ING Groep N.V. - Regulatory Filings 2020

6-K 1 ing6k20.htm 6-K Created with HDHtml v20.7.1.27557 ing6k20

UNITED STATES Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or SECURITIES AND EXCHANGE COMMISSIONForm 40-F.

Washington, D.C. 20549 Form 20-F [x] Form 40-F [ ]

FORM 6-KIndicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16[ ]
under the Securities Exchange Act of 1934Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T

Rule 101(b)(7):
[ ]

For the period ended 30 June 2020

Commission File Number 1-14642 This Report on Form 6-K is hereby incorporated by reference into the Registration Statements on Form S-8 (Files Nos. 333-215535, 333-172921, 333-172920, 333-172919, 333-168020, 333-165591, 333-158155, 333- 158154, 333-149631, 333-137354, 333-125075, 333-108833, 333-81564 and 333-92220) of ING Groep N.V.

ING Groep N.V. and shall be a part thereof from the date on which this Report is furnished, to the extent not superseded by documents or reports subsequently filed or furnished.

Bijlmerdreef 106

1102 CT Amsterdam

The Netherlands

reconciliation between IFRS -EU and IFRS -IASB as of and for the six months ended 30 June 2020, see Note

Presentation of information “Basis of preparation and accounting policies” of this document.

The condensed consolidated inte rim financial statements included in this report on Form 6-K are prepared in accordance with International Accounting Standard 34 ‘Interim Financial Reporting’ as adopted by theCapital measures included in this document are based on IFRS -EU, as this is the primary accounting basis for International Accounting Standards Board (‘IFRS -IASB’). In preparing the financial statements in thisstatutory and regulatory reporting used by ING Group.
document, except as described otherwise, the same accounting principles are applied as in ING Groep N.V.’s Annual Report on Form 20-F for the year ended 31 December 2019 (the “2019 Form 20-F”).Certain amounts set forth herein, such as percentages, may not sum due to rounding.

In this document, references to “ING Groep N.V.”, “ING Groep” and “ING Group” refer to ING Groep N.V. andThis document contains inactive textual addresses to Internet websites operated by us and third parties.
references to “ING”, the “Company”, the “Group”, “we” and “us” refer to ING Groep N.V. and itsReference to such websites is made for information purposes only, and information found at such websites is
consolidated subsidiaries.not incorporated by reference into this document. ING does not make any representation or warranty with
respect to the accuracy or completeness of, or take any responsibility for, any information found at any
All references to IFRS-IASB in this document refer to International Financial Reporting Standards (“IFRS”) aswebsites operated by third parties. ING specifically disclaims any liability with respect to any information
issued by the International Accounting Standards Board (“IASB”). ING prepares financial information infound at websites operated by third parties. ING cannot guarantee that websites operated by third parties
accordance with IFRS as issued by the IASB for purposes of reporting with the SEC, including financialremain available following the publication of this document, or that any information found at such websites
information contained in the 2019 Form 20-F. ING Group’s accounting policies under IFRS -IASB are describedwill not change following the filing of this document. Many of those factors are beyond ING’s control.

under “Basis of preparation and accounting policies” beginning on page F-13 in the consolidated financial statements contained in the 2019 Form 20-F.This document does not constitute an offer to sell, or a solicitation of an offer to purchase, any securities in the United States or any other jurisdiction.

All references to IFRS-EU in this document refer to IFRS as adopted by the European Union (“EU”), including

Forward-looking statements the decisions made by ING Group with respect to the options available under IFRS as adopted by the EU. ING
also prepares financial information in accordance with IFRS -EU, including the decisions ING made with regard Certain of the statements contained herein are not historical facts, including, without limitation, certain to the options available under IFRS -EU. Unless otherwise indicated, financial information included in this statements made of future expectations and other forward -looking statements that are based on document has been prepared in accordance with IFRS -EU. Other than for the purpose of SEC reporting, ING management’s current views and assumptions and involve known and unknown risks and uncertainties that Group intends to continue to prepare its annual accounts under IFRS -EU.
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 For an explanation of the differences between IFRS -IASB and IFRS -EU, see page F-14 of the 2019 Form 20-F.
a number of factors, including, without limitation:
For a reconciliation between IFRS -EU and IFRS -IASB as of and for the years ended 31 December 2019, 2018
and 2017, see Note 1.3.2 to the consolidated financial statements contained in the 2019 Form 20-F. For a

(1) changes in general economic conditions, in particular economic conditions in ING’s core markets,(15) outcome of current and future litigation, enforcement proceedings, investigations or other regulatory including changes affecting currency exchange rates,actions, including claims by customers, (2) the effects of the Covid-19 pandemic and related response measures, including lockdowns and travel(16) operational risks, such as system disruptions or failures, breaches of security, cyber-attacks, human restrictions, on economic conditions in countries in which ING operates, on ING’s business and operationserror, changes in operational practices or inadequate controls including in respect of third parties with which and on ING’s employees, customers and counterparties,we do business, (3) changes affecting interest rate levels,(17) risks and challenges related to cybercrime including the effects of cyber-attacks and changes in (4) any default of a major market participant and related market disruption,legislation and regulation related to cybersecurity and data privacy, (5) changes in performance of financial markets, including in Europe and developing markets,(18) changes in general competitive factors, (6) changes in the fiscal position and the future economic performance of the United States, including(19) the inability to protect our intell ectual property and infringement claims by third parties, potential consequences of a downgrade of the sovereign credit rating of the US government,(20) changes in credit ratings, (7) consequences of the United Kingdom’s withdrawal from the European Union,(21) business, operational, regulatory, reputation and other risks and challenges in connection with climate (8) changes in or discontinuation of ‘benchmark’ indices,change, (9) inflation and deflation in our principal markets,(22) inability to attract and retain key personne l, (10) changes in conditions in the credit and capital markets generally, including changes in borrower and(23) future liabilities under defined benefit retirement plans, counterparty creditworthiness,(24) failure to manage business risks, including in connection with use of models, use of derivatives, or (11) failures of banks falling under the scope of state comp ensation schemes,maintaining appropriate policies and guidelines, (12) non-compliance with or changes in laws and regulations, including those financial services and tax laws,(25) changes in capital and credit markets, including interbank funding, as well as customer deposits, which and the interpretation and application thereof,provide the liquidity and capital required to fund our operations, (13) geopolitical risks, political instabilities and policies and actions of governmental and regulatory(26) the other risks and uncertainties detailed in the most recent annual report on Form 20-F of ING Groep authorities,N.V. (including the Risk Factors contained therein) and ING’s more recent disclosures, including press (14) ING’s ability to meet minimum capital and other prudential regulatory requirements,releases, which are available on www.ING.com.

Contents| | 8Deposits from banks | 42 |
| --- | --- | --- |
| Interim report | 9Financial liabilities at fair value through profit or loss | 43 |

Interim report	5	10Debt securities in issue	43
Risk management	12	11Subordinated loans	44
		12Equity	44
Condensed consolidated interim financial statements		13Net interest income	46

Condensed consolidated statement of financial position	25	14Net fee and commission income	47
Condensed consolidated statement of profit or loss	26	15Valuation results and net trading income	47
Condensed consolidated statement of comprehensive income	28	16Other income	48
Condensed consolidated statement of changes in equity	29	17Earnings per ordinary share	49

Condensed consolidated statement of cash flows31

Segment reporting| Notes to the Condensed consolidated interim financial | | 18Segments | 49 |
| --- | --- | --- | --- |
| statements | | | |
| 1Basis of preparation and accounting policies | 33 | Additional notes to the Condensed consolidated interim financial | |
| 2Financial assets at fair value through profit or loss | 36 | statements | |
| 3Financial assets at fair value through other comprehensive income | 36 | 19Fair value of assets and liabilities | 56 |
| 4Securities at amortised cost | 38 | 20Legal proceedings | 65 |
| 5Loans and advances to customers | 39 | 21Related parties | 67 |
| 6Investments in associates and joint ventures | 39 | 22Subsequent events | 67 |
| 7Intangible assets | 41 | 23Capital Management | 67 |

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited4

Interim report

More information on the impact of Covid-19 on ING as well on the related risk measures taken to address the
Introductionimpact can be found in the section “Risk Management”. The financial impact on the Covid -19 related crisis
can be found in the section “ING Group consolidated results” and throughout the financial statements ING is a global financial institution with a strong European base, offering banking services through its section of this report.
operating company ING Bank. ING Bank’s more than 55,000 employees offer retail and wholesale banking
services to customers in over 40 countries.
As a reaction to the ongoing global pandemic, regulators have introduced a number of changes to regulatory
capital requirement reliefs that are also applicable to ING. More information on this can be found in the Steven van Rijswijk, previously member of the Executive Board and chief risk officer of ING, has succeeded section “business environment” of this report and note “Capital Management” of the interim financial Ralph Hamers as CEO and chairman of the Executive Board. The Supervisory Board has appointed Steven van statements.
Rijswijk effective 1 July 2020.

Covid-19 pandemic

The spread of Covid-19 in the first half of 2020 and its development into a global pandemic affected ING in a number of ways, impacting our customers, operations and employees and the communities where we operate. Supported by ING’s digital focus, most of our employees worldwide continue to work from home, providing an uninterrupted, high standard of service to our customers.

ING put measures in place to help customers deal with the impact of the pandemic on their finances. This included extensions of loan repayments for SME and retail customers in various countries. ING also works with larger corporate clients to deliver solutions tailored to their specific needs.

The economic impact of the Covid-19 pandemic and the impact of IFRS -9 methodology have resulted in

significantly higher Expected Credit Losses, which have impacted ING’s net profit for the first half of 2020. As

a result of the impairment test triggered by the Covid-19 pandemic, ING also recognised €310 million as an

impairment of goodwill on its balance sheet in the reporting period.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited5

ING Group consolidated results IASB. As no hedge accounting is applied to these mortgage and savings portfolios under IFRS-IASB, the fair value

changes of the derivatives are not offset by fair value changes of the hedge items (mortgages and savings).

ING Group: Consolidated profit or loss account

As from the financial year 2020 the information presented to the Executive Board is no longer based on of which: adjustment of

the IFRS -EU 'IAS 39 carveof which: Total ING Groupunderlying results but on IFRS as endorsed by the European Union. Previously monitoring and evaluation of| in € million | Total ING Group | | out' | | IFRS -EU | | ING Group’s segments was based a non-GAAP financial performance measure called underlying. Underlying |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 6 month period (1 January to 30 June) | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |
| Net interest income | 6,877 | 6,896 | –54 | –57 | 6,931 | 6,953 | result was derived by excluding from IFRS the following: special items, the impact of divestments and results |

Net fee and commission income1,5061,3861,5061,386from former insurance related activities. In 2020 and 2019 no special items, divestments or former insurance| Total investment and other income | 305 | –134 | –439 | –1,036 | 745 | 902 | related results were recorded anymore. |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Total income | 8,688 | 8,148 | –493 | –1,093 | 9,182 | 9,241 | |

Expenses excl. Regulatory costs	4,963	4,626	4,963	4,626
Regulatory costs	663	612	663	612	The breakdown of net result by segment is included in Note 18 ‘Segments’.

Operating expenses	5,626	5,238			5,626	5,238
Gross result	3,062	2,910	–493	–1,093	3,556	4,003	ING Group: reconciliation from IFRS -IASB to IFRS-EU
Addition to loan loss provisions	1,998	416			1,998	416	6 month period (1 January to 30 June)	2020	2019
Result before tax	1,065	2,493	–493	–1,093	1,558	3,586	Net result ING Group IFRS-IASB	591	1,707
Taxation	438	740	–115	–243	553	983	-/- Adjustment of the EU 'IAS 39 carve out'	–379	–850
Non-controlling interests	36	47			36	47	Net result ING Group IFRS-EU	969	2,556

Net result ING Group5911,707–379–8509692,556

Consolidated results of operations

ING Group monitors and evaluates the performance of ING Group at a consolidated level and by segment ING’s net result in the first half of 2020 decreased to €591 million, or 65.4%, compared with €1,707 million in using results based on figures according to IFRS as adopted by the European Union (IFRS -EU). The Executive the same period of 2019. This decrease in result was affected by €471 million less negative fair value changes Board and the Management Board Banking consider this measure to be relevant to an understanding of the on derivatives (including a negative impact under net interest income of ending some hedge relationships)
Group’s financial performance, because it allows investors to understand the primary method used by related to hedging mortgage and savings portfolios in the Benelux, Germany, France and Czech Republic.
management to evaluate the Group’s operating performance and make decisions about allocating resources.
These negative fair value changes are mainly caused by changes in markets interest rates. No fair value hedge In addition, ING Group believes that the presentation of results in accordance with IFRS -EU helps investors accounting is applied to these mortgage and savings portfolios under IFRS -IASB. Including the compensating compare its segment performance on a meaningful basis by highlighting result before tax attributable to positive hedge adjustment on those portfolios as applied under IFRS -EU, the net result decreased 62.1% to ongoing operations and the profitability of the segment businesses. IFRS -EU result is derived by excluding €969 million, compared with €2,556 million in the same period of 2019. The decline was primarily caused by from IFRS -IASB the impact of the IFRS -EU ‘IAS 39 carve out’ adjustment.
elevated risk costs reflecting the (expected) economic impact of the Covid-19 pandemic, including higher

Individual Stage 3 provisions, and €310 million of impairments on goodwill. Including the aforementioned The IFRS-EU ‘IAS 39 carve-out’ adjustment relates to fair value portfolio hedge accounting strategies for the

compensating hedge adjustment, the effective tax rate was 35.5% compared with 27.4% in the first half of mortgage and savings portfolios in the Benelux, Germany and Other Challengers that are not eligible under IFRS-

2019.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited6

The result before tax declined 57.3% to €1,065 million from €2,493 million in the first six months of 2019.Total investment and other income rose to €305 million in the first six months of 2020 from €-134 million in the Including the aforementioned compensating hedge adjustment, the result before tax fell 56.6% to €1,558same period of last year. Including the aforementioned compensating hedge adjustment, total investment and million from €3,586 million in the first half of 2019, predominantly due to €1,582 million higher risk costs, butother income fell to €745 million from €902 million in the first half of 2019, which had included a €119 million also due to higher expenses and lower income. Income decreased 0.6% as the first half of 2019 had includedone-off gain from the release of a currency translation reserve related to the sale of ING’s stake in Kotak a €119 million one-off gain related to the release of a currency translation reserve and a €79 millionMahindra Bank and a €79 million receivable related to the insolvency of a financial institution. Excluding these receivable related to the insolvency of a financial institution. Excluding these one-off items, income was 1.5%items, investment and other income rose by €41 million, or 5.8%, primarily in Financial Markets.
higher, mainly due to higher fee income on investment products and higher income from Financial Markets, which more than offset the impact of lower interest margins on customer deposits. Operating expenses roseOperating expenses increased by €388 million, or 7.4%, to €5,626 million. Expenses in the first six months of by €388 million, or 7.4%, on the first six months of 2019, mainly due to €310 million of goodwill impairments.2020 included €663 million of regulatory costs, while the same period of 2019 included €612 million of regulatory costs. Expenses excluding regulatory costs rose by €337 million, or 7.3%, to €4,963 million. The Net interest income decreased by €19 million, or 0.3%, to €6,877 million in the first six months of 2020, butincrease was mainly caused by €310 million of goodwill impairments related to a number of acquisitions in when including the aforementioned compensating hedge adjustment, net interest income income decreasedthe past. Also excluding this goodwill impairment, expenses increased by 0.6%, mainly due to the impact of by €22 million, or 0.3%, to €6,931 million in the first six months of 2020. The interest result on customercollective -labour-agreement salary increases and higher KYC -related expenses. These increases were largely deposits declined due to lower interest margins on both savings and current accounts caused by loweroffset by a value added tax (VAT) refund and the impact of cost savings (including lower marketing and travel reinvestment yields, while average current account volumes increased. The interest result on customercosts as a result of the Covid -19 restrictions), while the first half of 2019 included a restructuring provision in lending was higher compared with the same period a year ago, due to improved interest margins onRetail Germany. The cost/income ratio increased to 61.3% from 56.7% in the first half of 2019.
residential mortgages combined with higher lending volumes. Higher interest results at Treasury (supported by the introduction of the ECB’s two-tiering system at the end of October 2019) and Financial Markets (whichNet additions to loan loss provisions were €1,998 million compared with €416 million in the first half of 2019.
can be volatile), were offset by lower net interest income in the Corporate Line. ING’s overall net interestRisk costs in the first six months of 2020 were severely impacted by a combination of increased collective margin, which is defined as net interest income divided by the average balance sheet total, decreased by 7provisioning reflecting the worsened macro -economic indicators due to the Covid-19 pandemic, higher basis points to 1.47%, from 1.54% in the first half of 2019.Individual Stage 3 provisions and negative rating migration. Risk costs in the first half of 2020 included €627

million of collective provision related to the worsened macro -economic indicators. Risk costs were annualised Net fee and commission income increased 8.7% to €1,506 million from €1,386 million one year ago. In Retail64 basis points of average customer lending compared with 14 basis points in the first half of 2019.
Banking, net fee and commission income rose by €94 million. This was mainly driven by higher fee income on investment products, predominantly in Germany, while fee income on daily banking products was lowerFor the followin g information per business line the IFRS -EU measures are in place, in line with management reflecting a reduction of (international) payment transactions following the lockdown measures related toreporting.
the Covid-19 pandemic. Total fee income in Wholesale Banking increased by €23 million, predominantly in Financial Markets, mainly due to higher deal activity in Global Capital Markets, partly offset by lower fees in Trade & Commodity Finance as a result of lower average oil prices.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited7

Retail Netherlandscosts reflecting the worsened macro -economic environment, combined with lower income and higher

expenses.
Retail Netherlands posted a result before tax of €1,043 million, compared with €1,132 million in the first six

months of 2019. This decline was mainly attributable to higher risk costs reflecting the worsened macro- Total income declined by €44 million, or 3.5%, to €1,215 million. Net interest result decreased by €22 million, economic environment, as well as lower margins on savings and current accounts. The impact of these or 2.3%, mainly reflecting lower margins on savings and current accounts, partly offset by higher net interest factors was partly offset by higher Treasury -related revenues.
income from mortgages due to improved margins and higher volumes. Net core lending (excluding Treasury)

decreased by €0.3 billion in the first half of 2020, fully in residential mortgages. Net customer deposits Total income increased by €9 million, or 0.4%, to €2,269 million, compared with €2,260 million in the first
(excluding Treasury) grew by €3.3 billion, predominantly in current accounts. Net fee and commission income half of 2019. Net interest income rose 1.3%, mainly due to higher treasury related revenues, which was
rose by €19 million, or 10.1%, mainly due to higher fee income on investment products. Investment and largely offset by lower net interest results on savings and current accounts due to lower margins, while
other income declined by €41 million, mainly due to lower Treasury -related revenues, including negative average volumes continued to increase. Net interest results on customer lending were stable, as lower
marked -to-market movements of derivatives which are not in hedge accounting.
average volumes were compensated by slightly higher margins. Customer lending increased by €2.4 billion in

the first half of 2020. Net core lending (which excludes Treasury products and a €0.6 billion decline in the
Operating expenses rose by €96 million, of which €43 million was caused by a goodwill impairment related to WUB run-off portfolio) decreased by €0.9 billion, of which €0.4 billion was in residential mortgages and €0.5
an acquisition in the past by ING Belgium. The remaining increase was mainly due to higher regulatory costs billion in other lending. In the first half of 2020 net customer deposits (excluding Treasury) grew by €11.1
and KYC -related expenses.
billion, mainly in current accounts. Net fee and commission income increased by €3 million, or 0.9%, while

investment and other income was €15 million lower.
The net addition to the provision for loan losses increased to €282 million, or annualised 62 basis points of

average customer lending, from €58 million in the first half of 2019. The increase in risk costs was mainly in Operating expenses decreased by €7 million, or 0.6%, to €1,088 million from €1,095 million in the first six
business lending. Risk costs in the first half of 2020 included €65 million of collective provisions related to the months of 2019. The decrease was mainly due to lower expenses related to staff, marketing and travel, which
worsened macro -economic indicators, including provisioning related to loans subject to a payment holiday.
were largely offset by higher regulatory costs and IT expenses.
The remaining risk costs we re mainly related to Stage 3 provisioning on a number of individual files.

The net addition to loan loss provisions was €139 million, or 17 basis points of average customer lending, in

Retail Germany the first six months of 2020, compared with €33 million, or 4 basis points, in the same period of last year. Risk

costs in the first half of 2020 included €90 million of collective provisions related to the worsened macro-Retail Germany, which includes Austria, recorded a first -half 2020 result before tax of €494 million, up 10.0%

economic indicators, including provisioning related to loans subject to a payment holiday.from €449 million in the same period of 2019. The increase was primarily due to higher income, partly offset

by higher risk costs after a net release in the first half of 2019.

