6-K 1 maindocument001.htm 6-K  

 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

 

For the period ended 30 June 2019

Commission File Number 1-14642 

 

 

ING Groep N.V.

 

Bijlmerplein 888 

1102 MG Amsterdam

 The  Netherlands 

 

 

 

Indicate by  check mark whether the registrant files or will file annual reports under cover of  Form 20-F  or  Form 40-F. 

 

Form 20-F             Form 40-F 

Indicate by  check mark if  the  registrant  is  submitting the Form 6-K in paper as permitted by  Regulation S-T Rule 101(b)(1):

  

Indicate by  check mark if  the  registrant  is  submitting the Form 6-K in paper as permitted by  Regulation S-T Rule 101(b)(7):

  

This Report on Form 6-K is hereby incorporated by reference into the Registration Statement on Form F-3 (File No. 333-227391) of ING Groep N.V. and the Registration Statements on Form S-8 (Files Nos. 333-215535, 333-172921, 333-172920, 333-172919, 333-168020, 333-165591, 333-158155, 333-158154, 333-149631, 333-137354, 333-125075, 333-108833, 333-81564 and 333-92220) of ING Groep N.V. and shall be a part thereof from the date on which this Report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.

  

 


 

 

Contents

Interim report

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

Contents

 

Interim report

       

Interim report

 

 

2

 

 

 

 

 

 

Condensed consolidated interim accounts

 

Condensed consolidated statement of financial position

 

 

8

 

Condensed consolidated statement of profit or loss

 

 

9

 

Condensed consolidated statement of comprehensive income

 

 

11

 

Condensed consolidated statement of changes in equity

 

 

12

 

Condensed consolidated statement of cash flows

 

 

14

 

 

 

 

 

 

Notes to the Condensed consolidated interim accounts

 

 

 

 

1   

Accounting policies

 

 

17

 

 

 

 

 

 

Notes to the Condensed consolidated statement of financial position

 

 

 

 

2

Financial assets at fair value through profit or loss

 

 

19

 

3

Financial assets at fair value through other comprehensive income

 

 

19

 

4   

Securities at amortised cost

 

 

20

 

5   

Loans and advances to customers

 

 

21

 

6   

Assets and liabilities held for sale

 

 

22

 

7

Financial liabilities at fair value through profit or loss

 

 

23

 

8

Debt securities in issue

 

 

24

 

Subordinated loans

 

 

24

 

10 

Equity

 

 

25

 

 

 

 

 

 

Notes to the Condensed consolidated statement of profit or loss

 

 

 

 

11 

Net interest income

 

 

26

 

12

Net Fee and commission income

 

 

26

 

13

Other income

 

 

27

 

14

Staff expenses

 

 

27

 

15

Other operating expenses

 

 

28

 

16

Earnings per ordinary share

 

 

28

 

17

Dividend per ordinary share

 

 

29

 

 

 

 

 

 

Segment reporting

 

 

 

 

18

Segments

 

 

29

 

 

 

 

 

 

Additional notes to the Condensed consolidated interim accounts

 

 

 

 

19

Fair value of assets and liabilities

 

 

35

 

20

Legal proceedings

 

 

41

 

21

Related parties

 

 

41

 

22

Subsequent events

 

 

41

 

 

  

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

1

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

 

Interim report

  

Introduction

ING is a global financial institution with a strong European base, offering banking services through its operating company ING Bank. ING Bank’s more than 53,000 employees offer retail and wholesale banking services to customers in over 40 countries. The Group consists of ING Groep N.V., ING Bank N.V. and other group entities.

 

Risk and capital management

Risk and capital management focuses on maintaining our risk profile within our risk appetite and strengthening our capital base. It allows ING to grow a sustainable business while implementing the Think Forward strategy. In a dynamic environment, ING continually develops its risk and capital management to address political and economic developments, changing customer behaviour, increasing regulatory requirements, emerging competitors and new technologies.

 

Capital management

ING Group’s overall approach to capital management is intended to ensure that capital is adequate to cover the (economic) risks at all levels and to ensure compliance with regulations. ING Group constantly challenges capital positions at subsidiary levels to ensure its optimal use. The continued strength of ING’s capital position, the adequacy of our financial position and our risk management effectiveness are essential in order to achieve our purpose to empower people and businesses to realise their goals, as well as to support ING’s commercial activities, to pay dividends on common shares to shareholders and to invest in new technologies and best practices. In this way, ING aims to deliver shareholder returns while investing in the innovation of products and services.

 

Risk management

ING's business relies on managing risks, including financial risks - we take on credit risk when we offer loans, guarantees and other products as part of our business model, market risk in our trading and banking book positions, and liquidity and/or funding risks through financial management. Besides these financial risks, ING is subject to non-financial risks associated with IT and cybersecurity, daily operations, compliance with laws and regulations, and adherence to socially accepted ethical norms. Non-financial risks can also arise through relationships with our clients.

 

The integrated top-down/bottom-up risk assessment identifies and monitors developments that may have an impact on ING’s strategy and risk profile, like changes in the global environment, customer needs and expectations, local/global regulatory requirements and the effectiveness of our response to technological developments.

ING’s most important risks and control measures are regularly reported to and discussed by the Risk Committee of the Supervisory Board. Both financial and non-financial risk reports are reviewed in detail, including the status of ING’s metrics with regard to solvency, liquidity, funding, credit, market risk and non-financial risks. In the first half year of 2019, as part of this process, the Risk Committee and the full Supervisory Board spent considerable time discussing, among other things, the progress in the bank-wide Know Your Customer Enhancement Programme.

 

The KYC Enhancement Programme encompasses all client segments in all ING business units, leveraging on experiences from the enhancement programme already started in the Netherlands. The programme consists of three parts: (a) look-back analysis on past deficiencies in post-transaction monitoring. The look-back analysis consists of screening of transactions executed in the past. In case unusual transactions are identified, ING is committed to following the applicable reporting process; (b) enhancement of customer due diligence files with the aim to document sufficiently the knowledge the bank has about its clients in the line with past and new requirements; (c) structural solutions that should support getting sustainably better in addressing money laundering risks in our portfolio and complying with laws and regulations.

 

The structural solutions comprise five pillars:

·                      Development and global roll-out of KYC risk appetite statements, KYC risk assessments on clients, capability structure and maturity assessments.

·                      Development and global roll-out of a bank-wide KYC digital service platform,

·                      Translation of risk assessment outcomes into scenarios and alert definitions that can be applied in transaction monitoring.

·                      Set up central KYC organisation that defines standards and drives global execution and improvements.

·                      Develop and rollout KYC communication and awareness initiatives and set up a behavioural risk department that performs risk assessments.

 

In addition, the design and operation of the Risk Appetite Framework and the Non-Financial Risk Framework are discussed annually with the Risk Committee and the full Supervisory Board.

 

Business environment and geopolitical landscape

Our business and results of operations are materially affected by conditions in the global capital markets and the economy generally. A prolonged period of low or even negative interest rates may negatively impact our net interest income. In Europe, there are continuing concerns over weaker economic conditions, as well as concerns in relation to European sovereign debt, the uncertain outcome of the negotiations between the UK and the EU following the UK referendum on EU membership, increasing political instability, levels of unemployment, the availability and cost of credit, credit spreads, and the end of quantitative easing within the Eurozone through bond repurchases and the ECB’s targeted longer-term refinancing operation (‘TLTRO’). In the United States, political uncertainty (including the recent US government shutdown), US national debt levels and changes in US trade and foreign investment policies (including tensions with China) may result in adverse economic developments. In addition, geopolitical issues, including with respect to the Middle East, Russia/Ukraine and North Korea may all contribute to adverse developments in the global capital markets and the economy generally.

 

Regulatory compliance

While we are vigilant in our efforts to comply with applicable laws and regulations, it remains a significant operational challenge for banks to meet all requirements, in particular within the strict timelines. ING faces the risk of failures in compliance, including in areas where the 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. Implementing the processes and procedures necessary for effective compliance has significant implications for IT systems and data, as people with the necessary knowledge and skills are scarce.

 

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

2

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

Compliance with applicable laws and regulations is resources-intensive, changes in laws and regulations may materially increase costs and the consequences of non-compliance with applicable laws and regulations may be significant. We expect the scope and extent of regulation in the jurisdictions in which we conduct our business, as well as regulatory oversight and supervision, to generally continue to increase. However, we cannot predict whether or when future legislative or regulatory actions may be taken, or what impact, if any, actions taken to date or in the future could have on our business, results of operations and financial condition. Regulation is becoming increasingly more extensive and complex and the industries in which we operate are increasingly coming under the scrutiny of regulators, and affected companies, including ING, are required to meet the demands, which often necessitate additional resources. These regulations can limit our activities, among others, through stricter net capital, customer protection and market conduct requirements and restrictions on the businesses in which we can operate or invest.

