Contents | Report of the Executive Board | Corporate governance | Consolidated annual accounts | Parent company annual accounts | Other information | Appendices > The world around us
Short-term and long-term interest rates in the eurozone in 2018 10 year government bond Germany (%) 3 month euro area interbank (%)
ING is committed to playing a meaningful role in the banking sector’s fight against climate change.
There is more than one road to Paris – initiatives must be taken by governments, companies and people. We continue to build on the products and services we’ve launched in previous years to keep making progress on climate change, as required by many of our stakeholders.
For a full overview of our performance related to our material topics, see the infographic above.
Innovation is a strategic priority for ING. It is important that ING not only transforms into an innovation-enabled organisation, but also increases the number of adjacent and disruptive innovations in the market.
In most of our retail markets we offer a full range of banking products and services, covering payments, savings, investments and secured and unsecured lending. Wholesale Banking provides specialised lending, tailored corporate finance, debt and equity markets solutions, working capital, payments and cash management and trade and treasury services.
Contents | Report of the Executive Board | Corporate governance | Consolidated annual accounts | Parent company annual accounts | Other information | Appendices > Our business create the Bancontact Payconiq Company. Conceived by ING in 2014, Payconiq is a joint initiative with AXA Bank, Belfius, BNP Paribas Fortis, KBC, Rabobank and Volksbank. It allows users to pay for online and in-store purchases with their mobile phones, instantly and seamlessly connecting to their bank account. In 2018, 34 million mobile payments were processed through either Bancontact or Payconiq, which is about twice as many as in 2017.
Banking it means being the lender of choice and having an appropriate volume of flow products in
In February, ING acquired a 90 percent stake in Dutch digital real estate platform Makelaarsland, which connects home buyers and sellers directly, without the need for a real-estate broker. We teamed up with insurer AXA in June to offer customers personalised insurance services in a clear and easy way via the ING mobile app. And we announced partnerships with SME lending platforms
To close the year, ING completed a live commercial paper transaction on a new euro debt application, built on R3’s Corda platform. We participated as the dealer and escrow agent in the issuance of €100,000 notional with a one-day maturity, together with Natixis, Rabobank and
Think Forward Initiative Surveys in recent years show that 42 percent of households in Europe struggle to make ends meet. The Think Forward Initiative (TFI) is a community of experts that investigates people’s money choices and what influences their financial decisions. It uses data-driven research with a focus on behavioural economics to learn more about people’s decision-making habits and uncover actionable insights. Those insights can help change their behaviour and ultimately improve their financial well-being. Core sponsors include ING, Deloitte, Dell/EMC, Dimension Data,
Financial Markets recorded an underlying result before tax of €-40 million compared with €82 million in 2017. The drop in result was caused by lower income, which was impacted by lower client activity and challenging global market conditions, partly offset by a modest decline in expenses.
Total underlying income of Wholesale Banking fell 2.4 percent to €5,781 million compared with 2017, mainly reflecting lower revenues in Financial Markets and the loss on the intended sale of an
A total of 4,100 leaders and managers have so far participated in TFLP and TFLE. This includes almost all top-level management and almost 60 percent of people managers. We launched Phase 2 in 2018 for our senior leaders, focusing on sustained performance, talent management and performance transparency. The programme was recognised externally by Learning Technologies magazine with a Silver Award for the Best use of Blended Learning – International.
October 2016. Two salient risks it identifies for our own workforce are discrimination (diversity and inclusion) and work stress. See below for how we are addressing these two topics.
As part of our commitment to a diverse and inclusive organisation, our CEO Ralph Hamers signed the United Nations’ Global Compact Women Empowerment Principles in 2018. We also supported the UN Standards for Combatting LGBTI Discrimination in the Workplace. Our support of these standards will continue to guide our approach and be a source of learning for our own practices to combat discrimination and promote diversity and inclusion.
ING will strive to meet a post Basel IV CET1 ratio ambition of around 13.5% and, as before, it will continue to execute its strategy for its clients and to aim at delivering growth at good returns.
This annual event provides practitioners (export credit agencies, EP financial institutions, commercial banks, development institutions, etc.) with an opportunity to update each other on recent developments with regard to environmental, health, safety and social due diligence, and to exchange views to enhance collaboration.
