49 Primary reporting format - Business segments
ING Group’s business segments relate to the internal segmentation by business lines. These include the business lines: Insurance Europe, Insurance Americas, Insurance Asia/Pacific, Wholesale Banking, Retail Banking and ING Direct.
Other mainly includes items not directly attributable to the business lines.
Each business line is headed by a member of the Executive Board. The Executive Board sets the performance targets and approves and monitors the budgets prepared by the business lines. Business lines formulate strategic, commercial and financial policy in conformity with the strategy and performance targets set by the Executive Board.
The accounting policies of the business segments are the same as those described under Accounting policies for the consolidated balance sheet and profit and loss account. Transfer prices for inter-segment transactions are set at arm’s length. Corporate expenses are allocated to business lines based on time spent by head office personnel, the relative number of staff, or on the basis of income and/or assets of the segment. With regard to capital gains on the share portfolio, a fixed return of 3% is allocated to the insurance business lines. The differences between the actual capital gains on the shares portfolio and the allocated return are included in Other.
ING applies a system of capital charging that makes the results of the banking business units globally comparable, irrespective of the book equity they have and the currency they operate in. ING has the policy that, for the banking business units, equity locally needs to be invested at the local risk free rate. Banking business units are charged by the Corporate Line for the income that they make on the book equity invested and, are given a benefit based on the risk free Euro rate on the economic capital they employ. Consequently, the results of the businesses as disclosed are the local results after Group overhead charges while the investment returns on equity are based on the risk free Euro rate on economic capital.
ING Group evaluates the results of its business segments using a financial performance measure called underlying profit before taxation. Underlying profit before taxation is defined as profit before taxation excluding the impact of divestments and special items.
Business segments
| 2007 | Insur- ance Europe |
Insur- ance Americas |
Insur- ance Asia/ Pacific |
Whole- sale Banking |
Retail Bank- ing |
ING Direct | Other | Total Seg- ments |
Elimina- tions |
Total |
|---|---|---|---|---|---|---|---|---|---|---|
| Income | ||||||||||
| – external | 15,903 | 29,565 | 14,105 | 7,150 | 6,956 | 2,346 | 561 | 76,586 | 76,586 | |
| – inter-segment | 359 | 116 | 278 | –1,290 | –532 | –150 | 3,191 | 1,972 | –1,972 | |
| Total income | 16,262 | 29,681 | 14,383 | 5,860 | 6,424 | 2,196 | 3,752 | 78,558 | –1,972 | 76,586 |
| Segment profit before taxation | 2,300 | 2,152 | 576 | 2,260 | 1,783 | 530 | 1,442 | 11,043 | 11,043 | |
| Divestments | –460 | –93 | –32 | 129 | –456 | –456 | ||||
| Special items | 139 | 311 | 40 | 490 | 490 | |||||
| Underlying profit before taxation | 1,840 | 2,059 | 576 | 2,399 | 2,062 | 530 | 1,611 | 11,077 | 11,077 | |
| Segment assets | 98,287 | 159,679 | 61,433 | 965,680 | 461,946 | 262,560 | 139,050 | 2,148,635 | –836,125 | 1,312,510 |
| Segment liabilities | 89,531 | 150,769 | 55,996 | 957,923 | 458,006 | 259,792 | 110,995 | 2,083,012 | –810,033 | 1,272,979 |
| Share in profit or loss of associates | 316 | 191 | 212 | 26 | –5 | 740 | 740 | |||
| Book value of associates | 2,894 | 252 | 1 | 1,502 | 461 | –96 | 5,014 | 5,014 | ||
| Cost incurred in 2007 to acquire property, equipment, and intangibles | 219 | 766 | 122 | 177 | 1,227 | 296 | 344 | 3,151 | 3,151 | |
| Significant non-cash expenses | ||||||||||
| – Depreciation and amortisation | 255 | 1,102 | 573 | 155 | 199 | 87 | 4 | 2,375 | 2,375 | |
| – Impairments | 4 | 114 | 1 | 38 | 14 | 171 | 171 | |||
| – Reversal of impairments | 5 | 51 | 6 | 62 | 62 | |||||
| – Deferred acquisition costs and VOBA | 900 | 6,874 | 5,219 | 12,993 | 12,993 | |||||
| – Increase in provisions for Insurance and investment contracts | 4,339 | 12,036 | 10,060 | 59 | 26,494 | 26,494 | ||||
| – Addition to loan loss provision | –115 | 172 | 68 | 125 | 125 | |||||
The segment Insurance Asia/Pacific has a net reserve inadequacy using a prudent (90%) confidence level, and, in line with Group Policy, is taking measures to improve adequacy in that region. This inadequacy was offset by reserve adequacies in other segments, such that at the Group level there is a net adequacy at the prudent (90%) confidence level.