 

Cybercrime and data privacy

Like other financial institutions and global companies, we are regularly the target of cyber-attacks. In particular, threats from Distributed Denial of Service (‘DDoS’), targeted attacks (also called Advanced Persistent Threats) and Ransomware intensify worldwide, and attempts to gain unauthorised access and the techniques used for such attacks are increasingly sophisticated. We have faced, and expect to continue to face, an increasing number of cyber-attacks (both successful and unsuccessful) as we have further digitalized including by expanding our mobile- and other internet-based products and services, as well as our usage and reliance on cloud technology. In addition, due to our reliance on national critical infrastructure and interconnectivity with third-party vendors, exchanges, clearing houses, financial institutions and other third parties, we could be adversely impacted if any of them is subject to a successful cyber-attack or other information security event.

 

Cybersecurity and data privacy have become the subject of increasing legislative and regulatory focus. GDPR is an example of a regulation that was implemented in 2018. In certain locations where ING is active, there are additional regulatory requirements that must be followed for business conducted in that jurisdiction. We may become subject to new legislation or regulation concerning cybersecurity or the privacy of information we may store or maintain. Compliance with such legislation or regulation could increase the Group’s compliance costs and failure to comply with new and existing legislation or regulation could harm our reputation and could subject the Group to enforcement actions, fines and penalties.

 

While we take due care and have policies and processes to protect our customers, systems and networks, and strive to continuously monitor and develop them to protect our technology infrastructure and data, we continue to be vulnerable to misappropriation, unauthorised access, computer viruses or other malicious code, cyber-attacks and other external attacks or internal breaches that could have a security impact. These events could also jeopardise our confidential information or that of our clients or our counterparties and this could be exacerbated by the increase in data protection requirements as a result of GDPR. These events can potentially result in financial loss and harm to our reputation, hinder our operational effectiveness, result in regulatory censure, compensation costs or fines resulting from regulatory investigations and could have a material adverse effect on our business, reputation, revenues, results of operations, financial condition and prospects. Even when we are successful in defending against cyber-attacks, such defence may consume significant resources or impose significant additional costs on ING.

 

Other risks and uncertainties

Because we are a financial services company conducting business on a global basis, our revenues and earnings are affected by the volatility and strength of the economic, business, liquidity, funding and capital markets environments specific to the geographic regions in which we conduct business. The ongoing turbulence and volatility of such factors have adversely affected, and may continue to adversely affect, the profitability, solvency and liquidity of our business.

 

Factors such as interest rates, securities prices, credit ratings, credit spreads, liquidity spreads, exchange rates, discontinuation of or changes to ‘benchmark’ indices, consumer spending, changes in client behaviour, business investment, real estate values and private equity valuations, government spending, inflation or deflation, the volatility and strength of the capital markets, political events and trends, climate change, terrorism, as well as inability to protect our intellectual property and infringement claims by third parties, to achieve our strategy or to retain key personnel may all impact the business and economic environment and, ultimately, our solvency, liquidity and the amount and profitability of business we conduct in a specific geographic region.

 

Additional risks of which the Company is not presently aware, or that are currently viewed as less material than the risks described above, could also affect the business operations of ING and have a material adverse effect on ING’s business activities, financial condition, results of operations and prospects. For more information on risks, please refer to “Other information and appendices - Risk Factors” in the Annual Report on Form 20-F for the year ended December 31, 2018.

 

ING Group consolidated results

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 gives better insight into the commercial developments of the company.

 

Underlying result is a non-GAAP financial measure which is defined as result under IFRS-IASB, excluding the impact of the IFRS-EU ‘IAS 39 carve-out’ adjustment, divestments, special items and Insurance Other. The IFRS-EU ‘IAS 39 carve-out’ relates to fair value portfolio hedge accounting strategies for the mortgage and savings portfolios in the Benelux, Germany and Czech Republic that are not eligible under IFRS-IASB. As no hedge accounting is applied to these mortgage and savings portfolios under IFRS-IASB, the fair value changes of the derivatives are not offset by fair value changes of the hedged items (mortgages and savings).

 

Special Items include items of income and expense that are significant and arise from events or transactions that are clearly distinct from the ordinary operating activities. Insurance Other reflects (former) insurance related activities that are not part of the discontinued operations. In calculating underlying result for its Banking segments, ING Group also uses the measures underlying net profit, underlying expenses, underlying cost/income ratio and underlying result before tax, each of which are also non-GAAP financial measures. The executive Board of ING Group and Management Board of ING Bank consider these measures to be meaningful as it helps investors to compare its segment performance by highlighting result before tax attributable to ongoing operations and the underlying profitability of the segment businesses.

 

The breakdown of underlying net result by segment and the reconciliation between IFRS-IASB and the underlying net result is included in Note 18 ‘Segments’.

 

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

3

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

ING Group: Consolidated profit or loss account

in EUR million

6 month period (1 January to 30 June)

Total ING Group

of which: adjustment of the IFRS-EU 'IAS 39 carve out'

of which: Divestments / Special items

of which: Insurance Other

of which: Underlying Banking

2019

2018

2019

2018

2019

2018

2019

2018

2019

2018

Net interest income

6,896

6,860

–57

15

 

 

 

 

6,953

6,845

Net fee and commission income

1,386

1,377

 

 

 

 

 

–2

1,386

1,378

Total investment and other income

–134

646

–1,036

–91

 

 

 

20

902

717

Total income

8,148

8,883

–1,093

–75

 

 

 

18

9,241

8,940

Expenses excl. Regulatory costs

4,626

4,441

 

 

 

 

 

 

4,626

4,441

Regulatory costs

612

591

 

 

 

 

 

 

612

591

Operating expenses

5,238

5,032

 

 

 

 

 

 

5,238

5,032

Gross result

2,910

3,851

–1,093

–75

 

 

 

18

4,003

3,908

Addition to loan loss provisions

416

200

 

 

 

 

 

 

416

200

Result before tax

2,493

3,651

–1,093

–75

 

 

 

18

3,586

3,708

Taxation

740

995

–243

–26

 

 

 

–0

983

1,021

Non-controlling interests

47

51

 

 

 

 

 

 

47

51

Net result ING Group

1,707

2,605

–850

–50

 

 

 

19

2,556

2,636

 

 

 

 

 

 

 

 

 

 

 

 

ING Group: reconciliation from IFRS-IASB to underlying result

6 month period (1 January to 30 June)

2019

2018

Net result ING Group

1,707

2,605

-/- Adjustment of the IFRS-EU 'IAS 39 carve-out'

–850

–50

-/- Insurance Other

 

19

Underlying net result Banking

2,556

2,636

 

 

 

ING recorded a net result of EUR 1,707 million in the first half of 2019, compared with EUR 2,605 million in the same period of 2018. This decrease in result was affected by EUR 800 million more negative fair value changes on derivatives (including a negative impact under net interest income of ending some hedge relationships) related to hedging mortgage and savings portfolios in the Benelux, Germany and Czech Republic. These negative fair value changes are mainly caused by changes in markets interest rates. No fair value hedge accounting is applied to these mortgage and savings portfolios under IFRS-IASB. Including the compensating positive hedge adjustment on those portfolios as applied under IFRS-EU, the net result decreased 3.7% to EUR 2,556 million compared with EUR 2,654 million in the same period of 2018, driven by continued business growth and despite lower results in Financial Markets. This was offset by increased operating expenses and higher risk costs.

 

In 2019, there were no results from Insurance Other as ING sold its last warrants related to its previous Insurance activities in November 2018. The result in the first six months of 2018 included a EUR 19 million net result from Insurance Other, reflecting the result on the warrants on the shares of Voya and NN Group.

 

There were no divestments or special items in the first six months of both 2019 and 2018.

 

ING’s underlying net result banking, which is the net result excluding the adjustment of the IFRS-EU ‘IAS 39 carve-out’ and Insurance Other, decreased 3.0% to EUR 2,556 million from EUR 2,636 million in the first six months of 2018.

 

Banking operations

Consolidated results of operations

Underlying net result of ING’s banking operations decreased to EUR 2,556 million from EUR 2,636 million in the same period of 2018. The underlying effective tax rate was 27.4% compared with 27.5% in the first half of 2018.

