Edgar Filing: ING GROEP NV

Form 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For June 30, 2011

Commission File Number 1-14642

ING Groep N.V.

Amstelveenseweg 500

1081 KL 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 x 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): ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨ No x

If ‘Yes’ is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b).

THIS REPORT ON FORM 6-K (EXCEPT FOR REFERENCES THEREIN TO ‘UNDERLYING RESULT BEFORE TAX’ AND ANY OTHER NON-GAAP FINANCIAL MEASURE AS SUCH TERM IS DEFINED IN REGULATION G UNDER THE SECURTIES EXCHANGE ACT OF 1934, AS AMENDED) SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 333-155937) OF ING GROEP N.V. AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED. FOR THE AVOIDANCE OF DOUBT, THE DISCLOSURE CONTAINING REFERENCES TO ‘UNDERLYING RESULT BEFORE TAX’ AND ANY OTHER NON-GAAP FINANCIAL MEASURE CONTAINED IN THE ATTACHED REPORT IS NOT INCORPORATED BY REFERENCE INTO THE ABOVE-MENTIONED REGISTRATION STATEMENT OF ING GROEP N.V.

REPORT ON FORM 6-K

TABLE OF CONTENTS


	Page
1. Operating and Financial Review and Prospects

1.1 Introduction		3
1.2 Consolidated results of operations		5

2. ING Group Condensed Consolidated Interim Accounts (IFRS-IASB)

Condensed consolidated balance sheet		15
Condensed consolidated profit and loss account		16
Condensed consolidated statement of comprehensive income		17
Condensed consolidated statement of cash flows		18
Condensed consolidated statement of changes in equity		19
Notes to the condensed consolidated interim accounts		21

REPORT ON FORM 6-K

1. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

1.1 Introduction

Presentation of information

In this Report on Form 6-K (‘Form 6-K’), and unless otherwise stated or the context otherwise dictates, references to ‘ING Groep N.V.’, ‘ING Groep’ and ‘ING Group’ refer to ING Groep N.V. and references to ‘ING’, the ‘Company’, the ‘Group’, ‘we’ and ‘us’ refer to ING Groep N.V. and its consolidated subsidiaries. ING Groep N.V.’s primary insurance and banking subsidiaries are ING Verzekeringen N.V. (together with its consolidated subsidiaries, ‘ING Insurance’) and ING Bank N.V. (together with its consolidated subsidiaries, ‘ING Bank’), respectively.

All references to IFRS-IASB in this Form 6-K refer to International Financial Reporting Standards as issued by the International Accounting Standards Board (‘IASB’), including the decisions ING Group made with regard to the options available under IFRS as issued by the IASB.

All references to IFRS-EU in this Form 6-K refer 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.

ING prepares financial information in accordance with IFRS-IASB for purposes of reporting with the U.S. Securities and Exchange Commission (‘SEC’), including financial information contained in this Form 6-K. The published 2010 Consolidated Annual Accounts of ING Group, however, 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. Furthermore, IFRS 9 ‘Financial instruments’ (issued in 2009) is not yet endorsed by the EU and, therefore, is not yet part of IFRS-EU. IFRS 9 was initially effective as of 2013. However in July 2011 the International Accounting Standards Board tentatively decided to postpone the mandatory application of IFRS 9 until 2015. ING has not early adopted IFRS 9 under IFRS-IASB.

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 recognized 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 recognized 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.

The financial information in this Form 6-K is prepared under IFRS-IASB as required by the SEC. 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 fact that had ING Group applied IFRS-IASB as its primary accounting framework it may have applied alternative hedge strategies, where those alternative hedge strategies could have qualified for IFRS-IASB compliant hedge accounting, which could have resulted in different shareholders’ equity and net result amounts compared to those disclosed in this Form 6-K.

A reconciliation between IFRS-EU and IFRS-IASB is included on page 22.

Both IFRS-EU and IFRS-IASB differ in several areas from accounting principles generally accepted in the United States of America (‘US GAAP’).

Underlying result before tax and Operating result are included within this Form 6-K as they serve as performance measure utilized by the Banking operations and Insurance operations, respectively, for segment reporting.

Unless otherwise specified or the context otherwise requires, references to ‘EUR’ are to euros.

Small differences are possible in the tables due to rounding.

REPORT ON FORM 6-K

Cautionary statement with respect to forward-looking statements

All figures in this document are unaudited.

Certain of the statements contained herein are not historical facts, including, without limitation, certain statements made of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation:

(1)	changes in general economic conditions, in particular economic conditions in ING’s core markets,

(2)	changes in performance of financial markets, including developing markets,

(3)	the implementation of ING’s restructuring plan to separate banking and insurance operations,

(4)	changes in the availability of, and costs associated with, sources of liquidity such as interbank funding, as well as conditions in the credit markets generally, including changes in borrower and counterparty creditworthiness,

(5)	the frequency and severity of insured loss events,

(6)	changes affecting mortality and morbidity levels and trends,

(7)	changes affecting persistency levels,

(8)	changes affecting interest rate levels,

(9)	changes affecting currency exchange rates,

(10)	changes in general competitive factors,

(11)	changes in laws and regulations,

(12)	changes in the policies of governments and/or regulatory authorities,

(13)	conclusions with regard to purchase accounting assumptions and methodologies,

(14)	changes in ownership that could affect the future availability to us of net operating loss, net capital and built-in loss carry forwards and

(15)	ING’s ability to achieve projected operational synergies.

ING assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason.

Important events and transactions

For important events and transactions, reference is made to Note 15 to the condensed consolidated interim accounts.

REPORT ON FORM 6-K

1.2 Consolidated results of operations

The following information should be read in conjunction with, and is qualified by reference to the Group’s condensed consolidated interim accounts and other financial information included elsewhere herein. ING Group’s operating segments are based on the management structure of the Group, which is different from its legal structure. ING Group evaluates the results of its operating segments using a financial performance measure called underlying result. Underlying result is defined as result under IFRS-IASB excluding the impact of divestments and special items. For the banking activities underlying result is analysed in a format that is similar to the IFRS profit and loss account.

The breakdown of underlying result before tax by business line for the banking and insurance activities can be found in Note 13 ‘Segment Reporting’.

With regard to insurance activities, ING Group analyses, as of 2011, the underlying result through a margin analysis, which includes the following components:

•

Operating result

•

Non-operating items

Both are analysed into various sub-components. The total of operating result and non-operating items (gains/ losses and impairments, revaluations and market & other impacts) equals underlying result before tax.

To determine the Operating result the following Non-operating items are adjusted in the reported Underlying result before tax:

•

Realised capital gains/losses and impairments on debt and equity securities;

•

Revaluations on assets marked to market through the P&L; and

•

Other non-operating impacts, e.g. provision for guarantees on separate account pension contracts, equity related and other DAC unlocking, VA/FIA Guaranteed benefit Reserve Unlocking and DAC offset on gains/losses on debt securities.

The Operating result for the Life insurance business is also broken down in expenses and the following sources of income:

•

Investment margin which includes the spread between investment income earned and interest credited to insurance liabilities (excluding market impacts, including dividends and coupons);

•

Fees and premium-based revenues which includes the portion of life insurance premiums available to cover expenses and profit, fees on deposits and fee income on assets under management (net of guaranteed benefit costs in the US);

•

Technical margin which includes the margin between costs charged for benefits and incurred benefit costs; it includes mortality, morbidity and surrender results; and

•

Non-modelled which is immaterial and includes parts of the business for which no margins are provided.

Group Overview

ING Group’s net result in the first 6 months of 2011 totalled EUR 3,521 million including EUR 62 million net gain on divestments, a EUR 4 million net loss from divested units, EUR 66 billion from discontinued operations and EUR (227) million in special items, mainly restructuring costs. ING Group posted an underlying net result of EUR 3,624 million in the first six months of 2011, up from EUR 1,002 million in the same period last year as market conditions improved and the bank continued to benefit from attractive interest margins and lower loan loss provisions, as well as a positive effect of the carve-out.

Refer to Note 13 ‘Segment Reporting’ of the condensed consolidated interim accounts for Profit and loss account IFRS-IASB – Group, Banking and Insurance.

Sale Latin America

Following the announcement of the sale of the Latin American pension, life insurance and investment management operations, actual and historical results previously included under Insurance Latin America as well as ING Investment Management Latin America have been restated and are excluded from underlying net result and are now presented as discontinued operations. Reference is made to Note 20 of the condensed consolidated interim accounts.

Greece, Ireland and Portugal

Greece, Ireland and Portugal have applied for support from the European Financial Stability Fund (‘EFSF’). and on 21 July 2011 a Private Sector Initiative to support Greece was announced. Reference is made to Note 3 of the condensed consolidated interim accounts.

REPORT ON FORM 6-K

Banking operations

ING’s banking results were strong, supported by net production in client balances at solid interest margin and more normalised level of risk costs. The underlying result before tax increased to EUR 3,848 million from EUR 1,350 million in the first six months of last year, of which EUR 2,389 million was caused by higher valuation results on non-trading derivatives for which hedge accounting is not applied under IFRS-IASB. Excluding this impact, underlying result before tax rose EUR 110 million on the first six months of last year, which included a capital gain on the sale of an equity stake, while this year was impacted by impairments on Greek government bonds.

Total underlying income rose by EUR 2,443 million, or 34.8%, compared with the first six months of 2010. Interest results rose 3.4% compared with last year. This was driven by a four basis point increase in the interest margin to 1.43%, mainly due to higher interest results in Financial Markets and improved interest margins at ING Direct. Commission income rose 4.8% largely due to higher fees in Commercial Banking Structured Finance. Investment income decreased to EUR (102) million from EUR 119 million last year. The result on the sale of bonds and equities was EUR 76 million, compared with EUR 240 million in the previous year which included a EUR 86 million capital gain on the sale of an Asian equity stake. Despite the partial reversal of impairments in the first half of 2011, impairments on bonds and equities were EUR 65 million higher due to EUR 187 million impairments on Greek government bonds in the second quarter of 2011. Other income improved by EUR 2,380 million compared with the first half of 2010, of which EUR 2,389 million was caused by higher valuation results on non-trading derivatives for which hedge accounting is not applied under IFRS-IASB.

Underlying operating expenses rose 4.3% to EUR 4,909 million, as IT investments and marketing spending were skewed to the second half of 2010. Furthermore, costs rose on an increase in FTEs and regular salary increases while the last year included a release of an employee benefit provision. In the first half of 2011, impairments on real estate development projects and foreclosed properties were EUR 102 million compared with EUR 236 million last year. The underlying cost/income ratio improved to 51.9% from 67.0% in the first half of 2010.

Underlying risk costs declined towards more normalised levels, driven mainly by lower additions in Commercial Banking (Structured Finance and General Lending), and lower additions for mid-corporate and SME clients in the Benelux. ING Banking added underlying EUR 702 million to the loan loss provisions, down from EUR 962 million in the first six months of 2010. Risk costs amounted to 44 basis points of average risk-weighted assets. In the coming periods ING expects net provisions to remain below the average level seen in 2010.

Retail Netherlands

Retail Netherlands’ underlying result before tax decreased slightly to EUR 708 million from EUR 715 million in the first six months of 2010. Income was down as margins for lending products declined, which could not be offset by the increased volumes. Operating expenses increased versus a year ago due to higher pension costs following updated mortality tables, salary increases and a pension release last year. Loan losses declined as a result of lower additions in the mid-corporate and SME segments.

Total underlying income was EUR 2,075 million, which was 1.8% down on the first half of 2010. While the margin on savings in the first half of 2011 was still higher than a year ago, increased competition resulted in higher client rates putting pressure on margins going forward. In the first half of 2011 funds entrusted grew EUR 1.6 billion as an increase in savings was in part offset by lower current account balances. Mortgage volumes rose by EUR 3.1 billion in the first half of 2011, while margins declined as a result of lower expected prepayments, which increased funding costs. In business lending, margins dropped while volume growth remained modest, increasing by EUR 0.4 billion.

Operating expenses rose 5.9%, mainly as a consequence of salary increases, higher pension costs following updated mortality tables and a pension release in the first half of 2010.

The addition to loan loss provisions declined to EUR 169 million versus EUR 265 million a year ago. This was particularly attributable to lower risk costs in the mid-corporate and SME segments. The risk cost for mortgages were slightly up, but were still limited. Non-performing loans (NPLs) of mortgages remained stable at 1.0%.

Retail Belgium

Retail Belgium’s underlying result before tax declined to EUR 258 million from EUR 314 million in the first six months of 2010, due to increased operating expenses. Income was stable compared with the first half of 2010, whereas net additions to the loan loss provisions declined.

The underlying income remained stable at EUR 1,034 million compared to EUR 1,036 million last year as volume growth was offset by slightly lower margins and lower investment income which included a EUR 7 million impairment on Greek government bonds. Commission income declined due to lower fees from asset management activities. Funds entrusted increased by EUR 3.8 billion in the first half year of 2011 due to the success of the Orange Book savings product and the growing appetite for short term deposits, while margins remained stable. The lending portfolio increased EUR 3.2 billion, of which EUR 1.4 billion in residential mortgages and EUR 1.9 billion in other lending as demand for mid-corporate and SME lending picked up, however at somewhat lower margins.

Operating expenses increased 10.8% compared to first half of 2010, driven by higher staff expenses as a result of an increase in commercial staff, collective labour wage agreements as well as structural higher contribution to the deposit guarantee scheme and higher marketing costs.

