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Focused for Growth

Focused for Growth. Erik Dralans CEO ING SWE. 6 May 2008 www.ing.be. Introduction. ING Group Listed on Amsterdam, Brussels and New York Stock exchanges Involved in financial services Group holding company with two subholdings: ING Bank NV ING Verzekeringen NV

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Focused for Growth

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  1. Focused for Growth Erik Dralans CEO ING SWE 6 May 2008 www.ing.be

  2. Introduction ING Group • Listed on Amsterdam, Brussels and New York Stock exchanges • Involved in financial services • Group holding company with two subholdings: • ING Bank NV • ING Verzekeringen NV • Organised by business lines • Governed by a two-tier Board structure • Executive Committee • Supervisory Board • Voting principle: one share, one vote

  3. Key Points Key consumer trends are driving strong growth in savings as well as convergence of financial products ING is fundamentally well positioned to capitalise on changes in the industry ING’s strategy, focusing on banking, investments, life insurance and retirement services, offers strong long-term growth potential Working on new key performance indicators to reflect the essence of our business and delivery on our strategy Plays an important role in implementing the Group strategy Trends Well positioned Strategy KPIs ING Belgium

  4. People are living longer and need to take more responsibility for their own retirement People are living longer Populations are aging around the globe:(Percentage population age 60+) (Retirement age versus life expectancy in US) 80 % 78 45 2000 2050 Life expectancy 76 40 74 35 30 72 25 70 20 68 15 66 10 Retirement age 64 5 0 62 World US Japan Germany Italy NL Poland China 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: United Nations, 2007 • Demographics are driving growth in global savings worldwide • Government pension funds no longer sustainable • People need to take control of their financial future

  5. Total global savings pool is growing at 7.3% per year, and seen accelerating with growth led by developing markets Global retail financial balances* (in EUR trillion) Asia Pacific (Excl Japan / Australia) 7.3% 13% Central & Eastern Europe 16% Latin America 11% CAGR 2007E-2016E Source: McKinsey * Includes current accounts, savings, investments, mutual funds, consumer finance, mortgages, pensions and life insurance

  6. Technology is transforming the distribution of financial services Shift to bank technology/online:Global internet usage growth (millions of users) Number of client contacts in the Netherlands (mln) 1,320 Total number of clients 817 Direct contacts 598 361 147 Bank visits 36 Source: McKinsey Source: www.internetworldstats.com • Technology is transforming the distribution of financial services, improving convenience for customers and cost efficiency for banks • In this more flexible environment customer service, value for money, trust and a strong brand are crucial to keeping the customer relationship

  7. The life insurance industry is undergoing a paradigm shift Shift to investment-linked: Shift to bank distribution: (Share of life premium by product group) (Percentage of life insurance products sold through bank channel) Mature Europe Central and Eastern Europe Asia Traditional Life 88 80 Investment-linked 65 69 70 58 65 2000 60 60 2005 56 52 52 42 50 48 48 47 50 35 40 40 30 22 23 12 21 18 20 13 11 7 10 5 2 1 1 1986 2006 2002 2007E 2002 2006 0 0 0 Hungary United States South Korea India China NL S. Korea Poland Spain Belgium Hungary Czech Rep Source: McKinsey Source: McKinsey • Life insurance is undergoing a paradigm shift from traditional life to investment products • These products are moving more into the domain of banking • Life insurance is being distributed more and more through bank channels, which are more cost-effective • Banks own the customer relationship, and insurers will become increasingly dependent on banks for distribution

  8. These trends are driving growth and changes in the financial services industry Roll-over into retirement income stream Annuities Personalequity Pensions Retirement Services Unit-linked investments Mutual funds Life insurance Increase savings Mortgages Saving accounts Longer retirement Current accounts Accumulation phase Retirement income phase Time Customers can save in many different ways: the distinction between banking and insurance products is no longer relevant There is one customer savings pool

  9. Key Points Key consumer trends are driving strong growth in savings as well as convergence of financial products ING is fundamentally well positioned to capitalise on changes in the industry ING’s strategy, focusing on banking, investments, life insurance and retirement services, offers strong long-term growth potential Working on new key performance indicators to reflect the essence of our business and delivery on our strategy Plays an important role in implementing the Group strategy Trends Well positioned Strategy KPIs ING Belgium

  10. ING is well positioned to capitalise on changes in the industry Global brand Strategic Flexibility Flexibility to capture a larger share of savings pool Products & Scale Products for the customer’s life cycle Distribution Innovator in distribution Presence Strong presence in the most attractive markets Brand