 

The underlying result before tax decreased 3.3% to EUR 3,586 million from EUR 3,708 million in the first half of 2018, as higher income could not compensate for higher expenses and risk costs. Income rose 3.4% driven by continued business growth, and despite weaker Financial Markets performance and margin pressure on customer deposits. Income in the first half of 2019 was furthermore supported by a one-off gain from the release of a currency translation reserve following the sale of ING’s stake in Kotak Mahindra Bank and the recognition of a receivable related to the insolvency of a financial institution. Underlying operating expenses rose 4.1% on the first six months of 2018, and risk costs increased by EUR 216 million.

 

Total underlying income rose 3.4% to EUR 9,241 million from EUR 8,940 million in the first six months of 2018. Excluding the aforementioned one-off gain and receivable, income was 1.2% higher, despite weaker Financial Markets performance.

 

Net interest income rose by EUR 108 million, or 1.6%, to EUR 6,953 million in the first six months of 2019. The increase was driven by higher interest results on customer lending due to volume growth in both mortgages and other customer lending. The total lending margin was slightly higher compared with the same period a year ago, as the impact of an improved interest margin on residential mortgages was partially offset by lower margins on other customer lending, partly reflecting heightened competition in some of our markets. The interest result on customer deposits declined. This was fully caused by lower interest margins on both savings and current accounts, which were only partly offset by the impact of higher volumes (primarily in current accounts). The interest result of Financial Markets (which can be volatile), was relatively stable, while lower Treasury-

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

4

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

related interest results were largely off set by higher net interest income in the Corporate Line. ING’s overall net interest margin, which is defined as net interest income divided by the average balance sheet total, increased by 3 basis points to 1.54%, from 1.51% in the first half of 2018.

 

Net fee and commission income increased 0.6% to EUR 1,386 million from EUR 1,378 million one year ago. In Retail Banking, net fee and commission income increased in most of the Challengers & Growth Markets countries and the Netherlands, partly offset by declines in mainly Belgium, Turkey and Spain. Total fee income in Wholesale Banking decreased, despite the inclusion of Payvision as from the second quarter of 2018, mainly due to a lower number of syndicated deals in Lending and lower fees from Trade Finance Services. Total investment and other income rose by EUR 185 million to EUR 902 million in the first half of 2019, and was supported by a EUR 119 million gain from the release of a currency translation reserve following the sale of ING’s stake in Kotak Mahindra Bank and the recognition of a EUR 79 million receivable related to the insolvency of a financial institution. Excluding these items, investment and other income declined by EUR 13 million, or -1.8%. Lower revenues in Wholesale Banking, notably due to weaker performance in Financial Markets as a result of negative model valuation adjustments and negative marked-to-market movements on some hedges, were largely offset by higher Treasury-related revenues which mainly supported Retail Banking.

 

Underlying operating expenses increased by EUR 206 million, or 4.1%, to EUR 5,238 million. Expenses in the first six months of 2019 included EUR 612 million of regulatory costs, while the same period of 2018 included EUR 591 million of regulatory costs. Expenses excluding regulatory costs rose by EUR 185 million, or 4.2%, to EUR 4,626 million. The increase was mainly caused by higher expenses for business growth and salary increases, higher KYC-related expenses as well as a provision related to the Agile transformation in Retail Germany, while 2018 included a release from a litigation provision in Luxembourg. These increases were partly offset by strict cost control and cost savings from the ongoing transformation programmes. The underlying cost/income ratio increased to 56.7% from 56.3% in the first half of 2018.

 

Net additions to loan loss provisions rose to EUR 416 million from EUR 200 million in the first half of 2018, when risk costs were positively affected by a net release in the Netherlands and several larger releases on individual files in Wholesale Banking. Overall the macroeconomic outlook has turned less positive. Risk costs were annualised 14 basis points of average customer lending compared with 7 basis points in the first half of 2018.

 

Retail Netherlands

As from 2019, Retail Netherlands includes the real estate finance portfolio to Dutch domestic midcorporates of EUR 11 billion. This portfolio was transferred from Wholesale Banking to define clearer roles and responsibilities. All comparative figures have been adjusted.

 

Underlying result before tax of Retail Netherlands decreased to EUR 1,132 million from EUR 1,362 million in the first six months of 2018, due to lower income, mainly reflecting lower margins on customer deposits and lower revenues from Treasury, combined with higher risk costs, which turned from a net release to a modest net addition in the first half of 2019.

 

Total underlying income decreased by EUR 141 million, or 5.9%, to EUR 2,260 million, compared with EUR 2,401 million in the first half of 2018. Net interest income declined 7.6%, reflecting lower allocated net interest income from Treasury, and lower margins on savings and current accounts. This was partly compensated by higher net interest income from mortgages stemming from improved margins. Customer lending increased by EUR 3.7 billion in the first half of 2019. Net core lending (which excludes Treasury products and a EUR 0.5 billion decline in the WUB run-off portfolio) grew by EUR 2.2 billion, of which EUR 0.9 billion was in residential mortgages and EUR 1.3 billion in business lending. Net customer deposits (excluding Treasury) grew by EUR 6.1 billion in the first half of 2019. Net fee and commission income increased by EUR 4 million, or 1.2%, while investment and other income was EUR 2 million lower.

 

Operating expenses declined by EUR 9 million, or 0.8%, to EUR 1,095 million compared with the first six months of 2018. This decline was mainly due to lower regulatory costs, which was partly by offset higher staff expenses. These higher staff expenses were partly related to the transformation programmes.

 

The net addition to loan loss provisions rose to EUR 33 million, or 4 basis points of average customer lending, in the first half of 2019, from a net release of EUR 65 million, or -8 basis points, in the same period of last year. Risk costs in the first half of 2019 were mainly related to a model update in the residential mortgage portfolio.

 

Retail Belgium

The underlying result before tax of Retail Belgium, which includes Luxembourg, increased to EUR 328 million from EUR 231 million in the first six months of 2018, due to higher income, lower expenses and a decline in risk costs.

 

The underlying income increased by EUR 46 million, or 3.8%, to EUR 1,259 million. Net interest income rose by EUR 61 million, or 6.8%. This increase reflected higher revenues from Treasury-related activities. Higher net interest income on customer lending was offset by lower revenues on savings and current accounts. Net core lending (excluding Treasury) grew by EUR 2.7 billion in the first half of 2019, of which EUR 0.7 billion was in residential mortgages and EUR 2.0 billion in other lending. Net customer deposits (excluding Treasury) grew by EUR 3.8 billion, predominantly in current accounts. Net fee and commission income declined by EUR 13 million, or 6.5%, mainly due to lower fee income on investment products.

 

Operating expenses fell by EUR 30 million, or 3.3%, to EUR 873 million compared with the first six months of 2018. This decline mainly reflects lower staff-related expenses stemming from the transformation programmes (including the successful integration of Record Bank in ING Belgium), and more than compensated for higher regulatory costs.

 

The net addition to the provision for loan losses decreased to EUR 58 million, or annualised 13 basis points of average customer lending, from EUR 78 million in the first half of 2018. The decline in risk costs was mainly in business lending.

 

Retail Germany

Retail Germany, which includes Austria, recorded a first-half 2019 underlying result before tax of EUR 449 million, up 6.1% from 423 million in the first half of 2018. This increase was primarily due to higher income and a net release in risk costs following a model update for mortgages, partly offset by a provision for Agile transformation in Germany.

 

The underlying income increased to EUR 1,005 million, or 4.7%, from EUR 960 million the first six months of 2018. Net interest income decreased 7.1% to EUR 796 million, due to accounting asymmetry in Treasury (with an offset in other income). Excluding Treasury, net interest income rose by EUR 17 million driven by selective lending growth focused on better margin. Net core lending, which excludes Treasury products, increased by EUR 1.3 billion, of which EUR 1.0 billion was in residential mortgages and EUR 0.3 billion in consumer lending. Net customer deposits (excluding Treasury) decreased by EUR 0.5 billion due to some anticipated savings outflow after a promotional savings campaign in the fourth quarter of 2018.

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

5

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

Net fee and commission income increased by EUR 30 million to EUR 123 million, due to higher fee income on mortgages and investment products. Investment and other income increased by EUR 76 million due to the aforementioned accounting asymmetry in Treasury revenues.

 

Operating expenses increased by EUR 55 million, or 10.5%, to EUR 579 million compared with the first half of 2018. The increase was mainly due to a restructuring provision related to the completion of ING’s Agile transformation in Germany, higher investments to accelerate the acquisition of primary customers and the launch of Interhyp in Austria.

