1 | % |             |  | 2.1 | %    |  |  | 0.2 | % |  |      | 6.9 | % |    |  | 0.1 | %         |  |  | 95.6 | % |  |  | 4.4 | % |  |  | 100.0 | %
|                                                                                    |  |         |      |   |            |  |     |              |  |  |                |   |  |       |     |   |             |  |     |      |  |  |     |   |  |      |     |   |    |  |     |           |  |  |      |   |  |  |     |   |  |  |       |  



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-166 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                                    |  |         |      |   |            |  |     |              |  |  |                |   |  |       |     |   |             |  |     |      |  |  |     |   |  |      |     |   |    |  |     |           |  |  |      |   |  |  |     |   |  |  |       |  
|----------------------------------------------------------------------------------- |  | ------- | ---- | - | ---------- |  | --- | ------------ |  |  | -------------- | - |  | ----- | --- | - | ----------- |  | --- | ---- |  |  | --- | - |  | ---- | --- | - | -- |  | --- | --------- |  |  | ---- | - |  |  | --- | - |  |  | ----- | -
|Exposure classes ING Bank portfolio per risk category, as % of total regulatory EAD | 
|                                                                                    |  | Lending |      |   | Investment |  |     | Money Market |  |  | Pre-Settlement |   |  | Total |     |   | Total (ALL) | 
|2015                                                                                |  | AIRB    |      |   | SA         |  |     | AIRB         |  |  | SA             |   |  | AIRB  |     |   | SA          |  |     | AIRB |  |  | SA  |   |  | AIRB |     |   | SA |  |     | AIRB + SA | 
|Sovereigns                                                                          |  |         | 3.5  | % |            |  | 0.0 | %            |  |  | 8.3            | % |  |       | 0.1 | % |             |  | 1.6 | %    |  |  | 0.2 | % |  |      | 0.3 | % |    |  | 0.0 | %         |  |  | 13.7 | % |  |  | 0.3 | % |  |  | 14.1  | %
|Institutions                                                                        |  |         | 4.1  | % |            |  | 0.4 | %            |  |  | 2.2            | % |  |       | 0.0 | % |             |  | 0.3 | %    |  |  | 0.0 | % |  |      | 5.6 | % |    |  | 0.1 | %         |  |  | 12.3 | % |  |  | 0.5 | % |  |  | 12.8  | %
|Corporate                                                                           |  |         | 29.5 | % |            |  | 1.1 | %            |  |  | 0.2            | % |  |       | 0.0 | % |             |  | 0.1 | %    |  |  | 0.0 | % |  |      | 1.3 | % |    |  | 0.0 | %         |  |  | 31.1 | % |  |  | 1.1 | % |  |  | 32.2  | %
|Residential mortgages                                                               |  |         | 33.3 | % |            |  | 0.8 | %            |  |  | 0.0            | % |  |       | 0.0 | % |             |  | 0.0 | %    |  |  | 0.0 | % |  |      | 0.0 | % |    |  | 0.0 | %         |  |  | 33.3 | % |  |  | 0.8 | % |  |  | 34.1  | %
|Other retail                                                                        |  |         | 4.5  | % |            |  | 1.3 | %            |  |  | 0.0            | % |  |       | 0.0 | % |             |  | 0.0 | %    |  |  | 0.0 | % |  |      | 0.0 | % |    |  | 0.0 | %         |  |  | 4.5  | % |  |  | 1.3 | % |  |  | 5.8   | %
|Securitisation                                                                      |  |         | 0.2  | % |            |  | 0.0 | %            |  |  | 0.8            | % |  |       | 0.0 | % |             |  | 0.0 | %    |  |  | 0.0 | % |  |      | 0.1 | % |    |  | 0.0 | %         |  |  | 1.0  | % |  |  | 0.0 | % |  |  | 1.0   | %
|                                                                                    |  |         |      |   |            |  |     |              |  |  |                |   |  |       |     |   |             |  |     |      |  |  |     |   |  |      |     |   |    |  |     |           |  |  |      |   |  |  |     |   |  |  |       |  
|Total (ALL)                                                                         |  |         | 75.1 | % |            |  | 3.6 | %            |  |  | 11.5           | % |  |       | 0.1 | % |             |  | 2.0 | %    |  |  | 0.3 | % |  |      | 7.3 | % |    |  | 0.1 | %         |  |  | 95.9 | % |  |  | 4.1 | % |  |  | 100.0 | %
|                                                                                    |  |         |      |   |            |  |     |              |  |  |                |   |  |       |     |   |             |  |     |      |  |  |     |   |  |      |     |   |    |  |     |           |  |  |      |   |  |  |     |   |  |  |       |  

The total ING Bank portfolio size increased by 1.0% to EUR 845 billion in terms of READ, which was driven by volume growth and FX
changes. The increase related to FX changes was driven by the appreciation of the US Dollar and Australian Dollar against the Euro, and partly offset by the depreciation of the British Pound and Turkish Lira.

The total size of the residential mortgage portfolio grew which was mainly driven by Germany, Australia, Spain and Belgium, while the residential mortgage portfolio in
the Netherlands decreased in size. The decrease was driven by the continued transfer of mortgages from WestlandUtrecht (WU) Bank to NN Bank, the run-off of the WU Bank mortgage book and mortgage prepayments.

A concentration increase in the exposure class corporates was mainly observed in the Wholesale Banking business lines: structured finance, corporate &
financial institutions (C&FI) lending, trade finance services and real estate finance. This was driven by the implementation of the EU equivalence rule, which resulted in a shift from exposure class institutions to corporates, and by actual
lending growth in these portfolios. The lower concentration in exposure class institutions was also driven by a decrease in covered bond investments and pre-settlement exposures. TheEU equivalence rule
applies to certain countries outside the EU that have supervisory and regulatory arrangements in place that are at least equivalent to those applied in the EU. Since 2016 the EU equivalence indicator, which determines the exposure class allocation
and correlation, is based on the combination of country and customer type, while before it was only based on the country.

The lower concentration in sovereigns was
caused by decreased deposits at central banks, nostros at the Japanese Central Bank and government bonds. The investment portfolio decreased in proportion as well as in absolute value and was observed in government bonds, covered bonds and
securitisations (RMBS) in Germany, Italy and Spain. Along with fulfilling liquidity requirements the investment portfolio remains a source of supporting assets in Retail Challengers & Growth Markets with exposure primarily to European
central governments and central banks. The shrinking securitisations portfolio within ING Bank comprised of Investor and sponsor securitisations.

Risk rating
buckets per line of business and credit risk types

Risk rating buckets are defined based upon the quality of the exposures in terms of creditworthiness,
varying from investment grade to non-performing loan expressed in S&P, Moodys and Fitch equivalents.



|                                                                                    |  |             |       |                   |      |   |                |      |      |                                    |       |   |                |      |       |                |      |   |       |      |      |   |       |   |      |      |       |   |      |   |       |   |      |   |       |   |      |   |       |   |      |  
|----------------------------------------------------------------------------------- |  | ----------- | ----- | ----------------- | ---- | - | -------------- | ---- | ---- | ---------------------------------- | ----- | - | -------------- | ---- | ----- | -------------- | ---- | - | ----- | ---- | ---- | - | ----- | - | ---- | ---- | ----- | - | ---- | - | ----- | - | ---- | - | ----- | - | ---- | - | ----- | - | ---- | -
|Risk classes ING Bank portfolio per line of business, as % of total outstandings1,2 | 
|                                                                                    |  |             |       | Wholesale Banking |      |   | Retail Benelux |      |      | Retail Challengers &Growth Markets |       |   | Corporate Line |      |       | Total ING Bank |     
|Rating class                                                                        |  | 2016        |       |                   | 2015 |   |                | 2016 |      |                                    | 2015  |   |                | 2016 |       |                | 2015 |   |       | 2016 |      |   | 2015  |   |      | 2016 |       |   | 2015 |  
|1                                                                                   |  | (AAA)       |       |                   | 7.1  | % |                |      | 9.4  | %                                  |       |   | 0.2            | %    |       |                | 0.1  | % |       |      | 7.3  | % |       |   | 7.6  | %    |       |   | 42.7 | % |       |   | 40.2 | % |       |   | 5.5  | % |       |   | 6.5  | %
|2-4                                                                                 |  | (AA)        |       |                   | 11.9 | % |                |      | 10.0 | %                                  |       |   | 5.7            | %    |       |                | 5.3  | % |       |      | 16.1 | % |       |   | 16.9 | %    |       |   | 0.3  | % |       |   | 0.4  | % |       |   | 11.0 | % |       |   | 10.3 | %
|5-7                                                                                 |  | (A)         |       |                   | 18.9 | % |                |      | 22.1 | %                                  |       |   | 4.2            | %    |       |                | 4.4  | % |       |      | 15.0 | % |       |   | 15.5 | %    |       |   | 3.9  | % |       |   | 11.9 | % |       |   | 13.4 | % |       |   | 14.8 | %
|8-10                                                                                |  | (BBB)       |       |                   | 27.0 | % |                |      | 25.1 | %                                  |       |   | 34.5           | %    |       |                | 31.0 | % |       |      | 32.7 | % |       |   | 35.0 | %    |       |   | 7.5  | % |       |   | 6.3  | % |       |   | 30.5 | % |       |   | 29.3 | %
|11-13                                                                               |  | (BB)        |       |                   | 26.5 | % |                |      | 24.6 | %                                  |       |   | 43.2           | %    |       |                | 46.0 | % |       |      | 21.5 | % |       |   | 17.5 | %    |       |   | 42.2 | % |       |   | 38.0 | % |       |   | 30.3 | % |       |   | 29.4 | %
|14-16                                                                               |  | (B)         |       |                   | 5.5  | % |                |      | 5.4  | %                                  |       |   | 7.5            | %    |       |                | 7.7  | % |       |      | 5.6  | % |       |   | 5.8  | %    |       |   | 0.0  | % |       |   | 0.0  | % |       |   | 6.1  | % |       |   | 6.1  | %
|17-22                                                                               |  | (CCC & NPL) |       |                   | 3.0  | % |                |      | 3.4  | %                                  |       |   | 4.7            | %    |       |                | 5.5  | % |       |      | 1.8  | % |       |   | 1.7  | %    |       |   | 3.5  | % |       |   | 3.2  | % |       |   | 3.2  | % |       |   | 3.6  | %
|                                                                                    |  |             |       |                   |      |   |                |      |      |                                    |       |   |                |      |       |                |      |   |       |      |      |   |       |   |      |      |       |   |      |   |       |   |      |   |       |   |      |   |       |   |      |  
|Total                                                                               |  |             | 100.0 | %                 |      |   | 100.0          | %    |      |                                    | 100.0 | % |                |      | 100.0 | %              |      |   | 100.0 | %    |      |   | 100.0 | % |      |      | 100.0 | % |      |   | 100.0 | % |      |   | 100.0 | % |      |   | 100.0 | %
|                                                                                    |  |             |       |                   |      |   |                |      |      |                                    |       |   |                |      |       |                |      |   |       |      |      |   |       |   |      |      |       |   |      |   |       |   |      |   |       |   |      |   |       |   |      |  



|1 | Based on credit risk measurement contained in lending, pre-settlement, money market and investment activities.
|- | --------------------------------------------------------------------------------------------------------------

|2 | Covered bonds are presented on the basis of the external credit rating of the issuer in question. Covered bond issues generally possess a better external credit rating than the issuer standalone, given structural
features of such covered bonds.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The total ING Bank portfolio outstandings amounted to EUR 775 billion at the end of December 2016. The overall
ING Bank exposure increase was concentrated in the BBB and BB rating classes. The risk rating distribution across business lines and credit risk types showed various shifts over the year.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-167 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Decreased central bank deposits and the country rating downgrade of Finland to AA+ were the drivers behind the
decreased proportion of AAA-rated assets in Wholesale Banking and increased investment concentration in rating class AA. Additional concentration in the Wholesale Banking AA rating class was driven by
increased exposures in US government bonds and positive rating migration of one US financial institution which shifted derivatives exposure from rating class A. Next to this, the concentration in the A rating bucket decreased due to lower lending
exposures to the Japanese Central Bank and negative rating migration of one German financial institution to bucket BBB, which mainly impacted Wholesale Banking and Corporate Line.

Concentration in the BBB rating class in Retail Challengers & Growth Markets decreased due to reduced Italian government bond exposures, and the country rating
downgrade of Turkey which shifted concentration to rating class BB across all risk categories. The risk profile for residential mortgages in Retail Benelux improved due to enhanced arrears management, stricter screening rules and forbearance clients
reaching their 1-year minimum default period in the Netherlands. This led to a decreased concentration in the BB and CCC & NPL rating buckets and increased share for the BBB rated category. Additional
decreased concentration in the 17-22 (CCC & NPL) bucket was due to write-offs combined with positive rating migration in the commercial property finance portfolio.



|                                                                                  |  |             |       |         |      |   |            |      |      |              |       |   |                |      |       |                |      |   |       |      |      |   |       |   |      |      |       |   |      |   |       |   |      |   |       |   |      |   |       |   |      |  
|--------------------------------------------------------------------------------- |  | ----------- | ----- | ------- | ---- | - | ---------- | ---- | ---- | ------------ | ----- | - | -------------- | ---- | ----- | -------------- | ---- | - | ----- | ---- | ---- | - | ----- | - | ---- | ---- | ----- | - | ---- | - | ----- | - | ---- | - | ----- | - | ---- | - | ----- | - | ---- | -
|Risk classes ING Bank portfolio per credit risk type, as % of total outstandings1 | 
|                                                                                  |  |             |       | Lending |      |   | Investment |      |      | Money Market |       |   | Pre-settlement |      |       | Total ING Bank |     
|Rating class                                                                      |  | 2016        |       |         | 2015 |   |            | 2016 |      |              | 2015  |   |                | 2016 |       |                | 2015 |   |       | 2016 |      |   | 2015  |   |      | 2016 |       |   | 2015 |  
|1                                                                                 |  | (AAA)       |       |         | 1.9  | % |            |      | 3.0  | %            |       |   | 28.3           | %    |       |                | 27.9 | % |       |      | 14.5 | % |       |   | 13.3 | %    |       |   | 3.4  | % |       |   | 2.4  | % |       |   | 5.5  | % |       |   | 6.5  | %
|2-4                                                                               |  | (AA)        |       |         | 5.2  | % |            |      | 4.9  | %            |       |   | 40.4           | %    |       |                | 36.6 | % |       |      | 50.4 | % |       |   | 50.9 | %    |       |   | 14.8 | % |       |   | 11.4 | % |       |   | 11.0 | % |       |   | 10.3 | %
|5-7                                                                               |  | (A)         |       |         | 10.1 | % |            |      | 11.1 | %            |       |   | 16.9           | %    |       |                | 17.8 | % |       |      | 14.0 | % |       |   | 5.1  | %    |       |   | 47.5 | % |       |   | 52.7 | % |       |   | 13.4 | % |       |   | 14.8 | %
|8-10                                                                              |  | (BBB)       |       |         | 35.3 | % |            |      | 33.1 | %            |       |   | 6.9            | %    |       |                | 10.5 | % |       |      | 4.2  | % |       |   | 24.1 | %    |       |   | 23.3 | % |       |   | 23.8 | % |       |   | 30.5 | % |       |   | 29.3 | %
|11-13                                                                             |  | (BB)        |       |         | 36.0 | % |            |      | 35.6 | %            |       |   | 7.2            | %    |       |                | 6.8  | % |       |      | 15.4 | % |       |   | 6.0  | %    |       |   | 9.1  | % |       |   | 7.8  | % |       |   | 30.3 | % |       |   | 29.4 | %
|14-16                                                                             |  | (B)         |       |         | 7.5  | % |            |      | 7.8  | %            |       |   | 0.2            | %    |       |                | 0.1  | % |       |      | 1.5  | % |       |   | 0.0  | %    |       |   | 1.5  | % |       |   | 1.1  | % |       |   | 6.1  | % |       |   | 6.1  | %
|17-22                                                                             |  | (CCC & NPL) |       |         | 4.0  | % |            |      | 4.5  | %            |       |   | 0.1            | %    |       |                | 0.3  | % |       |      | 0.0  | % |       |   | 0.6  | %    |       |   | 0.4  | % |       |   | 0.8  | % |       |   | 3.2  | % |       |   | 3.6  | %
|                                                                                  |  |             |       |         |      |   |            |      |      |              |       |   |                |      |       |                |      |   |       |      |      |   |       |   |      |      |       |   |      |   |       |   |      |   |       |   |      |   |       |   |      |  
|Total                                                                             |  |             | 100.0 | %       |      |   | 100.0      | %    |      |              | 100.0 | % |                |      | 100.0 | %              |      |   | 100.0 | %    |      |   | 100.0 | % |      |      | 100.0 | % |      |   | 100.0 | % |      |   | 100.0 | % |      |   | 100.0 | %
|                                                                                  |  |             |       |         |      |   |            |      |      |              |       |   |                |      |       |                |      |   |       |      |      |   |       |   |      |      |       |   |      |   |       |   |      |   |       |   |      |   |       |   |      |  



|1 | Based on credit risk measurement contained in lending, pre-settlement, money market and investment activities. The ratings reflect probabilities of default and do not take
collateral into consideration.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-168 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Risk industry concentration

ING Bank uses a common industry classification methodology based on the NAICS system (North American Industry Classification System). This methodology has over 1,500
detailed industry descriptions, which are aggregated into 22 industry classes at the highest level. Certain countries require ING Bank to report locally based on other industry classification methodologies, which are generally derived from the NAICS
classifications presented here. Residential mortgages are generally only extended to private individuals.



|                                                                                        |  |                   |       |   |                |  |       |                                    |  |  |                |   |  |                |       |   |      |  |       |      |  |  |       |   |  |      |       |   |      |  |       |   |  |  |       |   |  |  |       |  
|--------------------------------------------------------------------------------------- |  | ----------------- | ----- | - | -------------- |  | ----- | ---------------------------------- |  |  | -------------- | - |  | -------------- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | - |  | ---- | ----- | - | ---- |  | ----- | - |  |  | ----- | - |  |  | ----- | -
|Risk concentration: ING Bank portfolio per economic sector, as % of total outstandings1 | 
|                                                                                        |  | Wholesale Banking |       |   | Retail Benelux |  |       | Retail Challengers &Growth Markets |  |  | Corporate Line |   |  | Total ING Bank |      
|Industry                                                                                |  | 2016              |       |   | 2015           |  |       | 2016                               |  |  | 2015           |   |  | 2016           |       |   | 2015 |  |       | 2016 |  |  | 2015  |   |  | 2016 |       |   | 2015 | 
|Private Individuals                                                                     |  |                   | 0.0   | % |                |  | 0.1   | %                                  |  |  | 73.4           | % |  |                | 74.0  | % |      |  | 68.8  | %    |  |  | 62.9  | % |  |      | 0.0   | % |      |  | 0.0   | % |  |  | 39.5  | % |  |  | 39.4  | %
|Commercial Banks                                                                        |  |                   | 14.8  | % |                |  | 14.3  | %                                  |  |  | 0.2            | % |  |                | 0.3   | % |      |  | 6.5   | %    |  |  | 7.8   | % |  |      | 56.4  | % |      |  | 54.6  | % |  |  | 8.8   | % |  |  | 8.8   | %
|Natural Resources                                                                       |  |                   | 15.0  | % |                |  | 13.0  | %                                  |  |  | 0.4            | % |  |                | 0.4   | % |      |  | 0.7   | %    |  |  | 0.7   | % |  |      | 0.0   | % |      |  | 0.0   | % |  |  | 6.8   | % |  |  | 5.7   | %
|Central Governments                                                                     |  |                   | 9.9   | % |                |  | 10.5  | %                                  |  |  | 0.9            | % |  |                | 1.2   | % |      |  | 5.6   | %    |  |  | 7.1   | % |  |      | 36.3  | % |      |  | 34.1  | % |  |  | 6.5   | % |  |  | 7.0   | %
|Real Estate                                                                             |  |                   | 10.2  | % |                |  | 10.0  | %                                  |  |  | 4.7            | % |  |                | 4.7   | % |      |  | 0.9   | %    |  |  | 0.8   | % |  |      | 0.0   | % |      |  | 0.0   | % |  |  | 6.0   | % |  |  | 5.8   | %
|Non-Bank Financial Institutions                                                         |  |                   | 10.4  | % |                |  | 11.7  | %                                  |  |  | 0.9            | % |  |                | 0.8   | % |      |  | 3.2   | %    |  |  | 4.3   | % |  |      | 7.3   | % |      |  | 11.3  | % |  |  | 5.7   | % |  |  | 6.4   | %
|Transportation & Logistics                                                              |  |                   | 8.0   | % |                |  | 7.6   | %                                  |  |  | 1.1            | % |  |                | 1.1   | % |      |  | 0.4   | %    |  |  | 0.4   | % |  |      | 0.0   | % |      |  | 0.0   | % |  |  | 3.9   | % |  |  | 3.6   | %
|Lower Public Administration                                                             |  |                   | 1.2   | % |                |  | 0.9   | %                                  |  |  | 2.8            | % |  |                | 2.4   | % |      |  | 5.6   | %    |  |  | 7.0   | % |  |      | 0.0   | % |      |  | 0.0   | % |  |  | 2.8   | % |  |  | 3.0   | %
|Central Banks                                                                           |  |                   | 5.1   | % |                |  | 8.4   | %                                  |  |  | 0.1            | % |  |                | 0.1   | % |      |  | 1.6   | %    |  |  | 1.6   | % |  |      | 0.0   | % |      |  | 0.0   | % |  |  | 2.7   | % |  |  | 4.0   | %
|Services                                                                                |  |                   | 3.2   | % |                |  | 3.1   | %                                  |  |  | 3.6            | % |  |                | 3.6   | % |      |  | 0.6   | %    |  |  | 0.7   | % |  |      | 0.0   | % |      |  | 0.0   | % |  |  | 2.6   | % |  |  | 2.5   | %
|Food, Beverages & Personal Care                                                         |  |                   | 3.7   | % |                |  | 3.8   | %                                  |  |  | 2.1            | % |  |                | 2.1   | % |      |  | 1.3   | %    |  |  | 1.4   | % |  |      | 0.0   | % |      |  | 0.0   | % |  |  | 2.6   | % |  |  | 2.6   | %
|General Industries                                                                      |  |                   | 3.4   | % |                |  | 3.3   | %                                  |  |  | 1.5            | % |  |                | 1.5   | % |      |  | 1.5   | %    |  |  | 1.7   | % |  |      | 0.0   | % |      |  | 0.0   | % |  |  | 2.3   | % |  |  | 2.3   | %
|Chemicals, Health & Pharmaceuticals                                                     |  |                   | 2.4   | % |                |  | 2.0   | %                                  |  |  | 2.8            | % |  |                | 2.8   | % |      |  | 0.7   | %    |  |  | 0.8   | % |  |      | 0.0   | % |      |  | 0.0   | % |  |  | 2.1   | % |  |  | 1.9   | %
|Other                                                                                   |  |                   | 12.7  | % |                |  | 11.3  | %                                  |  |  | 5.5            | % |  |                | 5.0   | % |      |  | 2.6   | %    |  |  | 2.8   | % |  |      | 0.0   | % |      |  | 0.0   | % |  |  | 7.7   | % |  |  | 7.0   | %
|                                                                                        |  |                   |       |   |                |  |       |                                    |  |  |                |   |  |                |       |   |      |  |       |      |  |  |       |   |  |      |       |   |      |  |       |   |  |  |       |   |  |  |       |  
|Total                                                                                   |  |                   | 100.0 | % |                |  | 100.0 | %                                  |  |  | 100.0          | % |  |                | 100.0 | % |      |  | 100.0 | %    |  |  | 100.0 | % |  |      | 100.0 | % |      |  | 100.0 | % |  |  | 100.0 | % |  |  | 100.0 | %
|                                                                                        |  |                   |       |   |                |  |       |                                    |  |  |                |   |  |                |       |   |      |  |       |      |  |  |       |   |  |      |       |   |      |  |       |   |  |  |       |   |  |  |       |  



|1 | Based on the total amount of credit risk in the respective column using ING Banks internal credit risk measurement methodologies. Economic sectors below 2% are not shown separately but grouped in Other.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During 2016, the overall portfolio continued to expand, which caused shifts in the concentration per economic sector. ING Banks main
concentration in Private Individuals was related to mortgage lending. Underlying, a decline in mortgage exposure in Retail Benelux was offset by growth in Retail Challengers & Growth Markets. The Central Banks concentration decreased mainly
due to lower amount of deposits and the Central Governments concentration decreased due to reduced government bond exposures in Wholesale Banking and Retail Challengers & Growth Markets. Concentration in Natural Resources increased due to
growth in structured finance exposure, but also due to the appreciation of the US Dollar. The risk concentration of Non-Bank Financial Institutions declined significantly in Wholesale Banking Belgium and
Netherlands due to decreased exposures in interest rate derivatives, exchange traded equity products, nostros and covered bonds.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-169 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Country risk

The
concentration increase in the portfolio was mainly observed in Germany, Americas, and Australia. The increase in Americas is explained by the continually positive structured finance business momentum. The portfolio growth was further strengthened by
the expanded Australian and German mortgage and structured finance portfolios. The Netherlands showed a significant decrease in the Wholesale Banking portfolio due to lower central bank deposits. The decrease in the Netherlands retail portfolio was
driven by the continued transfer of mortgages from WestlandUtrecht (WU) Bank to NN Bank, the run-off of the WU Bank mortgage book and mortgage prepayments.



|                                                                |  |                   |       |   |                |  |       |                                    |  |  |                |   |  |                |       |   |      |  |       |      |  |  |       |   |  |      |       |   |      |  |       |   |  |  |       |   |  |  |       |  
|--------------------------------------------------------------- |  | ----------------- | ----- | - | -------------- |  | ----- | ---------------------------------- |  |  | -------------- | - |  | -------------- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | - |  | ---- | ----- | - | ---- |  | ----- | - |  |  | ----- | - |  |  | ----- | -
|Country risk exposures: ING Bank portfolio, by geographic area1 | 
|                                                                |  | Wholesale Banking |       |   | Retail Benelux |  |       | Retail Challengers &Growth Markets |  |  | Corporate Line |   |  | Total ING Bank |      
|Region                                                          |  | 2016              |       |   | 2015           |  |       | 2016                               |  |  | 2015           |   |  | 2016           |       |   | 2015 |  |       | 2016 |  |  | 2015  |   |  | 2016 |       |   | 2015 | 
|Netherlands                                                     |  |                   | 14.2  | % |                |  | 16.5  | %                                  |  |  | 65.5           | % |  |                | 67.4  | % |      |  | 0.5   | %    |  |  | 0.5   | % |  |      | 50.6  | % |      |  | 56.5  | % |  |  | 25.7  | % |  |  | 27.6  | %
|Germany                                                         |  |                   | 5.4   | % |                |  | 4.9   | %                                  |  |  | 0.2            | % |  |                | 0.2   | % |      |  | 44.4  | %    |  |  | 43.7  | % |  |      | 0.1   | % |      |  | 4.4   | % |  |  | 13.3  | % |  |  | 13.2  | %
|Belgium                                                         |  |                   | 6.2   | % |                |  | 7.1   | %                                  |  |  | 32.1           | % |  |                | 30.4  | % |      |  | 0.5   | %    |  |  | 0.6   | % |  |      | 0.0   | % |      |  | 0.0   | % |  |  | 12.0  | % |  |  | 12.0  | %
|Rest of Europe 2                                                |  |                   | 40.8  | % |                |  | 40.5  | %                                  |  |  | 2.0            | % |  |                | 1.8   | % |      |  | 35.5  | %    |  |  | 37.6  | % |  |      | 0.2   | % |      |  | 1.5   | % |  |  | 28.2  | % |  |  | 28.2  | %
|Americas                                                        |  |                   | 19.5  | % |                |  | 18.1  | %                                  |  |  | 0.1            | % |  |                | 0.1   | % |      |  | 1.5   | %    |  |  | 1.5   | % |  |      | 0.1   | % |      |  | 0.2   | % |  |  | 9.5   | % |  |  | 8.6   | %
|Asia/Pacific                                                    |  |                   | 11.6  | % |                |  | 11.2  | %                                  |  |  | 0.1            | % |  |                | 0.1   | % |      |  | 0.1   | %    |  |  | 0.2   | % |  |      | 48.8  | % |      |  | 37.1  | % |  |  | 6.0   | % |  |  | 5.6   | %
|Australia                                                       |  |                   | 1.3   | % |                |  | 0.9   | %                                  |  |  | 0.0            | % |  |                | 0.0   | % |      |  | 17.5  | %    |  |  | 15.9  | % |  |      | 0.2   | % |      |  | 0.3   | % |  |  | 4.8   | % |  |  | 4.4   | %
|Rest of World                                                   |  |                   | 1.0   | % |                |  | 0.8   | %                                  |  |  | 0.0            | % |  |                | 0.0   | % |      |  | 0.0   | %    |  |  | 0.0   | % |  |      | 0.0   | % |      |  | 0.0   | % |  |  | 0.5   | % |  |  | 0.4   | %
|                                                                |  |                   |       |   |                |  |       |                                    |  |  |                |   |  |                |       |   |      |  |       |      |  |  |       |   |  |      |       |   |      |  |       |   |  |  |       |   |  |  |       |  
|Total                                                           |  |                   | 100.0 | % |                |  | 100.0 | %                                  |  |  | 100.0          | % |  |                | 100.0 | % |      |  | 100.0 | %    |  |  | 100.0 | % |  |      | 100.0 | % |      |  | 100.0 | % |  |  | 100.0 | % |  |  | 100.0 | %
|                                                                |  |                   |       |   |                |  |       |                                    |  |  |                |   |  |                |       |   |      |  |       |      |  |  |       |   |  |      |       |   |      |  |       |   |  |  |       |   |  |  |       |  



|1 | Geographic areas are based on country of residence, except for private individuals for which the geographic areas are based on the primary country of risk.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | The top 5 exposures within Rest of Europe are to United Kingdom (4.1%), France (3.4%), Poland (3.3%), Spain (3.2%) and Italy (2.4%).
|- | ------------------------------------------------------------------------------------------------------------------------------------

Credit risk mitigation

ING Banks lending and investment businesses are
subject to credit risk. As such, the creditworthiness of our customers and investments is continually monitored for their ability to meet their financial obligations to ING Bank. In addition to determining the credit quality and creditworthiness of
the customer, ING Bank uses various credit risk mitigation techniques and instruments to mitigate the credit risk associated with an exposure and to reduce the losses incurred subsequent to an event of default on an obligation a customer may have
towards ING Bank. The most common terminology used in ING Bank for credit risk protection is cover. While a cover can be an important mitigant of credit risk and an alternative source of repayment, generally it is ING Banks
practice to lend on the basis of the customers creditworthiness rather than exclusively relying on the value of the cover. Within ING Bank, there are two distinct forms of covers: assets and third party obligations.

Cover forms

Assets

The asset that has been pledged to ING Bank as collateral or security gives ING Bank the right to liquidate it in cases where the customer is unable to fulfil its
financial obligation. As such, the proceeds can be applied towards full or partial compensation of the customers outstanding exposure. An asset can be tangible (such as cash, securities, receivables, inventory, plant & machinery and
mortgages on real estate properties) or intangible (such as patents, trademarks, contract rights and licenses).

Third party obligation

Third Party Obligation, indemnification or undertaking (either by contract and/or by law) is a legally binding declaration by a third party that gives ING Bank the right
to expect and claim from that third party to pay an amount, if the customer fails on its obligations to ING Bank. The most common examples are guarantees (such as parent guarantees and export credit insurances) and letters of comfort.

Cover valuation methodology

General guidelines for cover valuation
are established to ensure consistency of the application within ING Bank. These general guidelines also require that the value of the cover needs to be monitored on a regular basis, in principle at least annually. Covers are revalued accordingly and
whenever there is reason to believe that the market is subject to significant changes in conditions. The frequency of monitoring and revaluation depends on the type of covers.

The valuation method also depends on the type of covers. For asset collateral, the valuation sources can be the customers balance sheet (e.g. inventory,
machinery, and equipment), nominal value (e.g. cash, receivables), market value (e.g. securities and commodities), independent valuer (commercial real estate) and market indices (residential real estate). For third party obligations, the valuation
is based on the value which is attributed to the contract between ING Bank and that third party.

Cover values

This section provides insight on the type of covers and to which extent a loan is collateralised. The cover disclosures are presented by risk category: Lending,
Investment, Money-Market and Pre-settlement. The cover amounts are presented by the most relevant collateral forms, being mortgages and financial collateral (cash and securities), and the most relevant third
party obligation being guarantees. ING Bank obtains covers which are eligible for credit risk mitigation under CRR/CRDIV, as well as those that are not eligible.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-170 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The cover values are presented for the total portfolio of ING Bank. Covers of both AIRB and SA portfolios are presented
in detail reflecting ING Banks complete portfolio. Next to that, detailed information is provided on the cover coverage for the performing and non-performing portfolio. The
non-performing loan definition is explained in detail in the section Credit Restructuring. To increase the understanding of the reader on the nature of the collateralised loans, insight is given in
the industry and geography breakdown of ING Banks portfolio as well. For comparability reasons with previous tables, outstandings are used to show ING Banks portfolio.

Exposures are categorised into different Value to Loan (VTL) buckets that give insight in the level of collateralisation of ING Banks portfolio. VTL is calculated
as the cover value divided by the outstandings at the balance sheet date. The cover values are indexed and exclude any cost of liquidation. Covers can either be valid for all limits, sub-limits or a particular
outstanding of a borrower, the latter being the most common. For the purpose of aggregation, the coverage of all outstanding is capped at 100%. Over-collateralisation is ignored in this overview. Each limit is subsequently assigned to one of the six
defined VTL buckets: no cover, >0% to 25%, >25% to 50%, >50% to 75%, >75% to <100%, and 3 100%. As the nature of the Pre-settlement portfolio determines that collateral is netted, these VTL buckets are not shown.

The first two tables give an
overview of the collateralisation of the total portfolio of ING Bank.



|                                                                      |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |        |  |                        |  |         |          |  |  |                  |  |  |              |      |   |  |  |      |   |  |  |      |  
|--------------------------------------------------------------------- |  | ------------ | ------- |  | ---------- |  | ------- | --------------------------- |  |  | ----------------------- |  |  | ---------- | ------ |  | ---------------------- |  | ------- | -------- |  |  | ---------------- |  |  | ------------ | ---- | - |  |  | ---- | - |  |  | ---- | -
|Cover values including guarantees received - Total ING Bank - 20161,2 | 
|                                                                      |  |              |         |  | Cover type |  |         | Value to Loan               | 
|                                                                      |  | Outstandings |         |  | Mortgages  |  |         | EligibleFinancialCollateral |  |  | Other CRR/CRDIVeligible |  |  | Guarantees |        |  | Non CRR/CRD IVeligible |  |         | No Cover |  |  | Partiallycovered |  |  | Fullycovered |     
|Consumer Lending                                                      |  |              | 304,448 |  |            |  | 486,156 |                             |  |  | 3,494                   |  |  |            | 391    |  |                        |  | 25,846  |          |  |  | 34,839           |  |  |              | 5.6  | % |  |  | 14.3 | % |  |  | 80.1 | %
|Business Lending                                                      |  |              | 310,395 |  |            |  | 128,578 |                             |  |  | 17,004                  |  |  |            | 89,204 |  |                        |  | 98,559  |          |  |  | 132,672          |  |  |              | 33.6 | % |  |  | 28.1 | % |  |  | 38.3 | %
|Investment and Money Market                                           |  |              | 110,218 |  |            |  | 0       |                             |  |  | 0                       |  |  |            | 0      |  |                        |  | 989     |          |  |  | 0                |  |  |              | 99.1 | % |  |  | 0.3  | % |  |  | 0.6  | %
|                                                                      |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |        |  |                        |  |         |          |  |  |                  |  |  |              |      |   |  |  |      |   |  |  |      |  
|Total Lending, Investment and Money Market                            |  |              | 725,061 |  |            |  | 614,734 |                             |  |  | 20,498                  |  |  |            | 89,595 |  |                        |  | 125,395 |          |  |  | 167,511          |  |  |              | 31.8 | % |  |  | 18.1 | % |  |  | 50.1 | %
|Pre-settlement3                                                       |  |              | 50,003  |  |            |  |         |                             |  |  |                         |  |  |            |        |  |                        |  |         |          |  |  |                  |  |  |              |      |   |  |  |      |   |  |  |      |  
|                                                                      |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |        |  |                        |  |         |          |  |  |                  |  |  |              |      |   |  |  |      |   |  |  |      |  
|Total Bank                                                            |  |              | 775,065 |  |            |  | 614,734 |                             |  |  | 20,498                  |  |  |            | 89,595 |  |                        |  | 125,395 |          |  |  | 167,511          |  |  |              | 31.8 | % |  |  | 18.1 | % |  |  | 50.1 | %
|                                                                      |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |        |  |                        |  |         |          |  |  |                  |  |  |              |      |   |  |  |      |   |  |  |      |  



|1 | Including loans to ING Group.
|- | -----------------------------

|2 | Excluding intercompany positions.
|- | ---------------------------------

|3 | More information on the credit risk mitigants of the Pre-settlement exposure can be found in the Pre-settlement section.
|- | ------------------------------------------------------------------------------------------------------------------------



|                                                                      |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |        |  |                        |  |         |          |  |  |                  |  |  |              |      |   |  |  |      |   |  |  |      |  
|--------------------------------------------------------------------- |  | ------------ | ------- |  | ---------- |  | ------- | --------------------------- |  |  | ----------------------- |  |  | ---------- | ------ |  | ---------------------- |  | ------- | -------- |  |  | ---------------- |  |  | ------------ | ---- | - |  |  | ---- | - |  |  | ---- | -
|Cover values including guarantees received - Total ING Bank - 20151,2 | 
|                                                                      |  |              |         |  | Cover type |  |         | Value to Loan               | 
|                                                                      |  | Outstandings |         |  | Mortgages  |  |         | EligibleFinancialCollateral |  |  | Other CRR/CRDIVeligible |  |  | Guarantees |        |  | Non CRR/CRD IVeligible |  |         | No Cover |  |  | Partiallycovered |  |  | Fullycovered |     
|Consumer Lending                                                      |  |              | 297,866 |  |            |  | 460,892 |                             |  |  | 3,363                   |  |  |            | 475    |  |                        |  | 26,283  |          |  |  | 35,017           |  |  |              | 5.3  | % |  |  | 18.0 | % |  |  | 76.7 | %
|Business Lending                                                      |  |              | 295,987 |  |            |  | 119,583 |                             |  |  | 16,736                  |  |  |            | 81,729 |  |                        |  | 90,158  |          |  |  | 130,344          |  |  |              | 36.8 | % |  |  | 27.5 | % |  |  | 35.7 | %
|Investment and Money Market                                           |  |              | 114,116 |  |            |  |         |                             |  |  | 6                       |  |  |            |        |  |                        |  | 3,113   |          |  |  | 35               |  |  |              | 97.5 | % |  |  | 1.2  | % |  |  | 1.3  | %
|                                                                      |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |        |  |                        |  |         |          |  |  |                  |  |  |              |      |   |  |  |      |   |  |  |      |  
|Total Lending, Investment and Money Market                            |  |              | 707,970 |  |            |  | 580,474 |                             |  |  | 20,105                  |  |  |            | 82,204 |  |                        |  | 119,554 |          |  |  | 165,396          |  |  |              | 33.3 | % |  |  | 19.3 | % |  |  | 47.4 | %
|Pre-settlement3                                                       |  |              | 52,574  |  |            |  |         |                             |  |  |                         |  |  |            |        |  |                        |  |         |          |  |  |                  |  |  |              |      |   |  |  |      |   |  |  |      |  
|                                                                      |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |        |  |                        |  |         |          |  |  |                  |  |  |              |      |   |  |  |      |   |  |  |      |  
|Total Bank                                                            |  |              | 760,543 |  |            |  | 580,474 |                             |  |  | 20,105                  |  |  |            | 82,204 |  |                        |  | 119,554 |          |  |  | 165,396          |  |  |              | 33.3 | % |  |  | 19.3 | % |  |  | 47.4 | %
|                                                                      |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |        |  |                        |  |         |          |  |  |                  |  |  |              |      |   |  |  |      |   |  |  |      |  



|1 | Including loans to ING Group.
|- | -----------------------------

|2 | Excluding intercompany positions.
|- | ---------------------------------

|3 | More information on the credit risk mitigants of the Pre-settlement exposure can be found in the Pre-settlement section.
|- | ------------------------------------------------------------------------------------------------------------------------

Over the year, the collateralisation level of ING Banks total portfolio improved. Excluding the pre-settlement portfolio
for which covers are netted to derive the outstandings at risk, 50.1% of the total ING Banks outstandings (from 47.4% as of 2015) were fully collateralised in 2016. Investments decreased in 2016 by EUR 5.3 billion, mainly in Italian
government bonds and Spanish covered bonds and securitisations. Since investments traditionally do not require covers, the no covers ratio in this portfolio is close to 100%. However, 93% of the investment outstandings are investment grade. In the
Lending portfolio, coverage within consumer lending increased influenced by an improvement in the house price index in the Netherlands. The risk profile of the Real Estate portfolio improved as well, which also positively contributed to the
coverage.

The increase in business lending for cover Other CRR/CRDIV eligible was mainly situated in UK and America, while the increase in Guarantees was seen in
structured finance and C&FI lending.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-171 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Consumer lending portfolio

The consumer lending portfolio comprises of residential mortgage loans (93.4% in 2016 versus 93.9% in 2015) and other consumer lending loans, which mainly comprise
credit cards, term loans and revolvers to consumers. As a result, most of the collateral consists of mortgages. The mortgage values are maintained in ING Banks central database (Vortex) and in most cases external data is used to index the
market value. On a quarterly basis, the mortgages value is updated in Vortex using the relevant house price index (the NVM Index in the Netherlands, Level Housing Index in Australia, Crif Real Estate Appraisal Company in Italy and Ministerio de
Fomento in Spain).

A significant, but decreasing part of ING Banks residential mortgage portfolio related to mortgage loans provided in the Netherlands
(43.2% in 2016 versus 45.8% in 2015), followed by other main markets such as Germany (23.9%), and Belgium (11.8%). Given the size of the Dutch mortgage portfolio, the valuation methodology employed to determine the cover values for the Dutch
residential mortgages is provided below.

Dutch mortgages valuation

When a mortgage loan is granted in the Netherlands, the policy dictates maximum loan to market value (LTMV) for an existing property and for construction property
financing of 102% (in 2015: 103%). In 2017 the LMTV will reduce further to 101% and will be 100% in 2018. The cover values are captured in the local systems which are subsequently fed into a central data system (Vortex). All valuations are performed
by certified valuators that are registered at one of the ING Bank-accepted organisations. In addition, the valuator must be a member of the NVM (Nederlandse Vereniging van Makelaars  Dutch Association of Real Estate Agents), VBO (Vereniging
Bemiddeling Onroerend Goed  Association of Real Estate Brokers), VastgoedPRO (Association of Real Estate Professionals) or NVR (Nederlandse Vereniging van Rentmeesters).