The addition to the provision for loan losses was EUR 68 million versus EUR 83 million a year ago, as a result of lower risk costs in the mid-corporate and SME segment.

REPORT ON FORM 6-K

ING Direct

The underlying result before tax declined to EUR 608 million from EUR 675 million in the first six months of last year. Despite impairments on Greek government bonds, income rose due to higher volumes and increased interest margin but this could not compensate the higher operating expenses.

Total underlying income rose to EUR 1,824 million from EUR 1,786 million in the first half year of 2010, supported by improved interest result and higher commission income. Interest result was up 7.9% to EUR 1,959 million, driven by higher volumes and improved margins mainly in Germany. The interest margin rose to 1.28% from 1.20% in the first six months of last year. The interest result in the US continued to benefit from the IFRS treatment on previously impaired bonds, which had a positive impact of EUR 88 million compared with EUR 125 million in the first six months of 2010. The production of funds entrusted was EUR 8.4 billion, led by Germany and the US and supported by promotional campaigns in both countries. Retail lending increased by EUR 5.8 billion, mainly due to mortgage growth in Germany. ING Direct added 346,000 clients in the first half of the year, bringing the total to 24.0 million worldwide.

Investment income declined to EUR (160) million compared to EUR (73) million in the same period last year. The decrease was mainly attributable to EUR 171 million of impairments on Greek government bonds, while the impairments on the US investment portfolio were lower. Other income was EUR (65) million, a decrease of EUR 30 million on last year, reflecting hedge results as well as losses on the selective sale of mainly unsecured and ABS exposures.

Operating expenses rose 9.8% to EUR 982 million, reflecting investments in the business as payment accounts were further rolled out in Canada, France and Italy, and a limited number of branches were set up in Spain.

The net addition to loan loss provisions was EUR 234 million, up EUR 17 million on last year. Compared with the first half of 2010, risk costs increased mainly in the US reflecting lower anticipated recovery rates and in Italy.

Retail Central Europe

The underlying result before tax of Central Europe was EUR 83 million versus EUR 72 million in the first six months of last year mainly due to higher income in Poland and Romania, which was partly offset by margin pressure in Turkey.

Underlying income increased 7.0% to EUR 522 million compared with EUR 488 million in the first half of 2010. The increase mainly reflects an increase in mortgage and mid-corporate lending volumes as well as higher margins for savings in Poland. In Romania, income increased driven by higher lending volumes and improved margins. In January 2011, ING Bank Turkey introduced the Orange Savings account. ING is taking a cautious investment approach for inflows on the Orange Savings account until client behaviour is better evidenced, which resulted in margin pressure during the first half of 2011.

Operating expenses increased to EUR 397 million from EUR 379 million in the first half of 2010. The cost increase mainly reflects increased client activity, higher marketing spending and investments in Poland.

The addition to the loan loss provisions was EUR 41 million versus EUR 37 million a year ago, mainly due to increases in Turkey and Romania.

Retail Asia

Retail Asia’s underlying result before tax was EUR 25 million versus EUR 33 million in the first half of 2010, due to lower income and higher expenses.

Total underlying income decreased 3.1% to EUR 126 million compared with EUR 130 million a year ago, due to lower interest results and lower dividend received from Kookmin Bank. Interest results decreased 18.6% to EUR 70 million reflecting margin pressure and higher funding costs in India. This was partly offset by higher other income, supported by higher hedge results in India.

Operating expenses increased to EUR 85 million versus EUR 80 million in the first half of 2010 reflecting investments to expand the branch network. The addition to the loans loss provision was EUR 16 million versus EUR 17 million a year ago.

Commercial Banking excl. Real Estate

Commercial Banking excluding Real Estate posted strong results in the first half year of 2011. The underlying result before tax turned positive to EUR 2,269 million compared with a loss of EUR 289 million a year ago, due to improved valuation results on non-trading derivatives for which hedge accounting is not applied under IFRS-IASB. For its asset and liability management, ING uses fixed rate payer interest rate swaps to hedge long-dated fixed rate retail mortgages, reflected in the result of Financial Markets. Under IFRS-EU, the positive valuation of derivatives, following interest rate increases in the first half of 2011, is offset in the P&L against a similar value decrease on the retail mortgage portfolio (i.e. hedge accounting is applied). Under IFRS-IASB, hedge accounting for fair value macro hedges is not allowed and the value decrease on the retail mortgage portfolio is not recognized in P&L nor in equity.

REPORT ON FORM 6-K

Total underlying income increased EUR 2,501 million from the first half year of 2010 to EUR 3,540 million. The increase was mainly visible in Financial Markets, due to the aforementioned improved valuation results on non-trading derivatives, next to higher income from Structured Finance and Leasing & Factoring, partly offset by lower income from General Lending & PCM.

The total interest result increased 3.9% on the first six months of 2010, mainly fuelled by higher interest results from Financial Markets. The interest margins in Structured Finance and General Lending and Payment & Cash Management (PCM) declined, which was compensated by volume growth in mainly Structured Finance.

Commission income rose 24.2% supported by a 50.8% increase in fees in Structured Finance and higher fees from Corporate Finance and Equity Markets. Investment income increased to EUR 67 million from EUR 46 million last year despite a decline in Financial Markets, which included EUR 9 million of impairments on Greek government bonds in the first half of 2011. Other income improved by EUR 2,317 million, of which EUR 2,389 million was caused by higher valuation results on non-trading derivatives for which hedge accounting is not applied under IFRS-IASB. Excluding this impact, other income dropped by EUR 72 million or (12.7%), reflecting lower trading income following the wind-down of the proprietary trading book in the US last year in part offset by improved sales results from the car lease activities.

Operating expenses amounted to EUR 1,156 million, an increase of 9.7% compared with the same period in 2010 due to higher staff costs and selective investments in Financial Markets and PCM. The underlying cost/income ratio in the first half of 2011 was 32.7%, compared with 101.5% a year ago.

Net additions to loan loss provisions declined 57.4% to EUR 115 million, mainly due to net releases in Structured Finance combined with lower net additions in General Lending. Risk costs in first six months of 2011 were equivalent to annualised 19 basis points of average risk-weighted assets.

Real Estate

ING Real Estate’s underlying result before tax improved to EUR 82 million from a loss of EUR 117 million in the first half of 2010. This improvement was driven by lower negative fair value and impairments, as well as lower expenses and risk costs.

The negative fair value changes, which are booked in income, were EUR 21 million compared with EUR 40 million last year. Impairments on real estate development projects, which are booked in expenses, declined to EUR 92 million from EUR 236 million in the prior year.

Corporate Line

The Corporate Line Banking reported an underlying result before tax of EUR (185) million compared with EUR (53) million in the first half of last year, which included a EUR 86 million capital gain on the sale of an equity stake. Fair value changes on part of ING Bank’s own Tier 2 debt turned to a negative EUR 42 million in the first six months of 2011, compared with EUR 25 million positive a year ago. Financing charges rose by EUR 45 million, as the total costs of Group core debt are allocated to Corporate Line Bank as of 2011. These impacts were partly offset by EUR 102 million higher ‘income on capital surplus’ as a result of higher average book equity due to retained earning and lower benefits paid to the business units as a result of a decline in average economic capital.

Insurance operations

Total underlying income from the insurance operations for the six months ending 30 June 2011 decreased 8.1% to EUR 18,859 million, mainly due to lower investment and other income. Investment and other income was EUR 3,559 million in the first six months of 2011, a 26.4% decrease compared with the same period a year ago. This decrease is more than offset by a decrease in the underwriting expenditure. In the first six months of 2010, Investment and other income was driven by positive revaluations of derivatives hedging guarantees on and hedging interest rate risk in the US and Japan closed block variable annuity businesses, as well as the separate account pension contracts in the Netherlands.

Insurance results continued to improve in the first six months of 2011. The operating result of EUR 1,201 million increased 60.7% from the same period last year as a result of higher investment margin, fees and premium based revenues and technical margin. This effect was partly offset by higher DAC amortisation. The underlying result before tax in the first six months of 2011 rose to EUR 1,102 million from EUR 76 million a year ago as a result of favourable market impacts.

Life insurance and investment management

The operating result from Life Insurance and Investment Management was EUR 1,327 million, or 33.0% higher than the first six months of 2010. This improvement was driven by an increase of EUR 191 million in the investment margin as well as a EUR 109 million higher technical margin. Fees and premium based revenues increased by EUR 149 million but were partly offset by an increase of EUR 113 million in DAC amortisation and trail commissions.

The investment margin increased to EUR 849 million from EUR 658 million in the first six months of 2010. This increase from the same period last year is mainly attributable to increased dividend income in the Netherlands and the US (excluding US Closed Block VA).

Fees and premium-based revenues grew 6.7% from the same period last year to EUR 2,357 million, primarily driven by increases in US Closed Block, Asia and ING IM, partly offset by adverse developments in the Benelux, US and Central and Rest of Europe. At ING IM the increase reflected higher Assets under Management and the introduction of fixed service fees in the second six months of 2010.

REPORT ON FORM 6-K

The technical margin amounted to EUR 455 million and improved by EUR 109 million (or 31.5%) compared to the first six months of 2010, mainly due to EUR 70 million positive impact from an early surrender of a contract with a large pension fund in the Netherlands.

Life & ING IM administrative expenses were EUR 1,444 million, just EUR 5 million or 0.3% lower than the first six months of 2010. This was caused by positive one-offs in the second quarter of 2010 in the Benelux, increased expenses in 2011 due to the implementation of a new IT organisation in CRE and the fixed service fee at ING IM, largely offset by lower expenses in the US following a reduction in staff.

DAC amortisation and trail commissions increased to EUR 940 million from 827 million in the first six months of 2010, or up 13.7%. This is mainly driven by US Closed Block VA business that significantly reduced DAC balance in the second quarter of 2010 as well as the growth in fees and premium based revenues in US Closed Block and Asia.

The non-life operating result increased by 31.0% to EUR 110 million compared to EUR 84 million in the first six months of 2010 mainly due to lower claims, commissions and operating expenses in the Netherlands.

The operating result for the Corporate Line was EUR (236) million versus EUR (336) million in the first six months of 2010. The improvement resulted from lower interest paid on hybrids since December 2010, and the discontinuation by ING Group of allocating interest on ING Group core debt to the Insurance Corporate Line as from 1 January 2011.

Total operating result increased by 60.8% to EUR 1,201 million for the first six months of 2011 as compared to EUR 746 million a year ago.

The underlying result before tax improved to EUR 1,102 million from EUR 76 million in the first six months of 2010. The increase was mainly driven by higher operating result and improved market impacts as the first six months of 2010 included the negative effect of DAC unlocking for the US, where the first six months of 2011 included negative effects of impairments on subordinated debt from Irish banks and Greek government bonds that are impacted by the restructuring proposals of July 2011.

Gains/losses and impairments on investments came out at EUR (236) million from EUR (343) million in the first six months of 2010. Impairments on subordinated debt from Irish banks (EUR 180 million) and Greek government bonds that are impacted by the restructuring proposals of July 2011 (EUR 123 million) were only partly offset by capital gains on public equities in the Benelux and favourable market conditions in the US and the Benelux.

Revaluations decreased to EUR 197 million in the first six months of 2011 versus EUR 201 million in the same period last year. Revaluations were exceptionally high in the first six months of 2010 due to a EUR 194 million marked-to-market impact related to CMOs and interest rate hedges in the US. In 2011 positive figures reflect the improved market sentiment.

Market and other impacts improved to EUR (60) million over the first six months of 2011 from EUR (528) million in the same period last year. The US showed negative DAC unlocking in individual retirement and individual life, where the prior year showed more negative DAC unlocking related to equity. In the Benelux the result was negatively impacted by the change of provision for guarantees on separate account pension contracts (net of hedging).

Insurance Benelux

Insurance Benelux posted a strong performance in the first six month of 2011, driven by higher investment returns and a higher technical margin. The operating result rose 64.3% to EUR 593 million from EUR 361 million in the first six months of 2010.

Life investment margin climbed to EUR 335 million versus EUR 239 million in the first six months of 2010. This was partly attributable to reinvestment into fixed income securities and higher dividends on equity. Furthermore, an incidental dividend on a fixed income fund was received in the second quarter of 2011.

Fees and premium-based revenues remained stable at EUR 306 million compared with EUR 307 million in the first six months of 2010.

Technical margin increased 123.0% to EUR 223 million from EUR 100 million in the same period last year, mainly due to EUR 70 million positive impact from an early surrender of a contract with a large pension fund.

Life administrative expenses increased to EUR 281 million from EUR 271 million in the first six months of 2010, driven by EUR 25 million incidental releases of provisions in payroll expenses in the second quarter of 2010.

DAC amortisation and trail commissions remained flat at EUR 114 million compared with the first six months of 2010.

The non-life operating result increased 32.5% to EUR 106 million from EUR 80 million in the first six months of 2010, mainly driven by lower claims, lower commission expenses and lower operating expenses.

The underlying result before tax in the first six months of 2011 decreased by EUR 158 million, or 34.8%, to EUR 296 million from EUR 454 million in the first six months of 2010. Underlying result was impacted by the change of the provision for guarantees on separate account pension contracts net of hedging (EUR (202) million) and impairments on subordinated debt from Irish banks (EUR (171) million) and Greek government bonds that are impacted by the restructuring proposals of July 2011 (EUR (16) million). These negative impacts were partly offset by higher capital gains on public equities.

