ING Group 2004 first-half operating net profit rises 35.2%

Strong results from banking businesses continue to drive profit growth. Highlights: Operating net profit rises 35.2% to € 2,796 million, Net profit per share rises 32.0% to € 1.36 from € 1.03, Operating net profit from banking rises 65.3% to € 1,327 million, Operating net profit from insurance rises 16.1% to € 1,469 million.

Chairman´s statement
'ING posted strong results in the first half, driven by an excellent performance at our banking businesses, as well as exceptionally low claims at our non-life insurance units and a gain on the sale of our Australian non-life business,' said Michel Tilmant, chairman of the Executive Board. 'All three banking business lines showed top-line growth while improving their cost/income ratios, and risk costs declined sharply. The life insurance businesses in the US and Asia also benefited from higher sales, stricter product pricing and lower credit losses.'

'This year we accelerated a programme to actively manage our portfolio of businesses, taking steps to sell units that no longer fit into our long-term strategy, such as the Asian cash equities business, and the Australian non-life insurance joint venture. We have agreed to sell CenE Bankiers in the Netherlands, and are in talks regarding ING BHF-Bank in Germany,´´ Tilmant said. 'As a result, ING´s debt/equity ratio is improving, so we decided to change ING´s dividend-funding policy to limit dilution of earnings per share.'

'The positive trends we experienced in the first quarter continued in the second quarter. Loan loss provisions and credit losses have declined sharply, and are now well below long-term average levels,' Tilmant said. ' However, there is still need for caution, as stock-market volatility and swift changes in interest rates could pose challenges for some businesses in the short run.'

'We are optimistic about the results for the full year,' Tilmant said. 'However, we have adopted a policy to no longer give profit forecasts.'

First-half profit
Operating net profit rose 35.2% to EUR 2,796 million, led by strong increases in operating profit from ING´s three banking business lines, driven by a sharp decline in risk costs and higher income. The insurance businesses in the Americas and Asia/Pacific also posted higher profit, driven by exceptionally strong results from non-life insurance, higher life insurance sales in the US and Asia, and a gain on the sale of ING´s non-life joint venture in Australia. Profit from Insurance Europe declined due to lower results in the Netherlands.

First-half net profit rose 40.0% to EUR 2,843 million, including EUR 47 million in realised capital gains on equities in the first half of 2004 as well as realised capital losses and a negative adjustment to the revaluation reserve shares which totalled EUR 38 million in the first half of 2003.

Net profit per share rose 32.0% to EUR 1.36 from EUR 1.03 in the first half last year. The increase lagged growth in total net profit due to an increase in the average number of shares outstanding because ING´s dividend has been fully funded in stock since the final dividend 2002. ING will continue to offer shareholders a choice to receive the dividend in cash or stock, but beginning with the interim dividend for 2004, it will no longer issue shares to fund the cash portion of the dividend.

Operating net profit from insurance rose 16.1% to EUR 1,469 million led by higher profit from the Americas and Asia/Pacific. For Insurance Americas, operating profit before tax increased 26.2% to EUR 800 million. Results from the US life business continued to improve and the Canadian non-life insurance operations posted exceptionally good results due to a very favourable claims experience. Operating profit before tax from Insurance Asia/Pacific increased from EUR 176 million to EUR 527 million, including a one-off gain of EUR 219 million from the sale of ING´s stake in its Australian non-life insurance venture. Excluding that gain, operating profit before tax from Insurance Asia/Pacific increased 75

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