 

The net addition to the provision for loan losses turned to a net release of EUR 23 million, or -5 basis points of average customer lending, in the first half of 2019, compared with a net addition of EUR 13 million, or 3 basis points, in the same period of last year. The net release in the first half of 2019 mainly reflects model updates for mortgages.

 

Retail Other Challengers & Growth Markets

Retail Other Challengers & Growth Markets’ underlying result before tax decreased to EUR 438 million from EUR 460 million in the first six months of 2018, reflecting higher risk costs as income growth outpaced higher expenses.

 

The underlying income increased by EUR 104 million, or 6.6%, to EUR 1,687 million from EUR 1,583 million in the first six months of last year. This was driven by continued strong revenue growth across most of the  countries, reflecting higher volumes at improved margins and the sale of a non-performing loan portfolio in Spain in the first half of 2019. The net production in customer lending (adjusted for currency effects and Treasury) was EUR 3.8 billion in the first half of 2019, with growth mainly in Poland, Spain and Australia, while lending in Turkey declined. The net inflow in customer deposits, also adjusted for currency impacts and Treasury, was EUR 4.8 billion, with largest increases in Spain, Australia and Poland.

 

Operating expenses increased by EUR 60 million, or 6.0%, to EUR 1,061 million compared with the first half of 2018, mainly explained by business growth in most countries, KYC-related expenses and higher regulatory costs.

 

The net addition to loan loss provisions increased by EUR 66 million on the first half of 2018 to EUR 187 million, or annualised 40 basis points of average customer lending. The increase mainly reflects model updates in Spain, Romania and Australia, as well as negative risk migration in Turkey and Poland.

 

Wholesale Banking

Following the Wholesale Banking strategic review in 2018, the product split in Wholesale Banking has changed in 2019 to better reflect how the business is managed. The most important change is that most of the lending activities are now concentrated under the new product group ‘Lending’. The main exception is Trade & Commodity Finance, which, together with Transaction Services, is included in the product group ‘Daily Banking & Trade Finance’. Furthermore, the real estate finance portfolio related to Dutch domestic mid-corporates (which had been included under Industry Lending) has been transferred to Retail Netherlands to define clearer roles and responsibilities. All comparative figures have been adjusted.

 

In the first six months of 2019, the underlying result before tax dropped 22.7% to EUR 1,018 million from EUR 1,317 million in the same period last year. The decline was mainly caused by higher risk costs (compared with a relatively low level one year ago) and lower revenues in Financial Markets and Treasury & Other. These negative impacts were partly offset by continued volume growth in Lending and improved margins in Daily Banking & Trade Finance.

 

Underlying income declined by EUR 112 million, or 4.1%, to EUR 2,618 million in the first half of 2019, mainly due to negative valuation adjustments in Financial Markets and lower revenues in Treasury & Other. This was partly offset by higher income in Lending and Daily Banking & Trade Finance.

 

Net interest income increased by EUR 38 million, or 2.1%, on the first six months of 2018, mainly driven by continued volume growth in Lending at slightly lower margins and higher interest results in Daily Banking & Trade Finance, especially in Payments & Cash Management and Bank Mendes Gans. This was partly offset by lower interest results in Treasury & Other. Net core lending (excluding currency impacts, Treasury and the Lease run-off portfolio) grew by EUR 6.2 billion in the first half of 2019. Net customer deposits (excluding currency impacts and Treasury) rose by EUR 2.3 billion. 

 

Net fee and commission income decreased by EUR 10 million, or 1.8%, on last year, mainly in Lending due to lower deal activity in the first half of 2019. Investment and other income fell to EUR 248 million from EUR 389 million in the first half of 2018, mainly due to lower revenues in Financial Markets, primarily from negative model valuation adjustments and negative market-to-market movements on hedges. 

   

Operating expenses were EUR 1,438 million, or 5.7% higher than in the first half of 2018. Excluding regulatory costs (EUR 143 million in the first half of 2019 versus EUR 120 million one year ago), operating expenses increased by EUR 55 million, or 4.4%. The increase was mainly explained by the release of a legal provision in the first half of 2018, the inclusion of Payvision as from the second quarter of 2018 and higher KYC-related costs, partly offset by the impact of strict cost control.

 

Net addition to loan loss provisions rose to EUR 162 million, or annualised 18 basis points of average customer lending, from EUR 53 million, or 6 basis points, in the first half of 2018. The increase was predominantly in individual Stage 3 provisions and mainly attributable to a few larger clients, whereas the first half of 2018 included several larger releases on individual files.

 

Corporate Line

The Corporate Line reported an underlying result before tax of EUR 221 million compared with EUR –85 million in the first half of 2018. Total income improved to EUR 413 million from EUR 54 million a year ago, supported by a EUR 119 million gain on the release of a currency translation reserve following the sale of ING’s stake in Kotak Mahindra Bank and the recognition of a EUR 79 million receivable related to the insolvency of a financial institution. Excluding both items, income rose by EUR 161 million, primarily due to higher income from foreign currency exchange ratio hedging. Operating expenses increased to EUR 192 million from EUR 139 million in the first half of 2018, mainly due to higher shareholders and KYC-related expenses, whereas the previous year included a release of a specific provision.

 

ING Group statement of financial position (‘balance sheet’)

 

ING Group’s total balance sheet increased by EUR 25 billion to EUR 910 billion at 30 June 2019 from EUR 885 billion at 31 December 2018.

 

Cash and balances with central banks

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

6

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

Cash and balances with central banks increased by EUR 2 billion to EUR 52 billion.

 

Loans and advances to banks and deposits from banks

Loans and advances to banks increased by EUR 4 billion to EUR 35 billion. Deposits from banks were EUR 1 billion higher.

 

Financial assets/liabilities at fair value through profit or loss

Financial assets at fair value through profit or loss decreased by EUR 2 billion to EUR 119 billion, due to EUR 6 billion lower reverse repo activity mandatorily recorded at fair value through profit or loss, partly offset by EUR 4 billion higher trading assets. On the liability side Financial liabilities at fair value through profit or loss increased by EUR 7 billion to EUR 99 billion, mainly caused by EUR 4 billion higher repo activity designated at fair value through profit or loss and EUR 2 billion higher trading liabilities.

 

Financial assets at fair value through other comprehensive income

Financial assets at fair value through other comprehensive income remained flat at EUR 31 billion, as EUR 1 billion higher debt securities at fair value through other comprehensive income was offset by EUR 1 billion lower equity securities at fair value through OCI. The decrease of equity securities included the impact of the sale of our stake in Kotak Mahindra Bank, which took place in the first quarter.

 

Securities at amortised costs

Securities at amortised costs decreased by EUR 1 billion to EUR 46 billion versus 31 December 2018.

 

Loans and advances to customers

Loans and advances to customers increased by EUR 17 billion to EUR 607 billion from EUR 590 billion at 31 December 2018 due to an increase in customer lending. Adjusted for currency/other impacts, a EUR 2 billion increase in short-term Treasury lending and a EUR 1 billion decline of the WUB and Lease run-off portfolio, net core lending increased by EUR 16 billion, of which EUR 5 billion was in residential mortgages and EUR 11 billion in other customer lending.

 

Property and equipment

Property and equipment increased by EUR 1 billion to EUR 3 billion, almost fully due to the impact of IFRS 16 ‘Leases’, which came into effect as per 1 January 2019.

 

Other assets/liabilities

Other assets increased by EUR 3 billion mainly due to a higher amount of financial transactions pending settlement. Other liabilities increased by EUR 3 billion, mirroring the development in unsettled balances of financial transactions on the asset side.

 

Assets held for sale

Assets held for sale were EUR 1 billion and reflect the intended sale of an Italian lease run-off portfolio. The sale of this portfolio, for which an agreement had been reached in December 2018, was completed on 1 July 2019.

 

Customer deposits

Customer deposits increased by EUR 15 billion to EUR 571 billion. Adjusted for currency impacts and Treasury, net customer deposits grew by EUR 16 billion in the first half of 2019, predominantly due to higher customer deposits at Retail Banking reflecting ING Bank’s strength as a deposit gatherer.

 

Debt securities in issue

Debt securities in issue decreased by EUR 1 billion to EUR 119 billion, caused by a EUR 6 billion decrease of CD/CPs related to active liquidity management. Other (mainly long-term) debt securities increased by EUR 6 billion mainly due to new issuances in the first half of 2019 (including TLAC/MREL eligible securities).