Business segments
| 2006 | Insur- ance Europe |
Insur- ance Americas |
Insur- ance Asia/ Pacific |
Whole- sale Banking |
Retail Bank- ing |
ING Direct | Other | Total Seg- ments |
Elimina- tions |
Total |
|---|---|---|---|---|---|---|---|---|---|---|
| Income | ||||||||||
| – external | 15,893 | 29,775 | 13,310 | 7,215 | 6,126 | 2,216 | –914 | 73,621 | 73,621 | |
| – inter-segment | 278 | 4 | 68 | –1,397 | –40 | 73 | 2,375 | 1,361 | –1,361 | |
| Total income | 16,171 | 29,779 | 13,378 | 5,818 | 6,086 | 2,289 | 1,461 | 74,982 | –1,361 | 73,621 |
| Segment profit before taxation | 2,362 | 1,992 | 636 | 2,481 | 1,935 | 691 | –157 | 9,940 | 9,940 | |
| Divestments | –113 | –15 | 44 | 3 | –81 | –81 | ||||
| Underlying profit before taxation | 2,249 | 1,992 | 621 | 2,525 | 1,935 | 694 | –157 | 9,859 | 9,859 | |
| Segment assets | 117,106 | 162,229 | 54,454 | 764,882 | 314,191 | 253,160 | 205,236 | 1,871,258 | –644,951 | 1,226,307 |
| Segment liabilities | 102,827 | 152,599 | 50,204 | 756,645 | 310,078 | 249,792 | 159,635 | 1,781,780 | –596,688 | 1,185,092 |
| Share in profit or loss of associates | 447 | 8 | 176 | 11 | –4 | 638 | 638 | |||
| Book value of associates | 2,981 | 14 | 2 | 1,141 | 57 | 148 | 4,343 | 4,343 | ||
| Cost incurred in 2006 to acquire property, equipment, and intangibles | 1,322 | 243 | 90 | 226 | 182 | 144 | 3 | 2,210 | 2,210 | |
| Significant non-cash expenses | ||||||||||
| – Depreciation and amortisation | 287 | 915 | 627 | 171 | 216 | 74 | 2,290 | 2,290 | ||
| – Impairments | 1 | 10 | 16 | 4 | 31 | 31 | ||||
| – Reversal of impairments | 4 | 4 | 4 | |||||||
| – Addition to loan loss provision | –118 | 161 | 60 | 103 | 103 | |||||
Business segments
| 2005 | Insur- ance Europe |
Insur- ance Americas |
Insur- ance Asia/ Pacific |
Whole- sale Banking |
Retail Bank- ing |
ING Direct | Other | Total Seg- ments |
Elimina- tions |
Total |
|---|---|---|---|---|---|---|---|---|---|---|
| Income | ||||||||||
| – external | 15,832 | 28,030 | 13,161 | 6,808 | 5,702 | 1,739 | –152 | 71,120 | 71,120 | |
| – inter-segment | 201 | 4 | 31 | –851 | 179 | 295 | 641 | 500 | –500 | |
| Total income | 16,033 | 28,034 | 13,192 | 5,957 | 5,881 | 2,034 | 489 | 71,620 | –500 | 71,120 |
| Segment profit before taxation | 2,031 | 1,941 | 478 | 2,599 | 1,864 | 630 | –649 | 8,894 | 8,894 | |
| Divestments | –87 | 38 | –31 | –300 | –62 | –13 | –455 | –455 | ||