The below tables show the values of different covers and the VTL split between performing and non-performing loans.



|                                                                                |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |          |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|------------------------------------------------------------------------------- |  | ------------ | ------- |  | ---------- |  | ------- | --------------------------- |  |  | ----------------------- |  |  | ---------- | --- |  | ---------------------- |  | ------ | -------- |  |  | -------- |  |  | -------- | ---- | - | --------- |  | --- | ----------- |  |  | ------ | - |  |  | --- | - |  |  | ---- | - |  |  | ---- | -
|Cover values including guarantees received - Consumer lending portfolio  20161 | 
|                                                                                |  |              |         |  | Cover type |  |         | Value to Loan               | 
|                                                                                |  | Outstandings |         |  | Mortgages  |  |         | EligibleFinancialCollateral |  |  | OtherCRR/CRDIV eligible |  |  | Guarantees |     |  | Non CRR/CRD IVeligible |  |        | No Cover |  |  | > 0%25% |  |  | >25%50% |      |   | > 50%75% |  |     | >75% <100% |  |  | > 100% |  
|Performing                                                                      |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |          |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|Residential Mortgages (Private Individuals)                                     |  |              | 276,412 |  |            |  | 473,271 |                             |  |  | 2,754                   |  |  |            | 136 |  |                        |  | 24,664 |          |  |  | 29,421   |  |  |          | 0.0  | % |           |  | 0.1 | %           |  |  | 0.1    | % |  |  | 1.4 | % |  |  | 13.4 | % |  |  | 85.0 | %
|Residential Mortgages (SME)                                                     |  |              | 4,439   |  |            |  | 6,911   |                             |  |  | 62                      |  |  |            | 70  |  |                        |  | 145    |          |  |  | 827      |  |  |          | 0.0  | % |           |  | 0.4 | %           |  |  | 0.4    | % |  |  | 1.3 | % |  |  | 8.6  | % |  |  | 89.3 | %
|Other Consumer Lending                                                          |  |              | 19,448  |  |            |  | 1,599   |                             |  |  | 647                     |  |  |            | 167 |  |                        |  | 761    |          |  |  | 3,939    |  |  |          | 83.6 | % |           |  | 0.3 | %           |  |  | 0.2    | % |  |  | 0.3 | % |  |  | 1.0  | % |  |  | 14.6 | %
|                                                                                |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |          |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|Total Performing                                                                |  |              | 300,299 |  |            |  | 481,781 |                             |  |  | 3,463                   |  |  |            | 373 |  |                        |  | 25,570 |          |  |  | 34,187   |  |  |          | 5.4  | % |           |  | 0.1 | %           |  |  | 0.1    | % |  |  | 1.3 | % |  |  | 12.5 | % |  |  | 80.6 | %
|Non-performing                                                                  |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |          |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|Residential Mortgages (Private Individuals)                                     |  |              | 3,197   |  |            |  | 4,097   |                             |  |  | 29                      |  |  |            | 5   |  |                        |  | 255    |          |  |  | 567      |  |  |          | 0.5  | % |           |  | 0.3 | %           |  |  | 0.8    | % |  |  | 6.1 | % |  |  | 27.4 | % |  |  | 64.9 | %
|Residential Mortgages (SME)                                                     |  |              | 176     |  |            |  | 265     |                             |  |  | 1                       |  |  |            | 10  |  |                        |  | 10     |          |  |  | 25       |  |  |          | 0.8  | % |           |  | 0.3 | %           |  |  | 1.1    | % |  |  | 2.1 | % |  |  | 13.4 | % |  |  | 82.3 | %
|Other Consumer Lending                                                          |  |              | 776     |  |            |  | 13      |                             |  |  | 1                       |  |  |            | 3   |  |                        |  | 11     |          |  |  | 60       |  |  |          | 94.1 | % |           |  | 0.4 | %           |  |  | 0.2    | % |  |  | 0.3 | % |  |  | 1.1  | % |  |  | 3.9  | %
|                                                                                |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |          |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|Total Non-performing                                                            |  |              | 4,149   |  |            |  | 4,375   |                             |  |  | 31                      |  |  |            | 18  |  |                        |  | 276    |          |  |  | 652      |  |  |          | 18.0 | % |           |  | 0.3 | %           |  |  | 0.7    | % |  |  | 4.8 | % |  |  | 21.9 | % |  |  | 54.3 | %
|                                                                                |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |          |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|Total Consumer Lending                                                          |  |              | 304,448 |  |            |  | 486,156 |                             |  |  | 3,494                   |  |  |            | 391 |  |                        |  | 25,846 |          |  |  | 34,839   |  |  |          | 5.6  | % |           |  | 0.1 | %           |  |  | 0.1    | % |  |  | 1.4 | % |  |  | 12.7 | % |  |  | 80.1 | %
|                                                                                |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |          |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  



|1 | Excluding intercompany positions.
|- | ---------------------------------



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-172 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                                |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |           |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|------------------------------------------------------------------------------- |  | ------------ | ------- |  | ---------- |  | ------- | --------------------------- |  |  | ----------------------- |  |  | ---------- | --- |  | ---------------------- |  | ------ | -------- |  |  | -------- |  |  | --------- | ---- | - | --------- |  | --- | ----------- |  |  | ------ | - |  |  | --- | - |  |  | ---- | - |  |  | ---- | -
|Cover values including guarantees received - Consumer lending portfolio  20151 | 
|                                                                                |  |              |         |  | Cover type |  |         | Value to Loan               | 
|                                                                                |  | Outstandings |         |  | Mortgages  |  |         | EligibleFinancialCollateral |  |  | OtherCRR/CRDIV eligible |  |  | Guarantees |     |  | Non CRR/CRD IVeligible |  |        | No Cover |  |  | > 0%25% |  |  | > 25%50% |      |   | > 50%75% |  |     | >75% <100% |  |  | > 100% |  
|Performing                                                                      |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |           |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|Residential Mortgages (Private Individuals)                                     |  |              | 270,966 |  |            |  | 447,613 |                             |  |  | 2,716                   |  |  |            | 154 |  |                        |  | 25,271 |          |  |  | 29,406   |  |  |           | 0.1  | % |           |  | 0.1 | %           |  |  | 0.1    | % |  |  | 1.5 | % |  |  | 17.1 | % |  |  | 81.1 | %
|Residential Mortgages (SME)                                                     |  |              | 4,230   |  |            |  | 6,522   |                             |  |  | 49                      |  |  |            | 98  |  |                        |  | 164    |          |  |  | 752      |  |  |           | 0.0  | % |           |  | 0.6 | %           |  |  | 0.6    | % |  |  | 1.5 | % |  |  | 8.5  | % |  |  | 88.8 | %
|                                                                                |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |           |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|Other Consumer Lending                                                          |  |              | 17,357  |  |            |  | 1,332   |                             |  |  | 554                     |  |  |            | 201 |  |                        |  | 418    |          |  |  | 4,110    |  |  |           | 84.9 | % |           |  | 0.3 | %           |  |  | 0.2    | % |  |  | 0.3 | % |  |  | 1.0  | % |  |  | 13.3 | %
|                                                                                |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |           |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|Total Performing                                                                |  |              | 292,553 |  |            |  | 455,467 |                             |  |  | 3,319                   |  |  |            | 453 |  |                        |  | 25,853 |          |  |  | 34,268   |  |  |           | 5.1  | % |           |  | 0.1 | %           |  |  | 0.2    | % |  |  | 1.4 | % |  |  | 16.0 | % |  |  | 77.2 | %
|Non-performing                                                                  |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |           |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|Residential Mortgages (Private Individuals)                                     |  |              | 4,323   |  |            |  | 5,148   |                             |  |  | 40                      |  |  |            | 5   |  |                        |  | 403    |          |  |  | 649      |  |  |           | 0.9  | % |           |  | 0.3 | %           |  |  | 0.9    | % |  |  | 7.4 | % |  |  | 33.9 | % |  |  | 56.6 | %
|Residential Mortgages (SME)                                                     |  |              | 187     |  |            |  | 274     |                             |  |  | 2                       |  |  |            | 12  |  |                        |  | 13     |          |  |  | 33       |  |  |           | 0.4  | % |           |  | 0.2 | %           |  |  | 1.1    | % |  |  | 1.5 | % |  |  | 16.1 | % |  |  | 80.7 | %
|                                                                                |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |           |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|Other Consumer Lending                                                          |  |              | 803     |  |            |  | 3       |                             |  |  | 2                       |  |  |            | 5   |  |                        |  | 14     |          |  |  | 67       |  |  |           | 93.8 | % |           |  | 0.3 | %           |  |  | 0.3    | % |  |  | 0.4 | % |  |  | 1.4  | % |  |  | 3.8  | %
|                                                                                |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |           |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|Total Non-performing                                                            |  |              | 5,313   |  |            |  | 5,425   |                             |  |  | 44                      |  |  |            | 22  |  |                        |  | 430    |          |  |  | 749      |  |  |           | 14.9 | % |           |  | 0.3 | %           |  |  | 0.8    | % |  |  | 6.2 | % |  |  | 28.4 | % |  |  | 49.4 | %
|                                                                                |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |           |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  
|Total Consumer Lending                                                          |  |              | 297,866 |  |            |  | 460,892 |                             |  |  | 3,363                   |  |  |            | 475 |  |                        |  | 26,283 |          |  |  | 35,017   |  |  |           | 5.3  | % |           |  | 0.1 | %           |  |  | 0.2    | % |  |  | 1.5 | % |  |  | 16.2 | % |  |  | 76.7 | %
|                                                                                |  |              |         |  |            |  |         |                             |  |  |                         |  |  |            |     |  |                        |  |        |          |  |  |          |  |  |           |      |   |           |  |     |             |  |  |        |   |  |  |     |   |  |  |      |   |  |  |      |  



|1 | Excluding intercompany positions.
|- | ---------------------------------

The collateralisation of the consumer lending portfolio continued to improve over the
year 2016. The rise in collateralisation levels was due to improved housing prices, seen over different mortgage markets, including the Netherlands as main market. In addition, due to stringent policies there has been a reduction in mortgages
granted with low VTLs (high loan-to-values).

House prices in the Netherlands
continued to show an improvement in 2016. This helped to increase the total residential mortgages cover values whilst overall mortgage outstandings increased, mainly in Germany and Australia, where the coverage ratio is nearly 100%. As the
Netherlands is the biggest market for mortgages for ING Bank, this also had a significant impact on the coverage quality of the portfolio. Mortgage portfolio in the Netherlands reduced in outstandings due to
run-off and transfer of WestlandUtrecht Bank mortgages to NN Bank. NPLs have shown a big improvement, especially in the Netherlands.

The numbers shown are conservative as the savings pledged to the mortgage product, Spaarhypotheek (or mortgage with external saving account) present in the
Dutch mortgage portfolio are not taken into account in the table above. For the residential mortgages portfolio, the guarantees relate to mortgages covered by governmental insurers under the Nationale Hypotheek Garantie (NHG) in the Netherlands. The
NHG guarantees the repayment of a loan in case of a forced property sale.

Business lending portfolio

Business lending is an important business of ING Bank, accounting for 40.0% of ING Banks total outstandings. In line with our objective to give stakeholders
insight into the portfolio, we present the business lending portfolio per Industry breakdown in accordance with the NAICS definition and per Region and main market. Business Lending presented in this section does not include Pre-settlement and Investment & Money Market exposures, which are separately exhibited in the next sections.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-173 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Business lending per economic sector



|                                                                                  |  |               |         |  |            |  |         |                             |  |  |                         |  |  |             |        |  |                        |  |        |          |  |  |         |  |  |          |      |   |           |  |     |             |  |  |       |   |  |  |      |   |  |  |      |   |  |  |      |  
|--------------------------------------------------------------------------------- |  | ------------- | ------- |  | ---------- |  | ------- | --------------------------- |  |  | ----------------------- |  |  | ----------- | ------ |  | ---------------------- |  | ------ | -------- |  |  | ------- |  |  | -------- | ---- | - | --------- |  | --- | ----------- |  |  | ----- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|Cover values including guarantees received - Business lending portfolio  20161,2 | 
|                                                                                  |  |               |         |  | Cover type |  |         | Value to Loan               | 
|Industry                                                                          |  | Out-standings |         |  | Mort-gages |  |         | EligibleFinancialCollateral |  |  | OtherCRR/CRDIV eligible |  |  | Guaran-tees |        |  | Non CRR/CRD IVeligible |  |        | No Cover |  |  | >0%25% |  |  | >25%50% |      |   | > 50%75% |  |     | >75% <100% |  |  | >100% |  
|Natural Resources                                                                 |  |               | 50,402  |  |            |  | 3,810   |                             |  |  | 3,399                   |  |  |             | 19,543 |  |                        |  | 20,014 |          |  |  | 23,022  |  |  |          | 22.2 | % |           |  | 8.7 | %           |  |  | 15.3  | % |  |  | 15.1 | % |  |  | 15.5 | % |  |  | 23.2 | %
|Real Estate                                                                       |  |               | 45,974  |  |            |  | 72,471  |                             |  |  | 1,685                   |  |  |             | 1,166  |  |                        |  | 7,610  |          |  |  | 8,534   |  |  |          | 5.7  | % |           |  | 1.5 | %           |  |  | 1.4   | % |  |  | 4.8  | % |  |  | 12.5 | % |  |  | 74.1 | %
|Transportation & Logistics                                                        |  |               | 28,168  |  |            |  | 3,336   |                             |  |  | 405                     |  |  |             | 22,486 |  |                        |  | 9,125  |          |  |  | 8,475   |  |  |          | 19.0 | % |           |  | 3.7 | %           |  |  | 3.2   | % |  |  | 5.6  | % |  |  | 14.6 | % |  |  | 53.9 | %
|Commercial Banks                                                                  |  |               | 22,025  |  |            |  | 336     |                             |  |  | 220                     |  |  |             | 1,622  |  |                        |  | 1,732  |          |  |  | 1,039   |  |  |          | 86.7 | % |           |  | 1.9 | %           |  |  | 1.3   | % |  |  | 0.7  | % |  |  | 1.4  | % |  |  | 8.0  | %
|Services                                                                          |  |               | 19,252  |  |            |  | 9,010   |                             |  |  | 1,389                   |  |  |             | 5,420  |  |                        |  | 6,034  |          |  |  | 10,369  |  |  |          | 32.4 | % |           |  | 3.4 | %           |  |  | 5.0   | % |  |  | 7.5  | % |  |  | 10.9 | % |  |  | 40.8 | %
|Food, Beverages & Personal Care                                                   |  |               | 18,158  |  |            |  | 6,942   |                             |  |  | 611                     |  |  |             | 7,459  |  |                        |  | 6,813  |          |  |  | 15,678  |  |  |          | 26.9 | % |           |  | 3.4 | %           |  |  | 5.8   | % |  |  | 11.1 | % |  |  | 13.3 | % |  |  | 39.5 | %
|Non-Bank Financial Institutions                                                   |  |               | 17,211  |  |            |  | 1,885   |                             |  |  | 6,060                   |  |  |             | 5,338  |  |                        |  | 7,268  |          |  |  | 9,075   |  |  |          | 35.5 | % |           |  | 8.7 | %           |  |  | 6.0   | % |  |  | 7.0  | % |  |  | 6.1  | % |  |  | 36.7 | %
|General Industries                                                                |  |               | 17,082  |  |            |  | 4,988   |                             |  |  | 278                     |  |  |             | 5,852  |  |                        |  | 6,658  |          |  |  | 11,781  |  |  |          | 31.5 | % |           |  | 3.8 | %           |  |  | 7.3   | % |  |  | 6.8  | % |  |  | 9.6  | % |  |  | 41.0 | %
|Chemicals, Health & Pharmaceuticals                                               |  |               | 14,732  |  |            |  | 7,636   |                             |  |  | 227                     |  |  |             | 3,458  |  |                        |  | 3,342  |          |  |  | 7,233   |  |  |          | 34.7 | % |           |  | 3.1 | %           |  |  | 5.6   | % |  |  | 10.6 | % |  |  | 12.5 | % |  |  | 33.5 | %
|Utilities                                                                         |  |               | 13,160  |  |            |  | 1,359   |                             |  |  | 1,167                   |  |  |             | 3,309  |  |                        |  | 4,306  |          |  |  | 7,354   |  |  |          | 40.9 | % |           |  | 5.8 | %           |  |  | 2.9   | % |  |  | 3.4  | % |  |  | 6.1  | % |  |  | 40.9 | %
|Others 3                                                                          |  |               | 64,231  |  |            |  | 16,805  |                             |  |  | 1,563                   |  |  |             | 13,551 |  |                        |  | 25,657 |          |  |  | 30,112  |  |  |          | 51.3 | % |           |  | 2.5 | %           |  |  | 5.2   | % |  |  | 5.5  | % |  |  | 8.3  | % |  |  | 27.2 | %
|                                                                                  |  |               |         |  |            |  |         |                             |  |  |                         |  |  |             |        |  |                        |  |        |          |  |  |         |  |  |          |      |   |           |  |     |             |  |  |       |   |  |  |      |   |  |  |      |   |  |  |      |  
|Total Business Lending                                                            |  |               | 310,395 |  |            |  | 128,578 |                             |  |  | 17,004                  |  |  |             | 89,204 |  |                        |  | 98,559 |          |  |  | 132,672 |  |  |          | 33.6 | % |           |  | 4.1 | %           |  |  | 5.9   | % |  |  | 7.4  | % |  |  | 10.6 | % |  |  | 38.3 | %
|of which Total Non- performing                                                    |  |               | 9,438   |  |            |  | 4,352   |                             |  |  | 293                     |  |  |             | 3,210  |  |                        |  | 3,961  |          |  |  | 3,705   |  |  |          | 24.1 | % |           |  | 4.4 | %           |  |  | 6.4   | % |  |  | 14.2 | % |  |  | 13.8 | % |  |  | 37.2 | %
|                                                                                  |  |               |         |  |            |  |         |                             |  |  |                         |  |  |             |        |  |                        |  |        |          |  |  |         |  |  |          |      |   |           |  |     |             |  |  |       |   |  |  |      |   |  |  |      |   |  |  |      |  



|1 | Including loans to ING Group.
|- | -----------------------------

|2 | Excluding intercompany positions.
|- | ---------------------------------

|3 | Others comprises industries with outstandings below EUR 13 billion.
|- | ---------------------------------------------------------------------



|                                                                                  |  |               |         |  |            |  |         |                             |  |  |                         |  |  |             |        |  |                        |  |        |          |  |  |         |  |  |          |       |   |           |  |     |            |  |  |       |   |  |  |      |   |  |  |      |   |  |  |      |  
|--------------------------------------------------------------------------------- |  | ------------- | ------- |  | ---------- |  | ------- | --------------------------- |  |  | ----------------------- |  |  | ----------- | ------ |  | ---------------------- |  | ------ | -------- |  |  | ------- |  |  | -------- | ----- | - | --------- |  | --- | ---------- |  |  | ----- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|Cover values including guarantees received - Business lending portfolio  20151,2 | 
|                                                                                  |  |               |         |  | Cover type |  |         | Value to Loan               | 
|Industry                                                                          |  | Out-standings |         |  | Mort-gages |  |         | EligibleFinancialCollateral |  |  | OtherCRR/CRDIV eligible |  |  | Guaran-tees |        |  | Non CRR/CRD IVeligible |  |        | No Cover |  |  | >0%25% |  |  | >25%50% |       |   | > 50%75% |  |     | >75%<100% |  |  | >100% |  
|Real Estate                                                                       |  |               | 43,129  |  |            |  | 66,819  |                             |  |  | 1,602                   |  |  |             | 1,080  |  |                        |  | 7,072  |          |  |  | 6,550   |  |  |          | 6.8   | % |           |  | 1.1 | %          |  |  | 2.0   | % |  |  | 6.8  | % |  |  | 17.8 | % |  |  | 65.5 | %
|Natural Resources                                                                 |  |               | 41,967  |  |            |  | 4,080   |                             |  |  | 3,927                   |  |  |             | 15,497 |  |                        |  | 21,793 |          |  |  | 23,362  |  |  |          | 23.6  | % |           |  | 9.4 | %          |  |  | 11.5  | % |  |  | 13.5 | % |  |  | 14.1 | % |  |  | 27.9 | %
|Transportation & Logistics                                                        |  |               | 24,877  |  |            |  | 3,575   |                             |  |  | 468                     |  |  |             | 22,224 |  |                        |  | 8,258  |          |  |  | 8,601   |  |  |          | 16.0  | % |           |  | 5.2 | %          |  |  | 3.0   | % |  |  | 6.2  | % |  |  | 11.4 | % |  |  | 58.2 | %
|Commercial Banks                                                                  |  |               | 22,367  |  |            |  | 14      |                             |  |  | 267                     |  |  |             | 619    |  |                        |  | 1,195  |          |  |  | 1,200   |  |  |          | 89.3  | % |           |  | 3.7 | %          |  |  | 1.4   | % |  |  | 0.6  | % |  |  | 1.3  | % |  |  | 3.7  | %
|Central Banks                                                                     |  |               | 21,714  |  |            |  | 0       |                             |  |  | 1                       |  |  |             | 0      |  |                        |  | 5      |          |  |  | 0       |  |  |          | 100.0 | % |           |  | 0.0 | %          |  |  | 0.0   | % |  |  | 0.0  | % |  |  | 0.0  | % |  |  | 0.0  | %
|Services                                                                          |  |               | 18,477  |  |            |  | 8,197   |                             |  |  | 1,282                   |  |  |             | 4,450  |  |                        |  | 5,586  |          |  |  | 10,287  |  |  |          | 30.0  | % |           |  | 4.6 | %          |  |  | 4.1   | % |  |  | 9.4  | % |  |  | 10.0 | % |  |  | 41.9 | %
|Non-Bank Financial Institutions                                                   |  |               | 16,702  |  |            |  | 2,288   |                             |  |  | 5,022                   |  |  |             | 4,401  |  |                        |  | 4,668  |          |  |  | 9,370   |  |  |          | 37.5  | % |           |  | 7.6 | %          |  |  | 5.5   | % |  |  | 8.7  | % |  |  | 7.1  | % |  |  | 33.6 | %
|General Industries                                                                |  |               | 16,661  |  |            |  | 4,673   |                             |  |  | 671                     |  |  |             | 6,211  |  |                        |  | 5,432  |          |  |  | 11,913  |  |  |          | 31.5  | % |           |  | 3.4 | %          |  |  | 8.1   | % |  |  | 10.7 | % |  |  | 10.2 | % |  |  | 36.1 | %
|Food, Beverages & Personal Care                                                   |  |               | 16,458  |  |            |  | 6,239   |                             |  |  | 550                     |  |  |             | 6,909  |  |                        |  | 7,177  |          |  |  | 18,213  |  |  |          | 26.9  | % |           |  | 4.5 | %          |  |  | 7.0   | % |  |  | 11.6 | % |  |  | 11.5 | % |  |  | 38.5 | %
|Chemicals, Health & Pharmaceuticals                                               |  |               | 13,300  |  |            |  | 6,937   |                             |  |  | 357                     |  |  |             | 4,803  |  |                        |  | 2,782  |          |  |  | 6,160   |  |  |          | 32.5  | % |           |  | 4.3 | %          |  |  | 3.9   | % |  |  | 11.8 | % |  |  | 14.0 | % |  |  | 33.5 | %
|Others 3                                                                          |  |               | 60,335  |  |            |  | 16,761  |                             |  |  | 2,589                   |  |  |             | 15,535 |  |                        |  | 26,190 |          |  |  | 34,688  |  |  |          | 40.5  | % |           |  | 5.8 | %          |  |  | 4.0   | % |  |  | 6.6  | % |  |  | 9.4  | % |  |  | 33.7 | %
|                                                                                  |  |               |         |  |            |  |         |                             |  |  |                         |  |  |             |        |  |                        |  |        |          |  |  |         |  |  |          |       |   |           |  |     |            |  |  |       |   |  |  |      |   |  |  |      |   |  |  |      |  
|Total Business Lending                                                            |  |               | 295,987 |  |            |  | 119,583 |                             |  |  | 16,736                  |  |  |             | 81,729 |  |                        |  | 90,158 |          |  |  | 130,344 |  |  |          | 36.8  | % |           |  | 4.8 | %          |  |  | 4.7   | % |  |  | 7.7  | % |  |  | 10.3 | % |  |  | 35.7 | %
|of which Total Non- performing                                                    |  |               | 9,841   |  |            |  | 5,171   |                             |  |  | 287                     |  |  |             | 2,993  |  |                        |  | 3,521  |          |  |  | 4,180   |  |  |          | 24.2  | % |           |  | 2.9 | %          |  |  | 8.1   | % |  |  | 15.8 | % |  |  | 16.2 | % |  |  | 32.8 | %
|                                                                                  |  |               |         |  |            |  |         |                             |  |  |                         |  |  |             |        |  |                        |  |        |          |  |  |         |  |  |          |       |   |           |  |     |            |  |  |       |   |  |  |      |   |  |  |      |   |  |  |      |  



|1 | Including loans to ING Group.
|- | -----------------------------

|2 | Excluding intercompany positions.
|- | ---------------------------------

|3 | Others comprises industries with outstandings below EUR 13 billion in 2015.
|- | -----------------------------------------------------------------------------



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-174 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Total business lending outstandings increased by EUR 14.4 billion, of which EUR 1.2 billion was FX driven.
Largest outstandings increase was seen in the industry Natural Resources (20.1%, mainly in the oil sector. The increase was driven by growth in structured finance trade and commodity financing and the appreciation of the US Dollar. Increases in
outstandings were also observed in the lending portfolios of Transportation & Logistics (13.2%) and Real Estate (6.6%).

Similar to the retail lending
portfolio, the risk profile of the business lending portfolio continued improving in 2016. Lower NPLs and increased levels of collateralisation contributed to this improvement. The cover values of Real Estate (traditionally a well collateralised
sector) improved over 2016. New transactions were done on more conservative collateral terms and improved valuations in real estate markets further helped to boost the total coverage in Real Estate.

The coverage of the non-performing part improved and an overall decrease was seen in the
non-performing outstandings. The majority of this was in the Real Estate industry while some increases were observed in Transportation & Logistics and the Telecom sectors.

Business lending per region



|                                                                                   |  |                |         |  |            |  |            |                             |        |               |                         |  |       |             |        |  |                        |  |        |          |        |  |         |  |        |          |      |   |           |   |      |             |     |   |       |   |     |   |      |   |      |   |      |   |      |   |      |   |      |  
|---------------------------------------------------------------------------------- |  | -------------- | ------- |  | ---------- |  | ---------- | --------------------------- | ------ | ------------- | ----------------------- |  | ----- | ----------- | ------ |  | ---------------------- |  | ------ | -------- | ------ |  | ------- |  | ------ | -------- | ---- | - | --------- | - | ---- | ----------- | --- | - | ----- | - | --- | - | ---- | - | ---- | - | ---- | - | ---- | - | ---- | - | ---- | -
|Cover values including guarantees received - Business lending portfolio  2016 1,2 | 
|                                                                                   |  |                |         |  |            |  | Cover type |                             |        | Value to Loan |                        
|Region                                                                             |  | Out-standings  |         |  | Mort-gages |  |            | EligibleFinancialCollateral |        |               | OtherCRR/CRDIV eligible |  |       | Guaran-tees |        |  | Non CRR/CRD IVeligible |  |        | No Cover |        |  | >0%25% |  |        | >25%50% |      |   | > 50%75% |   |      | >75% <100% |     |   | >100% |  
|Africa                                                                             |  |                | 2,533   |  |            |  | 14         |                             |        |               | 158                     |  |       |             | 922    |  |                        |  | 2,142  |          |        |  | 645     |  |        |          | 17.5 | % |           |   | 10.7 | %           |     |   | 5.2   | % |     |   | 10.8 | % |      |   | 22.6 | % |      |   | 33.2 | %
|America                                                                            |  |                | 40,096  |  |            |  | 5,484      |                             |        |               | 4,416                   |  |       |             | 21,080 |  |                        |  | 10,090 |          |        |  | 21,611  |  |        |          | 35.8 | % |           |   | 4.8  | %           |     |   | 4.8   | % |     |   | 6.7  | % |      |   | 12.6 | % |      |   | 35.3 | %
|Asia                                                                               |  |                | 39,455  |  |            |  | 1,087      |                             |        |               | 1,395                   |  |       |             | 12,182 |  |                        |  | 17,381 |          |        |  | 9,643   |  |        |          | 37.2 | % |           |   | 7.2  | %           |     |   | 10.1  | % |     |   | 7.9  | % |      |   | 9.9  | % |      |   | 27.7 | %
|Australia                                                                          |  |                | 5,394   |  |            |  | 3,603      |                             |        |               | 11                      |  |       |             | 947    |  |                        |  | 885    |          |        |  | 769     |  |        |          | 24.3 | % |           |   | 9.4  | %           |     |   | 5.6   | % |     |   | 1.0  | % |      |   | 8.2  | % |      |   | 51.5 | %
|                                                                                   |  | Belgium        |         |  | 44,815     |  |            |                             | 30,807 |               |                         |  | 1,655 |             |        |  | 6,287                  |  |        |          | 18,249 |  |         |  | 27,038 |          |      |   | 28.7      | % |      |             | 2.2 | % |       |   | 2.9 | % |      |   | 4.2  | % |      |   | 7.2  | % |      |   | 54.8 | %
|Europe                                                                             |  | Germany        |         |  | 8,777      |  |            |                             | 1,587  |               |                         |  | 300   |             |        |  | 688                    |  |        |          | 1,402  |  |         |  | 3,191  |          |      |   | 51.8      | % |      |             | 2.7 | % |       |   | 2.5 | % |      |   | 5.2  | % |      |   | 1.1  | % |      |   | 36.7 | %
|                                                                                   |  | Netherlands    |         |  | 63,597     |  |            |                             | 47,941 |               |                         |  | 3,007 |             |        |  | 23,451                 |  |        |          | 7,990  |  |         |  | 14,849 |          |      |   | 26.5      | % |      |             | 2.2 | % |       |   | 4.5 | % |      |   | 11.7 | % |      |   | 18.0 | % |      |   | 37.1 | %
|                                                                                   |  | Rest of Europe |         |  | 105,728    |  |            |                             | 38,055 |               |                         |  | 6,062 |             |        |  | 23,647                 |  |        |          | 40,420 |  |         |  | 54,926 |          |      |   | 37.2      | % |      |             | 4.3 | % |       |   | 7.2 | % |      |   | 6.6  | % |      |   | 8.0  | % |      |   | 36.7 | %
|                                                                                   |  |                |         |  |            |  |            |                             |        |               |                         |  |       |             |        |  |                        |  |        |          |        |  |         |  |        |          |      |   |           |   |      |             |     |   |       |   |     |   |      |   |      |   |      |   |      |   |      |   |      |  
|Total Business Lending                                                             |  |                | 310,395 |  |            |  | 128,578    |                             |        |               | 17,004                  |  |       |             | 89,204 |  |                        |  | 98,559 |          |        |  | 132,672 |  |        |          | 33.6 | % |           |   | 4.1  | %           |     |   | 5.9   | % |     |   | 7.4  | % |      |   | 10.7 | % |      |   | 38.3 | %
|of which Non-performing                                                            |  |                | 9,438   |  |            |  | 4,352      |                             |        |               | 293                     |  |       |             | 3,210  |  |                        |  | 3,961  |          |        |  | 3,705   |  |        |          | 24.1 | % |           |   | 4.4  | %           |     |   | 6.4   | % |     |   | 14.2 | % |      |   | 13.8 | % |      |   | 37.1 | %
|                                                                                   |  |                |         |  |            |  |            |                             |        |               |                         |  |       |             |        |  |                        |  |        |          |        |  |         |  |        |          |      |   |           |   |      |             |     |   |       |   |     |   |      |   |      |   |      |   |      |   |      |   |      |  



|1 | Including loans to ING Group.
|- | -----------------------------

|2 | Excluding intercompany positions.
|- | ---------------------------------



|                                                                                  |  |                |         |  |            |  |            |                             |        |               |                         |  |       |             |        |  |                        |  |        |          |        |  |         |  |        |          |      |   |           |   |      |             |     |   |       |   |     |   |      |   |      |   |      |   |      |   |      |   |      |  
|--------------------------------------------------------------------------------- |  | -------------- | ------- |  | ---------- |  | ---------- | --------------------------- | ------ | ------------- | ----------------------- |  | ----- | ----------- | ------ |  | ---------------------- |  | ------ | -------- | ------ |  | ------- |  | ------ | -------- | ---- | - | --------- | - | ---- | ----------- | --- | - | ----- | - | --- | - | ---- | - | ---- | - | ---- | - | ---- | - | ---- | - | ---- | -
|Cover values including guarantees received - Business lending portfolio  20151,2 | 
|                                                                                  |  |                |         |  |            |  | Cover type |                             |        | Value to Loan |                        
|Region                                                                            |  | Out-standings  |         |  | Mort-gages |  |            | EligibleFinancialCollateral |        |               | OtherCRR/CRDIV eligible |  |       | Guaran-tees |        |  | Non CRR/CRD IVeligible |  |        | No Cover |        |  | >0%25% |  |        | >25%50% |      |   | > 50%75% |   |      | >75% <100% |     |   | >100% |  
|Africa                                                                            |  |                | 1,898   |  |            |  | 21         |                             |        |               | 123                     |  |       |             | 620    |  |                        |  | 1,338  |          |        |  | 793     |  |        |          | 26.0 | % |           |   | 6.6  | %           |     |   | 7.1   | % |     |   | 14.7 | % |      |   | 22.0 | % |      |   | 23.7 | %
|America                                                                           |  |                | 35,127  |  |            |  | 4,836      |                             |        |               | 4,567                   |  |       |             | 19,050 |  |                        |  | 11,990 |          |        |  | 23,815  |  |        |          | 28.3 | % |           |   | 5.9  | %           |     |   | 6.9   | % |     |   | 9.8  | % |      |   | 10.9 | % |      |   | 38.2 | %
|Asia                                                                              |  |                | 37,439  |  |            |  | 1,004      |                             |        |               | 1,174                   |  |       |             | 10,593 |  |                        |  | 15,841 |          |        |  | 8,321   |  |        |          | 46.4 | % |           |   | 5.9  | %           |     |   | 5.5   | % |     |   | 8.7  | % |      |   | 6.4  | % |      |   | 27.1 | %
|Australia                                                                         |  |                | 3,925   |  |            |  | 3,225      |                             |        |               | 74                      |  |       |             | 861    |  |                        |  | 592    |          |        |  | 954     |  |        |          | 12.7 | % |           |   | 18.8 | %           |     |   | 5.5   | % |     |   | 3.6  | % |      |   | 8.9  | % |      |   | 50.5 | %
|                                                                                  |  | Belgium        |         |  | 41,378     |  |            |                             | 29,161 |               |                         |  | 1,405 |             |        |  | 6,348                  |  |        |          | 17,227 |  |         |  | 30,063 |          |      |   | 29.6      | % |      |             | 2.3 | % |       |   | 2.6 | % |      |   | 4.6  | % |      |   | 7.0  | % |      |   | 53.9 | %
|                                                                                  |  | Germany        |         |  | 8,365      |  |            |                             | 1,651  |               |                         |  | 314   |             |        |  | 602                    |  |        |          | 1,273  |  |         |  | 2,535  |          |      |   | 55.9      | % |      |             | 1.7 | % |       |   | 1.7 | % |      |   | 4.3  | % |      |   | 2.6  | % |      |   | 33.8 | %
|Europe                                                                            |  | Netherlands    |         |  | 71,146     |  |            |                             | 45,085 |               |                         |  | 3,092 |             |        |  | 24,330                 |  |        |          | 6,865  |  |         |  | 14,251 |          |      |   | 35.8      | % |      |             | 2.3 | % |       |   | 3.3 | % |      |   | 10.7 | % |      |   | 17.9 | % |      |   | 30.0 | %
|                                                                                  |  | Rest of Europe |         |  | 96,709     |  |            |                             | 34,600 |               |                         |  | 5,987 |             |        |  | 19,325                 |  |        |          | 35,032 |  |         |  | 49,612 |          |      |   | 39.4      | % |      |             | 6.4 | % |       |   | 5.6 | % |      |   | 5.9  | % |      |   | 8.3  | % |      |   | 34.4 | %
|                                                                                  |  |                |         |  |            |  |            |                             |        |               |                         |  |       |             |        |  |                        |  |        |          |        |  |         |  |        |          |      |   |           |   |      |             |     |   |       |   |     |   |      |   |      |   |      |   |      |   |      |   |      |  
|Total Business Lending                                                            |  |                | 295,987 |  |            |  | 119,583    |                             |        |               | 16,736                  |  |       |             | 81,729 |  |                        |  | 90,158 |          |        |  | 130,344 |  |        |          | 36.8 | % |           |   | 4.8  | %           |     |   | 4.7   | % |     |   | 7.7  | % |      |   | 10.3 | % |      |   | 35.7 | %
|of which Non-performing                                                           |  |                | 9,841   |  |            |  | 5,171      |                             |        |               | 287                     |  |       |             | 2,993  |  |                        |  | 3,521  |          |        |  | 4,180   |  |        |          | 24.2 | % |           |   | 2.9  | %           |     |   | 8.1   | % |     |   | 15.8 | % |      |   | 16.2 | % |      |   | 32.8 | %
|                                                                                  |  |                |         |  |            |  |            |                             |        |               |                         |  |       |             |        |  |                        |  |        |          |        |  |         |  |        |          |      |   |           |   |      |             |     |   |       |   |     |   |      |   |      |   |      |   |      |   |      |   |      |  



|1 | Including loans to ING Group.
|- | -----------------------------

|2 | Excluding intercompany positions.
|- | ---------------------------------



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-175 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The two tables above provide the collateralisation of ING Banks business lending portfolio with a breakdown per
geographical region or main market, which are defined based on the residence of the borrowers. The total increase in the business lending portfolio is in line with the increase in covers. This increase in collateralisation is observed in most
regions and main countries. The large increase in America was mainly due to growth in the structured finance portfolio and the appreciated US Dollar.

The
increase in Belgium was mainly due to growth in the C&FI Lending. The decrease in the Netherlands was due to a large decline in central bank deposits. As these deposits are not collateralised this decline had no influence on the total cover
amounts. The increase in the Rest of Europe was mainly observed in the United Kingdom, Luxembourg and Italy.

Investment and Money Market portfolio



|                                                                                      |                |               |         |        |                             |  |            |             |  |      |                        |     |            |               |  |  |                             |  |         |             |       |  |                        |  |  |  |       |       |  |  |    |  |  | 
|------------------------------------------------------------------------------------- | -------------- | ------------- | ------- | ------ | --------------------------- |  | ---------- | ----------- |  | ---- | ---------------------- | --- | ---------- | ------------- |  |  | --------------------------- |  | ------- | ----------- | ----- |  | ---------------------- |  |  |  | ----- | ----- |  |  | -- |  |  | 
|Cover values including guarantees received - Investment and Money Market portfolio1,2 |               
|                                                                                      |                |               |         | 2016   |                             |  | Cover type |             |  | 2015 |                        |     | Cover type |              
|Region                                                                                |                | Out-standings |         |        | EligibleFinancialCollateral |  |            | Guaran-tees |  |      | Non CRR/CRD IVeligible |     |            | Out-standings |  |  | EligibleFinancialCollateral |  |         | Guaran-tees |       |  | Non CRR/CRD IVeligible | 
|Africa                                                                                |                |               |         |        |                             |  |            |             |  |      |                        |     |            |               |  |  |                             |  | 0       |             |       |  |                        |  |  |  |       |       |  |  |    | 
|America                                                                               |                |               | 10,296  |        |                             |  |            |             |  |      | 44                     |     |            |               |  |  |                             |  | 8,860   |             |       |  | 6                      |  |  |  | 23    |       |  |  | 35 | 
|Asia                                                                                  |                |               | 8,065   |        |                             |  |            |             |  |      |                        |     |            |               |  |  |                             |  | 6,079   |             |       |  |                        |  |  |  |       |       |  |  |    | 
|Australia                                                                             |                |               | 3,695   |        |                             |  |            |             |  |      |                        |     |            |               |  |  |                             |  | 3,865   |             |       |  |                        |  |  |  |       |       |  |  |    | 
|Europe                                                                                |                | Belgium       |         |        | 9,282                       |  |            |             |  |      |                        |     |            |               |  |  |                             |  |         |             | 9,677 |  |                        |  |  |  |       |       |  |  |    |  |  | 
|                                                                                      | Germany        |               |         | 20,481 |                             |  |            |             |  |      |                        |     |            |               |  |  |                             |  |         | 20,914      |       |  |                        |  |  |  |       |       |  |  |    |  | 
|                                                                                      | Netherlands    |               |         | 11,586 |                             |  |            |             |  |      |                        |     |            |               |  |  |                             |  |         | 11,295      |       |  |                        |  |  |  |       |       |  |  |    |  | 
|                                                                                      | Rest of Europe |               |         | 46,813 |                             |  |            |             |  |      |                        | 945 |            |               |  |  |                             |  |         | 53,426      |       |  |                        |  |  |  |       | 3,090 |  |  |    |  | 
|                                                                                      |                |               |         |        |                             |  |            |             |  |      |                        |     |            |               |  |  |                             |  |         |             |       |  |                        |  |  |  |       |       |  |  |    |  |  | 
|Total Investment and Money Market                                                     |                |               | 110,218 |        |                             |  |            |             |  |      | 989                    |     |            |               |  |  |                             |  | 114,116 |             |       |  | 6                      |  |  |  | 3,113 |       |  |  | 35 | 
|of which Non-performing                                                               |                |               | 10      |        |                             |  |            |             |  |      |                        |     |            |               |  |  |                             |  | 171     |             |       |  |                        |  |  |  |       |       |  |  |    | 
|                                                                                      |                |               |         |        |                             |  |            |             |  |      |                        |     |            |               |  |  |                             |  |         |             |       |  |                        |  |  |  |       |       |  |  |    |  |  | 



|1 | Including loans to ING Group.
|- | -----------------------------

|2 | Excluding intercompany positions.
|- | ---------------------------------

A key characteristic of the investment and money market business is that typically
little cover is given to support these exposures. 99.7% of Money Market and 99.0% of Investment exposure receives no covers. The guarantees listed under Rest of Europe comprised of cedulas and were booked in Spain. The decrease in the guarantees was
related to the decreased outstandings in cedulas.

Pre-settlement portfolio

ING Bank uses various market pricing and measurement techniques to determine the amount of credit risk on pre-settlement
activities. These techniques estimate ING Banks potential future exposure on individual and portfolios of trades. Master agreements and collateral agreements are frequently entered into to reduce these credit risks.

ING Bank matches trades with similar characteristics to determine their eligibility for offsetting. This offsetting effect is called compensation.
Subsequently, ING Bank reduces the amount by any legal netting that may be permitted under various types of Master Agreements, such as ISDA Master Agreements, Global Master Repurchase Agreements (GMRA), Global Master Securities Lending Agreements
(GMSLA), etc. Lastly, the amount is further reduced by any collateral that is held by ING Bank under Credit Support Annexes (CSAs) or other similar agreements.

The
use of Central Clearing Parties (CCPs) is becoming more important for the derivatives business and as a consequence the credit risk is shifting from Counterparties to CCPs. In 2016, the notional Pre-Settlement
exposure that was cleared via CCPs formed 55.5% of the total notional (51.2% in 2015).

As part of its securities financing business, ING Bank entities actively
enter into agreements to sell and buy back marketable securities. These transactions can take many legal forms. Repurchase and reverse repurchase agreements, buy/sell-back and sell/buyback agreements, and securities borrowing and lending agreements
are the most common. As a general rule, the marketable securities that have been received under these transactions are eligible to be resold or re-pledged in other (similar) transactions. ING Bank is obliged
to return equivalent securities in such cases.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-176 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The table below represents the different types of outstandings in 2016 and 2015.



| |  | The Gross MtM before netting and collateral is the exposure calculated in accordance with the Current Exposure Method (CEM, which in the EU regulation is referred to as the Mark-to-Market method) without accounting for any netting or collateral benefit;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The MtM after netting is the exposure, according to the CEM, taking into account the benefit of legally enforceable netting agreements (e.g. ISDAs), but without considering the benefit of margin collateral
(e.g. CSAs);
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The MtM after netting and collateral is the exposure according to the CEM, taking into account both the benefit of netting and marginal collateral. In other words, the gap between the MtM after
netting and MtM after netting and collateral is the liquid collateral (cash and securities); and
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The outstandings column represents CEM exposure (MtM after netting and collateral) plus the Potential Future Exposure (PFE) at a 97.5% confidence level for derivatives and securities.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                             |  |                                      |         |      |                 |  |        |                                |        |  |              |  |        |                                       |        |  |                 |  |         |                                |         |  |              |  |        |  |        |  |        |  |        |  |        | 
|---------------------------- |  | ------------------------------------ | ------- | ---- | --------------- |  | ------ | ------------------------------ | ------ |  | ------------ |  | ------ | ------------------------------------- | ------ |  | --------------- |  | ------- | ------------------------------ | ------- |  | ------------ |  | ------ |  | ------ |  | ------ |  | ------ |  | ------ | 
|Pre-settlement portfolio 1,2 | 
|                             |  |                                      |         | 2016 |                 |  | 2015   |                               
|Region                       |  | Gross MtMbeforenetting andcollateral |         |      | MtMafternetting |  |        | MtM afternetting andcollateral |        |  | Outstandings |  |        | Gross MtMbefore nettingand collateral |        |  | MtMafternetting |  |         | MtM afternetting andcollateral |         |  | Outstandings | 
|Africa                       |  |                                      | 84      |      |                 |  | 49     |                                |        |  | 47           |  |        |                                       | 89     |  |                 |  | 71      |                                |         |  | 48           |  |        |  | 46     |  |        |  | 55     | 
|America                      |  |                                      | 20,866  |      |                 |  | 10,891 |                                |        |  | 6,549        |  |        |                                       | 9,241  |  |                 |  | 18,648  |                                |         |  | 10,237       |  |        |  | 7,127  |  |        |  | 8,734  | 
|Asia                         |  |                                      | 8,318   |      |                 |  | 4,743  |                                |        |  | 3,558        |  |        |                                       | 3,918  |  |                 |  | 6,598   |                                |         |  | 3,455        |  |        |  | 2,823  |  |        |  | 3,242  | 
|Australia                    |  |                                      | 537     |      |                 |  | 303    |                                |        |  | 228          |  |        |                                       | 492    |  |                 |  | 470     |                                |         |  | 259          |  |        |  | 236    |  |        |  | 344    | 
|                             |  | Belgium                              |         |      | 5,463           |  |        |                                | 3,368  |  |              |  | 2,871  |                                       |        |  | 2,455           |  |         |                                | 5,343   |  |              |  | 3,875  |  |        |  | 3,360  |  |        |  | 2,507  | 
|                             |  | Germany                              |         |      | 5,300           |  |        |                                | 2,757  |  |              |  | 1,842  |                                       |        |  | 3,479           |  |         |                                | 7,216   |  |              |  | 3,783  |  |        |  | 2,486  |  |        |  | 5,038  | 
|Europe                       |  | Netherlands                          |         |      | 9,146           |  |        |                                | 5,859  |  |              |  | 3,741  |                                       |        |  | 4,848           |  |         |                                | 10,256  |  |              |  | 5,842  |  |        |  | 4,385  |  |        |  | 5,138  | 
|                             |  | Rest of Europe                       |         |      | 124,173         |  |        |                                | 31,656 |  |              |  | 26,648 |                                       |        |  | 25,481          |  |         |                                | 118,920 |  |              |  | 34,762 |  |        |  | 28,212 |  |        |  | 27,504 | 
|                             |  |                                      |         |      |                 |  |        |                                |        |  |              |  |        |                                       |        |  |                 |  |         |                                |         |  |              |  |        |  |        |  |        |  |        |  |        | 
|Total Pre-settlement         |  |                                      | 173,887 |      |                 |  | 59,626 |                                |        |  | 45,484       |  |        |                                       | 50,003 |  |                 |  | 167,522 |                                |         |  | 62,261       |  |        |  | 48,675 |  |        |  | 52,562 | 
|of which Non-performing      |  |                                      | 37      |      |                 |  | 36     |                                |        |  | 36           |  |        |                                       | 36     |  |                 |  | 52      |                                |         |  | 52           |  |        |  | 52     |  |        |  | 55     | 
|                             |  |                                      |         |      |                 |  |        |                                |        |  |              |  |        |                                       |        |  |                 |  |         |                                |         |  |              |  |        |  |        |  |        |  |        |  |        | 



|1 | Including transactions with ING Group.
|- | --------------------------------------

|2 | Excluding intercompany positions.
|- | ---------------------------------

During 2016 the pre-settlement portfolio
decreased when expressed in outstandings. The MtM before and after netting and collateral increases were observed, especially in Rest of Europe due to increases from exposures to commercial banks and to central clearing houses. Rest of Europe forms
majority of the pre-settlement portfolio which was mainly concentrated in UK and where the portfolio consisted of mostly derivatives.