REPORT ON FORM 6-K

Insurance Central and Rest of Europe

The operating result before tax for Insurance Central and Rest of Europe declined 22.8% to EUR 115 million from EUR 149 million in the same period last year. This decline was mainly caused by higher administrative expenses as a result of higher project expenses for Solvency II and other new regionally shared costs.

The investment margin for the first six months of 2011 was flat at EUR 36 million.

Fees and premium-based revenues declined to EUR 241 million from EUR 254 million in the first six months of 2010. This was mainly due to the nationalisation of pension funds in Hungary and reallocation of health insurance premiums in Greece from fees and premium based revenues to the technical margin.

The technical margin increased by EUR 22 million from EUR 67 million in the first six months of 2010 to EUR 89 million at the end of June 2011. EUR 16 million of this increase was caused by the reallocation of health insurance premiums in Greece from fees and premium based revenues to the technical margin and EUR 3 million due to lower claims in Spain.

Life administrative expenses increased to EUR 157 million from EUR 122 million in the same period a year ago. This increase was mostly due to higher project expenses for Solvency II and shared IT expenses.

DAC amortisation and trail commissions increased by EUR 5 million compared with the same period last year to EUR 100 million. This is mainly due to higher commissions in Poland.

The underlying result before tax was EUR (2) million, which is EUR 128 million lower than in the same period last year. In addition to a decrease in operating result of EUR 34 million, the deterioration of underlying result was driven by EUR 117 million of impairments on Greek government bonds that are impacted by the restructuring proposals of July 2011 and subordinated debt from Irish banks, whereas the first six months of 2010 included EUR 23 million impairments.

Insurance United States

The operating result for Insurance US increased 34.3% to EUR 325 million from EUR 242 million in the first six months of 2010. The increase from the prior year is due to higher investment margin and lower administrative expenses. These effects are partly offset by lower technical margin mainly driven by lower amortisation of the gain related to the transfer of the US group reinsurance business in the first quarter of 2010.

The investment margin of EUR 428 million is a 10.9% increase from the first of 2010, primarily driven by lower interest rate swap expense, a reduction in average credited rates, and higher accretion of income on previously impaired securities due to improved market values.

Fees and premium-based revenues rose to EUR 528 million, a 1.3% increase from the first six months of 2010.

The technical margin of EUR 44 million decreased 53.7% from the first six months of 2010. The decrease from the prior year is due to the lower amortisation of the gain related to the transfer of the US group reinsurance business in the first quarter of 2010 and strong claim results in Employee Benefits in the prior year, as well as a large volume of Individual Life claims in the first quarter of 2011.

The total operating income remained flat at EUR 1,000 million as compared to EUR 1,003 million a year ago.

Administrative expenses were EUR 376 million, down 19.0% from the first six months of 2010, reflecting expense reductions initiated in late 2010, including the reduction of more than 700 positions since 30 June 2010.

DAC amortisation and trail commissions of EUR 300 million increased 1.0% over the first six months of 2010. The change was primarily due to a change in operating income that drives DAC amortisation and higher AUM-based trail commissions.

The underlying result before tax increased to EUR 428 million in the first six months of 2011 as compared to EUR 99 million in the previous year. The increase is driven by expense reductions in late 2010 reflected in the operating result, improved impairment results, partly offset by lower revaluations and higher market impacts.

Gains/losses and impairments narrowed to EUR (43) million from EUR (304) million in the first six months of 2010 as market conditions continue to improve. Losses in the first six months of 2011 reflect EUR (79) million of impairments and credit related losses, partially offset by EUR 36 million in trading gains.

Revaluations were EUR 162 million compared with EUR 289 million in the first six months of 2010. The decrease is primarily due to the second quarter of 2010 showing highly positive revaluations on CMOs.

Market and other impacts were EUR (15) million compared with EUR (128) million in the first six months of 2010. The prior year reflected higher DAC amortisation, due to the strong revaluation results, and more negative DAC unlocking partially due to equity related DAC Unlocking.

REPORT ON FORM 6-K

Insurance US Closed Block VA

The operating result for the US Closed Block VA increased to EUR 31 million in 2011 compared to EUR 28 million in the first 2010. The increase of 10.7% is driven by improved operating income being largely negated by increased DAC amortisation.

Investment margin of EUR 15 million increased from EUR (25) million in the first six months of 2010. The increase from previous year reflects reinvestment of short-term investments and government bonds into longer-duration fixed income securities.

Fees and premium-based revenues increased to EUR 118 million from EUR 58 million in the first six months of 2010, reflecting higher fee income and lower hedging costs due to improving market conditions, as well as the impact related to the move towards fair value accounting on reserves for Guaranteed Minimum Withdrawal Benefits for life (‘GMWB’).

The technical margin decreased EUR 3 million compared with the first six months of 2010 to EUR 13 million.

Administrative expenses of EUR 41 million are flat as compared to the first six months of 2010.

DAC amortisation and trail commissions increased to EUR 74 million over the first 6 months of 2011 from EUR (19) million in the same period previous year, driven by higher operating income as well as lower interest on DAC. DAC amortisation is reported net of interest, which declined by EUR 46 million from a year earlier due to the significant reductions in the DAC balance during 2010.

The underlying result before tax increased to a profit of EUR 122 million compared to a loss of EUR 558 million in the same period previous year. The loss in the same period previous year was driven by a reduction in the DAC balance of EUR 946 million and was partially offset by hedging gains that were greater than reserve changes.

Gains/losses and impairments of EUR 1 million in the six months ended per 30 June 2011 compared to EUR 14 million in the same period previous year. Revaluations of EUR 3 million compared to EUR(2) million in the first six months of 2011.

Market and other impacts of EUR 87 million improved substantially from EUR (598) million in the first six months of 2010. The prior year reflected a EUR 946 million reduction in the DAC balance, partially offset by hedging gains. A methodology change in DAC calculation reduced volatility of market and other impact in 2011.

Insurance Asia/Pacific

The operating result for Insurance Asia/Pacific amounted to EUR 281 million, compared with EUR 232 million in the first six months of 2010. The operating result increased by 20.2%, compared with the prior year on higher investment margin, fees and premium based revenues and technical margin.

The investment margin rose 57.1% to EUR 33 million, compared with EUR 21 million a year ago.

Fees and premium-based revenues rose 8.2% to EUR 710 million, mainly driven by growth in the Japan COLI business and modelling of the Malaysian Employee Benefits business in 2011. The increase was partly offset by a decline in ING Life Korea and lower fee income on the non-core Japan SPVA.

The technical margin was EUR 86 million as compared to EUR 68 million a year ago, mainly driven by higher surrender results in ING Life Korea being partly offset by a decline in mortality result in Japan.

Life administrative expenses increased 9.7% to EUR 227 million in line with business growth.

DAC amortisation and trail commissions were EUR 351 million compared with EUR 337 million in the first six months of 2010 following increased fees and premium based revenues.

The underlying result before tax increased to EUR 313 million from EUR 253 million in the first six months of 2010 on strong first quarter performance in Japan as well as surrender profits in Korea being partly offset by higher operating expenses following business growth and positive market and other impacts.

REPORT ON FORM 6-K

ING Investment Management

The operating result increased by 33.3% to EUR 92 million from EUR 69 million a year ago owing to higher fee and premium-based revenues that were partly offset by higher operating expenses.

Fees and premium-based revenues increased by 10.5% from EUR 411 million to EUR 454 million. Higher revenues from the introduction of a fixed service fee in Luxemburg and higher fee base were partly offset by adverse currency impacts.

Administrative Expenses increased 5.2% from EUR 344 million to EUR 362 million on the introduction of a Fixed Service Fee in Luxemburg and adverse currency impact.

Non-operating income was higher primarily owing to an increase in revaluations following positive market impacts partly offset by lower gains/losses and impairments.

The underlying result before tax increased 38.8% to EUR 111 million from EUR 80 million in the first six months of 2010 due to higher operating income as well as improved results from non-operating items.

Corporate line

The Corporate Line Insurance operating loss before tax of EUR (236) million improved from EUR (335) million in the first half of 2010, primarily due to lower interest on hybrids and debt. The Corporate Line Insurance mainly consists of items related to Capital Management and other insurance results. Corporate Line Insurance also includes ING Life Japan’s SPVA guaranteed benefits, which are reinsured to ING Reinsurance, net of the associated hedges that correspond to those benefits. Results have been restated to reflect the sale of the Latin American pension and life insurance businesses, which are now reflected in the net result from discontinued operations, while ING’s stake in the Brazilian insurer Sul America is now reported in the Corporate Line.

Consolidated assets and liabilities

The following table sets forth ING Group’s condensed consolidated assets and liabilities at June 30, 2011 and December 31, 2010:


	June 30, 2011		Dec. 31, 2010
(amounts in EUR billion)

Financial assets at fair value through P&L		255.2		263.9
Investments		207.8		234.2
Loans and advances to customers		585.7		608.9
Assets held for sale		61.2		0.7
Total assets		1,237.3		1,242.7

Insurance and investment contracts		259.6		271.1
Amounts due to banks		81.9		72.9
Customer deposits and other funds on deposit		458.3		511.4
Financial liabilities at fair value through P&L		123.2		138.5
Debt securities in issue/other borrowed funds		151.6		135.6
Liabilities held for sale		59.0		0.4
Total liabilities (including minority interests)		1,196.6		1,200.0

Non-voting equity securities		3.0		5.0
Shareholders’ equity (parent)		37.7		37.7
Shareholders’ equity per ordinary share (in EUR)		9.97		9.98

Compared with the end of December 2010, ING Group’s balance sheet decreased by EUR 5 billion to EUR 1,237 billion at the end of June 2011, including EUR 24 billion of negative foreign exchange movements. The transfer in June 2011 of balance sheet items of ING Direct USA (excluding the Illiquid Assets Back-up Facility), ING Car Lease and Insurance Latin America to Assets and liabilities held for sale caused large changes per item. The balance sheet growth was driven by increased loans and advances to customers and financial assets at fair value through profit and loss. )

For the complete balance sheet reference is made to page 15 Condensed Consolidated Balance Sheet of ING Group.

Loans and advances to customers

Loans and advances to customers declined EUR 23 billion compared with the end of December 2010 due to the reclassification of the Residential Mortgage portfolio of ING Direct USA with EUR 30 billion to Assets held for sale. In Germany and the Netherlands the residential mortgage portfolio increased. The increase in the Netherlands relates to mortgages under NHG (Nationale Hypotheek Garantie). The Illiquid Assets Back-up Facility government receivable within the Bank declined by EUR 3 billion to EUR 9 billion in the first six months of 2011 due to foreign exchange movements and repayments.

REPORT ON FORM 6-K

Investments

Investments fell by EUR 26 billion in the first six months of 2011 to EUR 208 billion. ING Bank decreased by EUR 22 billion driven by the reclassification of ING Direct USA to assets held for sale Excluding this impact, investments remained flat. Investments at ING Insurance’s decreased by EUR 4 billion, due to negative currency effects and revaluations.

Financial assets/liabilities at fair value

Financial assets at fair value through profit and loss diminished by EUR 9 billion from the end of December 2010. Financial assets at fair value through profit and loss at ING Bank remained almost flat compared to year-end 2010. For ING Insurance the decrease was EUR 8 billion, mainly due to currency effects. Financial liabilities at fair value through profit and loss decreased by EUR 15 billion, all of which was incurred within ING Bank and mainly related to lower repurchase transactions and lower valuation of derivatives following the increase in long term interest rates.

Insurance and investment contracts

Insurance and investment contracts decreased by EUR 12 billion to EUR 260 billion at the end of June 2011, due to currency effects and the transfer of the Latin America pensions, life insurance and investment management operations to liabilities held for sale.

Customer deposits

Customer deposits and other funds on deposits fell by EUR 53 billion to EUR 458 billion at the end of June 2011, fully explained by the reclassification of ING Direct USA.

Shareholders’ equity

Shareholders’ equity stabilised at EUR 37.7 billion. The decrease in foreign exchange movements of EUR (1.9) billion and EUR (1.0) billion repurchase premium non-voting equity securities, were offset by EUR 2.9 billion net profit.

