ING Groep 6K Current report

ING Group consolidated results

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Contents

Interim Report

Introduction

Risk Management

Risk management

Credit risk

Market risk

Other risks and uncertainties

Condensed consolidated interim financial statements

Condensed consolidated statement of financial position

Condensed consolidated statement of profit or loss

Condensed consolidated statement of comprehensive income

Condensed consolidated statement of changes in equity

Condensed consolidated statement of cash flows

Notes to the Condensed consolidated interim financial statements

Basis of preparation and accounting policies

Financial assets at fair value through profit or loss

Financial assets at fair value through other comprehensive income

Loans and advances to customers

Investments in associates and joint ventures

Assets and liabilities held for sale

Deposits from banks

Financial liabilities at fair value through profit or loss

Debt securities in issue

Subordinated loans

Equity

Net interest income

Net fee and commission income

Other income

Other operating expenses

Earnings per ordinary share

Additional notes to the Condensed consolidated interim financial

statements

Segments

Fair value of assets and liabilities

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Interim report

Introduction

ING is a global financial institution with a strong European base, offering banking

services through its operating

company ING Bank. ING Bank’s more than 57,000 employees offer retail and wholesale banking services to

customers in over 40 countries. The group consists of ING Groep N.V.,

ING Bank N.V.

and other group entities.

Covid-19

While the roll-out of the vaccine programmes has gained momentum in the second quarter

of 2021,

accompanied by gradual reopening of economies, the end of the

second quarter of 2021 was however again

marked by an increasing number of Covid-19 infections, mainly due to the spread of the Delta variant. ING

continues to closely monitor the developments around and effects of the ongoing Covid-19 pandemic.

Based on the potential economic and social implications

for the countries and sectors where ING is active,

mitigating actions have been implemented and will be adapted as necessary as

we continue to support our

customers during these challenging times.

Our staff is still largely working from home, supported with the appropriate tools. A central ING team provides

guidance on health and safety measures, travel advice and business continuity. As the situation differs from

country to country, ING is following local government guidelines in its response to the Covid-19 pandemic. More

information on the impact of Covid-19 on ING as well on

the related risk measures taken to address the impact

can be found in the section “Risk Management”. For the impact of Covid-19 on the financial

statements we refer

to Note 1.3 of the financial statements.

ING Group consolidated results

ING Group: Consolidated profit or loss account

in EUR million

6 month period (1 January to 30 June)

Total ING Group

of which: Adjustment of

the IFRS-EU 'IAS 39 carve

out'

of which: Total

ING Group

IFRS-EU

2021

2020

2021

2020

2021

2020

Net interest income

7,021

6,877

169

-54

6,853

6,931

Net fee and commission income

1,710

1,506

1,710

1,506

Total investment

and other income

1,444

305

788

-439

656

745

Total income

10,175

8,688

956

-493

9,219

9,182

Expenses excl. Regulatory costs

4,801

4,963

4,801

4,963

Regulatory costs

759

663

759

663

Operating expenses

5,560

5,626

5,560

5,626

Gross result

4,615

3,062

956

-493

3,659

3,556

Addition to loan loss provisions

131

1,998

131

1,998

Result before tax

4,484

1,065

956

-493

3,528

1,558

Taxation

1,265

438

260

-115

1,005

553

Non-controlling interests

Net result ING Group

3,161

591

697

-379

2,464

969

ING Group monitors and evaluates the performance of ING Group at a consolidated level and by segment using

results based on figures according to IFRS-EU. The Executive Board and the Management Board Banking consider

this measure to be relevant to an understanding of the Group’s financial performance, because it allows

investors to understand the primary method used by management to evaluate the Group’s operating

performance and make decisions about allocating resources. In addition, ING Group believes that the

presentation of results in accordance with IFRS-EU helps investors compare its segment performance on a

meaningful basis by highlighting result before tax attributable to 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.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

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).

The breakdown of net result by segment is included in Note 17 ‘Segments’.

Consolidated results of operations

In the first half of 2021, ING’s net result (including the adjustment of the EU ‘IAS 39 carve-out’)

increased to

€3,161 million, or 434.9%, compared with €591 million

in the same period of 2020. In the first six months of

2021, the result included a positive adjustment of the EU ‘IAS

39 carve-out’ of €697 million,

while this adjustment

was negative in the first half of 2020 (€-379 million). This positive adjustment of the EU ‘IAS

39 carve-out’ is

mainly driven by positive fair value changes on derivatives related to asset-liability-management activities for the

mortgage and savings portfolios due to increases in markets interest rates. As no fair value hedge accounting is

applied to these mortgage and savings portfolios under IFRS-IASB, the net positive fair value changes of the

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

In the first half of 2021, the IFRS-EU net result (before the adjustment of the EU ‘IAS 39 carve-out’)

increased to

€2,464 million, or 154.3%, compared with €969 million

in the same period of 2020. The increase

was primarily

due to lower risk costs due to releases from collective provisions following an update of the macroeconomic

indicators and limited individual Stage 3 provisioning, whereas the first half of 2020 included elevated risk costs.

The effective tax rate was 28.5% compared with 35.5% in the first half of 2020.

The result before tax rose 126.4% to €3,528 million from €1,558 million in the first half of 2020, predominantly

due to €1,867 million lower risk costs, but also due to higher income

and lower expenses. Income increased 0.4%,

mainly due to strong growth in fee income especially in daily banking and investment products and the

recognition of the conditional ECB funding rate benefit from the TLTRO III programme, which more than offset

the impact of lower interest margins on customer deposits. Operating expenses declined by €66 million,

or -1.2%,

on the first six months of 2020, mainly due to lower impairments, which

more than offset the impact of higher

regulatory costs and some redundancy and restructuring costs.

Net interest income decreased by €78 million, or 1.1%, to €6,853 million in the first six months of

2021, of which

almost €100 million was caused by negative currency impacts and despite the recognition of

a €316 million

conditional TLTRO III benefit (of which approximately half was related to a retroactive adjustment of the ECB

funding rate in 2020). The interest result on customer deposits declined due to lower interest margins on both

savings and current accounts caused by lower reinvestment yields, while average volumes increased. The interest

result on customer lending was slightly higher compared to last year, due to higher margins while average

lending volumes declined due to reduced loan demand. Furthermore,

interest results increased in Treasury and

Financial Markets (which can be volatile). ING’s overall net interest margin, which is defined as net interest

income divided by the average balance sheet total, decreased by 7 basis points to 1.41%, from 1.48% in

the first

half of 2020.

Net fee and commission income increased 13.5% to €1,710 million from €1,506

million one year ago. In Retail

Banking, net fee and commission income rose by €179 million, or 18.9%.

This increase was mainly driven by

higher fee income on daily banking products supported by higher fees for payment packages and an increasing

number of (domestic) payment transactions. Also fee income on investment products increased, mainly in

Germany and Belgium. Total fee income in Wholesale Banking rose by €19 million, predominantly in Daily

Banking & Trade Finance.

Total

investment and other income declined by €89 million, or 11.9%,

to €656 million from €745 million in the

first half of 2020. This was mainly due to lower Treasury-related revenues and lower income in Financial Markets,

partly offset by the recognition of a €72 million receivable due to a better than expected recovery of the

insolvency of a financial institution in the Netherlands

(recorded in Corporate Line).

Operating expenses decreased by €66 million, or 1.2%, to €5,560 million. This

included €759 million of regulatory

costs, which were €96 million up on the first half of 2020, due to higher contributions

to the (European) single

resolution fund and deposit guarantee schemes, including a catch-up in Germany following the Greensill

insolvency. Expenses excluding regulatory costs declined by €162 million, or 3.3%, to €4,801 million. The

decrease was mainly caused by €310 million of goodwill impairments

recorded in 2020, while the first half of

2021 included €123 million of incidental items. These items

consisted of €90 million of redundancy and

restructuring costs in Retail Netherlands, mainly related to the announced restructuring of the branch network

and the retail advice organisation, €11 million of restructuring costs related to the announcement to leave the

retail banking market in the Czech Republic, as well as a €22 million IT-related impairment recorded at Corporate

Line. Excluding regulatory costs and the aforementioned incidental items, expenses rose by 0.5%, mainly due to

higher IT costs and the impact of annual salary

increases as well as some litigation provisions, partly offset by

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

lower expenses for third-party staff, professional services and marketing. The cost/income ratio decreased to

60.3% from 61.3% in the first half of 2020.

Net additions to loan loss provisions were €131 million compared with €1,998

million in the first half of 2020. The

update of the macroeconomic indicators, including a lower management overlay to reflect a lower expected

impact from a delay in credit losses compared with year-end 2020, resulted in a €206 million net release

from

collective provisions in the first six months of 2021, recorded predominantly in Stage 1 and Stage 2. Total net

additions to Stage 3 provisions were €363 million (down from €1,193 million in

the first half of 2020) and were

largely related to Stage 3 collective provisions, including a €79 million addition (out of a total €109 million)

reflecting the adjustment of some model assumptions in Retail Belgium. Risk costs were annualised 4

basis points

of average customer lending compared with 64 basis points in the first half of 2020.

Retail Netherlands

Retail Netherlands posted a result before tax of €1,022 million, compared with €1,043 million in the first six

months of 2020. This decline is mainly attributable to lower income and higher

expenses, which were largely

offset by lower risk costs.

Total

income decreased by €131 million, or 5.8%, to €2,138

million, compared with €2,269 million in the first half

of 2020. Net interest income declined 6.4%, mainly due to continued margin pressure on customer deposits

and

lower interest results from lending products (due to lower margins and lower average lending volumes) and

despite the recognition of a €31 million TLTRO III benefit. Net core lending growth in the first half of 2021 (which

excludes Treasury products and a €0.5 billion decline in the WUB run-off portfolio) was €0.7 billion, of which €0.9

billion was in residential mortgages and €-0.2 billion in other lending.

