Ing 3 Q 2008 Earnings Presentation

1. Third Quarter 2008 Results
Analyst Presentation
Amsterdam – 12 November 2008
www.ing.com

2. Third Quarter 2008: Agenda
Overview Michel Tilmant, CEO
Financial Highlights John Hele, CFO
Risk Management Koos Timmermans, CRO
Closing Remarks Michel Tilmant, CEO
Third Quarter 2008 Results 2

3. Key Messages
• ING’s third-quarter results were impacted by the market turmoil,
resulting in our first ever quarterly loss, however the commercial
performance of the business was resilient
• ING acted to reinforce its capital base to bring ratios into line with
increased international expectations. Our capital position is strong and
ratios are in line with current international standards
• The current crisis has raised fundamental questions for the financial
industry, and ING will focus on reducing risk and volatility, while tightly
managing expenses for a leaner environment
Third Quarter 2008 Results 3

4. Market circumstances deteriorated sharply at the
end of 3Q
Stock markets Credit spreads
3,500 1,600 300
3,000 1,400
200
2,500 1,200
100
2,000 1,000
0
1,500 800
1/01/2008 1/04/2008 1/07/2008 1/10/2008
1/01/2008 1/04/2008 1/07/2008 1/10/2008
CDIX 5yr ITRAXX Europe
FTSE E100 S&P 500, rhs, inverted
Yield curve* Real estate
%-points
400
2.00 200
300
1.00
0.00 200 150
-1.00 100
-2.00 0 100
1/01/2008 1/04/2008 1/07/2008 1/10/2008 1/01/2008 1/04/2008 1/07/2008 1/10/2008
US Eurozone
MSCI Real Estate US
MSCI Real Estate Europe
*10yr -/- 3m US S&P Case-Shiller Comp. 20 rhs
Graphs represent market data through November 7, 2008, except US S&P Case-
Shiller Comp. 20
Third Quarter 2008 Results 4

5. Commercial result
1,713
before risk costs
-373
Risk costs Bank
Third Quarter 2008 Results
Result before
1,340
market impact
Impairments,
3Q 2008 result (In EUR mln)
revaluations -1,505
and write-offs
Revaluations real
-333
estate & private equity
Other market
-265
impacts*
in the financial markets
5
Underlying result
-763
before tax
Tax
185
* Includes DAC unlocking, hedges on equities, equity capital gains, FX hedges and Other mark to market
-8
Minority interests
Underlying net result
-585
Gains on
divestments and
108
special items
ING’s earnings were affected by the volatility
Net result
-478

6. 3Q impairments, revaluations and other market
impacts
Impairments, revaluations and write-offs (In EUR mln)
-30
-198
-181
-628
1,505
-416
-52
Impairments, Subprime Alt-A CDOs/CLOs Impairments Impairments Other debt
revaluations on equities on financials securities
and write-offs
Other market impacts (In EUR mln)
-130
204
-292
160
265 -207
Other market Equity capital Equity hedge Equity DAC FX hedges Other*
impacts gains unlocking
* Includes ING’s share in guarantee for Iceland banks, NN account shortfall, Japan hedging
Third Quarter 2008 Results 6

7. Revaluations of Real Estate and Private Equity
add to volatility under IFRS since 2004
Private Equity (in EUR mln)
Real Estate (in EUR mln)
EUR 1.8 billion in EUR 560 million in EUR 1 billion in EUR 132 million in
positive revaluations negative revaluations positive results negative results
358
497 560 468
291
252
120
298
25
-69
-204 -38 -119
-285
2004 2005 2006 2007 1Q08 2Q08 3Q08
2004 2005 2006 2007 1Q08 2Q08 3Q08
Third Quarter 2008 Results 7

8. Excluding market impacts, commercial results
before risk costs were stable
Total ING Group
3Q08 3Q07 9M08 9M07
in EUR million
Commercial result before risk costs 1,713 1,779 6,167 5,802
Impairments, etc on pressurised assets -409 -61 -549 -61
Impairments on equity securities -628 0 -1,021 -21
Impairments on financial institutions -416 0 -416 0
Impairments on other debts securities -52 -20 -90 -19
Impairments and losses -1,505 -81 -2,076 -101
Revaluations on real estate* -214 127 -571 456
Revaluations on private equity -119 56 -132 321
Revaluations -333 183 -703 777
Equity capital gains 160 599 1,018 1,858
Equity hedge 204 -2 433 -26
Equity DAC unlocking -130 -1 -188 34
FX hedge -292 0 -107 0
Other** -207 -11 -248 -127
Other market impacts -265 585 908 1,739
Risk costs Bank -373 -69 -705 -94
Underlying result before tax -763 2,397 3,591 8,123
* Includes EUR 10 mln impairments on real estate development
** Includes hedges and other mark-to-market valuations
Third Quarter 2008 Results 8