Retail Belgium

Retail Belgium, which includes Luxembourg, posted a result before tax of €-36 million in the first half of 2020,

compared with €328 million in the same period of 2019. The decline was mainly attributable to higher risk

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited8

Total income increased to €1,075 million, up 7.0% from €1,005 million in the first six months of 2019. Thedue to the Covid-19 pandemic reduced the number of daily banking transactions. The net production in increase was driven by €92 million higher fee income, predominantly on investment products due to a highercustomer lending (adjusted for currency effects and Treasury) was €1.3 billion in the first half of 2020, with number of brokerage trades on the back of market volatility. Net interest income increased 0.6% to €801growth in all countries, except in Italy. The net inflow in customer deposits, also adjusted for currency million, due to accounting asymmetry in Treasury (with an offset in other income) and higher margins onimpacts and Treasury, was €8.1 billion, with the largest increases in Poland and Spain.
mortgages, largely offset by margin pressure on savings. In the first six months of 2020, net core lending (which excludes Treasury products) increased by €1.5 billion, of which €1.3 billion was in residentialOperating expenses increased by €59 million, or 5.6%, to €1,120 million from €1,061 million in the first half of mortgages and €0.2 billion in consumer lending. Net customer deposits (excluding Treasury) increased by2019, of which €17 million was due to higher regulatory costs. The remaining increase was mainly due to €1.2 billion, fully in current accounts while savings showed an outflow. Investment and other incomestrategic initiatives and the execution of bank-wide regulatory programmes, including KYC, partly offset by declined by €27 million, mainly in Treasury due to the aforementioned accounting asymmetry and lowerlower marketing expenses.

capital gains.
The net addition to loan loss provisions increased by €117 million on the first half of 2019 to €304 million, or Operating expenses decreased by €12 million, or 2.1%, to €567 million from €579 million in the first half ofannualised 63 basis points of average customer lending. Risk costs in the first half of 2020 included €104 2019. When adjusted for a €36 million restructuring provision recorded in the first half of last year, expensesmillion of collective provisions related to the worsened macro -economic indicators. The increase versus the increased by €24 million. The increase was mainly due to investments to support business growth as well asfirst half of last year was mainly visible in Poland, Italy and Spain, whereas risk costs in Turkey declined.
the consolidation of a subsidiary as from the first half of 2020, partly offset by lower regulatory costs.

Wholesale Banking The net addition to the provision for loan losses was €14 million, or 3 basis points of average customer In the first six months of 2020, the result before tax turned to a loss of €204 million from €1,018 million in the lending, in the first half of 2020, compared with a net release of €23 million in the same period of last year, same period last year. The decline was predominantly due to elevated risk costs as well as higher expenses which had included model updates on mortgages. Risk costs in the first half of 2020 included €3 million of (including a €260 million goodwill impairment as a result of the impairment test triggered by the Covid-19 collective provisions related to the worsened macro -economic indicators.
pandemic), partly offset by higher income.

Retail Other Challengers & Growth Markets Total income increased by €162 million, or 6.2%, to €2,780 million in the first half of 2020, mainly due to Retail Other Challengers & Growth markets’ result before tax declined to €295 million from €438 million inhigher income in Financial Markets and Treasury & Other. This was partly offset by lower income in Daily the first six months of 2019, reflecting higher risk costs and operating expenses, partly offset by higherBanking & Trade Finance and negative marked -to-market adjustments in Lending. The increase in Financial income.Markets was driven by higher income in the Forex, Rates and Global Capital Market businesses, together with

substantial lower negative valuation adjustments than recorded in the first half of 2019.
Total income rose by €33 million, or 2.0%, to €1,720 million from €1,687 million in the first six months of last year, driven by higher net interest income consistent with higher volumes, and higher Treasury -relatedNet interest income increased by €33 million, or 1.8%, on the first six months of 2019, mainly driven by revenues. The increase was partially offset by lower net fee and commission income as lockdown measuresTreasury & Other and Financial Markets. The increase was partly offset by lower interest results in Daily

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited9

Banking & Trade Finance, mainly due to lower margins in Payments & Cash Management. Net core lendingCorporate Line

(excluding currency impacts, Treasury and the Lease run-off portfolio) grew by €3.8 billion in the first half of The Corporate Line reported a result before tax of €-34 million compared with €221 million in the first half of
2020. Net customer deposits (excluding currency impacts and Treasury) rose by €6.4 billion.
2019. Total income fell to €123 million from €413 million a year ago. This decline was primarily due to lower

investment and other income, as the first six months om 2019 included a €119 million one-off gain from the Net fee and commission income increased by €23 million, or 4.3%, on last year, predominantly in Financial release of a currency translation reserve related to the sale of ING’s stake in Kotak Mahindra Bank and the Markets mainly due to higher deal activity in Global Capital Markets. The increase was partly offset by Daily recognition of a €79 million receivable related to the insolvency of a financial institution. Excluding both Banking & Trade Finance mainly due to lower fees in Trade & Commodity Finance (mainly due to lower items, income decreased by €92 million, primarily due to lower income from foreign currency exchange ratio average oil prices). Investment and other income rose to €354 million from €248 million in the first half of hedging. Operating expenses decreased to €154 million from €192 million in the first half of 2019, mainly due 2019, primarily due to higher revenues in Financial Markets. This increase was partly offset by Lending, which to the recognition of a value -added tax (VAT) refund in the first half of 2020, partly offset by higher included negative marked -to-market adjustments related to syndicated loans and loans at fair value through shareholders and KYC -related expenses.
profit or loss.

ING Group statement of financial position (‘balance sheet’) Operating expenses were €1,728 million, or 20.2% higher than in the first six months of 2019. Excluding

regulatory costs (€151 million in the first half of 2020 versus €143 million one year ago), operating expenses
ING Group’s total balance sheet increased by €93 billion to €981 billion at 30 June 2020 from €889 billion at increased by €283 million, or 21.9%. The increase was mainly explained by a €260 million goodwill
31 December 2019.
impairment related to a number of acquisitions in the past. Also excluding this goodwill impairment,

expenses increased by 1.8%, mainly due to higher staff expenses related to annual salary increases and

Cash and balances with central banks higher KYC costs. This increase was partly offset by lower performance -related expenses and the impact of Cash and balances with central banks increased by €66 billion to €119 billion. The increase was driven by continued cost -savings measures.
ING’s participation in a new series of Targeted Longer-Term Refinancing Operations, TLTRO III, initiated by

the European Central Bank (visible in deposits from banks) and increased customer deposits. Further details Net addition to loan loss provisions rose to €1,256 million, or annualised 133 basis points of average
on TLTRO can be found in note Deposits from Banks.
customer lending, from €162 million, or 18 basis points, in the first half of 2019. The increase was

predominantly due to various Individual Stage 3 provisions and high collective Stage 1 and Stage 2 provisions

Loans and advances to banks and deposits from banks as a result of the economic impact of the Covid-19 pandemic, including €366 million of collective provisions

related to the worsened macro -economic indicators, as well as a €30 million collective Stage 2 provision forLoans and advances to banks decreased by €4 billion to €31 billion. Deposits from banks increased by €44

increased risk that was observed in the US reserve -based lending book.billion to €79 billion, mainly due to the participation in TLTRO III of €60 billion (of which €55 billion in June

2020), which was partly offset by repayments and maturities of TLTRO II (€-18 billion).

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited10

Financial assets/liabilities at fair value through profit or lossOther assets/liabilities

Financial assets at fair value through profit or loss increased by €15 billion to €111 billion, after a relativelyOther assets increased by €3 billion while other liabilities were €2 billion higher. Both movements were

low year-end 2019. The increase was mainly due to €10 billion of higher assets mandatorily at fair valuemainly due to changes in financial transactions pending settlement.

through profit or loss (reverse repos) and €5 billion higher trading assets (derivatives). Financial liabilities at

fair value through profit or loss increased by €13 billion to €91 billion, approximately mirroring theCustomer deposits

development on the asset side of the balance sheet, with €8 billion of higher trading liabilities (trading Customer deposits increased by €31 billion to €606 billion. Adjusted for currency impacts and Treasury, net

derivatives and repos) and €5 billion of increased designated financial liabilities at fair value through profit or customer deposits grew by €30 billion in the first half of 2020, predominantly due to higher customer

loss (repo activity).
deposits at Retail Banking reflecting ING Bank’s strength as a deposit gatherer.

Financial assets at fair value through other comprehensive income

Debt securities in issue Financial assets at fair value through other comprehensive income (OCI) increased by €5 billion to €39 billion, Debt securities in issue increased by €3 billion to €121 billion due to €5 billion of higher certificates of due to €5 billion more debt securities, which mainly reflect investments in government bonds (mainly US deposit/ commercial paper (CD/CPs), while other debt securities, mainly long-term debt, decreased by €3 Treasuries) and short-term paper. In addition, the value of the existing portfolio rose due to a drop in yields.
billion.

Securities at amortised costs

Subordinated lo ans Securities at amortised cost increased by €5 billion to €51 billion, mainly due to an increase of investments in Subordinated loans remained flat at €17 billion, as new issuances in February and May were offset by government bonds.
redemptions in the same months.

Loans and advances to customers

Shareholders’ equity Loans and advances to customers increased by €4 billion to €612 billion from €608 billion at 31 December Shareholders’ equity increased by €0.2 billion to €51.1 billion from €51.0 billion at 31 December 2019. The 2019. This was due to €6 billion of higher customer lending partly offset by €1 billion of higher provisions for increase mainly reflects the €0.6 billion net result for the first half of 2020 and a positive change in the loan losses. When adjusted for €3 billion of negative currency impacts, customer lending increased by €9 cashflow hedge reserve of €0.5 billion, partly offset by a €0.6 billion decrease of the currency translation billion. After also exclu ding €4 billion increase of short-term lending in Treasury and a €1 billion decline in the reserve and €0.3 billion of negative unrealised revaluations of equity securities (mainly due to a decrease of WUB and Lease run-off portfolios, net core lending increased by €5 billion of which €3 billion was in nonthe valuation of our stake in Bank of Beijing).
mortgage lending and €2 billion in residential mortgages.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited11

Risk managementBusiness environment

Managing risk is at the core of ING’s business. Financial risks include credit risk, for example when we offerThe Covid-19 pandemic and subsequent lockdown measures have thrown the world economy in turmoil.
loans, market risk through our trading and banking book positions, and liquidity or funding risk throughEven as countries are reopening, the global economy is expected to shrink in 2020 as domestic demand and financial management. Non-financial risks are those associated with IT and cybersecurity, our dailysupply, trade, and finance have been severely disrupted. In addition, the continuing US-China trade tensions operations (e.g. fraud and money laundering), compliance, adhering to socially-acceptable ethical norms andand prolonged uncertainty on Brexit have negatively affected the global economy in the first half-year of reputational issues.2020.

We continually develop our risk management to address political and economic developments, evolvingCovid-19 regulatory requirements, changing customer expectations, emerging competitors and new technologies, all In late -2019, a highly-infectious coronavirus named Covid-19 was first identified in China. Spreading quickly of which could potentially impact our business.
to other regions of the world, Covid-19 was declared a global pandemic by the World Health Organization on 11 March 2020. Various countries and local governmental authorities across the world have introduced

Basis of disclosures measures aimed at preventing the further spread of Covid-19, such as bans on public events with over a This risk management section contains an update of information relating to the nature and the extent of thecertain number of attendees, closures of places where larger groups of people gather such as schools, sports risks arising from financial instruments as disclosed in the 2019 ING Group consolidated financial statementsfacilities and bars and restaurants, lockdowns, border controls and travel and other restrictions. Such as included in the 2019 Annual Report on Form 20F. These disclosures are an integral part of the ING Groupmeasures have disrupted the normal flow of business operations in those countries and regions, which condensed consolidated interim financial statements and are indicated by the symbol (*). Chapters,include countries and regions where ING and its customers and counterparties operate, affected global paragraphs, graphs or tables within this risk management section that are indicated with this symbol in thesupply chains, global manufacturing, tourism, consumer spending and asset prices, and resulted in volatility respective headings or table header are considered to be an integral part of the condensed consolidatedand uncertainty across the global economy and financial markets.

interim financial statem ents.
In addition to measures aimed at preventing the further spread of the Covid-19 virus, governments in various This risk management section also includes additional disclosures beyond those required by IFRS standards,countries have introduced measures aimed at mitigating the economic consequences of the outbreak. For such as certain regulatory disclosures. Not all information in this section can be reconciled back to theexample, the Dutch government has announced economic measures aimed at protecting jobs, households’ primary financial statements and corresponding notes, as it has been prepared using risk data that differs towages and companies, e.g., by way of tax payment holidays, guarantee schemes and a compensation scheme the accounting basis of measurement. Examples of such differences include the exclusion of accrued interestfor heavily affected sectors in the economy. These announced measures and any additional measures, and certain costs and fees from risk data, and timing differences in exposure values (IFRS 9 models reportincluding any payment holidays with respect to mortgages or other loans, have had and may continue to expected credit loss on underlying exposures) .have a significant impact on ING’s customers and other counterparties.

Governments, regulators and central banks (including the ECB), have also announced that they are taking or considering measures seeking to safeguard the stability of the financial sector, to prevent lending to the

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited12

business sector from being jeopardised and to ensure the payment system continues to function properly.strategic change programs in the current environment. If any of these risks were to materialize that may

The Basel III framework includes capital and liquidity buffers which are designed to withstand stressedadversely affect ING’s business, results and financial condition

situations like the current one. In this context, ING Group’s Systemic Risk Buffer has been lowered from 3.0%

of global risk-weighted exposures to 2.5%. In addition, the ECB allows banks to operate temporarily belowAlso the potential economic implications for the countries and sectors where ING is active, which could have

the level of capital defined by the Pillar 2 Guidance (P2G) and the capital conservation buffer (CCB). The ECBa material adverse effect on ING’s business and operations, are being assessed and discussed in order to

effectuated Art 104(a) CRDV as of the first quarter of 2020, which essentially brings forward the possibility toidentify possible mitigating actions.

cover Pilar 2 requirements with a mix of own funds instead of CET1 only. For ING this means a reduction of

P2R from 1.75% to 0.98%. Furthermore, several countries released or reduced their countercyclical bufferFurther details on our credit risk and market risk portfolios are covered in the next chapters.

(CCyB). This brings back ING Group’s fully loaded CCyB from 24 bps in Q4 2019 to 3 bps in Q2 2020, helping to

maintain the supply of credit and dampen the downswing of the financial cycle. The measures remain untilCredit risk management practices (*)

further notice.
In many countries, Governments have adopted economic support programs (such as tax advantages,

unemployment regulations or guarantees) that we believe will assist ING clients in potential financial ING is monitoring the ongo ing Covid-19 pandemic carefully as it evolves to understand the impact on its difficulty to manage through these extraordinary times. In addition, various initiatives have been taken to people and business. A central ING team has been set up to monitor the situation globally and provide grant payment holidays, (guaranteed) new money facilities etc.
guidance on health and safety measures, travel advice and business continuity for our company. As the

situation differs from country to country, we are following local government guidelines in our response to the Governments in almost all Retail Banking countries have adopted measures providing for payment holidays.
virus. As of April 2020, most of ING’s staff are working from home for several months, during which time ING As of end of June, approximately 189,000 customers were granted payment holidays. The total exposure of has not experienced any substantial operational disruptions as result of work from home. In addition, since loans for which a payment holiday is granted amounts to € 18.1 billion, of which over 55% were for May staff in various countries have started rotation schemes to return to work in the office in a controlled customers located in the Netherlands and Belgium.
manner, taking into account local circumstances and any applicable government measures (including with

respect to social distancing). This controlled office opening process is expected to allow for essential face -to- The payment holiday schemes offered in the various countries differ in terms of scope, benefit duration and face meetings. However, at this time, it is not certain when ING’s employees may be generally expected or key conditions. Generally these schemes offer a 3 or 6 month suspension of principal payment, and in some permitted to return to ING’s offices. If due to illness, technical limitations or other restrictions in connection instances also of interest payment. The payment holidays are applied to business lending and for mortgages with the pandemic, employees are unable to work or are not able to operate as effectively and efficiently as and consumer loans.
in the office, this may adversely affect ING’s business, results and financial condition.

The modification of contractual terms of loans subject to payment holiday arrangements does not In addition, a situation in which most or some ING’s employees continue working from home may raise automatically result in derecognition of the financial assets. Where applicable, the carrying amount of the operational risks, including with respect to information security, data protection, availability of key systems financial asset has been recalculated as the present value of the renegotiated or modified contractual cash and infrastructure integrity . There is also a risk that ING will not be effective in implementing regulatory or flows, discounted at the original effective interest rate and a gain or loss was recognized .

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited13

The various measures by governments and ING to alleviate the impact of Covid-19 also impact the loanAs described in above section “business environment” governments in various countries have introduced classification in terms of forbearance and consequently IFRS 9 staging. In light of this, the EBA has providedmeasures aimed at mitigating the economic consequences of the Covid -19 virus outbreak, especially for guidelines which define eligibility criteria for a payment holiday arrangement offered to a large group ofprivate individuals and small business. These measures have a mitigating effect on the deterioration of the customers to be classified as a “general payment moratorium”. The application of such a general paymentcredit quality of the portfolio. Policies with respect to payment holidays are intended to address short-term moratorium should not lead to a forbearance classification. Therefore it should not automatically triggerliquidity difficulties for individuals and businesses resulting from the impact of Covid-19. These payment recognition of lifetime ECL either. ING follows the EBA guidelines and when a payment holiday is provided toholidays have led to a reduced number of defaults.
a customer as part of a “general payment moratorium”, ING does not consider this measure to classify as forbearance .Loan Loss Provisioning (*)

Since 1 January 2018, ING has recognised loss allowances based on the expected credit loss model (ECL) of

Portfolio quality and concentration IFRS 9, which is designed to be forward -looking. The IFRS 9 impairment requirements are applicable to on- Lending to businesses is diversified over various sectors and countries. The total gross carrying amounts isbalance sheet financial assets measured at amortised cost or fair value through other comprehensive income composed of approximately 65% business lending and 35% consumer lending. For a detailed breakdown of(FVOCI), such as loans, debt securities and lease receivables, as well as off -balance sheet items such as ING’s credit risk portfolio by Sector and Geographical area, refer to the section “Credit Risk portfolio”undrawn loan commitments, certain financial guarantees, and undrawn committed revolving credit facilities.

reported in the ‘Risk management’ section of the 2019 Annual Report on Form 20F.
The table below describes the portfolio composition over the different IFRS 9 stages and rating classes. The ING’s total credit outstandings increased significantly compared to year -end 2019 mainly as a result of theStage 1 portfolio represents 91.9% (31 December 2019: 94.0%) of the total gross carrying amounts, mainly TLTRO III participation through deposits to central banks. This is visible in the next table as investment gradecomposed of investment grade, while Stage 2 makes up 6.7% (31 December 2019: 4.7%) and Stage 3 makes with AAA rating. For the sectors which were mostly impacted by Covid -19, please refer to the sectionup 1.4% (31 December 2019: 1.3%) total gross carrying amounts, respectively.
“Changes in gross carrying amounts and loan loss provision”.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited14

*Gross Carrying amount per IFRS 9 stage and rating class ()**	1
31 December 2019		12-month ECL (Stage 1)			Lifetime ECL not credit impaired			Lifetime ECL credit impaired				Total
						(Stage 2)			(Stage 3)
Rating class		Gross Carrying		Provisions	Gross Carrying		Provisions	Gross Carrying		Provisions	Gross Carrying		Provisions
		Amount				Amount			Amount		Amount
	1 (AAA)		75,144		1							75,144		1
Investment grade	2-4 (AA)		82,992		3	28						83,020		3
	5-7 (A)	131,931			11	273					132,204			11
	8-10 (BBB)	295,449			55	4,905		6			300,354			61
	11-13 (BB)	194,643		209		7,925		54			202,568		263
Non-Investment grade	14-16 (B)		36,683	202		18,416	367					55,099	569
	17 (CCC)		405		7	4,067	146					4,472	153
	18 (CC)					3,253	160					3,253	160
Substandard grade	19 (C)					2,216	148					2,216	148
NPL grade	20-22 (D)								10,955	3,275		10,955	3,275
Total		817,247		490		41,082	881		10,955	3,275	869,284		4,646
1 IAS 37 provisions (EUR 93.3 million) are excluded.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited15

Changes in gross carrying amounts and loan loss provision (*)•Stage 2 gross carrying amount increased by €21.6 billion from €41.1 billion as per 31 December 2019.

This is mainly caused by the significant lifetime PD trigger (€8.4 billion), the Watchlist trigger (€4.0 The table below provides a reconciliation by stage of the gross carrying/nominal amount and allowances for
billion), primarily in Wholesale Banking, and to a lesser extent Forbearance (€3.3 billion);
loans and advances to banks and customers, including loan commitments and financial guarantees. The
•Transportation & Logistics, Services, Real Estate and Food, Beverages & Personal Care were the sectors transfers of financial instruments represents the impact of stage transfers upon the gross carrying/nominal
particularly impacted by the Covid-19 pandemic, with an increase in Stage 2 amounts of €4.7 billion, €2.1 amount and associated allowance for ECL. This includes the net remeasurement of ECL arising from stage
billion, €2.0 billion and €1.7 billion respectively. These sectors represent 12%, 9%, 9% and 8% of the total transfers, for example, moving from a 12-month (stage 1) to a lifetime (stage 2) ECL measurement basis.
Stage 2 gross carrying amounts respectively.