 

Subordinated loans

Subordinated loans remained flat at EUR 14 billion, as new issuances in February were offset by redemptions in June.

 

Shareholders’ equity

Shareholders’ equity increased by EUR 0.8 billion to EUR 49.9 billion from EUR 49.0 billion at 31 December 2018. The increase was mainly caused by a EUR 0.8 billion increase in the cash flow hedge reserve. The EUR 1.7 billion net result for the first half of 2019, was offset by the EUR 1.7 billion payment of the final dividend for the year 2018.

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

7

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

 

Condensed consolidated statement of financial position

  

 

 

 

as at

30

June

2019

31

December

2018

in EUR million

Assets

 

 

Cash and balances with central banks

52,171

49,987

Loans and advances to banks

34,584

30,422

Financial assets at fair value through profit or loss 2

118,928

120,486

Financial assets at fair value through other comprehensive income 3

31,294

31,223

Securities at amortised cost 4

45,970

47,276

Loans and advances to customers 5

607,081

589,653

Investments in associates and joint ventures

1,317

1,203

Property and equipment

2,825

1,659

Intangible assets

1,917

1,839

Current tax assets

392

202

Deferred tax assets

950

958

Other assets

11,363

8,433

Assets and liabilities held for sale 6

1,154

1,262

Total assets

909,945

884,603

 

 

 

Liabilities

 

 

Deposits from banks

38,095

37,330

Customer deposits

571,001

555,729

Financial liabilities at fair value through profit or loss 7

99,448

92,693

Current tax liabilities

487

822

Deferred tax liabilities

121

180

Provisions

853

1,011

Other liabilities

16,084

13,510

Debt securities in issue 8

118,929

119,751

Subordinated loans 9

14,205

13,724

Total liabilities

859,222

834,751

 

 

 

Equity 10

 

 

Share capital and share premium

17,116

17,088

Other reserves

4,218

3,621

Retained earnings

28,528

28,339

Shareholders’ equity (parent)

49,862

49,049

Non-controlling interests

862

803

Total equity

50,723

49,851

 

 

 

Total liabilities and equity

909,945

884,603

 

 

 

 

References relate to the accompanying notes. These form an integral part of the Condensed consolidated interim accounts.

 

Reference is made to Note 1 ‘Accounting policies’ for information on Changes in accounting policies, estimates and presentation of the Condensed consolidated interim accounts and related notes.

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

8

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

 

Condensed consolidated statement of profit or loss

  

 

 

6 month period

1 January to 30 June

in EUR million

2019

2018

Continuing operations

 

 

Interest income using effective interest rate method

12,799

12,399

Other interest income

1,434

1,073 1

Total interest income

14,233

13,472

 

 

 

Interest expense using effective interest rate method

–5,880

–5,435

Other interest expenses

–1,457

–1,177 1

Total interest expense

–7,337

–6,612

 

 

 

Net interest income 11 

6,896

6,860

 

 

 

Net fee and commission income 12 

1,386

1,377

Valuation results and net trading income

–489

393

Investment income

58

102

Other income 2 13

296

151

Total income

8,148

8,883

 

 

 

Addition to loan loss provisions

416

200

Staff expenses 14 

2,811

2,723

Other operating expenses 15 

2,427

2,309

Total expenses

5,654

5,232

 

 

 

Result before tax from continuing operations

2,493

3,651

 

 

 

Taxation

740

995

Net result from continuing operations

1,754

2,656

 

 

 

Net result (before non-controlling interests)

1,754

2,656

Net result attributable to Non-controlling interests

47

51

Net result attributable to Equityholders of the parent

1,707

2,605

 

 

 

1 Includes a reclassification of EUR 378 million in the six month period to 30 June 2018, from Other interest income to Other interest expense, to align with the current gross presentation of Other interest income and Other interest expense that was previously netted.

2 Other income includes Result from associates and joint ventures, Net operating lease income, Net result on derecognition of financial assets at amortised cost, and Other.

 

References relate to the accompanying notes. These form an integral part of the Condensed consolidated interim accounts.

 

Reference is made to Note 1 ‘Accounting policies’ for information on Changes in accounting policies, estimates and presentation of the Condensed consolidated interim accounts and related notes.

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

9

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

 

6 month period

1 January to 30 June

in EUR million

2019

2018

Net result attributable to Non-controlling interests

 

 

from continuing operations

47

51

from discontinued operations

 

 

 

47

51

Net result attributable to Equityholders of the parent

 

 

from continuing operations

1,707

2,605

from discontinued operations

 

 

 

1,707

2,605



 

6 month period

1 january to 30 June

in EUR million

2019

2018

Earnings per ordinary share 16 

 

 

Basic earnings per ordinary share

0.44

0.67

Diluted earnings per ordinary share

0.44

0.67

 

 

 

Earnings per ordinary share from continuing operations 16 

 

 

Basic earnings per ordinary share from continuing operations

0.44

0.67

Diluted earnings per ordinary share from continuing operations

0.44

0.67

 

 

 

Dividend per ordinary share 17 

0.24

0.24

 

 

 

 

References relate to the accompanying notes. These form an integral part of the Condensed consolidated interim accounts.

 

Reference is made to Note 1 ‘Accounting policies’ for information on Changes in accounting policies, estimates and presentation of the Condensed consolidated interim accounts and related notes.

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

10

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income 

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

 

Condensed consolidated statement of comprehensive income

  

 

6 month period

1 January to 30 June

in EUR million

2019

2018

Net result (before non-controlling interests)

1,754

2,656

 

 

 

Other comprehensive income

 

 

Items that will not be reclassified to the statement of profit or loss:

 

 

Realised and unrealised revaluations property in own use

36

–2

Remeasurement of the net defined benefit asset/liability

–23

6

Net change in fair value of equity instruments at fair value through other comprehensive income

201

–161

Change in fair value of own credit risk of financial liabilities at fair value through profit or loss

–91

75

 

 

 

Items that may subsequently be reclassified to the statement of profit or loss:

 

 

Net change in fair value of debt instruments at fair value through other comprehensive income

1

–51

Realised gains/losses on debt instruments at fair value through other comprehensive income reclassified to the statement of profit or loss

–36

–56

Changes in cash flow hedge reserve

861

164

Exchange rate differences

–116

–304

Share of other comprehensive income of associates and joint ventures and other income

–2

4

Total comprehensive income

2,585

2,331

 

 

 

Comprehensive income attributable to:

 

 

Non-controlling interests

86

29

Equity holders of the parent

2,500

2,301

 

2,585

2,331

 

 

 

Reference is made to Note 1 ‘Accounting policies’ for information on Changes in accounting principles, estimates and presentation of the Condensed consolidated interim accounts and related notes.

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

11

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

 

Condensed consolidated statement of changes in equity

  

 

in EUR million

Share

capital and

share

premium

Other

reserves

Retained

earnings

Share-

holders'

equity

(parent)

Non-

controlling

interests

Total

equity

Balance as at 31 December 2018

17,088

3,621

28,339

49,049

803

49,851

 

 

 

 

 

 

 

Net change in fair value of equity instruments at fair value through other comprehensive income

 

–123

322

199

2

201

Net change in fair value of debt instruments at fair value through other comprehensive income

 

0

 

0

0

1

Realised gains/losses on debt instruments at fair value through other comprehensive income reclassified to the statement of profit or loss

 

–34

 

–34

–1

–36

 

 

 

 

 

 

 

Changes in cash flow hedge reserve

 

830

 

830

31

861

Realised and unrealised revaluations property in own use

 

29

7

36

–0

36

Remeasurement of the net defined benefit asset/liability

 

–23

 

–23

–23

Exchange rate differences and other

 

–121

 

–121

6

–116

Share of other comprehensive income of associates

and joint ventures and other income

 

127

–129

–2

0

–2

Change in fair value of own credit risk of financial liabilities at fair value through profit or loss

 

–91

 

–91

–91

Total amount recognised directly in other comprehensive income net of tax

593

200

793

38

832

Net result

1,707

1,707

47

1,754

Total comprehensive income net of tax

593

1,906

2,500

86

2,585

 

 

 

 

 

 

 

Dividends

–1,714

–1,714

–27

–1,741

Changes in treasury shares

3

3

3

Employee stock option and share plans

27

–3

25

0

25

Balance as at 30 June 2019

17,116

4,218

28,528

49,862

862

50,723

 

 

 

 

 

 

 

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

12

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

 

Consolidated statement of changes in equity - continued

 

 

in EUR million

Share

capital and

share

premium

Other

reserves

Retained

earnings

Share-

holders'

equity

(parent)