9. Resilient commercial growth: EUR 38 billion net
production of client balances
Client balances, ING Group (in EUR billion)
Net production (in EUR bln)
19.6 Wholesale Banking
-18
28
38
9.8 Retail Banking
1,528
1,480
8.7 ING Direct
0.4 Insurance Americas
-0.4 Insurance Asia/Pacific
-0.5 Insurance Europe
30 June 2008 Net production FX Market Performance 30 September 2008
and Acq/Div
• Net production of client balances was EUR 38 billion, driven by EUR 12.9 billion in client savings and
deposits, including EUR 6.7 billion from retail customers
• Lending growth in the banking operations totalled EUR 22.9 billion
• Total client balances increased by EUR 48 billion to EUR 1,528 billion including FX and market impacts
Third Quarter 2008 Results 9

10. Retail deposits increase despite competition for
savings
ING Direct and ING Retail Banking savings and deposits (EUR billion)*
Retail deposits
357.0
347.0
339.2 336.0 339.3
• Retail deposits increased
by EUR 10.0 bln in 3Q, or
EUR 6.7 bln excluding FX
199.2
193.0
189.0
194.6 191.5
• Volume growth in retail
banking was sustained
through product innovation
• Ongoing shift to term
deposits puts pressure on
margins
157.8
154.0
150.3
144.6 144.5
• ING Direct funds entrusted
increased by EUR 2.1
billion at constant FX
3Q07 4Q07 1Q08 2Q08 3Q08
ING Direct
ING Retail Banking
* = ING Retail Banking excludes Mid-Corporates and is affected by acquisitions/divestments (acquisition ING
Bank Turkey in 4Q 07 and divestment Regio Bank in 3Q 07), while ING Direct benefited from fx-effects
Third Quarter 2008 Results 10

11. ING Direct attracted new customers in October
• In late September and the beginning of October, consumers worldwide were
re-allocating their account balances among multiple financial institutions to
maximise protection from government guarantees, which led to both outflows
of high balances and increases in new customers
• The rebalancing resulted in about 200,000 new clients in September (about
30% above the monthly average up to August 08), and 164,000 new clients in
October
• This supports ING Direct’s continued focus on broadening its client base,
aiming at a larger number of accounts with medium sized balances
• Active rebalancing slowed after the increase of deposit guarantee limits by
governments. ING Direct is back to normal growth patterns in clients and net
inflows, and funds entrusted were flat at the end of October
• Overall, ING Direct’s customer base has proven to be stable, and customers
continue to put their trust in our financial solidity and strong brand
Third Quarter 2008 Results 11

12. New life sales stable from previous quarter
despite reduced demand for investment products
Value new business (in EUR million)
New sales (APE, in EUR million)
440
2,018
1,940 1,871
116
1,651 1,627 320
298
267 266
47
34
3Q07 4Q07 1Q08 2Q08 3Q08
3Q07 4Q07 1Q08 2Q08 3Q08
VNB Romania second-pillar pension fund
• Relative to 2Q08, sales were down 1.5% primarily due • VNB decreased 10.7% (3.3% on a constant
to lower sales of investment-linked products currency basis) from 3Q07 but was flat excluding the
Romanian pension fund launched in 3Q07.
• New life sales (APE) declined 16.1% (8.5% on a
constant currency basis) relative to 3Q07 • In Asia/Pacific, VNB down with decline in sales
• Due to weakened demand for investment-linked • VNB up 22.7% (excluding currencies) in Americas
products in Asia/Pacific • Increase in Central Europe, driven by pension sales
• Net flows in retirement services in US remained strong in Poland
Third Quarter 2008 Results 12

13. Expenses under control
Recurring operating expenses (EUR million)
3,832
3,678
3,641
3,580
3,487
1,353
1,319
1,269
1,267
1,198
Recurring operating
expenses (3Q08 vs 3Q07):
• Up 5.5% ING Group
• Up 3.1% in mature
2,479 businesses
2,372 2,360
2,313
2,289
• Up 10.1% in growth
businesses
3Q07 4Q07 1Q08 2Q08 3Q08
Growth businesses = Insurance Central & Rest of Europe; US Wealth Management; Insurance Asia/Pacific; ING Real Estate; ING
Direct; Retail Banking (outside Benelux)
Mature businesses = Insurance Europe (Benelux); Insurance Americas (excl. US Wealth Management); Corporate Line Insurance;
Wholesale Banking (excl. ING Real Estate); Retail Banking (Benelux); Corporate Line Banking
Third Quarter 2008 Results 13

14. Key Messages
• ING’s third-quarter results were impacted by the market turmoil,
resulting in our first ever quarterly loss, however the commercial
performance of the business was resilient
• ING acted to reinforce its capital base to bring ratios into line with
increased international expectations. Our capital position is strong and
ratios are in line with current international standards
• The current crisis has raised fundamental questions for the financial
industry, and ING will focus on reducing risk and volatility, while tightly
managing expenses for a leaner environment
Third Quarter 2008 Results 14