Net core deposits growth (excluding

Treasury) was €9.3 billion, driven by holiday allowances and lower customer spending due to the lockdown

measures. Net fee and commission income increased by €36 million, or

10.8%, primarily in daily banking and

investment products. Investment and other income was €56 million lower, mainly due to lower Treasury-related

revenues.

Operating expenses increased by €93 million, or 8.5%, to €1,181 million from €1,088

million in the first six

months of 2020. The increase included €90 million

of redundancy and restructuring costs in the first half of 2021

mainly related to the announced restructuring of the branch network and the retail advice organisation, as well

as €39 million higher regulatory costs. Expenses excluding regulatory costs and the aforementioned items

declined by €36

million, or 3.7%, mainly due to lower third party staff costs.

The addition to loan loss provisions resulted in a net release of €65 million,

or -8 basis points of average customer

lending, compared with €139 million, or 17 basis

points, in the first half of 2020. The net release in the first half

of 2021 reflects releases in the mortgage and business lending portfolios due

to improved macroeconomic

indicators, which more than offset a net addition in the consumer lending portfolio.

Retail Belgium

Retail Belgium, which includes Luxembourg, posted a result before tax of €134 million in the first half of 2021,

compared with €-36 million in the same period of

2020. The improvement was the result of lower risk costs and

lower expenses, combined with an increase in income.

Total

income increased by €26 million, or 2.1%, to €1,241 million.

Net interest income decreased by €43 million,

or 4.6%, mainly reflecting continued margin pressure on customer deposits and lower interest results on lending

due to lower average lending volumes at a slightly higher lending margin, partly offset by a €48 million benefit

from TLTRO III. Net core lending growth (excluding Treasury)

was €0.2 billion in the first half of 2021, due to

growth in residential mortgages, while other lending declined by €0.4 billion.

Net core deposits growth (excluding

Treasury) was €1.9 billion. Net fee and commission income rose by €41 million, or 19.8%, primarily driven by

higher fee income in investment products and daily banking products. Investment and other income increased by

€28 million, mainly due to higher Treasury-related revenues, supported by positive fair value adjustments.

Operating expenses declined by €57 million, or 5.9%, to €912 million in

the first half of 2021, mainly due to a

goodwill impairment of €43 million recorded in the first half of 2020 and despite

a €16 million increase in

regulatory costs. Expenses excluding regulatory costs and the aforementioned goodwill impairment declined by

€30 million, or 4.1%, mainly due to lower staff costs and lower allocated group overhead expenses.

The net addition to the provision for loan losses declined to €194 million,

or annualised 43 basis points of average

customer lending, from €282 million in the first half of 2020. The decrease

in risk costs was mainly in business

banking. Risk costs in the first half of 2021 included a €109 million

addition (of which €79 million was in Stage 3)

reflecting the adjustment of some model assumptions. Excluding this model update,

risk costs were €85 million in

the first half of 2021.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Retail Germany

Retail Germany, which includes Austria, recorded a first-half of 2021 result before tax of €413 million, down

16.4% from €494 million in the same period of 2020.

The decline was mainly due to lower income and higher

expenses.

Total

income decreased to €1,036 million, down 3.6% from €1,075

million in the first six months of 2020. Net

interest income declined 8.4% to €734 million. Net interest income was supported by strong growth in mortgage

volumes and a €8 million TLTRO III benefit, which could only partly offset continued liability margin pressure. Net

core lending growth in the first half of 2021 (which excludes Treasury products and the run-off portfolio in

Austria) was €3.4 billion, of which €3.1 billion was in residential mortgages

and €0.3 billion in consumer lending.

Net core deposits growth (excluding Treasury,

and the run-off portfolio in Austria) was €5.5 billion, almost

equally divided over current accounts and savings. Fee income rose 19.5% to €257 million,

primarily on

investment products reflecting higher assets under management, new account openings and a higher number

brokerage trades in volatile markets. Fee income was furthermore supported by higher daily banking fees due to

the introduction of account maintenance fees in 2020. Investment and other income declined by €14 million.

Operating expenses increased by €37 million, or 6.5%, to €604 million in

the first half of 2021, of which €24

million was in regulatory costs, including a €30 million catch-up in the deposit

guarantee scheme following the

Greensill insolvency. Expenses excluding regulatory costs rose by €14 million, or 2.8%, mainly due to higher staff-

related expenses, primarily

driven by business growth in Interhyp.

The net addition to the provision for loan losses in the first half of 2021 was €19 million,

or annualised 4 basis

points of average customer lending, compared with an addition of €14 million in

the same period of last year.

Retail Other Challengers & Growth Markets

Retail Other Challengers & Growth Markets’ result before tax rose by to €454 million from €295 million in the

first six months of 2020, reflecting lower risk costs and higher income, partly offset by increased expenses.

Total

income rose by €9 million, or 0.5%, to €1,729 million

in the first six months of 2021, driven by €60 million

higher net fee and commission income, mainly reflecting growth in daily banking

fees and investment products in

most of the countries. This increase was partly offset by €38 million lower net interest income due to continued

margin pressure on customer deposits, partly offset by higher volumes and margins in

mortgages and higher

Treasury-related revenues, including a €4 million TLTRO III benefit. Net core lending growth (adjusted for

currency effects and Treasury) was €3.7 billion in the first half of 2021, of which €2.6 billion was in residential

mortgages; the growth was visible in most countries. Net core deposits growth (excluding Treasury and the Czech

run-off portfolio) was € 0.8 billion, with the largest declines in Australia, Spain and Italy, whereas in Poland,

Romania and Turkey core deposits increased. Investment and other income decreased by €12 million, mainly due

to lower revenues from Treasury-related products.

Operating expenses increased by €54 million, or 4.8%, to €1,174 million in the

first half of 2021, of which €12

million was caused by higher regulatory costs. The increase furthermore included €11

million of restructuring

costs following the announcement to discontinue retail activities in the Czech Republic, as well as a €11 million

legal provision in Spain. The remaining increase was mainly due to higher staff-related expenses.

The net addition to loan loss provisions decreased to €102 million, or

annualised 20 basis points of average

customer lending, from €304 million in the first half of 2020 The decrease

versus last year was visible in all

countries, with the largest declines in Poland, Australia, Turkey and Spain.

Wholesale Banking

In the first six months of 2021, the result before tax was €1,558 million compared with a loss of €204 million

the same period last year. The improvement was predominantly due to a net release in risk costs, while the first

half of 2020 included elevated risk costs triggered by the Covid-19 pandemic. The

result before tax was

furthermore supported by lower expenses (as last year included a €260 million

goodwill impairment) and higher

income.

Total

income increased by €111 million, or 4.0%, to €2,891

million in the first half of 2021, mainly due to higher

income in Lending and Daily Banking & Trade Finance. The increase in Lending was mainly

driven by improved

lending margins (supported by a €56 million TLTRO III benefit) at lower average lending volumes, and lower

negative

valuation adjustments on loans. Daily Banking & Trade Finance income rose supported by higher

income from Trade & Commodity Finance (higher average oil prices) and Payments & Cash Management. Income

in Financial Markets was slightly higher as a €41 million TLTRO benefit was largely offset by lower income from

FM Trading. These increases were partly offset by lower income in Treasury & Other.

Net interest income increased by €180 million, or 9.7%, on the first six months om 2020, and

was supported by

the recognition of a €113 million TLTRO benefit. The increase was furthermore driven by improved lending

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

margins and higher net interest income from Treasury-products. This more than compensated for lower average

lending volumes and lower margins on customer deposits as well as negative currency impacts.

Net core lending

growth in the first half of 2021 (excluding currency impacts, Treasury and the Lease run-off portfolio) was €6.1

billion. Net core deposits growth (excluding currency impacts and Treasury) was €0.9 billion.

Net fee and commission income increased by €19 million, or 3.4%, on last year, predominantly in Daily Banking &

Trade Finance, mainly due to various fee and pricing initiatives in Payments & Cash Management, as well as

higher fees in Trade & Commodity Finance on the back of higher average oil prices. Investment and other income

declined to €267 million from €354 million in the first half of 2020,

primarily due to lower revenues in Treasury &

Other and Financial Markets. This decline was partly offset by Lending, which

had included negative marked-to-

market adjustments on loans in the first half 2020.

Operating expenses were €1,452 million, or 16.0% lower than in the first six months of 2020.

Excluding regulatory

costs (€157 million in the first half of 2021 versus €151 million one year ago) and

the €260 million goodwill

impairment recorded in the first half of 2020, expenses decreased by €22 million, or

1.7%. This decline was

mainly due to continued cost-efficiency measures and currency impacts, which more than offset higher IT costs

and

litigation provisions as well as the impact of annual salary increases.

The addition to loan loss provisions was a net release of €119 million,

or annualised -13 basis points of average

customer lending, compared with a net addition of €1,256 million,

or 133 basis points, in the first half of 2020.

The release in risk costs in the first six months of 2021 was driven by releases from collective provisions caused

by improved macroeconomic indicators, partly offset by limited additions to individual Stage 3 provisions.

Corporate Line

The Corporate Line reported a result before tax of €-53 million compared with €-34 million in the first half of

2020. Total income rose to €184 million from €123 million a year ago. This increase was primarily due to higher

investment and other income, which included the recognition of a €72 million

receivable due to a better than

expected recovery of the insolvency of a financial institution in the Netherlands.

Net interest income in the first

six months of 2021 included an initial €111 million

funding rate benefit related to TLTRO III, offset by

lower

interest results from foreign currency ratio hedging and negative unwinding results. Operating expenses rose to

€237 million from €154 million in the first half of 2020, mainly

due to a €22 million IT-related impairment, a lower

value-added tax (VAT)

refund and higher shareholder expenses mainly following a change in the allocation

group overhead expenses in the fourth quarter of 2020 (offset by a lower allocation to the business lines).