•The net remeasurement of loan loss provisions in Stage 1 and Stage 2 of €182 million and €354 million The net remeasurement line represents the changes in provisions for facilities that remain in the same stage.
respectively and the transfer into lifetime ECL of €522 million were significantly impacted by the

worsened macro -economic outlook, including management adjustments of €90 million to reflect the Please note the following comments with respect to the movements observed in the table below for the first
risks in payment holidays and the impact of oil price decrease on the upstream Reserve Based Lending half-year 2020:
book in the US.
•Stage 3 gross carrying amount increased by €2.5 billion from €10.9 billion as per 31 December 2019

mainly as a result of ING’s introduction of a new definition of default which had an impact of €1.0 billion
Additional information on macro -economic scenarios is included in the section “Macro -economic and due to developments with respect to certain large individual files. For further background on
scenarios and sensitivity analysis of key sources of estimation uncertainty”.
implementation of new Definition of Default, please refer to section 1.5 of the Condensed Consolidated

Financial Statements.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited16

Changes in gross carrying amounts and loan loss provisions (*)1,2,3

30 June 202012-month ECL (Stage 1)Lifetime ECL not credit impaired (Stage 2)Lifetime ECL credit impaired (Stage 3)Total| | Gross carrying | | | | Gross carrying | | | Gross carrying | | | | Gross carrying | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | amount | | Provisions | | amount | | Provisions | amount | | Provisions | | amount | | Provisions | |
| Opening balance as at 1 January 2020 | 817,247 | | 490 | | 41,082 | | 881 | 10,955 | | 3,275 | | 869,284 | | 4,645 | |
| Transfer into 12-month ECL (Stage 1) | | 7,746 | | 14 | | -7,401 | -126 | | -346 | | -8 | | | -120 | |
| Transfer into lifetime ECL not credit impaired (Stage 2) | -33,528 | | -50 | | | 33,948 | 522 | | -420 | -46 | | | | 426 | |
| Transfer into lifetime ECL credit impaired (Stage 3) | | -2,136 | -20 | | | -2,144 | -136 | | 4,280 | 1,058 | | | | 900 | |
| Net remeasurement of loan loss provisions | | | 182 | | | | 354 | | | 261 | | | | 797 | |
| New financial assets originated or purchased | | 95,280 | 146 | | | | | | | | | | 95,280 | 146 | |
| Financial assets that have been derecognised | -65,966 | | -43 | | | -4,230 | -66 | | -551 | -73 | | -70,747 | | -182 | |
| Net drawdowns and repayments | | 44,955 | | | | 1,522 | | | -9 | | | | 46,468 | | |
| Changes in models/risk parameters | | | | – | | | | | | | | | | | |
| Increase in loan loss provisions | | | 230 | | | | 548 | | | 1,192 | | | | 1,970 | |
| Write -offs | | | | | | | | | -433 | -433 | | | -433 | -433 | |
| Recoveries of amounts previously written off | | | | | | | | | | | 19 | | | | 19 |
| Foreign exchange and other movements | | | | -2 | | | -17 | | | -70 | | | | -89 | |
| Closing balance as at 30 June 2020 | 863,599 | | 717 | | 62,777 | | 1,412 | 13,476 | | 3,983 | | 939,852 | | 6,112 | |

1 At the end of June 2020, the Gross carrying amounts included loans and advances to central banks (€116.9 billion), loans and advances to banks (€30.7 billion), financial assets at FVOCI (€37.0 billion), securities at amortised cost (€51.1 billion), loans and advances to customers (€618.4 billion) and financial guarantees (cred it replacement) in scope of IFRS 9 impairment requirements (€112.7 billion) and excludes receivables related to securities in reverse repurchase transaction (EUR -13.4 billion), cash collateral in respect of derivatives (€-9.4 billion), the value adjustment hedged items (€-0.1 billion), a receivable that is offset by a liquidity facility (€-1.5 billion), on-demand bank balances (€-2.7 billion) and other differences amounting to €0.1 billion.
2 Stage 3 Lifetime credit impaired includes €5 million Purchased or Originated Credit Impaired.
3 At the end of June 2020, the stock of provisions included provisions for loans and advances to central banks (€5 million), loans and advances to banks (€13 million), financial assets at FVOCI (€13 million), securities at amortised cost (€21 million), provisions for loans and advances to customers (€6,029 million) and provisions for contingent liabilities (credit replacements) recorded under Provisions (€30 million).

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited17

Condensed consolidated interim financialNotes to the Condensed consolidatedAdditional notes to the Condensed
Contents|Interim report|||Segment reporting|
statementsinterim financialstatementsconsolidated interim financialstatements| Changes in gross carrying amounts and loan loss provisions (*) | 1,2,3 | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 31 December 2019 | | 12-month ECL (Stage 1) | | | Lifetime ECL not credit impaired (Stage 2) | | | | Lifetime ECL credit impaired (Stage 3) | | | | | | Total | | |
| | | Gross carrying | | | | Gross carrying | | | | Gross carrying | | | | Gross carrying | | | |
| | | amount | | Provisions | | amount | | Provisions | | amount | | Provisions | | amount | | Provisions | |
| Opening balance as at 1 January 2019 | | 788,537 | | 501 | | 46,949 | | 925 | | 10,758 | | 3,141 | | 846,244 | | 4,568 | |
| Transfer into 12-month ECL (Stage 1) | | | 12,856 | | 30 | -12,579 | | -253 | | | -277 | -23 | | | | -246 | |
| Transfer into lifetime ECL not credit impaired (Stage 2) | | -21,577 | | -73 | | | 22,382 | 474 | | | -805 | -81 | | | | 320 | |
| Transfer into lifetime ECL credit impaired (Stage 3) | | | -2,210 | | -6 | | -1,753 | -135 | | | 3,964 | 1,113 | | | | 972 | |
| Net remeasurement of loan loss provisions | | | | -77 | | | | | 36 | | | 283 | | | | 242 | |
| New financial assets originated or purchased | | 180,605 | | 205 | | | | | | | | | | 180,605 | | 205 | |
| Financial assets that have been derecognised | | -126,082 | | -103 | | | -9,108 | -162 | | | -1,659 | -137 | | -136,849 | | -402 | |
| Net drawdowns and repayments | | -14,880 | | | | | -4,807 | | | | 1 | | | -19,686 | | | |
| Changes in models/risk parameters | | | | | 15 | | | | 2 | | | | -8 | | | | 9 |
| Increase in loan loss provisions | | | | | -9 | | | -39 | | | | 1,147 | | | | 1,099 | |
| Write -offs | | | -1 | | -1 | | -2 | | -2 | | -1,027 | -1,028 | | | -1,030 | -1,031 | |
| Recoveries of amounts previously written off | | | | | | | | | | | | | 55 | | | | 55 |
| Foreign exchange and other movements | | | | | -1 | | | | -3 | | | -41 | | | | -45 | |
| Closing balance as at 31 December 2019 | | 817,247 | | 490 | | 41,082 | | 881 | | 10,955 | | 3,275 | | 869,284 | | 4,646 | |

1 At the end of December 2019, the Gross carrying amounts included loans and advances to central banks (€51.2 billion), loans and advances to banks (€35.1 billion), financial assets at FVOCI (€32.2 billion), securities at amortised cost (€46.1 billion), loans and advances to customers (€612.6 billion) and financial guarantees (cre dit replacement) in scope of IFRS 9 impairment requirements (€115.7 billion) and excludes receivables related to securities in reverse repurchase transaction (€-9.9 billion), cash collateral in respect of derivatives (€-10.2 billion), a receivable that is offset by a liquidity facili ty (€-1.3 billion), de-netting of cash pool balances (€-1.8 billion) and other differences amounting to €-0.3 billion.
2 Stage 3 Lifetime credit impaired includes €1 million Purchased or Originated Credit Impaired.
3 At the end of December 2019, the stock of provisions included provisions for loans and advances to central banks (€1 million), loans and advances to banks (€9 million), financial assets at FVOCI (€10 million), securities at amortised cost (€10 million), provisions for loans and advan ces to customers (€4,590 million) and provisions for contingent liabilities (credit replacements) recorded under Provisions (€25 million).

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited18

Management adjustments (*) Macro-economic scenarios and sensitivity analysis of key sources of estimation uncertainty (*)

In times of volatility and uncertainty where the portfolio quality and economic environment is rapidly

changing, models alone may not be able to accurately predict losses. In these cases management

Methodology (*)
adjustments can be applied to appropriately reflect ECL. Adjustments can also be applied where the impact Our methodology in relation to the adoption and generation of macroeconomic scenarios is described in the
of the updated macroeconomic scenarios is over - or under-estimated by the IFRS 9 models.
Risk Management section of the Annual Report on Form 20F 2019. We continue to follow this methodology

in generating our probability-weighted ECL, with consideration of alternative scenarios and management As mentioned above, per the guidance from EBA, Covid-19 related payment holidays should not be regarded adjustments supplementing this ECL where, in management's opinion, the consensus forecast does not fully as an automatic forbearance trigger, and hence, should not automatically trigger recognition of lifetime ECL.
capture the extent of recent credit or economic events. The macro -economic scenarios are applicable to the

whole ING portfolio in the scope of IFRS9 ECL’s .
Looking forward, it is expected that the phasing out of the Covid-19 related payment holiday schemes and

other support measures in the second half of 2020 could potentially lead to more business insolvencies and

Macro -economic scenarios (*)
unemployment. This could lead to more clients that have currently taken payment holidays, getting into The provisions are based on the end of June macro -economic consensus forecasts, with the main inputs for
financial difficulties and to higher levels of defaults. To the extent ING believes that this elevated risk is not four of our main portfolios in the upside scenario, baseline scenario and downside scenario presented in the
yet covered in the IFRS9 models, a management adjustment has been recognised.
sensitivity table below. The Macro -economic (ME) forecast resulted increased calculated model based

collective provisions. The main driver for the increase is the significant GDP growth deterioration which is
This management adjustment has been recognised for SME portfolios as these portfolios are considered to forecasted as result of the Covid-19 crisis, which mainly impacted risk costs in Wholesale Banking. For Retail
be most at risk and have the highest percentage of customers requesting payment holidays compared to portfolios, unemployment rate and house prices are the most important drivers and those did show more
other portfolios. ING has recognised a management adjustment of €45 million in Netherlands and €15 million moderate deterioration. Hence the impact of worsened macroeconomic forecasts on the Retail portfolios is
in Belgium as they are the largest SME portfolios and not significantly impacted by ME forecasts updates.
more moderate.

In addition, as oil price remains volatile, as well as exposed to the impacts of the Covid-19 crisis and subject The macro -economic scenarios reflects how the Covid-19 pandemic, the (reversal of) lockdown measures and
to political decisions, ING reco gnised a management adjustment for the upstream oil book of €30 million.
government and central bank support measures potentially can impact the economic outlook. In the

consensus forecast, a rebound in activity is projected to start in the second half of 2020 despite ongoing

containment measures. Nevertheless, the consensus does not expect the major economies to return to pre-

crisis levels until after 2021. Making predictions is difficult as there are still many uncertainties about the

development of the Covid-19 pandemic.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited19

Analysis on sensitivity ()Sensitivity analysis ()**1,2,3

Based on the above, analysis on the sensitivity of key forward -looking macroeconomic inputs used in the ECLUn-weightedProbability-Reportable ECL

202020212022

ECL (Eur mln)weighing(Eur mln)4 collective -assessment modelling process and the probability -weights applied to each of the three scenarios is

Germany presented below. The countries included in the analysis are the Group’s most significant geographic regions, Real GDP-5.87.12.6

in terms of both gross contribution to reportable ECL, and sensitivity of ECL to forward -lookingUpside scenarioUnemployment3.72.41.651820%| macroeconomics. Accordingly, the Group considers these portfolios to present the most significant risk of | | HPI | 6.0 | 7.0 | 8.5 | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | Real GDP | -6.3 | 5.3 | 1.9 | | | |
| resulting in a material adjustment to the carrying amount of financial assets within the next financial year. | Baseline Scenario | Unemployment | 4.0 | 3.6 | 3.2 | 558 | 60% | 575 |

The Group also observes that, in general, the Wholesale business is more sensitive to the impact of forward-HPI4.43.25.1| looking macroeconomic scenarios. | | Real GDP | -6.9 | 1.7 | -0.4 | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | Downside scenario | Unemployment | 4.7 | 5.1 | 5.2 | 681 | 20% |

HPI0.7-1.31.3

While the table does give a high-level indication of the sensitivity of the outputs to the different scenarios, itBelgium

does not provide insight on the interdependencies and correlations between different macroeconomicReal GDP-7.66.22.8| variable inputs. | Upside scenario | Unemployment | 8.9 | 7.7 | 7.2 | 450 | 20% |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | HPI | 2.8 | 5.0 | 4.4 | | |

Real GDP-7.94.92.3

Sensitivity analysis ()1,2,3Baseline ScenarioUnemployment9.27.77.749160%510| | | | Un-weighted | Probability- | Reportable ECL | | HPI | 1.9 | 3.9 | 3.5 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2020 | 2021 | 2022 | ECL (Eur mln) | weighing | (Eur mln) | 4* | Real GDP | -8.5 | 2.5 | 1.0 |

Netherlands								Downside scenario	Unemployment	10.3	10.2	10.3	628	20%
	Real GDP	-6.0	5.2	3.9					HPI	0.7	2.2	2.6
Upside scenario	Unemployment	4.9	4.4	3.8	476	20%		United States
	HPI	3.7	14.7	5.3					Real GDP	-5.6	5.3	4.9
	Real GDP	-6.3	4.0	2.3				Upside scenario	Unemployment	9.8	5.2	2.7	205	20%
Baseline Scenario	Unemployment	5.3	5.4	5.4	536	60%	559		HPI	3.1	6.8	8.8
									Real GDP	-5.7	4.2	3.0
	HPI	-0.2	0.8	3.2				Baseline Scenario	Unemployment	10.2	6.6	4.7	285	60%	335
	Real GDP	-6.9	0.6	0.1					HPI	2.3	2.8	3.0

Downside scenarioUnemployment6.27.58.370820% Real GDP-6.60.50.7

HPI-4.4-14.40.3Downside scenarioUnemployment10.99.18.161220%

HPI1.3-1.9-3.3

1 Real GDP, in % year -on-year change

2 Unemployment in % of total labour force

3 House Price Index (HPI) in % year-on-year

4 Sensitivity does not include the effect of manual adjustments, which are not material

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited20

The setting of PD threshold bandings requires management judgement, and is a key source of estimation

Market risk in trading books(*) uncertainty. To demonstrate the sensitivity of the ECL to these PD thresholds bandings, analysis was run on

all collectively -assessed assets, which assumed all assets (Stage 1 and 2) were below the threshold, and

apportioned a 12 month ECL. On ING Group level, the total ECL collective -assessment for performing assets is

Sensitivities (*)
€2,129 million (2019: €1,291 million). On the same asset base, analysis was run which assumed all performing As part of the risk monitoring framework, ING actively monitors the daily changes of sensitivities of the assets were above the threshold, and apportioned a lifet ime ECL. This gave rise to a hypothetical collectivetrading portfolios. Sensitivities measure the impact of movements in individual market risk factors (foreign assessment ECLs €1,636 million (2019: €866 million) and €3,409 million (2019: €2,665 million) respectively.
exchange rates, interest rates, credit spreads, equity, and commodity prices) on profit and loss results of the Please note that in this analysis all other ECL risk parameters (except for the stage) were kep t equal.
trading positions and portfolios.

It should be noted that the lifetime PD thresholds are not the only drivers of stage allocation. An asset can The following tables show the five largest trading positions in terms of sensitivities to foreign exchange, change stages as a result of being in arrears, on a Watch List or being forborne, among other triggers.
interest rate and credit spread risk factor movements. These largest exposures also reflect concentrations of

risk in FX risk per currency, IR risk per currency, and Credit Spread risk per country and rating and sector. Due

to the nature of the trading portfolios, positions in the portfolios can change significantly from day to day,

and sensitivities of the portfolios can change daily accordingly.| Most important foreign exchange trading positions (*) | | | | |
| --- | --- | --- | --- | --- |
| amounts in EUR millions | 30 June 2020 | | 31 December | |
| | | | | 2019 |
| Foreign exchange | | Foreign exchange | | |
| US Dollar | | 127US Dollar | | 116 |
| Great Britain Pound | | -37Chinese Yuan Renminbi | | –21 |
| Chinese Yuan Renminbi | | 27South Korean Won | | 20 |
| Japanese Yen | | -26Brazilian Real | | –15 |
| Switzerland Franc | | -24Japanese Yen | | –10 |

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited21

Most important interest rate and credit spread sensitivities ()Credit spread sensitivities per risk class and sector (excluding sovereign exposures) ()**

30 June 202031 December 2019

31 December amounts in EUR thousands30 June 2020FinancialFinancial 2019amounts in EUR thousandsCorporateCorporate
InstitutionsInstitutions
Interest Rate (BPV)1Interest Rate (BPV)1Credit Spread (CSO1)1

Euro-1,280Euro–740Risk classes| US Dollar | | -745US Dollar | | –325 | 1 (AAA) | 1 | -3 | 1 | –1 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Great -Britain Pound | | -154Russian Ruble | | –105 | 2–4 (AA) | 21 | -64 | –15 | –63 |
| Japanese Yen | | -92Great -Britain Pound | | –68 | 5–7 (A) | 56 | -50 | 143 | 32 |
| Australian Dollar | | -66Australian Dollar | | –31 | 8–10 (BBB) | 207 | -24 | 273 | 1 |
| | | | | | 11–13 (BB) | 57 | -4 | 148 | 9 |
| | | | | | 14–16 (B) | 20 | -2 | 51 | 1 |
| Credit Spread (CSO1) | 2 | Credit Spread (CSO1) | 2 | | 17–22 (CCC and NPL) | 3 | | 26 | |
| Germany | | 153United States | | 360 | Not rated | | | | |
| United States | | 109Germany | | 163 | Total | 365 | -147 | 626 | –21 |
| Republic of Korea | | -58France | | 117 | 1 Credit Spread Sensitivity (CS01) measures the impact on value of a 1 basis point increase in credit spreads. | | | | |
| Indonesia | | 42Russian Federation | | 73 | | | | | |

United Kingdom40United Kingdom72

1 Basis Point Value (BPV) measures the impact on value of a 1 basis point increase in interest rates. The figures include commodity risk in banking books.

2 Credit Spread Sensitivity (CS01) measures the impact on value of a 1 basis point increase in credit spreads. Exposures to supranational institutions are not assigned to a specific country.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited22

The KYC Enhancement Programme encompasses all client segments in all ING business units. The programme

Other risks and uncertainties consists of three parts: (a) look-back analysis on past deficiencies in post -transaction monitoring. The look- Because we are a financial services company conducting business on a global basis, our revenues andback analysis consists of screening of transactions executed in the past. In case unusual transactions are
earnings are affected by the volatility and strength of the economic, business, liquidity, funding and capitalidentified, ING is committed to following the applicable reporting process; (b) enhancement of customer due
markets environments specific to the geographic regions in which we conduct business. The ongoingdiligence files with the aim to document sufficiently the knowledge the bank has about its clients in the line
turbulence and volatility of such factors have adversely affected, and may continue to adversely affect, thewith past and new requirements; (c) structural solutions that should support getting sustainably better in
profitability, solvency and liquidity of our business.addressing money laundering risks in our portfolio and complying with laws and regulations.

Factors such as interest rates, securities prices, credit ratings, credit spreads, liquidity spreads, exchangeThe structural solutions comprise five pillars:
rates, effects of the Covid-19 pandemic, consequences of the United Kingdom’s withdrawal from the●Development and global roll -out of KYC risk appetite statements, KYC risk assessments on clients,
European Union, changes to ‘benchmark’ indices, consumer spending, changes in client behaviour, businesscapability structure and maturity assessments;
investment, real estate values and private equity valuations, government spending, inflation or deflation, the●Development and global roll -out of a bank-wide KYC digital service platform;
volatility and strength of the capital markets, political events and trends, non-compliance with (or changes) in●Translation of risk assessment outcomes into scenarios and alert definitions that can be applied in
laws and re gulations, climate change, terrorism, as well as inability to protect our intellectual property andtransaction monitoring;
infringement claims by third parties, to achieve our strategy or to retain key personnel may all impact the●Set up central KYC organisation that defines standards and drives global execution and improvements;
business and economic environment and, ultimately, our solvency, liquidity and the amount and profitabilityand
of business we conduct in a specific geographic region.●Develop and rollout KYC communication and awareness initiatives and set up a behavioural risk
department that performs risk assessments.