15. Recapitalisation and government support raised
expected capital levels for financial institutions
Total capital raised: EUR 549 billion RBS, Lloyds TSB, HBOS have total French
of USD 64 bn injection govt
injects
EUR 10.5
USD 85 bn The US House of German govt saves Dutch govt
bn into 6
rescue Representatives passes the Hypo Real Estate injects EUR
banks
package for USD 700 bn rescue plan 10 bn into ING
AIG
UK government
Dexia bailed out announces GBP 50
r
by governments bn rescue package
be
er
em
ob
pt
ct
16 30 3 6 8 13 19 20
Se
O
7 15 28 7 9 14 17 28
Lehman Landsbanki Dutch government Swiss Dutch govt
Brothers (Icesave) makes EUR 20 bn government injects
collapses is nationalised available for buys EUR 3 bn
recapitalisation EUR 3.9 bn into AEGON;
stake in Belgian KBC
Fortis is nationalised; UBS gets EUR 3.5
Fannie Mae and US announces USD US government announces bn govt
Freddie Mac bailed 700 bn rescue USD 250 bn plan to support
out by US govt package purchase bank stakes
Third Quarter 2008 Results 15

16. ING considered various options to increase capital
into line with new international standards
Share price performance of ING Rebased at ING share Considerations in capital raising
price (in EUR) • The ‘bar was raised’ as government
(mln)
injections lifted Tier-1 ratios in UK, US
90.0
20
Volume
Share price
• ING’s share price came under pressure
18 80.0
in October as the crisis deepened and
16 70.0
banks were forced to recapitalise
14 60.0
12 • ING considered various options to
50.0
10 increase capital, but any transaction
40.0
8 would have to be large, quick, and
30.0
6 possible to complete in one transaction
20.0
12-mth avg volume: 19.0 mln
4
• An accelerated equity offering or rights
10.0
2
issue were not pursued because:
0.0
0
• A transaction of this size would have
03-Oct 07-Oct 09-Oct 13-Oct 15-Oct 17-Oct
been difficult to complete given the
Volume
market dislocation
ING
DJ EuroStoxx Banks • A rights issue would have taken
DJ EuroStoxx Insurance
much longer to complete
AEX
• It would have been very dilutive for
existing shareholders at the existing
stock price
Third Quarter 2008 Results 16

17. ING’s capital injection from the Dutch state
prevented dilution of existing share capital
• ING announced on Sunday, 19th October that it had reached an agreement with the Dutch State to
issue non-voting Core Tier-1 securities of EUR 10 bln to the Dutch State
Key merits
Qualifies as Core Capital for Dutch Central Bank
No dilution of existing share capital
Rapid execution
Flexibility as to coupon payment and security redemption
Simplicity vs. dual (equity + core capital) structure and no government ownership
The instrument
• ING issues non-voting perpetual Core Tier-1 securities for a total consideration of EUR 10 bln
• The securities rank pari passu with common equity, have no voting rights and are non-tax deductible
• The coupon is non-cumulative and is only payable if a dividend is paid on common shares
• The instrument is dilutive of earnings for existing shareholders but does not dilute share capital
• ING has the right at its sole discretion, only with prior DNB approval, to buy back all or some of the
securities at any time at 150% of their issue price
• The securities are convertible at any time after 3 years at ING’s option on a 1 for 1 basis into common
shares. When and if this option is exercised by ING, the Dutch State can then opt for redemption at
EUR 10 per security in cash
Third Quarter 2008 Results 17

18. After EUR 10 billion injection, capital ratios meet
current international standards
ING Group D/E ratio
• Ultimate capital
25%
targets will be
20% assessed going
14.4%
forward in
15%
cooperation with the
8.4%
10%
rating agencies to
5%
maintain an AA rating
0%
2003 2004 2005 2006 2007 3Q08 3Q08
target maximum
ING Insurance D/E ratio ING Bank Tier-1 ratio
25% 10.03%
10%
8.51%
20% 8%
Dutch GAAP
15% 6% IFRS
10% pro forma after
4%
8.0%
EUR 10 bln injection
5% 2%
-2.0%
0% 0%
2003
2004
2005
2006
2007
3Q08
3Q08
2003
2004
2005
2006
2007
3Q08
3Q08
Maximum/target
Target ≥ 7.2%
Third Quarter 2008 Results 18

19. Dividend outlook
• Final dividend waived for 2008, leaving total dividend over this year at EUR
0.74 per share
• Following the capital injection from the Dutch state, ING maintains full
discretion to determine its dividend on ordinary shares
• A first payment of interest in 2009 of EUR 0.425 per security
• If ING pays any future dividends, the state will receive the highest of:
EUR 0.85 (8.5%) coupon, or
• 110% of dividend paid on ordinary shares over 2009
• 120% of dividend paid on ordinary shares over 2010
• 125% of dividend paid on ordinary shares over 2011 and afterwards
• ING will take a balanced and prudent approach, weighing the market
conditions, ING’s capital position and cash generation
• We will maintain flexibility and weigh the interests of shareholders for an
attractive dividend as well as the interest to buy back the securities from the
Dutch state
Third Quarter 2008 Results 19

