Amsterdam –

13 January 2012

Balance sheet transformation – Capital, funding and liquidityING Investor Day

ING Investor Day - 13 January 2012 2

Priorities in transitioning to Basel III

Strong capital generation and a conservative funding mix Johannes Wolvius

Sound funding and liquidity profile form strategic advantage for our business model Harold Naus

1

2

3 Building Basel III liquidity while preserving the NIM Olivier Casse

& Boris Dunnewijk

4 Balance sheet integration to result in higher return Harold Naus

ING Investor Day - 13 January 2012 3

Strong capital generation and a conservative funding mix

Johannes Wolvius, Head ING Group Capital Management

ING Investor Day - 13 January 2012 4

Targets ActionsCore Tier 1

≥10%

•

To be reached in 2013•

Strong continued capital generation and RWA containment

Leverage ratio

< 25

•

To be reached in 2013•

Further reduction via balance sheet optimisation

LCR1

> 100%

•

To be reached in 2015•

Further optimising the investment portfolio

•

Implementation as of 2015NSFR1

> 100%

•

Implementation expected as of 2018

•

Uncertainty around definitions

ING has a good starting position to reach Basel III capital targets by 2013

9.6%6.5%

3Q08 3Q11

2957

3Q08 3Q11

~90%

3Q11

~85%

3Q111

Excluding ING Direct US

ING Investor Day - 13 January 2012 5

4,4622,809

1,150

1,959

-450 -261

2009 2010 3Q11

* Core Tier 1 capital generated is defined as net result before minority interest minus 10% * RWA growth at constant FX

Change of required capital (RWA movement at constant FX) Net profit before minority interest

7.3% 7.8%9.6% 9.6%

2008 2009 2010 9M2011

Core Tier 1 EUR 3 bln paid to State

ING has shown strong capital generation

Focus on State repayment and Basel III•

State repayment of EUR 3 bln in 2011 was offset by retained earnings, divestments and lower RWA

•

Cumulative capital generation since 2009 amounts to almost EUR 10 bln

Core Tier 1 capital surplus generation* (in EUR mln)

ING Bank core Tier 1 ratio

ING Investor Day - 13 January 2012 6

Core Tier 1 target increased to ≥10%

Basel III, 4.5%

Cap. cons. buffer, 2.5%

Counter cyclical buffer, 0-2.5%

Dutch SIFI 1-3%

Currenttarget

(Basel II)

Basel IIIstandard

(indicative)

Dutchregulator

(indicative)

EBA(Basel II)

•

Uncertain environment for setting a core Tier 1 target, with no formal guidance yet on SIFI buffers

•

A target of ≥10% offers a buffer between indicative SIFI requirements and could vary over the cycle depending on the counter cyclical buffer

•

SIFI buffer phased in during 2016-2019

•

10% target to be reached in 2013

8 -12%

CT1

8 –

12.5%

CT1

9.0%

CT1

7.5%CT1

Global SIFI0-2.5%

ING Investor Day - 13 January 2012 7

9.6% 9.5% 10.0% 10.0%

1.0% -0.8%-0.3%

Sept. 2011 Divest-ments*

Basel 2.5 Basel III CapitalGeneration

2013 2015

Core Tier 1 target of ≥10% to be reached in 2013

Strong focus on core Tier 1•

Strong earnings generation should enable ING to grow into Basel III targets before the end of 2013•

A further review of non-core assets in the Bank may also accelerate repayment of the State•

Dividend payments can be resumed post State repayment and restructuring

* Divestments include part of REIM and ING Direct USA

ING Investor Day - 13 January 2012 8

320 335

23

1131-35

-15

3Q11 ING DirectUSA

Basel 2.5 Basel III Growth /rating

migration

Identifiedmgt

actions

2013 Growth /rating

migration

2015

Limited increase in RWA expected

Managing RWA growth•

Divestments and indentified management actions offset the majority of the impact from regulatory changes