REPORT ON FORM 6-K

Condensed consolidated interim financial information for the period ended 30 June 2011

Report on Form 6-K, Condensed consolidated interim accounts

Condensed consolidated balance sheet of ING Group

as at


amounts in millions of euros	30 June 2011		31 December 2010
ASSETS
Cash and balances with central banks		12,091		13,072
Amounts due from banks		56,580		51,828
Financial assets at fair value through profit and loss 2		255,190		263,894
Investments 3		207,807		234,240
Loans and advances to customers 4		585,692		608,938
Reinsurance contracts		5,447		5,789
Investments in associates		3,235		3,925
Real estate investments		1,743		1,900
Property and equipment		2,920		6,132
Intangible assets 5		3,975		5,372
Deferred acquisition costs		10,021		10,499
Assets held for sale 6		61,188		681
Other assets		31,426		36,469

Total assets		1,237,315		1,242,739

EQUITY
Shareholders’ equity (parent)		37,736		37,719
Non-voting equity securities		3,000		5,000

		40,736		42,719
Minority interests		832		729

Total equity		41,568		43,448

LIABILITIES
Subordinated loans		10,180		10,645
Debt securities in issue		151,593		135,604
Other borrowed funds		19,526		22,291
Insurance and investment contracts		259,599		271,128
Amounts due to banks		81,889		72,852
Customer deposits and other funds on deposit		458,262		511,362
Financial liabilities at fair value through profit and loss 7		123,174		138,539
Liabilities held for sale 6		58,991		424
Other liabilities		32,533		36,446

Total liabilities		1,195,747		1,199,291


Total equity and liabilities		1,237,315		1,242,739

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

Report on Form 6-K, Condensed consolidated interim accounts

Condensed consolidated profit and loss account of ING Group

for the six month period ended


	6 month period
	1 January to 30 June
amounts in millions of euros	2011			2010
Continuing operations
Interest income banking operations		33,531			32,310
Interest expense banking operations		(26,826	)		(25,874	)

Interest result banking operations		6,705			6,436
Gross premium income		14,506			14,987
Investment income 8		3,458			3,422
Commission income		2,171			2,026
Other income 9		1,345			988

Total income		28,185			27,859

Underwriting expenditure 10		15,395			18,163
Addition to loan loss provision		702			962
Intangible amortisation and other impairments 11		158			300
Staff expenses		3,921			3,742
Other interest expenses		280			314
Other operating expenses		3,025			2,814

Total expenses		23,481			26,295


Result before tax from continuing operations		4,704			1,564
Taxation		1,204			328

Net result from continuing operations		3,500			1,236

Discontinued operations
Net result from discontinued operations 20		68			95


Net result from continuing and discontinued operations (before minority interests)		3,568			1,331

Net result attributable to:
Equityholders of the parent		3,521			1,294
Minority interests		47			37

		3,568			1,331
Net result from continuing operations attributable to:
Equityholders of the parent		3,455			1,201
Minority interests		45			35

		3,500			1,236
Net result from discontinued operations attributable to:
Equityholders of the parent		66			93
Minority interests		2			2

		68			95

	6 month period
	1 January to 30 June
amounts in euros	2011			2010
Earnings per share
Basic earnings per ordinary share 12		0.60			0.22
Diluted earnings per ordinary share 12		0.60			0.22

Earnings per share for continuing operations
Basic earnings per ordinary share for continuing operations 12		0.58			0.20
Diluted earnings per ordinary share for continuing operations 12		0.58			0.20

Earnings per share for discontinued operations
Basic earnings per ordinary share for discontinued operations 12		0.02			0.02
Diluted earnings per ordinary share for discontinued operations 12		0.02			0.02

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

Report on Form 6-K, Condensed consolidated interim accounts

Condensed consolidated statement of comprehensive income of ING Group

for the six month period ended


	6 month period
	1 January to 30 June
amounts in millions of euros	2011			2010
Result for the period		3,568			1,331

Unrealised revaluations after taxation		(721	)		1,823
Realised gains/losses transferred to profit and loss		213			164
Changes in cash flow hedge reserve		(208	)		695
Transfer to insurance liabilities/DAC		91			(1,869	)
Exchange rate differences		(1,942	)		4,508

Total amount recognised directly in equity (other comprehensive income)		(2,567	)		5,321


Total comprehensive income		1,001			6,652

Comprehensive income attributable to:
Equityholders of the parent		971			6,614
Minority interests		30			38

		1,001			6,652

For the six month period 1 January 2011 to 30 June 2011 the Unrealised revaluations after taxation comprises EUR 3 million (1 January 2010 to 30 June 2010: EUR (20) million) related to the share of other comprehensive income of associates.

For the six month period 1 January 2011 to 30 June 2011 the Exchange rate differences comprises EUR (117) million (1 January 2010 to 30 June 2010: EUR 315 million) related to the share of other comprehensive income of associates.

Report on Form 6-K, Condensed consolidated interim accounts

Condensed consolidated statement of cash flows of ING Group

for the six month period ended


amounts in millions of euros		30 June 2011			30 June 2010
Result before tax			4,790			1,680
Adjusted for	– depreciation		853			838
	– deferred acquisition costs and value of business acquired		(213	)		42
	– increase in provisions for insurance and investment contracts		555			4,047
	– addition to loan loss provisions		702			962
	– other		(711	)		1,890
Taxation paid			(761	)		(144	)
Changes in	– amounts due from banks, not available on demand		(5,501	)		(5,814	)
	– trading assets		(1,492	)		(22,612	)
	– non-trading derivatives		(957	)		(3,557	)
	– other financial assets at fair value through profit and loss		283			693
	– loans and advances to customers		(16,541	)		(11,018	)
	– other assets		(504	)		399
	– amounts due to banks, not payable on demand		2,705			709
	– customer deposits and other funds on deposit		14,631			15,064
	– trading liabilities		(10,733	)		19,470
	– other financial liabilities at fair value through profit and loss		(868	)		4,452
	– other liabilities		(3,848	)		(1,194	)

Net cash flow from (used in) operating activities			(17,610	)		5,907

Investments and advances	– available-for-sale investments		(113,143	)		(79,947	)
	– investments for risk of policyholders		(27,704	)		(26,407	)
	– other investments		(1,253	)		(1,128	)
Disposals and redemptions	– available-for-sale investments		105,377			76,059
	– investments for risk of policyholders		30,054			27,388
	other investments		3,082			4,321

Net cash flow from (used in) investing activities			(3,587	)		286

Proceeds from borrowed funds and debt securities			174,175			219,097
Repayments of borrowed funds and debt securities			(155,552	)		(221,666	)
Repurchase of non-voting equity securities			(2,000	)
Repurchase premium			(1,000	)
Other net cash flow from financing activities			44			(55	)

Net cash flow from financing activities			15,667			(2,624	)


Net cash flow			(5,530	)		3,569

Cash and cash equivalents at beginning of period			20,740			20,959
Effect of exchange rate changes on cash and cash equivalents			(206	)		429

Cash and cash equivalents at end of period			15,004			24,957

Cash and cash equivalents comprises the following items:
Treasury bills and other eligible bills			3,808			6,083
Amounts due from/to banks			(895	)		5,509
Cash and balances with central banks			12,091			13,365

Cash and cash equivalents at end of period			15,004			24,957

Report on Form 6-K, Condensed consolidated interim accounts

Condensed consolidated statement of changes in equity of ING Group

for the six month period ended


amounts in millions of euros	Share capital		Share premium		Reserves			Total shareholders’ equity (parent)			Non-voting equity securities			Minority interests			Total
Balance at 1 January 2011		919		16,034		20,766			37,719			5,000			729			43,448

Unrealised revaluations after taxation						(721	)		(721	)								(721	)
Realised gains/losses transferred to profit and loss						213			213									213
Changes in cash flow hedge reserve						(208	)		(208	)								(208	)
Transfer to insurance liabilities/DAC						91			91									91
Exchange rate differences						(1,925	)		(1,925	)					(17	)		(1,942	)

Total amount recognised directly in equity						(2,550	)		(2,550	)					(17	)		(2,567	)

Net result for the period						3,521			3,521						47			3,568

						971			971						30			1,001

Repurchase of non-voting equity securities												(2,000	)					(2,000	)
Repurchase premium ¹⁾						(1,000	)		(1,000	)								(1,000	)
Changes in the composition of the group															79			79
Dividends															(6	)		(6	)
Purchase/sale of treasury shares						38			38									38
Employee stock option and share plans						8			8									8

Balance at 30 June 2011		919		16,034		20,783			37,736			3,000			832			41,568

¹⁾ Repurchase premium paid on the repurchase of EUR 2 billion non-voting equity securities

amounts in millions of euros	Share capital		Share premium		Reserves			Total shareholders’ equity (parent)			Non-voting equity securities			Minority interests			Total
Balance at 1 January 2010		919		16,034		13,948			30,901			5,000			915			36,816

Unrealised revaluations after taxation						1,828			1,828						(5	)		1,823
Realised gains/losses transferred to profit and loss						164			164									164
Changes in cash flow hedge reserve						695			695									695
Transfer to insurance liabilities/DAC						(1,869	)		(1,869	)								(1,869	)
Exchange rate differences						4,502			4,502						6			4,508

Total amount recognised directly in equity						5,320			5,320						1			5,321

Net result for the period						1,294			1,294						37			1,331

						6,614			6,614						38			6,652

Changes in the composition of the group															62			62
Dividends															(4	)		(4	)
Purchase/sale of treasury shares						(32	)		(32	)								(32	)
Employee stock option and share plans						12			12									12

Balance at 30 June 2010		919		16,034		20,542			37,495			5,000			1,011			43,506

Report on Form 6-K, Condensed consolidated interim accounts

Condensed consolidated statement of changes in equity of ING Group continued

for the six month period ended


amounts in millions of euros	Share capital		Share premium		Reserves			Total shareholders’ equity (parent)			Non-voting equity securities		Minority interests			Total
Balance at 1 January 2009 (before change in accounting policy)		495		9,182		5,403			15,080			10,000		1,594			26,674
Effect of change in accounting policy						(145	)		(145	)							(145	)

Balance at 1 January 2009 (restated)		495		9,182		5,258			14,935			10,000		1,594			26,529

Unrealised revaluations after taxation						6,002			6,002								6,002
Realised gains/losses transferred to profit and loss						725			725								725
Changes in cash flow hedge reserve						(1,146	)		(1,146	)							(1,146	)
Transfer to insurance liabilities/DAC						(276	)		(276	)							(276	)
Exchange rate differences						223			223					15			238

Total amount recognised directly in equity						5,528			5,528					15			5,543

Net result for the period						(941	)		(941	)				9103	)		(1,044	)

						4,587			4,587					(88	)		4,499

Changes in the composition of the group														(430	)		(430	)
Dividends														(1	)		(1	)
Purchase/sale of treasury shares						111			111								111
Employee stock option and share plans						23			23								23

Balance at 30 June 2009		495		9,182		9,979			19,656			10,000		1,075			30,731

The change in accounting policy for the insurance provisions for Guaranteed Minimum Withdrawal Benefits for Life is disclosed in Note 1 ‘Basis of presentation’.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts

1 BASIS OF PRESENTATION

These 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 Standard Board (IFRS-IASB) and are consistent with those set out in the notes to the 2010 Consolidated Annual Accounts of ING Group, except for the amendments referred to below.

These condensed consolidated interim accounts should be read in conjunction with ING Group’s 2010 Annual Accounts.

The following standards, interpretations and amendments to standards and interpretations became effective in 2011:

•

Classification of Rights Issues (Amendment to IAS 32);

•

Amendment to IAS 24 ‘Related Party Disclosures’;

•

Amendment to IFRIC 14 ‘Prepayments of a Minimum Funding Requirement’;

•

IFRIC 19 ‘Extinguishing Financial Liabilities with Equity Instruments’;

•

Amendment to IFRS 1 ‘Limited Exemption from Comparative IFRS 7 Disclosure for First-time Adopters’; and

•

2010 Annual improvements to IFRS.

None of these new or revised standards and interpretations had a significant effect on the condensed consolidated interim accounts for the period ended 30 June 2011.

The following new or revised standards and interpretations were issued by the IASB, which become effective for ING Group as of 2012, unless otherwise indicated:

•

Amendments to IFRS 7 ‘Disclosures – Transfers of Financial Assets’;

•

Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters (Amendments to IFRS 1);

•

Deferred tax: Recovery of Underlying Assets (Amendments to IAS 12);

•

IFRS 10 ‘Consolidated Financial Statements’, effective as of 2013;

•

IFRS 11 ‘Joint Arrangements’, effective as of 2013;

•

IFRS 12 ‘Disclosure of Interests in Other Entities’, effective as of 2013;

•

IFRS 13 ‘Fair Value Measurement’, effective as of 2013;

•

IAS 27 ‘Separate Financial Statements’, effective as of 2013;

•

IAS 28 ‘Investments in Associates and Joint Ventures’, effective as of 2013: and

•

Amendments to IFRS 1 ‘Presentation of Financial Statements – Presentation of Items of Other Income’, effective as of 2013.

Although these new requirements are still being analysed and the final impact is not yet known, ING Group does not expect the adoption of these new or revised standards and interpretations to have a significant effect on the condensed consolidated interim accounts.

Furthermore, in 2010 IFRS 9 ‘Financial Instruments’ was issued, which was initially effective as of 2013. However in July 2011 the International Accounting Standards Board tentatively decided to postpone the mandatory application of IFRS 9 until 2015. Implementation of IFRS 9 may have a significant impact on equity and/or result of ING Group.

In June 2011 the revised IAS 19 ‘Employee Benefits’ was issued, which will become effective as of 2013. At this moment, the revized standard is being analysed and the full impact is not yet known. One of the changes in the revized standard results in immediate recognition in equity of ‘unrecognized actuarial gains and losses’ as of the effective date. Unrecognized actuarial gains and losses as at 31 December 2010 are disclosed in Note 21 ‘Other liabilities’ in the Group 2010 Annual Accounts and amount to EUR (1,734) million. The impact of the revized standard will be impacted by movements in the unrecognized actuarial gains and losses until the effective date and the impact of other changes in the revized standard.

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 2010 Annual Accounts.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

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 2010 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-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 recognized when the revized estimate of the amount of cash flows in scheduled time buckets falls below the original designated amount of that bucket and is not recognized 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 shareholders’ equity and net result amounts compared to those indicated in these Condensed interim accounts.

A reconciliation between IFRS-EU and IFRS-IASB 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 shareholders’ equity and net result under IFRS-EU and IFRS-IASB:


	Shareholders’ equity						Net result first half year of
amounts in millions of euros	30 June 2011			31 December 2010			2011			2010

In accordance with IFRS-IASB		37,736			37,719			3,521			1,294

Adjustment of the EU ‘IAS 39 carve-out’		3,416			4,266			(850	)		1,539
Tax effect of the adjustment		(864	)		(1,081	)		217			(392	)

Effect of adjustment after tax		2,552			3,185			(633	)		1,147


In accordance with IFRS-EU		40,288			40,904			2,888			2,441

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 presentation of, and certain terms used in, the consolidated balance sheet, the consolidated profit and loss account, consolidated statement of cash flows, consolidated statement of changes in equity and certain notes has been changed to provide additional and more relevant information or (for changes in comparative information) to better align with the current period presentation. The impact of these changes is explained in the relevant notes when significant.