20. Key Messages
• ING’s third-quarter results were impacted by the market turmoil,
resulting in our first ever quarterly loss, however the commercial
performance of the business was resilient
• ING acted to reinforce its capital base to bring ratios into line with
increased international expectations. Our capital position is strong and
ratios are in line with current international standards
• The current crisis has raised fundamental questions for the financial
industry, and ING will focus on reducing risk and volatility, while tightly
managing expenses for a leaner environment
Third Quarter 2008 Results 20

21. The crisis has raised some fundamental
questions for the financial industry…
Customers’ basic need to save has been reinforced by the crisis
More than ever, customers want a financial partner they can trust
Volatility Capital Profit Growth
• Markets have become • The perceived capital • Profit growth for the
increasingly volatile requirements for financial financial industry has
institutions has increased outpaced GDP and other
• This is exacerbated by
substantially industries since the 1980s
asymmetric accounting
for assets vs. liabilities • At the same time ING • Following the current
sees a return to a more market pressure, growth
• At the same time
national approach to for the industry is likely to
customers want stability
capital requirements be more in line with GDP
and guarantees
growth
Managing this earnings
This will put pressure on This requires a sharper
volatility while shielding our
returns going forward, and attention to cost
customers from market
raises the need for a containment to sustain
risks has implications for
renewed international earnings growth going
both products and
approach from regulators forward
accounting
Third Quarter 2008 Results 21

22. …leading to the following priorities
• Comfort customers and adapt products to meet their needs
Customers
• Reduce complexity: simplify and focus on the fundamentals
Focus
Capital • Strengthen capital: EUR 10 billion injection from Dutch state
Risk • Reduce risk: sale of Taiwan reduces interest rate exposure
Volatility • Reduce dependency on financial markets: equity, real estate
Costs • Tightly manage costs in leaner operating environment
Third Quarter 2008 Results 22

23. Insurance: priorities for managing through the
current environment
Insurance Europe Insurance Americas Insurance Asia/Pacific
Evolving product portfolio to
• Manage capital consumption
• Proactively manage equity risk
meet shifts in customer
exposure in the Netherlands
• Purchase credit protection preferences,
through conservative portfolio
Focus on distribution:
• Increased focus on risk-
management and hedging
strengthening the bank channel
protection products and fixed
• Continue to focus on expense and growing tied agency force
annuities
reduction Proactive expense
• Expense containment management
• Slowdown investments in new
Continuing focus on risk
Greenfields • Capitalise on the IT
management & talent
capabilities of CitiStreet and
• In Central Europe, focus on development
integrate with existing
distribution efficiency and the
Managing transition of ING Life
Retirement Services business
pension business Taiwan
• Focus on customers and
• Focus on customers and Focus on customers and
protect market share
protecting market share protect market share
Third Quarter 2008 Results 23

24. Bank: priorities for managing through the current
environment
Wholesale Banking Retail Banking ING Direct
• Accelerating restructuring in the
• Increased focus on core • Increased promotional
Netherlands and Belgium
franchise such as activities to fuel savings
Netherlands and Belgium growth
• Focus on increasing savings
deposits in the Netherlands and
• Heightened vigilance on • Growing savings and
Belgium
counterparty/corporate risk mortgages in balance
• Protecting margins in mortgages
• Increase margins further and over market share • Controlled expansion of
lock in high-value product
product range to retain and
• Repricing Mid Corporates
mandates with clients
attract customers
• Combining of ING Bank and
• Steps taken to limit growth in
Postbank well on track for
lending assets • Shortening duration of assets
external launch in 1Q09
where appropriate to increase
• Reducing cost base in • Visibility is increasing as the repricing flexibility
disrupted markets rebranding has started
• Focus on customers and
• Focus on customers and • Focus on customers and protect
protect market share protect market share
market share
Third Quarter 2008 Results 24

25. Looking forward
• The third quarter was extremely challenging for financial institutions
• Financial markets deteriorated rapidly toward the end of the quarter,
with steep declines in equity markets, widening credit spreads,
declining property prices and the failure of several banks
• In these increasingly turbulent times, ING acted proactively to
reinforce its capital base after the Dutch government made funds
available to help stabilise the financial system and create a level
playing field internationally
• The financial services industry is about trust, and as our customers
face uncertain times it is essential that they have no reason to be
concerned about the strength of ING as their financial partner
As we approach the end of 2008, markets continue to be turbulent, so we expect
pressure on asset prices to continue to impact results in the fourth quarter, while
weakening economic conditions will put pressure on results into 2009
Our priority is to sustain commercial momentum by remaining focused on our
customers, while managing our risks, capital and expense base with the discipline
that these exceptional times require
Third Quarter 2008 Results 25