Additional risks of which the ING is not presently aware, or that are currently viewed as less material than the
risks described above, could also affect the business operations of ING and have a material adverse effect onIn the first half-year 2020, ING continued to make progress in executing the Global KYC Enhancement
ING’s business activities, financial condition, results of operations and prospects. For more information onProgram. Several workstreams have delivered on their commitments and further improvement activities are
risks, please refer to “Other information and appendices - Risk Factors” in the Annual Report on Form 20-F ofnow embedded in continuous improvement cycles in regular operations. Key achievements in the past
ING Group for the year ended December 31, 2019."months include among others:
●the adjusted Global KYC organisation started on 1st February with the establishment of three pillars - Customer Due Diligence, Transac tion Monitoring and Screening – to enhance end-to-end steering and

Developments on KYC
ownership;
In the first half year of 2020, as part of this process, the Risk Committee and the Supervisory Board spent ●the adoption of ING’s 2020 Global KYC RAS, which includes a number of inclusions set for high risk considerable time discussing, among other things, the progress in the bank-wide Know Your Customer client relationships; and Enhancement Programme.
●the partnership with the Association of Certified Ant i-Money Laundering Specialists (ACAMS) to rollout
their internationally recognised and certified KYC training for ING employees .

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited23

IBOR Transition

Interbank offered rates, such as EURIBOR and LIBOR, are widely used as benchmarks to set interest rates across a broad range of financial products and contracts. In line with recommendations from the Financial Stability Board, a fundamental review and reform of the major interest rates benchmarks has been undertaken. For the Eurozone, this led to a reform of the EURIBOR benchmark rate and development of €STR as the recommended new nearly risk-free-rate (RFR) to replace EONIA. For LIBOR benchmarks, the reform will include replacing interest rate benchmarks with alternative, nearly risk-free rates. This process is at different stages, and is progressing at different speeds, across several major currencies.

ING Bank has exposure to IBORs through various products in all of its business lines (wholesale banking, retail banking, business banking) and exposure relating to the associated funding and hedging activities including debt issuance, the interest rate risk position, holdings of investment securities, etc. ING has established a global IBOR Transition Program to manage the transition. The program performs the assessment and actions necessary to manage a smooth transition to RFRs within all internal processes and systems, including pricing, risk management, legal documentation, hedge arrangements, as well as any impact on customers.
The Covid-19 virus outbreak has impacted the progress in a number of interim industry developments intended to aid transition. However, the key industry working groups are active and the FCA has reiterated that the working assumption that LIBOR cannot be assumed to be available beyond the end of 2021 remains.
ING is proactively reaching out to industry participants, counterparties and clients to create awareness and offer support on the upcoming transition.

At ING, progress has been made in H1 2020 on the IBOR execution activities in all Business Lines of the bank.
The program has a robust governance in place, with progress being tracked by business line Steering committees reporting into the central IBOR Steering committee. ING is well on track to meet the external milestones of 2020 and finalizing detailed roadmaps and resource planning for implementation in 2021. ING is monitor ing market developments closely, as there remain some uncertainties in the industry.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited24

Condensed consolidated statement of financial position| | | | | | 30 | | 31 | | | | 30 | | 31 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | June | December | | | | | June | December | |
| in EUR million | | | | | 2020 | 2019 | | | | | 2020 | 2019 | |
| Assets | | | | | | | | Liabilities | | | | | |
| Cash and balances with central banks | | | | | 118,971 | 53,202 | | Deposits from banks | 8 | | 78,649 | 34,826 | |
| Loans and advances to banks | | | | | 30,664 | 35,136 | | Customer deposits | | | 605,633 | 574,355 | |
| Financial assets at fair value through profit or loss | | | 2 | | 111,110 | 96,187 | | Financial liabilities at fair value through profit or loss | | 9 | 90,641 | 77,942 | |
| Financial assets at fair value through other comprehensive income | | | | 3 | 38,993 | 34,468 | | Current tax liabilities | | | 387 | 554 | |
| Securities at amortised cost | | 4 | | | 51,085 | 46,108 | | Deferred tax liabilities | | | 499 | 322 | |
| Loans and advances to customers | | 5 | | | 612,387 | 608,029 | | Provisions | | | 566 | 688 | |
| Investments in associates and joint ventures | | | 6 | | 1,775 | 1,790 | | Other liabilities | | | 14,879 | 12,829 | |
| Property and equipment | | | | | 3,086 | 3,172 | | Debt securities in issue | 10 | | 121,138 | 118,528 | |
| Intangible assets | 7 | | | | 1,586 | 1,916 | | Subordinated loans | 11 | | 16,697 | 16,588 | |
| Current tax assets | | | | | 515 | 251 | | Total liabilities | | | 929,091 | 836,631 | |
| Deferred tax assets | | | | | 1,548 | 1,242 | | | | | | | |
| Other assets | | | | | 9,543 | 7,018 | | Equity12 | | | | | |
| | | | | | | | | Share capital and share premium | | | 17,128 | 17,117 | |
| | | | | | | | | Other reserves | | | 3,616 | 4,013 | |
| | | | | | | | | Retained earnings | | | 30,406 | 29,866 | |
| | | | | | | | | Shareholders’ equity (parent) | | | 51,149 | 50,996 | |
| | | | | | | | | Non-controlling interests | | | 1,022 | 893 | |
| | | | | | | | | Total equity | | | 52,171 | 51,889 | |

Total assets981,262888,520Total liabilities and equity981,262888,520

References relate to the accompanying notes. These are an integral part of the Condensed consolidated Interim financial statements.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited25

Condensed consolidated statement of profit or loss

for the periods ended 30 June| 6 month period | | 1 January to 30 June | | | | 1 January to 30 June | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| in EUR million | | 2020 | 2019 | | | 2020 | 2019 |
| Continuing operations | | | | | | | |
| Interest income using effective interest rate method | | 10,935 | 12,799 | Addition to loan loss provisions | 5 | 1,998 | 416 |
| Other interest income | | 1,026 | 1,6101 | Staff expenses | | 2,923 | 2,811 |
| Total interest income | | 11,962 | 14,410 | Other operating expenses | | 2,703 | 2,427 |
| | | | | Total expenses | | 7,623 | 5,654 |
| Interest expense using effective interest rate method | | –4,160 | –5,880 | | | | |
| Other interest expense | | –925 | –1,6331 | Result before tax from continuing operations | | 1,065 | 2,493 |
| Total interest expense | | –5,085 | –7,513 | | | | |
| | | | | Taxation | | 438 | 740 |
| Net interest income | 13 | 6,877 | 6,896 | Net result from continuing operations | | 626 | 1,754 |

Net fee and commission income			1,506	1,386	Net result (before non-controlling interests)	626	1,754
Valuation results and net trading income		15	–4	–489	Net result attributable to Non-controlling interests	36	47
Investment income			40	58	Net result attributable to shareholders of the parent	591	1,707
Other income	216		269	296
Total income			8,688	8,148

1 Prior period amounts in other interest income and other interest expense have been updated to improve consistency and comparability.
2 Other income includes Result from associates and joint ventures, Result on disposal of group companies, Net result on derecognition of financial assets at amortised cost and Other.

References relate to the accompanying notes. These are an integral part of the Condensed consolidated Interim financial statements.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited26

Condensed consolidated statement of profit or loss – continued| | | 1 January to 30 June | |
| --- | --- | --- | --- |
| in EUR | | 2020 | 2019 |
| Earnings per ordinary share | 17 | | |
| Basic earnings per ordinary share | | 0.15 | 0.44 |
| Diluted earnings per ordinary share | | 0.15 | 0.44 |

Earnings per ordinary share from continuing operations	17
Basic earnings per ordinary share from continuing operations		0.15	0.44
Diluted earnings per ordinary share from continuing operations		0.15	0.44

Dividend per ordinary share–0.24

References relate to the accompanying notes. These are an integral part of the Condensed consolidated Interim financial statements.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited27

Condensed consolidated statement of comprehensive income| 6 month period | 1 January to 30 June | |
| --- | --- | --- |
| in EUR million | 2020 | 2019 |
| Net result (before non-controlling interests) | 626 | 1,754 |

Items that will not be reclassified to the statement of profit or loss:
Realised and unrealised revaluations property in own use	11	36
Remeasurement of the net defined benefit asset/liability	84	–23
Net change in fair value of equity instruments at FVOCI	–311	201
Net change in fair value of own credit risk of financial liabilities at FVPL	11	–91

Items that may subsequently be reclassified to the statement of profit or loss:
Net change in fair value of debt instruments at FVOCI	–81	1
Realised gains/losses on debt instruments at FVOCI reclassified to the statement of profit	–27	–36
or loss
Changes in cash flow hedge reserve	644	861
Exchange rate differences	–691	–116

Share of other comprehensive income of associates and joint ventures and other income2–2

Total comprehensive income2682,585| Comprehensive income attributable to: | | |
| --- | --- | --- |
| Non-controlling interests | 134 | 86 |
| Shareholders of the parent | 135 | 2,500 |
| | 268 | 2,585 |

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited28

Condensed consolidated statement of changes in equity

ShareSharecapital andholders'NonshareOtherRetainedequitycontrollingTotal in EUR millionpremiumreservesearnings(parent)interestsequity Balance as at 31 December 201917,1174,01329,86650,99689351,889| Net change in fair value of equity instruments at fair value through other comprehensive income | –310 | –2 | –312 | – | –311 |
| --- | --- | --- | --- | --- | --- |
| Net change in fair value of debt instruments at fair value through other comprehensive income | –76 | | –76 | –5 | –81 |
| Realised gains/losses on debt instruments at fair value through other comprehensive income reclassified to the statement of profit or loss | –27 | | –27 | –1 | –27 |

Changes in cash flow hedge reserve		501		501	144	644
Realised and unrealised revaluations property in own use		9	2	11	–	11
Remeasurement of the net defined benefit asset/liability		84		84	–	84
Exchange rate differences and other		–650		–650	–41	–691
Share of other comprehensive income of associates		54	–52	2	–	2
and joint ventures and other income
Change in fair value of own credit risk of financial liabilities at fair value through profit or loss		11		11	–	11
Total amount recognised directly in other comprehensive income net of tax	–	–404	–52	–456	98	–358
Net result	–	–	591	591	36	626
Total comprehensive income net of tax	–	–404	539	135	134	268

Dividends					–3	–3
Changes in treasury shares	–	6	–	6	–	6
Employee stock option and share plans	11	–	1	12	–	12
Changes in the composition of the group and other changes					–1	–1
Balance as at 30 June 2020	17,128	3,616	30,406	51,149	1,022	52,171

Changes in individual Reserve components are presented in Note 12 ‘Equity’.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited29

Condensed consolidated statement of changes in equity - continued

ShareSharecapital andholders'NonshareOtherRetainedequitycontrollingTotal in EUR millionpremiumreservesearnings(parent)interestsequity Balance as at 31 December 201817,0883,62128,33949,04980349,851| Net change in fair value of equity instruments at fair value through other comprehensive income | –123 | 322 | 199 | 2 | 201 |
| --- | --- | --- | --- | --- | --- |
| Net change in fair value of debt instruments at fair value through other comprehensive income | – | | – | – | 1 |
| Realised gains/losses on debt instruments at fair value through other comprehensive income reclassified to the statement of profit or loss | –34 | | –34 | –1 | –36 |

Changes in cash flow hedge reserve	830		830	31	861
Realised and unrealised revaluations property in own use	29	7	36	–0	36
Remeasurement of the net defined benefit asset/liability	–23		–23		–23
Exchange rate differences and other	–121		–121	6	–116
Share of other comprehensive income of associates and joint ventures and other income	127	–129	–2	–	–2
Change in fair value of own credit risk of financial liabilities at fair value through profit or loss	–91		–91		–91
Total amount recognised directly in other comprehensive income net of tax	593	200	793	38	832
Net result	–	1,707	1,707	47	1,754
Total comprehensive income net of tax	593	1,906	2,500	86	2,585

Dividends			–1,714	–1,714	–27	–1,741
Changes in treasury shares		3		3		3
Employee stock option and share plans	27		–3	25	–	25
Balance as at 30 June 2019	17,116	4,218	28,528	49,862	862	50,723

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited30

Condensed consolidated statement of cash flows| | | 1 January to 30 June | | | | | 1 January to 30 June | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| in EUR million | | 2020 | | 2019 | | | 2020 | | 2019 |
| Cash flows from operating activities | | | | | Disposals and redemptions: | – Associates and joint ventures | 12 | | 6 |
| Result before tax | | 1,065 | | 2,493 | | - Financial assets at fair value through other comprehensive income | 8,523 | | 8,982 |
| Adjusted for: | – Depreciation and amortisation | 402 | | 388 | | - Securities at amortised cost | 11,547 | | 7,441 |
| | – Addition to loan loss provisions | 1,998 | | 416 | | – Property and equipment | | 4 | 71 |
| | – Other non-cash items in Result before tax | 1,285 | | 53 | | – Loans sold | | – | 401 |
| Taxation paid | | –1,149 | | –1,583 | | – Other investments | | 8 | 1 |
| Changes in: | – Net change in Loans and advances to/from banks, not | 51,912 | | –3,434 | Net cash flow from/(used in) investing activities | | –9,627 | | 2,346 |
| | available/payable on demand | | | | | | | | |
| | – Net change in Trading assets and Trading liabilities | 3,208 | | –1,707 | | | | | |
| | – Loans and advances to customers | –9,865 | | –17,670 | Cash flows from financing activities | | | | |
| | – Customer deposits | 34,416 | | 15,297 | Proceeds from debt securities | | 48,565 | | 54,835 |
| | – Other | –5,849 | | 9,502 | Repayments of debt securities | | –46,335 | | –57,088 |
| Net cash flow from/(used in) operating activities | | 77,422 | | 3,754 | Proceeds from issuance of subordinated loans | | 2,165 | | 1,089 |
| | | | | | Repayments of subordinated loans | | –2,608 | | –933 |
| Cash flows from investing activities | | | | | Repayments of principal portion of lease liabilities | | –132 | | –123 |
| Investments and advances: | - Acquisition of subsidiaries, net of cash acquired | | – | –17 | Purchase/sale of treasury shares | | | 6 | 8 |
| | - Associates and joint ventures | –10 | | –60 | Dividends paid | | –3 | | –1,714 |
| | - Financial assets at fair value through other comprehensive | –13,095 | | –7,765 | Other financing | | | – | |
| | income | | | | | | | | |
| | - Securities at amortised cost | –16,306 | | –6,395 | Net cash flow from/(used in) financing activities | | 1,658 | | –3,926 |
| | – Property and equipment | –144 | | –135 | | | | | |
| | – Other investments | –165 | | –184 | Net cash flow | | 69,453 | | 2,174 |

Cash and cash equivalents at beginning of year	54,031	47,529
Effect of exchange rate changes on cash and cash equivalents	–192	–53
Cash and cash equivalents at end of year	123,292	49,650

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited31

Condensed consolidated statement of cash flows - continued

The table below presents the Interest and dividend received and paid.

Cash and cash equivalents| | 30 | 30 | | | |
| --- | --- | --- | --- | --- | --- |
| | June | June | | 1 January to 30 June | |
| | 2020 | 2019 | | 2020 | 2019 |
| Treasury bills and other eligible bills | 170 | 94 | Interest received | 12,287 | 14,784 |
| Deposits from banks/Loans and advances to banks | 4,151 | –2,615 | Interest paid | –5,504 | –7,575 |
| Cash and balances with central banks | 118,971 | 52,171 | | | |
| Cash and cash equivalents at end of year | 123,292 | 49,650 | | 6,784 | 7,208 |

	Dividend received	1	23	67
The increase in Cash and Cash Equivalents by EUR 69 billion in the 6 month period up to 30 June 2020 to EUR	Dividend paid		–3	–1,714

123 billion were mainly driven by ING’s participation of EUR 55 billion in the targeted longer -term refinancing

operations (TLTRO III) in June, which were mainly placed on deposit with the ECB as at 30 June (reported as 1.Includes dividends received as recognized within Investment Income, from equity securities included in the Financial assets at fair value Cash and balances with Central Banks) and by increased customer deposits.through profit or loss, Financial assets at fair value through OCI, and from Investments in associates and joint ventures. Dividend paid
and received from trading positions have been included.

Interest received, interest paid and dividends received are included in operating activities in the Condensed

consolidated statement of cash flows. Dividend paid is included in financing activities in the Condensed

consolidated statement of cash flows.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited32

Notes to the Condensed consolidated interim financial statements

1Basis of preparation and accounting policiesThe Condensed consolidated interim financial statements are presented in euros and rounded to the nearest
million, unless stated otherwise. Amounts may not add up due to rounding.

1.1Reporting entity

1.2.1 Presentation of Risk management disclosures

ING Groep N.V. is a company domiciled in Amsterdam, the Netherlands. Commercial Register of Amsterdam, Certain disclosures of the nature and extent of risks related to financial instruments as disclosed in the 2019
number 33231073. These Condensed consolidated interim financial statements, as at and for the six months ING Group Consolidated financial statements and included in the 2019 ING Group Annual Report on Form 20period ended 30 June 2020, comprise ING Groep N.V. (the Parent company) and its subsidiaries, together F are updated due to the Covid-19 developments in the first six months of 2020.
referred to as ING Group. ING Group is a global financial institution with a strong European base, offering a

wide range of retail and wholesale banking services to customers in over 40 countries.
Although these disclosures are included in the ‘Risk management’ section, they are an integral part of the

ING Group Condensed consolidated interim financial statements. The disclosures are indicated by the symbol
1.2 Basis of prepa ration of the Condensed consolidated interim financial statements(*).

The ING Group Condensed consolidated interim financial statements have been prepared in accordance with
International Accounting Standard 34 ‘ Interim Financial Reporting’. The accounting policies used to prepare1.2.2 Reconciliation between IFRS -EU and IFRS -IASB

the Condensed consolidated interim financial statements are consistent with International Financial ING Group also publishes its Consolidated financial statements and Condensed consolidated interim financial
Reporting Standards as issued by the International Accounting Standards Board (IFRS -IASB) and are statements based on IFRS -EU. IFRS -EU refers to International Financial Reporting Standards (‘IFRS’) as
consistent with those set out in the notes to the 2019 Consolidated financial statements as included in the adopted by the European Union (EU), including the decisions ING Group made with regard to the options
Annual Report on Form 20-F of ING Group except for the adoption of a number of amendments effective in available under IFRS as adopted by the EU. IFRS -EU differs from IFRS -IASB in respect of certain paragraphs in
2020 as set out in Note 1.3 ‘Changes to accounting policies’.
IAS 39 ‘Financial Instruments: Recognition and Measurement’ regarding hedge accounting for portfolio

hedges of intere st rate risk. Under IFRS 9, the IAS 39 hedge accounting principles can be applied.
The Condensed consolidated interim financial statements should be read in conjunction with ING Group’s

2019 Consolidated financial statements as included in the Form 20-F.
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 versio n of IAS 39. Under the EU IAS 39 carve -out,
The ING Group Condensed consolidated interim financial statements have been prepared on a going concern hedge accounting may be applied, in respect of fair value macro hedges, to core deposits and hedge
basis.
ineffectiveness is only recognised 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 recognised when the revised

amount of cash flows in scheduled time buckets is more than the original designated amount. Under IFRS-

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited33

Condensed consolidated interim financialNotes to the Condensed consolidatedAdditional notes to the Condensed
Contents|Interim report|||Segment reporting|
statementsinterim financialstatementsconsolidated interim financialstatements| IASB, hedge accounting for fair value macro hedges cannot be applied to core deposits and ineffectiveness | Reconciliation shareholders’ equity under IFRS -EU and IFRS -IASB | | | |
| --- | --- | --- | --- | --- |
| arises whenever the revised estimate of the amount of cash flows in scheduled time buckets is either more or | | 30 | | 31 |
| | | June | December | |
| less than the original designated amount of that bucket. | | 2020 | 2019 | |

	In accordance with IFRS -EU	54,305	53,769
This information is prepared by rever sing the hedge accounting impacts that are applied under the EU ‘carve-	Adjustment of the EU IAS 39 carve-out	–4,157	–3,658
	Tax effect of the adjustment	1,001	885
out’ version of IAS 39. Financial information under IFRS -IASB accordingly does not take account of the	Effect of adjustment after tax	–3,156	–2,773
possibility that had ING Group applied IFRS -IASB as its primary accounting framework it might have applied	Shareholders’ equity	51,149	50,996
alternative hedge strategies where those alternative hedge strategies could have qualified for IFRS -IASB	Non-controlling interests	1,022	893

compliant hedge accounting. These decisions could have resulted in different shareholders’ equity and netIn accordance with IFRS -IASB Total Equity52,17151,889

result amounts compared to those indicated in this Condensed consolidated interim financial statements on

Form 6-K.In the first six months of 2020 interest rates decreased, resulting in a positive hedge accounting impact related

to the EU IAS 39 carve-out. The difference in net result is fully reflected in the segment Wholesale Banking.