ING Group statement of financial position (‘balance sheet’)

ING Group’s total balance sheet,

in accordance with IFRS-IASB, increased by €42 billion to €976 billion at 30 June

2021 from €934 billion at 31 December 2020.

Cash and balances with central banks

Cash and balances with central banks increased by €10 billion to €121 billion.

The increase was partly driven by

liquidity management.

Loans and advances to banks and deposits from banks

Loans and advances to banks increased by €1 billion to €26 billion.

Deposits from banks increased by €11 billion

to €89 billion, including an additional TLTRO III participation of €6 billion in March 2021, bringing

ING’s total

TLTRO III participation to €66 billion at the end of June.

Financial assets/liabilities at fair value through profit or loss

Financial assets at fair value through profit or loss increased by €18 billion to €121 billion.

The increase was

predominantly caused by reverse repos mandatorily at fair value through profit or loss at Global Securities

Finance (GSF), after the relatively low year-end 2020 position. Financial

liabilities at fair value through profit or

loss increased by €4 billion to €87 billion, with €10 billion

of higher liabilities designated at fair value at profit or

loss (repo activity at GSF), partly offset by €6 billion lower trading liabilities

(decreased trading derivatives).

Financial assets and liabilities at fair value through profit or loss predominantly consist of derivatives, securities

and (reverse) repos, and are mainly used to facilitate client needs.

Financial assets at fair value through other comprehensive income

Financial assets at fair value through other comprehensive income (OCI) decreased by €3 billion

to €33 billion,

due to €3 billion lower debt securities, which mainly

reflect lower investments in government bonds (mainly due

to the sale of US government paper and matured and sold Italian government bonds).

Securities at amortised costs

Securities at amortised cost decreased by €1 billion to €49 billion.

The decrease included the sale of a

government bond portfolio of the Czech Republic (carrying amount €0.5 billion), related to the decision to

discontinue the Czech retail banking activities.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Loans and advances to customers

Loans and advances to customers increased by €14 billion to €608 billion from €594

billion at 31 December 2020.

This was due to €13 billion of higher customer lending,

while provisions for loan losses declined by €0.4 billion.

Following the decision to discontinue the Austrian retail banking activities, a loan portfolio of

€1 billion was

transferred from customer lending to assets held for sale. When adjusted for €2 billion of positive currency

impacts, customer lending increased by €11 billion. After also

excluding a €1 billion decrease in short-term

Treasury lending, the €1 billion transfer to assets held for sale of the Austrian retail loan portfolio, and a €1 billion

decline in the WUB and Lease run-off portfolios, net core lending growth

was €14 billion in the first half of 2021.

Of this amount, €7 billion was in non-mortgage lending (partly

due to additional TLTRO III eligible lending) and €7

billion in residential mortgages.

Other assets/liabilities

Other assets and other liabilities both increased by

€2 billion. Both movements were mainly due to changes in

financial transactions pending settlement.

Assets/liabilities held for sale

Assets held for sale were €1 billion at the end of June 2021 and

consisted of a loan portfolio from Retail Austria,

previously recorded as customer lending. Liabilities held for sale were €2 billion and concerned

a deposits

portfolio from Retail Austria, previously recorded as customer deposits. Both movements followed the decision

to discontinue the Austrian retail banking activities. The lending and deposits

portfolios will be sold to bank99

over the coming months, a process which is expected to be finalised by the end of

this year.

Customer deposits

Customer deposits increased by €11 billion to €621 billion, despite a

€7 billion outflow Retail Austria (including a

€3 billion transfer of a deposit portfolio from Retail Austria to liabilities held for sale, like the assets held for sale,

to be sold to bank99) and a €2 billion outflow from Retail Czech Republic (largely transfers to Raiffeisenbank).

The outflows are in line with ING’s intention to withdraw its retail activities from these countries before the end

of this year. Adjusted for the net outflows in Retail Austria and Czech Republic, the growth in Treasury

deposits

and currency impacts (negligible), net customer deposits

grew by €14 billion in the first half of 2021. This increase

was predominantly in Retail Banking.

Debt securities in issue

Debt securities in issue increased by €10 billion

to €92 billion due to €13 billion of higher certificates of deposit/

commercial paper (CD/CPs, driven by liquidity management), while other, mainly long-term, debt securities,

decreased by €3 billion, as maturities and redemptions were partly offset by issuances

of senior bonds (€ 1,500

million in January 2021 and USD 2,250 million

in April 2021) and a green bond (GBP 800

million in January 2021).

Subordinated loans

Subordinated loans declined by €1 billion to €15 billion, due to the call of a

Tier 2 instrument in February 2021,

partly offset by the issuance of a green Tier 2 bond in June

2021 of €500 million.

Shareholders’ equity

Shareholders’ equity increased by €2.3 billion to €53.9 billion from €51.6

billion at 31 December 2020. The

increase mainly reflects the €3,161 million net result for the first half of 2021 and a €151

million increase of the

currency translation reserve, partly offset by a €577 million negative change in the cashflow hedge reserve and

the €468 million interim dividend payment in February 2021.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Risk management

Managing risk is at the core of ING’s business. Financial risks include credit risk, for example when we offer loans,

market risk through our trading and banking book positions, and liquidity

or funding risk through financial

management. Non-financial risks are those associated with IT and cybersecurity, our daily operations (e.g. fraud

and money laundering), compliance, adhering

to socially-acceptable ethical norms and reputational issues.

We continually develop our risk management to address political and economic developments, evolving

regulatory requirements, changing customer expectations, emerging competitors and new technologies, all of

which could potentially impact our business.

Basis of disclosures

This risk management section contains an update of information relating to the nature and the extent of the risks

arising from financial instruments as disclosed in the

2020 ING Group consolidated financial statements as

included in the 2020 Annual Report. These disclosures

are an integral part of the ING Group condensed

consolidated interim financial statements and are indicated by the symbol (*). Chapters, paragraphs, graphs or

tables within this risk management section that are indicated with this symbol in

the respective headings or table

header are considered to be an integral part of the condensed consolidated interim financial statements.

This risk management section also includes additional

disclosures beyond those required by IFRS standards, such

as certain regulatory disclosures. Not all information in this section can be reconciled back

to the primary

financial statements and corresponding notes, as it has been prepared using risk data that differs to the

accounting basis of measurement. Examples of such differences include the exclusion of accrued interest and

certain costs and fees from risk data, and timing differences in exposure values (IFRS 9 models report expected

credit loss on underlying exposures).

Business environment

The economic outlook continues to be dominated by developments in the Covid-19

pandemic.

The roll-out of vaccines that started at the beginning of the year 2021 is progressing, but cases are rising

sharply

in some countries mainly caused by the spread of the delta variant of the Covid-19

virus.

Large differences persist between countries in the pace of recovery, given differences in vaccination rates.

In the

US, a large majority of adults have already been fully vaccinated, while in Asia widespread

vaccination is not likely

until 2022. In the eurozone, vaccine roll-out has gained momentum through the second quarter, accompanied by

gradual reopening of economies.

Indicators of economic sentiment suggest consumers and firms are poised to take advantage of reopening when

and where it occurs. Input prices have been rising on higher commodity prices

and shipping costs, and the further

reopening of economies is expected to push inflation higher for a period of time. But

with furlough schemes still

in place, there is less immediate pressure on wages in the eurozone than in the US, and higher eurozone inflation

is expected to fall back again in 2022.

The rapid progress of the vaccination programme, along with large fiscal and monetary stimulus, has enabled a

broad reopening of the US economy. Output is likely to have recovered to its pre-pandemic levels during the

second quarter, and employment is on track to recover by the end of 2021. Supply chain disruption and older

workers exiting the labour market are contributing to inflationary pressure, which has brought forward

expectations of a tightening in US monetary policy, beginning with tapering of QE asset purchases before the end

of 2021 and the first rises in interest rates in 2022.

Credit risk management practices (*)

Globally, in the first half of 2021 the roll-out of the vaccine programmes has gained momentum. However, in the

last months an increasing number of Covid-19 infections, mainly due to the spread of

the Delta variant was

observed. In many countries, governments have continued their economic support programs (such as tax

advantages, unemployment regulations or guarantees) that we believe will assist ING clients in potential financial

difficulty to manage through these extraordinary times.

Governments in almost all Retail Banking countries have adopted measures providing for payment holidays. As of

end of June 2021, approximately

159,000

customers were granted payment holidays. The total exposure of loans

for which a payment holiday is granted amounts to €

17.5

billion, of which over

% were for customers located

in the Netherlands and Belgium. At the end of June 2021,

% of granted payment holidays had expired.

In 2020, various measures were introduced by governments and ING to alleviate the impact of Covid-19,

including European Banking Authority (EBA) guidelines.

Based on the EBA guidelines, the granting of these

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

payment holidays did not lead to forbearance classifications. Therefore, it did not automatically trigger

recognition of lifetime Expected Credit Loss (ECL) either. Until 30 September 2020, ING followed these guidelines

and when a payment holiday was provided to a customer as part of a “general payment moratorium”, ING did

not classify the exposure as forborne.

The EBA further extended these guidelines from 1 October 2020 until 31 March

2021, with certain extra

conditions. ING decided not to make use of the extension of these guidelines

and has taken a prudent decision to

treat all payment holiday requests under new or extended schemes (after September 2020) as stage 2 or stage 3

exposures.

Portfolio quality and concentration

Lending to businesses is diversified over various sectors and countries. The total gross carrying amounts is

composed of approximately

% business lending and

% consumer lending. For a detailed breakdown of ING’s

credit risk portfolio by Sector and Geographical area, refer to the section “Credit Risk portfolio” reported in the

‘Risk management’ section of the

2020 Annual Report.

ING’s total gross carrying amounts increased compared to year-end 2020 partly as a result of the TLTRO III

participation through deposits to central banks. This is visible in the next table as investment grade with AAA

rating.