26. Third Quarter 2008: Agenda
Overview Michel Tilmant, CEO
Financial Highlights John Hele, CFO
Risk Management Koos Timmermans, CRO
Closing Remarks Michel Tilmant, CEO
Third Quarter 2008 Results 26

27. Financial Highlights Third Quarter 2008
• Key Performance Indicators
• Market environment and impact on results
• Variable annuity hedging & guarantees
Third Quarter 2008 Results 27

28. ING Group KPIs: Sound increase in Client Balances,
but income and result impacted by financial crisis
6,567 5,015
6,640 6,433
6,271
Operating Income (EUR mln)
Client balances (in EUR bln)
• Operating income decreased mainly due to 5,836 6,001 5,839
5,517
lower technical margins, and lower investment 4,354
margins as asset balances decreased
• Operating income Banking decreased mainly 3Q07 4Q07 1Q08 2Q08 3Q08
1,528 due to impairments & negative revaluations
1,480
1,455 1,455 n/a n/a 121 160 150 114
1,446
3,857 3,757
3,709 3,689
3,626
Operating Expenses (EUR mln)
• Operating expenses Bank and Life in bps of
3Q07 4Q07 1Q08 2Q08 3Q08 Client balances was equal to the previous 3,563 3,452 3,424 3,503
3,337
quarter
• Net production of client balances 3Q07 4Q07 1Q08 2Q08 3Q08
EUR 38 bln in 3Q 98 97 96 95 95 93
• Including FX and market 2,957
Underlying Result before tax (EUR mln) 2,397
impacts, total client balances up 2,107 2,246
• Underlying result before tax is trending
EUR 48 bln downwards due to the impact of deteriorating 2,590 2,085
2,068 1,930
financial markets and higher capital gains on
• Production driven by banking -763
equities in 2007
(EUR 12.9 bln savings and -947
-947
3Q07 4Q07 1Q08 2Q08 3Q08
deposits, EUR 22.9 bln lending) 68 70 67 60 38 -25
• Net inflows insurance flat as
growth in Insurance Americas Economic Capital (EUR bln) 35.2 36.7
36.0 34.8
33.1
was offset by outflows in • ROEC declined sharply due to a loss in
Insurance Europe and Insurance 3Q2008 and the diminishing positive influence
Asia/Pacific of the capital gains in 2007 in the rolling four-
quarter trend
Ratios are based on clients balances (rolling 4 3Q07 4Q07 1Q08 2Q08 3Q08
quarter basis) except ROEC which is based on
26% 27% 26% 24% 16% -6.5%
average Economic Capital
Ratio for the current quarter
bps Non-life Banking, Investments, Life insurance, Retirement Services
Third Quarter 2008 Results 28

29. Insurance: Financial markets downturn reduces
investment income
Underlying result before tax (in EUR million)
Insurance Europe Insurance Americas Insurance Asia/Pacific
490
439 182
374
151
397 297
362 358 339 124
113
101
19
3Q07 4Q07 1Q08 2Q08 3Q08
-214
3Q07 4Q07 1Q08 2Q08 3Q08 3Q07 4Q07 1Q08 2Q08 3Q08
• Underlying result before tax • Market turmoil triggers • Result before tax declined
down 72.1% due to asset underlying loss of EUR 214 87.4% to EUR 19 million,
revaluations (EUR 181 mln) million primarily due to faltering
financial markets
• Pension flows in Central & Rest • Net credit- and interest-related
of Europe increase 48.9% losses of EUR 365 million • Sales decline 28.7% as market
declines reduce demand for
• Operating expenses decline • Equity-related DAC unlocking of
investment products
6.5% on cost containment EUR -130 million
measures, particularly in the • Agreement to sell ING Life
• VNB up 22.7% excluding
Netherlands Taiwan
currencies
Third Quarter 2008 Results 29

30. Insurance: Margin analysis for Total Life Insurance
Insurance Total (in EUR mln) 3Q08 2Q08 1Q08 4Q07 3Q07
569 569 624 698 609
Investment margin
1,229 1,202 1,239 1,282 1,210
Fees and premium-based revenue
83 281 208 89 190
Technical margin
-153 23 11 75 15
Income non-modelled business*
1,729 2,074 2,081 2,144 2,024
Operating income
-1,561 -1,442 -1,526 -1,535 -1,437
Expenses
167 632 556 609 586
Operating result before tax
-898 353 -31 831 379
Investment variances
-730 985 524 1,439 966
Underlying result before tax
* = Insurance Europe: Netherlands servicing & brokerage (including AZL, IPS, NN Assurantiekantoren, NN HB), Luxembourg, Bulgaria and
Russia; Insurance Americas: Brazil; Insurance Asia Pacific: Japan SPVA, KB Life, Taiwan, New Zealand, Thailand, China and India
Third Quarter 2008 Results 30