Both IFRS -EU and IFRS -IASB differ in several areas from accounting principles generally accepted in the

1.3 Changes to accounting policies United States of America (US GAAP)
ING Group has consistently applied its accounting policies to all periods presented in these Condensed

consolidated interim financial statements, except for amendments that became effective in 2020.
A reconciliation between IFRS -EU and IFRS -IASB is included below.| | 2020 | 2019 | A number of amended standards became applicable for the current reporting period with no significant |
| --- | --- | --- | --- |
| In accordance with IFRS -EU | 969 | 2,556 | impact on ING Group’s accounting policies, ING Group’s results or financial position. |
| Adjustment of the EU IAS 39 carve-out | –493 | –1,093 | |
| Tax effect of the adjustment | 115 | 243 | The list of amendments effective in the current period and applicable for ING Group: |
| Effect of adjustment after tax | –379 | –850 | |
| | | | •Amendments to IAS 39 ‘ Financial Instruments: Recognition and Measurements’ and IFRS 7 ‘ Financial |

In accordance with IFRS -IASB (attributable to the shareholders of the parent)	591	1,707	Instruments: Disclosures’: ‘IBOR Reform and its Effects on Financial Reporting – Phase 1’ (issued on 26
Non-controlling interests	36	47	September 2019 and early adopted by ING in 2019);
In accordance with IFRS -IASB Total net result	626	1,754
			•Amendments to IFRS 3 ‘Business Combinations’: Definition of a Business (issued on 22 October 2018);

•Amendments to IAS 1 and IAS 8: ‘Definition of Materi al’ (issued on 31 October 2018); and

•Amendments to References to the Conceptual Framework in IFRS Standards (issued on 29 March 2018).

In May 2020 the IASB also issued amendments to IFRS 16 ‘Leases’: ‘Covid -19-Related Rent Concessions’ to

provide lessees with an exemption from assessing whether a Covid-19-related rent concession is a lease

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited34

modification. The amendments are effective for annual reporting periods beginning on or after 1 June 2020,outbreak and determination of the fair values of financial assets and liabilities due to market developments

with earlier application permitted (including financial statements not yet authorised for issue at 28 Mayin the first six months of 2020.

2020) and are also available for interim reports. The amendments will not have material impact on ING

In addition to the disclosures in the 2019 Annual Report on Form 20-F, the increased uncertainty for Loan loss Group’s accounting policies, ING Group’s results or financial position.

provisions from Covid-19 manifested itself in the following key areas: the uncertainty around macroeconomic

ING Group has not early adopted any standard, interpretation or amendment (including the aboveforecasts and the period and duration of the economic recovery path; uncertainty around determining when

mentioned IFRS 16 amendments) which has been issued, but is not yet effective.there has been a significant increase in credit risk, especially in the light of government measures such as

payment holidays where traditional risk drivers in ECL models based on payment behaviour can be ineffective

For further information, reference is made to Note 1 ‘Basis of preparation and accounting policies, 1.4.2 as these clients are not required to make regular payments and limited (if any) information is available. For

Upcoming changes in IFRS after 2019’ in the 2019 ING Group Consolidated financial statements as included in further discussion and details of the significant judgements and critical accounting estimates and

the Form 20-F.
assumptions relating to the Loan loss provisions, reference is made to paragraph ‘Loan loss provisioning’ in

1.4 Significant judgments and critical accounting estimates and assumptionsthe ‘Risk management’ section of the interim report.

The preparation of the Condensed consolidated interim financial statements requires management to make In light of uncertainties due to Covid-19, the assessment of impairment of non-financial assets became a new judgements in the process of applying its accounting policies and to use estimates and assumptions. The area of critical accounting estimates in the first six months of 2020. For ING it mainly related to the estimates and assumptions affect the reported amounts of the assets and liabilities and the amounts of the assessment for potential impairment of goodwill and an investment in associate (TMB), which involves contingent assets and contingent liabilities at the balance sheet date, as well as reported income and estimation of their recoverable amounts. Recoverable amounts are sensitive to the assumptions used and expenses for the period. The actual outcome may differ from these estimates. The process of setting their estimation becomes particularly judgmental in light of uncertainties due to Covid-19. The projected cash assumptions is subject to internal control procedures and approvals.
flows, discount rates and growth rates are particularly relevant and the sensitivity of the recoverable

amounts to these assumptions is described in Note 7 ‘Intangible assets’ and Note 6 ‘Investments in associates As discussed in Note 1.5 ‘ Significant judgements and critical accounting estimates and assumptions’ of the
and joint ventures’.
2019 ING Group Consolidated financial statements as included in the Form 20-F, ING Group has identified the

following 3 areas that require management to make significant judgements and use critical accounting1.5 Other developments

estimates and assumptions based on the information and financial data that may change in future periods:
ING has historically aligned the Definition of Default for regulatory purposes with the definition of ‘credit-

•The determination of the fair values of financial assets and liabilities;
impaired’ financial assets under IFRS 9 (Stage 3). To comply with new regulatory technical standards (RTS)

•Loan loss provisions; and and EBA guidelines ING updated its Definition of Default in the first quarter of 2020. Consequently, ING

•Provisions.
updated this definition also for IFRS 9 purposes. From an accounting perspective, this represents a change in

accounting estimate. This change had no material impact on the Expected Credit Losses but impacted the These areas continue to be relevant for these Condensed consolidated interim financial statements, and, in migration of assets mainly between Stage 2 and Stage 3 resulting in an increase in Stage 3 assets. For more particular, an increased level of estimation uncertainty is observed for Loan loss provisions due to Covid-19 details on this impact, reference is made to paragraph ‘Loan loss provisioning’ in the ‘Risk management’

section of the interim report.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited35

Notes to the Condensed consolidated statement of financial position

2 Financial assets at fair value through profit or lossReference is made to Note 9 ‘Financial liabilities at fair value through profit or loss’ for information on trading

liabilities.

Financial assets at fair value through profit or loss| | 30 | | 31 | Financial assets ‘Mandatorily measured at fair value through profit or loss’ mainly include reverse repurchase |
| --- | --- | --- | --- | --- |
| | June | December | | agreements. The related repurchase financial liabilities are classified as financial liabilities ‘Designated at fair |
| | 2020 | 2019 | | |
| Trading assets | 53,781 | 49,254 | | value through profit or loss’. As at 30 June 2020, Financial assets mandatorily measured at fair value through |
| Non-trading derivatives | 2,488 | 2,257 | | profit or loss include Loans and receivables of EUR 49,048 million (31 December 2019: EUR 38,985 million) |
| Designated at fair value through profit or loss | 3,700 | 3,076 | | with regard to reverse repurchase transactions. |
| Mandatorily measured at fair value through profit or loss | 51,142 | 41,600 | | |
| | 111,110 | 96,187 | | |
| | | | | 3 Financial assets at fair value through other comprehensive income |

needs of the clients of ING Group. ING offers institutional clients, corporate clients, and governments,
products that are traded on the financial markets.	30		31
	June	December
A significant part of the derivatives in the trading portfolio is related to servicing corporate clients in their risk	2020	2019

management to hedge for example currency or interest rate exposures. In addition, ING provides its	Equity securities		1,998	2,306
customers access to equity and debt markets for issuing their own equity or debt securities (securities	Debt securities	1	35,650	30,483
	Loans and advances	1	1,345	1,680
underwriting).			38,993	34,468

Part of the trading assets are sold subject to repurchase agreements, securities lending and similar 1 Debt securities include an amount of EUR -10 million (31 December 2019: EUR -7 million) and the Loans and advances includes EUR -3
agreements comparable to collateralised lending, and continue to be recognised in the consolidatedmillion (31 December 2019: EUR -3 million) of Loan loss provisions.

statement of financial position.

From a risk perspective, the gross amount of trading assets must be considered together with the gross

amount of trading liabilities, which are presented separately on the statement of financial position since IFRS

does not always allow netting of these positions in the stateme nt of financial position.

As at 30 June 2020, Trading Assets include Loans and receivables of EUR 14,344 million (31 December 2019:

EUR 11,969 million) with regard to reverse repurchase transactions.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited36

Exposure to equity securities

Changes in fair value through other comprehensive income financial assets| Equity securities designated as at fair value through other comprehensive income | | | | | | | | | | FVOCI debt instruments | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | Carrying | Dividend | Carrying | | Dividend | | | FVOCI equity securities | | | | | 1 | | Total | |
| | value | income | value | | income | | | 30 | | 31 | 30 | | 31 | 30 | | 31 |
| | | | | | | | | June | December | | June | December | | June | December | |
| | 30 | 30 | | 31 | 31 | | | 2020 | | 2019 | 2020 | 2019 | | 2020 | 2019 | |
| | June | June | December | December | | Opening balance as at 1 January | | 2,306 | | 3,228 | 32,163 | 27,995 | 34,468 | | 31,223 | |
| | 2020 | 2020 | 2019 | | 2019 | | | | | | | | | | | |
| Investment in Bank of Beijing | 1,704 | – | 2,001 | | 93 | Additions | | | 9 | 11 | 13,087 | 16,259 | 13,095 | | 16,270 | |
| Other Investments | 294 | 2 | 305 | | 18 | Amortisation | | | | | 32 | –12 | | 32 | –12 | |
| | 1,998 | 2 | 2,306 | | 111 | Transfers and reclassifications | | | 1 | 3 | – | –0 | | 1 | | 3 |
| | | | | | | Changes in unrealised revaluations | 2 | –289 | | 139 | 611 | 258 | | 322 | 397 | |

	Impairments			–0	–2	–0	–2
For strategic equity securities, ING decided to apply the option to irrevocably designate these investments at	Reversals of impairments			–3	1	–3	1
fair value through other comprehensive income, instead of the IFRS 9 default measurement of fair value	Disposals and redemptions	–1	–1,091	–8,524	–12,298	–8,526	–13,389

through profit or loss.Exchange rate differences–2715–369–40–396–25

Changes in the composition of the group and other| | changes | –0 | – | –0 | 2 | –0 | 3 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| As at 30 June ING holds approximately 13% (31 December 2019: 13%) of the shares of Bank of Beijing, a bank | Closing balance | 1,998 | 2,306 | 36,995 | 32,163 | 38,993 | 34,468 |

Regulatory Commission, ING, as a shareholder holding more than 5% or more of the shares, is required to1 Fair value through other comprehensive income debt instruments includes both debt securities and loans and advances.
2 Changes in unrealised revaluations include changes on hedged items which are recognised in the statement of profit or loss.
supply additional capital when necessary. No request for additional capital was received as per 30 June 2020

(2019: nil).
In the first six months of 2020, changes in unrealised revaluations of equity securities decreased mainly

related to negative revaluation of the stake in Bank of Bejing following a sharp decline in share price (EUR - Changes in fair value through other comprehensive income 271 million).
The following table presents changes in financial assets at fair value through other comprehensive income.

In the first quarter of 2019, ING sold its last tranche of shares in India’s Kotak Mahindra Bank (Kotak) for EUR

880 million. The transaction, for a stake of 3.07%, concluded the divestment process and was the main driver

for the ‘disposal’ line in 2019.

Reference is made to Note 4 ‘Securities at amortised cost’ for details on ING Group’s total exposure to debt

securities.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited37

4 Securities at amortised cost

Debt securities by type of exposure

Debt SecuritiesDebt SecuritiesDebt Securities Securities at amortised cost fully consist of Debt securities.
at FVPLat FVOCIat ACTotal

3031303130313031 ING Group’s total exposure to debt securities is included in the following lines in the statement of financial JuneDecemberJuneDecemberJuneDecemberJuneDecember

position:20202019202020192020201920202019

Government bonds14840824,67920,30028,42725,62753,25446,334

Exposure to debt securities Sub -sovereign, Supranationals

3031 and Agencies JuneDecember1,4135057,8626,60613,00610,68922,28117,801

20202019Covered bonds1,9861,7346,6696,9608,6558,693

Debt securities at fair value through other comprehensive income35,65030,483Corporate bonds325476137143462619| Debt securities at amortised cost | 51,085 | 46,108 | Financial institutions' bonds | 1,353 | 1,440 | 377 | 332 | 1,933 | 1,536 | 3,663 | 3,308 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Debt securities at fair value through other comprehensive income and amortised cost | 86,735 | 76,592 | ABS portfolio | 730 | 714 | 431 | 1,043 | 934 | 1,163 | 2,095 | 2,920 |

Trading assets	6,852	6,256		3,643	3,067	35,660	30,491	51,106	46,118	90,409	79,676
Debt securities at fair value through profit or loss	3,643	3,067	Loan loss provisions			–10	–7	–21	–10	–31	–17
Total debt securities at fair value through profit or loss	10,496	9,323	Bond portfolio	3,643	3,067	35,650	30,483	51,085	46,108	90,378	79,659

97,23085,914

Approximately 88% (31 December 2019: 90%) of the exposure in the ABS portfolio is externally rated AAA, ING Group’s total exposure to debt securities (excluding debt securities held in the trading portfolio) of EUR AA or A. There are no borrowed debt securities recognised in the statement of financial position.
90,378 million (31 December 2019: EUR 79,659 million) is specified as follows:

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited38

5 Loans and advances to customers6 Investments in associates and joint ventures

Loans and advances to customers by type

Investments in associates and joint ventures| | 30 | | 31 | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | June | December | | | | Fair value | | | | | |
| | 2020 | 2019 | | | | of listed | Balance | | | | |
| Loans to, or guaranteed by, public authorities | 41,925 | 42,190 | | | Interest | invest- | sheet | Total | Total | Total | Total |
| Loans secured by mortgages | 348,769 | 348,526 | | 30 June 2020 | held (%) | ments | value | assets | liabilities | income | expenses |
| Loans guaranteed by credit institutions | 4,397 | 3,775 | | TMB Public Company Limited | 23 | 673 | 1,492 | 54,563 | 48,832 | 526 | 378 |
| Personal lending | 28,814 | 28,250 | | Other investments in associates and joint | | | 283 | | | | |
| Corporate loans | 194,511 | 189,878 | | ventures | | | | | | | |
| | 618,416 | 612,619 | | | | | 1,775 | | | | |

Loan loss provisions–6,029–4,590Investments in associates and joint ventures

612,387608,029Fair value

of listedBalance

Interestinvest-sheetTotalTotalTotalTotal

As at 30 June 2020, Loans and advances to customers – corporate loans include receivables with regard to31 December 2019held (%)mentsvalueassetsliabilitiesincomeexpenses

TMB Public Company Limited231,1091,50955,80449,9741,145891 securities which have been acquired in reverse repurchase transactions amounting to EUR 3,012 million (31

December 2019: EUR 180 million).Other investments in associates and joint281
ventures

1,790

For details on credit quality and loan loss provisioning, refer to ‘Risk management – Credit risk’ paragraph

‘Credit quality’.
The reporting dates of certain associates and joint ventures can differ from the reporting date of the Group,

but by no more than three months.

Loans and advances to customers by subordination

3031

JuneDecemberTMB Bank Public Company Limited

20202019 ING Group has a 23.03% investment in TMB Bank Public Company Limited (hereafter: TMB), a bank listed on| Non-subordinated | 612,309 | 607,908 | the Stock Exchange of Thailand. TMB is providing products and services to Wholesale, Small and Medium |
| --- | --- | --- | --- |
| Subordinated | 78 | 121 | |
| | 612,387 | 608,029 | Enterprise (SME), and Retail customers. In December 2019 TMB merged with Thanachart Bank and became |

Thailand’s sixth largest bank.

No individual loan or advance has terms and conditions that significantly affect the amount, timing or

certainty of the consolidated cash flows of the Group.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited39

TMB is accounted for as an investment in associate based on the size of ING shareholding and representation●Terminal growth rate: 3% for periods after 2024, consistent with current long term forecasts of GDP

on the Board. IFRS requires to test its investment in TMB for impairment when there is an indication thatgrowth for Thailand;

impairment might exist.●Discount rate (cost of equity): 9%, based on the capital asset pricing model (CAPM) calculated for TMB,

using current market data .

Impairment testing

In the first half year of 2020, the fair value of ING’s investment in TMB significantly declined below theThe model was tested for reasonably possible changes to key assumptions in the model. This reflects the

purchase cost. This indicator triggered ING to perform an impairment test on the recoverability of thesensitivity of the VIU to each key assumption on its own and it is possible that more than one favourable

investment of TMB. The impairment test performed led to no impairment at 30 June 2020, as theand/or unfavourable change may occur at the same time. A reduction in all of the forecasted annual cash

recoverable amount, as determined by a Value in Use calculation, was higher than the carrying amount.flows, including terminal value, of 7.1% would reduce the recoverable amount to the carrying amount. A -

122bps change in the terminal growth rate or a 46bps change in the discount rate would cause the VIU to| | | Fair | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 30 June 2020 | Value in Use | value | Carrying value | | Changes in Investments in associates and joint ventures | | | |
| TMB Public Company Limited | 1,606 | 673 | | 1,492 | | | | |
| | | | | | | 30 | | 31 |
| | | | | | | June | December | |
| Methodology | | | | | | 2020 | 2019 | |
| In line with IFRS, the recoverable amount is determined as the higher of the fair value less costs of disposal | | | | | Opening balance as at 1 January | 1,790 | 1,203 | |
| | | | | | Additions | 10 | 507 | |
| and Value in Use (‘VIU’). Fair value less costs of disposal is based on observable share price. The ViU | | | | | Transfers to and from Investments/Other assets and liabilities | –0 | | 4 |
| calculation uses discounted cash flow projections based on management’s best estimates. VIU is derived | | | | | Revaluations | 2 | –18 | |
| using a Dividend Discount Model (DDM) where distributable equity, i.e. future earnings available to ordinary | | | | | Share of results | 33 | 82 | |
| | | | | | Dividends received | –11 | –58 | |
| shareholders, is used as a proxy for future cash flows. The valuation looks at expected cash flows into | | | | | Disposals | –1 | –10 | |
| perpetuity resulting in two main components to the ViU calculation: | | | | | Impairments | 1 | –34 | |
| i) the estimation of future earnings over a 5 year forecast period; and | | | | | Exchange rate differences | –55 | 113 | |
| | | | | | Other | 6 | | |
| ii) the terminal value being the extrapolation of earnings into perpetuity applying a long term growth | | | | | Closing balance | 1,775 | 1,790 | |

position of TMB, i.e. a steady state. The terminal value comprises the ma jority of the total VIU.
Share of results from associates and joint ventures of EUR 33 million (2019: EUR 82 million) as included in the

table above, is mainly attributable to results of TMB of EUR 39 million (2019: EUR 77 million).

Key assumptions used in the VIU calculation Share of results from associates and joint ventures as presented in the statement of profit or loss includes, The value in use is determined using a valuation model which is subject to multiple management assumptions.
besides above mentioned share of results, also impairments.
The key assumptions, i.e. those to which the overall result is most sensitive to, are the following:

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited40

7 Intangible assetsGoodwill| Changes in intangible assets | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | Goodwill | | | Software | | Other | | | Total | Goodwill allocation to group of CGUs | | | | | | | |
| | | | | 31 | | 31 | | | 31 | | 31 | | | Method used for | Discount rate | Long term | Goodwill | Goodwill | |
| | | 30 June | December | 30 June | December | | 30 June | December | 30 June | December | | | | recoverable amount | | growth rate | | | |
| | | 2020 | 2019 | 2020 | | 2019 | 2020 | 2019 | 2020 | | 2019 | | | | | | 30 | | 31 |
| Opening balance | | 907 | 918 | | 958 | 868 | 52 | 53 | 1,916 | | 1,839 | Group of CGUs | | | | | June | December | |
| Additions | | | 17 | | 50 | 94 | | | – | 50 | 111 | | | | | | 2020 | 2019 | |
| Capitalised expenses | | | | | 115 | 285 | | | 115 | | 285 | Retail Netherlands | | Values in use | 8.46% | 0.00% | 30 | 30 | |
| Amortisation | | | | –120 | | –235 | –1 | –2 | –121 | | –237 | Retail Belgium | | Values in use | 9.54% | 0.00% | | 50 | |
| Impairments | 1 | –310 | | | –3 | –61 | –15 | –0 | –328 | | –61 | Retail Germany | | Values in use | 8.43% | 0.00% | 349 | 349 | |
| Exchange rate differences | | –35 | –28 | | –5 | – | –0 | –0 | –40 | | –28 | Retail Growth Markets | 1 | Values in use | 13.59% | 3.61% | 182 | 209 | |
| Disposals | | | | | –8 | –1 | | –0 | | –8 | –1 | Wholesale Banking | 1 | Values in use | 9.38% | 0.85% | | 268 | |
| Changes in the composition of the group | | | | | | | | | | | | | | | | | 562 | 907 | |
| and other changes | | | | | 2 | 8 | – | | 1 | 2 | 9 | | | | | | | | |
| Closing balance | | 562 | 907 | | 989 | 958 | 35 | 52 | 1,586 | | 1,916 | 1Goodwill related to Growth Countries is allocated across two groups of CGUs, EUR 182 million to Retail Growth Markets and EUR 0 | | | | | | | |

								Banking).
Gross carrying amount	872	907	2,738	2,608	60	613,670	3,575
Accumulated amortisation		–1,737		–1,641	–8	–7–1,745	–1,648	Covid-19 has resulted in adverse changes in the market and economic environment. Due to the impact of the
Accumulated impairments	–310		–11	–9	–17	–2–338	–11	significant deterioration in the economic environment on the cash flow outlook of our businesses, we
Net carrying value	562	907	989	958	35	521,586	1,916	completed a goodwill impairment review across ING Group in the second quarter of 2020.