  11. ING has the flexibility to enter markets in different ways to capture a share of the savings pool… ING has the strategic flexibility to enter markets in different ways depending on market circumstances to capture a larger share of the total savings pool and grow from there • Pensions • Second-pillar pension reform is creating attractive opportunities, particularly in developing markets • ING is No. 1 pension provider in Central Europe, No. 2 in Latin America • 1.4 million new customers added in Romania following reforms in 2007 • Purchase of Santander pension business in Latin America brings AuM for the region to EUR 36 billion • Built the world’s largest direct bank with EUR 300 billion in balances and 20 million customers • Variable annuities • Experience developed in US market • Exported to Japan, where ING now ranks No. 3 in the market for SPVAs with EUR 13 billion in AuM • Beginning rollout in Europe, with Spain and Hungary launched in 2007 • Turkey is a large, fast-growing market • Retail Banking asset pool is much larger than life insurance pool, and growing faster • Retail Lending is growing at 37% per year, retail savings at 18% • Strategy to enter Turkey through retail banking and add products from there

  12. …and has the right products to meet customers’ changing needs, with global scale in core products Current accounts Savings & Deposits Mortgages Other Lending Lifeinsurance Annuities & retirement services Institutional AM & Mutual Funds EUR 82 bln* EUR 344 bln* EUR 229 bln EUR 207 bln* EUR 79 bln EUR 206 bln EUR 295 bln All figures per year end*) Includes Wholesale Banking • ING offers the full range of products for every stage of the customer’s life cycle • ING can export product expertise from one market to another (VA, pensions) • ING has the strategic flexibility to do what works in each market • ING has global scale, with EUR 1,442 billion in client balances and 75 million customers worldwide ING’s strengths

  13. 48 …including a leading position among the world’s top savings banks EUR billion, top 20 global banks, 2006 FY Savings* Retail savings and C/A deposits volume 1,195 685 302 296 294 242 237 219 217 212 207 203 178 155 154 143 131 129 106 112 * Excl. UBS, BNP Paribas, ABN AMRO, Credit Suisse (savings data not available) ** Includes also corporates Source: McKinsey 13

  14. ING has a track record for innovation in distribution We have also built a strong agent and broker distribution network in mature and developing markets

  15. No. 2 pension providerActive in 7 countries15 million customersEUR 36 bln in pension AuM Latin America 11.9% No. 1 pensions providerNo. 2 life insurer 11 million customersEUR 52 bln in retail client balances Retail banking positions in Poland, Turkey, Romania ING has a strong presence in the most attractive developing markets Developing Markets savings and investment pools (EUR trillion), CAGR Source: McKinsey Asia Pacific (excl Japan/Australia) Central & Eastern Europe 13.0% 17.5% No. 2 foreign life insurerNo. 2 fund managerActive in 10 countriesEUR 53 bln in AuM • Leading positions in pensions and life in Asia, Central Europe and Latin America • Retail banking presence in the most important markets of Central Europe & Asia

  16. 60 50 40 30 20 10 0 2006 2016E …and strong positions in today’s largest markets Large Markets savings and investment pools (EUR trillion), CAGR Source: McKinsey North America Japan North America, Western Europe, Japan and Australia account for more than 90% of all personal finance balances 5.6% 4.6% Leading US annuity and retirement services playerEUR 176 bln in AuM 8 million ING Direct customers EUR 18 bln in AuMNo. 1 in COLINo. 3 in SPVA Australia Western Europe 8.8% 6.2% No. 3 life insurerNo. 4 superannuation and fund managementEUR 17.7 bln in AuM1.3 mln ING Direct customers Leading life insurer and retail bank in Benelux EUR 106 bln in AuM 11 mln ING Direct customers

  17. ING has one of the world’s leading retail financial brands • ING has created a leading global brand, No. 81 on Interbrand league table • One of only 12 financial services brands in global top 100 • Global television coverage of F1 sponsorship helped increase brand awareness around the world, especially Central and Eastern Europe and Asian markets – key regions for ING’s growth strategy • Total brand awareness rose from 69% to 74%* • Sponsorship is generating many fruitful business leads and significant new business * ING Survey

  18. Key Points Key consumer trends are driving strong growth in savings as well as convergence of financial products ING is fundamentally well positioned to capitalise on changes in the industry ING’s strategy, focusing on banking, investments, life insurance and retirement services, offers strong long-term growth potential Working on new key performance indicators to reflect the essence of our business and delivery on our strategy Plays an important role in implementing the Group strategy Trends Well positioned Strategy KPIs ING Belgium

  19. It’s all about savings The retail financial services industry is simply about attracting savings and putting that to work for our customers to earn an attractive return Asset gathering ING has chosen to focus on the areas that offer the fastest growth potential: Focus on growth potential • Focus on banking, investments, life insurance and retirement services • Emphasis on mass-affluent customers • Increase retail banking distribution • More in developing markets • Supported by two core competencies: asset management and asset generation

  20. Focus on the most attractive segments: Banking, investments, life insurance and retirement services 5.8% 7.3% 7.3% 7.8% 7.1% 8.1% 7.7% 6.5% 7.9% CAGR Retail banking and wealth accumulation products account for two-thirds of total retail financial balances, growing at 7% to 8% per year Source: McKinsey

  21. Emphasis on mass-affluent customers Retail financial balances (EUR bln) and CAGR 6.8% The mass and affluent market represents 2/3 of global financial balances Source: McKinsey