Credit quality

Following, the somewhat higher credit risk levels seen as a
result of the financial crisis and economic downturn, the credit quality has been improving since 2014 and also continued the improving trend in 2016.



|                         |  |         |                 |  |            |  |              |                 |  |  |                      |  |  |  |                      | 
|------------------------ |  | ------- | --------------- |  | ---------- |  | ------------ | --------------- |  |  | -------------------- |  |  |  | -------------------- | 
|Credit risk categories   | 
|                         |  | Regular |                 |  | Watch List |  |              | Restructuring 1 |  |  | Non-performing1      | 
|Possible ratings         |  |         | 119            |  |            |  | 119         |                 |  |  | 1120                |  |  |  | 20-22                | 
|Typical ratings          |  |         | 114            |  |            |  | 1517        |                 |  |  | 1820                |  |  |  | 20-22                | 
|Deterioration in risk    |  |         | Not significant |  |            |  | Significant  |                 |  |  | Significant          |  |  |  | Significant          | 
|Significant intervention |  |         | Not required    |  |            |  | Not required |                 |  |  | Required             |  |  |  | Required             | 
|Includes impairments     |  |         | No              |  |            |  | No           |                 |  |  | Yes                  |  |  |  | Yes                  | 
|Account Ownership        |  |         | Front Office    |  |            |  | Front Office |                 |  |  | Front Office         |  |  |  | Front Office         | 
|Credit Risk Management   |  |         | Regular         |  |            |  | Regular      |                 |  |  | Credit Restructuring |  |  |  | Credit Restructuring | 
|Primary Manager          |  |         | Front Office    |  |            |  | Front Office |                 |  |  | Credit Restructuring |  |  |  | Credit Restructuring | 
|Accounting provisioning  |  |         | IBNR            |  |            |  | IBNR         |                 |  |  | IBNR/INSFA/ISFA      |  |  |  | INSFA/ISFA           | 



|1 | More information on the Restructuring and Non-performing categories can be found in the Credit restructuring section.
|- | ---------------------------------------------------------------------------------------------------------------------



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-177 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                     |  |      |         |  |      |  |         | 
|---------------------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | 
|Credit quality: ING Bank portfolio, outstandings     |  |      |         |  |      | 
|                                                     |  | 2016 |         |  | 2015 | 
|Neither past due nor non-performing                  |  |      | 757,498 |  |      |  | 740,890 | 
|Consumer lending past due but performing (190 days) |  |      | 3,970   |  |      |  | 4,328   | 
|Non-performing
1                                     |  |      | 13,597  |  |      |  | 15,325  | 
|                                                     |  |      |         |  |      |  |         | 
|Total                                                |  |      | 775,065 |  |      |  | 760,543 | 
|                                                     |  |      |         |  |      |  |         | 



|1 | Based on lending and investment activities.
|- | -------------------------------------------

The total ING Bank portfolio increase was driven by both asset origination
and FX movements. The credit quality of the ING Bank portfolio improved with lower past due and non-performing assets. Both developments were mainly observed in Dutch mortgages and the commercial property
finance portfolio. The improvement in the past due but performing portfolio was largely driven by Retail Benelux resulting from better arrears management. The reduction in the non-performing portfolio was due
to write-offs combined with positive rating migration to the performing portfolio and it was partly offset by an increase in non-performing loans in structured finance.

Past-due obligations

Retail Banking continuously measures its portfolio in terms of payment arrears. The retail portfolios are closely monitored on a monthly basis to determine if
there are any significant changes in the level of arrears. The methodology is principally extended to loans to private individuals, such as residential mortgage loans, car loans, and other consumer loans. An obligation is considered past-due if a payment of interest or principal is more than one day late. In practice, the first 5-7 days after an obligation becomes past due are frequently
operational in nature for retail loans and small businesses portfolios. After this period, letters are sent to the obligor reminding the obligor of its (past due) payment obligations. If the arrears continue to exist, the obligor is transferred to a
restructuring unit. The obligor is downgraded to risk rating 20 (non-performing) when the arrears exceed 90 days. The table below captures all past due exposures starting from day 1.



|                                                                                              |  |      |       |  |      |  |       | 
|--------------------------------------------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | 
|Aging analysis (past due but performing): ING Bank consumer lending portfolio, outstandings 1 | 
|                                                                                              |  | 2016 |       |  | 2015 | 
|Past due for 130 days                                                                        |  |      | 3,368 |  |      |  | 3,593 | 
|Past due for 3160 days                                                                       |  |      | 532   |  |      |  | 652   | 
|Past due for 6190 days                                                                       |  |      | 70    |  |      |  | 83    | 
|                                                                                              |  |      |       |  |      |  |       | 
|Total                                                                                         |  |      | 3,970 |  |      |  | 4,328 | 
|                                                                                              |  |      |       |  |      |  |       | 



|1 | Based on consumer lending. The amount of past due but performing financial assets in respect of non-lending activities was not significant.
|- | -------------------------------------------------------------------------------------------------------------------------------------------

The improvement in past due obligations was mainly seen in Retail Benelux, underlying a solid base for INGs primary market. The improved economy and revival of
the housing market in the Netherlands were the main drivers. At the same time, local risk management actions targeted at lowering arrears and enhancing the early warning methodology clearly helped to improve the overall portfolio quality.

Wholesale Banking: for business loans (governments, institutions, corporates), ING Bank classifies the relevant obligors as
non-performing when any of the below listed default triggers occurs:



| |  | Bankruptcy or financial reorganisation: The borrower has sought or has been placed (or is likely to seek or be placed) in bankruptcy or similar protection, where this would avoid or delay repayment of the financial
asset;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The borrower has failed in the payment of principal or interest/fees and such payment failure has remained unresolved for the following period:
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Corporates: more than 90 days; and
| | - |  | ----------------------------------



| |  |  | Financial Institutions and Governments: from day 1, however, a research period of 14 calendar days will be observed in order for ING Bank to establish whether the payment default was due to non-operational reasons (i.e. the deteriorated credit quality of the financial institution) or due to operational reasons. The latter does not trigger default.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | ING Bank thinks the borrower is unlikely to pay: The borrower has evidenced significant financial difficulty, to the extent that it will have a negative impact on the future cash flows of the financial asset. The
following events could be seen as examples of financial difficulty indicators:
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (1) | The borrower (or 3rd party) has started insolvency proceedings.
| | --- | ---------------------------------------------------------------



| | (2) | NPL status of a group company/co-borrower.
| | --- | ------------------------------------------



| | (3) | Significant fraud (affecting the companys ability to service its debt)
| | --- | -----------------------------------------------------------------------



| | (4) | There is doubt as to the borrowers ability to generate stable and sufficient cash flows to service its debt.
| | --- | -------------------------------------------------------------------------------------------------------------



| | (5) | Restructuring of debt includes a partial (debt waiver) or debt-equity conversion
| | --- | --------------------------------------------------------------------------------



| |  | ING Bank has granted concessions relating to the borrowers financial difficulty, the effect of which is a reduction in expected future cash flows of the financial asset below current carrying amount.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Wholesale Banking has an individual name approach, using Early Warnings indicators to signal possible future issues in debt service.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-178 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Credit restructuring

Global
Credit Restructuring (GCR) is the dedicated and independent corporate department that deals with non-performing loans and loans that hold a reasonable probability that ING will end up with a loss, if no
specific action is taken. GCR deals with accounts or portfolios requiring an active approach, which may include renegotiation of terms & conditions and business or financial restructuring. The loans are managed by GCR or by the regional
restructuring units in the various regions and business units.

ING uses three distinct statuses in categorizing the management of clients with (perceived)
deteriorating credit risk profile, i.e. there is doubt as to the performance and the collectability of the clients contractual obligations:



| |  | Watch List: Usually, a client is first classified as Watch List when there are concerns of any (potential or material) deterioration in the credit risk profile that might affect the ability of the client to
adhere to its debt service obligations or to refinance its existing loans. The Watch List status requires more than usual attention, increased monitoring and quarterly reviews. Some clients with a Watch List status may develop into a Restructuring
status or even a Recovery status.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Restructuring: A client is classified as Restructuring when there are concerns about the clients financial stability, credit worthiness and/or its ability to repay, but where the situation does not call for
recalling or acceleration of facilities or liquidating the collateral. INGs actions aim to maintain the going concern status of the client by:
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Restoring the clients financial stability;
| | - |  | -------------------------------------------



| |  |  | Supporting the clients turnaround;
| | - |  | -----------------------------------



| |  |  | Restoring the tension between debt and equity; and
| | - |  | --------------------------------------------------



| |  |  | Restructuring the debt to a sustainable situation.
| | - |  | --------------------------------------------------



| |  | Recovery:A client is classified as Recovery when ING and/or the client concludes that the clients financial situation cannot be restored and a decision is made to end the (credit) relationship or even to
enter into bankruptcy. ING will prefer an amicable exit, but will enforce and liquidate collateral or claim on the guarantees if deemed necessary.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Additionally, ING uses three distinct reporting signs in identifying exposures for clients facing financial difficulties with the notion of:



| |  | Forbearance: For clients facing financial difficulties, ING might enter into a forbearance agreement with these clients in order to ease the contractual debt service obligation. All ING Business Units/Lines are
required to review the clients with Early Warning Signals, Watch List, Restructuring and Recovery classification, to determine whether Forbearance is applicable. For further details on forbearance we refer to the Forbearance section.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Default:For clients with non-performing loan(s) in accordance with the definition of the regulator (CRR/CRDIV; EBA; ECB); and
|- |  | -----------------------------------------------------------------------------------------------------------------------------



| |  | Impairment: For clients with impaired loan(s) in accordance with the definition of accounting (IFRS/IAS).
|- |  | ---------------------------------------------------------------------------------------------------------

Watch
List, Restructuring and Recovery are discussed at least on a quarterly basis between Front Office, respective Credit Risk Management executives and GCR, at which time it may be decided to change the status of an account from Watch List to
Restructuring or Recovery or vice versa.

Non-performing loans

The ING Bank loan portfolio is under constant review. Loans with past due financial obligations of more than 90 days are reclassified as
non-performing. For the commercial lending portfolios, there generally are reasons for declaring a loan non-performing prior to being 90 days past due. These include,
but are not limited to, ING Banks assessment of the customers perceived inability to meet its financial obligations, or the customer filing for bankruptcy or bankruptcy protection.



The table below represents the economic sector breakdown of credit risk outstandings for loans
and positions that have been classified as non-performing loans.



|                                                                            |  |      |        |  |      |  |        | 
|--------------------------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|Non-performing Loans: ING Bank portfolio, outstandings by economic sector 1 | 
|                                                                            |  | 2016 |        |  | 2015 | 
|Private Individuals                                                         |  |      | 4,382  |  |      |  | 5,580  | 
|Real Estate                                                                 |  |      | 1,808  |  |      |  | 2,562  | 
|Natural Resources                                                           |  |      | 1,387  |  |      |  | 1,352  | 
|Transportation & Logistics                                                  |  |      | 1,056  |  |      |  | 793    | 
|Builders & Contractors                                                      |  |      | 955    |  |      |  | 1,037  | 
|General Industries                                                          |  |      | 710    |  |      |  | 694    | 
|Food, Beverages & Personal Care                                             |  |      | 705    |  |      |  | 710    | 
|Services                                                                    |  |      | 689    |  |      |  | 796    | 
|Other                                                                       |  |      | 1,905  |  |      |  | 1,801  | 
|                                                                            |  |      |        |  |      |  |        | 
|Total                                                                       |  |      | 13,597 |  |      |  | 15,325 | 
|                                                                            |  |      |        |  |      |  |        | 



|1 | Economic sectors not specified in above overview are grouped in Other.
|- | ----------------------------------------------------------------------



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-179 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The overall amount of NPLs decreased in 2016, mainly thanks to Private Individuals and improvements in the Real Estate
sectors. The decrease in NPLs for the Private Individuals segment was mainly due to the improved credit quality in the Dutch mortgage portfolio as a result of the improved economic conditions in the Netherlands. The decline in NPLs in the Real
Estate sector was observed in Wholesale Banking Netherlands and Spain/ Portugal Real Estate Finance and was driven by both cures and file resolutions or sales. The total decrease in the NPL portfolio outstandings was partly offset by an increase in
Shipping Netherlands and UK (part of Transportation & Logistics).

Provisioning

Loan Loss Provisions (LLP) are calculated and accounted for in accordance with IFRS. LLP are reported for financial assets that are measured against amortised costs
(loans and receivables, held-to-maturity investments). There are three types of LLP:



| |  | Individually Significant Financial Asset (ISFA) provisions: when there is objective evidence that a financial asset is defaulted as result of one or more prescribed default trigger events. In such cases, ING assigns a
risk rating 20, 21 or 22. Specific provisions are calculated if the exposure to a borrower exceeds the threshold amount. The threshold amount varies per business unit, but generally is EUR 1 million. Provisions are calculated based on
discounted future cash flows under 1 or more likely scenarios to arrive at a best estimate of future recoveries. Provisions are made on a quarterly basis.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Individually Not Significant Financial Asset (INSFA) provisions: are made for non-performing loans (ratings 20-22), if the exposure to a
borrower is below the threshold amount. A collective model based approach is taken to determine these provisions; and
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Incurred But Not Recognised (IBNR) provisions: are made for the performing loan portfolio as an estimate or proxy for the losses/defaults that may have already occurred in the portfolio. The PD time horizon
used in the calculation of IBNR provisions refers to the period during which an asset is impaired (in default), but not yet recognised as such - due to lack of objective evidence  and the moment that objective evidence of impairment occurs and
becomes available to ING (loss emergence period).
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

ISFA, INSFA and IBNR provisions are reported and calculated by using common standards
across ING Bank. In case there is objective evidence that one of the default triggers is applicable, ISFA or INSFA provisions are calculated. An analysis takes place on a quarterly basis in order to determine the appropriate level of LLP and Risk
Costs. The ING Bank Provisioning Committee (IPC) discusses and approves the LLP for ING Bank, on the basis of proposals originating from ING Business Units.

At the
end of 2016, ING Bank held specific (ISFA) and collective provisions (INSFA) of EUR 3,044 million and EUR 1,443 million, respectively (2015: EUR 3,331 million and EUR 1,686 million respectively), representing the difference
between the amortised cost of the portfolio and the estimated recoverable amount discounted at the effective rate of interest. In addition, there is EUR 821 million (2015: EUR 769 million) in provisions (IBNR) against the performing portfolio.



|                                           |  |                   |       |  |                |  |       |                                    |  |  |                |  |  |      |       |  |      |  |       |      |  |  |       |  |  |  |        |  |  |  |        | 
|------------------------------------------ |  | ----------------- | ----- |  | -------------- |  | ----- | ---------------------------------- |  |  | -------------- |  |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- |  |  |  | ------ |  |  |  | ------ | 
|Provisions: ING Bank portfolio 1,2         | 
|                                           |  | Wholesale Banking |       |  | Retail Benelux |  |       | Retail Challengers &Growth Markets |  |  | Total ING Bank | 
|                                           |  | 2016              |       |  | 2015           |  |       | 2016                               |  |  | 2015           |  |  | 2016 |       |  | 2015 |  |       | 2016 |  |  | 2015  | 
|Opening Balance                            |  |                   | 2,371 |  |                |  | 2,259 |                                    |  |  | 2,199          |  |  |      | 2,529 |  |      |  | 1,216 |      |  |  | 1,207 |  |  |  | 5,786  |  |  |  | 5,995  | 
|Changes in the composition of the group    |  |                   | 0     |  |                |  | 0     |                                    |  |  | 0              |  |  |      | 0     |  |      |  | 0     |      |  |  | 0     |  |  |  | 0      |  |  |  | 0      | 
|Write-offs                                 |  |                   | 625  |  |                |  | 520  |                                    |  |  | 681           |  |  |      | 956  |  |      |  | 188  |      |  |  | 242  |  |  |  | 1,494 |  |  |  | 1,718 | 
|Recoveries                                 |  |                   | 49    |  |                |  | 32    |                                    |  |  | 38             |  |  |      | 50    |  |      |  | 7     |      |  |  | 9     |  |  |  | 94     |  |  |  | 91     | 
|Increase/(decrease) in loan loss provision |  |                   | 367   |  |                |  | 478   |                                    |  |  | 347            |  |  |      | 602   |  |      |  | 260   |      |  |  | 267   |  |  |  | 974    |  |  |  | 1,347  | 
|Exchange rate or other movements           |  |                   | 15   |  |                |  | 122   |                                    |  |  | 19            |  |  |      | 26   |  |      |  | 18   |      |  |  | 25   |  |  |  | 52    |  |  |  | 71     | 
|                                           |  |                   |       |  |                |  |       |                                    |  |  |                |  |  |      |       |  |      |  |       |      |  |  |       |  |  |  |        |  |  |  |        | 
|Closing Balance                            |  |                   | 2,147 |  |                |  | 2,371 |                                    |  |  | 1,884          |  |  |      | 2,199 |  |      |  | 1,277 |      |  |  | 1,216 |  |  |  | 5,308  |  |  |  | 5,786  | 
|                                           |  |                   |       |  |                |  |       |                                    |  |  |                |  |  |      |       |  |      |  |       |      |  |  |       |  |  |  |        |  |  |  |        | 



|1 | At the end of 2016, the stock of provisions included provisions for amounts due from banks: EUR 11 million (2015: EUR 14 million).
|- | ----------------------------------------------------------------------------------------------------------------------------------

|2 | Includes EUR 119 million provisions for contingent liabilities.
|- | ---------------------------------------------------------------

The favourable trend in risk costs continued over
the year 2016. Compared to 2015-end, risk costs have trended down to 31 basis points (2015: 44 basis points) of average RWA which is below the
through-the-cycle range of 40-45 basis points. The improving risk trend caused average quarterly risk costs to remain well below
EUR 300 million, causing the total stock of provisions to decline from EUR 5.8 billion to EUR 5.3 billion.

Portfolios in Retail Benelux continued to
improve, Wholesale Banking corporate lending was also relatively strong with a few incidental defaults. Challenges continued in industries like Oil & Gas, Shipping and Telecom while on the other hand, improved risk profiles were witnessed
in other portfolios of the bank such as in residential mortgages and in commercial property finance. Encouraging signs in the Dutch housing market have helped to reduce the risk costs due to improved house prices and risk profiles. Risk costs in
Turkey and Ukraine have trended downwards in 2016.

There was an improvement in the bank coverage ratio to 39.0% (2015: 38.5%) due to improved non-performing loan levels and a comparatively lesser decrease in stock provision level



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-180 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Large parts of the Investment portfolio are not accounted for at amortised costs (loans & receivables or held-to-maturity) and therefore out of scope for LLP. Instead, these assets are evaluated for impairment. The ING Bank Impairment Meeting is a quarterly process that reviews
all assets that are subject to an IFRS-EU impairment test.

Forbearance

Forbearance occurs when a client is considered to be unable to meet its financial commitments under the contract due to financial difficulties and ING decides to grant
concessions towards the client. Forborne exposures are exposures in respect of which forbearance measures have been granted. Forbearance measures can be either modifications to existing contractual terms and conditions or total or partial
refinancing. Examples include reduction of loan principal and/or interest payments, extended payment terms, debt consolidations and deferral of foreclosures.

To
identify forbearance, ING assesses clients with Early Warning Signals, Watch List, Restructuring, Default or Recovery status. ING Bank reviews the performance of forborne exposures at least quarterly, either on a case-by-case (business) or on a portfolio (retail) basis.

For corporate customers, ING Bank applies forbearance measures
to support clients with fundamentally sound business models that are experiencing temporary difficulties. The aim is to maximise the repayment ability of the clients.

For ING Bank retail units, clear criteria have been established to determine whether a client is eligible for forbearance  generally as part of an automated
process. Specific approval mandates are in place to approve the measures, as well as procedures to manage, monitor and report the forbearance activities.

Exposures
with forbearance measures can be either performing (Risk Ratings 1-19) or non-performing (Risk Ratings 20-22). ING applies
criteria to move forborne exposures from non-performing to performing as well as criteria to remove the forbearance status that are consistent with the corresponding EBA standards. An exposure is reported as
forborne for a minimum of two years, plus a probation period observed for forborne exposures to move from non-performing back to performing.

ING Bank implemented its forbearance policy in 2014. In the course of 2016 based on a detailed re-assessment of the relevant
standards set by EBA and subsequent regulatory guidance, ING Bank tightened the definitions under its forbearance policy. Key policy revisions that led to an increase in the scope of forbearance relate to the inclusion of concessions where the risk
is significantly mitigated by the client and waivers or modifications of key financial covenants. As a result of these revisions in definition and scope, performing forborne exposure recognised by ING Bank increased significantly as measures taken
(in previous periods) were now recognized as forbearance.



|                                    |  |                |        |  |                     |  |       |                         |  |  |                     |  |  |                |     |   |                     |  |        |                         |  |  |                     |  |  |  |       |  |  |  |     |  
|----------------------------------- |  | -------------- | ------ |  | ------------------- |  | ----- | ----------------------- |  |  | ------------------- |  |  | -------------- | --- | - | ------------------- |  | ------ | ----------------------- |  |  | ------------------- |  |  |  | ----- |  |  |  | --- | -
|ING Bank: Summary Forborne assets 1 | 
|                                    |  | 2016           |        |  | 2015                | 
|Business Line                       |  | Forborneassets |        |  | Of which:Performing |  |       | Of which:Non-Performing |  |  | % of totalportfolio |  |  | Forborneassets |     |   | Of which:Performing |  |        | Of which:Non-Performing |  |  | % of totalportfolio | 
|Wholesale Banking                   |  |                | 7,776  |  |                     |  | 3,978 |                         |  |  | 3,799               |  |  |                | 2.7 | % |                     |  | 3,655  |                         |  |  | 881                 |  |  |  | 2,774 |  |  |  | 1.4 | %
|Retail Banking                      |  |                | 7,104  |  |                     |  | 3,944 |                         |  |  | 3,159               |  |  |                | 1.7 | % |                     |  | 6,982  |                         |  |  | 3,241               |  |  |  | 3,742 |  |  |  | 1.6 | %
|                                    |  |                |        |  |                     |  |       |                         |  |  |                     |  |  |                |     |   |                     |  |        |                         |  |  |                     |  |  |  |       |  |  |  |     |  
|Total                               |  |                | 14,880 |  |                     |  | 7,922 |                         |  |  | 6,958               |  |  |                | 2.1 | % |                     |  | 10,637 |                         |  |  | 4,122               |  |  |  | 6,516 |  |  |  | 1.5 | %
|                                    |  |                |        |  |                     |  |       |                         |  |  |                     |  |  |                |     |   |                     |  |        |                         |  |  |                     |  |  |  |       |  |  |  |     |  



|1 | Undrawn commitments are excluded.
|- | ---------------------------------

ING Banks forborne assets increased by EUR 4.2 billion (40%) to EUR
14.9 billion per December 2016, mainly driven by Wholesale Banking.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-181 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Wholesale Banking

As
per December 2016, Wholesale Banking forborne assets amounted to a total of EUR 7.8 billion, which represented 2.7% of the total Wholesale Banking portfolio.



|                                                            |  |                |             |  |                 |       |       |                     |  |       |                         |  |  |                 |       |  |                     |       |       |                         |  |     |     |  |  |       |       | 
|----------------------------------------------------------- |  | -------------- | ----------- |  | --------------- | ----- | ----- | ------------------- |  | ----- | ----------------------- |  |  | --------------- | ----- |  | ------------------- | ----- | ----- | ----------------------- |  | --- | --- |  |  | ----- | ----- | 
|Wholesale Banking: Forborne assets by Geographical Region 1 |  |                |             |  |                 |       |      
|                                                            |  |                |             |  | 2016            |       |       | 2015                | 
|Region                                                      |  |                |             |  | Forborne assets |       |       | Of which:Performing |  |       | Of which:Non-Performing |  |  | Forborne assets |       |  | Of which:Performing |       |       | Of which:Non-Performing | 
|Europe                                                      |  |                | Netherlands |  |                 |       | 2,200 |                     |  |       | 1,100                   |  |  |                 | 1,100 |  |                     |       | 1,229 |                         |  |     | 406 |  |  |       | 823   | 
|                                                            |  | Belgium        |             |  |                 | 245   |       |                     |  | 103   |                         |  |  | 142             |       |  |                     | 63    |       |                         |  | 17  |     |  |  | 46    |      
|                                                            |  | Germany        |             |  |                 | 41    |       |                     |  | 13    |                         |  |  | 28              |       |  |                     | 5     |       |                         |  | 5   |     |  |  | 0     |      
|                                                            |  | Rest of Europe |             |  |                 | 3,016 |       |                     |  | 1,496 |                         |  |  | 1,521           |       |  |                     | 1,949 |       |                         |  | 428 |     |  |  | 1,521 |      
|Africa                                                      |  |                |             |  |                 |       | 197   |                     |  |       | 112                     |  |  |                 | 85    |  |                     |       | 92    |                         |  |     | 0   |  |  |       | 92    | 
|America                                                     |  |                |             |  |                 |       | 1,387 |                     |  |       | 709                     |  |  |                 | 678   |  |                     |       | 237   |                         |  |     | 7   |  |  |       | 230   | 
|Asia                                                        |  |                |             |  |                 |       | 663   |                     |  |       | 445                     |  |  |                 | 218   |  |                     |       | 80    |                         |  |     | 18  |  |  |       | 62    | 
|Australia                                                   |  |                |             |  |                 |       | 27    |                     |  |       | 0                       |  |  |                 | 27    |  |                     |       |       |                         |  |     |     |  |  |       |       | 
|                                                            |  |                |             |  |                 |       |       |                     |  |       |                         |  |  |                 |       |  |                     |       |       |                         |  |     |     |  |  |       |       | 
|Total                                                       |  |                |             |  |                 |       | 7,776 |                     |  |       | 3,978                   |  |  |                 | 3,799 |  |                     |       | 3,655 |                         |  |     | 881 |  |  |       | 2,774 | 
|                                                            |  |                |             |  |                 |       |       |                     |  |       |                         |  |  |                 |       |  |                     |       |       |                         |  |     |     |  |  |       |       | 



|1 | Undrawn commitments are excluded.
|- | ---------------------------------



|                                                 |  |                 |       |  |                     |  |       |                         |  |  |                 |  |  |                     |       |  |                         |  |     |  |  |  |       | 
|------------------------------------------------ |  | --------------- | ----- |  | ------------------- |  | ----- | ----------------------- |  |  | --------------- |  |  | ------------------- | ----- |  | ----------------------- |  | --- |  |  |  | ----- | 
|Wholesale Banking: Forborne assets by Industry 1 |  |                 |       |  |                     |  |      
|                                                 |  | 2016            |       |  | 2015                | 
|Industry                                         |  | Forborne assets |       |  | Of which:Performing |  |       | Of which:Non-Performing |  |  | Forborne assets |  |  | Of which:Performing |       |  | Of which:Non-Performing | 
|Natural Resources                                |  |                 | 2,385 |  |                     |  | 1,232 |                         |  |  | 1,152           |  |  |                     | 960   |  |                         |  | 26  |  |  |  | 934   | 
|Real Estate                                      |  |                 | 1,775 |  |                     |  | 1,015 |                         |  |  | 759             |  |  |                     | 1,327 |  |                         |  | 383 |  |  |  | 944   | 
|Transportation & Logistics                       |  |                 | 1,319 |  |                     |  | 685   |                         |  |  | 634             |  |  |                     | 208   |  |                         |  | 55  |  |  |  | 153   | 
|Builders & Contractors                           |  |                 | 429   |  |                     |  | 269   |                         |  |  | 160             |  |  |                     | 182   |  |                         |  | 113 |  |  |  | 70    | 
|Services                                         |  |                 | 414   |  |                     |  | 198   |                         |  |  | 216             |  |  |                     | 213   |  |                         |  | 125 |  |  |  | 88    | 
|General Industries                               |  |                 | 411   |  |                     |  | 112   |                         |  |  | 299             |  |  |                     | 316   |  |                         |  | 105 |  |  |  | 211   | 
|Utilities                                        |  |                 | 259   |  |                     |  | 58    |                         |  |  | 201             |  |  |                     | 186   |  |                         |  | 2   |  |  |  | 184   | 
|Food, Beverages & Personal Care                  |  |                 | 207   |  |                     |  | 141   |                         |  |  | 66              |  |  |                     | 68    |  |                         |  | 37  |  |  |  | 32    | 
|Telecom                                          |  |                 | 152   |  |                     |  | 39    |                         |  |  | 114             |  |  |                     | 38    |  |                         |  | 9   |  |  |  | 29    | 
|Media                                            |  |                 | 120   |  |                     |  | 39    |                         |  |  | 81              |  |  |                     | 27    |  |                         |  | 9   |  |  |  | 18    | 
|Technology                                       |  |                 | 108   |  |                     |  | 87    |                         |  |  | 22              |  |  |                     | 3     |  |                         |  | 3   |  |  |  | 0     | 
|Chemicals, Health & Pharmaceuticals              |  |                 | 76    |  |                     |  | 65    |                         |  |  | 11              |  |  |                     | 26    |  |                         |  | 3   |  |  |  | 22    | 
|Other                                            |  |                 | 121   |  |                     |  | 38    |                         |  |  | 84              |  |  |                     | 101   |  |                         |  | 11  |  |  |  | 89    | 
|                                                 |  |                 |       |  |                     |  |       |                         |  |  |                 |  |  |                     |       |  |                         |  |     |  |  |  |       | 
|Total                                            |  |                 | 7,776 |  |                     |  | 3,978 |                         |  |  | 3,799           |  |  |                     | 3,655 |  |                         |  | 881 |  |  |  | 2,774 | 
|                                                 |  |                 |       |  |                     |  |       |                         |  |  |                 |  |  |                     |       |  |                         |  |     |  |  |  |       | 



|1 | Undrawn commitments are excluded.
|- | ---------------------------------

Wholesale Banking forborne assets were mainly concentrated in Natural Resources, Real
Estate and Transportation & Logistics. Together they accounted for 70% (2015: 68%) of the total forborne assets and 67% (2015: 73%) of the total non-performing forborne assets.

Wholesale Banking forborne assets increased by EUR 4.1 billion compared to 2015. This was largely driven by the revision of the forbearance policy which resulted
in increased forborne assets of EUR 3.1 billion, of which EUR 2.1 billion in the performing portfolio and EUR 1.0 billion in the non-performing portfolio. The main countries impacted were the
Netherlands and the United States.

Excluding the policy revision, the forborne assets increased by EUR 1.0 billion mainly visible in Natural Resources (EUR
0.4 billion) and Transportation & Logistics (EUR 0.3 billion), driven by the respective Oil & Gas and Shipping portfolios. The non-performing portfolio in Natural Resources mainly decreased
due to the bankruptcy of a large client. The performing Real Estate portfolio increased due to new inflow of clients, while the non-performing Real Estate portfolio mainly decreased due to repayments and
write-offs.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-182 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Retail Banking

As
per end of December, Retail Banking forborne assets amounted to a total of EUR 7.1 billion, which represented 1.7% of the total Retail Banking portfolio.



|                                                         |  |                |             |  |                |       |       |                     |  |     |                         |  |  |                |       |  |                     |       |       |                         |  |     |       |  |  |     |       | 
|-------------------------------------------------------- |  | -------------- | ----------- |  | -------------- | ----- | ----- | ------------------- |  | --- | ----------------------- |  |  | -------------- | ----- |  | ------------------- | ----- | ----- | ----------------------- |  | --- | ----- |  |  | --- | ----- | 
|Retail Banking: Forborne assets by Geographical Region 1 |  |                |             |  |                |       |      
|                                                         |  |                |             |  | 2016           |       |       | 2015                | 
|Region                                                   |  |                |             |  | Forborneassets |       |       | Of which:Performing |  |     | Of which:Non-Performing |  |  | Forborneassets |       |  | Of which:Performing |       |       | Of which:Non-Performing | 
|Europe                                                   |  |                | Netherlands |  |                |       | 4,301 |                     |  |     | 2,395                   |  |  |                | 1,906 |  |                     |       | 4,262 |                         |  |     | 1,719 |  |  |     | 2,543 | 
|                                                         |  | Belgium        |             |  |                | 1,139 |       |                     |  | 418 |                         |  |  | 721            |       |  |                     | 1,096 |       |                         |  | 412 |       |  |  | 684 |      
|                                                         |  | Germany        |             |  |                | 644   |       |                     |  | 511 |                         |  |  | 132            |       |  |                     | 696   |       |                         |  | 547 |       |  |  | 149 |      
|                                                         |  | Rest of Europe |             |  |                | 651   |       |                     |  | 335 |                         |  |  | 317            |       |  |                     | 527   |       |                         |  | 259 |       |  |  | 269 |      
|Africa                                                   |  |                |             |  |                |       | 1     |                     |  |     | 0                       |  |  |                | 1     |  |                     |       | 1     |                         |  |     | 0     |  |  |     | 1     | 
|America                                                  |  |                |             |  |                |       | 3     |                     |  |     | 0                       |  |  |                | 2     |  |                     |       | 2     |                         |  |     | 0     |  |  |     | 1     | 
|Asia                                                     |  |                |             |  |                |       | 1     |                     |  |     | 0                       |  |  |                | 1     |  |                     |       | 1     |                         |  |     | 0     |  |  |     | 1     | 
|Australia                                                |  |                |             |  |                |       | 364   |                     |  |     | 285                     |  |  |                | 79    |  |                     |       | 397   |                         |  |     | 304   |  |  |     | 94    | 
|                                                         |  |                |             |  |                |       |       |                     |  |     |                         |  |  |                |       |  |                     |       |       |                         |  |     |       |  |  |     |       | 
|Total                                                    |  |                |             |  |                |       | 7,104 |                     |  |     | 3,944                   |  |  |                | 3,159 |  |                     |       | 6,982 |                         |  |     | 3,241 |  |  |     | 3,742 | 
|                                                         |  |                |             |  |                |       |       |                     |  |     |                         |  |  |                |       |  |                     |       |       |                         |  |     |       |  |  |     |       | 



|1 | Undrawn commitments are excluded.
|- | ---------------------------------

The main concentration of forborne assets was in the Netherlands with 61% of the
total forborne assets (2015: 61%) and 60% of the non-performing forborne assets (2015: 68%). Retail Banking forborne assets only increased slightly by EUR 0.1 billion compared to 2015. The policy revision
impacted the Retail Banking portfolio to a much lesser extent (increase of EUR 0.4 billion) and was primarily seen in the Dutch business portfolio.

Excluding the
policy revision, the forborne assets decreased by EUR 0.3 billion. As the business lending portfolio remained stable, this decrease was attributable to the consumer portfolio and mainly driven by the Dutch residential mortgage portfolio.
Additionally, a EUR 0.7 billion move of non-performing to performing forborne assets was observed in the Netherlands, due to clients reaching the one year probation period. Both were the result of a
continued improved economic environment, visible by the increasing house prices and improved credit worthiness of our clients.

Securitisations

ING Bank primarily plays three roles in its exposure to securitisations programs which are:

ING Bank as Investor

ING Banks goal is to maintain a portfolio
of high quality liquid assets that meets the regulatory requirements of CRR/CRD IV and the Delegated Act of October 2014 regarding liquidity. ING invests in high quality residential mortgage backed securities (RMBS) and asset backed securities (ABS)
keeping close track of the securitisation investment positions via monthly monitoring reports and weekly update calls. Additionally, ING may invest in securitisation positions in order to facilitate client business from its Global Capital Markets
Unit

ING Bank as Originator

ING Bank occasionally originates own
securitisation transactions for economic and regulatory capital purposes, as well as liquidity and funding purposes. Securitisations originated by a company may only be considered for balance sheet
de-recognition when the requirements for significant credit risk transfer have been fulfilled. However, for a securitisation transaction to be recognised as for RWA reduction, risk transfer alone may be
insufficient due to the increasing impact of the maturity mismatch formula. As a consequence, the RWA of the retained tranches for one of the transactions would be higher than the total RWA of the underlying pool before securitisation. In such cases
the RWA calculation for the transaction is performed as if it was not securitised. ING Bank has done a very limited number of external transactions as originator.

ING Bank as Sponsor

In the normal course of business, ING Bank
structures financing transactions for its clients by assisting them in obtaining sources of liquidity by selling the clients receivables or other financial assets to a special purpose vehicle (SPV). Senior positions in these transactions are
often funded by the ING Bank administered multi-seller asset backed commercial paper (ABCP) conduit Mont Blanc Capital Corp. (rated A-1/P-1). Mont Blanc Capital Corp.
funds itself externally in the ABCP markets. In its role as administrative agent, ING Bank facilitates these transactions by providing structuring, accounting, funding and operations services. ING Bank also provides support facilities (liquidity
facilities) backing the transactions funded by the conduit. Mont Blanc is fully consolidated into the ING Bank financial accounts.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-183 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Market risk

Introduction

Market risk is the risk that movements in market variables, such as interest rates, equity prices, foreign exchange rates, credit spreads and real estate prices
negatively impact the banks earnings, capital, market value or liquidity position. Market risk either arises through positions in banking books or trading books. The banking book positions are intended to be held in the long-term (or until
maturity) or for the purpose of hedging other banking book positions. The trading book positions are typically held with a short-term trading intent or in order to hedge other positions in the trading book. This means that financial instruments in
the trading books should be free of restrictions on their tradability. Policies and processes are in place to monitor inclusion of positions into either a trading or a banking book and transfer of risk from trading to banking book and vice versa.

ING Bank recognises the importance of sound market risk management and follows the approach to identify, assess, control and manage market risks. The approach
consists of a cycle of five recurrent activities: risk identification, risk assessment, risk control, risk monitoring and risk reporting.



| |  | Risk identification is a joint effort of the 1st and 2nd line of defence (the three lines of defence governance model is explained in the risk governance paragraph of the general risk management section).
Its goal is to detect potential new risks and changes in known risks;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Identified risks are assessed to determine the importance of the risk for ING Bank and subsequently to identify the control measures needed;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  | Control measures used by ING Bank include policies, procedures, minimum standards, limit frameworks, buffers and stress tests;
|- |  | ------------------------------------------------------------------------------------------------------------------------------



| |  | An important element of risk management is to continuously check if the implemented risk controls are executed and complied with and monitor that the controls are effective; and
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Results and findings are reported to the governing departments and approval bodies.
|- |  | -----------------------------------------------------------------------------------

Governance

A governance framework has been established defining specific roles and responsibilities of business management, market risk management and internal approval bodies per
activity.

Within ING Bank, the overall risk appetite is set by the Supervisory Board. Market risk falls under the supervision of the MBB and is delegated to the
ALCO function, where ALCO Bank is the highest approval authority. ALCO Bank monitors adherence to the risk appetite for market risk and sets additional limits where appropriate. These limits are cascaded through the organisation through lower level
ALCOs. This ALCO structure within ING Bank facilitates top-down risk management, limit setting and the monitoring and control of market risk.

The Balance Sheet Risk (BSR) department and the Credit & Trading Risk (C&TR) department are the designated independent departments that are responsible for
the design and execution of the banks market risk and counterparty credit risk management functions in support of the ALCO function. Balance Sheet Risk focuses on the market risks in the banking books, Capital Management department and the
Bank Treasury department, whereas Credit & Trading Risk is responsible for counterparty credit risk and market risks resulting from the Financial Markets trading books. The organisational structure recognises that risk taking and risk
management to a large extent occur at the regional/local level. Bottom-up reporting allows each management level to fully assess the market risk relevant at the respective levels.

BSR and C&TR are responsible for determining adequate policies and procedures for actively managing market risk in banking and trading books and for monitoring the
compliance with these guidelines. An important element of the risk management function is the assessment of market risk in new products and businesses. Furthermore the two departments maintain an adequate limit framework in line with ING Banks
Risk Appetite Framework. The businesses are responsible for adhering to limits that ultimately are approved by ALCO Bank. Limit excesses are reported to senior management on a timely basis and the business is required to take appropriate actions to
reduce the risk position.

This market risk paragraph elaborates on the various elements of the risk management approach for:



| |  | Market risk economic capital for trading and banking books;
|- |  | -----------------------------------------------------------



| |  | Market risks in the banking books; and
|- |  | --------------------------------------



| |  | Market risks in the trading books.
|- |  | ----------------------------------

Economic capital for market risk

Economic capital for market risk is the economic capital necessary to withstand unexpected value movements due to changes in market variables and model risk.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-184 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Model disclosure

Economic Capital for market risk is calculated for exposures both in trading portfolios and banking portfolios and includes interest rate risk, equity price risk,
foreign exchange rate risk, real estate risk and model risks. Economic capital for market risk is calculated using internally developed methodologies with a 99.95% confidence interval and a horizon of one year.

For the trading books, the linear interest rate risk in the banking books and equity investments, the Value at Risk (VaR) is taken as a starting point for the economic
capital calculations for market risk. The VaR is measured at a 99% confidence interval, a one day holding period and under the assumption of an expected value of zero.

To arrive at the economic capital for market risk, a simulation based model is used which includes scaling to the required confidence interval and holding period. In
determining this scaling factor, several other factors are also taken into account like the occurrence of large market movements (events) and management interventions.

Embedded options, e.g. the prepayment option and offered rate option in mortgages in the banking books, result in non-linear
interest rate risk in the banking books. The embedded options are economically hedged using a delta-hedging methodology, leaving the mortgage portfolio exposed to convexity and volatility risk. For the calculation of economic capital for this non-linear interest rate risk ING Bank performs a Monte Carlo simulation.

Real estate price risk includes the market risks in
both the real estate investment and the development portfolio of ING Wholesale Banking. The economic capital for real estate price risk is calculated by stressing the underlying market variables.

While aggregating the different economic capital market risk figures for the different portfolios, diversification benefits (based on stressed correlations) are taken
into account as it is not expected that all extreme market movements will appear at the same moment.

Market risk in banking books

ING Bank makes a distinction between trading and banking (non-trading) books. Positions in banking books originate from the
market risks inherent in commercial products that are sold to clients, the Bank Treasury exposures and from the investment of own funds (core capital). Both the commercial products, and the products used to hedge market risk exposures in these
products are intended to be held until maturity, or at least for the long-term.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-185 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Risk transfer

An
important element of the management of market risks in the banking books is the process of risk transfer. In this process the interest rate, FX, funding and liquidity risks are transferred from the commercial books through matched funding to Bank
Treasury, where it is centrally managed. The scheme below presents the transfer and management process of market risks in the banking books:



LOGO

Risk measurement

The main concepts and
metrics used for measuring market risk in the banking books are described below per risk type.

Interest rate risk in banking book

Interest rate risk in the banking books is defined as the exposure of a banks earnings, capital and market value to adverse movements in interest rates originated
from positions in the banking books.

Governance

The management of
interest rate risk follows the interest rate risk in the banking book framework as approved by ALCO Bank. This framework describes roles and responsibilities, risk metrics, and it defines the policies and procedures related to interest rate risk
management. Furthermore, on an overall level, ALCO Bank sets the risk appetite for interest rate risk, which is translated into limits for interest rate risk metrics.

The ING Bank approach to interest rate risk management, as set forth in this framework, is centralisation of risks from commercial books (that capture the products sold
to clients) to central interest rate risk books. This enables a clear demarcation between commercial business results and results on unhedged interest rate positions.