31. Banking: Commercial growth despite increased
competition
Underlying result before tax (in EUR million)
Wholesale Banking Retail Banking ING Direct
179
155
638
651
570 120
512 558
522
420
365 73
279
40
3Q07 4Q07 1Q08 2Q08 3Q08
-47
3Q07 4Q07 1Q08 2Q08 3Q08 3Q07 4Q07 1Q08 2Q08 3Q08
• Result before tax down 85.7% • Growth of savings/deposits in • Client retail balances up
due to credit related the Benelux EUR 7.0 billion and 455,000
markdowns and impairments new clients
(EUR 211 mln), real estate • Continued pressure on margins
revaluations (EUR 88 mln) as a result of liquidity crisis • Impairments of EUR 217 million
due to unprecedented events in
• General Lending and Structured • ING Bank Turkey negatively
the quarter
Finance benefited from higher affected by fair value changes
demand for credit
on derivatives (EUR 41 mln) • Excluding impairments, result
• Risk costs increase to EUR 195 before tax up 42% on 3Q2007
• Risk costs increase to EUR 93
million, including EUR 72 million
million on inclusion of Turkey • Risk costs increase to EUR 85
related to Icelandic Banks
and mid-corporates in Benelux million on US and Germany
Third Quarter 2008 Results 31

32. Interest rates: interest margin healthy at 1.00%
ING Interest margins by quarter
1.2%
Total Bank
1.1%
1.0%
0.9%
0.8%
ING Direct
0.7%
0.6%
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08
• Compared with 3Q07 total interest margin improved 9 bps to 1.00% mainly due to
higher margin at ING Direct and inclusion of ING Bank Turkey
• The total interest margin was down 5 bps compared with 2Q08 as higher margins at
ING Direct and on new lending were offset by pressure on retail margins
• Improvement in the US interest rate environment drives recovery in interest margin at
ING Direct to 0.96% from 0.74% in 3Q07 and 0.93% in 2Q08
Third Quarter 2008 Results 32

33. Financial Highlights Third Quarter 2008
• Key Performance Indicators
• Market environment and impact on results
• Variable annuity hedging & guarantees
Third Quarter 2008 Results 33

34. Equity markets: sustained equity market declines
trigger impairments
Pre-tax P&L impact (in EUR mln)
• ING realised EUR 160 million in
pre-tax capital gains in 3Q08
• That was offset by EUR 628
1,391
897
729
million of impairments on equities
600
as markets sustained their
362 129 160
325 307
204
declines
176
170
137 142
-11 -10 -30
-1 -44 -349 -628
• 3Q07 included EUR 600 million in
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08
equity capital gains including
Dividend Income Capital Gains Impairments
EUR 455 million on part of ING’s
stake in ABN Amro
Market value shares at 30 Sep 2008
• Equity markets at Oct. 15 levels
would trigger a further EUR 303
In EUR million Insurance Bank Total
Shares with direct public 6,538 2,033 8,571
million of equity impairments
equity exposure
Hedged 2,450 0 2,450
Net exposure shares 4,088 2,033 6,121
Revaluation reserve pre-tax 449 901 1,350
Third Quarter 2008 Results 34

35. Equity markets: P&L impact from DAC unlocking in
the US
• In 3Q08, US results included EUR -130 million
equity-related DAC unlocking as markets
DAC unlocking
declined and fund performance lagged
EUR million, constant currency
• In 3Q08, other DAC unlocking was mainly due to
higher hedging costs in the annuity business
• DAC is charged to underwriting expenditures in
2.0%
0 68
proportion to the actual and future Estimated
Gross Profits (EGP) over the life of the block of
-26
-5
-35
business
-7 -101
• Current (actual) and future separate-account
-130
fund performance are critical inputs to EGP
-2.7%
-3.3%
• Equity-related DAC unlocking arises when fund
-1
performance differs from long-term equity
market growth assumption of 2.25% per quarter
-66
• ING does not apply a “corridor”, ING US uses
Equity-related DAC unlocking -8.4%
full DAC unlocking, with adjustments through the
Other DAC unlocking
P&L each quarter
-9.5%
S&P Index Total Return
• S&P 500 index performance is a good indicator
3Q07 4Q07 1Q08 2Q08 3Q08 of the P&L volatility caused by equity-related
DAC unlocking
• At October 15th levels, when the S&P was at
908 points, equity-related DAC unlocking would
be EUR -273 million
Third Quarter 2008 Results 35