1 Impairments of intangible assets are presented within Other operating expenses in the statement of Profit or Loss.
This review resulted in the recognition of goodwill impairments on the CGU Retail Belgium of EUR 50 million

(of which EUR 43 million Retail Belgium segment and EUR 8 million Corporate Line) and on the CGU

Wholesale Banking of EUR 260 million (fully reported in the Wholesale Banking segment).

For both CGUs the impairment resulted from the negative developments in the macro-economic outlook in the

context of the Covid-19 pandemic. In addition, the applicable discount rate is also affected by the deteriorated

economic and risk environment. The discount rate used to estimate the value in use of the CGU Belgium as at

30 June 2020 was 9.54 % (31 December 2019: 6.94 %). The discount rate used to estimate the value in use of

CGU Wholesale Banking, which is based on the weighted average of the discount rates of various local

businesses as Wholesale Banking is a global business line, was at 30 June 9.38% (31 December 2019: 7.29%).

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited41

Other intangible assets with indefinite life

For each of the other group of CGU’s the recoverable amount exceeds the carrying value of the CGUs for The carrying value of CGU Wholesale Banking includes as at 30 June 2020 EUR 11 million (31 December 2019:
2020 and 2019 and therefore no impairment is required.
EUR 20 million) of intangibles with indefinite life which relates to acquired trade names in the payments and

cash management business. The asset is deemed to have indefinite life because there is no foreseeable limit

Methodology
to the cash flows generated by those intangible assets.
Several methodologies are applied to arrive at the best estimate of the recoverable amount. In line with IFRS,

the recoverable amount is determined as the higher of the fair value less costs of disposal and Value in Use In the first half year of 2020 an impairment of an indefinite useful life asset of EUR 10 million was recognised, (VIU). The VIU calculation is based on a Dividend Discount model using three year management approved related to a trade name no longer in use.
plans, updated for the expected impact of Covid-19. When estimating the VIU of a CGU, local conditions and

8 Deposits from banks requirements determine the capital requirements, discount rates, and terminal growth rates. These local

conditions and capital requirements determine the ability to upstream excess capital and profits to INGDeposits from banks include non-subordinated debt from banks, except for amounts in the form of debt

Group. The discount rate calculation includes other inputs such as equity market premium, country risksecurities.

premium, and long term inflation which are based on market sources and management’s judgement. The

long term growth rate for EU-countries is based on long-term risk-free rate by reference to the yield of aDeposits from banks by type| composite index consisting of Euro generic government bonds, with a maturity of 30 years. For other | 30 | | 31 |
| --- | --- | --- | --- |
| countries, the growth rate includes long term inflation rate obtained from market sources. | June | December | |
| | 2020 | 2019 | |

	Non-interest bearing	19	180
Sensitivity of key assumptions	Interest bearing	78,631	34,646
Key assumptions in the goodwill impairment test model are the projected locally available cash flows (based		78,649	34,826

on local capital requirements and projected profits), discount rate s (cost of equity), and long term growth

rates.Deposits from banks includes ING’s participation in the targeted longer -term refinancing operations (TLTRO)

of EUR 59.5 billion (31 December 2019: EUR 17.7 billion). ING participated in a new series of Targeted Longer- The recoverable amounts of the unimpaired CGU’s are sensitive to the above key assumptions.
Term Refinancing Operations (TLTRO III) for EUR 4.5 billion in March 2020, EUR 55.0 billion in June 2020 and A decrease in the available cash flow of 10%, an increase in the discount rate of 1 percent point or a repaid EUR 17.7 billion on previous TLTRO. The TLTRO funding is granted for a period of three years with reduction of future growth rate to zero are considered reasonably possible changes in key assumptions. If the early repayment option after 1 year. The interest rate on the TLTRO depends on the lending volumes granted aforementioned changes occur to the above key assumptions holding the other key assumptions constant, to corporates (excluding financial institutions) and households (excluding mortgages).
goodwill of the remaining CGUs will continue to be recoverable and no impairment will occur.

Under the conditions of the program, banks that show growth in lending volumes equal to or above 0%

between 1 March 2020 and 31 March 2021 the interest rate applied on all TLTRO III operations outstanding

over the period between 24 June 2020 and 23 June 2021 will be 50 basis points below the average interest rate

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited42

Condensed consolidated interim financialNotes to the Condensed consolidatedAdditional notes to the Condensed
Contents|Interim report|||Segment reporting|
statementsinterim financialstatementsconsolidated interim financialstatements| on the deposit facility prevailing over the same period, and in any case not higher than -1%. In subsequent | Debt securities in issue – maturities | | | |
| --- | --- | --- | --- | --- |
| years the interest will be in a corridor between the Deposit Facility and Main Refinancing Operations rates, | | 30 | | 31 |
| | | June | December | |
| depending to what extent ING meets the lending growth conditions of the TLTRO III program. The amount of | | 2020 | 2019 | |

interest to be recognised on the TLTRO depends on a reasonable expectation of whether the conditions will beFixed rate debt securities| met over the life of the loan. Interest on TLTRO is presented as part of net interest margin. | Within 1 year | 32,575 | 26,871 |
| --- | --- | --- | --- |
| | More than 1 year but less than 2 years | 13,311 | 10,358 |

	More than 2 years but less than 3 years	3,232	9,527
9 Financial liabilities at fair value through profit or loss	More than 3 years but less than 4 years	6,608	6,321

				More than 4 years but less than 5 years	3,466	2,836
Financial liabilities at fair value through profit or loss				More than 5 years	28,705	29,007
	30		31	Total fixed rate debt securities	87,896	84,920
	June	December
	2020	2019
				Floating rate debt securities
Trading liabilities	35,745	28,042		Within 1 year	26,090	24,938
Non-trading derivatives	2,435	2,215		More than 1 year but less than 2 years	3,380	3,126
Designated at fair value through profit or loss	52,461	47,684		More than 2 years but less than 3 years	1,469	3,041
	90,641	77,942		More than 3 years but less than 4 years	1,458	1,541

More than 4 years but less than 5 years90144| As at 30 June 2020, trading liabilities include funds on deposit of EUR 8,559 million (31 December 2019: EUR | More than 5 years | 755 | 816 |
| --- | --- | --- | --- |
| 4,556 million) with regard to repurchase transactions. | Total floating rate debt securities | 33,242 | 33,608 |

Total debt securities121,138118,528 As at 30 June 2020, financial liabilities designated at fair value through profit or loss include funds entrusted

of EUR 43,180 million (31 December 2019: EUR 38,492 million) with regard to repurchase transactions.

In the first six months of 2020, Debt securities in issue increased by EUR 2.6 billion. This increase is mainly

10 Debt securities in issueattributable to issuances of commercial paper of EUR 4.7 billion, certificates of deposits of EUR 0.6 billion and

an increase in other debt securities of EUR 1.2 billion partly offset by matured savings certificates of EUR 0.2 Debt securities in issue relate to debentures and other issued debt securities with either fixed interest rates billion, the redemption of RMBS (residential mortgage backed securities) of EUR 0.5 billion and matured long or interest rates based on floating interest rate levels, such as certificates of deposit and accepted bills issued term maturity bonds of EUR 3.2 billion.
by ING Group, except for subordinated items. Debt securities in issue do not include debt securities

presented as Financial liabilities at fair value through profit or loss. ING Group does not have debt securities

that are issued on terms other than those available in the normal course of business. The maturities of the

debt securities are as follows:

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited43

11 Subordinated loansEquity

12 Equity

Subordinated loans by group companies

3031

Total equity

JuneDecember

202020193031| ING Groep N.V. | 13,691 | 13,069 | | June | December |
| --- | --- | --- | --- | --- | --- |
| ING Group companies | 3,007 | 3,519 | | 2020 | 2019 |
| | 16,697 | 16,588 | Share capital and share premium | | |
| | | | - Share capital | 39 | 39 |

Share premium17,08917,078

Subordinated loans issued by ING Groep N.V. include bonds issued to raise Tier 1 and Tier 2 (CRD IV eligible)17,12817,117

capital for ING Bank N.V. Under IFRS these bonds are classified as liabilities and for regulatory purposes, they

Other reserves are considered capital. Subordinated loans issued by ING Group companies comprise, for the most part,| subordinated loans which are subordinated to all current and future liabilities of ING Bank N.V. | - Revaluation reserve: Equity securities at FVOCI | 1,270 | 1,580 |
| --- | --- | --- | --- |
| | - Revaluation reserve: Debt instruments at FVOCI | 219 | 322 |

Revaluation reserve: Cash flow hedge1,7091,208

Changes in subordinated loans- Revaluation reserve: Credit liability–103–114| | 30 | | 31 | - Revaluation reserve: Property in own use | 262 | 253 |
| --- | --- | --- | --- | --- | --- | --- |
| | June | December | | - Net defined benefit asset/liability remeasurement reserve | –252 | –336 |
| | 2020 | 2019 | | - Currency translation reserve | –2,729 | –2,079 |
| Opening balance as at 1 January | 16,588 | 13,724 | | - Share of associates and joint ventures and other reserves | 3,243 | 3,189 |
| New issuances | 2,165 | 3,429 | | - Treasury shares | –3 | –10 |
| Repayments | –2,608 | –933 | | | | |
| Exchange rate differences and other | 553 | 367 | | | 3,616 | 4,013 |

Closing balance16,69716,588 Retained earnings30,40629,866

In 2020 ING Groep N.V. issued in February USD 750 million 4.875% Perpetual Additional Tier 1 Contingent Shareholders’ equity (parent)51,14950,996

Convertible Capital Securities and in May EUR 1.5 billion 2.125% Subordinated Tier 2 Notes. In February INGNon-controlling interests1,022893

Total equity52,17151,889 Bank N.V. bought back USD 1 billion 5.800% Tier 2 securities via a tender and in April ING Groep N.V.

redeemed USD 1 billion 6.000% Perpetual Additional Tier 1 Contingent Convertible Capital Securities and USD

In March 2020, ING Group announced that it will suspend any payment of dividends until 1 October 2020, 700 million 6.125% Perpetual Debt Securities.

following an industry wide recommendation of the ECB. The ECB subsequently updated their

recommendation at the end of July, extending the timeframe for suspension of dividend payments until 1

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited44

January 2021. Any dividend payment by ING will therefore be delayed until after 1 January 2021. FinalIn 2019, the unrealised revaluations of EUR 137 million are due to the revaluation of shares in Bank of Beijing

dividend 2019 paid out in the first half year of 2020 is therefore nil (2019: EUR 1,714 million).EUR 35 million and shares in EquensWorldLine EUR 101 million. The EUR -472 million transfer of revaluation

reserve to retained earnings is mainly related to the sale of shares in Kotak Mahindra Bank EUR -320 million

Changes in revaluation reserveand EquensWorldLine EUR -149 million.

Equity securities atDebt instruments at

FVOCIFVOCICash flow hedgeCredit liabilityProperty in own useCash flow hedge reserve

30313031303130313031ING mainly hedges floating rate lending with interest rate swaps. Due to decrease in interest rate yield curve| | June | December | June | December | June | December | June | December | June | December | the interest rate swaps had a positive revaluation of EUR 501 million (2019: EUR 604 million) which is |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |
| Opening balance | 1,580 | 1,914 | 322 | 398 | 1,208 | 604 | -114 | | 8253 | 204 | recognised in cash flow hedge reserve. |

Changes in credit 11-116 liability reserve| Unrealised | -312 | 137 | -76 | -43 | 501 | 604 | 11 | 58 | Changes in currency translation reserve | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| revaluations | | | | | | | | | | | | |
| Realised | | | | | | | | | | 30 | | 31 |
| gains/losses | | | | | | | | | | June | December | |
| transferred to the | | | -27 | -33 | | | | | | 2020 | 2019 | |
| statement of | | | | | | | | | Opening balance | –2,079 | –2,043 | |
| profit or loss | | | | | | | | | Unrealised revaluations | 84 | –134 | |

								Realised gains/losses transferred to the statement of profit or loss		–138
Realised								Exchange rate differences	–734	236
revaluations	2	-472	–	–	-6	-2	-9	Closing balance	–2,729	–2,079
transferred to

retained earnings| | | | | | | | | | | Unrealised revaluations relates to changes in the value of hedging instruments that are designated as net |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Closing balance | 1,270 | 1,580 | 219 | 3221,709 | 1,208 | -103 | -114 | 262 | 253 | |
| | | | | | | | | | | investment hedges. The hedging strategy is to hedge the CET1 ratio. The net decrease of unrealized |

revaluations and Exchange rate differences of EUR -650 million (2019: EUR 102 million increase) is related to

Equity securities at FVOCIseveral currencies including TRY, PLN, GBP, RUB and AUD that depreciated against the EUR.

In 2020, the unrealised revaluations of EUR -312 million includes EUR -297 million of revaluations of shares inRealised gains/losses transferred to the statement of profit or loss in 2019 is related to the sale of shares in

Bank of Beijing.Kotak Mahindra Bank (EUR -119 million) and the effect of the merger transaction of TMB (EUR -18 million).

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited45

Notes to the Condensed statement of profit or loss

13 Net interest income| | 1 January to 30 June | | | 1 January to 30 June | |
| --- | --- | --- | --- | --- | --- |
| | 2020 | 2019 | | 2020 | 2019 |
| Interest income on loans | 8,333 | 9,659 | Interest expense on deposits from banks | 113 | 184 |
| Interest income on financial assets at fair value through OCI | 283 | 311 | Interest expense on customer deposits | 823 | 1,482 |
| Interest income on financial assets at amortised cost | 263 | 359 | Interest expense on debt securities in issue | 1,005 | 1,239 |
| Interest income on non-trading derivatives (hedge accounting) | 1,769 | 2,268 | Interest expense on subordinated loans | 323 | 324 |
| Negative interest on liabilities | 288 | 202 | Negative interest on assets | 117 | 186 |
| Total interest income using effective interest rate method | 10,935 | 12,799 | Interest expense on non-trading derivatives (hedge accounting) | 1,779 | 2,466 |
| | | | Total interest expense using effective interest rate method | 4,160 | 5,880 |

Interest income on financial assets at fair value through profit or loss	450	1,006	Interest expense on financial liabilities at fair value through profit or loss	348	892
Interest income on non-trading derivatives (no hedge accounting)	556	5881	Interest expense on non-trading derivatives (no hedge accounting)	540	7011
Interest income other	21	16	Interest expense on lease liabilities	11	12
Total other interest income	1,026	1,610	Interest expense other	25	29
			Total other interest expense	925	1,633
Total interest income	11,962	14,410	Total interest expense	5,085	7,513

Net interest income6,8776,896

1 The prior periods have been updated to improve consistency and comparability.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited46

14 Net fee and commission income15 Valuation results and net trading income| | 1 January to 30 June | | Valuation results and net trading income | | |
| --- | --- | --- | --- | --- | --- |
| | 2020 | 2019 | | 1 January to 30 June | |
| Funds transfer | 686 | 736 | | 2020 | 2019 |
| Securities business | 439 | 316 | Securities trading results | –1,024 | 718 |
| Insurance broking | 101 | 91 | Derivatives trading results | 1,596 | –433 |
| Asset management fees | 115 | 97 | Other trading results | 54 | 65 |
| Brokerage and advisory fees | 321 | 278 | Change in fair value of derivatives relating to | | |
| Other | 644 | 648 | – fair value hedges | 231 | –164 |
| | 2,307 | 2,164 | – cash flow hedges (ineffective portion) | –42 | 24 |
| | | | – other non-trading derivatives | 383 | 150 |
| Other, mainly consists of commission fees in respect of bank guarantees of EUR 98 million (first six months of | | | Change in fair value of assets and liabilities (hedged items) | –644 | –830 |
| 2019: EUR 103 million), in respect of underwriting syndication loans of EUR 10 million (first six months of | | | Valuation results on assets and liabilities designated at FVPL and assets mandatorily measured | –293 | –329 |
| | | | at FVPL | | |
| 2019: EUR 6 million), in respect of structured finance fees of EUR 67 million (first six months of 2019: EUR 76 | | | Foreign exchange transactions results | –264 | 310 |
| million) and in respect of collective instruments distributed but not managed by ING of EUR 112 million (first | | | | –4 | –489 |

six months of 2019: EUR 80 million).

Securities trading results include the results of market making in instruments such as government securities,| | 1 January to 30 June | | | swaps, options, futures, and forward contracts. Foreign exchange transactions results include gains and |
| --- | --- | --- | --- | --- |
| | 2020 | | 2019 | losses from spot and forward contracts, options, futures, and translated foreign currency assets and |
| Funds transfer | 301 | | 321 | |
| Securities business | 80 | | 95 | liabilities. Other trading results include the results of trading loans and funds entru sted. |
| Insurance broking | | – | 1 | |
| Asset management fees | | 3 | 4 | Net trading income relates to trading assets and trading liabilities which include assets and liabilities that are |
| Brokerage and advisory fees | 157 | | 129 | |
| Other | 260 | | 229 | classified under IFRS as Trading but are closely related to servicing the needs of the clients of ING. ING offers |
| | 801 | | 778 | products that are traded on the financial markets to institutional clients, corporate clients, and governments. |

All of ING’s net fee and commission income are in scope of IFRS 15 ‘Revenue from Contracts with Customers’.The majority of the risks involved in security and currency trading is economically hedged with derivatives.

Reference is made to Note 18 ‘Segments’ which includes net fee and commission income, as reported to theThe securities trading results are partly offset by results on these derivatives. The result of these derivatives

Executive Board and the Management Board Banking, disaggregated by line of business and by geographicalis included in Derivatives trading results. The result on currency trading is included in foreign exchange

segment.transactions results.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited47

Condensed consolidated interim financialNotes to the Condensed consolidatedAdditional notes to the Condensed
Contents|Interim report|||Segment reporting|
statementsinterim financialstatementsconsolidated interim financialstatements| recovered during the second quarter of 2020 and volatility has largely returned to pre-pandemic levels. | | | | | |
| --- | --- | --- | --- | --- | --- |
| Derivatives trading results is also impacted by fair value | movements arising from changes in credit spreads | 16 Other income | | | |
| | | Other income | | | |
| As result of the economic consequences of the Covid-19 pandemic, ING also observed significant widening of | | | 1 January to 30 June | | |
| the spreads resulting in increased negative fair value changes. As markets stabilised in the second quarter of | | | 2020 | | 2019 |
| 2020 and spreads tightened, the fair value changes | decreased again . | Share of result associates and joint ventures | 34 | | 19 |
| | | Result on disposal of group companies | | – | 117 |
| In the first six months of 2020, Derivatives trading results include EUR -99 million CVA/DVA adjustments on | | Net result derecognition of FA measured at amortised cost | 187 | | 16 |
| trading derivatives (in the first six months of 2019: EUR -1 million). | | Other | 48 | | 144 |
| | | | 269 | | 296 |
| hedge accounting and economically hedging exposures) as well as the changes in the fair value of assets and | | In the first six months of 2020, ING realised a result of EUR 186 million following a one-off sale of certain | | | |
| liabilities included in hedging relationsh ips as hedged items. | | securities at amortised cost driven by exception al market conditions due to Covid-19. The sale is considered | | | |
| | | to be infrequent, but more than insignificant in value. | | | |

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited48

17 Earnings per ordinary shareSegment reporting

18 Segments

Earnings per ordinary share

Weighted average

number of ordinary ING Group’s segments are based on the internal reporting structures by lines of business.
shares outstanding

Amountduring the periodPer ordinary share
(in EUR million)(in millions)(in EUR)The Executive Board of ING Group and the Management Board Banking set the performance targets, approve

1 January to 30 June1 January to 30 June1 January to 30 Juneand monitor the budgets prepared by the business lines. Business lines formulate strategic, commercial, and| | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | financial plans in conformity with the strategy and performance targets set by the Executive Board of ING |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Basic earnings | 591 | 1,707 | 3,897.9 | 3,893.6 | 0.15 | 0.44 | Group and the Management Board Banking. |
| Basic earnings from continuing | 591 | 1,707 | | | 0.15 | 0.44 | |
| operations | | | | | | | |

Recognition and measurement of segment results are in line with the accounting policies as described in

Effect of dilutive instruments:Note 1 ‘Basis for preparation and accounting policies’. Corporate expenses are allocated to business lines| Stock option and share plans | 0.5 | 0.6 | based on time spent by head office personnel, the relative number of staff, or on the basis of income, |
| --- | --- | --- | --- |
| | 0.5 | 0.6 | expenses and/or assets of the segment. |

Diluted earnings5911,7073,898.53,894.20.150.44

Diluted earnings from continuing

5911,7070.150.44 operations

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited49

The following table specifies the segments by line of business and main sources of income of each of the

Specification of geographical segments segments:

Geographical segmentsMain countries

The Netherlands

Specification of the main sources of income of each of the segments by line of businessBelgiumIncluding Luxembourg

GermanyIncluding Austria

Segments of results by line of business

Main source of income Other ChallengersAustralia, France, Italy, Spain, Portugal, Czech Republic, and UK Legacy and Other
Income from retail and private banking activities in the Netherlands, including the Retail Netherlands Growth MarketsPoland, Romania, Turkey, Philippines and Asian bank stakes SME and mid-corporate segments, and the Real Estate Finance portfolio related to
Dutch domestic mid-corporates. The main products offered are current andWholesale Banking Rest of WorldUK, Americas, Asia and other countries in Central and Eastern Europe
(Market Leaders)savings accounts, business lending, mortgages and other consumer lending in theOtherCorporate Line Banking and the run-off portfolio of Real Estate
Netherlands.

