Zealand and agreed to enter into a strategic partnership with Bank of New York in the field of
Care for clients We would like to thank our clients and business partners for their confidence in ING. We will continue to offer them a wide range of insurance, banking and asset management products through the distribution channel of their choice, whether it be the internet, a call centre, a branch office, or a personal adviser. Although the larger part of ING’s income stems from retail financial services, we will continue to offer wholesale services in selected markets, with the emphasis on Europe, to serve our corporate and global clients.
S T RU C T U R E A N D C O M P O S I T I O N
WORKING AT ING HOUSE             
ING is now the established insurance leader, holding number-one positions in P&C
Zealand, ING New Zealand manages about 16% of all mutual funds in the country, making it the number-three player in terms of assets under management. With two joint venture operations in life insurance in China and a 44% stake in ING Vysya Bank,
“These open areas let you exchange information with colleagues in a very relaxed way,” is her analysis of her new working environment.
totalled EUR 449 billion at year-end 2002 with EUR 161 billion in mutual fund assets,
EUR 159 billion in assets held for ING companies. As from 2003, the regional ING Investment Management business units have been integrated into the respective regional executive centres.
In this connection, the Supervisory Board visited the American operations in May 2002.
The Remuneration and Nomination Committee met twice. The remuneration system of Executive
Board members was discussed, especially in connection with the management levels below the Executive Board. In the light of international developments, the ratio between fixed and variable remuneration was reviewed as well as the parameters that determine the variable part of the remuneration. This took place with the help of external expertise and on the basis of various benchmarks. The outcome was that both the remuneration system and the level of remuneration need to be adjusted. The way in which the remuneration of the Executive Board and the Supervisory Board is disclosed was also discussed.
Based on its new objectives, the Stichting will give priority to the interests of shareholders and holders of depositary receipts. The Board will consist entirely of independent members and will be obliged to explain its voting behaviour at the General Meeting of Shareholders. The new
and to lay them down in new charters. It was also decided to establish a new committee: the
Board bid farewell to three Supervisory Board members who, all from their own background and with their specific experience and expertise, have been of exceptional significance. This calls for a special word of thanks for the way in which they have devoted their talents to ING.
were adopted by the Supervisory Board and have now been submitted for the approval of the General Meeting of Shareholders. This also goes for the dividend for 2002, which has been set at EUR 0.97 per share. After the interim dividend of EUR 0.48 per share, the final dividend will amount to EUR 0.49 per share.
4,252 million. Operational profit before taxation decreased by 1.7% to EUR 5,641 million. Excluding the strong impact of risk costs in banking and investment losses in insurance, the gross result improved by 15.3% to EUR 7,629 million. The effective tax rate decreased from 20.3% to 18.7%, among others due to tax-exempt realised gains and the release of a tax provision.
The strong increase in the interest result compensated the big drop in other income. Total operating expenses – including the restructuring provision for international wholesale banking of
intends to fully fund the cash element by selling in the market the depositary receipts that would have been issued if stock was chosen instead of cash. The value of the dividend in cash will be 0% to 4% lower than the dividend in stock.
equity. Various other measures such as reduction of the risk-weighted assets of the banking operations also improved capital adequacy ratios. In addition, the risk of further negative revaluation of equity investments has been limited by hedging transactions to an amount of
Furthermore, ING will continue its efforts to improve its efficiency, return on equity, return on required capital (insurance), risk-adjusted return on capital (banking) and debt/equity ratios.
ING Europe’s aim is to be a top-five European financial institution, offering a variety of insurance, banking and asset management products and services to retail and wholesale clients through a number of distribution channels.
The new shared service centres are for mortgages and insurance claims handling in the Netherlands, international payments and securities processing.
South West Europe Retail activities were affected most by the difficult economic environment but Wholesale managed to almost compensate the resulting difference. Within Wholesale, Financial Markets made particularly good progress thanks to advances in derivatives and steady progress in other activities.
Europe is also facing a low-growth economic environment in the near future. To offset the effects on income and results, expense levels must be lowered but at the same time the quality level of both products and service must be improved. The operations/IT work in progress to create shared service centres and upgrade and standardise IT-infrastructure and applications plays a critical role in this process.
A further goal for 2003 will be to take advantage of the transfer of ING Investment
A headcount reduction of 2,700 (full-time equivalents) across the region contributed to an overall expense reduction of over EUR 400 million, a reduction of 17.2% organically. Back-office locations were reduced in the US (from fourteen to eight) and Mexico (from nine to three). The legal structure was simplified by eliminating ten separate legal entities. Country platforms were created in Mexico, the US and Canada, helping to promote synergies and reduce overhead costs.
América, one of the country’s top insurance companies with seven million customers. ING
Three products in particular sold well in 2002: fixed annuities, guaranteed mutual funds and the ING Direct savings accounts.
Life Insurance Company (United States) reached a settlement with plaintiffs in a class-action lawsuit valued at approximately USD 65 million.
In 2003 there will be more active monitoring of ING Americas’ business performance to ensure the region is delivering a proper return on capital deployed. Benchmarks that will play a more central role are net earnings, efficiency, internal rate of return on new business and return on equity. There will also be close monitoring to track the quality of customer service.