| Underlying profit before taxation | 1,945 | 1,979 | 447 | 2,299 | 1,802 | 617 | -649 | 8,440 | 8,440 | |
| Segment assets | 113,900 | 165,719 | 48,326 | 677,869 | 312,021 | 232,773 | 27,856 | 1,578,464 | –419,825 | 1,158,639 |
| Segment liabilities | 101,855 | 158,330 | 44,697 | 669,352 | 308,558 | 229,778 | 21,018 | 1,533,588 | –413,374 | 1,120,214 |
| Share in profit or loss of associates | 346 | 12 | 34 | 134 | 6 | 9 | 541 | 541 | ||
| Book value of associates | 2,421 | 15 | 1 | 1,114 | 45 | 2 | 24 | 3,622 | 3,622 | |
| Cost incurred in 2007 to acquire property, equipment, and intangibles | 1,081 | 142 | 46 | 214 | 236 | 103 | 8 | 1,830 | 1,830 | |
| Significant non-cash expenses | ||||||||||
| – Depreciation and amortisation | 405 | 934 | 613 | 181 | 229 | 63 | 2,425 | 2,425 | ||
| – Impairments | 29 | 15 | 19 | 75 | 6 | 144 | 144 | |||
| – Reversal of impairments | 41 | 1 | 15 | 12 | 69 | 69 | ||||
| – Addition to loan loss provision | –108 | 111 | 85 | 88 | 88 | |||||
Interest income (external) and interest expense (external) breakdown by business line
| 2007 | Insurance Europe | Insurance Americas | Insurance Asia/ Pacific |
Wholesale Banking | Retail Banking | ING Direct | Other | Total |
|---|---|---|---|---|---|---|---|---|
| Interest income | 3,026 | 4,603 | 975 | 51,890 | 12,931 | 12,040 | 157 | 85,622 |
| Interest expense | 85 | 376 | 4 | 45,431 | 10,594 | 9,963 | 2,603 | 69,056 |
| 2,941 | 4,227 | 971 | 6,459 | 2,337 | 2,077 | –2,446 | 16,566 | |
Interest income (external) and interest expense (external) breakdown by business line
| 2006 | Insurance Europe | Insurance Americas | Insurance Asia/Pacific |
Wholesale Banking | Retail Banking | ING Direct |
Other | Total |
|---|---|---|---|---|---|---|---|---|
| Interest income | 3,307 | 4,604 | 911 | 37,873 | 10,390 | 10,435 | 669 | 68,189 |
| Interest expense | 25 | 466 | 4 | 31,648 | 8,085 | 8,309 | 2,458 | 50,995 |
| 3,282 | 4,138 | 907 | 6,225 | 2,305 | 2,126 | –1,789 | 17,194 | |
Interest income (external) and interest expense (external) breakdown by business line
| 2005 | Insurance Europe | Insurance Americas | Insurance Asia/Pacific |
Wholesale Banking | Retail Banking | ING Direct |
Other | Total |
|---|---|---|---|---|---|---|---|---|
| Interest income | 3,658 | 4,492 | 856 | 30,092 | 10,253 | 8,101 | –289 | 57,163 |
| Interest expense | 115 | 341 | 4 | 25,326 | 7,072 | 6,523 | 769 | 40,150 |
| 3,543 | 4,151 | 852 | 4,766 | 3,181 | 1,578 | –1,058 | 17,013 | |