Non-

controlling

interests

Total

equity

 

Balance as at 31 December 2017

17,045

4,362

27,022

48,429

715

49,144

 

Effect of change in accounting policy

 

–604

–390

–994

–14

–1,008

 

Balance as at January 2018

17,045

3,759

26,632

47,435

700

48,136

 

 

 

 

 

 

 

 

 

Net change in fair value of equity instruments at fair value through other comprehensive income

 

–165

4

–161

 

–161

 

Net change in fair value of debt instruments at fair value through other comprehensive income

 

–52

 

–52

1

–51

 

Realised gains/losses on debt instruments at fair value through other comprehensive income reclassified to the statement of profit or loss

 

–55

 

–55

–2

–56

 

 

 

 

 

 

 

 

 

Changes in cash flow hedge reserve

 

159

 

159

5

164

 

Realised and unrealised revaluations property in own use

 

–2

 

–2

 

–2

 

Remeasurement of the net defined benefit asset/liability

 

6

 

6

 

6

 

Exchange rate differences and other

 

–278

 

–278

–26

–304

 

Share of other comprehensive income of associates and joint ventures and other income

 

95

–91

4

 

4

 

Change in fair value of own credit risk of financial liabilities at fair value through profit or loss

 

75

 

75

 

75

 

Total amount recognised directly in other comprehensive income net of tax

 

–216

–87

–303

–22

–326

 

Net result

 

 

2,605

2,605

51

2,656

 

Total comprehensive income net of tax

 

–216

2,518

2,301

29

2,331

 

 

 

 

 

 

 

 

 

Dividends

 

 

–1,673

–1,673

–27

–1,700

 

Changes in treasury shares

 

–6

 

–6

 

–6

 

Employee stock option and share plans

43

 

–7

36

 

36

 

Changes in the composition of the group and other changes 1

 

 

–96

–96

31

–65

 

Balance as at 30 June 2018

17,088

3,536

27,374

47,998

734

48,732

 

 

 

 

 

 

 

 

 

1 Includes an amount for the initial recognition of the redemption liability related to the acquisition of Payvision Holding B.V. And Makelaarsland B.V. that reduces the Retained earnings of the Group. Future remeasurements of the redemption liability are recognised in the statement of profit or loss.

 

 

 

 

 

 

 

 

 

Reference is made to Note 1 ‘Accounting policies’ for information on Changes in accounting principles, estimates and presentation of the Condensed consolidated interim accounts and related notes.

 
 

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

13

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

 

Condensed consolidated statement of cash flows

  

 

 

 

1 january to 30 June

in EUR million

 

2019

2018

Cash flows from operating activities

 

 

Result before tax

2,493

3,652

Adjusted for:

– Depreciation and amortisation

388

267

 

– Addition to loan loss provisions

416

200

 

– Other

53

–54

Taxation paid

 

–1,583

–834

Changes in:

–  Net change in Loans and advances to/from banks, not available/payable on demand

–3,434

1,009

 

–  Net change in Trading assets and Trading liabilities

–1,707

6,138

 

–  Loans and advances to customers

–17,670

–24,078

 

–  Customer deposits

15,297

19,842

 

–  Other

9,502

–9,272

Net cash flow from/(used in) operating activities

3,754

–3,130

 

 

 

 

Cash flows from investing activities

 

 

Investments and advances:

- Acquisition of subsidiaries, net of cash acquired

–17

–111

 

- Associates and joint ventures

–60

–47

 

- Financial assest at fair value through other comprehensive income

–7,765

–3,385

 

- Securities at amortised cost

–6,395

–9,887

 

– Property and equipment

–135

–133

 

– Other investments

–184

–162

Disposals and redemptions:

– Associates and joint ventures

6

54

 

- Financial assest at fair value through other comprehensive income

8,982

9,032

 

- Securities at amortised cost

7,441

9,104

 

– Property and equipment

71

5

 

– Loans sold

401

 

 

– Other investments

1

7

Net cash flow from/(used in) investing activities

2,346

4,477

 

 

 

 

Cash flows from financing activities

 

 

 

Proceeds from debt securities

 

54,835

72,330

Repayments of debt securities

 

–57,088

–53,923

Proceeds from issuance of subordinated loans

1,089

1,746

Repayments of subordinated loans

–933

–1,909

Repayments of principal portion of lease liabilities

–123

n/a

Purchase/sale of treasury shares

 

8

7

Dividends paid

 

–1,714

–1,673

Net cash flow from/(used in) financing activities

–3,926

16,578

 

 

 

 

Net cash flow

 

2,174

17,925

 

 

 

 

Cash and cash equivalents at beginning of year

47,529

18,977

Effect of exchange rate changes on cash and cash equivalents

–53

206

Cash and cash equivalents at end of the period

49,650

37,108

 

 

 

 

The table below presents the composition of Cash and cash equivalents.

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

14

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

 

Condensed consolidated statement of cash flows - continued

 

 

30

June

2019

30

June

2018

Treasury bills and other eligible bills

94

248

Deposits from banks/Loans and advances to banks

–2,615

–1,416

Cash and balances with central banks

52,171

38,276

Cash and cash equivalents at end ofthe period

49,650

37,108

 

 

 

The table below presents the Interest and dividend received and paid.

 

 

 

 

 

 

 

1 January to 30 June

 

2019

2018

Interest received

14,784

13,447

Interest paid

–7,575

–7,005

 

7,208

6,442

 

 

 

Dividend received1

67

67

Dividend paid

–1,714

–1,673

 

 

 

1    Includes dividends received as recognized within Investment Income, from equity securities included in the Financial assets at fair value through profit or loss, and from Investments in associates and joint ventures. Dividend paid and received from trading positions have been included.

 

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

 

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

15

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

Notes to the Condensed consolidated interim accounts

Amounts in millions of euros, unless stated otherwise

 

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 Condensed consolidated interim accounts, as at and for the six months ended 30 June 2019, 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.

 

Basis of preparation of the Condensed consolidated interim accounts

The ING Group Condensed consolidated interim accounts have been prepared in accordance with International Accounting Standard 34 ‘Interim Financial Reporting’.

 

The accounting principles used to prepare these Condensed consolidated interim accounts comply with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB) and are consistent with those set out in the notes to the 2018 Consolidated financial statements as included in the Annual Report on Form 20-F of ING Group except for the adoption of IFRS 16 ‘Leases’ as set out in Note 1 ‘Accounting policies’.

 

These Condensed consolidated interim accounts should be read in conjunction with ING Group’s 2018 Consolidated financial statements as included in the Form 20-F.

 

International Financial Reporting Standards as issued by the IASB provide several options in accounting principles. ING Group’s accounting principles under International Financial Reporting Standards as issued by the IASB and its decision on the options available are set out in the section ‘Principles of valuation and determination of results’ in the 2018 Annual Report on Form 20-F.

 

IFRS-EU refers to International Financial Reporting Standards 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. The published 2018 Consolidated annual accounts of ING Group are presented in accordance with IFRS-EU. The annual accounts of ING Group will remain to be prepared under IFRS-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 9, the IAS 39 hedge accounting principles can be applied.

 

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 equity and net result amounts compared to those indicated in these Condensed consolidated interim accounts. A reconciliation between IFRS-IASB and IFRS-EU 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’).

 

Reconciliation shareholder’s equity and net result under IFRS-EU and IFRS-IASB:

Reconciliation shareholders’ equity under IFRS-EU and IFRS-IASB

 

Total Equity

 

30

June

2019

31

December

2018

In accordance with IFRS-EU

52,598

50,932

Adjustment of the EU IAS 39 carve-out

–3,560

–2,460

Tax effect of the adjustment

823

577

Effect of adjustment after tax

–2,737

–1,883

 

 

 

Shareholders’ equity

49,862

49,049

Non-voting equity securities

 

 

Non-controlling interests

862

803

In accordance with IFRS-IASB Total Equity

50,723

49,851

 

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

16

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

Reconciliation net result under IFRS-EU and IFRS-IASB

 

Total net result

 

1 January to 30 June

 

2019

2018

In accordance with IFRS-EU

2,556

2,654

Adjustment of the EU IAS 39 carve-out

–1,093

–75

Tax effect of the adjustment

243

26

Effect of adjustment after tax

–850

–50

 

 

 

In accordance with IFRS-IASB (attributable to the equityholders of the parent)

1,707

2,605

Non-controlling interests

47

51

In accordance with IFRS-IASB net result

1,754

2,656

 

In the first six months of 2019 interest rates decreased significantly, resulting in a positive hedge accounting impact related to the EU IAS 39 carve-out. The difference in net result is fully reflected in the segment Wholesale Banking.