In this integrated annual report we also look forward and share our vision, ambitions, strategy, opinion and plans for the future. These forward-looking statements can be recognised by terms such as:  aims
The sharpened focus on non-financial risk, the big steps ING is making in accelerating the implementation of the Think Forward strategy and the transformation across the organisation to support that make it crucial to set clear priorities with regard to allocating talent, capital and management resources.
In 2018, the Supervisory Board attended special knowledge days and educational sessions on a range of topics, and did ‘deep-dives’ into ING’s businesses, including ING in Germany. Together with the MBB, we visited ING offices in Milan and Madrid. These were worthwhile activities that provided us with valuable insights into ING’s businesses and important topics.
Executive Board remuneration policy, the investigation by Dutch authorities and the EBA Guidelines on Internal Governance.
Organisational Health Index, ING’s global job evaluation framework, and performance management and remuneration practices. These educational sessions and visits also provided opportunities for
The Audit Committee met five times in 2018. On average, 95 percent of the members were present at the scheduled meetings. The Audit Committee discussed the quarterly results, the interim accounts and the annual accounts. Key audit matters, as included in the auditors’ reports, were also a topic of discussion.
Supervisory Board, with the Supervisory Board approving those items as required from a governance perspective. In each quarterly Risk Committee meeting both the financial and nonfinancial risk reports were discussed, including the status of ING’s metrics with regard to solvency risk, liquidity and funding risk, credit risk, country risk, market risk, non-financial risk and compliance risk. Stress-testing scenarios, including the impact of the 2018 EBA EU-wide stress test, were also discussed. Also the review of the Risk function was discussed. Furthermore, in 2018 the
General Meeting is required for these repurchases. Under Dutch law, this authorisation lapses after 18 months. Each year, a proposal is made to the General Meeting to authorise the repurchase of shares by the Executive Board.
Financial Supervision Act (or the predecessor of this legislation), are shown on in the ‘ING shares’
Contents | Report of the Executive Board | Corporate governance | Consolidated annual accounts | Parent company annual accounts | Other information | Appendices > Corporate Governance minutes are made available on the website of ING Group (www.ing.com/18ar015). By exception to the provisions of the Dutch Corporate Governance Code, shareholders will not have the opportunity to react to the minutes of a General Meeting if a notarial report of the meeting is made, as this would be in conflict with laws applicable to such notarial report.
Currently, there are no female members in the Executive Board, although that ambition of gender diversity remains unchanged. This remains a key topic for the Supervisory Board with respect to succession planning and future appointments to the Executive Board.
Member and CRO of the Executive Board of ING Groep N.V. and member and CRO of the
Board will nominate Tanate Phutrakul for appointment as a member of the Executive Board of ING
In case of a conflict of interest, the relevant member of the Supervisory Board abstains from discussions and decision-making on the topic or the transaction in relation to which he or she has a conflict of interest with ING Group.
financial, (ii) non-financial and (iii) risk. Within each of these three dimensions specific criteria are used to measure performance (e.g. customer, people, return on equity, cost/income, non-financial risk score and operational excellence).
For this ratio, ING deems most relevant the total direct compensation of the CEO compared to the average total direct compensation of more than 54,000 ING employees worldwide. On that basis, the internal ratio in 2018 was 1:29. For the sake of transparency we also calculated the ratio of the total direct compensation of the other Executive Board members compared to the average total direct compensation of all ING employees. On that basis the internal ratio in 2018 was 1:20.2 The lower ratios compared with last years‘ ratio, is a result of the fact that the Executive Board (including the CEO)
The new platform is truly modular and makes use of all of ING’s global IT building blocks (e.g. Touch Point Architecture, ING Private
Reference is made to Note 1 ‘Accounting policies’ for information in Changes in accounting principles, estimates and presentation of the Consolidated annual accounts and related notes.
For lessee accounting, the new standard removes the distinction between operating or finance leases. All leases will be recognised on the statement of financial position with exemptions 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 standard permits a lessee to choose either a full retrospective or a modified retrospective transition approach. Furthermore the standard provides some practical expedients and exemptions. ING has opted to apply for periods starting from 1 January, 2019 the modified retrospective approach and will make use of several of these practical expedients and exemptions permitted under the standard. Lessor accounting remains substantially unchanged.