•

Business growth will be limited and focussed on core clients

In line with GDPIn EUR bln

ING Investor Day - 13 January 2012 9

Identified management actions amount to 40 bps

Financial Markets

•

De-risking and adaption of Financial Markets platform

•

Currently identified management actions will lead to a RWA reduction

EUR 10 bln or

25 bps

Other

•

Additional management actions will lead to a further mitigation

•

Non-core general lease portfolio in run-off•

Reduce Real Estate Investments and Real Estate Development projects

EUR 5 bln

EUR 15 bln or

40 bps

ING Investor Day - 13 January 2012 10

RWA impact implemented in 2013* bpsIFRS assets below 15% threshold -20CVA and correlation -50Other RWA -5

Capital impact in 2013*AFS Revaluation reserve +10Minority interest -15Total 2013 -80

Additional phase 2014-2018*AFS Revaluation reservePension fund assetsExpected lossCVA derivativesIntangibles

* Estimated impact based on figures as of 30 September 2011

Basel III capital impact a manageable 80 bps by end of 2013

•

Basel III impact in 2013 is expected to be -80 bps

•

This excludes currently identified management actions of +25 bps by 2013

•

Currently identified management actions include adaption and de-risking of Financial Markets platform

-12 bps per annum 2014-2018

•

-60 bps is expected to be phased in during the period 2014-2018 and based on figures as of 30 September 2011

•

Total Basel III impact before management actions amounts to -140 bps

•

This does not incorporate 25 bps DTA impact, which is expected to be utilised before the end of 2013

-55 bps

Mgt actions

25 bps

ING Investor Day - 13 January 2012 11

ING Bank benefits from favourable funding mix

44% 49%

21%23%

3%2%13%14%8%4%

11% 8%

3Q11 Indicative 2015

Retail deposits Corporate deposits

Subordinated debt Long-term debt

Short-term debt Interbank

Funding mix (%) Further optimisation•

ING’s funding mix will remain dominated by client deposits (~70% in 2015)

•

ING Bank has increased the issuance of long-

term debt since 2008

•

Further reliance on long-term funding is expected to be moderate in line with market developments and redemptions

•

Impact on NIM by higher credit spreads manageable due to large client deposit base and increased issuance of secured funding

ING Investor Day - 13 January 2012 12

Reduction of short-term funding

Short-term debt in issue•

Short-term funding partly opportunistically used for short-term assets

•

Reliance on short-term funding is modest in relation to size and duration of total balance sheet (~5%) and versus EUR 155 bln eligible assets

•

Both short-term assets and short-term funding will be reduced as we optimise

our balance sheet:•

Reduction of opportunistic trading opportunities

•

Further increase of client deposits and long-

term debt issuance

55

30

3Q11 Indicative 2015

Reduce short-term professional fundingEUR bln

Amounts due to banks•

ING Bank is seen as a safe haven and strong credit, which is why other Financial Institutions deposited money with ING

•

The excess versus EUR 55 bln ‘Amounts due from banks’

was largely placed with Central Banks•

Exposure will be reduced to optimise

the balance sheet and reduce leverage

Lowering amounts due to banksEUR bln

8760

3Q11 Indicative 2015

ING Investor Day - 13 January 2012 13

Conservative approach towards long-term funding with limited refinancing needs

Maintaining a diversified funding mix and conservative maturity ladder•

ING Bank partly pre-financed 2012 funding needs by issuing EUR 23 bln in 2011 versus EUR 10.7 bln maturing in full-year 2011

•

ING Bank has EUR 18 bln of debt with tenor longer than 1 year maturing in 2012

•

Year-to-date, ING Bank has already successfully issued EUR 2.75 bln

76 90

20 15

3Q11 Indicative 2015Long-term debt in issue Subordinated debt

05,000

10,00015,00020,00025,000

2011 2012 2013 2014 2015 2016 2017 2018 >2018

Senior debt State guaranteed Lower Tier-2 Covered bonds RMBS

Long-term funding increase reflects conservative approach

~ EUR 96 bln ~ EUR 105 bln

Limiting refinancing needs (EUR mln)