Covid-19 sensitive sectors (*)

The following sectors are most impacted (directly or indirectly) by the Covid-19 pandemic and

the related

lockdown measures and restrictions.

Aviation (Transportation & Logistics):

credit outstandings declined to €

4.3

billion outstanding (

0.47

% of total

portfolio) from €

4.6

billion outstanding (

0.52

% of total portfolio) in 2020. In terms of rating, the distribution of

outstanding improved compared to 2020, with outstanding remaining stable in Investment grade, whereas the

Speculative grade outstanding decreased. Both, the Substandard grade and Non-performing grade improved to

0.0

% and

1.8

% from

1.3

% and

4.5

% respectively in 2020.

Hospitality & Leisure (Services and Food, Beverages & Personal Care):

credit outstandings decreased to €

5.4

billion outstanding (

0.59

% of total portfolio) from €

5.9

billion outstanding (

0.67

% of total portfolio). Rating

distribution worsened compared to 2020, with outstanding reduction in BBB and BB ratings, whereas an increase

is noticeable in CCC rating classes. Substandard grade slightly increased to

9.9

% from

9.7

% in 2020, and the NPL

grade deteriorated to

7.2

% from

6.2

% in 2020.

Non-food retail (Retail):

credit outstandings slightly increased and amounted to €

11.0

billion (

1.21

% of total

portfolio) from €

10.8

billion (

1.22

% of total portfolio) in 2020. Rating distribution improved with concentrations

increasing in Investment grade and reducing in Speculative grade. The NPL grade improved to

3.0

% from

3.3

% in

2020, while Substandard grade increased to

1.2

% from

0.7

Real estate:

credit outstandings slightly decreased and amounted to €

53.1

billion (

5.81

% of total portfolio) from

€

54.4

billion (

6.13

% of total portfolio) in 2020. Rating distribution improved with concentrations increasing in

Investment grade and slightly reducing in Speculative grade. The NPL grade increased to

1.5

% from

1.2

% in 2020,

while Substandard grade improved to

0.8

% from

1.2

Loan Loss Provisioning (*)

Since 1 January 2018, ING has recognised loss allowances

based on the expected credit loss model (ECL) of IFRS 9,

which is designed to be forward-looking. The IFRS 9 impairment requirements are applicable to on-balance

sheet

financial assets measured at amortised cost or fair value through other comprehensive income

(FVOCI), such as

loans, debt securities and lease receivables, as well as off-balance sheet items such as

undrawn loan

commitments, certain financial guarantees, and undrawn committed revolving credit facilities.

The table below describes the portfolio composition over the different IFRS 9 stages and rating classes. The Stage

1 portfolio represents

92.7

% (31 December 2020:

91.8

%) of the total gross carrying amounts, mainly composed

of investment grade, while Stage 2 makes up

6.0

% (31 December 2020:

6.8

%) and Stage 3 makes up

1.4

% (31

December 2020:

1.5

%) of the total gross carrying amounts, respectively.

ING Group Interim financial report

on form 6-K for

the six month period ended 30 June 2021 - Unaudited

Gross carrying amount per IFRS 9 stage

and rating class¹

in EUR million

12-month ECL (Stage 1)

Lifetime ECL not credit impaired (Stage 2)

Lifetime ECL credit impaired (Stage 3)

Total

30 June 2021

Rating class

Gross Carrying

Amount

Provisions

Gross Carrying

Amount

Provisions

Gross Carrying

Amount

Provisions

Gross Carrying

Amount

Provisions

Investment grade

1 (AAA)

118,799

118,846

2-4 (AA)

109,118

301

109,419

5-7 (A)

151,056

935

151,992

8-10 (BBB)

307,902

9,591

317,493

Non-Investment grade

11-13 (BB)

160,025

211

15,436

106

175,461

317

14-16 (B)

28,468

192

19,930

475

48,397

667

17 (CCC)

4,277

5,334

291

9,611

301

Substandard grade

18 (CC)

2,888

189

2,888

189

19 (C)

2,293

229

2,293

229

NPL grade

20-22 (D)

12,827

3,616

12,827

3,616

Total

879,645

505

56,755

1,306

12,827

3,616

949,228

5,427

¹IAS 37 provisions are established for non-credit replacement guarantees not in the scope of IFRS 9. Total

IAS 37 provisions of €

million are excluded from the above chart.

Gross carrying amount per IFRS 9 stage

and rating class¹

in EUR million

12-month ECL (Stage 1)

Lifetime ECL not credit impaired (Stage 2)

Lifetime ECL credit impaired (Stage 3)

Total

31 December 2020

Rating class

Gross Carrying

Amount

Provisions

Gross Carrying

Amount

Provisions

Gross Carrying

Amount

Provisions

Gross Carrying

Amount

Provisions

Investment grade

1 (AAA)

109,734

109,780

2-4 (AA)

108,776

646

109,422

5-7 (A)

137,901

797

138,698

8-10 (BBB)

294,923

7,418

302,341

100

Non-Investment grade

11-13 (BB)

159,076

239

18,513

133

177,588

372

14-16 (B)

28,335

208

23,742

570

52,077

777

17 (CCC)

2,817

5,113

259

7,930

269

Substandard grade

18 (CC)

3,384

248

3,384

248

19 (C)

2,323

254

2,323

254

NPL grade

20-22 (D)

13,398

3,797

13,398

3,797

Total

841,562

581

61,981

1,476

13,398

3,797

916,942

5,854

¹IAS 37 provisions are established for non-credit replacement guarantees not in the scope of IFRS 9. Total

IAS 37 provisions of €

million are excluded from the above chart.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Changes in gross carrying amounts and loan loss provisions (*)

The table below provides a reconciliation by stage of the gross carrying/nominal amount

and allowances for

loans and advances to banks and customers, including loan commitments and financial

guarantees. The transfers

of financial instruments represents the impact of stage transfers upon the gross carrying/nominal amount and

associated allowance for ECL. This includes the net remeasurement of ECL arising from stage transfers, for

example, moving from a 12-month (stage 1) to a lifetime (stage 2) ECL measurement basis.

The net remeasurement line represents the changes in provisions for facilities that remain in the same stage.

Please note the following comments with respect to the movements observed in the table below

for the first

half-year 2021:

●

Stage 2 gross carrying amount decreased by €

5.2

billion from €

billion as per 31 December 2020. This is

mainly caused by the significant lifetime PD trigger (€

-5.4

billion) and a decrease of Watchlist files (€

-3.3

billion), partly offset by an increase in other triggers of which Forbearance is the

most significant one (€

2.0

billion).

●

Transportation & Logistics, Real Estate, Services and Food, Beverages & Personal Care are still the sectors

with the highest Stage 2 gross carrying amounts, which represent

% and

%, respectively of the

total, however apart from Transportation & Logistics that stayed

flat, the other sectors showed a decrease of

Stage 2 amounts of €

0.8

billion, €

1.3

billion and €

0.8

billion, respectively.

●

Stage 3 gross carrying amount decreased by €

0.6

billion from €

13.4

billion as per 31 December 2020 largely

related to repayments and write-offs for certain large individual files. Consequently, in the first 6 months of

2021 relatively low stage 3 individual risk costs were recognized.

●

The net remeasurement of loan loss provisions in Stage 1 and Stage 2 of €

-114

million and €

-62

million

respectively were significantly impacted by the improved macroeconomic outlook resulting in lower

management adjustments to address for the delay in observed defaults .

Additional information on macroeconomic scenarios is included in

the section “Macroeconomic scenarios and

sensitivity analysis of key sources of estimation uncertainty”.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Changes in gross carrying amounts and

loan loss provisions (*)

1,2,3

in EUR million

12-month ECL (Stage 1)

Lifetime ECL not credit

impaired (Stage 2)

Lifetime ECL credit impaired

(Stage 3)

Total

Gross

carrying

amount

Provisions

Gross

carrying

amount

Provisions

Gross

carrying

amount

Provisions

Gross

carrying

amount

Provisions

Opening balance at 1 January 2021

841,562

581

61,981

1,476

13,398

3,797

916,942

5,854

Transfer into

12-month ECL (Stage 1)

13,305

-12,830

-202

-475

-19

-204

Transfer into

lifetime ECL not credit impaired (Stage 2)

-15,575

-23

16,345

185

-771

-79

Transfer into

lifetime ECL credit impaired (Stage 3)

-1,228

-3

-1,208

-64

2,436

426

359

Net remeasurement of loan loss provisions

-114

-62

-87

New financial assets originated or purchased

77,861

Financial assets that have been derecognised

-33,762

-31

-5,765

-46

-1,539

-87

-41,066

-163

Net drawdowns and repayments

-2,518

-1,768

-222

-4,509

Changes in models/risk parameters

Decrease/Increase in loan loss provisions

-70

-171

362

121

Write-offs

-472

Recoveries of amounts previously written off

Foreign exchange and other movements

-6

-92

-97

Closing balance at 30 June 2021

879,645

505

56,755

1,306

12,827

3,616

949,228

5,427

1 At the end of June 2021, the gross carrying amounts included loans and advances to central banks (€

119.6

billion), loans and advances to banks (€

26.2

billion), financial assets at FVOCI (€

30.6

billion), securities at amortised cost (€

49.5

billion), loans and advances to customers (€

613.1

billion), assets held for sale (€

1.3

billion) and contingent liabilities (credit replacements) in scope of IFRS 9 (€

126.9

billion) and excludes receivables related to securities in reverse repurchase transaction

(€

-6.5

billion), cash collateral in respect of derivatives (€

-6.1

billion), the value

adjustment hedged items (€

-0.8

billion), a receivable that is offset by a liquidity facility (€

-2.2

billion), on-demand bank balances (€

-2.5

billion) and other differences amounting to €

0.1

billion.

2 Stage 3 Lifetime credit impaired includes €

million Purchased or Originated Credit Impaired.