ING Bank distinguishes three types of activities that generate interest rate risk in the banking books:



| |  | Investment of own funds (by Capital Management)
|- |  | -----------------------------------------------



| |  | Commercial business (e.g. retail business)
|- |  | ------------------------------------------



| |  | The strategic interest rate position (Bank Treasury)
|- |  | ----------------------------------------------------

Below the three activities are described in more detail:

Capital Management is responsible for managing the investment of own funds (core capital), more information can be found in the Capital Management section. Capital is
invested for longer periods, targeting to maximise return, while keeping earnings stable.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-186 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The commercial activities can result in linear interest rate risk, for example when
re-pricing tenors of assets differ from those of liabilities. Also interest rate risk can arise from customer behaviour depending on the nature of the underlying product characteristics. Customer behaviour
risk is defined as the potential future value loss due to deviations in the actual behaviour of clients versus the modelled behaviour towards the embedded options in commercial products. General sources of customer behaviour risk include the state
of the economy, competition, changes in regulation, legislation and tax regime, and developments in the housing market. Since these risk factors cannot be (fully) mitigated, ING holds capital to be able to absorb possible losses as a result of
changed customer behaviour.

From an interest rate risk perspective the commercial activities can typically be divided into three main product types: savings and
demand deposits, mortgages and loans.



| |  | Savings and demand deposits are generally invested with the goal to hedge their value and minimize the sensitivity of the margin to market interest rates. Interest rate risk can arise when there is a lag between savings
rate adjustments versus adjustments experienced through market rates.The interest rate risk is modelled based on the stability of the deposit and the pass through rate. This takes into account different elements, such as pricing strategies, volume
developments and the level and shape of the yield curve. Savings volumes are typically assumed not to be sensitive to interest rate shocks.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Interests rate risk for mortgages arises through prepayment behaviour. Interest rate dependent prepayment behaviour is taken into account in the models. Next to dependence on interest rates, modelled prepayment may
include other effects such as loan to value, seasonality and age of the loan. In addition, the interest sensitivity of embedded offered rate options is considered.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Loans are typically hedged from an interest rate risk perspective and consequently do not bear any material remaining interest rate risk as no interest rate dependent prepayment behaviour is observed.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The customer behaviour in relation to mortgages, loans, savings and demand deposits is modelled, based on extensive research. Per business unit and product type,
exposures are typically segmented into different portfolios based on expected client behaviour. For each of the segments, model parameters for example for the pass through rate and customer behaviour are determined based on historical data and
expert opinion. Models are typically back tested at least semi-annually and updated when deemed necessary. Model parameters and the resulting risk measures are approved by (local) ALCO.

Linear interest rate risk is transferred from the commercial business to the treasury books (Bank Treasury), if necessary using estimations of customer behaviour. The
originating commercial business is ultimately responsible for estimating customer behaviour, leaving convexity risk and (unexpected) customer behaviour risk with the commercial business. Risk measurement and the risk transfer process take place on a
monthly basis, but more often if deemed necessary, for instance in volatile markets.

The commercial business manages the convexity risk that is the result of
products that contain embedded options, like mortgages. Here the convexity risk is defined as the optionality effects in the value due to interest rate changes, excluding the first-order effects. In some cases, convexity risk is transferred from the
commercial books to treasury books using cap/floor contracts.

Bank Treasury manages the strategic interest rate position excluding capital investments. The main
objective is to maximise the economic value of the book and to generate adequate and stable annual earnings within the risk appetite boundaries set by ALCO Bank.

Risk profile

In the following sections, the interest rate risk exposures in
the banking books are presented. ING Bank uses risk measures based on both an earnings and a value perspective. Earnings Sensitivity (ES) is used to provide the earnings perspective and the Net Present Value (NPV)-at-Risk and Basis Point Value (BPV) figures provide the value perspective. Also corrective management actions are not taken into account in these figures.

For Earnings Sensitivity (ES) and Net Present Value (NPV)-at-Risk the downward interest
rate scenario contains a floor of 0% on the interest rates, in line with regulatory guidelines. This means that interest rates will not drop below 0% when applying the decreasing rate scenario. In case interest rates were already below zero, they
remain at that negative level under this scenario.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-187 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Earnings Sensitivity (ES)

Earnings sensitivity is modelled as described above and measures the impact of changing interest rates on (before tax) net interest income of the banking books, this
excludes credit spread sensitivity. The Earnings Sensitivity figures in the tables below reflect an instantaneous interest rate shock of 1% and a time horizon of one year. The Earnings Sensitivity asymmetry between the downward floored scenario and
a +100 bps shock is primarily caused by the applying the regulatory 0% floor in this scenario.



|                                                                               |  |                         |     |  |          |  |     |                         |  |  |          |  |  |  |     | 
|------------------------------------------------------------------------------ |  | ----------------------- | --- |  | -------- |  | --- | ----------------------- |  |  | -------- |  |  |  | --- | 
|Earnings Sensitivity banking book per currency (instantaneous parallel shock)  | 
|                                                                               |  | 2016                    |     |  | 2015     | 
|                                                                               |  | downwardflooredscenario |     |  | +100 bps |  |     | downwardflooredscenario |  |  | +100 bps | 
|By currency                                                                    |  |                         |     |  |          |  |     |                         |  |  |          |  |  |  |     | 
|Euro                                                                           |  |                         | 54 |  |          |  | 186 |                         |  |  | 39       |  |  |  | 173 | 
|US Dollar                                                                      |  |                         | 14 |  |          |  | 19  |                         |  |  | 33      |  |  |  | 28  | 
|Other                                                                          |  |                         | 8   |  |          |  | 19  |                         |  |  | 28      |  |  |  | 39  | 
|                                                                               |  |                         |     |  |          |  |     |                         |  |  |          |  |  |  |     | 
|Total                                                                          |  |                         | 60 |  |          |  | 224 |                         |  |  | 22      |  |  |  | 240 | 
|                                                                               |  |                         |     |  |          |  |     |                         |  |  |          |  |  |  |     | 
|                                                                              
|Earnings Sensitivity banking books per business (instantaneous parallel shock) | 
|                                                                               |  | 2016                    |     |  | 2015     | 
|                                                                               |  | downwardflooredscenario |     |  | +100 bps |  |     | downwardflooredscenario |  |  | +100 bps | 
|By business                                                                    |  |                         |     |  |          |  |     |                         |  |  |          |  |  |  |     | 
|Wholesale Banking                                                              |  |                         | 15 |  |          |  | 138 |                         |  |  | 2       |  |  |  | 165 | 
|Retail Banking Benelux                                                         |  |                         | 73 |  |          |  | 88 |                         |  |  | 9        |  |  |  | 5   | 
|Retail Challengers & Growth Markets                                            |  |                         | 20  |  |          |  | 58  |                         |  |  | 30       |  |  |  | 10 | 
|Corporate Line Banking                                                         |  |                         | 8   |  |          |  | 116 |                         |  |  | 59      |  |  |  | 80  | 
|                                                                               |  |                         |     |  |          |  |     |                         |  |  |          |  |  |  |     | 
|Total                                                                          |  |                         | 60 |  |          |  | 224 |                         |  |  | 22      |  |  |  | 240 | 
|                                                                               |  |                         |     |  |          |  |     |                         |  |  |          |  |  |  |     | 

The Earnings sensitivity is mainly influenced by the sensitivity of savings to interest rate movements due to pass through rate
differences between savings rates and investment yields and is partially offset by the sensitivity of mortgages. The investment of own funds only impacts the Earnings sensitivity marginally, as only a relatively small part has to be (re)invested
within the 1-year horizon.

Year-on-year variance analysis

In line with previous year, the earnings with a one year horizon as per 2016 year end are relatively insensitive to rate changes, if compared to the net interest income.
The earnings sensitivity for an upward shock has a positive impact. Positive earnings sensitivity implies that when rates increase, the positive impact on interest received on assets including hedging derivatives is larger than the negative impact
of interest paid on liabilities. The change of the Earnings sensitivity for Retail Banking Benelux is mainly driven by changes to the savings model parameters as a result from changing customer behaviour. The Earnings sensitivity of the +100 bps
scenario within Wholesale Banking is mainly the result of investments done by the Bank Treasury function, which is reported under Wholesale Banking. The change of the Earnings sensitivity within Corporate Line Banking is mainly driven by the
investments of own funds which were not all re-invested long term.

Net Present Value (NPV) at Risk

NPV-at-Risk measures the impact of changing interest rates on value. For NPV-at-Risk calculations, an instantaneous shock of 1% is applied. The NPV-at-Risk asymmetry
between the downward floored scenario and a +100 bps shock is primarily caused by the applying the regulatory 0% floor in this scenario.

The full value impact
cannot be directly linked to the balance sheet or profit and loss account, as fair value movements in banking books are not necessarily reported through the profit and loss account or through equity. The value mutations are expected to materialise
over time in the profit and loss account, if interest rates develop according to forward rates throughout the remaining maturity of the portfolio.





|                                                                      |  |                         |     |  |          |  |        |                         |  |  |          |  |  |  |        | 
|--------------------------------------------------------------------- |  | ----------------------- | --- |  | -------- |  | ------ | ----------------------- |  |  | -------- |  |  |  | ------ | 
|NPV-at-Risk banking books per currency (instantaneous parallel shock) |  |                         |     |  |          |  |        |                         |  |  |          | 
|                                                                      |  | 2016                    |     |  | 2015     | 
|                                                                      |  | downwardflooredscenario |     |  | +100 bps |  |        | downwardflooredscenario |  |  | +100 bps | 
|By currency                                                           |  |                         |     |  |          |  |        |                         |  |  |          |  |  |  |        | 
|Euro                                                                  |  |                         | 55 |  |          |  | 1,739 |                         |  |  | 583     |  |  |  | 1,855 | 
|US Dollar                                                             |  |                         | 65  |  |          |  | 62    |                         |  |  | 12      |  |  |  | 42     | 
|Other                                                                 |  |                         | 51  |  |          |  | 125   |                         |  |  | 58      |  |  |  | 36     | 
|                                                                      |  |                         |     |  |          |  |        |                         |  |  |          |  |  |  |        | 
|Total                                                                 |  |                         | 61  |  |          |  | 1,926 |                         |  |  | 653     |  |  |  | 1,777 | 
|                                                                      |  |                         |     |  |          |  |        |                         |  |  |          |  |  |  |        | 



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-188 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                                 |  |          |      |  |          |  |        |          |  |  |          |  |  |  |        | 
|-------------------------------------------------------------------------------- |  | -------- | ---- |  | -------- |  | ------ | -------- |  |  | -------- |  |  |  | ------ | 
|NPV-at-Risk banking books per business (instantaneous parallel shock)            | 
|                                                                                 |  | 2016     |      |  | 2015     | 
|                                                                                 |  | downward |      |  |          |  |        | downward |  |  |          | 
|                                                                                 |  | floored  |      |  |          |  |        | floored  |  |  |          | 
|                                                                                 |  | scenario |      |  | +100 bps |  |        | scenario |  |  | +100 bps | 
|By business                                                                      |  |          |      |  |          |  |        |          |  |  |          |  |  |  |        | 
|Wholesale Banking                                                                |  |          | 157 |  |          |  | 19    |          |  |  | 76      |  |  |  | 53     | 
|Retail Banking Benelux                                                           |  |          | 224 |  |          |  | 287   |          |  |  | 159     |  |  |  | 270   | 
|Retail Challengers & Growth Markets                                              |  |          | 328  |  |          |  | 435   |          |  |  | 640     |  |  |  | 274   | 
|Corporate Line Banking                                                           |  |          | 115  |  |          |  | 1,186 |          |  |  | 222      |  |  |  | 1,286 | 
|                                                                                 |  |          |      |  |          |  |        |          |  |  |          |  |  |  |        | 
|Total                                                                            |  |          | 61   |  |          |  | 1,926 |          |  |  | 653     |  |  |  | 1,777 | 
|                                                                                 |  |          |      |  |          |  |        |          |  |  |          |  |  |  |        | 
|                                                                                
|NPV-at-Risk banking books per accounting category (instantaneous parallel shock) | 
|                                                                                 |  | 2016     |      |  | 2015     | 
|                                                                                 |  | downward |      |  |          |  |        | downward |  |  |          | 
|                                                                                 |  | floored  |      |  |          |  |        | floored  |  |  |          | 
|                                                                                 |  | scenario |      |  | +100 bps |  |        | scenario |  |  | +100 bps | 
|By accounting category                                                           |  |          |      |  |          |  |        |          |  |  |          |  |  |  |        | 
|Loans and Receivables & Held to Maturity                                         |  |          | 114  |  |          |  | 248    |          |  |  | 1,019   |  |  |  | 210    | 
|Available for Sale                                                               |  |          | 115  |  |          |  | 2,153 |          |  |  | 800      |  |  |  | 2,248 | 
|Fair value through profit and loss                                               |  |          | 168 |  |          |  | 21    |          |  |  | 434     |  |  |  | 261    | 
|                                                                                 |  |          |      |  |          |  |        |          |  |  |          |  |  |  |        | 
|Total                                                                            |  |          | 61   |  |          |  | 1,926 |          |  |  | 653     |  |  |  | 1,777 | 
|                                                                                 |  |          |      |  |          |  |        |          |  |  |          |  |  |  |        | 

The NPV-at-Risk is dominated by the interest rate
sensitive long-term investments of own funds, as the equity itself is not modelled and hence is not presented as an offset for the investments of own funds. The value of these investments is impacted significantly if interest rates move up by 1%.
The asymmetry between the NPV-at-Risk for a downward floored scenario and a +100 bps shock is primarily caused by the flooring of interest rates for this scenario. Due
to applying this flooring, negative convexity impacts do not materialize significantly in the risk figures of the downward scenario.

Year-on-year variance analysis

NPV-at-Risk for the downward floored scenario changed by EUR 714 million during 2016. The sensitivity for the downward floored scenario has mainly changed as a result of lower rates and is additionally
impacted by the regulatory requirement that interest rates on savings have to be floored at zero. NPV-at-Risk for the total +100 bps shock changed during 2016 showing an
increase of EUR 149 million. The NPV-at-risk for the +100 bps shock of the Corporate Line decreased due to a lower duration of the long-term investments of own
funds. The change in the NPV-at-Risk for the Retail Challengers & Growth Markets is due to changes made to the model as a result of changing customer behaviour.

Basis Point Value (BPV)

BPV measures the impact of a one basis point
increase in interest rates on value. To a large extent the BPV and NPV-at-Risk reflect the same risk  the difference being that BPV does not reflect convexity
risk, given the small shift in interest rates.



|                               |  |      |         |  |      |  |         | 
|------------------------------ |  | ---- | ------- |  | ---- |  | ------- | 
|BPV banking books per currency |  |      |         |  |      | 
|in EUR thousand                |  | 2016 |         |  | 2015 | 
|By currency                    |  |      |         |  |      |  |         | 
|Euro                           |  |      | 13,043 |  |      |  | 16,563 | 
|US Dollar                      |  |      | 550    |  |      |  | 424     | 
|Other                          |  |      | 1,303  |  |      |  | 357     | 
|                               |  |      |         |  |      |  |         | 
|Total                          |  |      | 14,896 |  |      |  | 15,782 | 
|                               |  |      |         |  |      |  |         | 



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-189 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                          |  |      |         |  |      |  |         | 
|----------------------------------------- |  | ---- | ------- |  | ---- |  | ------- | 
|BPV banking books per business            |  |      |         |  |      | 
|in EUR thousand                           |  | 2016 |         |  | 2015 | 
|By business                               |  |      |         |  |      |  |         | 
|Wholesale Banking                         |  |      | 246    |  |      |  | 277     | 
|Retail Banking Benelux                    |  |      | 345    |  |      |  | 448    | 
|Retail Challengers & Growth Markets       |  |      | 2,149  |  |      |  | 2,417  | 
|Corporate Line                            |  |      | 12,156 |  |      |  | 13,194 | 
|                                          |  |      |         |  |      |  |         | 
|Total                                     |  |      | 14,896 |  |      |  | 15,782 | 
|                                          |  |      |         |  |      |  |         | 
|                                          |  |     
|BPV banking books per accounting category |  |      |         |  |      | 
|in EUR thousand                           |  | 2016 |         |  | 2015 | 
|By accounting category                    |  |      |         |  |      |  |         | 
|Loans and Receivables & Held to Maturity  |  |      | 1,907   |  |      |  | 4,691   | 
|Available for Sale                        |  |      | 21,666 |  |      |  | 22,798 | 
|Fair value through profit and loss        |  |      | 4,863   |  |      |  | 2,325   | 
|                                          |  |      |         |  |      |  |         | 
|Total                                     |  |      | 14,896 |  |      |  | 15,782 | 
|                                          |  |      |         |  |      |  |         | 

In line with NPV-at-Risk, the banks overall BPV
position is dominated by the long-term investment of own funds, as the present value of this position is significantly impacted if interest rates move up by one basis point.

Year-on-year variance analysis

The overall BPV decreased in 2016 by EUR 0.9 million. This mainly results from a lower duration of capital investments. The changes in BPV in Retail Banking Benelux
and Retail Challengers and Growth Markets reflect volume and duration changes of originating assets and liabilities. Cash flow hedges were executed at the Bank Treasury function to mitigate these changes. The Bank Treasury function for Retail
Challengers and Growth Markets is reported under Wholesale Banking business. Besides the change of the overall BPV exposure there is a change in the exposure per accounting category. This is mainly the result of increased volume of both savings and
mortgages. This move was mitigated by cash flow hedges, which revaluate through equity, and the lower duration of capital investments.

Foreign exchange (FX)
risk in banking books

FX exposures in banking books result from core banking business activities (business units doing business in other currencies than
their base currency), foreign currency investments in subsidiaries (including realised net profit and loss) and strategic equity stakes in foreign currencies. The policy regarding these exposures is briefly explained below.

Governance  Core banking business

Every business unit hedges the FX
risk resulting from core banking business activities into its base currency. Consequently, assets and liabilities are matched in terms of currency.

Governance
 FX translation result

ING Banks strategy is to keep the target CET1 ratio within a certain range when FX rates fluctuate, whilst limiting the
volatility in the profit and loss account. Therefore, hedges are only done to the extent that they can be hedge accounted for against equity. Taking this into account, the CET1 ratio hedge can be achieved by deliberately taking foreign currency
positions equal to certain target positions, such that the target CET1 capital and risk-weighted assets are equally sensitive in relative terms to changing FX rates. A selection of emerging market currencies that meet specific requirements do not
have a target position, but are allowed to remain open under the policy.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-190 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Risk profile  FX translation result

The following table presents the currency exposures in the banking books for the most important currencies for FX translation result. Positive figures indicate long
positions in the respective currency. As a result of the strategy to hedge the CET1 ratio a net foreign currency exposure exists.



|                                             |  |                     |        |  |        |  |        |               |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 
|-------------------------------------------- |  | ------------------- | ------ |  | ------ |  | ------ | ------------- |  |  | ------ |  |  | ---- | ------ |  | ---- |  | ------ |  |  |  | ------ | 
|Net banking currency exposures banking books |  |                     |        |  |        |  |        |               |  |  |        |  |  |      |        |  |      | 
|                                             |  | Foreign Investments |        |  | Hedges |  |        | Net exposures | 
|                                             |  | 2016                |        |  | 2015   |  |        | 2016          |  |  | 2015   |  |  | 2016 |        |  | 2015 | 
|US Dollar                                    |  |                     | 2,852  |  |        |  | 2,869  |               |  |  | 280    |  |  |      | 65     |  |      |  | 3,133  |  |  |  | 2,935  | 
|Pound Sterling                               |  |                     | 701    |  |        |  | 992    |               |  |  | 128   |  |  |      | 179   |  |      |  | 573    |  |  |  | 812    | 
|Polish Zloty                                 |  |                     | 1,927  |  |        |  | 1,881  |               |  |  | 584   |  |  |      | 854   |  |      |  | 1,344  |  |  |  | 1,027  | 
|Australian Dollar                            |  |                     | 3,856  |  |        |  | 3,662  |               |  |  | 3,324 |  |  |      | 3,329 |  |      |  | 532    |  |  |  | 332    | 
|Turkish Lira                                 |  |                     | 2,066  |  |        |  | 2,186  |               |  |  | 3     |  |  |      | 3     |  |      |  | 2,063  |  |  |  | 2,183  | 
|Chinese Yuan                                 |  |                     | 3,012  |  |        |  | 2,817  |               |  |  | 161   |  |  |      | 168   |  |      |  | 2,851  |  |  |  | 2,649  | 
|Korean Won                                   |  |                     | 958    |  |        |  | 838    |               |  |  | 779   |  |  |      | 662   |  |      |  | 179    |  |  |  | 176    | 
|Indian Rupee                                 |  |                     | 714    |  |        |  | 1,172  |               |  |  |       |  |  |      |       |  |      |  | 714    |  |  |  | 1,172  | 
|Brazilian Real                               |  |                     | 253    |  |        |  | 211    |               |  |  |       |  |  |      |       |  |      |  | 253    |  |  |  | 211    | 
|Russian Rouble                               |  |                     | 589    |  |        |  | 429    |               |  |  | 224   |  |  |      | 181   |  |      |  | 364    |  |  |  | 248    | 
|Other currency                               |  |                     | 2,863  |  |        |  | 2,615  |               |  |  | 1,472 |  |  |      | 1,385 |  |      |  | 1,391  |  |  |  | 1,230  | 
|                                             |  |                     |        |  |        |  |        |               |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 
|Total                                        |  |                     | 19,792 |  |        |  | 19,672 |               |  |  | 6,396 |  |  |      | 6,696 |  |      |  | 13,396 |  |  |  | 12,977 | 
|                                             |  |                     |        |  |        |  |        |               |  |  |        |  |  |      |        |  |      |  |        |  |  |  |        | 

In order to measure the remaining sensitivity of the target CET1 ratio against FX rate fluctuations, the CET1 at Risk (cTaR) measure is
used. It measures the drop in the CET1 ratio from the target when stressing a certain FX rate. A negative sign in the stress scenario thus indicates that a depreciation of the corresponding currency against the Euro will result in a drop of the CET1
ratio.



|                                |  |      |      |   |                 |  |      |      |  |  |      |   |  |  |     |  
|------------------------------- |  | ---- | ---- | - | --------------- |  | ---- | ---- |  |  | ---- | - |  |  | --- | -
|CET1 ratio sensitivity ING Bank |  |      |      |   |                 |  |      |      |  |  |      |  
|                                |  | cTaR |      |   | Stress Scenario | 
|                                |  | 2016 |      |   | 2015            |  |      | 2016 |  |  | 2015 |  
|Currency                        |  |      |      |   |                 |  |      |      |  |  |      |   |  |  |     |  
|US Dollar                       |  |      | 0.18 | % |                 |  | 0.13 | %    |  |  | 15   | % |  |  | 15  | %
|Pound Sterling                  |  |      | 0.01 | % |                 |  | 0.01 | %    |  |  | 15   | % |  |  | 15 | %
|Polish Zloty                    |  |      | 0.00 | % |                 |  | 0.00 | %    |  |  | 15  | % |  |  | 15  | %
|Australian Dollar               |  |      | 0.00 | % |                 |  | 0.00 | %    |  |  | 20   | % |  |  | 20  | %
|Turkish Lira                    |  |      | 0.07 | % |                 |  | 0.07 | %    |  |  | 25  | % |  |  | 25 | %
|Chinese Yuan                    |  |      | 0.09 | % |                 |  | 0.09 | %    |  |  | 15  | % |  |  | 15 | %
|Korean Won                      |  |      | 0.01 | % |                 |  | 0.01 | %    |  |  | 15  | % |  |  | 15 | %
|Indian Rupee                    |  |      | 0.03 | % |                 |  | 0.05 | %    |  |  | 20  | % |  |  | 20 | %
|Brazilian Real                  |  |      | 0.01 | % |                 |  | 0.01 | %    |  |  | 25  | % |  |  | 25 | %
|Russian Rouble                  |  |      | 0.02 | % |                 |  | 0.01 | %    |  |  | 20  | % |  |  | 20 | %

The US Dollar is the main currency in terms of Net Exposure as the risk-weighted assets position in US Dollar is most
significant besides the Euro.

Year-on-year variance analysis

The INR Foreign Investments have decrease by EUR 458 million to EUR 714 million (vs 2015) as a result of sale of Kotak shares. The increase in US Dollar
cTaR is mainly due to appreciation of the US Dollar and an increase in US Dollar RWA.

Equity price risk in banking books

Governance

ING Bank maintains a strategic portfolio with substantial equity
exposure in its banking books. Local offices are responsible for the management of the equity investments positions. Market risk is responsible for monitoring and reporting the regulatory capital for Equity Investments on a monthly basis. Market
risk acts independently from the management of the equity investments in monitoring and reporting of the equity investments risk.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-191 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Risk Profile

Equity price
risk arises from the possibility that equity security prices will fluctuate, affecting the value of equity securities and other instruments whose value reacts similarly to a particular security, a defined basket of securities, or a securities index.
ING Bank equity exposure mainly consists of the investments in associates and joint ventures of EUR 1,003 million (2015: EUR 842 million) and equity securities held in the
available-for-sale (AFS) portfolio of EUR 4,024 million (2015: EUR 4,434 million). The value of equity securities held in the available-for-sale portfolio is directly linked to equity security prices with increases/decreases being recognised in the revaluation reserve, except in the case of impairment. Investments in associates and
joint ventures are measured in accordance with the equity method of accounting and the balance sheet value and therefore not directly linked to equity security prices.



|                                                          |  |      |       |  |      |  |       | 
|--------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- | 
|Equities Unrealised Gains and Losses in the AFS portfolio |  |      |       |  |      | 
|                                                          |  | 2016 |       |  | 2015 | 
|Gross unrealised gains                                    |  |      | 2,675 |  |      |  | 2,662 | 
|Gross unrealised losses                                   |  |      | 19   |  |      |  | 29   | 
|                                                          |  |      |       |  |      |  |       | 
|Total                                                     |  |      | 2,656 |  |      |  | 2,633 | 
|                                                          |  |      |       |  |      |  |       | 

Year-on-year variance analysis

During the year ended 31 December 2016 the revaluation reserve relating to equity securities held in the available-for-sale portfolio fluctuated between a month-end low amount of EUR 2,201 million (2015: EUR 1,931 million) and a high amount of EUR 2,787 million
(2015: EUR 2,709 million). The AFS portfolio decreased from EUR 4.4 billion in 2015 to EUR 4.0 billion in 2016, mainly due to the derecognition of Visa Europe shares and the reduction of the stake in Kotak Mahindra Bank, partly offset by
an increase in the value of the investment in Bank of Beijing.

Real Estate price risk in banking books

Real Estate price risk arises from the possibility that real estate prices fluctuate. This affects both the value of real estate assets and earnings related to real
estate activities.

Governance

Real Estate is a run-off business consisting of Real Estate Development and Real Estate Investment Management activities which are being wound down by sale of assets, strict execution of contract maturity or through portfolio sales.

Risk profile

ING Bank has two main different categories of real estate
exposure on its banking books: first, the own buildings ING Bank occupies, and second, development assets, which mostly consists of former Real Estate Development and Real Estate Investment Management activities. The total real estate exposure
amounts to EUR 1.1 billion (excluding property from foreclosures and third party interest). ING Bank has EUR 0.1 billion recognised at fair value through profit and loss and EUR 1.0 billion is recognised at cost or revalued through
equity (with impairments going through profit and loss). A split on the real estate exposure per continent and sector based on the risk management view is shown below.



|                                                                                       |  |      |       |  |      |  |       |  |  |             |  |  |       |  |  |  |       | 
|-------------------------------------------------------------------------------------- |  | ---- | ----- |  | ---- |  | ----- |  |  | ----------- |  |  | ----- |  |  |  | ----- | 
|Real Estate market risk exposure in banking books (by geographic area and sector type) |  |      |       | 
|                                                                                       |  | 2016 |       |  | 2015 |  |       |  |  | 2016        |  |  | 2015  | 
|Continent                                                                              |  |      |       |  |      |  |       |  |  | Sector      |  |  |       |  |  |  |       | 
|Europe                                                                                 |  |      | 968   |  |      |  | 1,136 |  |  | Residential |  |  | 104   |  |  |  | 115   | 
|Americas                                                                               |  |      | 36    |  |      |  | 45    |  |  | Office      |  |  | 895   |  |  |  | 1,045 | 
|Australia                                                                              |  |      | 0     |  |      |  | 0     |  |  | Retail      |  |  | 19    |  |  |  | 68    | 
|Asia                                                                                   |  |      | 0     |  |      |  | 35    |  |  | Industrial  |  |  | 18    |  |  |  | 16    | 
|Other                                                                                  |  |      | 104   |  |      |  | 118   |  |  | Other       |  |  | 72    |  |  |  | 91    | 
|                                                                                       |  |      |       |  |      |  |       |  |  |             |  |  |       |  |  |  |       | 
|Total                                                                                  |  |      | 1,108 |  |      |  | 1,334 |  |  | Total       |  |  | 1,108 |  |  |  | 1,334 | 
|                                                                                       |  |      |       |  |      |  |       |  |  |             |  |  |       |  |  |  |       | 

Main exposure arises from office buildings in own use located in Netherlands and Belgium (EUR 0.7 billion), as well as retail and
residential exposures in Europe (EUR 0.1 billion).

Year-on-year variance
analysis

In total, real estate market risk exposure in the banking books decreased by EUR 0.2 billion mainly as a result of divestments. The remainder is
due to impairments and fair value changes.

Market risk in trading books

Within the trading portfolios, positions are maintained in the professional financial markets. These positions are often a result of transactions with clients and may
serve to benefit from short-term price movements.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-192 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Governance

The
Financial Markets Risk Committee (FMRC) is the market risk committee that, within the risk appetite set by ALCO Bank, sets market risk limits both on an aggregated level and on a desk level, and approves new products. Credit & Trading Risk
advises both the FMRC and ALCO Bank on the market risk appetite of trading activities.

With respect to the trading portfolios, Credit & Trading Risk
focuses on the management of market risks of Wholesale Banking (mainly Financial Markets) as this is the only business line within ING Bank where trading activities take place. Trading activities include facilitation of client business and market
making. Credit & Trading Risk is responsible for the development and implementation of trading risk policies and risk measurement methodologies, the reporting and monitoring of risk exposures against approved trading limits and the
validation of pricing models. Credit & Trading Risk also reviews trading mandates and limits, and performs the gatekeeper role in the product review process. The management of trading market risk is performed at various organisational
levels, from Credit & Trading Risk overall down to specific business areas and trading offices.

Fair values of financial assets and liabilities

ING Bank aligns the pricing sources it uses with the Fair Value Hierarchy. The best evidence of Fair value are published price quotations in active markets.
Where quoted prices are not available, other pricing sources and valuation techniques are used to determine fair value.

Examples of other pricing sources can be
independent market vendors, brokers or market makers, or recent transactions. The range of prices obtained from these pricing sources can diverge. The choice for one or the other pricing source can therefore result in different estimates of fair
value. Selecting the most appropriate price within this range requires expertise and judgement. The selection of the pricing sources used is subject to internal approval and review in the Market Data Committee.

Valuation techniques range from discounting of cash flows to valuation models. Such models are based on relevant risk factors such as the market price of underlying
reference instruments, market parameters (volatilities, correlations and credit ratings) and customer behaviour. Some of these price factors require assumptions which imply that valuation models are subjective by nature. Depending on what valuation
technique is used and what assumptions are made, the obtained fair value can be different, hence the implied downward and/or upward uncertainty of the accounting value may vary. For a classification of fair valued exposure to products in accordance
with their degree of valuation uncertainty, refer to the section Financial instruments at fair value of Note 37 Fair value of assets and liabilities.

All valuation models used are subject to a model governance framework. Model governance refers to a set of policies and procedures that have to be strictly followed and
that cover the complete lifecycle of a model, i.e. its development, validation, approval, implementation and maintenance. The pillars of model governance are independent validation and periodic review. Such a review aims to determine whether a model
is still appropriate for its intended use. Where models are used for valuation, there can be uncertainty on the assumptions of the underlying models and/or parameters. In those cases where significant uncertainty on assumptions arises, a model risk
valuation adjustment is applied.

In general, positions are valued taking the bid price for a long position and the offer price for a short position. In cases where
positions are marked at mid-market prices, a fair value adjustment is calculated.

ING Bank has aligned existing fair
valuation adjustments with the regulatory standards for fair valued instruments issued by EBA, hence where possible it follows a unified valuation framework which meets both IFRS and CRR requirements. This approach is supported by a bank-wide
valuation policy framework. Detailed methodologies for fair valued instruments per product and degree of liquidity are available. These cover among others close out costs and mid-price uncertainty. Benefits of
this framework and chosen approach are a significant increase in consistency and transparency of the fair valuation of financial instruments across different locations and books. For compliance with EBA regulatory standards an additional valuation
adjustment through capital on the concentrated positions (the Concentration AVA) of EUR 21 million after tax is booked for ING Bank in 2016. On a quarterly basis all valuation adjustments are discussed in the Global Pricing and Impairment
Committee (GP&IC). This committee oversees the valuation framework and Independent price verification.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-193 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







To include credit risk in the fair valuation, ING Bank applies both credit and debit valuation adjustments (hereafter
referred to as respectively, CVA and DVA). Own issued debt and structured notes that are valued at fair value are adjusted for credit risk by means of an own credit adjustment. Additionally, derivatives valued at fair value are adjusted for credit
risk by a credit valuation adjustment. This credit valuation adjustment is of a bilateral nature; both the credit risks on the counterparty as well as on ING Bank are included in the adjustment. All market data that is used in the determination of
the CVA is based on market implied data. Additionally, wrong-way risk (when exposure to a counterparty is increasing and the credit quality of that counterparty decreases) and right way risk (when exposure to
a counterparty is decreasing and the credit quality of that counterparty decreases) are included in the adjustment. ING Bank applies CVA also for pricing credit risk into new external trades with counterparties. Risk limits and controls are in place
to monitor and anticipate CVA risk on a daily basis. The CVA is managed by global risk governance, where the risk limits and controls for CVA are managed and monitored on a global level. Our approach on CVA risk management is driven by increased
control, cost efficiency and the global scope of CVA.

ING applies a Funding Valuation Adjustment (FVA) to address the funding costs associated with the
collateral funding asymmetry on uncollateralized or partially collateralized OTC derivatives in the portfolio. This adjustment is based on the expected exposure profiles of the uncollateralized or partially collateralized OTC derivatives and
market-based funding spreads.

Credit & Trading Risk has the role to challenge the valuation and pricing sources used in the valuation models by the Front
Office. Credit and Trading risk performs independent price verification to ensure that valuations are correct. The independent price verification and valuation adjustments are confirmed in the Local parameter committee. To ensure segregation of
duties between Front Office and Credit & Trading Risk, the systems for pricing and price testing are secured in order to prevent unauthorised access.

Risk
measurement

ING Bank uses a comprehensive set of methodologies and techniques to measure market risk in trading books.

Basel Committee/CRD IV

ING Bank follows the regulatory framework set out in
the Capital Requirements Regulation (CRR/CRD IV) for its regulatory capital calculations. The Basel Committee is performing a Fundamental Review of the Trading Book, which may have a significant impact on the Pillar I calculations. The final
guidelines were published in January 2016 and full implementation is not expected before 2019.

Value at Risk

Credit & Trading Risk uses the historical simulation Value at Risk (VaR) methodology as its primary risk measure. The VaR for market risk quantifies, with a one-sided confidence level of 99%, the maximum overnight loss that could occur due to changes in risk factors (e.g. interest rates, equity prices, foreign exchange rates, credit spreads, implied volatilities) if
positions remain unchanged for a time period of one day. Next to general market movements in these risk factors, VaR also takes into account market data movements for specific moves in e.g. the underlying issuer of securities. The impact of
historical market movements on todays portfolio is estimated, based on equally weighted observed market movements of the previous year. ING Bank uses VaR with a 1-day horizon for internal risk
measurement, control and backtesting, and VaR with a 10-day horizon for determining regulatory capital.

Limitations

VaR has some limitations, such as the following: VaR uses historical data to forecast future price behaviour. Future price behaviour could differ substantially
from past behaviour. Moreover, the use of a one-day holding period (or ten days for regulatory capital calculations) assumes that all positions in the portfolio can be liquidated or hedged in one day. In
periods of illiquidity or market events, this assumption may not hold. Also, the use of 99% confidence level means that VaR does not take into account any losses that occur beyond this confidence level.

Backtesting

Backtesting is a technique for the ongoing monitoring of the
plausibility of the VaR model in use. Although VaR models estimate potential future trading results, estimates are based on historical market data. In a backtest, the actual daily trading result (excluding fees and commissions) is compared with the 1-day VaR. In addition to using actual results for backtesting, ING Bank also uses hypothetical results, which measure results excluding the effect of intraday trading, fees and commissions. When the actual or
hypothetical loss exceeds the VaR an outlier occurs. Based on ING Banks one-sided confidence level of 99% an outlier is expected once in every 100 business days. In 2016 there were three
occurrences where a hypothetical daily trading loss exceeded the daily consolidated VaR of ING Bank. The three outliers were caused by market movements for modelled risk factors. ING Bank reports the backtesting results on a quarterly basis to ECB.

Stressed VaR

The Stressed VaR (SVaR) is intended to replicate a VaR
calculation that would be generated on the banks current portfolio with inputs calibrated to the historical data from a continuous 12-month period of significant financial stress relevant to the
banks portfolio. To calculate SVaR, ING Bank uses the same model that is used for VaR (historical simulation). The historical data period used includes the height of the credit crisis around the fall of Lehman Brothers, and is reviewed
regularly.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-194 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Incremental Risk Charge

With the Incremental Risk Charge (IRC) ING Bank calculates an estimate of the default and migration risks for unsecuritised credit products in the trading book over a one-year capital horizon, with a 99.9% confidence level. For the calculation of IRC ING Bank performs a Monte-Carlo simulation based on a Gaussian copula model. The rating change is simulated for all issuers over
the different liquidity horizons (i.e. time required to liquidate the position or hedge all significant risks) within one year. The financial impact is then determined for the simulated migration to default, or for the simulated migration to a
different rating category, based on LGD or credit spread changes, respectively.

The liquidity horizon has been set to the regulatory minimum of three months for
all positions in scope. ING Bank reviews the liquidity horizons regularly based on a structured assessment of the time it takes to liquidate the positions in the trading portfolio.

ING Bank periodically assesses the compliance of the IRC model with the regulatory requirements by performing gap analyses, substantiating the modelling choices and
quantifying the impact of alternative approaches.

Event Risk

Event Risk
is a valuable risk management tool. Event Risk evaluates the banks financial stability under severe but plausible stress scenarios and assists in decision-making that assures the bank to remain a financially healthy going concern institution
after a severe event occurs. In addition to the bank-wide stress test framework as described in the ING Bank risk profile section, Credit & Trading Risk performs separate stressed scenario tests to monitor market risks under extreme market
conditions. Since VaR in general does not produce an estimate of the potential losses that can occur as a result of extreme market movements, ING Bank uses structured stressed scenario tests to calculate Event Risk for monitoring the market risk
under these extreme conditions. Event Risk is based on historical as well as hypothetical extreme scenarios. The result is an estimate of the profit and loss caused by a potential event and its world-wide impact for ING Bank. The Event Risk number
for the ING Bank trading activity is generated on a weekly basis. Like VaR, Event Risk is limited by ALCO Bank.

ING Banks Event Risk policy is based on a
large set of possible stress scenarios per risk type (fixed income, equity, foreign exchange, credit and related derivative markets). For example, for equity products we assume both a crisis scenario (prices decreasing) as well as a bull scenario
(prices increasing). Stress parameters are set per country. Scenarios are calculated based on events happening independently, jointly by region, or in all countries simultaneously. This way, for each risk type, a large set of scenarios is
calculated. The worst scenarios per market are combined across markets by assessing both independent events per market, and worst events happening in all markets at the same time.

Other trading controls

VaR and Event Risk limits are the most important
limits to control the trading portfolios. Additionally, limits have been set on SVaR and IRC. Furthermore, ING Bank uses a variety of other controls to supplement these limits. Position and sensitivity limits are used to prevent large concentrations
in specific issuers, sectors or countries. In addition to this, other risk limits are set with respect to the activities in complex derivatives trading. The market risk of these products is controlled by product specific limits and constraints.

Risk profile

The following chart shows the development of the
overnight VaR under a 99% confidence interval and a 1-day horizon versus daily trading profits and losses. The overnight VaR is presented for the ING Bank trading portfolio from 2012 to 2016.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-195 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Consolidated trading VaR ING Bank 2012  20161



LOGO



|1 | CVA risk is not included in VaR.
|- | --------------------------------

In 2016 there were two cases with large positive trading results. The first large
positive trading result was driven by a combination of position changes; the second large positive result was driven by volatile market moves on the day of Brexit.

The risk figures in the table below only relate to the trading books for which the internal model approach is applied.



|                                                       |  |         |   |  |         |  |   |         |  |  |          |  |  |      |    |  |      |  |    |      |  |  |      |  |  |  |     |  |  |  |    | 
|------------------------------------------------------ |  | ------- | - |  | ------- |  | - | ------- |  |  | -------- |  |  | ---- | -- |  | ---- |  | -- | ---- |  |  | ---- |  |  |  | --- |  |  |  | -- | 
|1d VaR for Internal Model Approach trading Portfolios1 |  |         |   |  |         |  |   |         |  |  |          |  |  |      |    |  |      |  |   
|amounts in millions of euros                           |  | Minimum |   |  | Maximum |  |   | Average |  |  | Year end | 
|                                                       |  | 2016    |   |  | 2015    |  |   | 2016    |  |  | 2015     |  |  | 2016 |    |  | 2015 |  |    | 2016 |  |  | 2015 | 
|Interest rate                                          |  |         | 3 |  |         |  | 3 |         |  |  | 10       |  |  |      | 8  |  |      |  | 5  |      |  |  | 5    |  |  |  | 5   |  |  |  | 4  | 
|Equity and commodity                                   |  |         | 2 |  |         |  | 4 |         |  |  | 11       |  |  |      | 10 |  |      |  | 5  |      |  |  | 6    |  |  |  | 4   |  |  |  | 6  | 
|Foreign exchange                                       |  |         | 1 |  |         |  | 1 |         |  |  | 5        |  |  |      | 4  |  |      |  | 2  |      |  |  | 2    |  |  |  | 2   |  |  |  | 1  | 
|Credit spread                                          |  |         | 4 |  |         |  | 7 |         |  |  | 11       |  |  |      | 10 |  |      |  | 6  |      |  |  | 8    |  |  |  | 7   |  |  |  | 9  | 
|Diversification2                                       |  |         |   |  |         |  |   |         |  |  |          |  |  |      |    |  |      |  | 7 |      |  |  | 9   |  |  |  | 12 |  |  |  | 6 | 
|                                                       |  |         |   |  |         |  |   |         |  |  |          |  |  |      |    |  |      |  |    |      |  |  |      |  |  |  |     |  |  |  |    | 
|Total VaR                                              |  |         | 5 |  |         |  | 8 |         |  |  | 22       |  |  |      | 17 |  |      |  | 11 |      |  |  | 12   |  |  |  | 6   |  |  |  | 14 | 
|                                                       |  |         |   |  |         |  |   |         |  |  |          |  |  |      |    |  |      |  |    |      |  |  |      |  |  |  |     |  |  |  |    | 



|1 | CVA risk is not included in VaR.
|- | --------------------------------



|2 | The total VaR for the columns Minimum and Maximum cannot be calculated by taking the sum of the individual components since the observations for both the individual markets as well as total VaR may occur on different
dates.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In 2016, the average VaR was at a similar level as last year, as notable also in different risk types. The VaR was volatile during the year
driven by position changes. Position changes decreased VaR by the end of the year in a response to increased market volatility.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-196 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                   |  |               |  |  |      |  |  |  |     | 
|------------------------------------------------------------------ |  | ------------- |  |  | ---- |  |  |  | --- | 
|EU MR3: Internal Model Approach values for CAD2 trading portfolios |  |               |  |  |      | 
|amounts in millions of euros                                       |  | 2016          |  |  | 2015 | 
|VaR (10 day 99%)                                                   |  |               |  |  |      |  |  | 
|1                                                                  |  | Maximum value |  |  | 64   |  |  |  | 64  | 
|2                                                                  |  | Average value |  |  | 33   |  |  |  | 44  | 
|3                                                                  |  | Minimum value |  |  | 9    |  |  |  | 29  | 
|4                                                                  |  | Period end    |  |  | 36   |  |  |  | 43  | 
|Stressed VaR (10 day 99%)                                          |  |               |  |  |      |  |  | 
|5                                                                  |  | Maximum value |  |  | 131  |  |  |  | 110 | 
|6                                                                  |  | Average value |  |  | 72   |  |  |  | 71  | 
|7                                                                  |  | Minimum value |  |  | 40   |  |  |  | 41  | 
|8                                                                  |  | Period end    |  |  | 84   |  |  |  | 78  | 
|Incremental Risk Charge (99.9%)                                    |  |               |  |  |      |  |  | 
|9                                                                  |  | Maximum value |  |  | 292  |  |  |  | 482 | 
|10                                                                 |  | Average value |  |  | 207  |  |  |  | 380 | 
|11                                                                 |  | Minimum value |  |  | 120  |  |  |  | 249 | 
|12                                                                 |  | Period end    |  |  | 120  |  |  |  | 267 | 
|Comprehensive Risk capital charge (99.9%)                          |  |               |  |  |      |  |  | 
|13                                                                 |  | Maximum value |  |  | n/a  |  |  |  | n/a | 
|14                                                                 |  | Average value |  |  | n/a  |  |  |  | n/a | 
|15                                                                 |  | Minimum value |  |  | n/a  |  |  |  | n/a | 
|16                                                                 |  | Period end    |  |  | n/a  |  |  |  | n/a | 

Risk position changes were also reflected in the 10 day VaR and 10 day Stressed VaR statistics. Compared to 10 day VaR in 2015, in 2016
position changes led to lower average, the wider range between a maximum and a minimum and a lower 10 day VaR at year-end. For 10 day Stressed VaR the average was stable compared to the previous year, while
maximum and year-end values increased. The overall decrease in IRC in 2016 was largely caused by decreased debt exposures to a number of sovereigns.