  22. Increase retail banking distribution The World's 20 biggest economies (in USD billion) 13,794 4,346 3,259 3,249 2,756 • ING has a retail banking footprint in the nine largest economies of the world and in 75% of the top 20 countries. • ING takes a pragmatic approach to bank distribution 2,515 2,068 1,415 1,406 1,295 1,224 • Own bank channels: full service retail bank • Self’banks: Entry strategy for developing markets • ING Direct: Entry strategy for mature markets • Strategic Stakes: Bank of Beijing, TMB • Exclusive distribution agreements and joint ventures • Open architecture 1,090 950 890 886 755 482 443 432 414 ING Direct Retail Banking Stake Source: IMF, September 2007* = planned

  23. More expansion in developing markets for long-term growth Retail financial balances in developing markets (EUR bln) and CAGR 12.8% 11.4% 12.6% 16.4% CAGR Developing markets showing strong growth in retail balances as economies develop and middle classes grow Source: McKinsey

  24. …. Supported by 2 core capabilities: asset management and asset generation Strong growth in total Assets under Management (in EUR bln) Total assets: EUR 1,312 bn 700 7.2% 600 293 bn Corporate Lending 265 500 400 300 553 bn 200 78 bn Personal Lending 261 100 61 bn 0 2007 2002 2003 2004 2005 2006 Insurance 28 327 bn • ING has the asset management skills to generate attractive returns for our clients • Top 25 global asset manager, active in 30 countries • World’s leading real estate investment manager • ING also has the ability to generate its own assets to manage its balance sheet effectively • Wholesale Banking generates high-quality assets, including corporate lending, leasing, structured finance • ING controls origination and credit quality

  25. 17 ING’s mission and strategic priorities Trends Mission Strengths Strategy Priorities People are living longer and need to take more responsibility for own retirement Setting the standard in helping our customers manage their financial future Products • ING is sharpening its strategic focus to: • Banking • Investments • Life insurance • Retirement services • Supported by two core capabilities: • Asset management • Asset gathering Retail (mass affluent) clients People are becoming richer Distribution Technology is transforming distribution of financial services Bank distribution Brand Customers are demanding value for money and simplicity. Trust is key Developing markets Existing presence in developing markets Life insurance paradigm shift – from traditional to investment products

  26. In Summary ING is well positioned to capture a larger share of the total savings pool • Strategic flexibility to enter markets in the way that works and grow from there • Right products to meet customers’ needs through life cycle • Strong presence in the most attractive developing markets • Strong positions in today’s large markets • Strong global brand • The life insurance industry is undergoing a paradigm shift to investment products • Differences between banking and insurance are becoming irrelevant. There is one savings and investment pool It’s all about savings Well-positioned ING is focused on the fastest growing segments of this market • Mass affluent • Banking, investments, life insurance, retirement services • Retail banking distribution • Developing markets Focused on growth

  27. Key Points Key consumer trends are driving strong growth in savings as well as convergence of financial products ING is fundamentally well positioned to capitalise on changes in the industry ING’s strategy, focusing on banking, investments, life insurance and retirement services, offers strong long-term growth potential Working on new key performance indicators to reflect the essence of our business and delivery on our strategy Plays an important role in implementing the Group strategy Trends Well positioned Strategy KPIs ING Belgium

  28. Measuring the delivery on our strategy The KPIs: 4 Group-wide metrics: Client Balances • Measuring our underlying business volume Expenses (and efficiency) • IFRS Operating Expenses and margin over client balances • Measuring our operating efficiency Profit (and margin) • Underlying Profit Before Tax • Disclosure will include a margin based on profit to client balances measuring our profitabiltiy Required Capital (and return) • Economic Capital and Return on Economic Capital, measuring the return on capital employed

  29. ING Belgium Rest of ING Group ING Belgium, an important part of ING Group Net Profit before Tax • With shares of 16% and 27% of the Retail and Wholesale banking activities, ING in Belgium accounts for 1/5th of ING Group banking activities and 1/10th of ING Group as a whole • ING Group employs 120.000 employees servicing more than 75 million customers in over 50 countries

  30. Enjoys a good level of autonomy… • Structures adapted to « Code Lippens »: • Executive Board • Audit & Remuneration Committee • Five external Board members • Gives input in Group / functional strategy settings • ING Belgium is responsible for implementing strategy / policy and adapting them to local markets and environment • In charge of controlling coherence with local rules and regulations

  31. … translating ING strategy locally & coherently • Strengthening savings gathering: • drive to increase share of savings pool • Innovation in distribution • Transformation of traditional retail bank into a universal direct bank (“direct when possible, advice when necessary”) • Launch of online products • Leader in asset gathering • Mortgages /consumer loans • Important lender to the corporate sector

  32. Conclusion • Comprehensive (« easy ») corporate strategy supported by a strong brand • ING Belgium: solid positioning and clear role

  33. Questions & answers

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