3 At the end of June 2021, the stock of provisions included provisions for loans and advances to central banks (€

million), loans and advances to banks (€

million), financial assets at FVOCI (€

million),

securities at amortised cost (€

million), provisions for loans and advances to customers (€

5,347

million) and provisions for contingent liabilities (credit replacements) recorded under Provisions (€

million).

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Changes in gross carrying amounts and

loan loss provisions (*)

1,2,3

in EUR million

12-month ECL (Stage 1)

Lifetime ECL not credit

impaired (Stage 2)

Lifetime ECL credit impaired

(Stage 3)

Total

Gross

carrying

amount

Provisions

Gross

carrying

amount

Provisions

Gross

carrying

amount

Provisions

Gross

carrying

amount

Provisions

Opening balance at 1 January 2020

817,247

490

41,082

881

10,955

3,275

869,284

4,646

Transfer into

12-month ECL (Stage 1)

9,139

-8,899

-200

-240

-18

-194

Transfer into

lifetime ECL not credit impaired (Stage 2)

-39,093

-76

39,601

651

-509

-57

518

Transfer into

lifetime ECL credit impaired (Stage 3)

-3,592

-30

-1,879

-163

5,471

1,518

1,325

Net remeasurement of loan loss provisions

109

450

700

1,259

New financial assets originated or purchased

161,333

178

161,333

178

Financial assets that have been derecognised

-116,035

-85

-6,987

-107

-897

-236

-123,919

-428

Net drawdowns and repayments

12,563

-938

-181

11,444

Changes in models/risk parameters

Increase in loan loss provisions

119

638

1,908

2,666

Write-offs

-1,200

Recoveries of amounts previously written off

Foreign exchange and other movements

-28

-42

-226

-297

Closing balance at 31 December 2020

841,562

581

61,981

1,476

13,398

3,797

916,942

5,854

1 At the end of December 2020, the gross carrying amounts included loans and advances to central banks (€

109.2

billion), loans and advances to banks (€

25.4

billion), financial assets at FVOCI (€

34.0

billion), securities at amortised cost (€

50.6

billion), loans and advances to customers

(€

599.7

billion) and contingent liabilities (credit replacements) in scope of IFRS 9 (€

118.4

billion) and excludes receivables related to securities in reverse repurchase transaction

(€

-6.4

billion), cash collateral in respect of derivatives (€

-8.3

billion), the value adjustment hedged items (€

-1.0

billion), a receivable that is offset by a liquidity facility (€

-2.2

billion), on-demand bank balances (€

-2.2

billion) and other differences amounting to €

-0.3

billion.

2 Stage 3 Lifetime credit impaired includes €

million Purchased or Originated Credit Impaired.

3 At the end of December 2020, the stock of provisions included provisions for loans and advances to central banks (€

million), loans and advances to banks (€

million), financial assets at FVOCI (€

million), securities at amortised cost (€

million), provisions for loans and advances to

customers (€

5,779

million) and provisions for contingent liabilities (credit replacements) recorded under Provisions (€

million).

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Macroeconomic scenarios and sensitivity analysis of key sources of estimation uncertainty

(*)

Methodology (*)

Our methodology in relation to the adoption and generation of macroeconomic scenarios

is described in this

section. We continue to follow this methodology in generating our probability-weighted ECL, with consideration

of alternative scenarios and management adjustments supplementing this

ECL where, in management's opinion,

the consensus forecast does not fully capture the extent of recent credit or economic events. The

macroeconomic scenarios are applicable to the whole ING portfolio in the scope

of IFRS9 ECL’s.

Under IFRS 9, ING’s reportable ECL numbers are most sensitive to the forward-looking macroeconomic forecasts

used as model inputs, the probability-weights applied to each

of the three scenarios, and the criteria for

identifying a significant increase in credit risk. As such, these crucial

components require consultation and

management judgement, and are subject to extensive governance.

Management adjustments can be applied where the impact of the updated macroeconomic

scenarios is over-

under-estimated by the IFRS 9 models. As a result of the economic effects related to Covid-19, estimation

uncertainty and level of management judgement increased resulting in the need for additional

management

adjustments.

Baseline scenario (*)

As a baseline for IFRS 9, ING has adopted a market neutral view combining consensus forecasts for economic

variables (GDP,

unemployment) with market forwards (for interest rates, exchange rates

and oil prices). The

Oxford Economics’ Global Economic Model (OEGEM) is used to complement the consensus with consistent

projections for variables for which there are no consensus estimates available (most notably house prices and –

for some countries - unemployment), to generate alternative scenarios, to convert annual consensus information

to a quarterly frequency and to ensure general consistency of the scenarios. As the baseline

scenario is consistent

with the consensus view it can be considered as free from any bias.

The relevance and selection of macroeconomic variables is defined by the ECL models

under credit risk model

governance. The scenarios are reviewed and challenged by two panels. The first panel consists of economic

experts from Global Markets Research and Risk and Modelling specialists, while the second

panel consists of

relevant senior managers.

Alternative scenarios and probability weights (*)

Two alternative scenarios are taken into account; an upside and a downside scenario. The alternative scenarios

have to a large extent a technical character as these are based on the forecast errors of the OEGEM.

To understand

the baseline level of uncertainty around any forecast, Oxford Economics keeps track of all its

forecast errors of the past 20 years. The distribution of forecast errors for GDP,

unemployment, house prices and

share prices is applied to the baseline forecast creating a broad range of alternative outcomes. In addition, to

understand the balance of risks facing the economy in an unbiased way, Oxford Economics runs a survey with

respondents from around the world and across a broad range of industries. In this survey the respondents put

forward their views of key risks. Following the survey results, the distribution of forecast errors (that is being

used for determining the scenarios) may be skewed.

For the downside scenario, ING has chosen for the 90th percentile of that distribution because

this corresponds

with how within risk management earnings at risk is defined

within the Group. The upside scenario is

represented by the 10th percentile of the distribution. The applicable percentiles of the distribution

imply a 20%

probability for each alternative scenario. Consequently, the baseline scenario has a 60% probability weighting.

Please note that, given their technical nature, the downside and upside scenarios

are not based on an explicit

specific narrative.

Macroeconomic scenarios applied (*)

The provisions are based on the June 2021 consensus forecasts.

Baseline assumptions (*)

The June 2021 consensus anticipates global output (based

on average GDP growth in the 25 for ING most

relevant economies), after declining sharply in 2020 by

3.2

%, to bounce back to

6.0

% expected growth in 2021

and

4.3

% in 2022. For the years thereafter a levelling off to a below

% growth rate is being expected. The

consensus reflects that vaccination has picked up strongly in most developed economies allowing most

governments to (further) re-open their economies. For Europe in particular the

assumption is that it will turn a

corner in Q2 2021 as the speed of vaccination has picked up decisively and social

distancing measures removed

or lessened, thus broadening the global economic recovery. The recovery of economies in Asia-Pacific, in which

countries like China, Japan and Australia were already back at pre-crisis levels in 2020, is expected to continue. In

the US, a stimulus-fuelled economic boom, that already brought back the

economy to pre-crisis levels in Q2 2021,

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

is expected to continue with growth rates of

6.6

% in 2021 and

4.3

% in 2022. The eurozone may reach pre-crisis

levels only by Q2 2022.

For most countries unemployment is expected to peak in 2020/21 and to gradually decline in

the years

thereafter.

With the economic recovery expected to continue, unemployment to decrease and interest rates to

remain low (albeit increasing), house prices can be assumed

to (continue to) increase.

When compared to the December 2020 consensus forecast, used for the 2020 Annual

Report, this quarter’s

forecast assumes a stronger economic recovery. Global GDP is expected to increase by

6.0

% in 2021 (compared

5.0

% assumed before) and

4.3

% in 2022 (

3.8

% assumed before). This upward adjustment follows on from a

more effective than expected roll-out of vaccination programs and generally better than expected realizations.

Alternative scenarios and risks (*)

Although vaccination against Covid-19 progresses swiftly in many countries, uncertainty surrounding the

forecasts remain larger than usual, reflecting continued uncertainty around the development and impact of the

pandemic. In 2020, the dispersion of the alternative scenarios has

been widened to reflect the general increase

of uncertainty.

Specifically, the forecast bandwidths projected for the end of the forecast horizon has been applied to the near

term as well. As the forecast-error distributions widen over time, this means that the distributions became

wider

in the near-term and thus allowed for a wider range of possible outcomes. Meanwhile,

at the end of the scenario

horizon they remained unchanged and hence comparable to scenarios generated prior to the pandemic.

However, experience from 2020 shows that the economic harm from lockdowns has diminished over time.

Economies have become better at operating with lockdown restrictions in place (measures became more tailored

and businesses more prepared). Oxford Economics’ research shows that the harm from lockdowns has halved

from what it was in the first half of 2020. Following on from this, in the current scenarios the

above mentioned

overlay to the near-term dispersion has been halved while the downward skew following on from the outcomes

of Oxford Economics’ Global Risk Survey has been maintained. As a result from this adjustment, the

near-term

dispersion of the forward-looking distributions (from which the alternative scenarios are being derived)

remains

larger than in normal times, but it now also reflects the adaptability of

economies to the pandemic.

The upside scenario – though technical in nature – for most countries implies a quick

return of output to its pre-

coronavirus baseline forecast and more positive medium-term prospects than envisaged in the baseline scenario.

In this scenario unemployment rates quickly fall back from their peaks.

The downside scenario, while being equally technical in

nature, results in a renewed global downturn in the near-

term. The downside scenario reflects the risk of the coronavirus pandemic not only

continuing to pose significant

risks to the near-term outlook but also of leaving longer-lasting scars on the supply

side of economies (faster

private sector de-leveraging, austerity measures from governments to reduce overall debt, weaker productivity

growth).

Management adjustments applied (*)

In times of volatility and uncertainty where portfolio quality and the economic

environment are changing rapidly,

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

can be

applied to appropriately reflect ECL. Management adjustments can also be applied where the impact of

the

updated macroeconomic scenarios is over-

or under-estimated by the IFRS 9 models.