Regulatory capital

According to the Capital Requirements Regulation
(CRR/CRD IV), regulatory capital for trading portfolios can be calculated using the standardised approach or an internal model approach. ING Bank received regulatory approval to use an internal model to determine the regulatory capital for the
market risk in all trading books of ING Bank. Market risk capital of CAD2 trading books is calculated according to the CRR, using internal VaR, Stressed VaR and Incremental Risk Charge models, where diversification is taken into account. On the
other hand, market risk capital of CAD1 books is calculated using Standardised Approach with fixed risk weights. In 2016, capital calculations for all trading books are made under the Internal Model Approach. Mismatches in FX risk from the banking
books are incorporated under the Standardised Approach. ING Bank does not have a Correlation Trading Portfolio or any other securitisations in the trading book.

Standardised Approach



|                                                |  |                                           |  |      |                     |  |      |     |    |  |                     |  |       |  |  |  |     | 
|----------------------------------------------- |  | ----------------------------------------- |  | ---- | ------------------- |  | ---- | --- | -- |  | ------------------- |  | ----- |  |  |  | --- | 
|EU MR1: Market risk under Standardised Approach |  |                                           |  |      |                     |  |      |     |    |  |                     | 
|                                                |  |                                           |  | 2016 |                     |  | 2015 |    
|amounts in EUR millions                         |  | RWA                                       |  |      | Capitalrequirements |  |      | RWA |    |  | Capitalrequirements | 
|Outright products                               |  |                                           |  |      |                     |  |      |     |    |  |                     |  |       |  |  | 
|1                                               |  | Interest rate risk (general and specific) |  |      |                     |  |      |     |    |  |                     |  |       |  |  |  |     | 
|2                                               |  | Equity risk (general and specific)        |  |      |                     |  |      |     |    |  |                     |  |       |  |  |  |     | 
|3                                               |  | Foreign exchange risk                     |  |      | 1,081               |  |      |     | 87 |  |                     |  | 1,328 |  |  |  | 106 | 
|4                                               |  | Commodity risk                            |  |      |                     |  |      |     |    |  |                     |  |       |  |  |  |     | 
|Options                                         |  |                                           |  |      |                     |  |      |     |    |  |                     |  |       |  |  | 
|5                                               |  | Simplified approach                       |  |      |                     |  |      |     |    |  |                     |  |       |  |  |  |     | 
|6                                               |  | Delta-plus method                         |  |      |                     |  |      |     |    |  |                     |  |       |  |  |  |     | 
|7                                               |  | Scenario approach                         |  |      |                     |  |      |     |    |  |                     |  |       |  |  |  |     | 
|8                                               |  | Securitisation (specific risk)            |  |      |                     |  |      |     |    |  |                     |  |       |  |  |  |     | 
|                                                |  |                                           |  |      |                     |  |      |     |    |  |                     |  |       |  |  |  |     | 
|9                                               |  | Total                                     |  |      | 1,081               |  |      |     | 87 |  |                     |  | 1,328 |  |  |  | 106 | 
|                                                |  |                                           |  |      |                     |  |      |     |    |  |                     |  |       |  |  |  |     | 



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-197 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







The Market risk regulatory capital under Standardized Approach is fully driven by the foreign exchange risk in the non-trading portfolio. The decrease in foreign exchange risk in 2016 mainly relates to the decrease in INR (Indian Rupee) currency exposure, caused by the sale of shares in Kotak Mahindra Bank.

Internal Model Approach



|                                                    |  |                                                                                                                                                               |  |      |                     |  |      |     |     |  |                     |  |       |  |  |  |     | 
|--------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------------------- |  | ---- | --- | --- |  | ------------------- |  | ----- |  |  |  | --- | 
|EU MR2-A: Market risk under Internal Model Approach | 
|                                                    |  |                                                                                                                                                               |  | 2016 |                     |  | 2015 |    
|amounts in EUR millions                             |  | RWA                                                                                                                                                           |  |      | Capitalrequirements |  |      | RWA |     |  | Capitalrequirements | 
|1                                                   |  | VaR (higher of values a and b)                                                                                                                                |  |      | 1,123               |  |      |     | 90  |  |                     |  | 1,797 |  |  |  | 144 | 
|(a)                                                 |  | Previous days VaR (Article 365(1) (VaRt-1))                                                                                                                  |  |      | 449                 |  |      |     | 36  |  |                     |  | 535   |  |  |  | 43  | 
|(b)                                                 |  | Average of the daily VaR (Article 365(1)) on each of the preceding sixty business days (VaRavg) x
multiplication factor ((mc) in accordance with Article 366) |  |      | 1,123               |  |      |     | 90  |  |                     |  | 1,797 |  |  |  | 144 | 
|2                                                   |  | SVaR (higher of values a and b)                                                                                                                               |  |      | 2,546               |  |      |     | 204 |  |                     |  | 2,931 |  |  |  | 235 | 
|(a)                                                 |  | Latest SVaR (Article 365(2) (sVaRt-1))                                                                                                                        |  |      | 1,054               |  |      |     | 84  |  |                     |  | 969   |  |  |  | 78  | 
|(b)                                                 |  | Average of the SVaR (Article 365(2) during the preceding sixty business days (sVaRavg) x multiplication
factor (ms) (Article 366)                             |  |      | 2,546               |  |      |     | 204 |  |                     |  | 2,931 |  |  |  | 235 | 
|3                                                   |  | Incremental risk charge  IRC (higher of values a and b)                                                                                                      |  |      | 1,910               |  |      |     | 153 |  |                     |  | 3,579 |  |  |  | 286 | 
|(a)                                                 |  | Most recent IRC value (incremental default and migration risks section 3 calculated in accordance with
Section 3 articles 370/371)                            |  |      | 1,500               |  |      |     | 120 |  |                     |  | 3,339 |  |  |  | 267 | 
|(b)                                                 |  | Average of the IRC number over the preceding 12 weeks                                                                                                         |  |      | 1,910               |  |      |     | 153 |  |                     |  | 3,579 |  |  |  | 286 | 
|4                                                   |  | Comprehensive Risk Measure  CRM(higher of values a, b and c)                                                                                                 |  |      |                     |  |      |     |     |  |                     |  |       |  |  |  |     | 
|(a)                                                 |  | Most recent risk number for the correlation trading portfolio (article 377)                                                                                   |  |      |                     |  |      |     |     |  |                     |  |       |  |  |  |     | 
|(b)                                                 |  | Average of the risk number for the correlation trading portfolio over the preceding 12-weeks                                                                  |  |      |                     |  |      |     |     |  |                     |  |       |  |  |  |     | 
|(c)                                                 |  | 8 % of the own funds requirement in SA on most recent risk number for the correlation trading portfolio
(Article 338(4))                                      |  |      |                     |  |      |     |     |  |                     |  |       |  |  |  |     | 
|                                                    |  |                                                                                                                                                               |  |      |                     |  |      |     |     |  |                     |  |       |  |  |  |     | 
|5                                                   |  | Total                                                                                                                                                         |  |      | 5,579               |  |      |     | 446 |  |                     |  | 8,307 |  |  |  | 665 | 
|                                                    |  |                                                                                                                                                               |  |      |                     |  |      |     |     |  |                     |  |       |  |  |  |     | 

The decrease in market risk Regulatory Capital for Trading as of 2015 is mainly due to decrease in exposures to sovereign issuers and as
a result a decrease in IRC, and a change in risk positions during 2016 that resulted in decreases in VaR and Stressed VaR. The main changes in risk positions throughout the year were in equity derivatives portfolio and CVA hedge portfolio. The CVA
hedges are capitalized under market risk framework, while CVA is capitalized under credit risk framework according to Basel rules.

Sensitivities

As part of the risk monitoring framework, Credit & Trading Risk actively monitors the daily changes of sensitivities of our trading portfolios. The following
tables show the five largest trading foreign exchange positions and interest rate and credit spread sensitivities. The credit spread sensitivities are furthermore split in different risk classes and sectors. Due to the nature of the trading
portfolios, positions change from day to day.



|                                                           |  |      |     |  |  |                  |      |  |     | 
|---------------------------------------------------------- |  | ---- | --- |  |  | ---------------- | ---- |  | --- | 
|Most important foreign exchange year-end trading positions |  |      |    
|Deltacash amounts in EUR millions                          |  | 2016 |     |  |  |                  | 2015 | 
|Foreign exchange                                           |  |      |     |  |  | Foreign exchange |      |  |     | 
|US Dollar                                                  |  |      | 201 |  |  | US Dollar        |      |  | 160 | 
|Romanian New Leu                                           |  |      | 45  |  |  | Romanian New Leu |      |  | 57  | 
|Chinese Yuan                                               |  |      | 40 |  |  | Chinese Yuan     |      |  | 42 | 
|South Korean Won                                           |  |      | 22 |  |  | South Korean Won |      |  | 46 | 
|Czech Koruna                                               |  |      | 21  |  |  | Swiss Franc      |      |  | 18  | 



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-198 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                                         |  |      |      |  |  |                       |      |  |      | 
|------------------------------------------------------------------------ |  | ---- | ---- |  |  | --------------------- | ---- |  | ---- | 
|Most important interest rate and credit spread sensitivities at year-end | 
|amounts in EUR thousands                                                 |  | 2016 |      |  |  |                       | 2015 | 
|Interest Rate (BPV1)                                                     |  |      |      |  |  | Interest Rate (BPV1)  |      |  |      | 
|Euro                                                                     |  |      | 119 |  |  | Euro                  |      |  | 414 | 
|South Korean Won                                                         |  |      | 44  |  |  | South Korean Won      |      |  | 52  | 
|Polish Zloty                                                             |  |      | 32  |  |  | British Pound         |      |  | 45   | 
|Indian Rupee                                                             |  |      | 23  |  |  | US Dollar             |      |  | 43   | 
|Romanian New Leu                                                         |  |      | 22   |  |  | Japanese Yen          |      |  | 18   | 
|Credit Spread (CSO12)                                                    |  |      |      |  |  | Credit Spread (CSO12) |      |  |      | 
|United States                                                            |  |      | 333  |  |  | Netherlands           |      |  | 289 | 
|Germany                                                                  |  |      | 173  |  |  | Germany               |      |  | 154 | 
|Belgium                                                                  |  |      | 74   |  |  | Norway                |      |  | 110 | 
|India                                                                    |  |      | 38  |  |  | United States         |      |  | 99   | 
|Poland                                                                   |  |      | 38  |  |  | Spain                 |      |  | 89  | 



|1 | Basis Point Value (BPV) measures the impact on value of a 1 basis point increase in interest rates. The figures Include commodity risk in banking books.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | Credit Spread Sensitivity (CS01) measures the impact on value of a 1 basis point increase in credit spreads. Exposures to supranational institutions are not assigned to a specific country.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                  |  |               |  |      |                       |  |      |           |      |  |                       |  |      |  |  |  |      | 
|----------------------------------------------------------------- |  | ------------- |  | ---- | --------------------- |  | ---- | --------- | ---- |  | --------------------- |  | ---- |  |  |  | ---- | 
|Credit spread sensitivities per risk class and sector at year-end |  |               |  |      |                       |  |     
|                                                                  |  |               |  | 2016 |                       |  | 2015 |          
|amounts in EUR thousands                                          |  | Corporate     |  |      | FinancialInstitutions |  |      | Corporate |      |  | FinancialInstitutions | 
|Credit Spread
(CSO11)                                             |  |               |  |      |                       |  |      |           |      |  |                       | 
|Risk classes                                                      |  |               |  |      |                       |  |      |           |      |  |                       |  |      |  |  |  |      | 
|1                                                                 |  | (AAA)         |  |      | 3                    |  |      |           | 48  |  |                       |  | 0    |  |  |  | 60  | 
|24                                                               |  | (AA)          |  |      | 21                   |  |      |           | 26   |  |                       |  | 13   |  |  |  | 108 | 
|57                                                               |  | (A)           |  |      | 13                    |  |      |           | 9   |  |                       |  | 12   |  |  |  | 207 | 
|810                                                              |  | (BBB)         |  |      | 126                  |  |      |           | 154 |  |                       |  | 61  |  |  |  | 180 | 
|1113                                                             |  | (BB)          |  |      | 104                  |  |      |           | 88  |  |                       |  | 88  |  |  |  | 64  | 
|1416                                                             |  | (B)           |  |      | 0                     |  |      |           | 9   |  |                       |  | 3   |  |  |  | 2   | 
|1722                                                             |  | (CCC and NPL) |  |      | 1                    |  |      |           | 2   |  |                       |  | 12  |  |  |  | 11  | 
|Not rated                                                         |  |               |  |      | 1                     |  |      |           | 1    |  |                       |  | 3    |  |  |  | 1    | 
|                                                                  |  |               |  |      |                       |  |      |           |      |  |                       |  |      |  |  |  |      | 
|Total                                                             |  |               |  |      | 241                  |  |      |           | 283 |  |                       |  | 136 |  |  |  | 631 | 
|                                                                  |  |               |  |      |                       |  |      |           |      |  |                       |  |      |  |  |  |      | 



|1 | Credit Spread Sensitivity (CS01) measures the impact on value of a 1 basis point increase in credit spreads.
|- | ------------------------------------------------------------------------------------------------------------

According
to the Capital Requirements Regulation (CRR/CRD IV) ING Bank monitors and controls its large exposures, including exposures in the trading books. In the course of 2016 there were no exposures in the trading book exceeding the regulatory large
exposure limits.

Funding and liquidity risk

Introduction

Funding and liquidity risk is the risk that ING Bank or one of its subsidiaries cannot meet its financial liabilities when they come due, at reasonable cost and in a
timely manner. Liquidity risk can materialise both through trading and non-trading positions.

ING Bank incorporates funding
and liquidity management in its business strategy. In order to optimise its funding and liquidity risk management, ING Bank has developed a funding and liquidity risk framework aimed at maximising liquidity access and minimising funding risks and
costs. The main objective of INGs funding and liquidity risk management is to maintain sufficient liquidity to ensure safe and sound operations under normal market circumstances and in times of stress.

Governance

Within ING Bank, the MBB, staff departments from the CRO and CFO
domain, Capital Management and Bank Treasury have oversight of and are responsible for managing funding and liquidity risk. The MBB defines the funding and liquidity strategy, target funding and liquidity position and the risk appetite based on
recommendations from Bank Treasury, Capital Management, Balance Sheet Risk and Finance.

Liquidity risk management within ING Bank falls under the supervision of
the ALCO function, with ALCO Bank as the highest approval authority overseeing the execution of the overall strategy set by the MBB.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-199 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







ALCO Bank determines the liquidity risk (limit) framework and appetite after which this is cascaded down in the
organisation under the responsibility of the lower level ALCOs. ING Banks liquidity risk framework is based on the three lines of defence concept, whereby risk principles are implemented, monitored and controlled in conjunction with both first
and second line functions within the Bank.

Bank Treasury is a 1st line of defence function. Its main funding and liquidity responsibilities are to manage
INGs funding gap and INGs (regulatory) liquidity position. Bank Treasury is INGs primary contact to the market for long and short term funding, with exception of capital transactions which are under the responsibility of the
Capital Management function and the execution of some specific structured funding products which are executed by Financial Markets under a mandate that provides strict guidance around pricing, volumes, optionalities and tenors.

The 2nd line Balance Sheet Risk function is responsible for defining the governance with regard to funding and liquidity management and facilitates the decision making
processes for ALCO Bank regarding this. Next to this, Balance Sheet Risk sets the standards for the funding and liquidity risk approach (identify, assess, control, monitor and report). Furthermore, it determines adequate policies and procedures for
managing and monitoring liquidity risk and checks compliance with guidelines and limits.

Management

Framework

INGs liquidity risk management framework incorporates
all relevant risk principles with regard to the daily and on-going management of funding and liquidity risk. The framework contains the following key elements:



| |  | Liquidity risk appetite: This is set by ALCO Bank (which includes all MBB members) in line with INGs complexity, business mix and liquidity risk profile. The risk appetite is reviewed on an annual basis and
forms part of the input of business units in their medium term business plans. The defined risk appetite is allocated to the lower level ALCOs;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Funding: The Bank Treasury function sets and updates the funding strategy and funding planning, taking into account diversification in sources and tenor of funding;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Intraday Liquidity Management: Bank Treasury actively manages its short term liquidity positions and risks to meet payment and settlement obligations on a timely basis under both normal and stressed conditions;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Collateral Position Management: Bank Treasury actively manages the liquidity risk of its collateral positions to meet INGs collateral needs, and resources, under both normal and stressed conditions and in
accordance with all internal and regulatory rules;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Liquidity buffers: ALCO Bank ensures that sufficient liquidity is maintained, in accordance with Bank- and regulatory rules and standards, including a buffer of unencumbered, high quality liquid assets, to
withstand stress events, such as those involving the loss or impairment of both unsecured and secured funding sources;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Liquidity risk transfer and pricing: ALCO Bank sets and maintains a Funds Transfer Pricing (FTP) framework that optimises Bank-wide funding and liquidity risk management, whereby all business units must transfer
their structural funding and liquidity risks to Bank Treasury whilst managing their own customer behaviour liquidity risk costs. Any negative carry resulting from necessity to keep a buffer of liquid assets as contingent liquidity is not captured in
FTP, this negative carry is captured and allocated through a separate contingent liquidity charging (CLC) mechanism;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Stress testing: ALCO ensures that liquidity stress tests are planned, designed, conducted and reviewed, to identify sources of potential liquidity strain, to determine how these can and will be addressed and to
ensure that current exposures remain within the established liquidity risk tolerance; and
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Contingency Funding Plan: ALCO ensures the design, regular test and maintenance of formal Contingency Funding planning, setting out the strategies for addressing liquidity shortfalls in emergency situations,
outlining procedures to manage these situations, establishing clear lines of responsibility, and articulating clear implementation and escalation procedures.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Liquidity risk appetite

INGs liquidity risk appetite expresses
the level of liquidity risk ING is willing to take in pursuit of its strategic objectives. The Liquidity Risk Appetite Statements (RAS) are aligned with the ING strategy and are allocated to the ING entities by way of limits, where needed per ING
entity. INGs Liquidity RAS is build up of three levels:



| |  | RAS Level 1 are considered in conjunction with each other for the purpose of steering the ING Bank liquidity positions as they differ in assumptions, horizon and scope. The level 1 risk appetite statements
(i) assure compliance with regulatory requirements (LCR and NSFR) and (ii) set adequate buffers related to internally defined stress scenarios;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | RAS Level 2 are additional principles that allow assessing different aspects of ING consolidated liquidity position and/or balance sheet (ratios). They can ultimately affect RAS Level 1, or they can be
complementary to RAS Level 1 (where the differences lie in either the metrics, the assumption, the data source or both). The level 2 risk appetite statements focus on (i) ING Banks cash & collateral position, (ii) the
asset encumbrance ratio, (iii) assure sufficient levels of funding diversification; and
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | RAS Level 3 are additional principles that allow assessing aspects of the consolidated liquidity position that concern certain parts of on- and
off- balance sheet items, or represent a further specification of RAS Level 1 or Level 2.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

This RAS
hierarchy is applied consistently for all currencies and for USD for both the consolidated ING scope and ING Bank N.V. solo. Where relevant the RAS are cascaded down to specific regional and local levels.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-200 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Based on the above, ING Bank has defined the following funding and liquidity risk management risk appetite statements:



| |  | Home/host regulatory liquidity limits must be pro-actively complied with;
|- |  | -------------------------------------------------------------------------



| |  | The time-to-survive in a funding stress situation must extend over defined period, depending on the level of stress applied;
|- |  | ----------------------------------------------------------------------------------------------------------------------------



| |  | Funding of longer-term assets and investments must be done by stable and longer-term liabilities;
|- |  | -------------------------------------------------------------------------------------------------



| |  | Geographical dependencies with respect to intra-group funding are to be limited; and
|- |  | ------------------------------------------------------------------------------------



| |  | Diversification must be in place of funding profile, across funds providers, instrument types, geographic markets, tenors and currencies.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------

Funding

In detailing the activities of the bank regarding utilisation
of professional market funding sources, the following key principles apply:



| |  | Maintaining adequate market access in both normal and stressed but operable market conditions;
|- |  | ----------------------------------------------------------------------------------------------



| |  | Managing risk by adhering to internally and externally imposed risk limits and balance sheet ratios; and
|- |  | --------------------------------------------------------------------------------------------------------



| |  | Optimising the cost of funding under the principles above.
|- |  | ----------------------------------------------------------

With respect to funding sources, ING Bank manages its balance
sheet prudently, whereby short-term funding is primarily utilised for funding short-term assets. The bank aims to fund longer term assets and investments by stable and longer term liabilities. Next to this, ING Bank monitors exposures in major
currencies such as the USD. Monitoring and control of the USD funding is effectuated through a dedicated USD funding and liquidity risk framework.

ING Bank reviews
its funding plan on at least a quarterly basis, assessing market developments and funding requirements.

Intraday liquidity management

The objective of managing intraday liquidity and its risks at ING is twofold: it is focused on preventing damage to the institutions own liquidity position, and,
in light of its role in global financial markets, ING also takes into account the potential damage to other parties which can arise through chain effects in payment and securities transactions. Intraday liquidity management is managed through the
intraday risk appetite statement, by setting amongst others monitoring metrics and triggers on daily net negative liquidity positions and levels of payments outflows.

Collateral position management

The objective of the Collateral
Management is to ascertain that ING Bank can meet collateral requirements for INGs collateral needs. ING Bank maintains a liquidity buffer existing of cash, cash equivalents and other highly liquid unencumbered assets to facilitate this.
Tactical (short term) management of the liquidity buffer is performed, by increasing or decreasing the liquidity coverage with collateral transformation by execution of repos, in order to meet internal and regulatory requirements. Reporting and
analysis is performed, providing availability of collateral for emergency financing, its eligibility and its route to cash in an efficient manner.

Liquidity
buffers

The liquidity buffer ING Bank holds can be seen as the short-term part of the counterbalancing capacity, i.e. the total of available sources and
measures within ING to generate liquidity (including also stopping professional lending), and serves as a cushion for liquidity needs under normal and stressed conditions.

The size and composition of the Liquidity buffer depends on INGs risk appetite and regulatory liquidity standards. In the buffer, only assets that are included
that are unencumbered and freely available for liquidity purposes. Bank Treasury ensures functional management of all liquidity buffers within ING Bank, both buffers at Bank level and buffers at local business unit level.

The liquidity buffer is held as an insurance against a range of stress scenarios, covering the additional need for liquidity that may arise over a defined short period
of time under stress conditions. INGs minimum standards for liquidity buffers are described below:



| |  | When local regulatory rules require so, local liquidity buffers can be established. Although locally established, these buffers must be centrally functionally managed by the Bank Treasury function;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The buffer must be aligned in relation to the contractual and expected expiry calendars and other expected or planned developments;
|- |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  | The size of the buffers is supported by estimates of liquidity needs performed under the Banks or business entitys stress testing and be aligned with the liquidity risk appetite;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The liquidity buffer is composed of cash and core assets that are eligible for the Liquidity Coverage Ratio (LCR) and/or highly marketable, which are not pledged to payment systems or clearing houses. For longer term
buffer purposes, a broader set of liquid assets might be appropriate, subject to the Banks or entitys ability to generate liquidity from them under stress, within the specified period of time; and
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The location and size of liquidity buffers reflects the Banks or entitys structure (e.g. legal and geographical) and business activities.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-201 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Liquidity risk transfer and pricing

Funds Transfer Pricing (FTP) is an internal measurement and allocation system that assigns a profit contribution to funds raised, lent, or invested. FTP is the pricing
mechanism used within ING to transfer interest rate risk, basis risk and liquidity risk positions from commercial units to Bank Treasury. The FTP framework enables local ALCOs to set their local FTP levels and manage these risks for all internal
transfers at local level. This means that these risks are transferred from the business to a separate Bank Treasury book where they can be monitored and managed more efficiently and effectively. Any negative carry resulting from necessity to keep a
buffer of liquid assets as contingent liquidity is not captured in FTP. This negative carry is captured and allocated through a separate contingent liquidity charging (CLC) mechanism. The liquidity costs, benefits and risks are considered in the
product pricing, design and offering and in the Product Approval and Review Process (PARP) or deal approval and other related processes for commercial products by the business units.

Stress testing

Stress testing allows ING to examine the effect of
exceptional but plausible future events on the liquidity position of the bank and provides insight into which entities, business lines or portfolios are vulnerable to which type of risks and/or in which type of scenarios. Liquidity stress testing is
an important tool in identifying, assessing, measuring and controlling funding and liquidity risks, providing a complementary and forward-looking perspective to other liquidity and funding risk management tools.

In line with SREP and EBA guidance, INGs liquidity position is stress tested on a monthly basis under a particular scenario that is a mix between a market event
and an ING specific event. The outcome of stress tests are evaluated and provide input to any follow-up on the need for additional contingency measures.

In addition to the bank-wide stress test framework as described in the ING Bank risk profile section, stress test reports are produced with respect to the funding and
liquidity position on a regular basis. Some of these stress tests are regulatory driven, and others are based on internal scenarios. On a weekly basis ING reports an internal net liquidity position metric, this is reported on a consolidated (bank)
level for the main entities and split in Euro and US Dollar. On a monthly basis ING Bank reports the Liquidity Coverage Ratio (LCR) and a internally defined stress scenario related to the time-to-survive period. Additionally, on a quarterly basis, ING Bank reports a number of internally defined stress scenarios related to
time-to-survive periods.

On ad-hoc basis
ING Bank performs additional stress tests related to the funding and liquidity position. Overall, stress testing is an integral part of the liquidity and funding risk management framework and also serves as input for the contingency funding plan.
From a currency perspective, stress tests are applied on Euro and US Dollar whilst other currencies are monitored. This aligns with the Basel III and CRR approach with regard to major currencies.

Contingency funding plan

In the contingency funding plan, contingency
liquidity risk is addressed which specifically relates to the organisation and planning of liquidity management in time of stress. Within ING Bank, for contingency purposes, a dedicated crisis team  consisting of key MBB members and senior
management representatives from e.g. Risk, Finance, Capital Management and Bank Treasury  is responsible for liquidity management in times of crisis. Throughout the organisation contingency funding plans are in place to enable senior
management to act effectively and efficiently in times of crisis. The contingency funding plans are developed in line with the ING Recovery Plan and are tested on a regular basis, both centrally and at business unit level.

Funding and Liquidity profile

Funding sources

In 2016, ING Bank had readily access to a large variety of funding sources, both short term and long term. In the table below, the various funding sources are presented
in the funding mix:



|                               |  |      |     |   |      |  |     |  
|------------------------------ |  | ---- | --- | - | ---- |  | --- | -
|ING Bank Funding Mix           |  |      |     |   |      | 
|                               |  | 2016 |     |   | 2015 | 
|Funding type                   |  |      |     |   |      |  |     |  
|Retail deposits                |  |      | 51  | % |      |  | 48  | %
|Corporate & other deposits     |  |      | 21  | % |      |  | 22  | %
|Interbank (incl. central bank) |  |      | 5   | % |      |  | 5   | %
|Lending/repurchase agreement   |  |      | 5   | % |      |  | 5   | %
|Public debt                    |  |      | 16  | % |      |  | 18  | %
|Subordinated debt              |  |      | 2   | % |      |  | 2   | %
|                               |  |      |     |   |      |  |     |  
|Total                          |  |      | 100 | % |      |  | 100 | %
|                               |  |      |     |   |      |  |     |  

The funding mix remained well diversified. Retail deposits remained ING Banks primary sources of funds and slightly increased to
51% of the total funding mix per year end 2016. The Loan-to-Deposit ratio (excluding securities at amortised costs) increased from 1.04 per 2015 year-end to 1.06 per year end 2016.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-202 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Regulatory developments

Based on the Delegated Act on the LCR issued by the European Commission in October 2014, the EBA issued Implementing Technical Standards with regard to the reporting of
the LCR as per 1 October 2015. The LCR is currently calculated and reported based on this Delegated Act and the corresponding Implementation Technical Standards. A Corrigendum for the LCR Delegated Act is in the making and is expected to be
issued later in 2017.

The current implemented additional monitoring metrics will be extended with a maturity ladder template, which was out of scope in the initial
implementation.

In November 2016, the EC has submitted a legislative proposal on NSFR to the European Parliament and Council. It is expected that the NSFR will
come into force two years after its approval by the European Parliament and Council, with an indicative date of 2019. The NSFR ratio is currently reported on a quarterly basis based on BCBS and EBA guidance.

The European Commission proposal also contains guidance on disclosure. This means that disclosure requirements will come into force after the approval by the European
Parliament and Council.

Non-Financial Risk

Introduction

The Non-Financial Risk
(NFR) function encompasses the operational and compliance risk management functions. It ensures appropriate risk controls in these functional areas by implementing clear policies and minimum standards which are embedded in ING Bank business
processes in all divisions. The necessary infrastructure is in place to enable management to track events and non-financial risk issues. A comprehensive system of internal controls that are reviewed and
updated as necessary creates an environment of continuous improvement in managing non-financial risk.

ING Bank believes
that fully embedding controls preserves and enhances the trust of its customers, staff and shareholders and is essential to build sustainable businesses. The Orange Code sets the foundation for the high ethical standards ING Bank expects from all
its business activities. The Orange Code requires all staff to conduct themselves, not only within the spirit and letter of laws and regulations, but above all, with integrity, whilst being honest, prudent and responsible.

Governance

Non-Financial Risk
Committees (NFRCs) and Management Teams (MTs) manage, measure and monitor operational and compliance risks. NFRCs exist at Bank level and at other relevant levels. They are chaired by the first line of defence and steer the risk management
activities of the first and second lines of defence in their scope. Non-financial risk topics are an integral part of the agenda of regular MTs at all levels in the organisation. The Bank NFRC is the primary
approval and oversight committee for non-financial risk matters.

The Head of Corporate Operational Risk Management (CORM)
and the Chief Compliance Officer report to the Chief Risk Officer (CRO) and are jointly responsible for developing the framework of non-financial risk policies and standards within ING Bank and for monitoring
the quality of non-financial risk management in the divisions.

The Chief Compliance Officer (CCO) is the general manager of
the Bank Compliance Risk Management department and the Head of the Compliance Risk Management function within the Bank. This is an independent function responsible for developing and establishing the Bank-wide policies and minimum standards for
managing compliance risks. The CCO assists and supports the MBB in managing ING Banks compliance risks and control framework. The CCO is a permanent participant of the Risk Committee of the Supervisory Board and meets regularly with its
Chairman.

The NFR function uses a layered functional approach within divisions to ensure systematic and consistent implementation of the framework of policies and
minimum standards within ING Bank. To avoid potential conflicts of interests, it is imperative that staff in this function are independent and objective when advising business management on non-financial risk
matters in their business unit or business line. To facilitate this, a strong functional reporting line to the next higher level within Operational Risk Management (ORM) and Compliance is in place. The functional reporting line has clear
accountabilities with regard to objectives setting, remuneration, performance management and appointment of new staff as well as obligations to veto and escalate.

Framework

Non-financial risk is the
risk of financial loss, legal or regulatory sanctions, or reputational damage due to inadequate or failing internal processes, people and systems; a failure to comply with laws, regulations and standards; or external events. ING Bank has a
comprehensive framework for non-financial risks that supports and governs the process of identifying, measuring, mitigating, monitoring and reporting non-financial
risks. It reflects the stages described in the Enterprise Risk Management model of COSO (Committee of Sponsoring Organisations of the Treadway Commission).



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-203 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Processes are in place to identify key threats, vulnerabilities and the associated risks which might cause adverse
events. Event identification is performed proactively and precedes a risk assessment. Different techniques for event identification exist within ING Bank, e.g. Risk & Control Self-Assessments, scenario analysis, external events inventories,
internal events analyses (e.g. lessons learned based on information from event reporting), key risk indicators and threat scans.

Risk & Control
Self-Assessment

Identification and assessment of non-financial risks inherent to ING Bank products, activities,
people, processes and systems provide management with an understanding of the operational risk profile. Based on the identification and assessment, internal controls are designed for mitigation of risks to remain within the risk appetite.

Business Environment Assessment

The Business Environment Assessment
(BEA) assesses all internal control factors and external factors that could influence the internal and external operating environment and may lead to unacceptable operational risk exposure.

Scenario analysis

Scenario analysis is a process used to consider the
impact of rare, significant, yet plausible future events, taking into consideration alternative possible outcomes for those events, their severity and frequency. Input for scenario analysis includes the results of various internal and external
assessments such as the BEA. Scenario analysis is an important component in the calculation of operational risk capital.

Internal events analyses

Analysis of internal non-financial loss data assists in identifying, quantifying, mitigating and monitoring
operational risk exposure. It provides insight into causes and effectiveness of associated controls.

External events inventories

External non-financial loss data provides valuable information about the losses experienced by other businesses, and assists ING
Bank to quantify its exposure to risk events that have not been experienced internally.

Business units and departments perform regular BEAs and Risk &
Control Self-Assessments (RCSAs) to identify and assess risks. These are conducted with involvement of the business and their ORM, Compliance and Legal departments. Based on the results of the risk assessment, response measures must be determined
for the identified risks beyond the risk appetite. Risk response actions balance the expected cost for implementing these measures with the expected benefits regarding the risk reduction.

Risk response can be achieved through several combinations of mitigation strategies, for example reducing likelihood of occurrence, reducing impact, risk avoidance,
risk acceptance or through the transfer of risk. Tracking takes place through ING Banks central risk management system.

The risk appetite (defined as the
acceptable and authorised maximum level of risk) is set by the Bank NFRC. Adherence to this risk appetite is monitored quarterly through the NFR Dashboard which reports the key non-financial risk exposures.
The NFR Dashboard provides management at country, divisional and bank level with an overview of key risks within the non-financial risk areas including compliance risks, information security risks, continuity
risks, control risks, fraud and unauthorised activities risks and personal and physical security risks, enabling management to focus and set priorities.

The yearly
objective setting process for both business management and NFR professionals aims to keep improving the management of non-financial risk throughout ING Bank to ensure that ING Bank stays in control of its
current and future non-financial risks.



Advanced Measurement Approach (AMA)

ING Bank has an Operational Risk Capital
model in place in which the risk profile is closely tailored to the internal risk profile of ING Bank and its divisions, by using scenario data for capturing severe risks and internal loss and RCSA data for capturing
day-to-day risks. The business has a strong role in assessing scenario severities and the ORM function in validating the results. The internal data are combined with
external loss data (ORX) in the AMA capital calculation. Since April 2013 ING is allowed to use its AMA model for regulatory supervision purposes. ING Bank reports the regulatory capital numbers on a quarterly basis. The AMA capital requirement per
the end of 2016 amounts to EUR 3,242 million, compared to EUR 3,451 million per 2015 year-end.

Risk
mitigations

ING Bank is currently not using any insurance or risk transfer mechanisms for the mitigation of risk in the context of the AMA capital calculation.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-204 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Operational risk

Definition

Operational risk is defined as the risk of direct or indirect loss
resulting from inadequate or failed internal processes, people and systems or from external events.

Risk categories

ING Bank categorises operational risks in a number of risk areas:



| |  | Information (Technology) riskis the risk of financial loss, regulatory sanctions or reputational damage due to breaches of confidentiality, integrity or availability within business processes or information or
lack of information quality;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Continuity riskis the risk of financial loss, regulatory sanctions or reputational damage due to business disruptions (loss of people, processes, systems, data, premises);
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Control riskis the risk of financial loss, regulatory sanctions or reputational damage due to ineffective organisation structures and governance procedures (including unclear roles and responsibilities and
inadequate reporting structure); monitoring and enforcement of risk mitigating measures; and risk culture;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Internal fraud riskis the risk of financial loss, regulatory sanctions or reputational damage due to deliberate abuse of procedures, systems, assets, products and/or services of ING by employees (incl. temporary
workers, third party contractors, internships and consultants) who intend to deceitfully or unlawfully benefit themselves or others;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | External fraud riskis the risk of financial loss, regulatory sanctions or reputational damage due to deliberate abuse of procedures, systems, assets, products and/or services of ING by external parties (clients,
potential clients or other third parties, including vendors and outside agencies) who intend to deceitfully or unlawfully benefit themselves or others;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Unauthorised activity riskis the risk of financial loss, regulatory sanctions or reputational damage due to employees performing outside the normal course of their business, intentionally giving unauthorised
approvals or overstepping of their authority;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Personal and physical security riskis the risk of financial loss, regulatory sanctions or reputational damage due to criminal and environmental threats that might endanger the security or safety of ING personnel
at work, people in ING locations, ING assets or assets entrusted to ING, people at ING event locations, or might have an impact on ING organisations confidentiality, integrity or availability;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Processing riskis the risk of financial loss, regulatory sanctions or reputational damage due to failed (transaction) processing (input, execution, output) or failing process management; and
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Employment practice riskis the risk of financial loss, regulatory sanctions or reputational damage due to acts inconsistent with employment, health and/or safety laws, regulations or agreements, from payment of
personal injury claims, or from diversity/discrimination events.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Operational risk includes the related risk of reputation loss, as well as legal risk
but strategic risks are not included.

Reputational risk is defined as the potential that adverse publicity regarding ING Banks business practices and
associations, whether accurate or not, will cause a loss of confidence in the integrity of ING Bank. Reputational risk is multidimensional and reflects the perception of other market participants, like customers, counterparties, shareholders,
investors or regulators that can adversely affect ING Banks ability to maintain existing, or establish new, business relationships and continued access to sources of funding (e.g. through the interbank or securitisation markets).

Legal risk is defined as the risk related to (i) a failure (or perceived failure) to adhere to applicable laws, regulations and standards, (ii) contractual
liabilities or contractual obligations that are defaulted or cannot be enforced as intended, or are enforced in an unexpected or adverse way, and (iii) liability (tort) towards third parties due to an act or omission contributable to ING Bank
(potentially) resulting in impairment of ING Banks integrity, leading to damage to ING Banks reputation, legal or regulatory sanctions, or financial loss.

Given the heavy reliance on IT systems in financial institutions, controls that monitor the various aspects of IT risk, such as integrity and confidentiality, are
embedded in ING Banks risk and control framework.

Main developments in 2016

Internal and external fraud

The risk of clients and ING Bank staff being
targeted by fraudsters using social engineering techniques to execute payments is still increasing and CxO impersonation fraud (criminals investigate the senior management structure of an organisation and target key positions) remains a significant
threat. Efforts are undertaken to mitigate the risk such as creating awareness for customers and staff. ING Bank stringently monitors both this type of fraud and new emerging fraud methodologies.

ING Bank continues working on strengthening its global fraud resilience and to strengthen its control environment as fraudsters turn their interest to the end-user. Exploring and combining automated fraud detection tools that can be used for monitoring or early detection of fraudulent incoming and outgoing payments remains important in fraud prevention. These are used
to further enhance an effective set of organisational controls.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-205 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







Cybercrime

Cybercrime is a
continuous threat to companies in general and to financial institutions specifically. Both the frequency and the intensity of attacks increase on a global scale. Particularly threats from Distributed Denial of Service (DDoS), targeted attacks (also
called Advanced Persistent Threats) and Ransomware intensify worldwide. ING Bank builds on its cybercrime resilience, further enhancing the control environment to protect, detect and respond to e-banking
fraud, DDoS and targeted attacks. Additional controls continue to be embedded in the organisation as part of the overall internal control framework and are continuously re-assessed against existing and new
threats. During 2016 ING did not experience any cyber incident that can be classified as material. ING provides continuous reporting on cyber incidents to the ECB.

ING Bank also works on strengthening its global cybercrime resilience including strong collaboration against cybercrime with the financial industry, law enforcement
authorities, government (e.g. National Cyber Security Center) and Internet Service Providers (ISPs).

Compliance risk

Definition

Compliance risk is defined as the risk of impairment of ING
Banks integrity, leading to damage to INGs reputation, legal or regulatory sanctions, or financial loss, due to a failure (or perceived failure) to comply with applicable laws, regulations and standards and the ING Values as part of the
Orange Code. We aim to effectively manage compliance risks that could expose ING Bank to reputational damage, fines, civil and criminal penalties, payment of damages, court orders and suspension or revocation of licenses that would adversely impact
our customers, staff, shareholders and other stakeholders.

The Bank Compliance Risk Management function established a compliance control framework in which
controls are defined based on laws, regulations and standards that are part of the internal control framework of ING Bank applicable to non-financial risks. To support management in mitigating compliance
risks, the Bank Compliance Risk Management function educates and supports the business in managing compliance risks related to e.g. money laundering, terrorist financing, sanction and export control compliance, conflicts of interests, mis-selling, corruption and protection of customers interests.

Risk categories

ING Bank categorises compliance risk into four conduct-related integrity risk areas:



| |  | Client conductrefers to the compliance risks arising from the relationship with or generated by the conduct of our clients and/or business partners, like money laundering or terrorist financing. Those risks are
generally defined within ING Bank as Financial Economic Crimes (FEC);
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Personal conductrefers to the compliance risks arising from the conduct of ING employees;
|- |  | -----------------------------------------------------------------------------------------



| |  | Financial Services conductrefers to the compliance risks arising from or generated by the conduct of ING Bank when developing, marketing and/or selling products and services to its clients;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Organisational conductrefers to the compliance risks arising from the way the Bank is organising itself to develop its activities. This category covers for instance the licences required to perform its regulated
banking activities or the operating effectiveness of its information barriers.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The controls to mitigate the compliance risks associated with the
above mentioned risk areas are designed and embedded in the ING business units. The effectiveness of the controls as designed is tested periodically, and senior management is aware about their responsibility to ensure their processes are compliant
with applicable laws and regulations, ING Banks internal policies and the Orange Code.

In cases where an employee from ING Bank suspects a breach of external
laws and regulations, internal policies and minimum standards and/or the Orange Code they are encouraged to (anonymously) speak up in line with the Whistleblower policy using the most appropriate channel, e.g. the (external) ethics line.



Financial Economic Crime (FEC) Policy and Minimum Standards

The ING Bank FEC Policy and Minimum Standards directly reflect relevant national and international laws, regulations and industry standards. The ING Bank FEC Policy is
mandatory and applies to all ING banking entities, majority owned ING business, businesses under management control, staff departments, product lines and to all client engagements and transactions.

Management of ING Bank entities maintain local procedures aiming to enable them to comply with local laws, regulations and the ING Bank FEC Policy and Minimum
Standards. Where local laws and regulations are more stringent, the local laws and regulations are applied. Likewise the FEC Policy and Minimum Standards prevail when the standards therein are stricter than stipulated in local laws and regulations
and if not specifically forbidden (data privacy or bank secrecy).



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-206 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







The ING Bank FEC Policy and Minimum Standards set the requirements for all ING Bank entities with respect to guard
against any involvement in criminal activity, and to participate in international efforts to combat money laundering and the funding of terrorist and criminal activities. The requirements in the ING Bank FEC Policy cover minimum standards and
controls related to: money laundering, terrorist financing, export trade controls, proliferation financing, sanctions (economic, financial and trade) and countries designated by ING Bank as Ultra High Risk Countries (UHRC). The effectiveness of
those controls is reviewed periodically.

As a result of frequent evaluation of all businesses from economic, strategic and risk perspective ING Bank continues to
believe that for business reasons doing business involving certain specified countries should be discontinued. In that respect, ING has a policy not to enter into new relationships with clients from these countries and processes remain in place to
discontinue existing relationships involving these countries. At present these countries are North Korea, Sudan, Syria, Iran and Cuba. Each of these countries is subject to a variety of EU, US and/or other sanctions regimes. Iran, Sudan, and Syria
are identified by the US as state sponsors of terrorism and are subject to U.S. economic sanctions and export controls.

ING Bank has a FEC control framework in
place to mitigate the risks related to Financial Economic Crime.

Also in 2016, the Ukraine-related sanctions as imposed earlier by both the US and the EU remained
in force. Those sanctions restrict amongst others the dealing in specific (financial) products with certain named parties. Management of ING Bank entities use their existing control framework to ensure compliance with these sanctions.