ING Investor Day - 13 January 2012 14

Sound funding and liquidity profile form strategic advantage

for our business modelHarold Naus, Head of Market Risk Management

ING Investor Day - 13 January 2012 15

Sound funding and liquidity profile form strategic advantage for our business model

•

Liquidity is integral part of ING Bank’s Risk Appetite Statements, Strategic steering and tactical business planning and operations:

•

No necessity to divest portfolio of assets•

Lending growth conditional to funding availability•

Full compliance with regulatory (Basel III) requirements•

Embedding of liquidity risk management throughout all subs and branches of the Bank

•

ING Bank is well placed with its current and future liquidity position:•

Balance sheet integration enables efficient use of ING’s funding sources•

ING’s Retail Banking model makes ING well placed for strong deposit growth•

Large unencumbered eligible asset portfolio provides strong cash

generating capacity•

Investment book will be transformed into liquidity portfolio (fully Basel III eligible)•

ING has modest long-term refinancing needs and has access to broad range of funding sources

ING Investor Day - 13 January 2012 16

Liquidity Buffer MtM Unencumbered After central bank haircut LCR Value

Ample liquidity reserves/eligible assets

•

ING has ample liquidity reserves with EUR 155 bln of central bank eligible debt securities, central bank reserves and cash

•

“Other”

includes cash, retained RMBS and central bank reserves•

Encumbrance due to minimum reserves and repo•

Level 1 assets include cash and government (guaranteed) bonds •

Level 2 contains highly rated covered bonds and corporate bonds

212187

8771

Investments

115

Other

97

27

64

96

23

64

23

61

Amounts in EUR billion

Level 1Level 2Level 3

155

ING Investor Day - 13 January 2012 17

ING manages liquidity by comparing liquidity reserves with severe funding stress test outcome

•

Liquidity reserves / eligible asset provides insight into nature

and quality of underlying assets

•

However, the ultimate test is to show adequacy of eligible asset

buffer compared to the potential funding outflow

•

Conservative approach to inconvertible currency and non-transferable positions•

Liquidity position of ING is stress-tested using the following assumptions:

•

High degree of outflow for wholesale funding (typically 90-100%)•

Relevant degree of outflow to retail savings (typically 10%)•

Drawings on credit facilities (typically 10%)•

Customer lending rolled over for a significant part (typically 40%)

•

Stress testing leads to a significant 1-month liquidity buffer•

A limit framework is in place to ensure this stress test is always passed•

The limit framework embeds liquidity risk management in the business

ING Investor Day - 13 January 2012 18

Further optimising the investment portfolio will support the LCR

Based on indicative definition NSFR1 ~85%

•

Net Stable Funding Ratio metric has an uncertain status and is not expected to be implemented before 2018:

•

BIS scheduled to be implemented with a binding minimum ratio

•

CRDIV drafts of July 2011 do not contain NSFR calibration nor minimum requirement

•

NSFR addressed via target balance sheet where long-term lending and investment assets require stable funding in the form of funds entrusted, equity and long-term debt

Automatically growing into LCR1 target

•

Liquidity coverage ratio will force banks to hold more cash, government bonds and covered bonds

•

Liquid asset definition is currently very restrictive, which will likely impact margins for the industry

•

To increase the LCR to the targeted level, we will•

Reduce short-term funding•

Increase long-term funding•

Replace maturing non-eligible investment portfolio with eligible assets

•

Regulatory observation period has started. Revisions to LCR to be made by mid-2013. Implemented in 2015

>100%~90%

3Q11 2015

>100%~85%

3Q11 2018

1

Excluding ING Direct US

ING Investor Day - 13 January 2012 19

LCR = [~EUR 87

bln stock] / [~EUR 95 bln out]

LCR ~ 90%

Liquidity Coverage Ratio is at ~90%

September 2011 (EUR bln), indicative*

LCR = [Stock of Liquid Assets] / [Net Potential Outflow over

a 30-day period]