36. Fair values of RMBS shifted to “Level C” pricing due
to lack of market prices
IFRS “ABC” fair value hierarchy: • ING has EUR 550 billion of financial
assets measured at fair value. The vast
A = reference to published price
majority of which is based on published
quotations in an active market price quotations
B = valuation technique supported by • In the third quarter there was a shift for
observable market data
Alt-A and subprime RMBS to Level C
C = valuation technique not supported
• To a large extent, ING still bases RMBS
by observable market inputs
prices on independent vendor pricing
services
IFRS fair value hierarchy – ING Group 3Q08 (in EUR mln)
• Illiquid market conditions have led to
A B C Total
more dependence by these vendors on
Total, 367,710 153,700 28,658 550,068
models to determine the fair value due to
of which:
lack of observable market prices
Subprime RMBS 44 15 2,154 2,213
• ING did not apply any accounting change
Alt-A RMBS 435 71 20,208 20,714
on Alt-A or Subprime portfolios in 3Q08
CDOs 4,447 287 0 4,734
Third Quarter 2008 Results 36

37. Financial Highlights Third Quarter 2008
• Key Performance Indicators
• Market environment and impact on results
• Variable annuity hedging & guarantees
Third Quarter 2008 Results 37

38. Despite market volatility, ING’s SPVA hedge
programs have been largely effective
• The US and Japan have the major blocks of SPVAs with guarantees.
There are small blocks in the Netherlands, Hungary, Poland and Spain
• Dynamic hedging programs in the US and in Japan hedge a substantial
portion of the risk posed by the guaranteed benefits due to movements
in the equity markets. Japan also hedges interest rate and currency
risks
• The hedge programs have proven to be effective, even in volatile
markets
• The risk of unhedged equity volatility lies primarily in the cost of
dynamically rebalancing the portfolio. As actual volatility increases, the
cost of rebalancing the hedges increases
• Poor equity performance is a risk to profitability as future fee income is
reduced
• Reported new business profitability above ING’s hurdles while reflecting
current, higher volatility and low interest rates
Third Quarter 2008 Results 38

39. The majority of ING’s exposure to equity
movements in the US VA business are hedged
USFS SPVA Guaranteed Benefits (As of 9/30, USD Millions)
Net Amount at NAR Externally Statutory
Account Value Risk Reinsured NAR Retained NAR Hedged Reserves
Guaranteed Living Benefits
10-year Accumulation Benefits 496 25 0 25 25 15
72 14 0 14 14 19
20-Year Accumulation Benefits
1,325 55 0 55 55 46
Withdrawal Benefit (GMWB)
16,000 4,369 0 4,369 4,369 511
Income Benefit (GMIB)
10,088 1,919 0 1,919 1,919 146
Life Pay/Life Pay Plus
Guaranteed Minimum Death Benefits
Return of Premium 18,885 1,975 41 1,934 1,915 70
Ratchet 9,583 2,328 477 1,851 1,720 86
Roll-up 3,290 2,041 1,088 953 175 345
Combo 12,805 4,148 25 4,123 1,214 465
Total USFS Guaranteed Benefits 44,563 16,874 1,631 15,243 11,406 1,705
• The Net Amount at Risk (NAR) represents the difference between the current benefit base and the account value. Over time, lapses,
partial withdrawals, mortality, interest and equity growth will determine the eventual cash benefits
• Statutory reserves, prescribed by local authorities are USD 1.7 billion. The Market Consistent Value of these potential future benefits
less future fees is USD 2.7 billion. The difference is largely attributable to a market consistent assumption that limits equity growth to
the current swap rates whereas the statutory view allows consideration of equity risk premia
• Dynamic delta hedge of equity exposure using S&P and other market Index futures. Hedge payoffs offset any increase/decrease in
liability. The costs associated with rebalancing the portfolio are reflected in product pricing
• A portion of the GMDB guarantees are left unhedged because hedge costs as calculated exceed capital costs
• Interest rate and equity volatility are not hedged because of the high cost of hedging
• Profitability, as measured by IRR, is 14.6% in the third quarter. This reflects current higher volatility and lower interest rates, grading
into long-term volatility of 17.8% and interest rates of 4.5%
Third Quarter 2008 Results 39

40. Hedges in the US dynamic hedging program,
launched in 2000, has successfully tracked liabilities
Weekly Hedge Programme Performance
1000 2,000
S&P 500 Level
Gains/(Losses) in USD Millions
900
S&P 500 Index
The programme success is demonstrated
800
by the high degree to which hedge
programme payoffs track changes in
700
guaranteed benefit liabilities 1,500
600
500
400
300
1,000
200
100
0
-100 500
-200
changes in guaranteed
-300
benefit liabilities hedge programme
-400
payoffs
-500 0
0
4
8
2
6
2
6
1
1
7
3
05
03
5
07
-0
-0
l-0
l-0
l-0
-0
-0
-0
-0
0
-0
0
g-
b-
-
p-
-
ar
ar
ct
ct
n
ay
ay
ec
ec
Ju
Ju
Ju
Au
Ja
Fe
Se
O
O
M
M
M
M
D
D
Asset Incr/(Decr) Liability Incr/(Decr) S&P 500
Third Quarter 2008 Results 40

