Bancherul - BANCI / ENGLISH / ING 1Q underlying net loss narrows to EUR -305 million

Underlying net loss narrows substantially to EUR -305 million from EUR -3,073 million in 4Q08

Pre-tax impairments, fair value changes, DAC unlocking and other impacts of EUR -1,707 million, down significantly from 4Q08
All six business lines post improvement in 1Q09 underlying result before tax compared with 4Q08
Banking underlying net profit of EUR 519 million and Insurance underlying net loss of EUR -824 million for 1Q09
Divestments and special items totalled EUR -488 million, bringing the quarterly net loss to EUR -793 million
All key capital and leverage ratios within target; Bank Tier 1 ratio rose to 9.7% and core Tier 1 ratio rose to 7.5%

Significant progress achieved on de-risking, de-leveraging, cost-containment and initiatives to simplify the Group

Illiquid Assets Back-up Facility with Dutch State closed in the first quarter of 2009 reduces exposure to Alt-A securities by 80%
Listed equity exposure declined to EUR 5.0 billion with increased hedges on remaining exposure
Bank balance sheet reduced by EUR 79 billion out of EUR 110 billion planned reduction
Group expenses down 3.5% year-on-year and 13.3% from 4Q08; over 75% of targeted 7,000 FTE reduction achieved
ING to separate Banking and Insurance Boards to simplify governance and increase business focus

Net production of client balances resilient at EUR 11.2 billion, which excludes FX and market value declines

Net production driven by EUR 9.6 billion of bank deposits, excluding FX and market impacts, fuelled mainly by ING Direct
Limited net outflow at Insurance of EUR 1.4 billion with outflows in the US and Europe partly offset by inflows in Asia/Pacific
APE -27.5% and VNB -57.4% versus 1Q08 due to lower sales from weak demand and controlled slowdown in variable annuities

Chairman's Statement

"Market conditions remained challenging in the first quarter as equity markets declined further, credit spreads remained elevated, real estate prices continued to fall and loan losses increased as the crisis spread from the financial markets to the real economy," said Jan Hommen, CEO of ING. "In this environment, our first priorities are to reduce costs, risk and leverage to strengthen the Group. At the same time, we are working to reduce complexity by focusing on fewer businesses and markets."

"Market volatility continued to weigh on ING's results, however de-risking and cost-containment measures helped mitigate part of the impact. The underlying net loss narrowed substantially to EUR -305 million in the first quarter from EUR -3,073 million in the fourth quarter. All three banking business lines contributed to an underlying net profit of EUR 519 million despite rising risk costs. Income from the banking business recovered almost to the level of the first quarter last year, supported by strong Financial Markets results. The insurance business lines were impacted by falling asset prices, resulting in an underlying net loss of EUR -824 million."

"We made good progress in our efforts to reduce risks and costs and to simplify our organisation. The Illiquid Assets Back-up Facility with the Dutch State was completed in the first quarter, reducing ING's exposure to Alt-A RMBS by 80% and boosting shareholders' equity. Direct equity exposure was further reduced and hedge positions were increased. The de-leveraging of the Bank's balance sheet is progressing ahead of schedule, with EUR 79 billion of the planned EUR 110 billion reduction completed by the end of March. We are on track to cut expenses by EUR 1 billion this year as we align our cost base with today's leaner operating environment. Operating expenses were down 3.5% from the first quarter last year and 13.3% compared with the fourth quarter of 2008. Of the 7,000 workforce reduction announced in January, 5,380 had been completed by the end of March. In order to simplify governance and increase the customer focus of our leadership, ING will create separate Management Boards for Banking and Insurance. The Group Executive Board will consist of the CEO, CFO and CRO who will also serve on the Banking and Insurance Management Boards."

"Our businesses continued to show a resilient commercial performance as our customers continue to put their trust in ING. Total client balances increased by EUR 11.2 billion excluding currency impacts and market value declines. Growth was driven by a strong inflow of savings, particularly at ING Direct and ING Belgium, while competition for savings in the Netherlands continued to put pressure on volumes and margins. Lending growth was moderate given the economic slowdown, and the insurance businesses showed small net outflows as demand for investment-linked products continued to wane amid the current market volatility."

"This year will remain challenging as markets are volatile and the economic environment continues to be uncertain. We will continue to reduce risks and improve ING's operational performance through our Back to Basics programme while working to restore the confidence of our customers and adapt to their changing needs."