Main developments in 2016

Regulatory developments

Compliance with applicable laws and regulations is resource-intensive and costly. Banks continue to be faced with new and increasingly onerous regulatory requirements,
and we expect the scope and extent of regulations in the jurisdictions in which we operate to generally increase further. ING is concerned that the lack of coordination among policy makers and the lack of clarity on future regulatory requirements is
making it increasingly difficult to actively support the economies where we operate.

Regulation is becoming increasingly more extensive and complex. A recent
example is the implementation of the Common Reporting Standard (CRS), which like FATCA requires financial institutions to report detailed client-related information to the competent authorities. Customer due diligence (CDD) and transaction
monitoring impose obligations on financial institutions to maintain appropriate policies, procedures and controls to detect, prevent and report money laundering (AML), terrorist financing, and fraud.

Despite our efforts to comply with applicable laws and regulations, there are a number of risks in areas where applicable regulations are unclear, subject to multiple
interpretations or under development, are in conflict with each other, or where regulators revise their guidance or courts overturn previous rulings. Meeting all these requirements within the strict timelines that have been set poses a significant
operational challenge for banks. Implementing the necessary processes and procedures to effectively comply has significant implications for IT systems and data, while people who have the necessary knowledge and skills are scarce.

User Access Management (UAM) is an important element of our control framework to mitigate unauthorized and / or inappropriate access to our data and information. The
standards of controls on UAM are high and best practices illustrate that the trends are towards further increasing requirements. We have identified control deficiencies related to UAM and a central task force was formed to coordinate, assess,
monitor and track remediation efforts that resulted in increased focus by the Executive Board, senior management and ING staff. In 2017, management will continue to enhance the internal controls, mitigation and monitoring the progress of mitigation
and remediation.

Compliance Risk Culture Monitoring

The Bank Compliance
Risk Management function enhanced its control framework by assessing the operation of soft controls in relation to compliance risks in addition to hard controls. The aim of Compliance risk culture monitoring is to assess the risks that might
influence the conduct and risk culture, promoting the individual integrity of all employees and enhancing the overall culture that is led by integrity.

Market
Abuse

Integrity and transparency in financial markets are essential for public and investor confidence. In light of revised Market Abuse European legislation
that came into effect on 3 July 2016, ING Bank issued a new Market Abuse Policy and Minimum Standard to prevent insider dealing, unlawful disclosure of inside information and market manipulation, including benchmark manipulation. A central
project was established to support INGs commitment in adhering to the revised market abuse European legislation and to create consistency throughout the organisation with respect to the roll out and implementation of the policy and minimum
standard requirements.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-207 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Financial Economic Crime

The 4th AML Directive as issued by the European Union has been incorporated into the update of the FEC Policy and
Minimum Standards. The main changes in this Directive (compared to the 3rd AML Directive) are related to: the establishment of an UBO register (at national level with the potential to share the
information within the European Economic Area (EEA)) and a stronger approach towards the application of Due Diligence on INGs customers. The final translation of the 4th AML Directive into
the laws and regulations of the EU member states is foreseen in Q2/2017. Various global programs have started in 2016 to enhance the Know Your Client process and the risk assessment of the clients files, as well as strengthening the
requirements and activities relating to Client Activity Monitoring.

Regulator relationships

The Bank Compliance Risk Management function continued its policy of investing in pro-active relationship building with
regulators in the jurisdictions where ING Bank operates, by striving for cooperation in identifying and mitigating compliance risks for ING Bank as well as seeking to contribute to the regulatory debate going forward.

Review processes for setting benchmark rates

ING Bank has reviewed its
internal processes for contributing to setting various benchmark rates. Possible irregularities have been investigated and remedial actions have been taken. ING Bank is cooperating with information requests and/or investigations of regulators and
other authorities concerning ING Banks contribution to setting various benchmark rates. It is at this moment not possible to assess whether ING Bank will be subject to monetary or other penalties, or the amount and nature thereof if they
should arise.

Non-Financial Risk Awareness

Promoting Integrity Programme

The Promoting Integrity Programme was started
in 2010 and is an innovative programme consisting of e-learning modules on key bank-wide topics that can be followed-up with dialogue sessions in which managers discuss
the issues raised with their teams. The programme is sponsored by board members and senior managers and is created to ensure that every employee in every part of ING Bank understands how their actions and behaviour can help earn and retain customer
and stakeholder trust. The modules consist of several case studies and real life examples which require staff to think about various aspects of the issue. In 2016 Cybersecurity was addressed, with a closer look at CxO fraud, the risks of malicious
apps, innovation and vulnerability to cybercrime, how to secure our assets (including responsible disclosure) and identity theft.

Learning

An e-learning module for all ING Bank employees was launched to raise awareness of Market Abuse and its consequences, addressing
new and stricter legislation that took effect in July 2016. It aimed at increasing knowledge of ING standards, regulatory obligations and market practice to prevent it, looking at aspects, such as insider dealing, unlawful disclosure of inside
information, market manipulation and how to guard against them. Also understanding the human element involved to remain alert and maintain high standards of integrity and adhering to the Orange Code values.

Global education and awareness in the form of e-learning modules, awareness sessions and material was provided on topics such as
Fraud and Security, Conflicts of Interest, Financial Economic Crime (FEC) and an ORM Onboarding e-learning for staff new to Operational Risk Management worldwide. Similar to what was developed earlier for
Compliance Risk Management, an ORM curriculum and learning path was launched in the ING Learning Centre that gives staff in Operational Risk Management worldwide an overview of available ORM and other relevant training, including recommended
external trainings. For staff in the Netherlands an Insiders e-learning was developed. Furthermore, there were end of year campaigns for anti-bribery and anti-corruption to strengthen awareness.

Classroom sessions were delivered on general non-financial risk awareness for all lines of defence in the Netherlands and in
other countries. This included training in introduction programmes for new staff and talent programmes. The international Training on Operational Risk was held for staff in ING Bank worldwide who are new to the ORM function. Compliance Risk
Management held its mandatory international Compliance Officer Training programme for all new Compliance Officers in ING Bank worldwide and also held an advanced Compliance Officer Training for senior compliance officers in ING Bank worldwide. For
Compliance and ORM staff, there were classroom trainings on Risk Assessment and Monitoring. Classroom trainings and workshops were held for risk officers involved in the areas of Information Risk and Business Continuity Risk to update and align
these communities with regard to models, toolkits, internal standards and procedures.

In addition, regular global calls and webcasts were organised on various
subjects to provide advice and clarification to non-financial risk staff and provide the opportunity to ask questions.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-208 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Business Risk

Introduction

Business Risk for ING Bank has been defined as the exposure to
value loss due to fluctuations in volumes/margins, expenses as well as the impact of customer behaviour risk. It is the risk inherent to strategy decisions and internal efficiency. The calculation of business risk capital is done by calculation of
two components that are combined to one business risk figure via the variance-covariance methodology:



|1. | Expense risk covers the risk that expenses will deviate from the expected expenses over the horizon of the relevant activities. This risk primarily relates to the (in)flexibility to adjust expenses, when that is needed.
Expense risk only concerns non-financial expenses (e.g. staff and IT expenses); financial expenses are not in scope; and
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|2. | Customer behaviour risk relates to clients behaving differently than expected and the effect that this behaviour can have on customer deposits and mortgage pre-payments. The
customer behaviour risk is calculated by stressing the underlying assumptions in the models for behavioural assets and liabilities.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Governance and
risk management

The governance and management of Business Risk differs from the risk types that have been described in the sections before. ING Bank has not
developed explicit risk appetite statements regarding business risk nor has it set up a department that is responsible for managing this risk. The main reason is that the underlying risk types (expense risk, volume-margin risk, and customer
behaviour risk) are mitigated and managed in a different way. Expense risk is monitored and managed via the financial performance of the bank and the local units, whereby the reported expense numbers are compared on a quarterly basis with the 2020
Ambition of having a cost/income ratio between 50% and 53%. Deviations from this ambition are monitored as part of the financial projections that are discussed continuously within different parts of the organisation. For customer behaviour risk, the
management and monitoring of this risk is part of the day-to-day business of the Balance Sheet Risk department. As of January 2017, customer behaviour risk will be
reported under market risk economic capital. For a more extensive explanation of the risk management practices for customer behaviour risk, please refer to the Market Risk in Banking Books section.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-209 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







2.2.2 Capital management section

Objectives

ING Group Capital Management (Capital Management) is responsible
for the adequate capitalisation of ING Group and ING Bank entities at all times in order to manage the risk associated with INGs business activities. This involves not only the management, planning and allocation of capital within ING Group
and ING Bank, but also the necessary capital market transactions, term (capital) funding and risk management transactions. ING takes an integrated approach to assess the adequacy of its capital position in relation to its risk profile and its
operating environment. This implies taking into account the interests of its various stakeholders. Capital Management takes into account the metrics and requirements of regulators, rating agencies and internal risk based metrics such as the Risk
Appetite Framework.

ING applies the following main capital definitions:



| |  | Common equity Tier 1 capital, Tier 1 capital and Total capital  Tier 1 capital is defined as shareholders equity plus Additional Tier 1 (hybrid) capital less regulatory adjustments. Common equity Tier 1,
Tier 1 and Total capital divided by risk-weighted assets equal the Common equity Tier 1, Tier 1 and Total capital ratios respectively. Common equity Tier 1 capital is equal to Tier 1 capital excluding Additional Tier 1 (hybrid) capital;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Common equity Tier 1 Risk Appetite  the solvency risk appetite statement is not only compared to the actual reported level, but also includes the potential impact of a standardised and pre-determined 1-in-10-year stress event (i.e. at a 90% confidence level with a 1-year horizon) as described in the Risk Management section;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Overall Capital Requirement (OCR). The OCR means that INGs own funds exceeds the sum of the total SREP capital requirement (wherein per risk type the maximum is taken of Regulatory and Economic Capital
requirements), capital buffer requirements and macro-prudential requirements.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Developments

2016 was an important year for ING Group, as it further strengthened its capitalisation. The further regulatory capital strengthening reflects the sale of the remaining
stake in NN Group as well as strong profitability. Although the regulatory environment remains uncertain, our capital position ensures we can continue to support our customers to realise their financial future.

In January 2016, ING sold 33 million ordinary shares of NN Group and subsequently exchanged the final tranche of EUR 337.5 million mandatory exchangeable
subordinated notes in February 2016, which were issued in 2014 as part of the anchor investment in NN Group. These transactions reduced INGs remaining stake in NN Group from 25.8% to 14.1%. In April 2016, ING sold its remaining 14.1% stake in
NN Group. The divestment of NN Group is the final step of INGs programme to divest all of its insurance and investment management businesses as part of the restructuring agreement with the European Commission. As a result of the sale of NN
Group shares, NN Group is not an investment anymore and available Tier-1 instruments on-lent to NN Group do not longer need to be deducted of available Tier-1 capital. This had a positive impact on available Tier-1 capital of EUR 0.8 billion.

All net capital flows in 2016 related to the sale of insurance related activities are disclosed in Note 51 Other events

In March 2016 a GBP 66 million grandfathered additional Tier 1 security, which was fully on-lent to ING Bank, was redeemed
by ING Group on its first call date. In April 2016, ING Bank NV issued EUR 1 billion CRD IV-eligible Tier-2 instruments. The transaction had an issuer substitution
option which gives ING the right to exchange these for subordinated Tier-2 notes issued by ING Groep NV.

In September 2016,
ING Group redeemed USD 800 million 7.05% grandfathered Perpetual Debt Securities which were on-lent to ING Bank NV.

In
November 2016, ING Group issued USD 1,000 million contingent convertible Securities which qualify as Additional Tier-1 capital under CRD IV/CRR to strengthen INGs capital base. The perpetual bond,
which will be on-lent to ING Bank can be called by ING Group five years after issuance, has a coupon of 6.875%.



The transitional (phased-in) common equity Tier 1 requirement that ING Group had to meet on a consolidated basis in 2016 was set
at 10.25%. This requirement is the sum of (i) 9.5% being the ECBs decision on the 2015 Supervisory Review and Evaluation Process (SREP), including the capital conservation buffer, and (ii) 0.75% for the Systemic Risk Buffer (SRB) which has
been set separately for Dutch systemic banks by the Dutch Central Bank. The fully-loaded SRB requirement is currently set at 3% for ING Group and phases in over four years, with a final implementation date of 1 January 2019. The impact from
countercyclical buffer requirements was insignificant at the start of 2016.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-210 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







At year-end 2016, ING Group received the ECBs decision on the 2016 SREP. The
common equity Tier 1 requirement for ING Group was set at 9.0% in 2017. This requirement consists of a 4.5% Pillar 1 requirement, a 1.75% Pillar 2 requirement, a 1.25% Capital Conservation Buffer (CCB) and the 1.50% Systemic Risk Buffer (SRB) which
has been set separately for Dutch systemic banks by the Dutch Central Bank (De Nederlandsche Bank). This excludes Pillar 2 guidance, which is not disclosed. The CCB and the SRB are scheduled to phase-in over
the coming years to 2.5% and 3.0% respectively by 1 January 2019. Consequently, the fully-loaded Maximum Distributable Amount (MDA) trigger level is expected to rise from 9.0% in 2017 to 11.75% in 2019 and assumes a stable Pillar 2 requirement.
In the event that ING Group breaches the MDA level it may face restrictions to pay dividends, coupons on AT1 instruments and bonuses. The impact from the Countercyclical Buffer (CCyB) is negligible at this stage.

With a 14.2% fully-loaded Group common equity Tier 1 ratio as at 31 December 2016, ING is in compliance with the current fully-loaded requirement of 11.75%. ING
Groups fully-loaded Tier 1 ratio (including grandfathered securities) was 16.6% at the end of 2016, while the total capital ratio (including grandfathered securities) increased to 19.7%.

To support orderly resolution, the BRRD requires banks to meet minimum requirements for own funds and eligible liabilities (MREL). In addition, ING as a Global
Systemically Important Bank (G-SIB) needs to comply with the total loss absorption capacity (TLAC) proposal published by the Financial Stability Board (FSB) in November 2015.

Since 2012, ING has worked with the different resolution authorities to determine a resolution strategy and to identify potential impediments to resolution. Following
an discussion throughout 2016, with the Single Resolution Board (SRB) and the national resolution authority, De Nederlandsche Bank (DNB), we concluded that ING Group should be our designated resolution entity. At the end of January 2017, the Single
Resolution Board (SRB) has informed us that it supports the designation of ING Group as the point of entry. Henceforth, ING Group will be the issuing entity for all TLAC/ MREL eligible debt consisting of Additional Tier 1, Tier 2 and senior
unsecured debt.

G-SIBs will be required to meet the TLAC requirement alongside the minimum regulatory requirements set out
in the Basel III framework. Specifically, they will be required to meet a Minimum TLAC requirement of at least 16% of the resolution groups risk-weighted assets (TLAC RWA Minimum) as from 1 January 2019 and at least 18% as from
1 January 2022. Minimum TLAC must also be at least 6% of the Basel III leverage ratio denominator (TLAC Leverage Ratio Exposure (LRE) Minimum) as from 1 January 2019, and at least 6.75% as from 1 January 2022. Buffer requirements will
come on top of the RWA requirement but not on top of the leverage requirement. In addition, the Single Resolution Board has assumed full power as per 1 January 2016. The work plan for the SRB in 2016 focused on determining the preferred
resolution strategy, the resolution entity and the required amount of Minimum Required Eligble Liabilities (MREL).

ING Bank continues to maintain a strong and high
quality capital level, with a fully-loaded Common Equity Tier-1 ratio and a phased-in Common Equity Tier-1 ratio of 12.6%,
thereby complying with CRR/CRD IV solvency requirements. Dividend from ING Bank to ING Group of EUR 1.3 billion was paid in November 2016. The fourth quarter 2016 profit of EUR 0.6 billion is not included in the regulatory capital per
December 2016 as this was upstreamed as dividend to ING Group in February 2017. The sale of 2.5% of Kotak Mahindra Bank shares, which was settled in October 2016, had no material impact on INGs capital ratios. The fully loaded and phased in Tier-1 ratios respectively increased from 13.9% to 14.7% and 13.4% to 14.4%, primarily reflecting developments in ING Banks common equity Tier 1 ratio. This was partly offset by the redemption of the USD
800 million 7.05% grandfathered Perpetual Debt Securities in September. In April 2016, ING Bank had issued EUR 1 billion of Tier 2 bonds with an issuer substitution option through exchange. Now that clarity has been provided on the
preferred resolution strategy, ING intends to use the option to replace these ING Bank Tier 2 notes with ING Group Tier 2 notes at similar terms through exchange. The noteholders have agreed upfront to the terms and conditions to exchange their ING
Bank Tier 2 notes for ING Group Tier 2. ING Banks fully-loaded Tier 1 ratio (including grandfathered securities) was 14.7% at the end of 2016, while the total capital ratio (including grandfathered securities) increased to 17.8%.

Dividend

ING Groups dividend policy aims to pay a progressive dividend
over time which will reflect considerations including expected future capital requirements, growth opportunities available to the Group, net earnings, and regulatory developments. The Executive Board proposes to pay a total cash dividend of EUR
2,560 million, or EUR 0.66 per ordinary share, over the financial year 2016. This is subject to the approval of shareholders at the Annual General Meeting in May 2017. Taking into account the interim dividend of EUR 0.24 per ordinary share paid
in August 2016, the final dividend will amount to EUR 0.42 per ordinary share and will be paid fully in cash. The total amount of EUR 1,629 million is fully covered by the remaining balance of interim profits not included in CET1
capital at year-end 2016.

Policies

The activities of Capital Management are executed on the basis of established policies, guidelines and procedures. For the Capital Treasury there are additional policies
and limits that guide the management of the balance sheets and the execution of capital market transactions.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-211 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Processes for managing capital

In addition to measure capital adequacy, Capital Management also ensures that sufficient capital is available through setting targets and limits relevant to the above
mentioned metrics for ING Group and ING Bank and ensuring adherence to the set limits and targets through planning and executing capital management transactions. The ongoing assessment and monitoring of capital adequacy is embedded in Capital
Managements capital planning process. Following the annual budgeting process, each year a capital plan is prepared for the Group as a whole and each of its material businesses. This plan is updated on a quarterly basis and it is assessed to
what extent additional management actions are required. At all times maintaining sufficient financial flexibility should be preserved to meet important financial objectives. At the foundation of the capital plan are INGs risk appetite
statements that determine target setting. These constraints are being cascaded to the different businesses in line with our risk management strategy.

Important
inputs to the capital planning and management process are provided by stress testing that is performed on a regular basis. These stress tests focus on topical issues and the sensitivity of the Groups capital position to certain risks. These
analyses provide input that help to steer strategic direction. Setting policies for recovery planning and resolution are a natural extension of INGs capital management policies and follow INGs risk management framework seamlessly.

Capital adequacy assessment

As at 1 January 2014, the CRR/CRD IV
capital rules entered into force. The capital position table reflects own funds according to the Basel III rules as specified in the CRR/CRD IV. As CRD IV will be phased-in gradually until 2019, the table
shows the CRD IV positions according to the 2019 end-state rules and the 2016 rules. This makes clear which items phase in directly and which phase in gradually in 2015. ING reports these metrics for ING Group
and ING Bank. During 2016, ING Group and ING Bank were adequately capitalised.



|                                                                  |  |                |         |   |             |  |         |      |  |  |         |   |  |  |         |  
|----------------------------------------------------------------- |  | -------------- | ------- | - | ----------- |  | ------- | ---- |  |  | ------- | - |  |  | ------- | -
|ING Group capital position                                        |  |                |         |   |             |  |         |      |  |  |         |  
|                                                                  |  | (fully-loaded) |         |   | (phased-in) | 
|                                                                  |  | 2016           |         |   | 2015        |  |         | 2016 |  |  | 2015    |  
|Shareholders equity                                              |  |                | 47,257  |   |             |  | 44,972  |      |  |  | 47,257  |   |  |  | 44,972  |  
|Differences IFRS-IASB and IFRS-EU1                                |  |                | 2,536   |   |             |  | 2,860   |      |  |  | 2,536   |   |  |  | 2,860   |  
| Deductions of significant investments in financial institutions |  |                | 0       |   |             |  | 1,389  |      |  |  | 0       |   |  |  | 558    |  
| Interim profit not included in CET1 capital2                    |  |                | 1,629  |   |             |  | 1,586  |      |  |  | 1,629  |   |  |  | 1,586  |  
| Other adjustments                                               |  |                | 3,596  |   |             |  | 4,069  |      |  |  | 3,698  |   |  |  | 4,134  |  
|                                                                  |  |                |         |   |             |  |         |      |  |  |         |   |  |  |         |  
|Regulatory adjustments                                            |  |                | 5,225  |   |             |  | 7,044  |      |  |  | 5,327  |   |  |  | 6,278  |  
|                                                                  |  |                |         |   |             |  |         |      |  |  |         |   |  |  |         |  
|Available common equity Tier 1 capital                            |  |                | 44,568  |   |             |  | 40,788  |      |  |  | 44,466  |   |  |  | 41,554  |  
|Additional Tier 1 securities3                                     |  |                | 7,706   |   |             |  | 6,574   |      |  |  | 7,706   |   |  |  | 6,574   |  
|Regulatory adjustments additional Tier 1                          |  |                | 0       |   |             |  | 0       |      |  |  | 809    |   |  |  | 1,716  |  
|                                                                  |  |                |         |   |             |  |         |      |  |  |         |   |  |  |         |  
|Available Tier 1 capital                                          |  |                | 52,274  |   |             |  | 47,362  |      |  |  | 51,364  |   |  |  | 46,412  |  
|Supplementary capital Tier 2 bonds4                               |  |                | 9,488   |   |             |  | 8,570   |      |  |  | 9,488   |   |  |  | 8,570   |  
|Regulatory adjustments Tier 2                                     |  |                | 109     |   |             |  | 102     |      |  |  | 86     |   |  |  | 657    |  
|                                                                  |  |                |         |   |             |  |         |      |  |  |         |   |  |  |         |  
|Available Total capital                                           |  |                | 61,871  |   |             |  | 56,034  |      |  |  | 60,765  |   |  |  | 54,325  |  
|Risk weighted assets5                                             |  |                | 314,325 |   |             |  | 321,151 |      |  |  | 314,325 |   |  |  | 321,135 |  
|Common equity Tier 1 ratio                                        |  |                | 14.18   | % |             |  | 12.70   | %    |  |  | 14.15   | % |  |  | 12.94   | %
|Tier 1 ratio                                                      |  |                | 16.63   | % |             |  | 14.75   | %    |  |  | 16.34   | % |  |  | 14.45   | %
|                                                                  |  |                |         |   |             |  |         |      |  |  |         |   |  |  |         |  
|Total capital ratio                                               |  |                | 19.68   | % |             |  | 17.45   | %    |  |  | 19.33   | % |  |  | 16.92   | %



|1 | Capital measures exclude the difference between IFRS-EU and IFRS-IASB as capital measures are based on IFRS-EU as primary accounting basis
for statutory and regulatory deductions.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | The interim profit not included in CET1 is the proposed dividend of EUR 1,629 million, subject to approval of the shareholders at the Annual General Meeting in
May 2017.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3 | Including EUR 3,052 million (2015: EUR 2,061 million) is CRR/CRD IV compliant and EUR 4,654 million (2015: EUR 5,187 million) to be replaced as capital recognition is subject to CRR/CRD IV grandfathering
rules. For 2015 this amount is presented net of positions on lent to insurance.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4 | Including EUR 7,347 million (2015: EUR 6,229 million) is CRR/CRD IV-compliant and EUR 2,141 million (2015: EUR 2,341 million) to be replaced as capital recognition is
subject to CRR/CRD IV grandfathering rules.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5 | The 2015 fully-loaded RWA deviated from the phased-in RWA as a result of a slightly higher threshold to which the significant Financial Institutions were risk weighted.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As per 31 December 2016 the total amount of available distributable items following the CRD IV definition is EUR 37,959 million, slightly
higher compared with EUR 36,284 million in 2015.

ING Group available distributable items according to the CRR/CRD IV



|                                                              |  |      |        |  |      |  |        | 
|------------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|Amounts in millions of euros                                  |  | 2016 |        |  | 2015 | 
|Share premium                                                 |  |      | 16,950 |  |      |  | 16,054 | 
|Other reserve                                                 |  |      | 22,372 |  |      |  | 21,131 | 
|Share of associate reserve                                    |  |      | 5,781  |  |      |  | 5,715  | 
|Non distributable                                             |  |      | -7,379 |  |      |  | -6,832 | 
|                                                              |  |      |        |  |      |  |        | 
|Total                                                         |  |      | 37,724 |  |      |  | 36,068 | 
|                                                              |  |      |        |  |      |  |        | 
|Accrued interest expenses on own fund instruments at
year-end |  |      | 235    |  |      |  | 216    | 
|                                                              |  |      |        |  |      |  |        | 
|Distributable items                                           |  |      | 37,959 |  |      |  | 36,284 | 
|                                                              |  |      |        |  |      |  |        | 





|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-212 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                     |  |                |         |   |             |  |         |      |  |  |         |   |  |  |         |  
|---------------------------------------------------- |  | -------------- | ------- | - | ----------- |  | ------- | ---- |  |  | ------- | - |  |  | ------- | -
|ING Bank NV capital position according to CRR/CRD IV |  |                |         |   |             |  |         |      |  |  |         |  
|                                                     |  | (fully-loaded) |         |   | (phased-in) | 
|                                                     |  | 2016           |         |   | 2015        |  |         | 2016 |  |  | 2015    |  
|Shareholders equity                                 |  |                | 41,004  |   |             |  | 37,997  |      |  |  | 41,004  |   |  |  | 37,997  |  
|Differences IFRS-IASB and IFRS-EU 1                  |  |                | 2,536   |   |             |  | 2,860   |      |  |  | 2,536   |   |  |  | 2,860   |  
|Interim profit not included in CET1 capital2         |  |                | 617    |   |             |  | 0       |      |  |  | 617    |   |  |  | 0       |  
|Other adjustments                                    |  |                | 3,548  |   |             |  | 4,022  |      |  |  | 3,661  |   |  |  | 4,103  |  
|                                                     |  |                |         |   |             |  |         |      |  |  |         |   |  |  |         |  
|Regulatory adjustments                               |  |                | 4,165  |   |             |  | 4,022  |      |  |  | 4,278  |   |  |  | 4,103  |  
|                                                     |  |                |         |   |             |  |         |      |  |  |         |   |  |  |         |  
|Available common equity Tier 1 capital               |  |                | 39,375  |   |             |  | 36,834  |      |  |  | 39,262  |   |  |  | 36,753  |  
|Additional Tier 1 securities3                        |  |                | 6,496   |   |             |  | 7,248   |      |  |  | 6,496   |   |  |  | 7,248   |  
|Regulatory adjustments additional Tier 1             |  |                | 0       |   |             |  | 0       |      |  |  | 798    |   |  |  | 1,281  |  
|                                                     |  |                |         |   |             |  |         |      |  |  |         |   |  |  |         |  
|Available Tier 1 capital                             |  |                | 45,871  |   |             |  | 44,083  |      |  |  | 44,960  |   |  |  | 42,721  |  
|Supplementary capital Tier 2 bonds4                  |  |                | 9,488   |   |             |  | 8,570   |      |  |  | 9,488   |   |  |  | 8,570   |  
|Regulatory adjustments Tier 2                        |  |                | 109     |   |             |  | 102     |      |  |  | 86     |   |  |  | 239    |  
|                                                     |  |                |         |   |             |  |         |      |  |  |         |   |  |  |         |  
|Available Total capital                              |  |                | 55,467  |   |             |  | 52,754  |      |  |  | 54,362  |   |  |  | 51,052  |  
|Risk weighted assets                                 |  |                | 312,086 |   |             |  | 318,202 |      |  |  | 312,086 |   |  |  | 318,202 |  
|Common equity Tier 1 ratio                           |  |                | 12.62   | % |             |  | 11.58   | %    |  |  | 12.58   | % |  |  | 11.55   | %
|Tier 1 ratio                                         |  |                | 14.70   | % |             |  | 13.85   | %    |  |  | 14.41   | % |  |  | 13.43   | %
|Total capital ratio                                  |  |                | 17.77   | % |             |  | 16.58   | %    |  |  | 17.42   | % |  |  | 16.04   | %



|1 | Capital measures exclude the difference between IFRS-EU and IFRS-IASB as capital measures are based on IFRS-EU as primary accounting basis
for statutory and regulatory deductions.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2 | The interim profit of the fourth quarter 2016 has not been included in CET1 capital as off 31 December 2016.
|- | ------------------------------------------------------------------------------------------------------------

|3 | Of which EUR 3,542 million (2015: EUR 3,531 million) is CRR/CRD IV compliant and EUR 2,954 million (2015: EUR 3,718 million) to be replaced as capital recognition subject to CRR/CRDIV grandfathering rules.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4 | Of which EUR 7,347 million (2015: EUR 6,229 million) is CRR/CRD IV-compliant and EUR 2,141 million (2015: EUR 2,341 million) to be replaced as capital recognition is
subject to CRR/CRD IV grandfathering rules.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Regulatory requirements

Capital adequacy and the use of regulatory required capital are based on the guidelines developed by the Basel Committee on Banking Supervision (The Basel Committee) and
the European Union Directives, as implemented by the Dutch Central Bank (Dutch Central Bank until 3 November 2014, the ECB thereafter) for supervisory purposes. In 2010 the Basel Committee on Banking Supervision issued new solvency and
liquidity requirements, which superseded Basel II. The minimum requirements, excluding buffers, for the common equity Tier 1 ratio is 4.5%, the minimum Tier 1 requirement is 6% and the total capital ratio) is 8% of all risk-weighted assets. Basel
III requires Banks to hold a capital of at least 80% of the old Basel I requirements, which was 8% of the RWAs as calculated with the Basel I methodology. This Basel I floor has been extended until the end of 2017.

ICAAP/SREP process

On a yearly basis ING Bank N.V. submits extensive
documentation on the Internal Capital Adequacy Assessment Process (ICAAP) to its regulator as prescribed in the CRD IV frameworks. This documentation includes a description of INGs internal capital models, its risk appetite framework, an asset
quality analysis and a capital planning, both under normal circumstances and in certain stressed scenarios. This documentation is an important input for the regulators Supervisory Review and Evaluation Process (SREP) resulting in a letter to
ING Management. The SREP is conducted by the ECB and examines on a regular basis INGs internal models and processes. The regulatory 2016 guidance indicated that the minimum capital ratios ECB considers adequate for ING Bank and ING Group
sufficiently covered by INGs own capital standards.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-213 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Ratings



|                                               |  |                   |     |  |         |  |        |        |  |  |         |  |  |        |        |  |         |  |    |  |  |  |        | 
|---------------------------------------------- |  | ----------------- | --- |  | ------- |  | ------ | ------ |  |  | ------- |  |  | ------ | ------ |  | ------- |  | -- |  |  |  | ------ | 
|Main credit ratings of ING at 31 December 2016 |  |                   |     |  |         |  |        |        |  |  |         |  |  |        |        |  |         | 
|                                               |  | Standard & Poors |     |  | Moodys |  |        | Fitch  | 
|                                               |  | Rating            |     |  | Outlook |  |        | Rating |  |  | Outlook |  |  | Rating |        |  | Outlook | 
|ING Groep N.V.                                 |  |                   |     |  |         |  |        |        |  |  |         |  |  |        |        |  |         |  |    |  |  |  |        | 
| long-term                                    |  |                   | A-  |  |         |  | Stable |        |  |  | Baa1    |  |  |        | Stable |  |         |  | A+ |  |  |  | Stable | 
|ING Bank N.V.                                  |  |                   |     |  |         |  |        |        |  |  |         |  |  |        |        |  |         |  |    |  |  |  |        | 
| long-term                                    |  |                   | A   |  |         |  | Stable |        |  |  | A1      |  |  |        | Stable |  |         |  | A+ |  |  |  | Stable | 
| short-term                                   |  |                   | A-1 |  |         |  |        |        |  |  | P-1     |  |  |        |        |  |         |  | F1 |  |  |  |        | 

INGs key credit ratings and outlook are shown in the table above. Each of these ratings reflects only the view of the applicable
rating agency at the time the rating was issued, and any explanation of the significance of a rating may be obtained only from the rating agency.

A security rating
is not a recommendation to buy, sell or hold securities and each rating should be evaluated independently of any other rating. There is no assurance that any credit rating will remain in effect for any given period of time or that a rating will not
be lowered, suspended or withdrawn entirely by the rating agency if, in the rating agencys judgment, circumstances so warrant. ING accepts no responsibility for the accuracy or reliability of the ratings.

2.3. Supplemental Information

The following
financial information presents the statement of financial position for the years ended 31 December 2016, 2015 and 2014, and the profit or loss accounts and statements of cash flows for the years ended 31 December 2016, 2015 and 2014 of
(i) ING Groep N.V. (parent company only), (ii) subsidiaries, (iii) the eliminations necessary to arrive at the information for ING on a consolidated basis and (iv) the total for ING Group. The principles of determination of results
stated in connection with the profit or loss account are also applicable to the ING Groep N.V. parent only column. Investments in group companies and investments in associates are initially recognised at cost and subsequently accounted for by the
equity method of accounting.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-214 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







2.3.1 Consolidating Statement of financial position



|                                                           |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|---------------------------------------------------------- |  | --------------------------- | ------ |  | ------------ |  | ------- | -------------------- |  |  | --------------------- |  |  |  | ------- | 
|For the year ended 31 December 2016                        |  | ING Group N.V.parentcompany |        |  | Subsidiaries |  |         | Consolidatingentries |  |  | ING Groupconsolidated | 
|Assets                                                     |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Cash and balances with central banks                       |  |                             |        |  |              |  | 18,144  |                      |  |  |                       |  |  |  | 18,144  | 
|Loans and advances to banks                                |  |                             | 15,633 |  |              |  | 28,858  |                      |  |  | 15,633               |  |  |  | 28,858  | 
|Financial assets at fair value through profit or loss      |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
| trading assets                                           |  |                             |        |  |              |  | 114,504 |                      |  |  |                       |  |  |  | 114,504 | 
| non-trading derivatives                                  |  |                             | 236    |  |              |  | 2,580   |                      |  |  | 326                  |  |  |  | 2,490   | 
| designated as at fair value through profit or loss       |  |                             |        |  |              |  | 5,099   |                      |  |  |                       |  |  |  | 5,099   | 
|Investments                                                |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|
available-for-sale                                       |  |                             |        |  |              |  | 82,912  |                      |  |  |                       |  |  |  | 82,912  | 
|
held-to-maturity                                         |  |                             |        |  |              |  | 8,751   |                      |  |  |                       |  |  |  | 8,751   | 
|Loans and advances to customers                            |  |                             | 823    |  |              |  | 560,731 |                      |  |  | 1,400                |  |  |  | 560,154 | 
|Investments in associates and joint ventures               |  |                             | 41,175 |  |              |  | 1,141   |                      |  |  | 41,175               |  |  |  | 1,141   | 
|Property and equipment                                     |  |                             |        |  |              |  | 2,002   |                      |  |  |                       |  |  |  | 2,002   | 
|Intangible assets                                          |  |                             |        |  |              |  | 1,484   |                      |  |  |                       |  |  |  | 1,484   | 
|Current tax assets                                         |  |                             | 51     |  |              |  | 263     |                      |  |  |                       |  |  |  | 314     | 
|Deferred tax assets                                        |  |                             |        |  |              |  | 1,641   |                      |  |  |                       |  |  |  | 1,641   | 
|Other assets                                               |  |                             | 125    |  |              |  | 14,722  |                      |  |  | 125                  |  |  |  | 14,722  | 
|Assets held for sale                                       |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|                                                           |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Total assets                                               |  |                             | 58,043 |  |              |  | 842,832 |                      |  |  | 58,659               |  |  |  | 842,216 | 
|Liabilities                                                |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Deposits from banks                                        |  |                             | 54     |  |              |  | 31,964  |                      |  |  | 54                   |  |  |  | 31,964  | 
|Customer deposits                                          |  |                             |        |  |              |  | 531,062 |                      |  |  | 8,154                |  |  |  | 522,908 | 
|Financial liabilities at fair value through profit or loss |  |                             |        |  |              |  | 83,167  |                      |  |  |                       |  |  |  | 83,167  | 
| trading liabilities                                      |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
| non-trading derivatives                                  |  |                             | 10     |  |              |  | 3,586   |                      |  |  | 55                   |  |  |  | 3,541   | 
| designated as at fair value through profit or loss       |  |                             |        |  |              |  | 12,266  |                      |  |  |                       |  |  |  | 12,266  | 
|Current tax liabilities                                    |  |                             |        |  |              |  | 546     |                      |  |  |                       |  |  |  | 546     | 
|Deferred tax liabilities                                   |  |                             |        |  |              |  | 624     |                      |  |  |                       |  |  |  | 624     | 
|Provisions                                                 |  |                             | 49     |  |              |  | 1,979   |                      |  |  |                       |  |  |  | 2,028   | 
|Other liabilities                                          |  |                             | 145    |  |              |  | 16,977  |                      |  |  | 270                  |  |  |  | 16,852  | 
|Debt securities in issue                                   |  |                             | 1,902  |  |              |  | 101,332 |                      |  |  |                       |  |  |  | 103,234 | 
|Subordinated loans                                         |  |                             | 8,626  |  |              |  | 17,548  |                      |  |  | 8,951                |  |  |  | 17,223  | 
|Liabilities held for sale                                  |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|                                                           |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Total liabilities                                          |  |                             | 10,786 |  |              |  | 801,051 |                      |  |  | 17,484               |  |  |  | 794,353 | 
|Equity                                                     |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Shareholders equity (parent)                              |  |                             | 47,257 |  |              |  | 41,175  |                      |  |  | 41,175               |  |  |  | 47,257  | 
|Non-controlling interests                                  |  |                             |        |  |              |  | 606     |                      |  |  |                       |  |  |  | 606     | 
|                                                           |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Total equity                                               |  |                             | 47,257 |  |              |  | 41,781  |                      |  |  | 41,175               |  |  |  | 47,863  | 
|                                                           |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Total equity and liabilities                               |  |                             | 58,043 |  |              |  | 842,832 |                      |  |  | 58,659               |  |  |  | 842,216 | 
|                                                           |  |                             |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-215 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                           |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|---------------------------------------------------------- |  | ---------------------------- | ------ |  | ------------ |  | --------- | -------------------- |  |  | --------------------- |  |  |  | --------- | 
|For the year ended 31 December 2015                        |  | ING Group N.V.parent company |        |  | Subsidiaries |  |           | Consolidatingentries |  |  | ING Groupconsolidated | 
|Assets                                                     |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Cash and balances with central banks                       |  |                              |        |  |              |  | 21,458    |                      |  |  |                       |  |  |  | 21,458    | 
|Loans and advances to banks                                |  |                              | 16,119 |  |              |  | 29,988    |                      |  |  | 16,119               |  |  |  | 29,988    | 
|Financial assets at fair value through profit or loss      |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
| trading assets                                           |  |                              |        |  |              |  | 131,467   |                      |  |  |                       |  |  |  | 131,467   | 
| non-trading derivatives                                  |  |                              | 439    |  |              |  | 3,234     |                      |  |  | 326                  |  |  |  | 3,347     | 
| designated as at fair value through profit or loss       |  |                              |        |  |              |  | 3,234     |                      |  |  |                       |  |  |  | 3,234     | 
|Investments                                                |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|
available-for-sale                                       |  |                              |        |  |              |  | 87,000    |                      |  |  |                       |  |  |  | 87,000    | 
| held-to-maturity                                         |  |                              |        |  |              |  | 7,826     |                      |  |  |                       |  |  |  | 7,826     | 
|Loans and advances to customers                            |  |                              | 823    |  |              |  | 697,470   |                      |  |  | 1,400                |  |  |  | 696,893   | 
|Investments in associates and joint ventures               |  |                              | 38,157 |  |              |  | 962       |                      |  |  | 38,157               |  |  |  | 962       | 
|Property and equipment                                     |  |                              |        |  |              |  | 2,027     |                      |  |  |                       |  |  |  | 2,027     | 
|Intangible assets                                          |  |                              |        |  |              |  | 1,567     |                      |  |  |                       |  |  |  | 1,567     | 
|Current tax assets                                         |  |                              | 42     |  |              |  | 280       |                      |  |  |                       |  |  |  | 322       | 
|Deferred tax assets                                        |  |                              |        |  |              |  | 1,783     |                      |  |  |                       |  |  |  | 1,783     | 
|Other assets                                               |  |                              | 106    |  |              |  | 12,290    |                      |  |  | 135                  |  |  |  | 12,261    | 
|Assets held for sale                                       |  |                              | 2,153  |  |              |  |           |                      |  |  |                       |  |  |  | 2,153     | 
|                                                           |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Total assets                                               |  |                              | 57,839 |  |              |  | 1,000,586 |                      |  |  | 56,137               |  |  |  | 1,002,288 | 
|Liabilities                                                |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Deposits from banks                                        |  |                              | 40     |  |              |  | 33,808    |                      |  |  | 35                   |  |  |  | 33,813    | 
|Customer deposits                                          |  |                              |        |  |              |  | 672,165   |                      |  |  | 7,955                |  |  |  | 664,210   | 
|Financial liabilities at fair value through profit or loss |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
| trading liabilities                                      |  |                              |        |  |              |  | 88,807    |                      |  |  |                       |  |  |  | 88,807    | 
| non-trading derivatives                                  |  |                              | 220    |  |              |  | 4,363     |                      |  |  | 326                  |  |  |  | 4,257     | 
| designated as at fair value through profit or loss       |  |                              |        |  |              |  | 12,616    |                      |  |  |                       |  |  |  | 12,616    | 
|Current tax liabilities                                    |  |                              |        |  |              |  | 590       |                      |  |  |                       |  |  |  | 590       | 
|Deferred tax liabilities                                   |  |                              | 2      |  |              |  | 587       |                      |  |  |                       |  |  |  | 589       | 
|Provisions                                                 |  |                              |        |  |              |  | 964       |                      |  |  |                       |  |  |  | 964       | 
|Other liabilities                                          |  |                              | 229    |  |              |  | 13,038    |                      |  |  | 135                  |  |  |  | 13,132    | 
|Debt securities in issue                                   |  |                              | 3,733  |  |              |  | 117,556   |                      |  |  |                       |  |  |  | 121,289   | 
|Subordinated loans                                         |  |                              | 8,643  |  |              |  | 17,297    |                      |  |  | 9,529                |  |  |  | 16,411    | 
|Liabilities held for sale                                  |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|                                                           |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Total liabilities                                          |  |                              | 12,867 |  |              |  | 961,791   |                      |  |  | 17,980               |  |  |  | 956,678   | 
|Equity                                                     |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Shareholders equity (parent)                              |  |                              | 44,972 |  |              |  | 38,157    |                      |  |  | 38,157               |  |  |  | 44,972    | 
|Non-controlling interests                                  |  |                              |        |  |              |  | 638       |                      |  |  |                       |  |  |  | 638       | 
|                                                           |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Total equity                                               |  |                              | 44,972 |  |              |  | 38,795    |                      |  |  | 38,157               |  |  |  | 45,610    | 
|                                                           |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Total equity and liabilities                               |  |                              | 57,839 |  |              |  | 1,000,586 |                      |  |  | 56,137               |  |  |  | 1,002,288 | 
|                                                           |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-216 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                           |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|---------------------------------------------------------- |  | ---------------------------- | ------ |  | ------------ |  | --------- | -------------------- |  |  | --------------------- |  |  |  | --------- | 
|For the year ended 31 December 2014                        |  | ING Group N.V.parent company |        |  | Subsidiaries |  |           | Consolidatingentries |  |  | ING Groupconsolidated | 
|Assets                                                     |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Cash and balances with central banks                       |  |                              |        |  |              |  | 12,233    |                      |  |  |                       |  |  |  | 12,233    | 
|Loans and advances to banks                                |  |                              |        |  |              |  | 37,119    |                      |  |  |                       |  |  |  | 37,119    | 
|Financial assets at fair value through profit or loss      |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
| trading assets                                           |  |                              |        |  |              |  | 136,959   |                      |  |  |                       |  |  |  | 136,959   | 
| non-trading derivatives                                  |  |                              | 380    |  |              |  | 4,308     |                      |  |  | 304                  |  |  |  | 4,384     | 
| designated as at fair value through profit or loss       |  |                              |        |  |              |  | 2,756     |                      |  |  |                       |  |  |  | 2,756     | 
|Investments                                                |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
| available-for-sale                                       |  |                              |        |  |              |  | 95,402    |                      |  |  |                       |  |  |  | 95,402    | 
| held-to-maturity                                         |  |                              |        |  |              |  | 2,239     |                      |  |  |                       |  |  |  | 2,239     | 
|Loans and advances to customers                            |  |                              | 11,608 |  |              |  | 700,144   |                      |  |  | 13,518               |  |  |  | 698,234   | 
|Investments in associates and joint ventures               |  |                              | 47,945 |  |              |  | 953       |                      |  |  | 47,945               |  |  |  | 953       | 
|Property and equipment                                     |  |                              |        |  |              |  | 2,100     |                      |  |  |                       |  |  |  | 2,100     | 
|Intangible assets                                          |  |                              |        |  |              |  | 1,655     |                      |  |  |                       |  |  |  | 1,655     | 
|Current tax assets                                         |  |                              |        |  |              |  | 289       |                      |  |  |                       |  |  |  | 289       | 
|Deferred tax assets                                        |  |                              |        |  |              |  | 2,389     |                      |  |  |                       |  |  |  | 2,389     | 
|Other assets                                               |  |                              | 177    |  |              |  | 12,716    |                      |  |  | 281                  |  |  |  | 12,612    | 
|Assets held for sale                                       |  |                              | 1,592  |  |              |  | 165,530   |                      |  |  | 1,695                |  |  |  | 165,427   | 
|                                                           |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Total assets                                               |  |                              | 61,702 |  |              |  | 1,176,792 |                      |  |  | 63,743               |  |  |  | 1,174,751 | 
|Liabilities                                                |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Deposits from banks                                        |  |                              |        |  |              |  | 29,999    |                      |  |  |                       |  |  |  | 29,999    | 
|Customer deposits                                          |  |                              |        |  |              |  | 675,083   |                      |  |  | 5,411                |  |  |  | 669,672   | 
|Financial liabilities at fair value through profit or loss |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
| trading liabilities                                      |  |                              |        |  |              |  | 97,091    |                      |  |  |                       |  |  |  | 97,091    | 
| non-trading derivatives                                  |  |                              | 89     |  |              |  | 6,357     |                      |  |  | 406                  |  |  |  | 6,040     | 
| designated as at fair value through profit or loss       |  |                              |        |  |              |  | 13,551    |                      |  |  |                       |  |  |  | 13,551    | 
|Current tax liabilities                                    |  |                              |        |  |              |  | 450       |                      |  |  |                       |  |  |  | 450       | 
|Deferred tax liabilities                                   |  |                              | 12     |  |              |  | 783       |                      |  |  |                       |  |  |  | 795       | 
|Provisions                                                 |  |                              |        |  |              |  | 1,017     |                      |  |  |                       |  |  |  | 1,017     | 
|Other liabilities                                          |  |                              | 554    |  |              |  | 13,595    |                      |  |  | 230                  |  |  |  | 13,919    | 
|Debt securities in issue                                   |  |                              | 5,397  |  |              |  | 120,955   |                      |  |  |                       |  |  |  | 126,352   | 
|Subordinated loans                                         |  |                              | 8,096  |  |              |  | 17,834    |                      |  |  | 7,772                |  |  |  | 18,158    | 
|Liabilities held for sale                                  |  |                              |        |  |              |  | 144,085   |                      |  |  | 1,979                |  |  |  | 142,106   | 
|                                                           |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Total liabilities                                          |  |                              | 14,148 |  |              |  | 1,120,800 |                      |  |  | 15,798               |  |  |  | 1,119,150 | 
|Equity                                                     |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Shareholders equity (parent)                              |  |                              | 47,554 |  |              |  | 47,945    |                      |  |  | 47,945               |  |  |  | 47,554    | 
|Non-controlling interests                                  |  |                              |        |  |              |  | 8,047     |                      |  |  |                       |  |  |  | 8,047     | 
|                                                           |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Total equity                                               |  |                              | 47,554 |  |              |  | 55,992    |                      |  |  | 47,945               |  |  |  | 55,601    | 
|                                                           |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 
|Total equity and liabilities                               |  |                              | 61,702 |  |              |  | 1,176,792 |                      |  |  | 63,743               |  |  |  | 1,174,751 | 
|                                                           |  |                              |        |  |              |  |           |                      |  |  |                       |  |  |  |           | 