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.
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
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.
Approximately 99% (2017: 99%) of the exposure in the ABS portfolio is externally rated AAA, AA or
In 2018, 2017 and 2016 respectively, ING Groep N.V. issued nil, nil and USD 1,000 million Perpetual
In 2017, the Available-for-sale revaluation reserve decreased by EUR 383 million mainly due to the revaluation of shares in Bank of Beijing EUR –479 million, partly offset by revaluation of shares in
Interest income on financial assets at fair value through profit or loss 1,795 n/a n/a
In 2016, Dividend income mainly consists of dividend received from ING’s equity stake in Bank of
Group. The purpose of the option and share schemes, apart from promoting a lasting growth of ING
The weighted average share price at the date of exercise for options exercised during 2018 is EUR
As at 31 December 2018, total unrecognised compensation costs related to share awards amount to EUR 29 million (2017: EUR 37 million; 2016: EUR 41 million). These costs are expected to be recognised over a weighted average period of 1.4 years (2017: 1.4 years; 2016: 1.4 years).
Special items in 2016 primarily comprise restructuring charges and impairments related to the intended digital transformation programmes as announced in October 2016.
4 Underlying figures are derived from figures according to IFRS by excluding the impact of special items, Insurance Other, and discontinued operations.
Rest of Europe Poland ING Bank Slaski S.A Wholesale / Retail 8,829 8,664 8,735 1,229 1,119 992 33,040 29,976 26,581 525 444 379 128 112 90
receives fees. The pension fund has not engaged ING in any swap or derivative transactions to manage the risk of the pension funds.
(equity) is EUR -453 million (EUR -394 million after tax) as at 31 December 2018 (2017: EUR -476 million, EUR -400 million after tax).
– Assets designated as at fair value through profit or loss 2,887 4,242 2,887 4,242
3 The 2018 presentation was prospectively changed together with other IFRS9 changes and includes the reclassification of accrued interest from other assets and other liabilities to the corresponding balance sheet item of the host contract.
 Exeptional Valuation Adjustments – Exceptional valuation adjustments are valuation adjustments of temporary nature and are subject to approval of GP&IC.
Realised gain/loss recognised in the statement of profit or loss during the period1,3 –54 –232 109 –45 10 –20 4 1 45 –273
The net notional amounts presented in the table are a combination of payer (-) and receiver (+)
Apart from the third party funding, these securitisations did not impact ING Group’s Consolidated statement of financial position and profit or loss.
The MoRM department is one of the cornerstones of ING’s risk model governance. The department sets and maintains a model risk framework containing the (1) governance setting the responsibilities, (2) the model risk appetite, (3) model risk management policies and standards as well as (4) the model management inventory and tooling. MoRM monitors global model risk and model performance.
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.
ING’s risk management function & assess their potential impact; benchmarking current risk framework versus regulatory developments; re-assessing known risks to confirm risk level or detect potential changes; and reflecting on the current set of Risk Appetite Statements.
Detailed and comprehensive models are used to calculate the impact of the scenarios. 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 macroeconomic and market variables as input variables. The calculations are in
Decisions like this have been informed by energy transition risk assessment as well as our own internal climate ambition to steer our portfolio towards the goals of the Paris Agreement.
 Reference benchmarks: being the maximum appetite of credit risk per legal one obligor group. It is expressed as a (benchmark) exposure at the concentration risk level, which corresponds to
Local / Regional Authorities. BB rating class increased outstandings in Retail Challengers & Growth
Australia (10.6%). Given the size of the Dutch mortgage portfolio, the valuation methodology to determine the cover values for Dutch residential mortgages is provided below.
Of the total ING Bank portfolio, 81.5% of total outstandings is classified as stage 1, while stage 2 and 3 make up 5.1% and 1.3% of total outstandings, respectively. The remaining 12.1% of the outstandings is not measured in accordance to IFRS 9 impairments (mainly guarantees, letters of credit and pre-settlement exposures).