The comparison of balance sheet items between 31 December 2010 and 30 June 2011 is impacted by the held for sale classification as disclosed in Note 6 ‘Assets and liabilities held for sale’.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

Change in accounting policy for the insurance provisions for Guaranteed Minimum Withdrawal Benefits for Life

ING changed its accounting policy for the insurance provisions for Guaranteed Minimum Withdrawal Benefits for Life (GMWBL) on the Insurance US Closed Block VA book as of 1 January 2011. The revised accounting will better reflect the economic value of these guarantees and more closely align accounting practice with United States peers. Under the revised accounting, the insurance provisions will reflect current market interest rates and current estimates for other assumptions, except for volatility and correlation (which remain unchanged). ING substantially increased hedging of interest rate risk in the Insurance US Closed Block VA book; the results from these hedging derivatives are expected to largely mirror the effect of interest changes on the guarantees in future periods. Implementation of the revised accounting for GMWBL represents a change in accounting policy under IFRS, with a transitional impact being reflected in shareholders’ equity. Comparative periods’ results have been restated. The combined impact on shareholders’ equity as at 1 January 2011 is EUR 651 million (lower equity).

The impact on individual balance sheet line items and previous reporting periods can be specified as follows:

Impact on balance sheet


amounts in millions of euros	1 January 2009			30 June 2009			31 December 2009			30 June 2010			31 December 2010
Deferred acquisition costs		1,146			392			(190	)		383			(105	)
Insurance and investment contracts		1,369			314			148			751			546

		(223	)		78			(338	)		(368	)		(651	)
Tax effect		78			(27	)		118			129

Shareholders’ equity		(145	)		51			(220	)		(239	)		(651	)

The impact on the consolidated profit and loss account can be specified as follows:

Impact on profit and loss account


amounts in millions of euros	2009			2010			1 April 2010 to 30 June 2010		1 January 2010 to 30 June 2010
Underwriting expenditure		(109	)		(281	)		186		39
Taxation		(38	)		128			65		14

Result after taxation		(71	)		(409	)		121		25

2 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS

Financial assets at fair value through profit and loss


amounts in millions of euros	30 June 2011		31 December 2010
Trading assets		127,951		125,675
Investment for risk of policyholders		113,486		120,481
Non-trading derivatives		8,367		11,722
Designated as at fair value through profit and loss		5,386		6,016

		255,190		263,894

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

3 INVESTMENTS

Investments


amounts in millions of euros	30 June 2011		31 December 2010
Available-for-sale
– equity securities		9,613		9,754
– debt securities		189,262		212,793

		198,875		222,547

Held-to-maturity
– debt securities		8,932		11,693

		8,932		11,693


		207,807		234,240

Exposure to debt securities

ING Group’s total exposure to debt securities included in available-for-sale investments and assets at amortised cost of EUR 237,263 million (31 December 2010: EUR 266,859 million) is specified as follows by type of exposure and by banking and insurance operations:

Debt securities included in available-for-sale investments and assets at amortised cost by type and by banking and insurance operations


	Banking operations				Insurance operations				Total
amounts in millions of euros	30 June 2011		31 December 2010		30 June 2011		31 December 2010		30 June 2011		31 December 2010
Government bonds		52,599		51,960		48,276		48,455		100,875		100,415
Covered bonds		26,808		28,947		1,124		1,327		27,932		30,274
Corporate bonds		1,285		1,066		37,777		38,404		39,062		39,470
Financial institution bonds		18,902		25,863		12,186		13,047		31,088		38,910

Bond portfolio (excluding ABS)		99,594		107,836		99,363		101,233		198,957		209,069

US agency RMBS		376		10,930		4,286		4,799		4,662		15,729
US prime RMBS		15		706		1,315		1,625		1,330		2,331
US Alt-A RMBS		163		2,431		304		358		467		2,789
US subprime RMBS		30		87		1,095		1,560		1,125		1,647
Non-US RMBS		12,523		14,677		4,991		5,174		17,514		19,851
CDO/CLO		481		574		810		731		1,291		1,305
Other ABS		3,747		4,490		2,482		2,429		6,229		6,919
CMBS		1,427		2,409		4,261		4,810		5,688		7,219

ABS portfolio		18,762		36,304		19,544		21,486		38,306		57,790


		118,356		144,140		118,907		122,719		237,263		266,859

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

Greece, Ireland and Portugal

Greece, Ireland and Portugal have applied for support from the European Financial Stability Fund (‘EFSF’). At 30 June 2011, ING’s balance sheet value of ‘Government bonds’ and unsecured ‘Financial institutions’ bonds to Greece, Ireland and Portugal and the related pre-tax revaluation reserve in equity was as follows:

Bank

Insurance

30 June 2011

amounts in millions of euros

Balance
sheet
value

Pre-tax
revaluation
reserve

Pre-tax
impairments
in the first
half of 2011

Balance
sheet
value

Pre-tax
revaluation
reserve

Pre-tax
impairments
in the first
half of 2011

Greece

Goverment bonds – available-for-sale

406

(143

)

(187

)

323

(103

)

(123

)

Ireland

Goverment bonds – available-for-sale

(19

)

Financial institutions – available-for-sale

)

(180

)

Financial institutions – at amortised cost

154

Portugal

Goverment bonds – available-for-sale

469

(163

)

109

(73

)

Financial institutions – available-for-sale

193

(39

)

(81

)

Financial institutions – at amortised cost

Total

1,322

(354

)

(187

)

573

(276

)

(303

)

On 21 July 2011 a Private Sector Initiative to support Greece was announced. This initiative involves a voluntary exchange of existing Greek government bonds together with a Buyback Facility. The initiative relates to Greek Government Bonds maturing up to 2020. ING is currently assessing the alternative exchange options in this initiative. Based on this Private Sector Initiative, it was concluded that bonds that are in scope of the initiative (i.e. Greek government bonds maturing up to 2020) are impaired in the second quarter of 2011. The impairment relates to bonds classified as available-for-sale and is based on the 30 June 2011 market values of these bonds.

In the first quarter of 2011 ING Insurance recognised an impairment on subordinated debt from Irish banks.

Reference is made to Note 8 ‘Investment income’ for impairments on available-for-sale debt securities.

Reclassifications to Loans and advances to customers and Amounts due from banks (2009 and 2008)

Reclassifications out of available-for-sale investments to loans and receivables are allowed under IFRS-IASB as of the third quarter of 2008. In the second and first quarter of 2009 and in the fourth quarter of 2008 ING Group reclassified certain financial assets from Investments available-for-sale to Loans and advances to customers and Amounts due from banks. The Group identified assets, eligible for reclassification, for which at the reclassification date it had an intent to hold for the foreseeable future. The table on the next page provides information on the three reclassifications made in the second and first quarter of 2009 and the fourth quarter of 2008. Information is provided for each of the three reclassifications (see columns) as at the date of reclassification and as at the end of the subsequent reporting periods (see rows). This information is disclosed under IFRS-IASB as long as the reclassified assets continue to be recognised in the balance sheet.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

Reclassifications to Loans and advances to customers and Amounts due from banks


amounts in millions of euros	Q2 2009			Q1 2009			Q4 2008
As per reclassification date
Fair value		6,135			22,828			1,594
Effective interest rate (weighted average)		1.4%– 24.8%			2.1%– 11.7%			4.1%– 21%
Expected recoverable cash flows		7,118			24,052			1,646
Unrealised fair value losses in shareholders’ equity (before tax)		(896	)		(1,224	)		(69	)
Recognised fair value gains (losses) in shareholders’ equity (before tax) between the beginning of the year in which the reclassification took place and the reclassification date		173			nil			(79	)
Recognised fair value gains (losses) in shareholders’ equity (before tax) in the year prior to reclassification		(971	)		(192	)		(20	)
Recognised impairment (before tax) between the beginning of the year in which the reclassification took place and the reclassification		nil			nil			nil
Recognised impairment (before tax) in the year prior to reclassification		nil			nil			nil

2011
Carrying value as at 30 June		6,563			15,481			721
Fair value as at 30 June		6,644			14,690			742
Unrealised fair value losses recognised in shareholders’ equity (before tax) as at 30 June		(386	)		(536	)		(11	)
Effect on shareholders’ equity (before tax) as at 30 June if reclassification had not been made		82			(791	)		21
Effect on result (before tax) for the six month period ended 30 June if reclassification had not been made		nil			nil			nil
Effect on result (before tax) for the six month period ended 30 June (mainly interest income)		54			216			15
Recognised impairments (before tax) for the six month period ended 30 June		2			nil			nil
Recognised provision for credit losses (before tax) for the six month period ended 30 June		2			nil			nil

2010
Carrying value as at 31 December		6,418			16,906			857
Fair value as at 31 December		6,546			16,099			889
Unrealised fair value losses recognised in shareholders’ equity (before tax) as at 31 December		(491	)		(633	)		(65	)
Effect on shareholders’ equity (before tax) if reclassification had not been made		128			(807	)		32
Effect on result (before tax) if reclassification had not been made		nil			nil			nil
Effect on result (before tax) for the year (mainly interest income)		78			467			34
Recognised impairments (before tax)		nil			nil			nil
Recognised provision for credit losses (before tax)		nil			nil			nil

2009
Carrying value as at 31 December		6,147			20,551			1,189
Fair value as at 31 December		6,472			20,175			1,184
Unrealised fair value losses recognised in shareholders’ equity (before tax) as at 31 December		(734	)		(902	)		(67	)
Effect on shareholders’ equity (before tax) as at 31 December if reclassification had not been made		325			(376	)		(5	)
Effect on result (before tax) as at 31 December if reclassification had not been made		nil			nil			nil
Effect on result (before tax) after the reclassification until 31 December (mainly interest income)		54			629			n/a
Effect on result (before tax) for the year (mainly interest income)		n/a			n/a			47
Recognised impairments (before tax)		nil			nil			nil
Recognised provision for credit losses (before tax)		nil			nil			nil

2008
Carrying value as at 31 December								1,592
Fair value as at 31 December								1,565
Unrealised fair value losses recognised in shareholders’ equity (before tax) as at 31 December								(79	)
Effect on shareholders’ equity (before tax) as at 31 December if reclassification had not been made								(28	)
Effect on result (before tax) if reclassification had not been made								nil
Effect on result (before tax) after the reclassification until 31 December (mainly interest income)								9
Recognised impairments (before tax)								nil
Recognised provision for credit losses (before tax)								nil

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

4 LOANS AND ADVANCES TO CUSTOMERS

Loans and advances to customers by banking and insurance operations


amounts in millions of euros	30 June 2011			31 December 2010
Banking operations		561,741			584,773
Insurance operations		30,425			31,065

		592,166			615,838

Eliminations		(6,474	)		(6,900	)

		585,692			608,938

Loans and advances to customers by type – banking operations


amounts in millions of euros	30 June 2011			31 December 2010
Loans to, or guaranteed by, public authorities		53,780			55,953
Loans secured by mortgages		313,765			330,473
Loans guaranteed by credit institutions		8,771			8,664
Personal lending		22,800			21,743
Asset backed securities		15,947			18,605
Corporate loans		151,294			154,509

		566,357			589,947

Loan loss provisions		(4,616	)		(5,174	)

		561,741			584,773

Changes in loan loss provisions


	Banking operations						Insurance operations						Total
	6 month period ended			year ended			6 month period ended			year ended			6 month period ended			year ended
amounts in millions of euros	30 June 2011			31 December 2010			30 June 2011			31 December 2010			30 June 2011			31 December 2010
Opening balance		5,195			4,399			117			111			5,312			4,510
Changes in the composition of the group		(3	)					(3	)					(6	)
Write-offs		(606	)		(1,166	)		(8	)		(42	)		(614	)		(1,208	)
Recoveries		62			105			1			1			63			106
Increase in loan loss provisions		702			1,751			11			41			713			1,792
Exchange rate differences		(131	)		155			(2	)		6			(133	)		161
Other changes		(595	)		(49	)								(595	)		(49	)

Closing balance		4,624			5,195			116			117			4,740			5,312

Changes in loan loss provisions relating to insurance operations are presented under Investment income. Changes in the loan loss provisions relating to banking operations are presented under Addition to loan loss provision on the face of the profit and loss account.

Other changes mainly relate to ING Direct USA that classifies as a disposal group held for sale as per 30 June 2011. Reference is made to Note 6 ‘Assets and liabilities held for sale’.

The loan loss provision relating to banking operations at 30 June 2011 of EUR 4,624 million (31 December 2010: EUR 5,195 million) is presented in the balance sheet under Loans and advances to customers and Amounts due from banks for EUR 4,616 million (31 December 2010: EUR 5,174 million) and EUR 8 million (31 December 2010: EUR 21 million) respectively.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

5 INTANGIBLE ASSETS

Intangible assets


amounts in millions of euros	30 June 2011		31 December 2010
Value of business acquired		1,115		1,320
Goodwill		1,886		2,765
Software		666		754
Other		308		533

		3,975		5,372

The decrease in Goodwill mainly relates to the Latin American pensions, life insurance and investment management operations that classify as discontinued operations. Reference made to Note 20 ‘Discontinued operations’.