41. Fall in equity markets has manageable impact
on required capital and IFRS earnings
Capital Injection IFRS Earnings 4Q Impact
(EUR bln) (EUR mln, Pre-Tax)
Date S&P 500 Index
30 September 2008 1,166 n/a n/a
31 October 2008 (-16.9%) 969 0.4 (180)
30 September less 30% 815 0.6 (310)
Capital Injections
• ING Insurance can downstream capital to the Americas while staying within 15% Debt/Equity ratio
limit. A EUR 770 million capital injection from ING Insurance to Insurance Americas at 30
September would have increased the D/E ratio for ING Insurance from 8.05% to 10.50%
• As the S&P 500 declines, an injected capital amount is determined to restore the capital to the level
required by rating agencies, equal to the greater of the S&P required capital and 325% Risk Based
Capital
IFRS earnings impact
• Variable Annuity equity-related DAC unlocking is the primary earnings sensitivity
• IFRS liabilities for guarantees more than offset by the equity hedges, partially offsetting the impact of
the DAC unlocking
• Actual tracking error and losses due to volatility will have potential other impacts on IFRS earnings
Third Quarter 2008 Results 41

42. Japan hedges vast majority of exposure to
changes in equities, interest rates and currency
Japan SPVA Guaranteed Benefits (in EUR million)
% NAR
Net Amount at
Account Value Externally % NAR Hedged Reserve
Risk
Reinsured
Guaranteed Living Benefits
Accumulation Benefits 9,657 1,352 0% More than 95% 836
Withdrawal Benefits 23 6 0% More than 95% Nil
Income Benefits 161 21 0% 0% Nil
Guaranteed Minimum Death Benefits
Return of Premium 2,429 146 0% More than 95% 131
Ratchet 1,272 204 0% More than 95% 30
Total Japan Guaranteed Benefits 13,542 1,729 997
• Reserves held on the guaranteed benefits of EUR 1.0 billion compares to the Market Consistent Value of future benefits
associated with the Net Amount at Risk, less future fees, of EUR 1.2 billion at 30 September
• Dynamic delta hedge of equity, fixed income and FX risk using market Index futures. Interest rate risk (“rho”) is fully hedged
using swaps and forward contracts
• Equity and FX delta hedges are rebalanced daily with intra-day trades if assets and liabilities move outside a pre-prescribed
range. Fixed income delta and rho are rebalanced weekly with intra-week trades if assets and liabilities move outside a pre-
prescribed range
• Implied volatility and asset-based fee income are not hedged
• Counter-party risk is managed in accordance with ING’s guidelines and limits. Only transactions with qualified counterparties are
entered into
• Profitability of Smart Design 1-2-3 sold in the quarter was 54bp of single premium, reflecting 30 September implied equity
volatility of 20-25% and 10 year spot rate of 1.73%
Third Quarter 2008 Results 42

43. Japan’s hedge programme has been largely
effective through volatile markets
Financial markets have been volatile and …and the hedge programme has been effective
declining in the recent past… in smoothing the economic gains and losses
0%
600
-5%
500
-10%
400
300
-15%
Result (EUR Million)
200
-20%
100
-25%
0
-100
-30%
-200
-35%
-300 a
-40%
-400
-500
-45%
-600
-50%
20 03
20 04
20 05
20 06
20 07
20 08
09
20 08
20 09
20 10
20 11
20 12
20 01
20 02
20 01
20 02
20 03
20 04
20 05
20 06
20 07
26 n
10 n
24 l
7- l
4- g
3- r
24 n
7- n
2 9 ay
12 y
21 g
20 ar
1- r
15 ay
6- b
17 r
ep
10 c
21 b
18 p
u
u
a
p
Ap
08
08
08
08
08
08
08
07
07
08
08
07
07
07
07
07
07
07
07
07
07
u
u
a
u
a
a
e
Au
e
Fe
Se
-J
-J
-M
M
-A
-J
-J
-M
-M
M
-J
-J
-A
-D
-F
-S
20
27
Topix S&P500 DJ EUROSTOXX 50 FTSE100 Change in value guarantee Hedge gains & losses¹
The hedging programme has gone a long way in smoothing out the amplitude of volatility
While the hedge programme was 82% effective in the quarter, extraordinary market volatility resulted in
direct hedge losses of EUR 93 million
* = reflects hedge programme performance relative to the hedge objective
Third Quarter 2008 Results 43

44. Third Quarter 2008: Agenda
Overview Michel Tilmant, CEO
Financial Highlights John Hele, CFO
Risk Management Koos Timmermans, CRO
Closing Remarks Michel Tilmant, CEO
Third Quarter 2008 Results 44

45. Risk Management
• The balance sheet
• Originated loans
• Investment portfolio: corporate bonds, Alt-A RMBS, other
• Liquidity
• Key messages
Third Quarter 2008 Results 45