•

Shortfall can easily be covered by 2015•

(Re)investments

in LCR eligible assets only•

Increase proportion of long-term debt in funding mix

Assets Liabilities

Customer deposits and other funds on deposits

-47 bln out

Sub debt

Short-term debt -22 bln out

Long-term debt -1 bln out

Equity

Fair value through the P&L -30 bln out

Banks -43 bln out

Other

10%

40%1%

20%

50%

Loans and advances to customers +16 bln in

Debt securities

Cash and balances with central banks

Fair value through the P&L +15 bln in

Banks +16 bln in

Other

3%

10%

35%

+87bln Liquid

assets

* Excluding ING Direct US

ING Investor Day - 13 January 2012 20

Indicative definition results in Net Stable Funding Ratio of ~85% September 2011 (EUR bln), indicative*

NSFR = [Available amount of stable funding (ASF)] / [Required

amount of stable funding (RSF)]

NSFR = [~EUR 500

bln ASF] / [~EUR 600 bln RSF]

NSFR ~ 85%

Assets Liabilities

•

Shortfall under Basel 3 calibration to be closed by 2018 •

NSFR not included in CRDIV framework by European Commission Increase proportion of long-

term debt in funding mix

•

Optimise product characteristics

Customer deposits and other funds on deposits

375 bln ASF

Sub debt 18 bln ASF

Short-term debt 0 bln ASF

Long-term debt 69 bln ASF

Equity 34 bln ASF

Fair value through the P&L 0 bln ASF

Banks 0 bln ASF

Other 0 bln ASF

80%

90%0%

100%

0%

0%

0%

Loans and advances to customers 433 bln RSF

Debt securities 23 bln RSF

Cash and balances with central banks 0 bln RSF

Fair value through the P&L 105 bln RSF

Banks 0 bln RSF

Other 39 bln RSF

80%

20%

70%

0%

100%

0%

90%

* Excluding ING Direct US

ING Investor Day - 13 January 2012 21

Investment Portfolio: Building Basel III liquidity while preserving the NIM

Olivier Casse, Co-head ING FM Boris Dunnewijk, CIO ING Direct

ING Investor Day - 13 January 2012 22

Bank TreasuryOne ALM

(results in local P&L)

Optimised liquidity

Optimised funding

One investment view

Netherlands Belgium DiBa Slaski UK Direct Europe Australia Others

Taking consolidated and local constraints into account

Investment portfolio governance: More central co-ordination and pro-active management

Bank Treasury•

Centralised governance: one investment view across all execution centres

•

Pro-active portfolio management•

Set and manage the liquidity, funding and investment positions of the Bank: prevent concentrations

Historical organisation•

Business line or country based management: scattered investment portfolios

•

Mainly buy-and-hold books•

Historical concentration in AAA ABS/RMBS

ING Investor Day - 13 January 2012 23

Towards a smaller portfolio with a higher liquidity value and a similar NIM•

Fixed income investment portfolio is generating historical spread of around 11 bps •

Re-investments in liquid assets deliver higher liquidity value at a

similar average spread•

Portfolio reduction used to downsize professional funding or to fund client assets

Historical credit spreads are lowHistorical spread (bps)

Level 1 0

Level 2 +15

Non-liquid +28

Average +1158%50%

19% 31%31% 11%

115100

3Q11 Indicative 2015Level 1 Level 2 Non-BIII liquid

Transforming the investment portfolio into a liquidity book, while preserving the NIM

ING Bank’s investment portfolio (EUR bln): re-investing in liquid Basel III level 1 and 2 assets

ING Investor Day - 13 January 2012 24

Re-allocate maturities to improve liquidity value at a similar NIM•

Beneficial maturity profile: EUR 68 bln will mature before 2016•

Re-allocate to improve liquidity value and preserve the NIM •

Generally re-invest Basel III Level 1 assets in Level 1 •

Generally re-invest ABS and financials in Basel III Level 2 assets

EUR 68 bln maturities in 2012-2015

8 8 5 5

37

6 3

34

31

2

45

211

1922

16

2012 2013 2014 2015

ABS

Financials/Corporates

Covered Bonds

Government Bonds

Maturity ladder provides flexibility and will support the portfolio’s liquidity value and NIM