Goodwill impairment testing

Goodwill is tested for impairment at the lowest level at which it is monitored for internal management purposes. This level is defined as the so called ‘reporting units’ as set out in the 2010 ING Group Annual Accounts. Goodwill is tested for impairment by comparing the book value of the reporting unit to the best estimate of the recoverable amount of that reporting unit. The book value is determined as the IFRS-IASB net asset value including goodwill. The recoverable amount is estimated as the higher of fair value less cost to sell and value in use. Several methodologies are applied to arrive at the best estimate of the recoverable amount.

As a first step of the impairment test, the best estimate of the recoverable amount of reporting units to which goodwill is determined separately for each relevant reporting unit based on Price to Earnings, Price to Book, and Price to Assets under management ratios. The main assumptions in this valuation are the multiples for Price to Earnings, Price to Book and Price to Assets under management; these are developed internally but are either derived from or corroborated against market information that is related to observable transaction in the market for comparable businesses. Earnings and book values are equal to or derived from the relevant measure under IFRS-IASB. If the outcome of this first step indicates that the difference between recoverable amount and book value may not be sufficient to support the amount of goodwill allocated to the reporting unit, an additional analysis is performed in order to determine a recoverable amount in a manner that better addresses the specific characteristics of the relevant reporting unit.

No goodwill impairment was recognised in the first half year of 2011 (first half year of 2010: nil).

6 ASSETS AND LIABILITIES HELD FOR SALE

Assets and liabilities held for sale include disposal groups whose carrying amount will be recovered principally through a sale transaction rather than through continuing operations. This relates to businesses for which a sale is agreed upon or a sale is highly probable at the balance sheet date but for which the transaction has not yet fully closed. As at 30 June 2011 this relates mainly to the Latin American pensions, life insurance and investment management operations, ING Real Estate Investment Management (ING REIM) and Clarion Real Estate Securities (CRES) (except for Clarion Partners), ING Investment Management Australia, ING Direct USA, ING Car Lease, ING Arrendadora, S.A. de C.V. in Mexico and the part of ING Real Estate Investment Management Australia (ING REIMA) that has not yet closed. As at 31 December 2010 this related to Pacific Antai Life Insurance Company Ltd. (PALIC), ING Arrendadora, S.A. de C.V. in Mexico, ING REIM and CRES. Reference is made to Note 14 ‘Acquisitions and disposals’.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

Assets held for sale


amounts in millions of euros	30 June 2011		31 December 2010
Cash and balances with central banks		2,501		28
Amounts due from banks		308
Financial assets at fair value through profit and loss		739		16
Available-for-sale investments		21,161		144
Held-to-maturity investments		508
Loans and advances to customers		28,687		244
Reinsurance contracts		3
Investments in associates		62		43
Real estate investments		102
Property and equipment		3,291		12
Intangible assets		947		15
Deferred acquisition costs		9		43
Other assets		2,870		136

		61,188		681

Liabilities held for sale


amounts in millions of euros	30 June 2011		31 December 2010
Other borrowed funds		196		35
Insurance and investments contracts		716		217
Amounts due to banks		154
Customer deposits and other funds on deposit		56,739
Financial liabilities at fair value through profit and loss		1
Other liabilities		1,185		172

		58,991		424

Cumulative other comprehensive income includes EUR 374 million (2010: EUR 7 million) related to Assets held for sale.

In addition to the entities presented as Held for sale above, ING is considering potential divestments, including those that are listed under the European Commission Restructuring plan in Note 33 ‘Related Parties’ in the ING Group 2010 Annual Accounts. However, none of these businesses qualify as held for sale as at 30 June 2011 as the potential divestments are not yet available for immediate sale in their present condition and/or a sale is not yet highly probable to occur.

7 FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS

Financial liabilities at fair value through profit and loss


amounts in millions of euros	30 June 2011		31 December 2010
Trading liabilities		97,319		108,050
Non-trading derivatives		13,620		17,782
Designated as at fair value through profit and loss		12,235		12,707

		123,174		138,539

The change in the fair value of financial liabilities designated as at fair value through profit and loss attributable to changes in the credit risk of that liability in the first half year of 2011 was EUR (9) million (first half year of 2010: EUR 30 million; entire year 2010: EUR 28 million) and EUR 58 million (31 December 2010: EUR 67 million) on a cumulative basis.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

8 INVESTMENT INCOME

Investment income


6 month period	Banking operations						Insurance operations						Total
	1 January to 30 June						1 January to 30 June						1 January to 30 June
amounts in millions of euros	2011			2010			2011			2010			2011			2010
Income from real estate investments		16			75			28			32			44			107
Dividend income		15			17			140			112			155			129
Income from investments in debt securities								2,777			2,731			2,777			2,731
Income from loans								802			725			802			725
Realised gains/losses on disposal of debt securities		54			125			59			(89	)		113			36
Impairments of available-for-sale debt securities		(222	)		(107	)		(392	)		(296	)		(614	)		(403	)
Reverals of impairments of available-for-sale debt securities		43						4			11			47			11
Realised gains/losses on disposal of equity securities		22			115			175			72			197			187
Impairments of available-for-sale equity securities		(14	)		(22	)		(29	)		(10	)		(43	)		(32	)
Change in fair value of real estate investments		(19	)		(35	)		(1	)		(34	)		(20	)		(69	)

		(105	)		168			3,563			3,254			3,458			3,422

Impairments of available-for-sale debt securities in banking and insurance operations include EUR 490 million in the first half year of 2011 (first half year of 2010: nil) of impairments on subordinated debt from Irish banks and Greek government bonds that are impacted by the restructuring proposals of July 2011.

Impairments/reversals of impairments on investments per operating segment


6 month period	Impairments				Reversal of impairments
	1 January to 30 June				1 January to 30 June
amounts in millions of euros	2011		2010		2011			2010
Retail Belgium		8
ING Direct		203		78
Commercial Banking (excluding Real Estate)		25		49
ING Real Estate						(43	)
Insurance Benelux		219		25
Insurance CRE		120		11
Insurance US *		76		268		(4	)
Insurance Asia/Pacific		5		2					(2	)
ING IM									(9	)
Corporate Line Banking				2
Corporate Line Insurance		1

		657		435		(47	)		(11	)

*	Excluding US Closed Block VA

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

9 OTHER INCOME

Other income


6 month period	Banking operations					Insurance operations						Total
	1 January to 30 June					1 January to 30 June						1 January to 30 June
amounts in millions of euros	2011		2010			2011			2010			2011		2010
Net result on disposal of group companies		42		385			27			2			69		387
Valuation results on non-trading derivatives		1,218		(1,770	)		(717	)		1,684			501		(86	)
Net trading income		64		667			342			(518	)		406		149
Result from associates		47		15			108			75			155		90
Other income		159		160			55			288			214		448

		1,530		(543	)		(185	)		1,531			1,345		988

Higher valuation results on non-trading derivatives from insurance operations in the first half year of 2011 were driven by revaluations of derivatives hedging guarantees on and interest rate risk in the United States and Japan closed block variable annuity business as well as the separate account pension contracts in the Netherlands. These valuation results on non trading derivatives related to the indirect equity exposures were more than offset by an opposite amount in underwriting expenditure (reference is made to Note 10 ‘Underwriting expenditure’).

Result from associates


6 month period	Banking operations						Insurance operations				Total
	1 January to 30 June						1 January to 30 June				1 January to 30 June
amounts in millions of euros	2011			2010			2011		2010		2011			2010
Share of results from associates		61			17			108		75		169			92
Impairments		(14	)		(2	)						(14	)		(2	)

		47			15			108		75		155			90

10 UNDERWRITING EXPENDITURE

Underwriting expenditure


	6 month period
	1 January to 30 June
amounts in millions of euros	2011			2010
Gross underwriting expenditure
– before effect of investment result for risk of policyholders		16,283			19,002
– effect of investment result risk of policyholders		2,693			(2,035	)

		18,976			16,967
Investment result for risk of policyholders		(2,693	)		2,035
Reinsurance recoveries		(888	)		(839	)

Underwriting expenditure		15,395			18,163

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

Underwriting expenditure by class


	6 month period
	1 January to 30 June
amounts in millions of euros	2011			2010
Expenditure from life underwriting
Reinsurance and retrocession premiums		874			1,027
Gross benefits		13,229			12,164
Reinsurance recoveries		(885	)		(837	)
Change in life insurance provisions for risk of company		93			2,752
Costs of acquiring insurance business		529			778
Other underwriting expenditure		276			235
Profit sharing and rebates		242			1,066

		14,358			17,185
Expenditure from non-life underwriting
Reinsurance and retrocession premiums		32			50
Gross claims		533			515
Reinsurance recoveries		(4	)		(3	)
Change in provision for unearned premiums		246			236
Change in claims provision		12			33
Costs of acquiring insurance business		134			141
Other underwriting expenditure		(2	)

		951			972
Expenditure from investment contracts
Costs of acquiring investment contracts		2			2
Profit sharing and rebates					11
Other changes in investment contract liabilities		84			(7	)

		86			6

		15,395			18,163

11 INTANGIBLE AMORTISATION AND OTHER IMPAIRMENTS

Intangible amortisation and (reversals of) impairments


6 month period	Impairment losses				Reversals of impairments						Total
	1 January to 30 June				1 January to 30 June						1 January to 30 June
amounts in millions of euros	2011		2010		2011			2010			2011		2010
Property and equipment		8		11		(3	)		(2	)		5		9
Property development		101		235								101		235
Software and other intangible assets		21		19								21		19

(Reversals of) other impairments		130		265		(3	)		(2	)		127		263

Amortisation of other intangible assets												31		37

												158		300

In the first half year of 2011 EUR 101 million impairments are recognised on Property development (in the segment ING Real Estate) of which EUR 59 million is due to the sale or termination of large projects in Germany and the Netherlands and EUR 43 million is based on the reassessment of Spanish real estate development projects and a small part relates to foreclosure property in the United States.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

12 EARNINGS PER ORDINARY SHARE

Earnings per ordinary share

6 month period

Amount
(in millions of euros)

Weighted average
number of ordinary
shares outstanding
during the period
(in millions)

Per ordinary share
(in euros)

1 January to 30 June

2011

2010

2011

2010

2011

2010

Net result

3,521

1,294

3,783.4

3,782.5

Attribution to non-voting equity securities

(1,260

)

(425

)

Basic earnings

2,261

869

3,783.4

3,782.5

0.60

0.22

Dilutive instruments:

Stock option and share plans

7.6

5.4

7.6

5.4

Diluted earnings

2,261

869

3,791.0

3,787.9

0.60

0.22

Attribution to non-voting equity securities

The attribution to non-voting equity securities represents the amount that would be payable on the non-voting equity securities if and when the entire net result for the period would be distributed as dividend. This amount is only included for the purpose of determining earnings per share under IFRS-IASB and does not represent a payment (neither actual nor proposed) to the holders of the non-voting equity securities. It also includes the premium that is due on repayment of non-voting equity securities during the period.

The first quarter of 2011 includes an attribution of EUR 425 million, being the coupon payable on the non-voting equity securities if and when the net result of the first quarter would be distributed as dividend. In the second quarter, EUR 2 billion of non-voting equity securities were repaid. The total attribution for the first half year of 2011 is EUR 282 million (i.e. a positive impact of EUR 143 million in the second quarter of 2011). The attribution in the second quarter of 2011 also includes the premium of EUR 1 billion paid in relation to the repurchase of the EUR 2 billion non-voting equity securities during the period.

The first quarter of 2010 includes an attribution of EUR 425 million, being the coupon payable on the non-voting equity securities if and when the net result of the first quarter would be distributed as dividend. The attribution for the first half year of 2010 is also EUR 425 million. Therefore, no additional attribution is reflected in the second quarter of 2010.

Dilutive instruments

Diluted earnings per share is calculated as if the stock options and share plans outstanding at the end of the period had been exercised at the beginning of the period and assuming that the cash received from exercised stock options and share plans is used to buy own shares against the average market price during the period. The net increase in the number of shares resulting from exercising stock options and share plans is added to the average number of shares used for the calculation of diluted earnings per share.

The potential conversion of the non-voting equity securities has an anti-dilutive effect on the earnings per share calculation in 2011 and 2010 (the diluted earnings per share becoming higher or less negative than the basic earnings per share). Therefore, the potential conversion is not taken into account in the calculation of diluted earnings per share for these periods.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

Earnings per ordinary share for continuing operations

6 month period

Amount
(in millions of euros)

Weighted average
number of ordinary
shares outstanding
during the period
(in millions)

Per ordinary share
(in euros)

1 January to 30 June

2011

2010

2011

2010

2011

2010

Basic earnings

2,261

869

3,783.4

3,782.5

Less: Net result for discontinued operations

Basic earnings for continuing operations

2,195

776

3,783.4

3,782.5

0.58

0.20

Dilutive instruments:

Stock option and share plans

7.6

5.4

7.6

5.4

Diluted earnings for continuing operations

2,195

776

3,791.0

3,787.9

0.58

0.20

Earnings per ordinary share for discontinued operations


6 month period	Amount (in millions of euros)				Weighted average number of ordinary shares outstanding during the period (in millions)				Per ordinary share (in euros)
	1 January to 30 June				1 January to 30 June				1 January to 30 June
	2011		2010		2011		2010		2011		2010
Net result for discontinued operations		66		93		3,783.4		3,782.5

Basic earnings for discontinued operations		66		93		3,783.4		3,782.5		0.02		0.02

Dilutive instruments:
Stock option and share plans						7.6		5.4

						7.6		5.4


Diluted earnings for discontinued operations		66		93		3,791.0		3,787.9		0.02		0.02

13 SEGMENT REPORTING

a. General

ING Group’s operating segments relate to the internal segmentation by business lines. ING Group identifies the following operating segments:

Operating segments of ING Group


Banking		Insurance

Retail Netherlands		Insurance Benelux

Retail Belgium		Insurance Central & Rest of Europe (CRE)

ING Direct		Insurance United States (US) *

Retail Central Europe (CE)		Insurance US Closed Block VA

Retail Asia		Insurance Asia/Pacific

Commercial Banking (excluding Real Estate)		ING Investment Management (IM)

ING Real Estate		Corporate Line Insurance

Corporate Line Banking

*	Excluding US Closed Block VA

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

As per the second quarter of 2011 the operating segment Insurance Latin America is not included in the segment reporting anymore as those activities classify mainly as discontinued operations. Reference is made to Note 20 ‘Discontinued operations’. Activities reported previously in the segment Insurance Latin America and that are not classified as discontinued operations are now reported in the Corporate Line Insurance.