In New Zealand, ING New Zealand manages about 16% of all mutual funds in the country, making it the number-three player by assets under management.
Life (ICL) in Dalian province. PALIC ranks fourth in terms of new business premium among life insurance companies in Shanghai with an 8.6%
It has 5% of deposits (of foreign and private banks) and 450 branches. ING also operates a life insurance joint venture called ING Vysya Life.
Better e-business ING improved its e-business platforms during the year. Self-service platforms were enhanced for clients and advisers throughout the region.
In the institutional business, a shift in focus from relative performance (compared to a benchmark) to absolute performance is becoming noticeable. In addition to an
Investment Management was able to help a number of clients manage their downside risks.
Baring Asset Management launched new specialist products, for example in the area of managing high-yield bond collateralised debt obligations.
Real estate ING Real Estate is an international organisation, operating as asset manager, developer and financier. With EUR 37 billion assets from both third-party clients as well as ING, ING Real Estate ranks in the top-three of global real estate asset managers.
The hedge fund assets are principally managed by ING Investment Management in the
(IVR or the internet). ING Direct cafés and cooperation with intermediaries and tied agents from sister companies and third parties form a third supplementary channel. ING Direct makes use of intermediary networks to sell more complex products.
Expanding market positions in 2002 ING Direct Canada acquired First Marathon
(2%). The average credit rating of the fixedincome investment securities is AA–.
          -       
ING is characterised by a wide diversity of its employees and it is a challenge to derive maximum benefit from this. At all levels ING
desires its staff to be a representation of its client base and the geographic and cultural mix of the locations where the Group does business.
Bank’s lending and counterparty activities. The following table shows the regional specification of the addition to the provision for loan losses.
Credit risk ING Insurance Within the insurance companies there are detailed investment mandates also specifying the credit risk appetite. ING Insurance’s policy is to maintain a fixed-income investment portfolio with a diversified credit portfolio within acceptable internally and externally driven parameters.
I N T E R E S T R AT E R I S K The insurance operations are exposed to interest rate movements with respect to guaranteed interest rates and policyholders’ reasonable expectations with respect to crediting rates. The current product portfolio also comprises products where interest rate risks are entirely taken by the policyholder, thereby reducing ING’s exposure to interest movements.
(+31 411 652125) or by mail (P.O. Box 258, 5280 AG Boxtel, The Netherlands).
                  CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER before profit appropriation amounts in millions of euros
This consolidated profit and loss account is specif ied by insurance and banking operations and by Operational and Non-operational result on page 65.
The goodwill amounted to EUR 245 million and is charged to Shareholders’ equity. The interest in Sul
L E N D I N G A N A LY S E D B Y S E C U R I T Y
Salaries, pension and social security costs 2,765 2,732 4,787 5,064 7,552 7,796
This item includes the interest income and interest expense, results from interest-rate arbitrage, results from financial instruments to the extent that these serve to limit interest-rate and lending commission.
The change in the interest result compared with 2001 is due to an increase of the interest margin of
R A R O C B Y E X E C U T I V E C E N T R E
R A R O C B Y S E G M E N T
General Meeting of Shareholders to abandon the Dutch structure regime applied at ING Group level and to amend the Articles of Association of
(thus removing the 1% cap) and vote on these shares, without any limitations or maximum (thus removing the existing 1% voting limitation).
Cumulatief Preferente Aandelen ING Groep (which will be renamed Stichting Continuïteit ING) a call option on cumulative preference shares. Reference is also made to the information on page 90.
ING (‘Trust Office ING Continuity’) and that members of the Supervisory or Executive Board of ING can no longer have a seat on the Board of this Stichting.
– former CFO of Robert Bosch GmbH – is based on his extensive expertise and experience as board member of a multinational corporation, especially in the field of corporate finance and controlling. The proposed appointment of Wim
Appointment Executive Board ING Group: May 1998. Vice-Chairman as of May 2000. Joined ING
Base salary So far, the base salaries were reviewed every two years against developments in the market.
In 2003, to each member of the Executive Board 35,000 options with a term of ten years and vesting after three years were granted relating to the financial year 2002 (2001: 35,000). The exercise price of these options is EUR 12.65, being the Euronext Amsterdam Stock Market opening price of the ING Group share on
N U M B E R O F O P T I O N S O U T S TA N D I N G A N D E X E R C I S A B L E , A N A LY S E D I N A C C O R D A N C E W I T H Y E A R O F I S S U E
Registered Shares of ING Groep N.V. dated 24 January 1991 and most recently amended on 29 June 2001, we hereby report the following to the holders of depositary receipts.
Corporate Governance contained in Annex X of the Rules Relating to Securities of Euronext Amsterdam N.V.,
(x) changes in the policies of governments and/or regulatory authorities. ING assumes no obligation to update any forward-looking information contained in this document.
Investing – mutual funds, securities brokerage ING offers a wide array of investment products, such as country and sector mutual funds, both ING funds and third-party funds, and various forms of securities brokerage.