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-217 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







2.3.2. Consolidated profit and loss account



|                                                          |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|--------------------------------------------------------- |  | --------------------------- | ----- |  | ------------ |  | ------- | -------------------- |  |  | --------------------- |  |  |  | ------- | 
|For the year ended 31 December 2016                       |  | ING Group N.V.parentcompany |       |  | Subsidiaries |  |         | Consolidatingentries |  |  | ING Groupconsolidated | 
|Continuing operations                                     |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Interest income                                           |  |                             | 498   |  |              |  | 44,280  |                      |  |  | 596                  |  |  |  | 44,182  | 
|Interest expense                                          |  |                             | 574  |  |              |  | 30,963 |                      |  |  | 596                   |  |  |  | 30,941 | 
|                                                          |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net interest income                                       |  |                             | 76   |  |              |  | 13,317  |                      |  |  |                      |  |  |  | 13,241  | 
|Commission income                                         |  |                             |       |  |              |  | 3,581   |                      |  |  |                       |  |  |  | 3,581   | 
|Commission expense                                        |  |                             |       |  |              |  | 1,148  |                      |  |  |                       |  |  |  | 1,148  | 
|                                                          |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net commission income                                     |  |                             |      |  |              |  | 2,433   |                      |  |  |                      |  |  |  | 2,433   | 
|Valuation results and net trading income                  |  |                             | 42    |  |              |  | 1,503   |                      |  |  |                       |  |  |  | 1,545   | 
|Investment income                                         |  |                             |       |  |              |  | 421     |                      |  |  |                       |  |  |  | 421     | 
|Share of result from associates and joint ventures        |  |                             | 4,562 |  |              |  | 88      |                      |  |  | 4,562                |  |  |  | 88      | 
|Result on disposal of group companies                     |  |                             | 7     |  |              |  | 6      |                      |  |  |                       |  |  |  | 1       | 
|Other income                                              |  |                             |       |  |              |  | 173     |                      |  |  |                       |  |  |  | 173     | 
|                                                          |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Total income                                              |  |                             | 4,535 |  |              |  | 17,929  |                      |  |  | 4,562                |  |  |  | 17,902  | 
|Addition to loan loss provisions                          |  |                             |       |  |              |  | 974     |                      |  |  |                       |  |  |  | 974     | 
|Staff expenses                                            |  |                             | 4     |  |              |  | 5,035   |                      |  |  |                       |  |  |  | 5,039   | 
|Other operating expenses                                  |  |                             | 16    |  |              |  | 5,559   |                      |  |  |                       |  |  |  | 5,575   | 
|                                                          |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Total expenses                                            |  |                             | 20    |  |              |  | 11,568  |                      |  |  |                      |  |  |  | 11,588  | 
|                                                          |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Result before tax from continuing operations              |  |                             | 4,515 |  |              |  | 6,361   |                      |  |  | 4,562                |  |  |  | 6,314   | 
|Taxation                                                  |  |                             | 19   |  |              |  | 1,724   |                      |  |  |                       |  |  |  | 1,705   | 
|                                                          |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result from continuing operations                     |  |                             | 4,534 |  |              |  | 4,637   |                      |  |  | 4,562                |  |  |  | 4,609   | 
|Discontinued operations                                   |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result from discontinued operations                   |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result from classification as discontinued operations |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result from disposal of discontinued operations       |  |                             | 441   |  |              |  |         |                      |  |  |                       |  |  |  | 441     | 
|                                                          |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Total net result from discontinued operations             |  |                             | 441   |  |              |  |        |                      |  |  |                      |  |  |  | 441     | 
|                                                          |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result (before minority interests)                    |  |                             | 4,975 |  |              |  | 4,637   |                      |  |  | 4,562                |  |  |  | 5,050   | 
|Net result attributable to Minority interests             |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  | 75      | 
|                                                          |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result attributable to Equityholders of the parent    |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  | 4,975   | 
|                                                          |  |                             |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-218 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                          |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|--------------------------------------------------------- |  | ---------------------------- | ----- |  | ------------ |  | ------- | -------------------- |  |  | --------------------- |  |  |  | ------- | 
|For the year ended 31 December 2015                       |  | ING Group N.V.parent company |       |  | Subsidiaries |  |         | Consolidatingentries |  |  | ING Groupconsolidated | 
|Continuing operations                                     |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Interest income                                           |  |                              | 568   |  |              |  | 46,452  |                      |  |  | 699                  |  |  |  | 46,321  | 
|Interest expense                                          |  |                              | 720  |  |              |  | 33,739 |                      |  |  | 699                   |  |  |  | 33,760 | 
|                                                          |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net interest income                                       |  |                              | 152  |  |              |  | 12,713  |                      |  |  |                      |  |  |  | 12,561  | 
|Commission income                                         |  |                              |       |  |              |  | 3,411   |                      |  |  |                       |  |  |  | 3,411   | 
|Commission expense                                        |  |                              |       |  |              |  | 1,093  |                      |  |  |                       |  |  |  | 1,093  | 
|                                                          |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net commission income                                     |  |                              |      |  |              |  | 2,318   |                      |  |  |                      |  |  |  | 2,318   | 
|Valuation results and net trading income                  |  |                              | 50   |  |              |  | 2,495   |                      |  |  |                       |  |  |  | 2,445   | 
|Investment income                                         |  |                              | 59    |  |              |  | 64      |                      |  |  |                       |  |  |  | 123     | 
|Share of result from associates and joint ventures        |  |                              | 5,925 |  |              |  | 492     |                      |  |  | 5,925                |  |  |  | 492     | 
|Result on disposal of group companies                     |  |                              |       |  |              |  | 2       |                      |  |  |                       |  |  |  | 2       | 
|Other income                                              |  |                              |       |  |              |  | 66      |                      |  |  |                       |  |  |  | 66      | 
|                                                          |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Total income                                              |  |                              | 5,782 |  |              |  | 18,150  |                      |  |  | 5,925                |  |  |  | 18,007  | 
|Addition to loan loss provisions                          |  |                              |       |  |              |  | 1,347   |                      |  |  |                       |  |  |  | 1,347   | 
|Staff expenses                                            |  |                              | 10    |  |              |  | 4,962   |                      |  |  |                       |  |  |  | 4,972   | 
|Other operating expenses                                  |  |                              | 8     |  |              |  | 4,346   |                      |  |  |                       |  |  |  | 4,354   | 
|                                                          |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Total expenses                                            |  |                              | 18    |  |              |  | 10,655  |                      |  |  |                      |  |  |  | 10,673  | 
|                                                          |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Result before tax from continuing operations              |  |                              | 5,764 |  |              |  | 7,495   |                      |  |  | 5,925                |  |  |  | 7,334   | 
|Taxation                                                  |  |                              | 41   |  |              |  | 1,965   |                      |  |  |                       |  |  |  | 1,924   | 
|                                                          |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result from continuing operations                     |  |                              | 5,805 |  |              |  | 5,530   |                      |  |  | 5,925                |  |  |  | 5,410   | 
|Discontinued operations                                   |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result from discontinued operations                   |  |                              |       |  |              |  | 800     |                      |  |  |                       |  |  |  | 800     | 
|Net result from classification as discontinued operations |  |                              |       |  |              |  | 3       |                      |  |  |                       |  |  |  | 3       | 
|Net result from disposal of discontinued operations       |  |                              | 879  |  |              |  |         |                      |  |  |                       |  |  |  | 879    | 
|                                                          |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Total net result from discontinued operations             |  |                              | 879  |  |              |  | 803     |                      |  |  |                      |  |  |  | 76     | 
|                                                          |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result (before minority interests)                    |  |                              | 4,926 |  |              |  | 6,333   |                      |  |  | 5,925                |  |  |  | 5,334   | 
|Net result attributable to Minority interests             |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  | 408     | 
|                                                          |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result attributable to Equityholders of the parent    |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  | 4,926   | 
|                                                          |  |                              |       |  |              |  |         |                      |  |  |                       |  |  |  |         | 



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-219 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                          |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|--------------------------------------------------------- |  | ---------------------------- | ------ |  | ------------ |  | ------- | -------------------- |  |  | --------------------- |  |  |  | ------- | 
|For the year ended 31 December 2014                       |  | ING Group N.V.parent company |        |  | Subsidiaries |  |         | Consolidatingentries |  |  | ING Groupconsolidated | 
|Continuing operations                                     |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Interest income                                           |  |                              | 584    |  |              |  | 48,418  |                      |  |  | 833                  |  |  |  | 48,169  | 
|Interest expense                                          |  |                              | 808   |  |              |  | 35,818 |                      |  |  | 761                   |  |  |  | 35,865 | 
|                                                          |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net interest income                                       |  |                              | 224   |  |              |  | 12,600  |                      |  |  | 72                   |  |  |  | 12,304  | 
|Commission income                                         |  |                              |        |  |              |  | 3,314   |                      |  |  | 17                   |  |  |  | 3,297   | 
|Commission expense                                        |  |                              |        |  |              |  | 1,024  |                      |  |  | 20                    |  |  |  | 1,004  | 
|                                                          |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net commission income                                     |  |                              |       |  |              |  | 2,290   |                      |  |  | 3                     |  |  |  | 2,293   | 
|Valuation results and net trading income                  |  |                              | 105    |  |              |  | 154    |                      |  |  |                       |  |  |  | 49     | 
|Investment income                                         |  |                              | 25     |  |              |  | 211     |                      |  |  |                       |  |  |  | 236     | 
|Share of result from associates and joint ventures        |  |                              | 3,092  |  |              |  | 138     |                      |  |  | 3,092                |  |  |  | 138     | 
|Result on disposal of group companies                     |  |                              | 1,926 |  |              |  | 2,121   |                      |  |  |                       |  |  |  | 195     | 
|Other income                                              |  |                              |        |  |              |  | 97      |                      |  |  |                       |  |  |  | 97      | 
|                                                          |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Total income                                              |  |                              | 1,072  |  |              |  | 17,303  |                      |  |  | 3,161                |  |  |  | 15,214  | 
|Addition to loan loss provisions                          |  |                              |        |  |              |  | 1,594   |                      |  |  |                       |  |  |  | 1,594   | 
|Staff expenses                                            |  |                              |        |  |              |  | 5,788   |                      |  |  |                       |  |  |  | 5,788   | 
|Other operating expenses                                  |  |                              | 35     |  |              |  | 4,436   |                      |  |  |                       |  |  |  | 4,471   | 
|                                                          |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Total expenses                                            |  |                              | 35     |  |              |  | 11,818  |                      |  |  |                      |  |  |  | 11,853  | 
|                                                          |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Result before tax from continuing operations              |  |                              | 1,037  |  |              |  | 5,485   |                      |  |  | 3,161                |  |  |  | 3,361   | 
|Taxation                                                  |  |                              | 74     |  |              |  | 802     |                      |  |  | 17                   |  |  |  | 859     | 
|                                                          |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result from continuing operations                     |  |                              | 963    |  |              |  | 4,683   |                      |  |  | 3,144                |  |  |  | 2,502   | 
|Discontinued operations                                   |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result from discontinued operations                   |  |                              |        |  |              |  | 667     |                      |  |  |                       |  |  |  | 667     | 
|Net result from classification as discontinued operations |  |                              |        |  |              |  | 470    |                      |  |  |                       |  |  |  | 470    | 
|Net result from disposal of discontinued operations       |  |                              |        |  |              |  | 1,572  |                      |  |  |                       |  |  |  | 1,572  | 
|                                                          |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Total net result from discontinued operations             |  |                              |       |  |              |  | 1,375  |                      |  |  |                      |  |  |  | 1,375  | 
|                                                          |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result (before minority interests)                    |  |                              | 963    |  |              |  | 3,308   |                      |  |  | 3,144                |  |  |  | 1,127   | 
|Net result attributable to Minority interests             |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  | 164     | 
|                                                          |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 
|Net result attributable to Equityholders of the parent    |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  | 963     | 
|                                                          |  |                              |        |  |              |  |         |                      |  |  |                       |  |  |  |         | 



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-220 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                       |  |      |       |  |      |  |       |      |  |  |        | 
|------------------------------------------------------ |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ------ | 
|For the year ended 31 December                         |  | 2016 |       |  | 2015 |  |       | 2014 | 
|Net result attributable to Non-controlling interests   |  |      |       |  |      |  |       |      |  |  |        | 
| from continuing operations                           |  |      | 75    |  |      |  | 69    |      |  |  | 79     | 
| from discontinued operations                         |  |      |       |  |      |  | 339   |      |  |  | 85     | 
|                                                       |  |      |       |  |      |  |       |      |  |  |        | 
|                                                       |  |      | 75    |  |      |  | 408   |      |  |  | 164    | 
|Net result attributable to Equityholders of the parent |  |      |       |  |      |  |       |      |  |  |        | 
| from continuing operations                           |  |      | 4,534 |  |      |  | 5,341 |      |  |  | 2,423  | 
| from discontinued operations                         |  |      | 441   |  |      |  | 415  |      |  |  | 1,460 | 
|                                                       |  |      |       |  |      |  |       |      |  |  |        | 
|                                                       |  |      | 4,975 |  |      |  | 4,926 |      |  |  | 963    | 
|                                                       |  |      |       |  |      |  |       |      |  |  |        | 



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-221 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                  |  |                                                                    |       |  |              |  |       |                      |         |  |                       |  |        |  |       |  |         | 
|------------------------------------------------- |  | ------------------------------------------------------------------ | ----- |  | ------------ |  | ----- | -------------------- | ------- |  | --------------------- |  | ------ |  | ----- |  | ------- | 
|2.3.3. Consolidated Statement of cash flows       |  |                                                                    |       |  |              |  |       |                      |         |  |                       |  |        |  |       | 
|For the year ended 31 December 2016               |  | ING GroupN.V. parentcompany                                        |       |  | Subsidiaries |  |       | Consolidatingentries |         |  | ING Groupconsolidated | 
|Cash flows from operating activities              |  |                                                                    |       |  |              |  |       |                      |         |  |                       |  |        |  |       | 
|Result before tax                                 |  |                                                                    |       |  | 4,954        |  |       |                      | 6,361   |  |                       |  | 4,562 |  |       |  | 6,753   | 
|Adjusted for:                                     |  |  depreciation                                                     |       |  |              |  |       |                      | 536     |  |                       |  |        |  |       |  | 536     | 
|                                                  |  |  change in provisions for insurance and investment contracts      |       |  |              |  |       |                      |         |  |                       |  |        |  |       |  |         | 
|                                                  |  |  addition to loan loss provisions                                 |       |  |              |  |       |                      | 974     |  |                       |  |        |  |       |  | 974     | 
|                                                  |  |  other                                                            |       |  | 4,562       |  |       |                      | 1,084   |  |                       |  | 4,562  |  |       |  | 1,084   | 
|Taxation paid                                     |  |                                                                    |       |  | 8           |  |       |                      | 1,595  |  |                       |  |        |  |       |  | 1,603  | 
|Changes in:                                       |  |  loans and advances to banks, not available on demand             |       |  |              |  |       |                      | 1,162  |  |                       |  |        |  |       |  | 1,162  | 
|                                                  |  |  trading assets                                                   |       |  |              |  |       |                      | 16,956  |  |                       |  |        |  |       |  | 16,956  | 
|                                                  |  |  non-trading derivatives                                          |       |  | 35           |  |       |                      | 1,777   |  |                       |  |        |  |       |  | 1,812   | 
|                                                  |  |  other financial assets at fair value through profit or loss      |       |  |              |  |       |                      | 3,401  |  |                       |  |        |  |       |  | 3,401  | 
|                                                  |  |  loans and advances to customers2                                 |       |  | 12           |  |       |                      | 29,668 |  |                       |  |        |  |       |  | 29,656 | 
|                                                  |  |  other assets                                                     |       |  | 365          |  |       |                      | 1,280  |  |                       |  |        |  |       |  | 915    | 
|                                                  |  |  deposits from banks, not payable on demand                       |       |  |              |  |       |                      | 342    |  |                       |  |        |  |       |  | 342    | 
|                                                  |  |  customer deposits2                                               |       |  |              |  |       |                      | 23,493  |  |                       |  |        |  |       |  | 23,493  | 
|                                                  |  |  trading liabilities                                              |       |  |              |  |       |                      | 5,634  |  |                       |  |        |  |       |  | 5,634  | 
|                                                  |  |  other financial liabilities at fair value through profit or loss |       |  |              |  |       |                      | 432    |  |                       |  |        |  |       |  | 432    | 
|                                                  |  |  provisions and other liabilities                                 |       |  | 123          |  |       |                      | 33     |  |                       |  |        |  |       |  | 90      | 
|                                                  |  |                                                                    |       |  |              |  |       |                      |         |  |                       |  |        |  |       |  |         | 
|Net cash flow from/(used in) operating activities |  |                                                                    | 919   |  |              |  | 7,634 |                      |         |  |                      |  |        |  | 8,553 | 
|Cash flows from investing activities              |  |                                                                    |       |  |              |  |       |                      |         |  |                       |  |        |  |       | 
|Investments and advances:                         |  |  associates and joint ventures                                    |       |  |              |  |       |                      | 49     |  |                       |  |        |  |       |  | 49     | 
|                                                  |  |  available-for-sale
investments                                   |       |  |              |  |       |                      | 27,003 |  |                       |  |        |  |       |  | 27,003 | 
|                                                  |  |  held-to-maturity
investments                                     |       |  |              |  |       |                      | 1,731  |  |                       |  |        |  |       |  | 1,731  | 
|                                                  |  |  property and equipment                                           |       |  |              |  |       |                      | 351    |  |                       |  |        |  |       |  | 351    | 
|                                                  |  |  assets subject to operating leases                               |       |  |              |  |       |                      | 64     |  |                       |  |        |  |       |  | 64     | 
|                                                  |  |  investments for risk of policyholders                            |       |  |              |  |       |                      |         |  |                       |  |        |  |       |  |         | 
|                                                  |  |  other investments                                                |       |  |              |  |       |                      | 288    |  |                       |  |        |  |       |  | 288    | 
|Disposals and redemptions:                        |  |  group companies (including cash in company
disposed)3            |       |  |              |  |       |                      |         |  |                       |  |        |  |       |  |         | 
|                                                  |  |  associates and joint ventures4                                   |       |  | 1,016        |  |       |                      | 55      |  |                       |  |        |  |       |  | 1,071   | 
|                                                  |  |  available-for-sale
investments5                                  |       |  | 1,375        |  |       |                      | 31,165  |  |                       |  |        |  |       |  | 32,540  | 
|                                                  |  |  held-to-maturity
investments                                     |       |  |              |  |       |                      | 630     |  |                       |  |        |  |       |  | 630     | 
|                                                  |  |  property and equipment                                           |       |  |              |  |       |                      | 63      |  |                       |  |        |  |       |  | 63      | 
|                                                  |  |  assets subject to operating leases                               |       |  |              |  |       |                      | 12      |  |                       |  |        |  |       |  | 12      | 
|                                                  |  |  investments for risk of policyholders                            |       |  |              |  |       |                      |         |  |                       |  |        |  |       |  |         | 
|                                                  |  |  loans                                                            |       |  |              |  |       |                      | 1,295   |  |                       |  |        |  |       |  | 1,295   | 
|                                                  |  |  other investments                                                |       |  |              |  |       |                      | 9       |  |                       |  |        |  |       |  | 9       | 
|                                                  |  |                                                                    |       |  |              |  |       |                      |         |  |                       |  |        |  |       |  |         | 
|Net cash flow from/(used in) investing activities |  |                                                                    | 2,391 |  |              |  | 3,743 |                      |         |  |                      |  |        |  | 6,134 | 
|                                                  |  |                                                                    |       |  |              |  |       |                      |         |  |                       |  |        |  |       | 



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-222 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|------------------------------------------------------------ |  | --------------------------- | ------ |  | ------------ |  | -------- | -------------------- |  |  | --------------------- |  |  |  | -------- | 
|For the year ended 31 December 2016                          |  | ING GroupN.V. parentcompany |        |  | Subsidiaries |  |          | Consolidatingentries |  |  | ING Groupconsolidated | 
|Net cash flow from/(used in) operating activities            |  |                             | 919    |  |              |  | 7,634    |                      |  |  |                       |  |  |  | 8,553    | 
|Net cash flow from/(used in) investing activities            |  |                             | 2,391  |  |              |  | 3,743    |                      |  |  |                       |  |  |  | 6,134    | 
|Cash flows from financing activities                         |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Proceeds from debt securities                                |  |                             |        |  |              |  | 106,174  |                      |  |  |                       |  |  |  | 106,174  | 
|Repayments of debt securities                                |  |                             | 1,750 |  |              |  | 121,998 |                      |  |  |                       |  |  |  | 123,748 | 
|Proceeds from issuance of subordinated loans                 |  |                             | 985    |  |              |  | 1,085    |                      |  |  |                       |  |  |  | 2,070    | 
|Repayments of subordinated loans6                            |  |                             | 83    |  |              |  | 959     |                      |  |  |                       |  |  |  | 1,042   | 
|Repayment and premium paid on non-voting equity securities   |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Purchase/sale of treasury shares                             |  |                             | 10     |  |              |  |          |                      |  |  |                       |  |  |  | 10       | 
|Proceeds from NN Group divestments and related transactions  |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Dividends paid                                               |  |                             | 2,521 |  |              |  | 1,354   |                      |  |  | 1,354                 |  |  |  | 2,521   | 
|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Net cash flow from/(used in) financing activities            |  |                             | 3,359 |  |              |  | 17,052  |                      |  |  | 1,354                 |  |  |  | 19,057  | 
|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Net cash flow                                                |  |                             | 49    |  |              |  | 5,675   |                      |  |  | 1,354                 |  |  |  | 4,370   | 
|Cash and cash equivalents at beginning of year               |  |                             | 49     |  |              |  | 20,379   |                      |  |  | 49                   |  |  |  | 20,379   | 
|Effect of exchange rate changes on cash and cash equivalents |  |                             |        |  |              |  | 155      |                      |  |  |                       |  |  |  | 155      | 
|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Cash and cash equivalents at end of year                     |  |                             |       |  |              |  | 14,859   |                      |  |  | 1,305                 |  |  |  | 16,164   | 
|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-223 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                  |  |                                                                    |        |  |              |  |       |                      |         |  |                       |  |        |  |        |  |         | 
|------------------------------------------------- |  | ------------------------------------------------------------------ | ------ |  | ------------ |  | ----- | -------------------- | ------- |  | --------------------- |  | ------ |  | ------ |  | ------- | 
|For the year ended 31 December 2015               |  | ING Group N.V.parentcompany                                        |        |  | Subsidiaries |  |       | Consolidatingentries |         |  | ING Groupconsolidated | 
|Cash flows from operating activities              |  |                                                                    |        |  |              |  |       |                      |         |  |                       |  |       
|Result before tax                                 |  |                                                                    |        |  | 4,885        |  |       |                      | 8,443   |  |                       |  | 5,925 |  |        |  | 7,403   | 
|Adjusted for:                                     |  |  depreciation                                                     |        |  |              |  |       |                      | 634     |  |                       |  |        |  |        |  | 634     | 
|                                                  |  |  change in provisions for insurance and investment contracts      |        |  |              |  |       |                      | 1,499  |  |                       |  |        |  |        |  | 1,499  | 
|                                                  |  |  addition to loan loss provisions                                 |        |  |              |  |       |                      | 1,347   |  |                       |  |        |  |        |  | 1,347   | 
|                                                  |  |  other                                                            |        |  | 5,925       |  |       |                      | 1,310  |  |                       |  | 5,925  |  |        |  | 1,310  | 
|Taxation paid                                     |  |                                                                    |        |  | 1           |  |       |                      | 1,449  |  |                       |  |        |  |        |  | 1,450  | 
|Changes in:                                       |  |  loans and advances to banks, not available on demand             |        |  |              |  |       |                      | 6,766   |  |                       |  |        |  |        |  | 6,766   | 
|                                                  |  |  trading assets                                                   |        |  |              |  |       |                      | 5,458   |  |                       |  |        |  |        |  | 5,458   | 
|                                                  |  |  non-trading derivatives                                          |        |  | 17          |  |       |                      | 303    |  |                       |  | 17     |  |        |  | 303    | 
|                                                  |  |  other financial assets at fair value through profit or loss      |        |  |              |  |       |                      | 256    |  |                       |  |        |  |        |  | 256    | 
|                                                  |  |  loans and advances to customers2                                 |        |  | 4,624       |  |       |                      | 23,030 |  |                       |  | 4,624  |  |        |  | 23,030 | 
|                                                  |  |  other assets                                                     |        |  | 30           |  |       |                      | 519     |  |                       |  |        |  |        |  | 549     | 
|                                                  |  |  deposits from banks, not payable on demand                       |        |  |              |  |       |                      | 5,179   |  |                       |  |        |  |        |  | 5,179   | 
|                                                  |  |  customer deposits2                                               |        |  |              |  |       |                      | 17,970  |  |                       |  |        |  |        |  | 17,970  | 
|                                                  |  |  trading liabilities                                              |        |  |              |  |       |                      | 8,276  |  |                       |  |        |  |        |  | 8,276  | 
|                                                  |  |  other financial liabilities at fair value through profit or loss |        |  |              |  |       |                      | 1,582  |  |                       |  |        |  |        |  | 1,582  | 
|                                                  |  |  provisions and other liabilities                                 |        |  | 870          |  |       |                      | 766     |  |                       |  | 1,341  |  |        |  | 2,977   | 
|                                                  |  |                                                                    |        |  |              |  |       |                      |         |  |                       |  |        |  |        |  |         | 
|Net cash flow from/(used in) operating activities |  |                                                                    | 4,782 |  |              |  | 9,377 |                      |         |  | 5,982                 |  |        |  | 10,577 | 
|Cash flows from investing activities              |  |                                                                    |        |  |              |  |       |                      |         |  |                       |  |        |  |        | 
|Investments and advances:                         |  |  group companies                                                  |        |  | 82          |  |       |                      |         |  |                       |  | 82     |  |        |  |         | 
|                                                  |  |  associates and joint ventures                                    |        |  |              |  |       |                      | 40     |  |                       |  |        |  |        |  | 40     | 
|                                                  |  |  available-for-sale
investments                                   |        |  |              |  |       |                      | 47,858 |  |                       |  |        |  |        |  | 47,858 | 
|                                                  |  |  held-to-maturity
investments                                     |        |  |              |  |       |                      | 3,457  |  |                       |  |        |  |        |  | 3,457  | 
|                                                  |  |  property and equipment                                           |        |  |              |  |       |                      | 353    |  |                       |  |        |  |        |  | 353    | 
|                                                  |  |  assets subject to operating leases                               |        |  |              |  |       |                      | 37     |  |                       |  |        |  |        |  | 37     | 
|                                                  |  |  investments for risk of policyholders                            |        |  |              |  |       |                      | 2,417  |  |                       |  |        |  |        |  | 2,417  | 
|                                                  |  |  other investments                                                |        |  |              |  |       |                      | 648    |  |                       |  |        |  |        |  | 648    | 
|Disposals and redemptions:                        |  |  group companies (including cash in company
disposed)3            |        |  | 2,446        |  |       |                      | 9,372  |  |                       |  |        |  |        |  | 6,926  | 
|                                                  |  |  associates and joint ventures4                                   |        |  |              |  |       |                      | 1,175   |  |                       |  |        |  |        |  | 1,175   | 
|                                                  |  |  available-for-sale
investments5                                  |        |  | 1,824        |  |       |                      | 50,851  |  |                       |  |        |  |        |  | 52,675  | 
|                                                  |  |  held-to-maturity
investments                                     |        |  |              |  |       |                      | 1,219   |  |                       |  |        |  |        |  | 1,219   | 
|                                                  |  |  property and equipment                                           |        |  |              |  |       |                      | 74      |  |                       |  |        |  |        |  | 74      | 
|                                                  |  |  assets subject to operating leases                               |        |  |              |  |       |                      | 17      |  |                       |  |        |  |        |  | 17      | 
|                                                  |  |  investments for risk of policyholders                            |        |  |              |  |       |                      | 7,566   |  |                       |  |        |  |        |  | 7,566   | 
|                                                  |  |  loans                                                            |        |  |              |  |       |                      | 3,201   |  |                       |  |        |  |        |  | 3,201   | 
|                                                  |  |  other investments                                                |        |  |              |  |       |                      | 5       |  |                       |  |        |  |        |  | 5       | 
|                                                  |  |                                                                    |        |  |              |  |       |                      |         |  |                       |  |        |  |        |  |         | 
|Net cash flow from/(used in) investing activities |  |                                                                    | 4,188  |  |              |  | 74   |                      |         |  | 82                    |  |        |  | 4,196  | 
|                                                  |  |                                                                    |        |  |              |  |       |                      |         |  |                       |  |        |  |        |  |         | 



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-224 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|------------------------------------------------------------ |  | --------------------------- | ------ |  | ------------ |  | -------- | -------------------- |  |  | --------------------- |  |  |  | -------- | 
|For the year ended 31 December 2015                          |  | ING Group N.V.parentcompany |        |  | Subsidiaries |  |          | Consolidatingentries |  |  | ING Groupconsolidated | 
|Net cash flow from/(used in) operating activities            |  |                             | 4,782 |  |              |  | 9,377    |                      |  |  | 5,982                 |  |  |  | 10,577   | 
|Net cash flow from/(used in) investing activities            |  |                             | 4,188  |  |              |  | 74      |                      |  |  | 82                    |  |  |  | 4,196    | 
|Cash flows from financing activities                         |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Proceeds from debt securities                                |  |                             | 72     |  |              |  | 143,976  |                      |  |  | 4,624                |  |  |  | 139,424  | 
|Repayments of debt securities                                |  |                             | 1,651 |  |              |  | 145,686 |                      |  |  |                       |  |  |  | 147,337 | 
|Proceeds from issuance of subordinated loans                 |  |                             | 2,025  |  |              |  | 1,.134   |                      |  |  |                       |  |  |  | 3,159    | 
|Repayments of subordinated loans6                            |  |                             | 1,848 |  |              |  | 4,244   |                      |  |  |                       |  |  |  | 6,092   | 
|Purchase/sale of treasury shares                             |  |                             |        |  |              |  | 34       |                      |  |  |                       |  |  |  | 34       | 
|Issuance of ordinary shares                                  |  |                             |        |  |              |  | 82       |                      |  |  | 82                   |  |  |  |          | 
|Proceeds from NN Group divestments and related transactions  |  |                             | 1,040  |  |              |  |          |                      |  |  |                       |  |  |  | 1,040    | 
|Dividends paid                                               |  |                             | 889    |  |              |  | 2,282   |                      |  |  |                       |  |  |  | 1,393   | 
|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Net cash flow from/(used in) financing activities            |  |                             | 527    |  |              |  | 6,986   |                      |  |  | 4,706                |  |  |  | 11,165  | 
|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Net cash flow                                                |  |                             | 67    |  |              |  | 2,317    |                      |  |  | 1,358                 |  |  |  | 3,608    | 
|Cash and cash equivalents at beginning of year               |  |                             | 116    |  |              |  | 18,404   |                      |  |  | 1,407                |  |  |  | 17,113   | 
|Effect of exchange rate changes on cash and cash equivalents |  |                             |        |  |              |  | 342     |                      |  |  |                       |  |  |  | 342     | 
|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Cash and cash equivalents at end of year                     |  |                             | 49     |  |              |  | 20,379   |                      |  |  | 49                   |  |  |  | 20,379   | 
|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-225 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                  |  |                                                                    |        |  |              |  |        |                      |         |  |                       |  |        |  |        |  |         | 
|------------------------------------------------- |  | ------------------------------------------------------------------ | ------ |  | ------------ |  | ------ | -------------------- | ------- |  | --------------------- |  | ------ |  | ------ |  | ------- | 
|For the year ended 31 December 2014               |  | ING Group N.V.parentcompany                                        |        |  | Subsidiaries |  |        | Consolidatingentries |         |  | ING Groupconsolidated | 
|Cash flows from operating activities              |  |                                                                    |        |  |              |  |        |                      |         |  |                       |  |       
|Result before tax                                 |  |                                                                    |        |  | 1,037        |  |        |                      | 4,355   |  |                       |  | 3,161 |  |        |  | 2,231   | 
|Adjusted for:                                     |  |  depreciation                                                     |        |  |              |  |        |                      | 692     |  |                       |  |        |  |        |  | 692     | 
|                                                  |  |  change in provisions for insurance and investment contracts      |        |  |              |  |        |                      | 3,527  |  |                       |  |        |  |        |  | 3,527  | 
|                                                  |  |  addition to loan loss provisions                                 |        |  |              |  |        |                      | 1,594   |  |                       |  |        |  |        |  | 1,594   | 
|                                                  |  |  other                                                            |        |  | 375         |  |        |                      | 2,964   |  |                       |  | 226   |  |        |  | 2,363   | 
|Taxation paid                                     |  |                                                                    |        |  | 74          |  |        |                      | 999    |  |                       |  |        |  |        |  | 1,073  | 
|Changes in:                                       |  |  loans and advances to banks, not available on demand             |        |  |              |  |        |                      | 3,360   |  |                       |  |        |  |        |  | 3,360   | 
|                                                  |  |  trading assets                                                   |        |  | 5            |  |        |                      | 23,681 |  |                       |  |        |  |        |  | 23,676 | 
|                                                  |  |  non-trading derivatives                                          |        |  | 105         |  |        |                      | 2,917  |  |                       |  |        |  |        |  | 3,022  | 
|                                                  |  |  other financial assets at fair value through profit or loss      |        |  |              |  |        |                      | 553    |  |                       |  |        |  |        |  | 553    | 
|                                                  |  |  loans and advances to customers 2                                |        |  | 2,192       |  |        |                      | 15,116 |  |                       |  | 3,407  |  |        |  | 13,901 | 
|                                                  |  |  other assets                                                     |        |  | 211          |  |        |                      | 57     |  |                       |  | 92     |  |        |  | 246     | 
|                                                  |  |  deposits from banks, not payable on demand                       |        |  |              |  |        |                      | 3,353   |  |                       |  |        |  |        |  | 3,353   | 
|                                                  |  |  customer deposits 2                                              |        |  |              |  |        |                      | 19,015  |  |                       |  |        |  |        |  | 19,015  | 
|                                                  |  |  trading liabilities                                              |        |  |              |  |        |                      | 23,855  |  |                       |  |        |  |        |  | 23,855  | 
|                                                  |  |  other financial liabilities at fair value through profit or loss |        |  |              |  |        |                      | 1,018  |  |                       |  |        |  |        |  | 1,018  | 
|                                                  |  |  provisions and other liabilities                                 |        |  | 3,295       |  |        |                      | 790    |  |                       |  | 6,165  |  |        |  | 2,080   | 
|                                                  |  |                                                                    |        |  |              |  |        |                      |         |  |                       |  |        |  |        |  |         | 
|Net cash flow from/(used in) operating activities |  |                                                                    | 4,788 |  |              |  | 10,530 |                      |         |  | 6,277                 |  |        |  | 12,019 | 
|Cash flows from investing activities              |  |                                                                    |        |  |              |  |        |                      |         |  |                       |  |        |  |        | 
|Investments and advances:                         |  |  associates and joint ventures                                    |        |  |              |  |        |                      | 528    |  |                       |  |        |  |        |  | 528    | 
|                                                  |  |  available-for-sale
investments                                   |        |  |              |  |        |                      | 85,799 |  |                       |  |        |  |        |  | 85,799 | 
|                                                  |  |  held-to-maturity
investments                                     |        |  |              |  |        |                      | 315    |  |                       |  |        |  |        |  | 315    | 
|                                                  |  |  property and equipment                                           |        |  |              |  |        |                      | 375    |  |                       |  |        |  |        |  | 375    | 
|                                                  |  |  assets subject to operating leases                               |        |  |              |  |        |                      | 34     |  |                       |  |        |  |        |  | 34     | 
|                                                  |  |  investments for risk of policyholders                            |        |  |              |  |        |                      | 20,598 |  |                       |  |        |  |        |  | 20,598 | 
|                                                  |  |  other investments                                                |        |  |              |  |        |                      | 6,831  |  |                       |  |        |  |        |  | 6,831  | 
|Disposals and redemptions:                        |  |  group companies (including cash in company disposed)             |        |  | 934          |  |        |                      | 2,150  |  |                       |  |        |  |        |  | 1,216  | 
|                                                  |  |  associates and joint ventures                                    |        |  | 1,956        |  |        |                      | 549     |  |                       |  |        |  |        |  | 2,505   | 
|                                                  |  |  available-for-sale
investments                                   |        |  | 166          |  |        |                      | 69,278  |  |                       |  |        |  |        |  | 69,444  | 
|                                                  |  |  held-to-maturity
investments                                     |        |  |              |  |        |                      | 1,172   |  |                       |  |        |  |        |  | 1,172   | 
|                                                  |  |  property and equipment                                           |        |  |              |  |        |                      | 55      |  |                       |  |        |  |        |  | 55      | 
|                                                  |  |  assets subject to operating leases                               |        |  |              |  |        |                      | 3       |  |                       |  |        |  |        |  | 3       | 
|                                                  |  |  investments for risk of policyholders                            |        |  |              |  |        |                      | 28,003  |  |                       |  |        |  |        |  | 28,003  | 
|                                                  |  |  loans                                                            |        |  |              |  |        |                      | 2,382   |  |                       |  | 1,215 |  |        |  | 1,167   | 
|                                                  |  |  other investments                                                |        |  |              |  |        |                      | 5,928   |  |                       |  |        |  |        |  | 5,928   | 
|                                                  |  |                                                                    |        |  |              |  |        |                      |         |  |                       |  |        |  |        |  |         | 
|Net cash flow from/(used in) investing activities |  |                                                                    | 3,056  |  |              |  | 9,260 |                      |         |  | 1,215                |  |        |  | 7,419 | 
|                                                  |  |                                                                    |        |  |              |  |        |                      |         |  |                       |  |        |  |        |  |         | 



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-226 |  | 



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##### Table of Contents

Notes to the Consolidated financial statements - continued







|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|------------------------------------------------------------ |  | --------------------------- | ------ |  | ------------ |  | -------- | -------------------- |  |  | --------------------- |  |  |  | -------- | 
|For the year ended 31 December 2014                          |  | ING Group N.V.parentcompany |        |  | Subsidiaries |  |          | Consolidatingentries |  |  | ING Groupconsolidated | 
|Net cash flow from/(used in) operating activities            |  |                             | 4,788 |  |              |  | 10,530   |                      |  |  | 6,277                 |  |  |  | 12,019   | 
|Net cash flow from/(used in) investing activities            |  |                             | 3,056  |  |              |  | 9,260   |                      |  |  | 1,215                |  |  |  | 7,419   | 
|Cash flows from financing activities                         |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Proceeds from debt securities                                |  |                             | 3,221  |  |              |  | 144,451  |                      |  |  | 4,044                |  |  |  | 143,628  | 
|Repayments of debt securities                                |  |                             | 1,165 |  |              |  | 152,483 |                      |  |  | 4,044                 |  |  |  | 149,604 | 
|Proceeds from issuance of subordinated loans                 |  |                             | 1,125  |  |              |  | 3,086    |                      |  |  |                       |  |  |  | 4,211    | 
|Repayments of subordinated loans 6                           |  |                             | 1,500 |  |              |  | 1,867   |                      |  |  |                       |  |  |  | 3,367   | 
|Repayment and premium paid on non-voting equity securities   |  |                             | 2,250 |  |              |  |          |                      |  |  |                       |  |  |  | 2,250   | 
|Purchase/sale of treasury shares                             |  |                             |        |  |              |  | 10       |                      |  |  | 24                   |  |  |  | 14      | 
|Issuance of ordinary shares                                  |  |                             | 850   |  |              |  | 850      |                      |  |  |                       |  |  |  |          | 
|Proceeds from NN Group divestments and related transactions  |  |                             | 1,747  |  |              |  | 986      |                      |  |  |                       |  |  |  | 2,733    | 
|Dividends paid                                               |  |                             | 1,403  |  |              |  | 1,412   |                      |  |  | 9                     |  |  |  |          | 
|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Net cash flow from/(used in) financing activities            |  |                             | 1,731  |  |              |  | 6,379   |                      |  |  | 15                   |  |  |  | 4,663   | 
|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Net cash flow                                                |  |                             | 1     |  |              |  | 5,109   |                      |  |  | 5,047                 |  |  |  | 63      | 
|Cash and cash equivalents at beginning of year               |  |                             | 1      |  |              |  | 23,517   |                      |  |  | 6,338                |  |  |  | 17,180   | 
|Effect of exchange rate changes on cash and cash equivalents |  |                             |        |  |              |  | 4       |                      |  |  |                       |  |  |  | 4       | 
|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 
|Cash and cash equivalents at end of year                     |  |                             |       |  |              |  | 18,404   |                      |  |  | 1,291                |  |  |  | 17,113   | 
|                                                             |  |                             |        |  |              |  |          |                      |  |  |                       |  |  |  |          | 

2.3.4. Notes to the supplemental information

Investments in group companies



|                               |  |                  |     |   |                                    |  |        |                  |  |  |                                    |   |  |  |        | 
|------------------------------ |  | ---------------- | --- | - | ---------------------------------- |  | ------ | ---------------- |  |  | ---------------------------------- | - |  |  | ------ | 
|Investments in group companies |  |                  |     |   |                                    |  |        |                  |  |  |                                    |  
|                               |  | 2016             |     |   | 2015                               | 
|                               |  | Interestheld (%) |     |   | Statementof financialpositionvalue |  |        | Interestheld (%) |  |  | Statementof financialpositionvalue |  
|ING Bank                       |  |                  | 100 | % |                                    |  | 41,004 |                  |  |  | 100                                | % |  |  | 37,997 | 
|Other                          |  |                  |     |   |                                    |  | 171    |                  |  |  |                                    |   |  |  | 160    | 
|                               |  |                  |     |   |                                    |  |        |                  |  |  |                                    |   |  |  |        | 
|                               |  |                  |     |   |                                    |  | 41,175 |                  |  |  |                                    |   |  |  | 38,157 | 
|                               |  |                  |     |   |                                    |  |        |                  |  |  |                                    |   |  |  |        | 

Other includes certain intercompany eliminations.



|                                                         |  |      |        |  |      |  |         | 
|-------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------- | 
|Changes in investments in group companies                |  |      |        |  |      | 
|                                                         |  | 2016 |        |  | 2015 | 
|Opening balance                                          |  |      | 38,157 |  |      |  | 47,945  | 
|Disposals                                                |  |      |        |  |      |  | 14,479 | 
|Revaluations                                             |  |      | 179   |  |      |  | 818     | 
|Results                                                  |  |      | 4,561  |  |      |  | 6,101   | 
|Capital contributions                                    |  |      |        |  |      |  | 82      | 
|Dividends                                                |  |      | 1,354 |  |      |  | 2,282  | 
|                                                         |  |      |        |  |      |  |         | 
|                                                         |  |      | 41,185 |  |      |  | 38,185  | 
|Changes in ING Groep N.V. shares held by group companies |  |      | 10    |  |      |  | 28     | 
|                                                         |  |      |        |  |      |  |         | 
|Closing balance                                          |  |      | 41,175 |  |      |  | 38,157  | 
|                                                         |  |      |        |  |      |  |         | 



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-227 |  | ING Group Annual Report on Form 20-F 2016



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##### Table of Contents

Notes to the Consolidated financial statements - continued







In 2015, Disposal of group companies included the further divestment of INGs stake in NN Group, resulting in loss
of control and deconsolidation of NN Group at the end of May 2015. As at 31 December 2015, the remaining interest in NN Group was 25.75% and was included in Investments in associates and joint ventures. Reference is made to Note 2
Investments in associates and joint ventures.