 

Certain amounts recorded in the Condensed consolidated interim accounts reflect estimates and assumptions made by management. Actual results may differ from the estimates made. Interim results are not necessarily indicative of full-year results.

 

The ING Group Condensed consolidated interim accounts have been prepared on a going concern basis.

 

Amounts may not add up due to rounding.

 

1 Accounting policies

ING Group has consistently applied its accounting policies to all periods presented in these Condensed consolidated interim accounts, except for changes in IFRS 16 that became effective in 2019.


Major new IFRSs
A number of new or amended standards and an IFRIC interpretation became applicable for the current reporting period. ING Group changed its accounting policies as a result of adopting IFRS 16.

 

The impact of the adoption of IFRS 16 is disclosed in Note 1a ‘IFRS 16 – Impact of adoption’ and the new IFRS 16 accounting policies are disclosed in note 1b ‘IFRS 16 - Accounting policies applied from 1 January 2019’. The other amendments did not have a significant impact on the Group’s accounting policies.

 

ING Group has not early adopted any standard, interpretation or amendment which has been issued, but is not yet effective.


Upcoming changes in IFRS
There are no upcoming changes in IFRSs that will significantly impact the accounting policies of ING Group.


Changes to accounting policies in 2019

IFRS 16 ‘Leases’

IFRS 16 ‘Leases’ was issued by the IASB in January 2016 and endorsed by the EU in October 2017. IFRS 16 replaces IAS 17 ‘Leases’, IFRIC 4 ‘Determining whether an Arrangement contains a Lease’, SIC-15 ‘Operating Leases- Incentives’ and SIC-27 ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’. ING Group has adopted IFRS 16 retrospectively from 1 January 2019, but has not restated comparatives for the 2019 reporting period, as permitted under the specific transitional provisions in the Standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognized in the opening statement of financial position on 1 January 2019. 

 

1.a)  IFRS 16 – Impact of adoption

Transition

For lessee accounting, the new Standard removes the distinction between operating and finance leases. All leases are recognized 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).

 

There is no significant impact of the adoption of IFRS 16 on ING Group’s Net Result, Comprehensive income and Shareholders’ equity on transition. This follows ING Group’s implementation decision where the value of the right-of-use asset is based on the value of the lease liability, adjusted for any previously recognized prepaid and/or accrued lease payments on that lease contract, as is permitted under the Standard.

 

On transition to IFRS 16, ING recognised lease liabilities of EUR 1,301 million and right-of-use assets of EUR 1,279 million equal to the lease liability adjusted for any previously recognised prepaid or accrued lease payments on that lease.

 

The weighted average incremental borrowing rate applied to lease liabilities recognised in the statement of financial position at the date of initial application is 2.47%.


The following table reconciles the future rental commitments for operating lease contracts under IAS 17 to the lease liability under IFRS 16 on transition to IFRS 16 as of 1 January 2019:

  

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

17

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

 

 

1 January 2019

Future rental commitments for operating lease contract disclosed under IAS 17 as at 31 December 2018

1,378

(Less) discounting effect using ING’s incremental borrowing rate at 1-1-2019

–108

(Less) recognition exemption for short-term leases

–16

(Less) recognition exemption for low value assets

–3

(Less) non-lease components of a contract

–78

Add extension and termination options reasonably certain to be exercised

143

(Less) variable lease payments based on an index or a rate

–15

Lease liability recognised under IFRS 16 at 1 January 2019

1,301

 

In applying IFRS 16 for the first time, ING Group has used the following practical expedients permitted by the Standard:

·          Reliance on previous assessments whether a contract is, or contains a lease at the date of initial application;

·          The use of a single discount rate to a portfolio of leases with reasonably similar characteristics;

·          Reliance on previous assessments on whether leases are onerous;

·          The accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases;

·          The exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application; and

·          The use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

 

1.b) IFRS 16 - Accounting policies applied from 1 January 2019

A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a corresponding liability representing its obligation to make lease payments at the date at which the leased asset is available for use by ING Group. Each lease payment is allocated between the liability and finance cost. The finance costs are charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.

 

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

·          Fixed payments (including in-substance fixed payments), less any lease incentives receivable;

·          Variable lease payments that are based on an index or a rate;

·          Amounts expected to be payable by the lessee under residual value guarantees;

·          The exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and

·          Payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

 

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. This rate is approximated by using the risk free rate applicable to the lease term, the currency of the lease payment and jurisdiction, with the Fund Transfer Pricing (FTP) rate as an add-on. The FTP rate is used to transfer interest rate risk and funding and liquidity risk positions between the ING Group business and treasury departments. It is determined by either ING Group or Local Asset and Liability Committee (ALCO).

 

Right-of-use assets are measured at cost comprising the amount of the initial measurement of the lease liability, any lease payments made at or before the commencement date less any lease incentives received and any initial direct costs and restoration costs.

 

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise mainly IT-equipment (for example mobile phones or laptops) and small items of office furniture.

 

The right-of-use asset is included in the statement of financial position line-item ‘Property and equipment’, the lease liability is included in the statement of financial position line-item ‘Other liabilities’.

 

1.c) Leases prior to 1 January 2019 under IAS 17

The comparative figures presented are accounted for using the previous Standard, IAS 17 ‘Leases’. Under this Standard a distinction is made between finance leases and operating leases. A lease is considered a finance lease if it transfers substantially all risks and rewards of the ownership of the asset. All other leases are operating leases.

 

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

 

When ING Group acts as a lessor these are mainly finance leases. 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 finance lease 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.

 

 

 

 

  

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

18

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

Notes to the Condensed consolidated statement of financial position

 

 

 

 

 

2 Financial assets at fair value through profit or loss

 

 

 

 

 

Financial assets at fair value through profit or loss

 

30

June

2019

31

December

2018

Trading assets

54,212

50,152

Non-trading derivatives

2,397

2,664

Designated at fair value through profit or loss

2,944

2,887

Mandatorily measured at fair value through profit or loss

59,376

64,783

 

118,928

120,486

 

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 clients, 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. 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 always allow netting of these positions in the statement of financial position.

Reference is made to Note 7 ‘Financial liabilities at fair value through profit or loss’ for information on trading liabilities

 

Financial assets ‘Mandatorily measured at fair value through profit or loss’ mainly include reverse repurchase agreements. The related repurchase financial liabilities are classified as financial liabilities ‘Designated at fair value through profit or loss’.

 

3 Financial assets at fair value through other comprehensive income

 

 

 

 

 

Financial assets at fair value through other comprehensive income by type

 

30

June

2019

31

December

2018

Equity securities

2,551

3,228

Debt securities1

26,776

25,616

Loans and advances1

1,967

2,379

 

31,294

31,223

 

 

 

1  Debt securities include an amount of loan loss provisions of EUR -8 million (31 December 2018: EUR -6 million) and the Loans and advances includes an amount of loan loss provision of EUR -4 million (31 December 2018: -5 million).

 

Exposure to equity securities

 

 

 

 

 

Equity securities designated as at fair value through other comprehensive income

 

Carrying

value

Dividend income

 

30

June

2019

30

June

2019

Investment in Bank of Beijing

2,080

 

Other Investments

471

5

 

2,551

5

 

For strategic equity securities, ING decided to apply the option to irrevocably designate these investments at fair value through other comprehensive income, instead of the IFRS 9 default measurement of fair value through profit or loss.

 

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

19

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

Changes in fair value through other comprehensive income financial assets

The following table presents changes in fair value of equity securities and debt instruments at fair value through other comprehensive income.

  

Changes in fair value through other comprehensive income financial assets

 

FVOCI equity securities

FVOCI debt instruments1

Total

 

30

June

2019

31

December

2018

30

June

2019

31

December

2018

30

June

2019

31

December

2018

Opening balance as at 1 January

3,228

3,983

27,995

65,747

31,223

69,730

Effect of changes in accounting policy

 

–184

 

–31,945

 

–32,129

Additions

9

33

7,756

10,486

7,764

10,518

Amortisation

 

 

–2

–12

–2

–12

Transfers and reclassifications 

0

1

0

1

0

2

Changes in unrealised revaluations2

241

–463

972

–660

1,213

–1,123

Impairments

 

 

–3

 

–3

 

Reversals of impairments

 

 

1

16

1

16

Disposals and redemptions

–943

–178

–8,039

–15,478

–8,982

–15,656

Exchange rate differences

16

35

63

–159

79

–124

Changes in the composition of the group and other changes

 

0

1

1

1

1

Closing balance

2,551

3,228

28,744

27,995

31,294

31,223

 

 

 

 

 

 

 

1 Fair value through other comprehensive income debt instruments includes both debt securities and loans and advances

2 Changes in unrealised revaluations include changes on hedged items which are recognised in the statement of profit or loss.