An overlay of €

296

million was taken in June 2021 (31 December 2020: €

394

million) because of time lags in

defaults occurring in this crisis, as a result of support programmes, while GDP growth

forecasts were improving

as more favourable 2021 GDP growth forecasts (and subsequent years) are now being taken into account in the

models. As it is expected that additional defaults as a result of the crisis

will still come in, the €

296

million overlay

was calculated using a scenario with a time lag between GDP growth forecasts deteriorating and defaults

occurring.

Looking forward, it is expected that the phasing out of the Covid-19 related government support

measures, such

as Payment Holidays, tax deferrals or subsidies, in the course of 2021 could lead to more business insolvencies

and unemployment. This could lead to more clients that have currently taken payment holidays or benefited

from other support measures getting into financial difficulties and to higher levels of defaults.

To the extent

ING believes that the elevated risk related to government support measures is not yet covered in

the IFRS 9 models, a management adjustment has been recognised. This management

adjustment has been

recognised for SME and mid-corporate portfolios as these portfolios are considered to be most at risk as having

the highest percentage of customers that requested for payment holidays or include the sectors most dependent

on the government support measures compared to other portfolios. As at 30 June 2021 ING has

recognised a

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

management adjustment of €

million in the Netherlands (31 December

2020: €

million) and €

146

million in

Belgium (31 December 2020: €

131

million) as they are the largest SME portfolios and not significantly impacted

by macroeconomic forecasts updates. Furthermore, a management adjustment of €

million (31 December

2020: €

million) has been recognised in Australia for the mortgage portfolio which is also a portfolio where

relative many payment holidays are granted and which is considered at risk.

Given positive developments among

which the increase in oil price, the management

adjustment for the

upstream oil book of €

million as at 31 December 2020 has been released in the

first 6 months of 2021,

however a new €

million management adjustment for the Acquisition Finance book

has been recognised, given

higher risk in the book due to the leveraged nature of the book.

Analysis on sensitivity (*)

The table below presents the analysis on the sensitivity of key forward-looking macroeconomic inputs used in

the

ECL collective-assessment modelling process and the probability-weights applied to each of the three scenarios.

The countries included in the analysis are the most significant geographic regions, in terms of both

gross

contribution to reportable ECL, and sensitivity of ECL to forward-looking macroeconomics. Accordingly, ING

considers these portfolios to present the most significant risk of a material change to the carrying amount

financial assets within the next financial year. ING also observes that, in general, the Wholesale Banking business

is more sensitive to the impact of forward-looking macroeconomic scenarios.

The purpose of the sensitivity analysis is to enable the

reader to understand the extent of the impact on model

based reportable ECL from the upside and downside scenario. The table does not

include any management

adjustments, except for the overlay for time lag in defaults of €

296

million as at 30 June 2021.

In the table below the Real GDP is presented in percentage year-on-year change, the unemployment in

percentage of total labour force and the house price index (HPI) in percentage year-on year change.

While the table does give a high-level indication of the sensitivity of

the outputs to the different scenarios, it does

not provide insight into the interdependencies and correlations between different macroeconomic variable

inputs. On total ING level, the unweighted ECL for all collective provisioned clients in the upside scenario was

€

2,757

million, in the baseline scenario €

2,933

million and in the downside scenario €

3,307

million compared to

€

2,973

reportable collective provisions currently accounted for (including time lag overlay, excluding other

management adjustments).

When compared to the sensitivity analysis of 2020 the macroeconomic inputs

are different, as macroeconomic

forecasts have improved since December 2020. Furthermore the dispersion of the up-

and downside scenario

around the baseline scenario has been reduced, reflecting the decreased uncertainty

related to the impact of

Covid-19.

The following table shows the sensitivity of the ECL figures to a change in macroeconomic

forecasts, as it shows

also the unweighted ECL as calculated before applying the scenario probabilities.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Sensitivity analysis as at 30 June 2021

(*)

2021

2022

2023

Un-weighted

ECL (Eur mln)

Probability-

weighting

Reportable ECL

(Eur mln)

Netherlands

Upside scenario

Real GDP

3.3

4.5

3.2

341

382

Unemployment

4.0

3.2

HPI

11.0

16.3

4.6

Baseline Scenario

Real GDP

2.6

3.2

1.9

374

Unemployment

4.8

4.7

HPI

7.9

2.6

2.5

Downside scenario

Real GDP

0.1

0.6

1.0

448

Unemployment

6.1

7.1

7.7

HPI

4.6

-12.6

-0.4

Belgium

Real GDP

4.9

4.8

2.6

486

511

Unemployment

6.4

6.0

5.5

HPI

2.7

2.6

3.5

Baseline Scenario

Real GDP

4.2

3.5

2.2

507

Unemployment

7.0

6.4

6.2

HPI

1.9

1.6

2.6

Downside scenario

Real GDP

2.6

1.4

1.7

550

Unemployment

8.2

8.5

HPI

1.1

-0.1

1.7

Germany

Upside scenario

Real GDP

4.5

5.9

1.9

517

543

Unemployment

3.3

2.7

2.0

HPI

10.6

6.8

4.0

Baseline Scenario

Real GDP

3.3

4.1

1.5

540

Unemployment

4.2

3.8

3.6

HPI

9.4

3.1

0.7

Downside scenario

Real GDP

1.3

1.0

0.2

580

Unemployment

5.3

5.4

5.5

HPI

7.9

-1.5

-2.9

United States

Upside scenario

Real GDP

8.2

5.3

3.0

115

Unemployment

4.3

2.8

2.0

HPI

11.6

8.7

9.9

Baseline Scenario

Real GDP

6.6

4.3

2.3

107

Unemployment

4.7

3.8

3.6

HPI

11.1

4.9

4.1

Downside scenario

Real GDP

4.4

1.2

0.7

167

Unemployment

6.7

7.5

HPI

10.2

-0.1

-2.3

1 Sensitivity does only include the effect of time lag overlay, other management adjustments are

excluded.

Sensitivity analysis as at 31 December 2020

(*)

2021

2022

2023

Un-weighted

ECL (Eur mln)

Probability-

weighting

Reportable ECL

(Eur mln)

Netherlands

Upside scenario

Real GDP

5.3

3.3

2.8

383

468

Unemployment

5.1

3.9

3.0

HPI

8.1

6.3

4.7

Baseline Scenario

Real GDP

2.8

2.9

1.9

441

Unemployment

5.8

5.2

4.7

HPI

-1.9

-1.6

4.5

Downside scenario

Real GDP

-4.9

4.8

1.4

636

Unemployment

7.7

7.8

7.9

HPI

-12.3

-11.0

4.3

Belgium

Real GDP

6.9

3.3

2.4

494

559

Unemployment

7.3

6.2

5.8

HPI

-0.2

4.2

4.8

Baseline Scenario

Real GDP

4.5

3.3

2.3

540

Unemployment

7.5

6.3

HPI

-1.7

3.5

3.8

Downside scenario

Real GDP

-0.4

4.0

2.2

681

Unemployment

9.4

9.1

8.8

HPI

-3.6

2.5

2.9

Germany

Upside scenario

Real GDP

7.6

3.3

1.5

504

558

Unemployment

3.0

2.2

1.8

HPI

3.5

8.3

6.6

Baseline Scenario

Real GDP

3.9

3.4

1.6

541

Unemployment

4.1

3.5

HPI

0.4

4.8

3.1

Downside scenario

Real GDP

-2.4

3.5

1.3

662

Unemployment

5.6

5.3

5.6

HPI

-3.5

0.8

-0.9

United States

Upside scenario

Real GDP

5.6

4.1

3.8

189

Unemployment

5.0

3.0

1.9

HPI

6.2

9.4

9.3

Baseline Scenario

Real GDP

4.0

3.2

2.5

134

Unemployment

6.0

4.7

4.1

HPI

4.3

4.1

4.0

Downside scenario

Real GDP

-6.3

6.8

1.9

448

Unemployment

8.5

7.9

7.6

HPI

1.2

-1.9

-2.3

1 Sensitivity does only include the effect of time lag overlay, other management adjustments are

excluded.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Criteria for identifying a significant increase in credit risk (*)

All assets and off-balance sheet items that are in scope of IFRS 9 impairment

and which are subject to collective

ECL assessment are allocated a 12-month ECL if deemed to belong in stage 1, or a lifetime ECL if deemed to

belong in stages 2 and 3. An asset belongs in stage 2 if it is considered to have experienced a significant increase

in credit risk since initial origination or purchase. The stage allocation process involves an asset’s derived scenario

weighted average PD being assessed against a set of PD threshold bandings, which determines the appropriate

staging and ECL. Stage 2 is triggered when either a threshold for absolute change in lifetime PD or relative change

in lifetime PD is hit. The thresholds for the absolute change in lifetime PD vary between

bps for Retail

portfolios,

100

bps for Wholesale and

250

bps for SMEs, based on the characteristics of the specific portfolio. We

are however in a transition phase to determine this on a portfolio level, which has been implemented for a

few

Turkish and Polish models which already have deviating lifetime PD thresholds. The threshold for the relative

change in lifetime PD is inversely correlated with the PD at origination; the higher the PD at origination, the lower

the threshold. Despite this, the relative threshold is sensitive for investment grade assets while the absolute

threshold primarily affects speculative grade assets. On ING Group level, the total ECL collective-assessment for

performing assets is €

1,418

million (2020: €

1,678

million) (without taking management adjustments other than

time lag overlay into account).

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

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 the same asset base, analysis was run

which assumed all performing assets were above the

threshold, and apportioned a lifetime ECL. This gave rise to hypothetical collective-assessment ECLs of €

989

million (2020: €

1,242

million) and €

2,665

million (2020: €

3,552

million) respectively. Please note that in this

analysis all other ECL risk parameters (except for the stage) were kept equal.