Wholesale Banking forborne portfolio were mainly concentrated in Natural Resources, Real Estate and Transportation & Logistics. Together they accounted for 65% (2017: 72%) of the total
Within the trading portfolios, positions are maintained in the financial markets. These positions are often a result of transactions with clients and may serve to benefit from short-term price movements. In 2018, ING continued its strategy of undertaking trading activities to develop its client-driven franchise and deliver a differentiating experience by offering multiple market and trading products.
Minimum Maximum Average Year end amounts in millions of 1 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.
3 In order to make sure that all the tables in the Market risk in trading books are aligned, the scope of all the tables has been set to include all portfolios that are part of the trading book regulatory capital for both 2018 and 2017. In the Annual report of 2017 the table above included only the portfolios that are part of ING’s Financial Markets business line.
For the stress lens, the risk appetite is set such that there is sufficient counterbalancing capacity in the form of liquid assets under different internally defined stress scenarios. From the Sustainability perspective, an internally defined Stable funding to Loans ratio (supplemented by other metrics) is used to have a diversified funding base and to prevent overreliance on (short term) professional funding. Finally, the regulatory metrics Liquidity Coverage Ratio (LCR) and NSFR (Net Stable Funding
FATCA. While the existence of IGAs will not eliminate the risk of the withholding described above, these agreements are expected to reduce that risk for financial institutions and investors in countries that have entered into IGAs. IGAs often require financial institutions in those countries to report information on their US account holders to the taxing authorities of those countries, who then passes the information to the IRS.
ING applies an explicit Risk Appetite Statements regarding business risk, focusing on earnings stability and diversification of the business mix, as avoiding to put all eggs in one basket reduces the risk that volumes and/or margins will suddenly drop due to unexpected changes in the business environment for certain markets and products. Furthermore, the underlying risk types (expense risk and volume-margin risk) are also 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 projected cost/income ratio. Deviations from this ambition are monitored as part of the financial projections that are discussed continuously within different parts of the organisation.
Changes in ING Groep N.V. shares held by group companies 4 7 2 Receivables from Group companies
Contents | Report of the Executive Board | Corporate governance | Consolidated annual accounts | Parent company annual accounts | Other information | Appendices > Staff expenses > 6 6 Staff expenses
 lower interest rates may cause asset margins to decrease thereby lowering our results of operations. This may for example be the consequence of increased competition for investments as result of the low rates, thereby driving margins down; and/or
We are subject to detailed banking laws and government regulation in the jurisdictions in which we conduct business. Regulatory agencies and supervisors have broad administrative power and enforcement capabilities over many aspects of our business, which may include liquidity, capital adequacy, permitted investments, ethical issues, money laundering, anti-terrorism measures, privacy, recordkeeping, product and sale suitability, marketing and sales practices, remuneration policies, personal conduct and our own internal governance practices. Also, regulators and other supervisory authorities in the EU, the US and elsewhere continue to scrutinise payment processing and other transactions and activities of the financial services industry through laws and regulations governing such matters as money laundering, anti-terrorism financing, tax evasion, prohibited transactions with countries or persons subject to sanctions, and bribery or other anti-corruption measures.
(‘CFTC’) as a swap dealer. The SEC is expected to adopt regulations establishing registration and
Many countries, including the Netherlands, have entered into agreements (‘intergovernmental agreements’ or ‘IGAs’) with the US to facilitate the type of information reporting required under
ING as a deductible interest expenses for Dutch corporate income tax purposes and as exempt for
G e n e ri c e n g in e e ri n g **
-Our material topics -Sustainability and climate change governance of Note 53 – ING Group Risk Management -ING Values, Purpose and Strategy (www.ing.com/18ar040)
Total carbon per FTE in tonne 0.9 1.0 1.2 1 The carbon total is the sum of scope 1, 2 and 3 emissions. The total can deviate from the sum of all categories due to rounding-up to kilotonnes. Our calculation methodology and scope are defined in ING’s Non-financial data reporting protocol.
Special items include items of income or expense that are significant and arise from events or transactions that management consider distinct from the regular operating activities. These may either be recurring or non-recurring in nature but must be of a significant size to qualify as a special item. Disclosures on comparative periods also reflect the impact of current period's divestments. Legacy Insurance consists of 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.
* average shareholders’ equity calculated based on quarter-end figures after excluding 'interim profit not included in CET1 capital' as from 31 March 2017.