 

Following a partial divestment in Q4 2018, ING sold its last tranche of shares in India’s Kotak Mahindra Bank (Kotak) in the first quarter of 2019 for EUR 923 million. The transaction, for a stake of 3.07%, concludes the divestment process.

 

Reference is made to Note 10 ‘Equity’ for information on ING’s equity reserves following the full divestment of the Kotak stake held by ING

 

Reference is made to Note 4 ‘Securities at amortised cost’ for details on ING Group’s exposure to debt securities.

  

 

4 Securities at amortised cost

 

 

 

Securities at amortised cost

 

30

June

2019

31

December

2018

Debt securities at amortised cost

45,970

47,276

 

45,970

47,276

 

 

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

 

30

June

2019

31

December

2018

Debt securities at fair value through other comprehensive income

26,776

25,616

Debt securities at amortised cost

45,970

47,276

Debt securities at fair value through other comprehensive income and amortised cost

72,747

72,893

 

 

 

Trading assets

8,409

5,213

Debt securities at fair value through profit or loss

3,196

3,218

Financial assets at fair value through profit or loss

11,605

8,431

 

84,352

81,323

 

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

20

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

ING Group’s total exposure to debt securities (excluding debt securities held in the trading portfolio) of EUR 75,943 million (31 December 2018: EUR 76,111 million) is specified as follows:

  

Debt securities by type of exposure

 

Debt Securities at FVPL

Debt Securities at FVOCI

Debt Securities at AC

Total

 

30

June

2019

31

December

2018

30

June

2019

31

December

2018

30

June

2019

31

December

2018

30

June

2019

31

December

2018

Government bonds

329

142

17,609

15,580

24,260

24,659

42,198

40,381

Sub-sovereign, Supranationals and Agencies

495

467

5,988

5,928

10,722

11,244

17,205

17,639

Covered bonds

 

 

1,600

2,245

6,985

6,722

8,585

8,967

Corporate bonds

21

23

393

485

179

765

593

1,273

Financial institutions bonds

1,415

1,527

371

460

2,405

2,415

4,192

4,402

ABS portfolio

935

1,059

823

924

1,428

1,483

3,187

3,466

 

3,196

3,218

26,785

25,622

45,979

47,288

75,960

76,128

Loan loss provisions

 

 

–8

–6

–9

–11

–17

–17

Bond portfolio

3,196

3,218

26,776

25,616

45,970

47,276

75,943

76,111

 

 

 

 

 

 

 

 

 

 

Approximately 99% (2018: 99%) of the exposure in the ABS portfolio is externally rated AAA, AA or A. There are no borrowed debt securities recognised in the statement of financial position.

 

5 Loans and advances to customers

 

 

 

 

 

Loans and advances to customers by type

 

Total

 

30

June

2019

31

December

2018

Loans to, or guaranteed by, public authorities

43,968

41,803

Loans secured by mortgages

342,731

337,379

Loans guaranteed by credit institutions

3,107

3,095

Personal lending

25,954

24,867

Corporate loans

195,801

187,000

 

611,562

594,144

 

 

 

Loan loss provisions

–4,481

–4,491

 

607,081

589,653

 

As at 30 June 2019, Loans and advances to customers includes receivables with regard to securities which have been acquired in reverse repurchase transactions amounting to EUR 1,416 million (2018: EUR 266 million).

 

Loans and advances to customers by subordination

 

30

June

2019

31

December

2018

Non-subordinated

606,974

589,533

Subordinated

107

120

 

607,081

589,653

 

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.

 

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

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Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

The following table show the reconciliations from the opening to the closing balance of the loan loss provisions.

  

Changes in Loan loss provisions

 

12-month

ECL

(Stage 1)

Lifetime

ECL not

credit

impaired

(stage 2)

Lifetime

ECL credit

impaired

(stage 3)

Purchased and originated

credit

impaired

Total¹

Opening balance as at 1 January 2019

501

925

3,139

2

4,568

Transfer into 12-month ECL

30

–208

–11

 

–190

Transfer into lifetime ECL not credit impaired

–38

283

–61

 

184

Transfer into lifetime ECL credit impaired

–2

–82

453

 

369

Net remeasurement of loan loss provision

–47

27

145

 

124

New financial assets originated or purchased

116

 

 

 

116

Financial assets that have been derecognised

–50

–75

–64

 

–188

Changes in models

 

 

 

 

Increase in loan loss provisions

10

–55

462

 

416

Write-offs

 

–2

–422

 

–424

Recoveries of amounts previously written off

 

 

31

 

31

Foreign exchange and other movements

–3

–4

–36

0

–43

Closing balance as at 30 June 2019

507

864

3,175

2

4,548

 

 

 

 

 

 

 

1   As at 30 June 2019, the stock of provisions included provisions for loans and advances to central banks (EUR  1 million), loans and advances to banks (EUR  9 million), financial assets at FVOCI (EUR  13 million), securities at amortised cost (EUR  9 million), provisions for loans and advances to customers (EUR  4,481 million) and provisions for contingent liabilities (credit replacements) recorded under Provisions (EUR  36 million).

  

 

Changes in Loan loss provisions¹

 

12-month

ECL

(Stage 1)

Lifetime

ECL not

credit

impaired

(stage 2)

Lifetime

ECL credit

impaired

(stage 3)

Purchased and originated

credit

impaired

Total²

Opening balance as at 1 January 2018 IAS 39

 

 

 

 

4,521

Effect of changes in accounting policy

 

 

 

 

795

Opening balance as at 1 January 2018

438

955

3,916

7

5,316

Transfer into 12-month ECL

19

–206

–23

 

–209

Transfer into lifetime ECL not credit impaired

–62

501

–56

 

383

Transfer into lifetime ECL credit impaired

–7

–86

707

 

615

Net remeasurement of loan loss provision

17

–55

312

 

274

New financial assets originated or purchased

213

 

 

 

212

Financial assets that have been derecognised

–101

–145

–341

 

–588

Changes in models

 

 

 

 

 

Increase in loan loss provisions

80

9

599

 

688

Write-offs

 

 

–1,043

 

–1,044

Recoveries of amounts previously written off

 

 

53

 

53

Foreign exchange and other movements

–18

–38

–386

–4

–446

Closing balance as at 31 December 2018

501

925

3,139

2

4,568

 

 

 

 

 

 

 

1   As at 31 December 2018, the stock of provisions included provisions for loans and advances to central banks (EUR  3 million), loans and advances to banks (EUR  9 million), financial assets at FVOCI (EUR  11 million), securities at amortised cost (EUR  11 million), provisions for loans and advances to customers (EUR  4,491 million) and provisions for contingent liabilities (credit replacements) recorded under Provisions (EUR  42 million).

  

 

6 Assets and liabilities held for sale  

 

Assets and liabilities held for sale includes disposal groups whose carrying amount will be recovered principally through a sale transaction rather than through continuing operations.

 

In December 2018, ING reached an agreement to sell part of the ING Lease Italy business. The carrying amount of EUR 1,154 million of the assets and liabilities held for sale decreased compared to a carrying amount of EUR 1,262 million as at 31 December 2018 due to a change in expected cashflows to be realised in the sale transaction.

 

The sale was completed on 1 July 2019, see also Note 22 ‘Subsequent events’.

 

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

22

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

7 Financial liabilities at fair value through profit or loss

 

 

 

 

 

Financial liabilities at fair value through profit or loss

 

 

30

June

2019

31

December

2018

Trading liabilities

33,575

31,215

Non-trading derivatives

2,381

2,299

Designated at fair value through profit or loss

63,492

59,179

 

99,448

92,693

 

  

ING Group Report on form 6-K for the period ended 30 June 2019 - Unaudited

23

 


 

 

Contents

Interim report 

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed

consolidated statement of comprehensive income

Condensed consolidated statement changes in equity

Condensed consolidated statement of cash flows

Notes to the condensed consolidated interim accounts

 

 

8 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

 

30

June

2019

31

December

2018

Fixed rate debt securities

 

 

Within 1 year

26,134

32,626

More than 1 year but less than 2 years

8,442

7,766

More than 2 years but less than 3 years

13,309

10,267