ING Investor Day - 13 January 2012 25

3%3%

21%

30%

43%

AAA AA A BBB BB+ and below

Ongoing portfolio transformation: Reduction in size and improvement in composition

Portfolio affected by downgrades*2010 3Q11

3%5%

20%

38%

34%

Composition improves•

ABS and unsecured Financials reduced by EUR 21 bln since 2008

•

Portfolio reduced EUR 8 bln in 9M11:•

Almost entirely due to maturities and sales in ABS and Financials

•

Government and covered bond portfolio size remained stable in 9M11

•

EUR 22 bln downgrades, concentrated in AAA

52 47 50 51

35 32 29 2828 22 22 19

2925 22 17

144127 123 115

2008 2009 2010 3Q11

ABSFinancials/corporatesCovered bondsGovernment bonds

* Excluding ING Direct US, cash balances and equity

Investment portfolio 2008-11* (EUR bln)

ING Investor Day - 13 January 2012 26

14.7 16.0

6.82.5

-5.9-1.0-1.1

2010 Migration Sales Impairments Maturities Purchases Nov-11*

Portfolio is actively managed to counterbalance RWA migration

RWA actively managed•

EUR 22 billion bonds downgraded in 2011, adding EUR 6.8 bln RWA•

Maturities released EUR 5.9 bln RWA, re-investments have limited RWA •

ABS sales immediately released EUR 1.1 bln RWA and prevented an additional EUR 1.5 bln RWA migration

•

Pro-active management continues

RWA migration offset by sales and maturities* (EUR bln)

* Preliminary data

* Excluding ING Direct US

ING Investor Day - 13 January 2012 27

1.61.70.8

0.4 0.3

4.4

0.6 0.50.4 0.20.50.9

Italy Spain Portugal Greece

B/S value 4Q10B/S value 3Q11B/S value 4Q11*

Peripheral sovereign debt further reduced in 4Q11

Reduced peripheral sovereign in 2011 •

EUR 4 bln GIIPS sovereign sold in 2011•

GIIPS exposure further reduced in Q4•

Italian sovereign debt reduced by EUR 0.8 bln•

Spanish sovereign debt reduced by EUR 0.3 bln

•

Remaining positions are below EUR 1 bln per country

Sovereign exposures (EUR bln)

* Preliminary data

ING Investor Day - 13 January 2012 28

Balance sheet integration to result in higher returnHarold Naus, Head of Market Risk Management

ING Investor Day - 13 January 2012 29

Balance sheet integration to result in higher return

Balance sheet integration•

Align capital, assets and liabilities•

Reducing low-yielding investments with own-

originated assets to optimise returns

•

Balanced growth in Commercial Banking assets via organic growth and selected portfolio transfers

Eliminate cross-border inefficiencies•

Asset and liability generation to create locally sustainable balance sheets

•

Income diversification enables more competitive offering for retail liabilities

•

Diversified income drivers offering the full Retail and Commercial Banking product range

Assets Liabilities•

An optimised balance sheet should result in a higher return on assets

•

Within regulatory constraintsRetail

assets

Money market

Investment portfolio

Commercial Banking

assets

Money market

Investment portfolio

Commercial Banking

assets

ST funding

Deposits

ST funding

Deposits

Equity Equity

LT fundingLT funding

2011 Optimised 2011 Optimised

Retail assets

ING Investor Day - 13 January 2012 30

ING has several ways to optimise the balance sheet

Reduction of professional short-

term funding

•

Portfolio rationalisation•

Increase long-term funding

Improves LCR and NSFR

Fund assets with local liabilities

•

Germany•

Belgium•

Luxembourg•

Spain•

France•

Italy

Improves liquidity and repairs

geographical asymmetry

Asset optimisation•

Investment portfolio•

Client assets Improves liquidity

Balance sheet integration

•

Coordinate country balance sheet management

•

Merging legal entities

Improves liquidity and return on

assets

ING Investor Day - 13 January 2012 31

2010 2011<2010

20152012

Wave 1

Optimise utilisation of excess funding

Integration impact EUR 7 bln

Wave 2

Internal securitisations

•

DiBa•

Belgium•

Luxemburg•

France•

Italy

Integration impact EUR 12 bln

Wave 3

CB Asset transfers

•

Belgium•

Luxemburg•

Spain•

France•

Italy

Integration impact EUR 3 bln

Wave 4

Coordinate country balance sheet management

•

DiBa•

France•

Italy

Integration impact EUR 1 bln

Further optimisation

Wave 4 to be continued with an additional impact of EUR 30 bln to be realised by transfer of Commercial Banking assets