The Executive Board of ING Group, the Management Board Banking and the Management Board Insurance set the performance targets and approve and monitor 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 Management Board Banking and the Management Board Insurance.

The accounting policies of the operating segments are the same as those described under Accounting policies for the consolidated annual accounts except for the change described in Note 1 ‘Basis of presentation’. 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.

ING Group evaluates the results of its operating segments using a financial performance measure called underlying result. The information presented in this note is in line with the information presented to the Executive and Management Board. Underlying result is defined as result under IFRS-IASB excluding the impact of divestments and special items. Disclosures on comparative periods also reflect the impact of current period’s divestments.

The following table specifies the main sources of income of each of the segments:

Specification of the main sources of income of each of the segments


Segment		Main source of income
Retail Netherlands		Income from retail and private banking activities. The main products offered are current and savings accounts, mortgages and other consumer lending in the Netherlands.

Retail Belgium		Income from retail and private banking activities in Belgium. The main products offered are similar to those in the Netherlands.

Retail CE		Income from retail and private banking activities in Central Europe. The main products offered are similar to those in the Netherlands.

Retail Asia		Income from retail banking activities in Asia. The main products offered are similar to those in the Netherlands.

ING Direct		Income from direct retail banking activities. The main products offered are savings accounts and mortgages.

Commercial Banking (excluding Real Estate)		Income from wholesale banking activities. A full range of products is offered from cash management to corporate finance.

ING Real Estate		Income from real estate activities.

Insurance Benelux		Income from life insurance, non-life insurance and retirement services in the Benelux.

Insurance CRE		Income from life insurance, non-life insurance and retirement services in Central and Rest of Europe.

Insurance US *		Income from life insurance and retirement services in the United States.

Insurance US Closed Block VA		Consists of ING’s Closed Block Variable Annuity business in the United States, which has been closed to new business since early 2010 and which is now being managed in run-off.

Insurance Asia/Pacific		Income from life insurance and retirement services in Asia/Pacific.

ING IM		Income from investment management activities.

Corporate Line Banking		Corporate Line Banking is a reflection of capital management activities and certain expenses that are not allocated to the banking businesses. ING Group applies a system of capital charging for its banking operations in order to create a comparable basis for the results of business units globally, irrespective of the business units’ book equity and the currency they operate in.

Corporate Line Insurance		The Corporate Line Insurance includes items related to capital management, run-off portfolios, ING Re and remaining activities in Latin America.

*	Excluding US Closed Block VA

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

b. ING Group

Operating segments ING Group total

6 month period

1 January to 30 June 2011

amounts in millions of euros

Total
Banking

Total
Insurance

Eliminations

Total

Underlying income

– Gross premium income

14,506

– Net interest result - banking operations

6,744

)

6,738

– Commission income

1,377

794

2,171

– Total investment and other income

1,338

3,560

(207

)

4,691

Total underlying income

9,459

18,860

(213

)

28,106

Underlying expenditure

– Underwriting expenditure

15,395

– Operating expenses

4,783

1,865

6,648

– Other interest expenses

487

(213

)

274

– Additions to loan loss provision

702

– Other impairments

126

137

Total underlying expenses

5,611

17,758

(213

)

23,156

Underlying result before taxation

3,848

1,102

4,950

Taxation

1,004

277

1,281

Minority interests

Underlying net result

2,809

815

3,624

Operating segments ING Group total


6 month period 1 January to 30 June 2010 amounts in millions of euros	Total Banking			Total Insurance		Eliminations			Total
Underlying income
– Gross premium income					14,990					14,990
– Net interest result - banking operations		6,521					(66	)		6,455
– Commission income		1,314			702					2,016
– Total investment and other income		(820	)		4,833		(52	)		3,961

Total underlying income		7,015			20,525		(118	)		27,422

Underlying expenditure
– Underwriting expenditure					18,162					18,162
– Operating expenses		4,427			1,841					6,268
– Other interest expenses					434		(118	)		316
– Additions to loan loss provision		962								962
– Other impairments		276			13					289

Total underlying expenses		5,665			20,450		(118	)		25,997


Underlying result before taxation		1,350			75					1,425
Taxation		383			2					385
Minority interests		38								38

Underlying net result		929			73					1,002

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

Reconciliation between Underlying and IFRS-IASB income, expenses and net result


6 month period 1 January to 30 June	Income						Expenses				Net result
amounts in millions of euros	2011			2010			2011		2010		2011			2010
Underlying		28,106			27,422			23,156		25,997		3,624			1,002

Divestments		112			438			28		28		58			402
Discontinued operations												66			93
Special items		(33	)		(1	)		297		270		(227	)		(203	)

IFRS-IASB		28,185			27,859			23,481		26,295		3,521			1,294

Divestments in the first half year of 2011 reflect the results on the sale of IIM Phillipines, two real estate funds of REIM Australia and Clarion Partners and PALIC. Divestments in the first half year of 2010 reflect the impact of divestments including the gain on the sale of Private Banking Asia and Switzerland and the operating result of the divested units in 2010.

Reference is made to Note 20 ‘Discontinued operations’ for information on Discontinued operations.

Special items in the first half year of 2011 include costs related to the combination of the Dutch retail activities, the Belgium retail transformation, further restructuring at ING Real Estate following the announced sale of ING REIM (reference is made to Note 14 ‘Acquisitions and disposals’), costs related to the separation of Banking and Insurance and restructuring costs. Special items in the first half year of 2010 include costs related to the combination of the Dutch retail activities, the Belgium retail transformation program, costs related to the separation of Banking and Insurance and restructuring costs.

c. Banking activities

Operating segments Banking

6 month period

1 January to 30 June 2011

amounts in millions of euros

Retail
Netherlands

Retail
Belgium

ING
Direct

Retail
CE

Retail
Asia

Commercial
Banking

ING
Real
Estate

Corporate
Line
Banking

Total
Banking

Underlying income

– Net interest result

1,787

790

1,959

340

1,597

242

(41

)

6,744

– Commission income

239

182

133

533

177

)

1,377

– Total investment and other income

(224

)

1,410

(50

)

1,338

Total underlying income

2,075

1,034

1,824

522

126

3,540

434

(96

)

9,459

Underlying expenditure

– Operating expenses

1,194

708

969

397

1,155

200

4,783

– Additions to loan loss provision

169

234

115

702

– Other impairments *

126

Total underlying expenses

1,367

776

1,216

439

101

1,271

352

5,611

Underlying result before taxation

708

258

608

2,269

(185

)

3,848

Taxation

178

208

497

(24

)

1,004

Minority interests

)

Underlying net result

530

189

399

1,758

(161

)

2,809

*	analysed as a part of operating expenses.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

Operating segments Banking


6 month period 1 January to 30 June 2010 amounts in millions of euros	Retail Netherlands			Retail Belgium			ING Direct			Retail CE			Retail Asia		Commercial Banking			ING Real Estate			Corporate Line Banking			Total Banking
Underlying income
– Net interest result		1,849			783			1,815			352			86		1,537			216			(117	)		6,521
– Commission income		265			188			79			144			26		429			187			(4	)		1,314
– Total investment and other income		(2	)		65			(108	)		(8	)		18		(928	)		16			127			(820	)

Total underlying income		2,112			1,036			1,786			488			130		1,038			419			6			7,015

Underlying expenditure
– Operating expenses		1,116			639			889			379			80		1,054			228			42			4,427
– Additions to loan loss provision		265			83			217			37			17		272			71						962
– Other impairments *		16						5								1			237			17			276

Total underlying expenses		1,397			722			1,111			416			97		1,327			536			59			5,665


Underlying result before taxation		715			314			675			72			33		(289	)		(117	)		(53	)		1,350
Taxation		183			68			218			13			9		(83	)		(5	)		(20	)		383
Minority interests					(8	)					9			11		18			4			4			38

Underlying net result		532			254			457			50			13		(224	)		(116	)		(37	)		929

*	analysed as a part of operating expenses.

d. Insurance activities

With regard to insurance activities, ING Group analyses, as of 2011, the underlying result through a margin analysis, which includes the following components:

•

Operating result

•

Non-operating items

Both are analysed into various sub-components. The total of Operating result and Non-operating items equals underlying result before tax.

To determine the Operating result the following Non-operating items are adjusted in the reported Underlying result before tax:

•

Realised capital gains/losses and impairments on debt and equity securities;

•

Revaluations on assets marked to market through the P&L; and

•

The Operating result for the Life insurance business is also broken down in expenses and the following sources of income:

•

Investment margin which includes the spread between investment income earned and interest credited to insurance liabilities (excluding market impacts, including dividends and coupons)

•

Technical margin which includes the margin between costs charged for benefits and incurred benefit costs; it includes mortality, morbidity and surrender results.

•

Non-modelled which is immaterial and includes parts of the business for which no margins are provided

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

Operating segments Insurance

6 month period

1 January to 30 June 2011

amounts in millions of euros

Insurance
Benelux

Insurance
CRE

Insurance
US

Insurance
US
Closed
Block
VA

Insurance
Asia/
Pacific

ING IM

Corporate
Line
Insurance

Total
Insurance

Investment margin

334

429

849

Fees and premium based revenues

306

241

527

118

710

454

2,356

Technical margin

223

455

Income non-modelled life business

Life & ING IM operating income

881

370

1,000

146

857

456

3,710

Administrative expenses

281

157

375

227

362

1,443

DAC amortisation and trail commissions

114

100

300

351

940

Life & ING IM expenses

395

257

675

115

578

363

2,383

Life & ING IM operating result

486

113

325

279

1,327

Non-life operating result

106

110

Corporate Line operating result

(236

)

(236

)

Operating result

592

115

325

281

(236

)

1,201

Gains/losses and impairments

(111

)

(117

)

(43

)

(236

)

Revaluations

162

)

197

Market & other impacts

(202

)

(15

)

(60

)

Underlying result before tax

296

)

429

122

313

111

(167

)

1,102

Taxation

126

)

277

Minority interests

)

Underlying net result

282

(24

)

302

108

231

(155

)

815

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

Operating segments Insurance


6 month period 1 January to 30 June 2010 amounts in millions of euros	Insurance Benelux			Insurance CRE			Insurance US			Insurance US Closed Block VA			Insurance Asia/ Pacific			ING IM		Corporate Line Insurance			Total Insurance
Investment margin		239			35			387			(25	)		20			2					658
Fees and premium based revenues		307			254			521			59			655			411					2,207
Technical margin		100			67			95			16			68								346
Income non-modelled life business		22			8									32								62

Life & ING IM operating income		668			364			1,003			50			775			413					3,273

Administrative expenses		272			122			464			41			207			343					1,449
DAC amortisation and trail commissions		115			95			297			(19	)		337			2					827

Life & ING IM expenses		387			217			761			22			544			345					2,276


Life & ING IM operating result		281			147			242			28			231			68					997

Non-life operating result		80			2									2								84
Corporate Line operating result																			(336	)		(336	)

Operating result		361			149			242			28			233			68		(336	)		745

Gains/losses and impairments		(69	)		(23	)		(304	)		14			29			10					(343	)
Revaluations		(14	)					289			(2	)		(4	)		2		(70	)		201
Market & other impacts		176						(128	)		(598	)		(6	)				28			(528	)

Underlying result before tax		454			126			99			(558	)		252			80		(378	)		75
Taxation		90			25			(58	)		(61	)		71			28		(93	)		2
Minority interests					5														(5	)

Underlying net result		364			96			157			(497	)		181			52		(280	)		73

While the reserves for the segment Insurance US Closed Block VA are adequate at the 50% confidence level, a net reserve inadequacy exists using a prudent (90%) confidence level. This inadequacy existed in the second quarter of 2011 and 2010 and in the first half year of 2011 and 2010. In line with Group Policy, Insurance US Closed Block VA 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.

Effective as of 2011, the estimate for the short-term equity growth assumption used to calculate the amortisation of DAC in the United States (Insurance US) was changed to a mean reversion assumption. The impact of this change in estimate in the second quarter of 2011 was approximately EUR 11 million higher result before tax and the impact in the first half year of 2011 was approximately EUR 18 million lower result before tax.

14 ACQUISITIONS AND DISPOSALS

Acquisitions

There were no acquisitions in the first half year of 2011.

Disposals and expected disposals

Pacific Antai Life Insurance Company Ltd.