It should be noted that the lifetime PD thresholds are not the only drivers of stage allocation. An asset can

change stages as a result of being in arrears, being on a Watch List or being forborne, among other triggers. Refer

to section 1.7.8 of Note 1 ‘Basis of preparation and accounting policies’ in the

Annual Report ING Group for the

year ended December 31, 2020 for an exhaustive list. Furthermore, this analysis is

rudimentary in that other

parameters would change when an asset changes stages.

Market risk in banking books (*)

IBOR transition (*)

Interbank offered rates, such as EURIBOR and LIBOR, are widely used benchmarks to set interest rates across a

broad range of financial products and contracts. In line with the recommendations from the Financial Stability

Board, a fundamental review of the major interest rates benchmarks has been undertaken. For the eurozone,

this led to a reform of the EURIBOR benchmark rate and the development of €STR as the recommended

nearly

risk-free-rate (RFR) to replace EONIA. For LIBOR benchmarks, the reform will include replacing current LIBOR

rates with alternative, nearly risk-free rates.

The US and UK RFR working groups have recommended SOFR and

SONIA as the replacement rates for USD and GBP LIBOR respectively. This transition process is at different stages

and progressing at different speeds, across several major currencies.

The reform of EURIBOR was completed in 2019 and consisted of a change to the underlying calculation

methodology. The Belgian Financial Services and Markets Authority has granted authorisation with respect to

EURIBOR under the EU Benchmarks Regulation. This allows market participants to continue to use EURIBOR

for

both existing and new contracts.

In addition, the Working Group on Euro Risk-Free Rates has recently completed

its work on developing recommended fallbacks for EURIBOR contracts based on €STR.

It is expected that these

recommendations will be used by the industry to improve fallback language for both new and existing EURIBOR

contracts.

EONIA will cease to be published on 3 January 2022 and

cannot be used in any contracts that may be outstanding

at that time. The transition of existing contracts and products that rely on EONIA is ongoing. EONIA and €STR are

both overnight rates and the spread between them was established and fixed in 2019 so this transition is

considered less complex than that for LIBOR. ING has transitioned a large number of

EONIA dependent current

accounts in the course of 2021. Clearing houses transitioned EUR cleared derivatives to €STR discounting

in July

2020, leaving the task of processing similar changes to our bilateral arrangements. A key challenge to complete

this transition is obtaining active engagement from our clients, which is also noted by other

financial institutions

and hence subject to discussion, to identify possible

actions, in the Working Group on Euro RFRs.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

The administrator of LIBOR confirmed on 5 March 2021 its plans for the cessation of most LIBOR

rates at the end

of 2021, with an 18 month extended period of publication for the most commonly

used USD LIBOR tenors.

The

extended timeline for USD LIBOR is only intended to support existing USD products, as the expectation from U.S.

and other key non-U.S. Regulatory Agencies is that USD LIBOR should not be used after the

end of 2021 for new

contracts.

This extension is seen as a welcome step, and allows the industry time to

shift some focus onto the

other LIBOR rates in 2021.

Hence in 2021 ING will focus on conducting new business

using the recommended

alternative rates and transitioning existing GBP/CHF/JPY

LIBOR referenced cash instruments (e.g. loans, bonds)

and derivatives. This aligns with our increasing ability to offer RFR products and for example we have already

started participating/arranging SONIA based loans.

The financial sector has issued a number of interim

targets, guidance papers and other initiatives to help phase in

key components of this transition. For example significant progress has been made to address deficiencies in

derivative fallback clauses. ISDA has issued an IBOR fallback supplement to help ensure clear

fallback rates will

apply on the discontinuation of certain key IBORs. From the effective date of 25 January 2021, all new derivatives

that reference these ISDA definitions

automatically include these updated fallbacks. The Group and many other

parties have also adhered to a protocol to implement these fallbacks into derivative contracts that were entered

into before the effective date. If both counterparties adhere to the protocol, these updated fallbacks are

automatically incorporated into existing derivative contracts. For loans, various recommendations have been

made to help drive consistent inclusion of robust fallbacks and/or rate switch mechanisms for new contracts.

These industry recommendations are incorporated into our contract templates used for new lending.

Public authorities have also recognised that certain LIBOR contracts do not contain provisions for any

alternatives, contain inappropriate alternatives, or cannot be renegotiated or amended prior to the expected

cessation of LIBOR. In response, the European Commission

has implemented legislation that gives the

Commission the power to replace critical benchmarks if their termination would significantly

disrupt or otherwise

affect the functioning of the financial markets in the EU. In addition, the UK government has granted additional

powers to the FCA to enable the temporary publication of a ‘’synthetic’’ LIBOR using a different methodology and

inputs, that could be used to reduce the disruption to any holders of tough legacy contracts. However, there is no

certainty as to the conditions the FCA will apply when exercising these powers and the FCA has consequently

encouraged users of LIBOR to renegotiate or amend as many contracts as possible before cessation of the

relevant LIBOR.

ING Group has significant exposures to IBORs on its financial instruments that will be

reformed as part of this

market-wide initiative. The potential discontinuation of interest rate benchmarks, or changes in the methodology

or manner of administration of any benchmark, could result in a number of

risks for ING Group, its customers,

and the financial services industry more widely. These risks include legal risks in relation to any required changes

to documentation for new and existing transactions. Financial risks (predominantly limited to interest rate risk)

may also arise from any changes in the valuation of financial instruments linked to such benchmarks and

declining liquidity may impact a contract directly or the ability to hedge the risks in

that contract. Changes in

valuation, interest calculation methodology or documentation may also result in complaints or litigation. The

Group is also exposed to operational risks or may incur additional costs due to the requirement to adapt IT

systems, trade reporting infrastructure and operational processes. Conduct risk is also relevant in relation to

communications and transition activities with clients or other parties

during the transition period.

For example,

the renegotiation of loan contracts requires active engagement from both parties or multiple parties in the

case

of syndicated loans, which is seen as one of the key challenges and may lead to negotiations and the

required

contractual updates occurring later than planned and concentrated in a period close to actual cessation.

ING

continues to reach out to impacted clients in order to best support the relevant industry timelines and regulatory

guidelines, many of which are reliant on customer preferences and readiness.

The ING IBOR programme has a robust governance in place, with progress being tracked by business line steering

committees reporting into a central IBOR steering committee. The programme assesses and coordinates the

actions necessary to manage the required changes to internal processes and systems, including pricing,

risk

management, legal documentation, hedge arrangements, as well as the impact on our customers. ING continues

to monitor market developments, and the outcome of several remaining uncertainties such as the use and

availability of term rates, to anticipate the impact on the program, our customers and any related risks.

As at 30 June 2021 approximately EUR

billion (31 December 2020: EUR

billion) of non-derivative financial

assets and approximately EUR

billion (31 December 2020: EUR

billion) of non-derivative liabilities have yet to

transition to alternative benchmark rates. This represents approximately

thousand contracts. In addition, ING

had as at 30 June 2021 approximately EUR

billion of committed undrawn credit facilities linked to benchmark

rates that have yet to transition.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

The tables below summarize these approximate exposures by significant benchmark rate and excludes exposures

that will expire before transition is required. For all rates except USD LIBOR this has been taken as 31 December

2021. For USD LIBOR 30 June 2023 has been taken as the benchmark

will be available to support existing

contracts until that time. Comparatives for USD LIBOR have been updated to reflect this as well.

Non derivative Financial instruments

to transition to alternative benchmarks

(*)

30 June 2021

in EUR million

Financial Assets non-

derivative

Financial Liabilities

non-

derivative

Off balance sheet

commitments

Carrying value

(in EUR mln)

Carrying value

(in EUR mln)

Nominal value

(in EUR mln)

By benchmark rate

GBP LIBOR

6,825

424

3,798

USD LIBOR

33,703

1,459

12,445

CHF LIBOR

243

404

JPY LIBOR

225

136

EUR LIBOR

200

2,808

EONIA

344

Total

41,196

2,310

19,630

Non derivative Financial instruments

to transition to alternative benchmarks

(*)

31 December 2020

in EUR million

Financial Assets non-

derivative

Financial Liabilities

non-

derivative

Off balance sheet

commitments

Carrying value

(in EUR mln)

Carrying value

(in EUR mln)

Nominal value

(in EUR mln)

By benchmark rate

GBP LIBOR

6,912

259

3,732

USD LIBOR

30,959

3,796

9,376

CHF LIBOR

345

321

JPY LIBOR

225

EUR LIBOR

422

2,564

EONIA

100

728

Total

38,963

4,873

16,111

As at 30 June 2021 approximately EUR

538

billion derivatives notional exposures linked to benchmark rates have

yet to transition. The majority of derivatives are transacted with clearing houses which will transition

through a

standardized exercise in December 2021 (except USD LIBOR). For not centrally cleared derivatives the main

transition will occur via ISDA IBOR fallback protocol at the relevant IBOR cessation date.

Comparatives have been

updated to improve consistency and comparability with the current period

disclosure.

Derivative Financial instruments

to transition to alternative

benchmarks (*)

30 June 2021

31 December 2020

in EUR million

Nominal value

(in EUR mln)

Nominal value

(in EUR mln)

By benchmark rate

GBP LIBOR

31,045

27,031

USD LIBOR

369,056

355,066

CHF LIBOR

12,308

9,710

JPY LIBOR

92,874

87,057

EONIA

32,730

29,593

Total

538,013

508,457

1 For cross currency swaps all legs of the swap are included that are linked to a main IBOR that is significant to ING Group.

The table above does not include EURIBOR exposures as the reformed EURIBOR

is compliant with the EU

Benchmarks Regulation and there are no plans to discontinue the rate.

ING Group also has exposure to interest rate benchmark reform in respect of its cash collateral balances across

some of its Credit Support Annex agreements. This exposure is not included

within the table above.