Retail BelgiumIncome from retail and private banking activities in Belgium (includingING Group monitors and evaluates the performance of ING Group at a consolidated level and by segment
Luxembourg), including the SME and mid-corporate segments. The main products
using results based on figures according to IFRS as adopted by the European Union (IFRS -EU). The Executive
(Market Leaders)offered are similar to those in the Netherlands.

Board and the Management Board Banking consider this measure to be relevant to an understanding of the
Retail GermanyIncome from retail and private banking activities in Germany (including Austria).
Group’s financial performance, because it allows investors to understand the primary method used by
The main products offered are current and savings accounts, mortgages and other
(Challengers and Growth Markets)customer lending.management to evaluate the Group’s operating performance and make decisions about allocating resources.

In addition, ING Group believes that the presentation of result s in accordance with IFRS -EU helps investors
Retail OtherIncome from retail banking activities in the rest of the world, including the SME compare its segment performance on a meaningful basis by highlighting result before tax attributable to and mid-corporate segments in specific countries. The main products offered are
(Challengers and Growth Markets)similar to those in the Netherlands.ongoing operations and the profitability of the segment businesses. IFRS -EU result is derived by excluding

from IFRS -IASB the impact of the IFRS-EU ‘IAS 39 carve out’ adjustment.
Income from wholesale banking activities. The main products are: lending, debt Wholesale Bankingcapital markets, working capital solutions, export finance, daily banking solutions, treasury and risk solutions, and corporate finance.The IFRS -EU ‘IAS 39 carve-out’ adjustment relates to fair value portfolio hedge accounting strategies for the

mortgage and savings portfolios in the Benelux, Germany and Other Challengers that are not eligible under

IFRS -IASB. As no hedge accounting is applied to these mortgage and savings portfolios under IFRS -IASB, the

fair value changes of the derivatives are not offset by fair value changes of the hedge items (mortgages and

savings).

ING Group reconciles the total segment results to the total result using Corporate Line. The Corporate Line is

a reflection of capital management activities and certain income and expenses that are not allocated to the

banking businesses, including a recog nition of a value -added tax (VAT) refund in the first half of 2020

(recorded under expenses), while the same period of last year included a EUR 119 million gain from the

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited50

release of a currency translation reserve following the sale of ING’s stake in Kotak Mahindra Bank in 2019 and the recognition of a EUR 79 million receivable related to the insolvency of a financial institution (both recorded under income). Furthermore, the Corporate Line includes the isolated legacy costs (mainly negative interest results) caused by the replacement of short-term funding with long-term funding during 2013 and 2014. 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.

The difference between IFRS -IASB and IFRS -EU is reflected in the Wholesale segment, and in the geographical segments the Netherlands, Belgium, Germany and Other Challengers. As from the financial year 2020 the information presented to the Executive Board is no longer based on underlying results but on IFRS as endorsed by the EU. Pre viously monitoring and evaluation of ING Group’s segments was based on a non- GAAP financial performance measure called underlying. Underlying result was derived by excluding from IFRS -IASB the following: the impact of the IFRS -EU ‘IAS 39 carve-out’ adjustment, special items, divestments and results from former insurance related activities. In 2020 and 2019 no special items, divestments or results from former insurance related activities were recorded anymore.

The information presented in this note is in line with the information presented to the Executive Board of ING Group and Management Board Banking.

This note does not provide information on the revenue specified to each product or service as this is not reported internally and is therefore not readily available.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited51

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

6 month period

1 January to 30 June20202019

Non-controllingNon-controlling IncomeExpensesTaxationinterestsNet result1IncomeExpensesTaxationinterestsNet result1 Net result IFRS -IASB attributable to equity holder of the parent8,6887,623438365918,1485,654740471,707| Remove impact of: | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Adjustment of the EU 'IAS 39 carve out' | | 2 | 493 | | 115 | | 379 | 1,093 | | 243 | | 850 |
| Result IFRS -EU | 3 | | 9,182 | 7,623 | 553 | 36 | 969 | 9,241 | 5,654 | 983 | 47 | 2,556 |

1 Net result, after tax and non-controlling interests.
2 ING prepares the Form 6-K in accordance with IFRS-IASB. This information is prepared by reversing the hedge accounting impacts that applied under the EU 'carve-out' version of IAS 39. For the IFRS-EU result, the impact of the carve-out is reinstated as this is the measure at which management monitors the business.
3 Results are derived from figures in accordance with IFRS-IASB by excluding the impact of adjustment of the EU 'IAS 39 carve-out'.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited52

Expenditure
– Operating expenses	5,625	1	5,626	5,226	12	5,238
– Addition to loan loss provisions	1,997	–	1,998	416	–	416
Total expenses	7,623	1	7,623	5,643	12	5,654

Result before taxation	1,575	–17	1,558	3,590	–3	3,586
Taxation	519	34	553	954	29	983
Non-controlling interests	36		36	47	–	47
Net result IFRS -EU	1,021	–51	969	2,589	–32	2,556
Adjustment of the EU 'IAS 39 carve out'	–379		–379	–850		–850
Net result IFRS -IASB attributable to equity holder of the parent	642	–51	591	1,739	–32	1,707

1 Comprises for the most part the funding charges of ING Groep N.V. (Holding).

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited53

c. Banking activities| Segments by line of business | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 6 month period | 2020 | | | | | | | 2019 | | | | | | | |
| 1 January to 30 June | | | | | | | | | | | | | | | |
| | | Retail | Retail | Retail | Retail | Wholesale | Corporate | | Retail | Retail | Retail | Retail | Wholesale | Corporate | |
| | Netherlands | | Belgium | Germany | Other | Banking | Line | Total | Netherlands | Belgium | Germany | Other | Banking | Line | Total |
| Income | | | | | | | | | | | | | | | |
| – Net interest income | | 1,763 | 937 | 801 | 1,392 | 1,864 | 173 | 6,931 | 1,740 | 959 | 796 | 1,374 | 1,831 | 253 | 6,953 |
| – Net fee and commission income | | 332 | 207 | 215 | 193 | 561 | –2 | 1,506 | 329 | 188 | 123 | 212 | 538 | –6 | 1,386 |
| – Total investment and other income | | 175 | 71 | 59 | 134 | 354 | –48 | 745 | 190 | 112 | 86 | 100 | 248 | 166 | 902 |
| Total income | | 2,269 | 1,215 | 1,075 | 1,720 | 2,780 | 123 | 9,182 | 2,260 | 1,259 | 1,005 | 1,687 | 2,618 | 413 | 9,241 |

Expenditure
– Operating expenses	1,088	969	567	1,120	1,728	154	5,626	1,095	873	579	1,061	1,438	192	5,238
– Addition to loan loss provisions	139	282	14	304	1,256	3	1,998	33	58	–23	187	162	–	416
Total expenses	1,227	1,251	581	1,424	2,984	156	7,623	1,128	931	556	1,248	1,600	192	5,654

Result before taxation	1,043	–36	494	295	–204	–34	1,558	1,132	328	449	438	1,018	221	3,586
Taxation	262	9	188	85	23	–14	553	287	100	153	123	209	112	983
Non-controlling interests	–1	–	2	27	8	–0	36	–	–	1	38	8	–0	47
Net result IFRS -EU	781	–44	304	183	–235	–19	969	845	229	295	278	801	109	2,556
Adjustment of the EU 'IAS 39 carve out'					–379		–379					–850		–850
Net result IFRS -IASB	781	–44	304	183	–614	–19	591	845	229	295	278	–49	109	1,707

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited54

Expenditure
– Operating expenses	1,736	1,126	652	669	644	644	155	5,626	1,472	1,025	654	638	616	640	193	5,238
– Addition to loan loss provisions	320	338	241	212	205	678	3	1,998	78	99	–32	92	130	50	–	416
Total expenses	2,056	1,465	893	882	849	1,322	158	7,623	1,550	1,124	622	730	746	690	193	5,654

Result before taxation	732	26	474	162	284	–85	–35	1,558	1,088	435	689	302	377	477	219	3,586
Retail Banking	1,043	–36	494	74	222	–	–	1,796	1,132	328	449	163	275			2,348
Wholesale Banking	–310	62	–20	88	62	–85	–2	–204	–44	106	240	139	102	477	–2	1,018
Corporate Line	–	–	–	–	–	–	–34	–34							221	221
Result before taxation	732	26	474	162	284	–85	–35	1,558	1,088	435	689	302	377	477	219	3,586
Taxation	252	25	170	56	71	–10	–10	553	271	132	233	101	84	48	113	983
Non-controlling interests	–1	–	2	–	35	–	–0	36	–0	–	1		46			47
Net result IFRS -EU	481	2	302	106	178	–74	–25	969	817	303	454	201	246	429	106	2,556
Adjustment of the EU 'IAS 39 carve out'	–338	3	–97	53	–	–	–	–379	–413	–287	–160	10				–850
Net result IFRS -IASB	143	5	205	159	178	–74	–25	591	404	16	294	211	246	429	106	1,707

1) As from 2020 financials of Philippines are reported in Growth Markets while previously Wholesale Banking in Philippines was reported in WB Rest of World; historical figures have been adjusted.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited55

Condensed consolidated interim financialNotes to the Condensed consolidatedAdditional notes to the Condensed
Contents|Interim report|||Segment reporting|
statementsinterim financialstatementsconsolidated interim financialstatements| | | | Estimated fair value | | | | position | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| The following table presents the estimated fair values of ING Group’s financial assets and liabilities. Certain | | | 30 | | 31 | 30 | | 31 |
| items per the statement of financial position are not included in the table, as they do not meet the definition | | | June | December | | June | December | |
| | | | 2020 | 2019 | | 2020 | 2019 | |
| of a financial asset or liability. The aggregation of the fair values presented below does not represent, and | Financial assets | | | | | | | |
| should not be construed as representing, the underlying value of ING Group. | Cash and balances with central banks | | 118,971 | 53,202 | 118,971 | | 53,202 | |
| | Loans and advances to banks | | 30,671 | 35,133 | | 30,664 | 35,136 | |
| | Financial assets at fair value through profit or loss | | | | | | | |
| The Covid-19 pandemic impacted the global financial markets in the first six months of 2020. ING observed | – Trading assets | | 53,781 | 49,254 | | 53,781 | 49,254 | |
| large volatility in the market resulting in increased spreads, markets distortion and also illiquidity in some | – Non-trading derivatives | | 2,488 | 2,257 | | 2,488 | 2,257 | |
| specific markets which has stressed ING’s valuation processes and movements in level classifications. The | – Assets mandatorily as at fair value through profit or loss | | 51,142 | 41,600 | | 51,142 | 41,600 | |
| | – Assets designated as at fair value through profit or loss | | 3,700 | 3,076 | | 3,700 | 3,076 | |
| volatility in the market has stabilised in the second quarter of 2020. Financial Assets and Liabilities, including | Financial assets at fair value through other comprehensive income | | | | | | | |
| Level 3, continued to be valued using agreed methodologies and ING continued to limit the unobservable | – Equity securities | | 1,998 | 2,306 | | 1,998 | 2,306 | |
| input to arrive at the most appropriate Fair Market value. | – Debt securities | | 35,650 | 30,483 | | 35,650 | 30,483 | |
| | – Loans and advances | | 1,345 | 1,680 | | 1,345 | 1,680 | |
| | Securities at amortised cost | | 52,147 | 46,928 | | 51,085 | 46,108 | |
| | Loans and advances to customers | | 626,983 | 621,194 | 612,387 | | 608,029 | |
| | Other assets | 1 | 8,381 | 5,854 | | 8,381 | 5,854 | |
| | | | 987,257 | 892,966 | 971,591 | | 878,985 | |
| | Financial liabilities | | | | | | | |
| | Deposits from banks | | 78,531 | 35,086 | | 78,649 | 34,826 | |
| | Customer deposits | | 606,363 | 575,055 | 605,633 | | 574,355 | |
| | Financial liabilities at fair value through profit or loss | | | | | | | |
| | – Trading liabilities | | 35,745 | 28,042 | | 35,745 | 28,042 | |
| | – Non-trading derivatives | | 2,435 | 2,215 | | 2,435 | 2,215 | |
| | – Designated as at fair value through profit or loss | | 52,461 | 47,684 | | 52,461 | 47,684 | |
| | Other liabilities | 2 | 12,115 | 9,776 | | 12,115 | 9,776 | |
| | Debt securities in issue | | 120,907 | 118,844 | 121,138 | | 118,528 | |
| | Subordinated loans | | 16,250 | 17,253 | | 16,697 | 16,588 | |
| | | | 924,807 | 833,956 | 924,875 | | 832,014 | |

1Other assets do not include, among others: (deferred) tax assets, net defined benefit asset, inventory, property development and

property obtained from foreclosures.
2Other liabilities do not include, among others: (deferred) tax liabilities, net defined benefit and related employee benefit liabilities, reorganisation and other provisions, other taxation, social security contributions and lease liabilities.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited56

b) Fair value hierarchy

ING Group has categorised its financial instruments that are either measured in the statement of financial position at fair value or of which the fair value is disclosed, into a three level hierarchy based on the priority of the inputs to the valuation. The fair value hierarchy gives the highest priority to (unadjusted) quoted prices in active markets for identical assets or liabilities and the lowest priority to valuation techniques supported by unobservable inputs. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide reliable pricing information on an ongoing basis. The fair value hierarchy consists of three levels, depending upon whether fair values were determined based on (unadjusted) quoted prices in an active market (Level 1), valuation techniques with observable inputs (Level 2) or valuation techniques that incorporate inputs which are unobservable and which have a more than insignificant impact on the fair value of the instrument (Level 3). Financial assets in Level 3 include for example illiquid debt securities, complex derivatives, certain complex loans (for which current market information about similar assets to use as observable, corroborated data for all significant inputs into a valuation model is not available), and asset backed securities for which there is no active market and a wide dispersion in quoted prices.

Observable inputs reflect market data obtained from independent sources. Unobservable inputs are inputs which are based on the Group’s own assumptions about the factors that market participants would use in pricing an asset or liability, developed based on the best information available in the market. Unobservable inputs may include volatility, correlation, spreads to discount rates, default rates and recovery rates, prepayment rates, and certain credit spreads. Transfers into and transfers out of fair value hierarchy levels are made on a quarterly basis.

A comprehensive description of Fair value hierarchy is reported in ‘Note 38 Fair value of assets and liabilities’ of the 2019 Annual Report on Form 20-F of ING Group. This chapter of the Interim financial report should be read in conjunction with the 2019 Annual Report on Form 20-F of ING Group.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited57

Methods applied in determining fair values of financial assets and liabilities (carried at fair value) Level 1Level 2Level 3Total| 30 | | 31 | 30 | | 31 | 30 | | 31 | 30 | | 31 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June | December | | June | December | | June | December | | June | December | |
| 2020 | 2019 | | 2020 | 2019 | | 2020 | 2019 | | 2020 | 2019 | |

Financial assets at fair value through profit or loss
- Trading assets	9,361	13,228	43,504	35,852	915	174	53,781	49,254
- Non-trading derivatives			2,482	2,249	6	8	2,488	2,257
- Assets mandatorily at fair value through profit or loss	27	22	49,836	40,196	1,280	1,381	51,142	41,600
- Assets designated as at fair value through profit or loss	142	203	2,492	1,628	1,066	1,244	3,700	3,076
Financial assets at fair value through other comprehensive income	36,312	32,165	1,057	343	1,624	1,961	38,993	34,468
	45,842	45,618	99,372	80,269	4,890	4,768	150,103	130,655

Financial liabilities at fair value through profit or loss
– Trading liabilities	1,217	1,446	34,332	26,401	197	195	35,745	28,042
– Non-trading derivatives	1		2,278	2,105	155	110	2,435	2,215
– Financial liabilities designated as at fair value through profit or loss	966	1,081	50,712	46,419	783	184	52,461	47,684
	2,184	2,527	87,322	74,924	1,135	490	90,641	77,942

In the first six months of 2020, the increase in financial assets mandatorily at fair value through profit or lossIn 2020 there were no significant transfers between level 1 and 2 and no significant changes in valuation

and financial liabilities designated as at fair value through profit or loss mainly relates to (reverse) repurchasetechniques.

transactions for which the valuation technique is supported by observable inputs.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited58

Changes in Level 3 Financial assets| | | | | | Non-trading | | | Financial assets | | | Financial assets | | | Financial assets | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | Trading assets | | | | derivatives | | mandatorily at FVPL | | | designated at FVPL | | | | at FVOCI | | | Total | |
| | | 30 | | 31 | 30 | | 31 | 30 | | 31 | 30 | | 31 | 30 | | 31 | 30 | | 31 |
| | | June | December | | June | December | | June | December | | June | December | | June | December | | June | December | |
| | | 2020 | 2019 | | 2020 | 2019 | | 2020 | 2019 | | 2020 | 2019 | | 2020 | 2019 | | 2020 | 2019 | |
| Opening balance | | 174 | 494 | | 8 | 27 | | 1,381 | 1,042 | | 1,244 | 1,075 | | 1,961 | 2,749 | | 4,768 | 5,387 | |
| Realised gain/loss recognised in the statement of profit or loss during the period | 1 | –42 | 40 | | –1 | –21 | | –70 | –63 | | –110 | –6 | | –9 | –15 | | –231 | –66 | |
| Revaluation recognised in other comprehensive income during the period | 2 | | | | | | | | | | | | | –51 | 155 | | –51 | 155 | |
| Purchase of assets | | 96 | 28 | | 3 | | | 928 | 1,494 | | 173 | 360 | | 9 | 11 | | 1,208 | 1,893 | |
| Sale of assets | | –53 | –53 | | –3 | | –3 | –836 | –832 | | –101 | –212 | | –187 | –680 | | –1,179 | –1,780 | |
| Maturity/settlement | | –29 | –11 | | –1 | | | –43 | –461 | | –41 | –35 | | –97 | –212 | | –210 | –719 | |
| Reclassifications | | | –279 | | | | | 2 | 279 | | | | | 1 | | 3 | 3 | | 4 |
| Transfers into Level 3 | | 787 | 26 | | | | 4 | –2 | | 9 | | 63 | | | | | 785 | 103 | |
| Transfers out of Level 3 | | –18 | –72 | | | | | –86 | –88 | | –101 | | | | –53 | | –205 | –214 | |
| Exchange rate differences | | | | 1 | | | | 2 | –1 | | | | | –2 | | 1 | 1 | | 1 |
| Changes in the composition of the group and other changes | | | | | | | | 2 | | 2 | | | | –0 | | 1 | 2 | | 3 |
| Closing balance | | 915 | 174 | | 6 | | 8 | 1,280 | 1,381 | | 1,066 | 1,244 | | 1,624 | 1,961 | | 4,890 | 4,768 | |

1 Net gains/losses were recorded as ‘Valuation results and net trading income’ in the statement of profit or loss. The total amountsTransfers out of Level 3 is mainly related to debt obligations due to the valuation no longer being significantly
includes EUR 202 million (31 December 2019: EUR 43 million) of unrealised gains and losses recognised in the statement of profit or impacted by unobservable inputs.

loss.
2 Revaluation recognised in other comprehensive income is included on the line ‘Net change in fair value of debt instruments at fair value through other comprehensive income’.
In 2019 the amounts reported on the line reclassifications rela te to syndicated loans reclassified from trading
assets to financial assets mandatory at FVPL.
In the first six months of 2020, the transfer into Level 3 assets is mainly driven by debt securities that are part
of a structure transferred into level 3 due to illiquidity in the market which decreased market observability
for an input.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited59

1 Net gains/losses were recorded as ‘Valuation results and net trading income’ in the statement of profit or loss. The total amount includes EUR 13 million(31 December 2019: EUR 115 million) of unrealised gains and losses recognised in the statement of profit or loss.

In the first six months of 2020, the tranfers into level 3 mainly consisted of debt issued at designated fair value, mainly structured notes, which were transferred into Level 3 due to illiquidity in the market which caused the valuation being significantl y impacted by unobservable inputs.