In December 2009 ING announced the sale of its entire stake in China’s Pacific Antai Life Insurance Company Ltd. (PALIC) to China Construction Bank. This is the outcome of a strategic review announced in April 2009 as part of ING’s Back to Basics program. The stake in PALIC was previously included in the segment Insurance Asia/Pacific. The transaction was closed in June 2011.

ING REIM and CRES (except for the sale of Clarion Partners), ING IM Australia, ING Direct USA, ING Arrendadora S.A. de C.V. , the part of ING Real Estate Investment Management Australia that has not yet been disposed, the Latin American pensions, life insurance and investment management operations and ING Car Lease qualify as disposal groups held for sale at 30 June 2011 as ING expects to recover the carrying amount principally through the sale transactions. They are available for sale in their immediate condition subject to terms that are usual and customary for sales of such assets and the sales are considered to be highly probable.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

ING REIM Europe, ING REIM Asia and Clarion Real Estate Securities (CRES)

ING announced in February 2011 that it has reached agreement with CB Richard Ellis Group, Inc., to sell ING REIM Europe, ING REIM Asia and Clarion Real Estate Securities (CRES), ING REIM’s US-based manager of listed real estate securities, as well as part of ING’s equity interests in funds managed by these businesses. The proceeds for these REIM businesses and the equity interests amount to approximately USD 1.0 billion. ING REIM Europe, ING REIM Asia and CRES combined have EUR 44.7 billion in assets under management as of 31 December 2010. In a separate transaction, ING has agreed to sell the private market real estate investment manager of its US operations, Clarion Partners, to Clarion Partners management in partnership with Lightyear Capital LLC for USD 100 million. This sale was completed in June 2011. Clarion Partners was previously included in the segment ING Real Estate. The Real Estate Investment Management business in Australia (ING REIMA), with EUR 4.8 billion in assets under management as of 31 December 2010, is not included in these transactions. Combined, the transactions are expected to result in an after-tax gain on disposal of approximately EUR 500 million at the date of announcement. The final terms are subject to potential adjustments at closing, customary for this kind of transaction. ING Real Estate Development and ING Real Estate Finance are not impacted by the transactions and will continue to be part of ING Bank.

In July 2011 ING announced the completion of the sale of CRES to CB Richard Ellis. CRES was previously included in the segment ING Real Estate. ING continues to expect the rest of the transaction with CB Richard Ellis to close in the second half of 2011. Until the closing of the transaction the part that is not yet disposed is included in the segment ING Real Estate.

ING Investment Management Australia

In June 2011 ING announced that it reached an agreement to sell ING Investment Management (ING IM) Australia to UBS AG. ING IM Australia’s business provides a number of investment strategies and products directly to the Australian institutional and wholesale markets. This transaction supports ING’s objective to actively manage its capital and portfolio of businesses to ensure an attractive and coherent combination for the announced potential IPOs of its insurance and investment management activities. ING IM Australia is included in the segment ING Investment Management. The transaction is subject to regulatory approval and is expected to close in the fourth quarter of 2011.

ING Direct USA

In June 2011 ING announced that it had reached an agreement to sell ING Direct USA for a total consideration of USD 9.0 billion (EUR 6.3 billion at the date of announcement) to Capital One Financial Corporation, a leading US-based financial holding company. Under the terms of the sale agreement ING will receive USD 6.2 billion in cash and USD 2.8 billion in the form of 55.9 million shares of Capital One. With its pro forma 9.9% stake, ING will become the largest single shareholder in Capital One. After closing ING has the right to be represented by one member of the Board of Directors of Capital One. The sale of ING Direct USA is expected to result in a net positive result of USD 0.7 billion and a capital release at closing of USD 4.1 billion (approximately EUR 2.9 billion). ING Direct USA is included in the segment ING Direct. The sale of ING Direct USA to Capital One is expected to close in the fourth quarter of 2011 and is subject to regulatory consent.

In connection with the sale of ING Direct USA, ING has reached an agreement with the Dutch State to amend the structure of the Illiquid Assets Back-up Facility (IABF) in June 2011. The amendment serves to delink the IABF from ING Direct USA by putting ING Bank in its place as counterparty for the Dutch State. The IABF is further amended to ensure a continued alignment between ING and the State regarding exposure to the Alt-A portfolio.

Under the original transaction terms agreed between ING and the State in January 2009 the State assumed the risk on 80% of the Alt-A mortgage securities of ING Direct USA and ING Insurance Americas. Only the part covering ING Direct USA, which currently covers approximately 85% of the total portfolio, is amended in the agreement and the text below only refers to this part. The ING Insurance part of the IABF remains unaltered.

Under the terms of the original transaction the Dutch State receives 80% of all cash flows from the portfolio and a guarantee fee from ING. In return, the State pays a funding fee and management fee to ING. ING Direct USA held on its balance sheet a receivable from the Dutch State along with the remaining 20% of the Alt-A portfolio, ensuring an alignment of interests between ING and the Dutch state regarding the performance of the portfolio.

Under the terms of the agreement, the government receivable will be transferred from ING Direct USA to ING Bank. In return, ING Direct USA will receive on its balance sheet an amount in cash from ING Bank. Also, after the sale of ING Direct USA, ING Bank will receive the funding fee and management fee from the Dutch State and pay the guarantee fee.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

The 20% of the Alt-A portfolio not covered by the IABF will remain on the balance sheet of ING Direct USA and will move to Capital One as part of the sale of ING Direct USA. In order to ensure continued alignment between the interests of ING and the Dutch State with regard to the Alt-A portfolio, ING will provide a counter guarantee to the Dutch State covering 25% of the 80% part of the Dutch State. This guarantee will cover realised cash losses if they would exceed the 35% that is implied by the current market value of the portfolio. This amendment will therefore lower the risk exposure for the Dutch State. The potential capital and P&L impact of the alignment for ING Bank is expected to be limited.

Latin American pensions, life insurance and investment management operations

In July 2011 ING announced that it has reached an agreement to sell its Latin American pensions, life insurance and investment management operations for a total consideration of approximately EUR 2,680 million to Grupo de Inversiones Suramericana (‘GRUPOSURA’). The sale is the first major step in the divestment of ING’s insurance and investment management activities. Under the terms of the agreement, ING will receive approximately EUR 2,615 million in cash and GRUPOSURA will assume EUR 65 million in debt.

ING expects the sale to deliver a net transaction result of approximately EUR 1 billion. The transaction is subject to regulatory approvals and is expected to close by year-end. The transaction, including cash proceeds, debt reduction in Latin America, and the extraction of excess capital prior to closing, is expected to reduce the leverage in ING Insurance by approximately EUR 2.8 billion.

Included in the transaction are the mandatory pension and voluntary savings businesses in Chile, Colombia, Mexico, Uruguay and ING’s 80% stake in AFP Integra S.A. in Peru; the life insurance businesses in Chile and Peru; including ING’s 33.7% stake in InVita Seguros de Vida S.A. in Peru. The transaction also includes the local investment management capabilities in these five countries. Not included in the transaction is ING’s 36% in leading Brazilian insurer Sul America SA. ING’s Commercial Banking activities in Mexico, Brazil and Argentina are not affected by the announcement. ING’s Mortgage and ING’s Leasing businesses in Mexico are also not part of the transaction.

As per 30 June 2011, the Latin American pensions, life insurance and investment management operations classify as discontinued operations. In the condensed consolidated profit and loss account, for the current period but also for the comparative periods, the income and expenses from discontinued operations are reported separately from income and expenses from continuing operations, down to the level of result after tax. The Latin American pensions, life insurance and investment management operations used to be included in the segments Insurance Latin America and ING Investment Management before they classified as discontinued operations. The net result from discontinued operations is presented separately in the condensed consolidated profit and loss account. Reference is made to Note 20 ‘Discontinued operations’ for more detailed disclosures.

ING Car Lease

In July 2011 ING announced that it has reached an agreement to sell ING Car Lease for an expected total consideration of EUR 700 million to BMW Group fleet management division Alphabet. Expected total proceeds of EUR 700 million at closing will include purchase price of EUR 637 million based on 2010 year end book value and estimated 2011 earnings until closing. The sale of ING Car Lease will result in a net transaction result of approximately EUR 335 million and a capital release of around EUR 530 million. ING Car Lease is included in the segment Commercial Banking. The transaction is expected to close in the fourth quarter of 2011, subject to regulatory approvals.

15 IMPORTANT EVENTS AND TRANSACTIONS

On 11 March 2011 a severe earthquake and tsunami struck Japan. While ING does not have any non-life operations in Japan, ING has life insurance, asset management and banking businesses in Japan. The life insurance business sold primarily two product types: Single Premium Variable Annuities (SPVA, closed for new business in 2009) and Corporate Owned Life Insurance (COLI). ING’s financial position may be impacted by these events and any related developments, including through (but not limited to) death and health-related claims, policyholder behaviour, re-insurance coverage, investment losses and impact from general market developments. The direct financial impact of the earthquake and subsequent tsunami in Japan were relatively limited although indirect impacts are possible during the remainder of the year. The technical margin reflects EUR 4 million of additional reserves (IBNR) in anticipation of mortality claims related to the disaster.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

16 FAIR VALUE OF FINANCIAL ASSETS

The methods used to determine fair value of financial assets and liabilities are disclosed in the 2010 Annual Accounts, including a breakdown of fair value determined by Reference to published price quotations in active markets (Level 1), by using Valuation techniques supported by observable inputs (Level 2) and by using Valuation techniques supported by unobservable inputs (Level 3). The classification by Levels was impacted in the first half year of 2011 by a transfer of available-for-sale investments of EUR 2.1 billion from Level 3 to Level 2, relating to mortgage backed securities in the United States. Previously these were classified in Level 3 because of the dispersion between prices obtained for the same security from different price sources. In 2011 prices supported by market observable inputs became available and were used in determining fair value.

As a consequence of the disposal of ING Direct USA EUR 0.6 billion available-for-sale investments that were classified in Level 3 are no longer subject to disclosure in the fair value hierarchy.

17 RELATED PARTY TRANSACTIONS

In the normal course of business, the Group enters into various transactions with related companies. Parties are considered to be related if one party has the ability to control or exercise significant influence over the other party in making financial or operating decisions. Transactions have taken place on an arm’s length basis and include rendering or receiving of services, leases, transfers under finance arrangements and provisions of guarantees or collateral.

Transactions with related parties (Joint ventures and associates) and Key management personnel compensation are disclosed in Note 33 ‘Related Parties’ in the ING Group 2010 Annual Accounts. Following the transactions as disclosed in Note 33 ‘Related Parties’ the Dutch State is also a related party of ING Group. All other transactions between ING Group and the Dutch State are of a normal business nature and on an at arm’s length basis. No other material changes in related party disclosures occurred. Reference is made to Note 19 ‘Issuances, Repurchases and Repayment of debt and equity securities in issue’ for the repayment of EUR 2 billion of the remaining non-voting equity securities.

18 DIVIDEND PAID

No dividend was paid in the first half year of 2011.

19 ISSUANCES, REPURCHASES AND REPAYMENT OF DEBT AND EQUITY SECURITIES IN ISSUE

Issue of debt securities in issue

In total ING Bank issued EUR 16.5 billion in the capital markets (including both unsecured debt and covered bonds) during the first half year of 2011. All issues are part of ING’s regular medium term funding operations.

Repurchase of non-voting equity securities

In December 2009, ING repurchased the first half of the non-voting equity securities (core Tier 1 securities) of EUR 5 billion plus a total premium of EUR 605 million. On 13 May 2011, ING exercised its option for early repurchase of EUR 2 billion of the remaining non-voting equity securities (core Tier 1 securities). The total payment in May 2011 amounted to EUR 3 billion and included a 50% repurchase premium. ING has funded this repurchase from retained earnings. Provided that the strong capital generation continues, ING intends to repurchase the remaining EUR 3 billion non-voting equity securities (core Tier 1 securities) ultimately by May 2012 from retained earnings. The final decision on repurchase of these non-voting equity securities (core Tier 1 securities) will be made before the envisaged repayment date and will be conditional upon there having been no material changes regarding ING’s capital requirements and/or ING’s outlook on external market circumstances.

Report on Form 6-K, Condensed consolidated interim accounts

Notes to the condensed consolidated interim accounts continued

20 DISCONTINUED OPERATIONS

As at 30 June 2011 the Latin American pensions, life insurance and investment management operations are classified as disposal groups held for sale and as discontinued operations. The results of the Latin American pensions, life insurance and investment management operations for the period are presented below:


	6 month period 1 January to 30 June
amounts in millions of euros	2011		2010
Total income		384		338
Total expenses		298		222

Gross result		86		116


Result before tax from discontinued operations		86		116

Tax related to current pre-tax gross result		18		21

Net result from discontinued operations		68		95

Reference is made to Note 6 ‘Assets and liabilities held for sale’ for information on the assets and liabilities of the discontinued operations.

The net cash flow incurred by the Latin American pensions, life insurance and investment management operations are as follows:


6 month period
amounts in millions of euros	30 June 2011			30 June 2010
Operating cash flow		33			6
Investing cash flow		(37	)		35
Financing cash flow					(5	)

Net cash flow		(4	)		36

Cash flows with regard to Assets and liabilities that classify as held for sale are presented in the condensed consolidated cash flow statement as an operating cash flow.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


ING Groep N.V.
(Registrant)

By:		/s/ P. Flynn

		P. Flynn
		Chief Financial Officer

By:		/s/ H. van Barneveld

		H. van Barneveld
		General Manager Group Finance & Control

Dated: 4 August 2011