Balance sheet integration initiatives have delivered EUR 23 bln and a further EUR 30 bln targeted

ING Investor Day - 13 January 2012 32

Germany –

A classic example of balance sheet optimisation delivering significant benefits

•

Balance sheet integration is expected to deliver EUR 16 bln of benefits, of which EUR 10 bln completed

•

EUR 9 bln of internal securitisations and collateralised lending

•

EUR 1 bln integration of Commercial Banking

•

EUR 1 bln integration of Real Estate Finance

•

EUR 5 bln usage of retail funds to facilitate CB asset transfers

•

Intercompany transactions are increasing

•

Balanced growth in commercial banking assets via organic growth and selected portfolio transfers

Capital

Align capital with assets and liabilities: •

Merging of German Commercial Banking activities with ING-DiBa

•

Optimises capital use of ING-DiBa•

Transfer of Commercial Banking assets

Funding

Integration of ING-DiBa in ING term-funding strategy:•

Use of high-quality German residential mortgages for long-term funding and Pfandbriefe programme (up to EUR 10 bln) established in April 2011

•

Inaugural issue of EUR 500 mln in June 2011•

Strong track record in retail deposit generation

Liquidity

Leverage residential mortgage expertise for investments•

Purchase of Orange Lions (backed by Dutch residential mortgages)

•

Total intercompany transactions up to EUR 9 bln •

Improved liquidity of ING Bank NV

ING Investor Day - 13 January 2012 33

REF/CB

Further

potential

benefits

of balance

sheet integration

in France, Spain and Italy

France

•

Three strong businesses combined (CB, REF, ING Direct)

•

Steady growth of retail deposits•

Well-positioned for French corporates operating in Benelux and CE

•

REF recognised international player with outstanding financial performances and low risk profile

•

Potential optimisation EUR 5 bln

Spain

•

Locally fund asset origination after balance sheet integration is optimised

•

Locally yielding assets enable being more competitive in retail savings market

•

Self-sufficient in terms of liquidity•

Potential optimisation EUR 5 bln

Italy

•

Asset and liability generation to create a self-sustainable balance sheet which is locally funded

•

Income diversification enables more competitive offering for retail liabilities

•

Diversified income drivers offering the full retail and commercial banking product range

•

Potential optimisation EUR 4 bln

18 1820201212

55REF/CB Wholesale

funding

Investment portfolio Deposits

Commercial Bank

ING Direct

Lending

Investment portfolio

Deposits

Wholesale funding

44

REF/CB Wholesale funding

Commercial Bank

ING Direct

Commercial Bank

ING Direct

Money market

Mortgages

Investment portfolio

Deposits

Wholesale funding

55Wholesale

funding

Money market Money marketWholesale

funding/other

REF/CB

ING Investor Day - 13 January 2012 34

Priorities in transitioning to Basel III

Strong capital generation and a conservative funding mix

Sound funding and liquidity profile form strategic advantage for our business model

1

2

3 Building Basel III liquidity while preserving the NIM

4 Balance sheet integration to result in higher return

ING Investor Day - 13 January 2012 35

Disclaimer

ING Group’s Annual Accounts are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (‘IFRS-EU’).In preparing the financial information in this document, the same accounting principles are applied as in the 3Q2011 ING Group Interim Accounts. All figures in this document are unaudited. Small differences are possible in the tables due to rounding.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. This document, and any other document or presentation to which it refers, do not constitute an offer to sell, or a solicitation of an offer to buy, any securities.www.ing.com