In 2019, financial liabilities mainly repo’s were transferred out of Level 3 mainly due to the valuation not being significantly impacted by unobservable inputs.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited60

Recognition of unrealised gains and losses in Level 3Of the total amount of financial assets classified as Level 3 as at 30 June 2020 of EUR 4.9 billion (31 December

2019: EUR 4.8 billion), an amount of EUR 2.9 billion ( 59.9%) (31 December 2019: EUR 2.5 billion, being Amounts recognised in the statement of profit or loss relating to unrealised gains and losses during the year

52.6%) is based on unadjusted quoted prices in inactive markets. As ING does not generally adjust quoted that relates to Level 3 assets and liabilities are included in the line item ‘Valuation results and net trading

prices using its own inputs, there is no significant sensitivity to ING’s own unobservable inputs.
income’ in the statement of profit or loss.

Furthermore, Level 3 financial assets includes approximately EUR 1.1 billion (31 December 2019: EUR 1.3 Unrealised gains and losses that relate to ‘Financial assets at fair value through other comprehensive income’

billion) which relates to financial assets that are part of structures that are designed to be fully neutral in are included in the Revaluation reserve – Equity securities at fair value through other comprehensive income

terms of market risk. Such structures include various financial assets and liabilities for which the overall or Debt Instruments at fair value through other comprehensive income.

sensitivity to market risk is insignificant. Whereas the fair value of individual components of these structures

may be determined using different techniques and the fair value of each of the components of these

Level 3 Financial assets and liabilities

structures may be sensitive to unobservable inputs, the overall sensitivity is by design not significant.
Financial assets measured at fair value in the statement of financial position as at 30 June 2020 of EUR 150

billion includes an amount of EUR 4.9 billion ( 3.3%) which is classified as Level 3 (31 December 2019: EUR 4.8 The remaining EUR 0.8 billion (31 December 2019: EUR 1.0 billion) of the fair value classified in Level 3 billion, being 3.6%). Changes in Level 3 from 31 December 2019 to 30 June 2020 are detailed above in the financial assets is established using valuation techniques that incorporates certain inputs that are table Changes in Level 3 Financial assets.
unobservable.

Financial liabilities measured at fair value in the statement of financial position as at 30 June 2020 of EUR 91 Of the total amount of financial liabilities classified as Level 3 as at 30 June 2020 of EUR 1.1 billion (31 billion includes an amount of EUR 1.1 billion ( 1.3%) which is classified as Level 3 (31 December 2019: EUR 0.5 December 2019: EUR 0.5 billion), an amount of EUR 0.7 billion (64.6%) (31 December 2019: EUR 0.2 billion, billion, being 0.6%). Changes in Level 3 from 31 December 2019 to 30 June 2020 are disclosed above in the being 39.3%) is based on unadjusted quoted prices in inactive markets. As ING does not generally adjust table ‘Changes in Level 3 Financial liabilities’.
quoted prices using its own inputs, there is no significant sensitivity to ING’s own unobservable inputs.

Financial assets and liabilities in Level 3 include both assets and liabilities for which the fair value was Furthermore, Level 3 financial liabilities includes approximately EUR 0.1 billion (31 December 2019: EUR 0.1 determined using (i) valuation techniques that incorporate unobservable inputs as well as (ii) quoted prices billion) which relates to financial liabilities that are part of structures that are designed to be fully neutral in which have been adjusted to reflect that the market was not actively trading at or around the balance sheet terms of market risk. As explained above, the fair value of each of the components of these structures may date. Unobservable inputs are inputs which are based on ING’s own assumptions about the factors that be sensitive to unobservable inputs, but the overall sensitivity is by design not significant.
market participants would use in pricing an asset or liability, developed based on the best information

available in the circumstances. Unobservable inputs may include volatility, correlation, spreads to discount The remaining EUR 0.3 billion (31 December 2019: EUR 0.2 billion) of the fair value classified in Level 3 rates, default rates and recovery rates, prepayment rates, and certain credit spreads. Valuation techniques financial liabilities is established using valuation techniques that incorporates certain inputs that are that incorporate unobservable inputs are sensitive to the inputs used.
unobservable.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited61

The table below provides a summary of the valuation techniques, key unobservable inputs and the lower and upper range of such unobservable inputs, by type of Level 3 asset/liability. The lower and upper range mentioned in the overview represent the lowest and highest variance of the respective valuation input as actually used in the valuation of the different financial instruments. Amounts and percentages stated are unweighted. The range can vary from period to period subject to market movements and change in Level 3 position. Lower and upper bounds reflect the variability of Level 3 positions and their underlying valuation inputs in the portfolio, but do not adequately reflect their level of valuation uncertainty. For valuation uncertainty assessment, reference is made to section Sensitivity analys is of unobservable inputs (Level 3).

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited62

(Reverse) repo's	539	3	434	1Present value techniques	Interest rate	1%	4%	4%	4%
Structured notes			350	184Price based	Price (%)	69%	83%	112%	124%
				Net asset value	Price (%)	n/a	n/a	n/a	n/a
				Option pricing model	Equity volatility (%)	14%	13%	27%	20%
					Equity/Equity correlation	0.6	0.6	0.9	0.8
					Equity/FX correlation	-0.7	-0.5	0.3	0.3
					Dividend yield (%)	1%	2%	5%	4%
					Interest rate volatility (%)	n/a	n/a	n/a	n/a
					IR/IR correlation	n/a	n/a	n/a	n/a
				Present value techniques	Implied correlation	n/a	n/a	n/a	n/a
Derivatives
– Rates	5	13	83	68Option pricing model	Interest rate volatility (bps)	17	17	137	137
					Interest rate correlation	n/a	n/a	n/a	n/a
					IR/INF correlation	n/a	n/a	n/a	n/a
				Present value techniques	Reset spread (%)	2%	2%	2%	2%
					Prepayment rate (%)	n/a	n/a	n/a	n/a
					Inflation rate (%)	n/a	n/a	n/a	n/a
					Credit spread (bps)	n/a	n/a	n/a	n/a
– FX		1		Present value techniques	Inflation rate (%)	n/a	n/a	n/a	n/a
				Option pricing model	FX volatility (bps)	9	5	10	8
– Credit	144	102	185	183Present value techniques	Credit spread (bps)	4	2	25,961	11,054
					Implied correlation	n/a	n/a	n/a	n/a
					Jump rate (%)	12%	12%	12%	12%
				Price based	Price (%)	99%	n/a	107%	n/a

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited63

The actual levels chosen for the unobservable inputs in preparing the financial statements are consistent with
Valuation techniquesthe valuation methodology used for fair valued financial instruments.

The presented Fair Values include an IFRS Fair Value Adjustment that reflects the fair exit price of which the

valuation changes are booked through P&L or OCI.If ING had used input values from the upper and lower bound of this range of reasonably possible alternative

input values when valuing these instruments as of 30 June 2020, then the impact would have been higher or

Additionally, an adjustment that is to capture the 90% confidence prudency is considered as Additionallower as indicated below. The purpose of this disclosure is to present the possible impact of a change of

Valuation Adjustment according to CRR Article 105/ RTS, which is not part of the IFRS Fair Value and isunobservable inputs in the fair value of financial instruments where unobservable inputs are significant to

deducted from CET1.the valuation.

Sensitivity analysis of unobservable inputs (Level 3)In practice valuation uncertainty is measured and managed per exposure to individual valuation inputs (i.e.

risk factors) at portfolio level across different product categories. Where the disclosure looks at individual Where the fair value of a financial instrument is determined using inputs which are unobservable and which
Level 3 inputs the actual valuation adjustments may also reflect the benefits of portfolio offsets.
have a more than insignificant impact on the fair value of the instrument, the actual value of those inputs at

the balance date may be drawn from a range of reasonably possible alternatives. In line with market practice

the upper and lower bounds of the range of alternative input values reflect a 90% level of valuation certainty.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited64

Because of the approach taken, the valuation uncertainty in the table below is broken down by related risk20 Legal proceedings

class rather than by product.
Settlement agreement:On 4 September 2018, ING announced that it had entered into a settlement

agreement with the Dutch Public Prosecution Service relating to previously disclosed investigations regarding In reality some valuation inputs are interrelated and it would be unlikely that all unobservable inputs would
various requirements for client on-boarding and the prevention of money laundering and corrupt practices.
ever be simultaneously at the limits of their respective ranges of reasonably possible alternatives. Therefore
Under the terms of the settlement agreement ING paid a fine of EUR 675 million and EUR 100 million for it can be assumed that the estimates in the table below show a greater fair value uncertainty than the
disgorgement. In connection with the investigations, ING had also received information requests from the US realistic position at period end assuming normal circumstances/normal markets.
Securities and Exchange Commission (“SEC”). As ING announced on 5 September 2018, ING has received a

formal notification from the SEC that it has concluded its investigation. In the letter dated 4 September 2018 Also, this disclosure does not attempt to indicate or predict future fair value movement. The numbers in
the Division of Enforcement states that, based on information as of the date thereof, it does not intend to isolation give limited information as in most cases these Level 3 assets and liabilities should be seen in
recommend an SEC enforcement action against ING. Following the entry into the settlement agreement, ING combination with other instruments (for example as a hedge) that are classified as Level 2.
has experienced heightened scrutiny from authorities in various countries. ING is also aware, including as a

result of media reports, that other parties may, among other things, seek to commence legal proceedings The possible impact of a change of unobservable inputs in the fair value of financial instruments at fair value
against ING in connection with the subject matter of the settlement, have filed requests with the Court of through other comprehensive income are estimated to be immaterial.
Appeal in The Netherlands to reconsider the prosecutor’s decision to enter into the settlement agreement

with ING and not to prosecute ING or (former) ING employees and that the Court of Appeal is now taking

Sensitivity analysis of Level 3 instruments
procedural steps as part of due process of law before entering into its final decision making. In addition other Positive fair valueNegative fair value
movements frommovements fromparties have filed or may file requests for disciplinary proceedings against ING employees based on the Dutch
using reasonableusing reasonable “Banker’s oath”.
possible alternativespossible alternatives| 30 | | 31 | 30 | | 31 | Findings regarding AML processes | : As previously disclosed, after its September 2018 settlement with Dutch |
| --- | --- | --- | --- | --- | --- | --- | --- |
| June | December | | June | December | | authorities concerning Anti -Money Laundering matters, and in the context of significantly increased attention | |
| 2020 | 2019 | | 2020 | 2019 | | on the prevention of financial economic crime, ING has experienced heightened scrutiny by authorities in | |

Fair value through profit or loss					various countries. The interactions with such regulatory and judicial authorities have included, and can be
Equity (equity derivatives, structured notes)	43	35	–20		expected to continue to include, onsite visits, information requests, investigations and other enquiries. Such
Interest rates (Rates derivatives, FX derivatives)	25	40	–1
	25	10	–9		interactions, as well as ING’s internal assessments in connection with its global enhancement programme,
Credit (Debt securities, Loans, structured notes, credit derivatives)
	93	85	–30	–	have in some cases resulted in satisfactory outcomes, and also have resulted in, and may continue to result

consequences. ING intends to continue to work in close cooperation with authorities as it seeks to improve

its management of non-financial risks in terms of policies, tooling, monitoring, governance, knowledge and

behaviour.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited65

Interest rate derivatives claims:ING is involved in several legal proceedings in the Netherlands with respectING has reviewed the relevant product portfolio. The provision previously taken has been reversed for

to interest rate derivatives that were sold to clients in connection with floating interest rate loans in order tocertain of these complaints. All claims are dealt with individually. Thus far, the courts have ruled in favour of

hedge the interest rate risk of the loans. These proceedings are based on several legal grounds, depending onING in each case, ruling that ING was allowed to increase the interest surcharged based upon the essential

the facts and circumstances of each specific case, inter alia alleged breach of duty of care, insufficientobligations in the contract. In line with the Dutch Supreme Court ruling in a case involving another bank, ING

information provided to the clients on the product and its risks and other elements related to the interestwill continue to deal with all claims individually.

rate derivatives that were sold to clients. In some cases, the court has ruled in favour of the claimants and Criminal proceedings regarding cash company financing:In June 2017, a Belgian criminal Court ruled that awarded damages, annulled the interest rate derivative or ordered repayment of certain amounts to the ING Luxembourg assisted third parties in 2000 to commit a tax fraud in the context of the purchase of the claimants. The total amounts that need to be repaid or compensated in some cases still need to be shares of a cash company. The Court convicted ING Luxembourg, among others, and ordered ING to pay a determined. ING may decide to appeal against adverse rulings. Although the outcome of the pending penal fine of EUR 120,000 (suspended for half of the total amount). The court also ordered ING Luxembourg litigation and similar cases that may be brought in the future is uncertain, it is possible that the courts may jointly and severally with other parties, to pay EUR 31.48 million (together with any interest payable under ultimately rule in favour of the claimants in some or all of such cases. Where appropriate a provision has applicable law) to the bankruptcy trustee of the cash company. In July 2017, ING Luxembourg filed an appeal been taken. The aggregate financial impact of the current and future litigation could become material.
against this judgment. A settlement with all the civil parties involved was reached in mid-2018. However, this As requested by the AFM, ING has reviewed a significant part of the files of clients who bought interest rate settlement does not apply to the criminal conviction of ING Luxembourg. In January 2020, the Court of derivatives. In December 2015, the AFM concluded that Dutch banks may have to re -assess certain client Appeal of Antwerp reformed the first judgment: ING Luxemburg benefitted from an "opschorting van de files, potentially including certain derivative contracts that were terminated prior to April 2014 or other client uitspraak/suspension du prononcé" which means that the conviction has been upheld, but no penal sanction files. As advised by the AFM, the Minister of Finance appointed a Committee of independent experts (the has been pronounced (penalties suspended). The judgement is now final.
“Committee”) which has established a uniform recovery framework for Dutch SME clients with interest rate

derivatives. ING has adopted this recovery framework and has reassessed individual files against thisMortgage expenses claims:ING Spain has received claims and is involved in procedures with customers

framework. ING has taken an additional provision for the financial consequences of the recovery framework.regarding reimbursement of expenses associated with the formalisation of mortgages. In most court

In 2017, ING has informed the majority of the relevant clients whether they are in scope of the recoveryproceedings in first instance the expense clause of the relevant mortgage contract has been declared null and

framework, and thus eligible for compensation, or not. Because implementation by ING of the uniformING Spain has been ordered to reimburse all or part of the applicable expenses. The courts in first instance

recovery framework encountered delay, ING has previously offered advance payments to customers out ofhave applied in their rulings different criteria regarding the reimbursement of expenses. ING Spain has filed

the existing provision. As of December 2018, all customers in scope of the uniform recovery framework havean appeal against a number of these court decisions. ING Spain has also been included, together with other

received an offer of compensation from ING (including offers of no compensation). In July 2020, theSpanish banks, in three class actions filed by customer associations. The outcome of the pending litigation

independent derivative dispute committee rejected all claims by the client against ING in ING’s last open fileand similar cases that may be brought in the future is uncertain. A provision has been taken. However, the

under the uniform recovery framework.aggregate financial impact of the current and future litigation could change. In February 2018, the Spanish

Supreme Court ruled that Stamp Duty (Impuesto de Actos Jurídicos Documentados) expenses are chargeable Interest surcharges claims:ING received complaints and was involved in litigation with natural persons to the customer, while in October 2018 it ruled that Stamp Duty is chargeable to the banks. In November (natuurlijke personen) in the Netherlands regarding increases in interest surcharges with respect to several 2018, the Spanish Supreme Court clarified the issue regarding Stamp Duty by stating that this tax should be credit products, including but not limited to commercial property (commercieel verhuurd onroerend goed).

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited66

borne by the customer. As for the remaining types of the expenses, in January 2019, the Spanish Supreme

23 Capital management
Court issued several decisions that stated that the client and the bank each have to bear half of the notary ING Group’s CET1 ratio increased to 15.0% in Q2 2020 (EOY 2019: 14.6%), mainly due to capital generation and management company costs and that registry costs have to be borne in full by the bank. Allocation of and decreased RWA from various relief measures and management actions taken.
valuation costs between the bank and the customer were not addressed by the Spanish Supreme Court

decisions and remain uncertain. In July 2020, the European Court of Justice ruled that if the clause that

Policy changes due to the Covid-19 pandemic regulates the mortgage formation costs is declared null and void, any mortgage formation costs payable

pursuant to such clause have to be borne in full by the bank, and not equally divided between the bank andAs a reaction to the ongoing global pandemic, the following relevant regulators have introduced a number of

the customer, contrary to the Spanish Supreme Court in its January 2019 ruling. ING Spain is assessing thechanges to regulatory capital requirements applica ble to ING:

impact of this decision on claims from customers against ING.

The DNB decreased ING Group’s Systemic Risk Buffer requirement from 3.00% to 2.50%. Moreover, various For further information regarding legal proceedings we refer to note 46 “Legal proceedings” in ING Group’s competent authorities changed or removed Countercyclical Buffer (CCyB) requirements, which reduced the 2019 Consolidated financial statements as included in the Form 20-F.
fully loaded CCyB for ING from 24 basis points to 3 basis points.

21 Related parties The ECB effectuated Art 104(a) CRDV as of the first quarter of 2020, which essentially brings forward the

possibility to cover Pillar 2 Requirements with a mix of own funds instead of CET1 only.
In the normal course of business, ING Group enters into various transactions with related parties. Parties are

considered to be related if one party has the ability to control or exercise significant influence over the other
Consequentially, ING Group’s fully loaded Total Capital Maximum Distributable Amount trigger level party in making financial or operating decisions. Related parties of ING Group include, among others, its
decreased from 15.49% to 14.78%. This also reduced the fully loaded CET1 requirement, which decreased subsidiaries, associates, joint ventures, key management personnel, and various defined benefit and
from 11.99% to 10.51%, and the fully loaded Tier 1 requirement, which decreased from 13.49% to 12.34%.
contribution plans. Transactions between related parties include rendering or receiving of services, leases,

transfers under finance arrangements and provisions of guarantees or collateral. All transactions with related
ING is committed to maintaining a CET1 ratio above the prevailing fully loaded requirement plus a parties took place at conditions customary in the market. There are no significant provisions for doubtful
comfortable management buffer.
debts or individually significant bad debt expenses recognised on outstanding bal ances with related parties.

The ECB provided some relief on RWA increases by postponing pending TRIM reviews by at least six months.

22 Subsequent events The DNB further announced it is delaying the introduction of a floor for mortgage loan risk weighting.
There are no subsequent events to report.

The Basel Committee on Banking Supervision announced the postponement of the implementation date of

Basel IV standards by one year to the beginning of 2023.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited67

Following the CRR amendments due to Covid-19 (“CRR quick fix” or CRR 2.5), ING adopted a) an extension ofA security rating is not a recommendation to buy, sell or hold securities and each rating should be evaluated the IFRS 9 transitional arrangements (EUR 0.2 billion capital increase), b) the infrastructure support factorindependently of other ratings. There is no assurance that any credit rating will remain in effect for any given (EUR 0.9 billion RWA relief) and c) the SME support factor (EUR 2.0 billion RWA relief).period of time or that a rating will not be lowered, suspended or withdrawn entirely by the rating agency if, in the rating agency’s judgment, circumstances so warrant. ING accepts no responsibility for the accuracy or Dividendreliability of the ratings.

In March 2020, ING Group announced that it will suspend any payment of dividends following an industry wide recommendation of the ECB. The ECB subsequently updated their recommendat ion at the end of July, extending the timeframe for suspension of dividend payments until 1 January 2021. Any dividend payment by ING will therefore be delayed until after 1 January 2021.

Ratings

The ratings from S&P, Moody’s and Fitch remained unchanged in the first half of the year. Fitch changed its outlook on both ING Group and ING Bank to ‘Rating Watch Negative’ (RWN) on 1 April 2020. Standard & Poor's changed its outlook for ING Group to 'Negative' on 23 April 2020.

Main credit ratings of ING at 30 June 2020 Standard & Poor’sMoody’sFitch RatingOutlookRatingOutlookRatingOutlook

ING Groep N.V. Long-termA-NegativeBaa1StableA+RWN*

ING Bank N.V. Long-termA+StableAa3StableAA-RWN* Short-termA-1P-1F1+ * Rating Watch Negative

ING’s key credit ratings and outlook are shown in the table above. Each of these ratings reflects only the view of the applicable rating agency at the time the rating was issued, and any explanation of the significance of a rating may be obtained only fro m the rating agency.

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited68

SIGNATURES

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)

Date: August 5, 2020

By: /s/T. Phutrakul T. Phutrakul Chief Financial Officer

ING Group Interim financial report on form 6-K for the period ended 30 June 2020 - Unaudited69

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ING Groep N.V. Regulatory Filings 2020

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ING Groep N.V. — Regulatory Filings 2020

3854_ffr_2020-08-06_7fa72718-5c91-4b36-8d9c-a953b04f101b.zip

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ING Groep N.V. Regulatory Filings 2020