Investments in associates and joint ventures



|                                                        |  |      |        |  |      |  |        | 
|------------------------------------------------------- |  | ---- | ------ |  | ---- |  | ------ | 
|Changes in investments in associates and joint ventures |  |      |        |  |      | 
|                                                        |  | 2016 |        |  | 2015 | 
|Opening balance                                         |  |      | 2,153  |  |      |  |       | 
|Additions                                               |  |      |        |  |      |  | 3,612  | 
|Transfer to and from Investments                        |  |      | 1,315 |  |      |  |        | 
|Revaluations                                            |  |      | 178    |  |      |  |        | 
|Disposals                                               |  |      | 1,016 |  |      |  | 1,459 | 
|                                                        |  |      |        |  |      |  |        | 
|Closing balance                                         |  |      |       |  |      |  | 2,153  | 
|                                                        |  |      |        |  |      |  |        | 

During 2016, ING sold its remaining shares in NN Group. As at 31 December 2015, Investments in associates and joint ventures
comprised INGs investment, of 25.75%, amounting to EUR 2,153 million in NN Group.

In 2015, Additions represented the fair value of the investment
retained in NN Group at deconsolidation. Further divestments of ING Groups shareholding in NN Group, subsequent to deconsolidation, was included in Disposals. As at 31 December 2015, Investments in associates and joint ventures
represented the remaining interest in NN Group of 25.75%. The investment was measured at the lower of the carrying value and the fair value less cost to sell. Reference is made to the Consolidated annual accounts, Note 51 Other events.

Subordinated loans



|                   |  |               |  |                   |  |                                      |  |  |       |  |                                      |      |       |  |  |  |       | 
|------------------ |  | ------------- |  | ----------------- |  | ------------------------------------ |  |  | ----- |  | ------------------------------------ | ---- | ----- |  |  |  | ----- | 
|Subordinated loans |  |               |  |                   |  |                                      |  |  |       |  |                                     
|                   |  |               |  |                   |  |                                      |  |  |       |  | Statement of financialposition value |     
|Interest rate      |  | Year of issue |  | Due date          |  | Notional amount in original currency |  |  | 2016  |  |                                      | 2015 |      
|6.875%             |  | 2016          |  | Perpetual         |  | USD                                  |  |  | 1,000 |  |                                      |      | 948   |  |  |  |       | 
|6.500%             |  | 2015          |  | Perpetual         |  | USD                                  |  |  | 1,250 |  |                                      |      | 1,177 |  |  |  | 1,139 | 
|6.000%             |  | 2015          |  | Perpetual         |  | USD                                  |  |  | 1,000 |  |                                      |      | 943   |  |  |  | 912   | 
|4.000%             |  | 2014          |  | Anchor investors1 |  | EUR                                  |  |  | 1,125 |  |                                      |      |       |  |  |  | 338   | 
|9.000%             |  | 2008          |  | Perpetual         |  | EUR                                  |  |  | 10    |  |                                      |      | 10    |  |  |  | 10    | 
|6.375%             |  | 2007          |  | Perpetual         |  | USD                                  |  |  | 1,045 |  |                                      |      | 975   |  |  |  | 960   | 
|5.140%             |  | 2006          |  | Perpetual         |  | GBP                                  |  |  | 66    |  |                                      |      |       |  |  |  | 90    | 
|6.125%             |  | 2005          |  | Perpetual         |  | USD                                  |  |  | 700   |  |                                      |      | 662   |  |  |  | 635   | 
|Variable           |  | 2004          |  | Perpetual         |  | EUR                                  |  |  | 555   |  |                                      |      | 551   |  |  |  | 568   | 
|6.200%             |  | 2003          |  | Perpetual         |  | USD                                  |  |  | 500   |  |                                      |      | 470   |  |  |  | 454   | 
|Variable           |  | 2003          |  | Perpetual         |  | EUR                                  |  |  | 430   |  |                                      |      | 427   |  |  |  | 428   | 
|7.200%             |  | 2002          |  | Perpetual         |  | USD                                  |  |  | 1,100 |  |                                      |      | 1,041 |  |  |  | 1,004 | 
|7.050%             |  | 2002          |  | Perpetual         |  | USD                                  |  |  | 800   |  |                                      |      |       |  |  |  | 727   | 
|Variable           |  | 2000          |  | 31 December 2030  |  | USD                                  |  |  | 1,500 |  |                                      |      | 1,422 |  |  |  | 1,378 | 
|                   |  |               |  |                   |  |                                      |  |  |       |  |                                      |      |       |  |  |  |       | 
|                   |  |               |  |                   |  |                                      |  |  |       |  |                                      |      | 8,626 |  |  |  | 8,643 | 
|                   |  |               |  |                   |  |                                      |  |  |       |  |                                      |      |       |  |  |  |       | 



|1 | Reference is made to the ING Group Consolidated annual accounts, Note 18 Subordinated loans  Subordinated notes  Anchor investors.
|- | --------------------------------------------------------------------------------------------------------------------------------------

In November 2016, ING Groep N.V. issued USD 1,000 million securities that qualify as Additional Tier 1 capital under CRR/CRD IV. The issuance was in the form of 5
Year Callable USD denominated Perpetual Additional Tier 1 Contingent Convertible Securities, with coupon 6.875%. The securities are subject to full conversion into ordinary shares of ING Groep N.V. in the event that INGs phased-in CET1 ratio would fall below 7%.



|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-228 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







In February, March and September 2016 respectively, ING Groep N.V. redeemed the final tranche of subordinated loans
from the Anchor investors (EUR 338 million), GBP 66 million 5.14% Bond and the USD 800 million 7.05% ING Perpetual Debt Securities. Reference is made to the ING Group Consolidated annual accounts, Note 18 Subordinated loans and
Note 19 Equity.

The Subordinated loans rank subordinated to the Other liabilities in a winding-up of ING Group.



| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-229 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Glossary Amortised costs The amount at which the financial asset or liability is
measured at initial recognition less principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, and minus any reduction for impairment or
uncollectability. Application programme interface A software device
that allows for an application or data to be shared. Asset-backed security (ABS) A type of bond or note that is based on pools of assets, or collateralised by the cash flows from a specified pool of underlying assets. Asset Liability Committee (ALCO) ALCO manages the balance sheet of ING,
especially regarding the strategic non-trading risk. These are interest rate risk, equity risk, real estate risk, liquidity, solvency and foreign exchange risk and fluctuations. Asset & Liability Management (ALM) The practice of managing a
business such that decisions on assets and liabilities are coordinated. It involves the ongoing process of formulating, implementing, monitoring and revising strategies related to assets and liabilities. Assets under Management (AuM) Refers to the total market value of assets a
financial company invests on behalf of its customers. Associate An
entity over which the Group has significant influence but not control. Significant influence generally results from a shareholding of between 20% and 50% of the voting rights, but also is the ability to participate in the financial and operating
policies through situations including, but not limited to, one or more of the following:  
representation on the board of directors;  
participation in the policymaking process; and  
interchange of managerial personnel. Audit Committee The Audit Committee, consisting of members of the Supervisory Board, assists the Supervisory Board in monitoring the integrity of the financial statements of ING Group
N.V. and ING Bank N.V., in monitoring the compliance with legal and regulatory requirements, and in monitoring the independence and performance of INGs internal and external auditors. Authorised capital The maximum amount of share capital that a public limited
company or a private limited company can issue according to its Articles of Association. Part of the authorised capital can remain unissued.


Available Financial Resources (AFR) The available financial resources equal the market value of assets minus the market value of liabilities, excluding hybrids issued by ING Group, which count as capital.
INGs policy is that the available financial resources should exceed economic capital for Bank and Group. Available-for-sale financial assets Those non-derivative financial assets that
are designated as available-for-sale or are not classified as:  
loans and receivables;  
held-to-maturity investments; and  
financial assets at fair value through profit and loss. Bank for International Settlements (BIS) The Bank for International Settlements is an international organisation fostering the cooperation of central banks and international monetary policy makers. Basel I Regulatory requirements issued by the Basel Committee on Banking
Supervision for the solvency calculation, which were superseded by Basel II, and apply to ING from 2008 onwards. Basel II Regulatory requirements issued by the Basel Committee on Banking Supervision for the solvency calculation, which apply to ING from 2008. Basel II is an international
standard for calculating the required capital, based on internal models that take into account financial and operational risks. Basel III Regulatory requirements issued by the Basel Committee on Banking Supervision for solvency calculation and liquidity requirements, which superseded Basel II. Basel III
was adopted in 2010 and consequently translated by the EU into the Capital Requirement Regulation (CRR) and the Capital Requirement Directive IV (CRD IV). The CRR is binding for all EU member states and became effective as at 1 January 2014,
with the full requirements to take effect from 1 January 2018. The CRD IV directs all EU member states to implement certain components of Basel III in their own law; in the Netherlands in the Wet Financieel Toezicht(Act on
Financial Supervision). Although not all definitions and parameters of the CRR/CRD IV have been finalised, the key principles of Basel III have been included in INGs solvency and liquidity risk appetite frameworks that are continuously
monitored by senior management. Basis Point Value (BPV) The change in
the net present value of a cash flow or a pool of cash flows due to a one basis-point change of the yield curve. Business risk The exposure to value loss due to fluctuations in volumes, margins and costs. These fluctuations can occur because of internal, industry, or wider market factors. It is
the risk inherent to strategy decisions and internal efficiency.






|                                          |  |       |  | 
|----------------------------------------- |  | ----- |  | 
|ING Group Annual Report on Form 20-F 2016 |  | F-230 |  | 



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Capital base Capital plus
minority interests plus subordinated loans. Capital coverage ratio Available capital divided by required capital. Capital Requirements Directive
(CRD IV) For European banks, the Basel III requirements are implemented through the Capital Requirement Regulation (CRR) and the Capital Requirement Directive
IV (CRD IV). The CRD IV directs all EU member states to implement certain components of Basel III in their own law, taking into account transitional arrangements, in the Netherlands through amendments to the Wet Financieel Toezicht (Act
on Financial Supervision). Capital Requirements Regulation (CRR) For
European banks, the Basel III requirements are implemented through the Capital Requirement Regulation (CRR) and the Capital Requirement Directive IV (CRD IV). The CRR is binding for all EU member states and came into effect on 1 January 2014,
taking into account transitional arrangements, with the full requirements to take effect on 1 January 2018. Central Clearing Parties or Central
Counterparties (CCP) A legal entity between two trade counterparties in a bilateral transaction. The parties legally assign their trades to the CCP , and the
CCP becomes the counterparty to each, assuming all rights and responsibilities. Thus, from the point of view of the original counterparties, the counterparty credit risk exposure is shifted from the other original counterparty to the CCP. Collateralised debt obligation (CDO) A type of asset-backed security that
provides investors with exposure to the credit risk of a pool of fixed income assets. Collateralised loan obligation (CLO) A type of collateralised debt obligation (CDO) that is backed primarily by leveraged bank loans. Commercial paper Promissory note (issued by financial institutions or large
firms) with a very-short to short maturity period (usually 2 to 30 days, and not more than 270 days), and unsecured. Common equity Tier 1 capital Capital definition specified in article 26 of the capital requirements regulation (CRR). Common equity Tier 1 items of institutions consist of the following:  a.
capital instruments;  b.
share premium accounts related to the instruments referred to in point (a);  c.
retained earnings;  d.
accumulated other comprehensive income;  e.
other reserves; and  f.
funds for general banking risk.


Compliance risk Compliance
risk is defined as the risk of impairment of ING Banks integrity as a result of failure (or perceived failure) to comply with applicable laws, regulations, ING Bank policies and minimum standards, and the ING Values as part of the Orange Code. Concentrations of credit risk Concentrations of credit risk exist when
changes in economic, industry or geographical factors similarly affect groups of counterparties whose aggregate exposure is significant in relation to ING Groups total exposure. Contingent liabilities Possible obligations that arise from past events and
whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or a present obligation that arises from past
events, but is not recognised because:  
its not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and  
the amount of the obligation cannot be measured with sufficient reliability. Control Situations in which ING owns, directly or indirectly, more than half of the voting power of a company, or when ING has control of a companys operating and
financial policies through situations including, but not limited to:  
ability to appoint or remove the majority of the board of directors;  
power to govern such policies under statute or agreement; and  
power over more than half of the voting rights through an agreement with other investors. Convexity The non-linear relationship between changes in interest rates and changes in bond prices and their net present value. It is a
very important market risk measure for portfolios containing embedded options. Corporate governance The way in which a company is governed and how it deals with the various interests of its customers, shareholders, employees, business partners and society at large. Corporate Governance Committee The Corporate Governance Committee,
consisting of members of the Supervisory Board, assists the Supervisory Board in monitoring and evaluating the corporate governance of ING as a whole and the way its reported on in the Annual Report and to the General Meeting of Shareholders.
It advises the Supervisory Board on improvements.






| |  |       |  |                                          
| |  | ----- |  | -----------------------------------------
| |  | F-231 |  | ING Group Annual Report on Form 20-F 2016



---

##### Table of Contents

Notes to the Consolidated financial statements - continued







Cost of capital The costs
related to owning capital. These can be split into the cost of equity, hybrids and debt, taking a target leverage into account. Country of residence From the perspective of a given country, a resident is an individual or legal entity that has its major operations in the given country. All of INGs customers and
entities are said to be residents in one country only. Country risk The
risk that a government will not fulfil its obligations or that it will obstruct the remittance of funds by debtors, either for financial reasons (transfer risk) or for other reasons (e.g. political risk). Credit default swap (CDS) A CDS is a financial derivative instrument that
synthetically transfers the credit risk of a specific reference entity between two counterparties. The protection buyer pays a fixed periodic fee, usually expressed in basis points per annum, on the notional amount. The protection seller makes no
payment unless some specified credit event relating to the reference entity occurs, in which case he/she is obliged to make a payment to compensate the loss incurred by the protection buyer. Credit institutions All institutions that are subject to banking supervision
by public authorities, including mortgage banks, capital market institutions, multilateral development banks and the International Monetary Fund (IMF). Credit
rating Credit ratings, as assigned by rating agencies (such as Standard & Poors and Moodys), are indicators of the likelihood of timely and
complete repayment of interest and instalments of fixed-income securities. Credit risk The risk of loss from default by borrowers (including bond issuers) or counterparties. Credit risks arise in INGs lending,
pre-settlement and investment activities, as well as in its trading activities. Credit risk management is supported by dedicated credit risk information systems and internal rating methodologies for debtors
and counterparties. Credit risk exposure Total amount of committed
facilities to a designated borrower or an obligor group or, if higher, their outstanding balances, together with the outstanding balances of any related uncommitted facilities.


Credit support annex (CSA) Supporting documentation for a collateral arrangement that accompanies a master agreement used in the execution of an over-the-counter derivative swap. The document clearly delineates the rules and procedures for the use of the collateral in the backing of the traded securities. A CSA may be executed as a separate document,
or can be part of the master agreement. Credit valuation adjustment (CVA) An adjustment to the valuation of over-the-counter (OTC) derivative contracts
to reflect the creditworthiness of OTC derivative counterparties. Cumulative preference shares Shares that entitle the holder to a fixed annual dividend. In the case of a profit distribution, these shares take precedence over ordinary shares. If the profit
available for distribution isnt enough to pay this dividend in full, the shortfall will be made up from the reserves as much as possible. If, and to the extent that, the dividend distribution cant be made from the reserves, the profits
earned in subsequent years shall first be used to make up the shortfall before any distribution may be made on shares of any other category. Debit valuation
adjustment (DVA) An adjustment made by ING to the valuation of
over-the-counter (OTC) derivative liabilities to reflect within fair value INGs own credit risk. Deferred tax assets arising from carryforward of tax losses The amount of
income tax receivable in future periods arising from the utilisation of carryforward tax losses against future taxable profits. Deferred tax assets/liabilities
arising from temporary differences The amounts of income tax receivable/payable in future periods in respect of taxable temporary differences between carrying
amounts of assets or liabilities in the balance sheet and tax base, based on tax rates that are expected to apply in the period when the assets are realised or the liabilities are settled. Defined benefit plan Post-employment benefit plans other than defined
contribution plans. Defined contribution plan Post-employment benefit
plans under which ING pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to
employee service in the current and prior periods.






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Derivatives A derivative is a
financial instrument or other contract with all three of the following characteristics:  a.
Its value changes in response to a change in any of the following: a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index,
or other variable (provided in the case of a non-financial variable that the variable is not specific to a party to the contract, sometimes called the underlying);  b.
It requires no initial net investment, or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; and  c.
It is settled at a future date. Discontinued operations A discontinued operation is a component of an entity that either has been disposed of, or is classified as held for sale, and  a.
represents a separate major line of business or geographical area of operations;  b.
is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or  c.
is a subsidiary acquired exclusively with a view to resale. Discounted bills Bills that are sold, less interest, giving the owner the right to receive an amount of money on a given date. Earnings sensitivity (ES) Measures the impact of changing interest rates on (before-tax) net interest income. Economic capital (EC) EC is defined as the amount of capital that a transaction or business unit requires in order to support the economic risks it takes. In general, EC is measured as the
unexpected loss above the expected loss at a given confidence level. This economic capital definition is in line with the net market value (or surplus) definition. Economic exposure Total of outstandings plus undrawn committed portions
calculated on the basis of economic risk principles. Effective interest method The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of financial assets or financial
liabilities) and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial
instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability.


Elimination A process by which
intercompany transactions are matched with each other and deducted, so that the assets, liabilities, income and expenses are not inflated. Employee benefits All forms of consideration given by a company in exchange for service rendered by employees or for the termination of employment. Employee value proposition Sets out the various rewards and benefits
received by employees in return for their performance. ESR framework The Environmental and Social Risk (ESR) Framework is a set of policies and governance to identify, assess and manage INGs engagement with companies operating in
sectors that are more vulnerable to environmental and social risks and impacts. ESR policies Our financing and investment policies, as well as our broader business ambitions, are structured around strongly embedded social, ethical and environmental criteria. Our
Environmental and Social Risk (ESR) policies guide our decisions for customer engagement and assessing finance proposals. Expected loss (EL) The expected loss provides a measure of the value of the credit losses that ING Bank may reasonably expect to incur on its portfolio. ING Bank must hold a reserve (as
part of its capital base) to cover the expected losses in its credit portfolio. EL is calculated as probability of default x loss given default x exposure at default. Collective provisions are taken to cover for expected losses. Exposure at default (EaD) The exposure at default uses models to estimate
the outstanding amount or obligation at the moment of default in the future. Since the fact that a counterparty will go into default is not known, and the level of outstandings (see definition) that may occur on that date is also not known, ING Bank
uses a combination of statistical, expert and hybrid models to estimate the exposure at default. Fair value The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the balance sheet date
(exit price). Final dividend The final dividend is the
total dividend for the year as proposed by the Board, less any interim dividend paid during the year. The dividend is subject to approval of shareholders at the Annual General Meeting.






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Finance lease A lease that
transfers substantially all the risks and rewards associated with ownership of an asset to the lessee. Title may or may not eventually be transferred. Financial
asset Any asset that is:  
cash;  
an equity instrument of another company; and  
a contractual right to:  
receive cash or another financial asset from another company;  
exchange financial instruments with another company under conditions that are potentially favourable; and  
a certain contract that will or may be settled in INGs own equity instruments. Financial instruments Contracts that give rise to both a financial asset for one company and a financial liability or equity instrument for another company. Financial liability Any liability that is:  a.
contractual obligation:  
to deliver cash or another financial asset to another company; or  
to exchange financial instruments with another company under conditions that are potentially unfavourable; or  b.
contract that will or may be settled in the companys own equity instruments. Fintech This stands for financial technology. Its used to describe companies (generally startups) that are using software and technology to disrupt current
banking models and deliver innovative financial services. First call date Perpetual subordinated loans have no set maturity. The first call date is the date on which ING has the option to repay and cancel that particular subordinated loan. Forbearance activities Forbearance occurs when a client is considered
unable to meet its financial commitments under the contract due to financial difficulties, and based on these difficulties, ING decides to grant concessions towards the client by either loan modification or refinancing. Modification is when the
terms and conditions of the contract are adjusted to enable the client to service the debt. Refinancing relates to putting a new loan contract in place to ensure the total or partial repayment of an existing loan contract, which the debtor is unable
to comply with. Examples of forbearance measures are: postponement and/or reduction of loan principal and/or interest payments, extended payment terms, debt consolidations and deferral of foreclosures.


Foreign exchange rate risk (FX risk) Probability of loss occurring from an adverse movement in foreign exchange rates. Forward contracts Commitments to exchange currencies or to buy or sell other
financial instruments at specified future dates. Fully loaded CET 1 ratio The CRR/CRD IV Common Equity Tier 1 ratio calculated according to the 2019 end-state rule. (See other definitions.) Future contracts Commitments to exchange currencies or to buy or sell other
financial instruments at specified future dates. Exchanges act as intermediaries and require daily cash settlement and collateral deposits. Group debt Investments in ING Group subsidiaries minus the equity of the holding company, including hybrids. Held for sale A business or group of assets for which the carrying amount
will be recovered principally through a sale transaction rather than through continuing use. When a business or a group of assets are to be sold together in a single transaction, and the sale is considered to be highly probable, these are classified
separately in the balance sheet as assets held for sale. A sale is highly probable when management is demonstrably committed to the sale, which is expected to occur within one year from the date of classification as held for sale.
Liabilities directly associated with those assets, and that are included in the transaction, are included in the balance sheet as liabilities held for sale. Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturity that ING Group has the positive intention
and ability to hold to maturity other than:  a.
those that ING Group upon initial recognition designates as at fair value through profit and loss;  b.
those that ING Group designates as available-for-sale; and  c.
those that meet the definition of loans and receivables. Historical simulation A model to calculate value at risk, assuming that future changes in risk factors will have the same distribution as they had in the past, taking into account the non-linear behaviour of financial products. Human capital return on investment The human capital return on investment (HCROI) provides a means of measuring a companys profitability in relation to total employee costs. It is calculated by
removing non-employee costs from overall operating costs and deriving the resulting operating profitability.






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Hybrid capital Tier 1
instruments issued by ING Group (e.g. perpetual debt securities and preference shares). Hybrid capital securities are perpetual fixed income securities with an embedded call and coupon deferral feature. All hybrid capital securities rank senior to
core Tier 1 securities and ordinary shares of ING Group and they are structurally subordinated to the senior debt instruments issued by ING Groep N.V. Impairment loss The amount by which the carrying amount of an asset exceeds
its recoverable amount. ING Continuity Foundation The role of the ING
Continuity Foundation is to safeguard to the best of its ability the interests of ING, its enterprises, and its stakeholders; and to resist influences that might conflict with these interests by affecting the independence, continuity or identity of
ING. This foundation may for that purpose exercise its call option right for as many cumulative preference shares as are necessary in order to hold up to one-third of the issued share capital. Integrated reporting An integrated report is a concise communication about
how an organisations strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long term. The report should tell the overall story of an organisation in
a manner that allows all stakeholders to assess its ability to create value. Interest-bearing instrument A financial asset or liability for which a time-proportionate compensation is paid or received, in relation to a notional amount. Interest margin Difference between the average interest received on funds
lent and the interest paid by the bank on capital raised. Internal rate of return (IRR) Internal rate of return is the calculated discount rate at which the present value of distributable earnings from new business equals the investment in new business
(i.e. the projected return on the investment in new business). Interest rate risk Probability that the market interest rates will rise significantly higher than the interest rate earned on investments such as bonds, resulting in their lower market
value. Interim dividend The interim dividend is an advance on the total
dividend and distributed before the end of the fiscal year.


Internal assessment approach (IAA) A method used to calculate credit risk capital requirements for securitisation exposures (including liquidity lines provided to asset-backed commercial paper programmes
and sponsored securitisations). In the money A call option is said to
be in the money if the exercise price is lower than the price of the underlying value. A put option is said to be in the money if the exercise price is higher than the price of the underlying value. Investment risk Investment risk is the credit default and risk rating
migration risk that is associated with ING Banks investments in bonds, commercial paper, securitisations, and other similar publicly traded securities. This can be viewed as the worst-case loss that ING Bank may incur as a result of holding a
position in underlying securities whose Issuers credit quality deteriorates or defaults. Initial public offering (IPO) This is when a company publicly offers its shares for sale for the first time on a stock exchange. The most important goal of an IPO is to raise capital that the company
can use to invest and expand. Irrevocable facilities This mainly
constitutes unused portions of irrevocable credit facilities granted to corporate customers, and commitments made to purchase securities to be issued by governments and private issuers. Irrevocable letters of credit This represents an obligation on behalf of a
customer to pay an amount of money upon submission of a specific letter or document, or to accept a bill of exchange, subject to certain conditions. An irrevocable letter of credit cannot be cancelled or adjusted by the bank that has granted it for
the duration of the agreement unless all those concerned agree. Issued share capital The share capital that is issued by a public or private limited company. Joint
venture A joint venture is an entity over which the Group has joint control. Joint control is the contractually agreed sharing of control over an arrangement or
entity, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control. Joint control means that no party to the agreement is able to act unilaterally to control the activity of the
entity. The parties to the agreement must act together to control the entity and therefore exercise the joint control.






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Legal risk Legal risk is the
risk related to:  
A failure (or perceived failure) to adhere to applicable laws, regulations and standards;  
Contractual liabilities or obligations that are defaulted or cannot be enforced as intended, or are enforced in an unexpected or adverse way; and  
Liability (tort) towards third parties due to an act or omission attributable to ING (potentially) resulting in impairment of INGs integrity, leading to damage to INGs reputation, legal or regulatory
sanctions, or financial loss. Lending risk Lending risk
arises when ING Bank grants a loan to a counterparty, or issues guarantees on behalf of a counterparty. This includes term loans, mortgages, revolving credits, overdrafts, guarantees, letters of credit, etc. The risk is measured as the notional
amount of the financial obligation that the counterparty has to repay to ING Bank, excluding any accrued and unpaid interest, discount/premium amortisations or impairments. Leverage ratio The Basel III leverage ratio is defined as the capital
measure (the numerator) divided by the exposure measure (the denominator expressed as a percentage). Liquidity coverage ratio (LCR) Regulatory measure for the liquidity of banks, which compares the amount of high-quality liquid assets with a potential outflow over a
one-month period. The measure is introduced under Basel III. LCR is defined as: stock of high quality liquid assets divided by assumed 30-day cash outflow. Liquidity premium In order to correct the value of liabilities for their
illiquidity, a premium is added to the risk-free liability valuation curve. This premium reflects the price of illiquid long-term funding, which increases in stressed markets. Liquidity risk The risk that ING Group, or one of its subsidiaries, cannot
meet its financial liabilities when they are due, at reasonable costs and in a timely manner. Loan to deposit ratio (LtD ratio) Measure for the liquidity of banks. The LtD ratio is defined as: own originated loans divided by own originated deposits. Loan to value ratio (LtV ratio) This is defined as the amount of the
mortgage divided by the value of the property and is one way to measure the risk of a mortgage. Typically, assessments with higher LtV ratios are considered riskier mortgages. This also affects how the mortgage is weighed for regulatory capital
purposes. Loss given default (LGD) Anticipated percentage loss in the
event of a default of a customer or counterpart.


Management Board Banking The
Management Board Banking (MBB) consists of:  
the CEO, CFO and CRO of ING Group;  
the vice-chairman and head of Market Leaders of ING Bank;  
the head of Challengers & Growth Markets of ING Bank;  
the head of Wholesale Banking of ING Bank; and  
the chief operations officer of ING Bank. The MBB reports to the Executive Board of ING Group. Marked-to-market (MTM) Valuing a security, portfolio or account against its market value instead of its carrying value. Market risk Market risk is the risk that movements in market variables, such
as interest rates, equity prices, foreign exchange rates, credit spreads and real estate prices, negatively impact the banks earnings, capital, market value or liquidity position. Master agreement Contract between parties in which agreements are reached
for most of the terms and conditions of future transactions, so that negotiations only focus on deal-specific terms. Well-known master agreements include ISDA (for
over-the-counter derivative transactions), GMRA (for repo or repurchase transactions) and GMSLA (for securities-lending transactions). Minority interest That part of the profit or loss and net assets of a
subsidiary attributable to an interest that is not owned, directly or indirectly, by the parent company. Minimum requirement of eligible liabilities (MREL) The institution-specific loss absorption and recapitalisation requirement established in the EU Bank Recovery & Resolution Directive based on the
resolvability assessment of the institution. Monetary assets and liabilities Assets and liabilities that are fixed in terms of units of currency by contract or otherwise. Examples are cash, short or long-term accounts, notes receivable in cash
and notes payable in cash. Money market risk Money market risk arises
when ING Bank places short-term deposits with a counterparty in order to manage excess liquidity. As such, money market deposits tend to be short-term in nature. In the event of a counterparty default, ING Bank may lose the deposit placed. Money
market risk is measured as the notional value of the deposit, excluding any accrued and unpaid interest or the effect of any impairment Monte Carlo simulation A model to calculate value at risk, assuming that changes in risk factors are normally distributed together, taking into account
non-linear behaviour of financial products.






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Mortgage-backed securities (MBS) A security with cash flows backed by typically the principal and/or the interest payments of a pool of mortgages. Net asset value Used in the equity method of accounting. The initial net
asset value of the investment is determined by the fair value of the assets and liabilities of the investee. After the initial valuation of assets and liabilities of the investee at fair value, the assets and liabilities of the investee are valued
in accordance with the accounting policies of the investor. The profit and loss account reflects the investors share in the results of operations of the investee. Net present value at risk (NPV at risk) NPV at risk measures the impact of
changing interest rates on value. As a full valuation approach is applied, the risk figures include convexity risk that results from embedded optionalities like mortgage prepayment options. Net promoter score Net promoter score (NPS) is a way of measuring customer
loyalty and satisfaction. Its based on a direct question: How likely is it that you would recommend our company/product/service to a friend or colleague? Promoters respond with a score of 9 or 10 (out of 10) and are considered
loyal enthusiasts. Detractors are those who respond with a score of 0 to 6 (unhappy customers). Scores of 7 and 8 are passives, and will only count towards the total number of respondents, but not directly affect
the formula. NPS is calculated by subtracting the percentage of customers who are detractors from the percentage of customers who are promoters. Nominal value
of share Dutch shares have a nominal value, which is mentioned on all issued share certificates. Shares must be issued against at least the nominal value. The
nominal value remains fixed, as opposed to the market value, which fluctuates. Nomination Committee The Nomination Committee, consisting of members of the Supervisory Board, assists the Supervisory Board on aspects such as the composition of the Supervisory Board and
Executive Board. Notional amounts Represent units of account, which in
respect of derivatives, reflect the relationship with the underlying assets. They do not reflect, however, the credit risks assumed by entering into derivative transactions. Obligor This is a person or entity whos legally obliged to provide
some benefit or payment to another. Financially, it usually refers to a bond issuer whos obligated to make payments on the principal and interest of the outstanding debt.


Operating lease A contract
that allows use of an asset, but not ownership of the asset. Different than a finance lease. Operational risk The risk of direct and indirect loss resulting from inadequate or failed internal processes, people and systems or from external events. Orange Code INGs framework for a common corporate culture to unite
employees. Developed with input from employees, the code is based on the principle of integrity above all. It comprises values and behaviours. Values are those non-negotiable promises we make to
the world no matter what. These are: we are honest, we are responsible and we are prudent. Behaviours are the commitments we make to each other and the standards by which we measure each others performance: You take it on and make it happen,
you help others to be successful and you are a step ahead. The Orange Code underpins all of INGs people processes and tools including performance management. Ordinary share An equity instrument that is subordinated to all other
classes of equity instruments. Ordinary shares participate in the net profit for the financial year after other types of shares such as preference shares. Outstandings Total amount of all drawn portions of a facility and thus the
sum of all transactions of a specific facility. Over-the-counter instrument A non-standardised financial instrument not traded on a stock exchange, but directly between market participants. Performing loans Loans for which customers currently meet and are expected
to meet their financial obligations in full and on time. Plan assets Comprise assets held by a long-term employee benefit fund and qualifying insurance policies. Assets held by a long-term employee benefit fund are assets (other than non-transferable financial instruments issued by the reporting enterprise) that:  
are held by an entity (a fund) that is legally separate from the reporting enterprise and exists solely to pay or fund employee benefits; and  
are available to be used only to pay or fund employee benefits, are not available to the reporting enterprises own creditors (even in bankruptcy), and cannot be returned to the reporting enterprise, unless either
the remaining assets of the fund are sufficient to meet all the related employee benefit obligations of the plan or the reporting enterprise, or the assets are returned to the reporting enterprise to reimburse it for employee benefits already paid.






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A qualifying insurance policy is an insurance policy issued by an insurer that is not a related party of the reporting
enterprise, if the proceeds of the policy:  
can be used only to pay or fund employee benefits under a defined benefit plan; and  
arent available to the reporting enterprises own creditors (even in bankruptcy) and cant be paid to the reporting enterprise, unless either the proceeds represent surplus assets that arent needed
for the policy to meet all the related employee benefit obligations, or the proceeds are returned to the reporting enterprise to reimburse it for employee benefits already paid. Post-employment benefit plans Formal or informal arrangements under which a
company provides post-employment benefits for one or more employees. Post-employment benefits are employee benefits other than termination benefits and equity compensation benefits, which are payable after the completion of employment. Pre-settlement risk Pre-settlement risk arises when a counterparty defaults on a transaction before settlement and ING Group has to replace the contract by making a trade with another counterparty at the then prevailing (possibly
unfavourable) market price. The pre-settlement risk (potential or expected risk) is the cost of ING Group replacing a trade in the market. This credit risk category is associated with dealing room products, such as options, swaps, and securities financing transactions. Where there is a mutual exchange of
value, the outstanding amount is generally based on the replacement value (mark-to-market) plus potential future volatility concept, using an historical seven-year time
horizon and a 99% confidence level. Private placement A placement in
which newly issued shares or debentures come into possession of a limited group of subscribers who are prepared to buy the new securities. Projected unit credit
method This has to do with employee benefit plans, such as retirement plans. Its an actuarial valuation method that considers each period of service as
giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Probability of default (PD) The likelihood that a customer or counterparty will default. Problem
loans In line with IFRS, if a borrower defaults on payment for more than 90 days, or a customer is likely to default payment, the particular loan and all other
positions will be regarded as problem or non-performing loans.


Qualifying asset (related to borrowing costs) An asset that necessarily takes a substantial period of time to get ready for its intended use or sale. Recognition The process of incorporating in the balance sheet, or profit and
loss account, an item that meets the definition of an element and satisfies the following criteria for recognition:  
Its probable that any future economic benefit associated with the item will flow to or from the enterprise; and  
The item has a cost or value that can be measured reliably. Recoverable amount The higher of an assets fair value less costs of disposal and its value in use. Recovery plan As a consequence of the global financial crisis, ING Bank has
set up an all-encompassing recovery planning process. It aims to improve the banks readiness and decisiveness to tackle financial crises on its own. Redemption value With respect to investments in fixed-interest securities,
the amount payable on the maturity date. Regulatory capital (RC) The
minimum amount of capital that a bank is required to hold in order to absorb unexpected losses. RC is calculated using regulatory approved internal models. Remuneration Committee The Remuneration Committee, consisting of members of
the Supervisory Board, advises the Supervisory Board on aspects such as the terms and conditions of employment of Executive Board members and senior managers of ING and its subsidiaries. This includes their remuneration, as well as the policies and
principles that the employment terms and conditions are based on. Repurchase agreement (Repo) The sale of a financial instrument combined with an agreement to repurchase the same instrument at a future date. Resolution plan Resolution planning sets out which action needs to be taken
if the bank is found to be failing in order to continue its critical functions and avoid significantly adverse effects on financial stability while minimising public financial support. The Single Resolution Board (SRB) and the National Resolution
Authorities (NRAs) are responsible for resolution planning and resolution of a bank and to that end determine the strategy for ING, based on information that ING provided on critical functions, the financial, legal, operational, and organisational
structure and internal and external interdependencies.






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Return on equity (ROE) The
return on equity is the net result as a percentage of average equity. Its used as a measurement of a companys profitability and efficiency. Reverse
repurchase agreement (Reverse repo) The purchase of a financial instrument with the agreement to sell it at a specific future date. Risk Committee The Risk Committee, consisting of members of the Supervisory
Board, assists the Supervisory Board in monitoring the risk profile of the company, as well as the structure and operation of the internal risk management and control systems. Risk-weighted assets (RWA) under Basel I Assets that are weighted for credit
risk according to a formula used by the Dutch Central Bank (De Nederlandsche Bank), which conforms to the capital adequacy guidelines of the BIS (Bank of International Settlements). On- and off-balance-sheet items are weighted for risk, with off-balance-sheet items converted to balance-sheet equivalents (using credit conversion factors) before being allocated a
risk weight. Risk-weighted assets (RWA) under Basel II Assets that are
weighted for credit and market risk in accordance with the Basel II methodology. The risk-weighted assets are calculated using internal models approved by the Dutch Central Bank (De Nederlandsche Bank). Regulatory capital requirements for
operational risk are calculated without the use of risk-weighted assets, but are included in the total risk-weighted assets reported. In the CRR/CRD IV, the term RWA is replaced by Total Risk Exposure Amount, but for now we follow common
usage. Settlement risk Settlement risk arises when there is an exchange
of value (funds, instruments or commodities) for the same or different value dates or times, but the receipt wont be verified or expected until ING Group has paid or delivered its side of the trade. The risk is that ING Group delivers, but the
counterparty doesnt. Significant influence The power to
participate in the financial and operating policy decisions of an entity, but not to have control over these policies. Significant influence may be gained by share ownership, statute or agreement. Stakeholder A stakeholder is a person or group with an interest in ING. We
distinguish the following groups: customers (individuals, families, small businesses, large corporations, financial institutions, governments, public-private entities and supranational agencies), capital providers, employees, supervisors,
regulators, civil society organisations, citizens and society at large.


Stress testing Stress testing
examines the effect of exceptional but plausible scenarios on the capital position of ING. Stress testing can be initiated internally or be external parties such as the European Central Bank. Structured entity An entity that has been designed so that voting or similar
rights are not the dominant factor in deciding who controls the entity, such as when voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements. Subsidiary An entity that is controlled by another entity. Sub-sovereign supranationals and agencies (SSA) SSAs comprise, among others, multilateral development banks, regional governments, local authorities and US agencies. Under certain conditions, SSA bonds may qualify as
Level 1 High Quality Liquid Assets for LCR. SSA categories are defined per:  a.
The EU-regulation (EU) 575/2013 CRR, which defines exposure classes in Article 112  Article 132 (CRR);  b.
The exemption list in Article 2 of the directive 2013/36/EU (CRD IV); and  c.
Delegated act on Liquidity Covered Ratio (EU) 680/2014 (Directive on LCR). Sustainable assets under
management / socially responsible investments Assets of customers registered at ING Bank that are defined as sustainable following an assessment of
environmental, social and governance (ESG) parameters / criteria. Sustainable engagement score The extent to which employees are motivated, enabled and energised to perform at their best and help ING to succeed. Sustainable transitions financed Sustainable transitions financed describes
the business that we do with clients who are environmental outperformers in their sectors as well as projects that provide sustainable solutions. The definition by which projects should be tagged as a sustainable solution or by which a client is
tagged as an environmental outperformer is determined by ING sector strategies and consists of:  a.
ING Groenbank: total assets on the balance sheet  b.
Loans to Renewable energy: Renewable energy projects include biomass, geothermal, hydro, solar, offshore and onshore wind power generation.  c.
Loans to Sustainable Real Estate: Sustainable Real Estate projects include the financing of sustainable buildings (certified with a BREEAM, LEED, HQE or DGNB, or with an EPC label of C or higher)  d.
Loans to other sustainable projects: Other sustainable projects include energy efficiency, greenhouse gas reduction, climate change mitigation, waste management, water efficiency, public transport and social welfare.  e.
Loans to environmental outperformers: Clients that are identified as environmental outperformer either by an independent reputable data provider or by ING client due diligence Know Your Customer process






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Swap contracts Commitments to
settle in cash at a specified future date, based on differentials between specified financial indices as applied to a notional principal amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by
either party. Tier 1 capital The Tier 1 capital of an institution
consists of the sum of the common equity Tier 1 capital and additional Tier 1 capital. Tier 1 ratio Reflecting the Tier 1 capital of ING Bank as a percentage of its total risk-weighted assets. Tier 2 capital Tier 2 capital shall consist of the following:  a.
Capital instruments and subordinated loans where the conditions laid down in Article 63 (CRR) are met;  b.
The share premium accounts related to instruments referred to in point (a.);  c.
For institutions calculating risk-weighted exposure amounts in accordance with Chapter 2 of Title II of Part Three, general credit risk adjustments, gross of tax effects, of up to 1,25 % of risk-weighted exposure
amounts calculated in accordance with Chapter 2 of Title II of Part Three of the CRR; and  d.
For institutions calculating risk-weighted exposure amounts under Chapter 3 of Title II of Part Three, positive amounts, gross of tax effects, resulting from the calculation laid down in Articles 158 and 159 up to
0.6 % of risk-weighted exposure amounts calculated under Chapter 3 of Title II of Part Three of the CRR. Total loss-absorbency capacity
(TLAC) The minimum loss-absorbing and recapitalisation standard that the Financial Stability Board (FSB) issued for Global Systemically Important Banks (G-SIBs). The TLAC standards aim to bolster G-SIBs capital and leverage ratios, ensuring critical functions to continue without threatening financial market stability or
requiring further public financial support. Trading portfolio Comprises
financial instruments held to obtain short-term transaction results, to facilitate transactions on behalf of customers or to hedge other positions in the trading portfolio. Transfer risk Probability of loss due to currency conversion (exchange)
restrictions imposed by a foreign government that make it impossible to move money out of the country.


Treasury bills Generally,
these are short-term debt certificates issued by a central government. Dutch Treasury Certificates are regarded as Dutch Treasury Bills. Treasury shares An entitys own equity instruments, held by the entity or other members of the consolidated group. Underlying result Underlying result is a financial performance measure used
by ING Group to evaluate the results of its banking segments and is derived by excluding the following from IFRS-IASB: special items, the impact of divestments and Legacy Insurance. Value at risk (VaR) Value at risk is a technique that uses the statistical
analysis of historical market trends and volatilities to estimate the likelihood that a given portfolios losses will exceed a certain amount. The VaR for
market risk quantifies, with a one-sided confidence level of 99%, the maximum overnight loss that could occur due to changes in risk factors (e.g. interest rates, equity prices, foreign exchange rates, credit
spreads, implied volatilities) if positions remain unchanged for a time period of one day. Note that risk due to DVA and CVA sensitivities is not covered in this trading risk measure. Next to general market movements in these risk factors, VaR also
takes into account market data movements for specific moves in e.g. the underlying issuer of securities. The impact of historical market movements on todays
portfolio is estimated, based on equally weighted observed market movements of the previous year. ING Bank uses VaR with a 1-day horizon for internal risk measurement, control and backtesting, and VaR with a 10-day horizon for determining regulatory capital. Value in use The present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Variance-covariance A model to calculate value at risk, assuming that
changes in risk factors are normally distributed jointly and that the change in portfolio value is linearly dependent on all risk factor changes. Warrant A financial instrument that gives the holder the right to purchase ordinary shares.






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|ING Group Annual Report on Form 20-F 2016 |  | F-240 |  |