Given that IBOR reform may have various accounting implications, the International Accounting Standards Board

(IASB) has undertaken a two phase project:

●

Phase 1 addresses those issues that affect financial reporting before the replacement of an existing

benchmark. Phase 1 amendments to IFRS were issued by the IASB in

2019 and were early adopted by ING

Group in the same year. This allowed and still continues to allow ING to apply a set of temporary exceptions

to continue hedge accounting even when there is uncertainty about contractual cash flows arising from the

reform. Under these temporary exceptions, interbank offered rates are assumed to continue unaltered for

the purposes of hedge accounting until such time as the

uncertainty is resolved.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

●

Phase 2 focuses on issues that may affect financial reporting when the existing benchmark rate is reformed

or replaced. Phase 2 amendments to IFRS were issued by the IASB in

2020 and became effective in 2021.

Phase 2 amendments to IFRS relate mainly to accounting for changes in the basis for determining the

contractual cash flows of financial assets and liabilities due to the IBOR reform and impact on hedge

accounting when an existing benchmark rate is reformed or replaced with an alternative risk free rate. Refer

to section 1.4.1 of Note 1 ‘Basis of preparation and accounting policies’ of

the financial statements.

As explained above, Phase 1 and Phase 2 IBOR amendments

to IFRS, amongst other changes, provide specific

hedge accounting reliefs that allow hedge accounting relationships to continue when IBOR Reform is ongoing.

Phase 1 reliefs cease when uncertainty arising from IBOR Reform is no longer present with respect to the timing

and amount of the IBOR-based cash flows of the relevant instruments. Although

the administrator of LIBOR

confirmed on 5 March 2021 its plans for the cessation of most LIBOR rates, there is still uncertainty with respect

to the timing of the IBOR transition as well as the transition strategy for individual hedged items and/or hedging

instruments. It is ING Group’s policy to cease to apply Phase 1 reliefs when the applicable contract (either

hedging instrument or hedged item) are actually modified.

As a result, the applicable Phase 1 reliefs will continue

to apply until the relevant contract is modified. At that point in time, Phase 2 reliefs will become applicable.

Other risks and uncertainties

Because we are a financial services company conducting business

on a global basis, our revenues and earnings

are affected by the volatility and strength of the economic, business, liquidity, funding and capital markets

environments specific to the geographic regions in which we conduct business. The ongoing

turbulence and

volatility of such factors have adversely affected, and may continue to adversely affect, the profitability,

solvency

and liquidity of our business.

Factors such as effects of the Covid-19 pandemic, consequences of the United Kingdom`s withdrawal from the

European Union, interest rates, securities prices, credit ratings, credit spreads, liquidity spreads, exchange rates,

discontinuation of or changes to ‘benchmark’ indices, consumer spending,

changes in client behaviour, business

investment, real estate values and private equity valuations, government spending, inflation or deflation, the

volatility and strength of the capital markets, operational risks, political events and trends, non-compliance with

(or changes) in laws and regulations, climate change, terrorism, as well as inability to protect our intellectual

property and infringement claims by third parties, to achieve our strategy or to retain key personnel may all

impact the business and economic environment and, ultimately, our solvency, liquidity and the amount and

profitability of business we conduct in a specific geographic region.

Additional risks of which 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 on ING’s

business activities, financial condition, results of operations

and prospects. For more information on risks, please

refer to “Other information and appendices - Risk Factors” in the Annual Report ING Group for the year ended

December 31, 2020."

Developments on KYC

In the first half year of 2021, the Risk Committee and the Supervisory

Board continued to focus on the progress in

the bank-wide Know Your Customer Enhancement Programme and in the ongoing day-to-day KYC operations.

The KYC Enhancement Programme encompasses all client segments in all ING business

units. The programme

consisted of three parts: (a) look-back analysis on past deficiencies in post-transaction monitoring, which is

completed. The look-back analysis consisted of screening of transactions executed in the past and following

reporting processes where applicable; (b) enhancement of customer due diligence

files with the aim to document

sufficiently the knowledge the bank has about its clients in

line with past and new requirements; (c) structural

solutions that should support getting sustainably better in addressing Financial Economic Crime

(FEC)/Anti

Money Laundering (AML) risks in our portfolio and complying

with laws and regulations. The structural solutions

are structured in various workstreams and range from Policy and Behavioural deliverables to Globally

standardized Technology

solutions.

In the first half-year 2021, ING continued to make progress in executing the Global KYC Enhancement Program.

Key achievements in the past months include among others:

●

The completion of the global roll out of the new solution

for continuous Adverse Media Screening to enable

ING to better identify customers involved in criminal activity;

●

The Global KYC Innovation Committee was established to centrally steer and prioritise all Innovation

initiatives in the KYC area in ING;

●

The Retail KYC Committee was established [replacing earlier C&G and Market Leaders committees] covering

all Retail and Business Banking customers to better address existing inefficiencies in processes, approaches,

tooling and decision making across the business lines;

●

The adoption of ING’s 2021 Global KYC RAS, which includes an increased number of inclusions

now covering

all functional KYC areas; and

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

●

Behavioural Risk Management continued with Behavioural Risk follow-up measurements and targeted

interventions, further strengthening the awareness on behavioural risk in the organization.

ING also completed the re-planning of the workstream related to the roll out of the Global bank-wide KYC case

management system, resulting in prolonged timelines. ING continues the process of executing its Global KYC

Enhancement Program, while balancing with the increasing ongoing

day-to-day KYC operations.

��

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Condensed consolidated statement

of financial position

in EUR million

June

2021

December

2020

June

2021

December

2020

Assets

Liabilities

Cash and balances with central banks

121,331

111,087

Deposits from banks

89,134

78,098

Loans and advances to banks

26,198

25,364

Customer deposits

620,564

609,517

Financial assets at fair value through profit or loss

121,402

103,370

Financial liabilities at fair value through profit or loss

87,141

82,781

Financial assets at fair value through other comprehensive income

33,016

35,895

Current tax liabilities

290

342

Securities at amortised cost

49,467

50,587

Deferred tax liabilities

356

343

Loans and advances to customers

607,777

593,970

Provisions

756

691

Investments in associates and joint ventures

1,461

1,475

Other liabilities

13,652

11,609

Property and equipment

2,631

2,841

Liabilities held for sale

2,243

Intangible assets

1,315

1,394

Debt securities in issue

91,840

82,065

Current tax assets

679

419

Subordinated loans

14,791

15,805

Deferred tax assets

1,352

1,596

Total liabilities

920,767

881,250

Other assets

7,743

5,893

Assets held for sale

1,278

Equity

Share capital and share premium

17,144

17,128

Other reserves

1,870

2,342

Retained earnings

34,882

32,149

Shareholders’ equity (parent)

53,896

51,619

Non-controlling interests

987

1,022

Total equity

54,883

52,640

Total assets

975,650

933,891

Total liabilities and equity

975,650

933,891

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 six month period ended 30 June

2021 - Unaudited

Condensed consolidated statement

of profit or loss

for the periods ended 30 June

6 month period

1 January to 30 June

in EUR million

2021

2020

2021

2020

Continuing operations

Interest income using effective interest

rate method

9,313

10,935

Addition to loan loss provisions

131

1,998

Other interest income

1,368

1,026

Staff expenses

2,938

2,923

Total interest

income

10,680

11,962

Other operating expenses

2,621

2,703

Total expenses

5,691

7,623

Interest expense using effective interest

rate method

-2,534

-4,160

Other interest expense

-1,125

-925

Result before tax from continuing operations

4,484

1,065

Total interest

expense

-3,659

-5,085

Taxation

1,265

438

Net interest income

7,021

6,877

Net result from continuing operations

3,219

626

Net fee and commission income

1,710

1,506

Valuation results and net trading income

1,212

-4

Investment income

Net result (before non-controlling interests)

3,219

626

Other income

184

269

Net result attributable to Non-controlling interests

Total income

10,175

8,688

Net result attributable to shareholders of the parent

3,161

591

in EUR

Earnings per ordinary share

Basic earnings per ordinary share

0.81

0.15

Diluted earnings per ordinary share

0.81

0.15

Earnings per ordinary share from continuing operations

Basic earnings per ordinary share from continuing operations

0.81

0.15

Diluted earnings per ordinary share from continuing operations

0.81

0.15

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 six month period ended 30 June

2021 - Unaudited

Condensed consolidated statement

of comprehensive income

6 month period

1 January to 30 June

in EUR million

2021

2020

Net result (before non-controlling interests)

3,219

626

Other comprehensive income

Items that will not be reclassified to the statement of profit or loss:

Realised and unrealised revaluations property in own use

-3

Remeasurement of the net defined benefit asset/liability

Net change in fair value of equity instruments at FVOCI

-311

Change in fair value of own credit risk of financial liabilities at FVPL

Items that may subsequently be reclassified to the statement of

profit or loss:

Net change in fair value of debt instruments at FVOCI

-108

-81

Realised gains/losses on debt instruments at FVOCI reclassified to the statement

of profit or loss

-30

-27

Changes in cash flow hedge reserve

-673

644

Exchange rate differences

158

-691

Share of other comprehensive income of associates and joint ventures and other income

-2

Total comprehensive

income

2,698

268

Comprehensive income attributable to:

Non-controlling interests

-31

134

Equity holders of the parent

2,730

135

2,698

268

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Condensed consolidated statement

of changes in equity

in EUR million

Share capital

and share

premium

Other

reserves

Retained

earnings

Shareholders'

equity (parent)

Non-

controlling

interests

Total

equity

Balance as at 31 December 2020

17,128

2,342

32,149

51,619

1,022

52,640

Net change in fair value of equity instruments at fair value through other comprehensive

income

Net change in fair value of debt instruments at fair value through

other comprehensive income

-106

-1

-108

Realised gains/losses on debt instruments at fair value through other

comprehensive income reclassified to the statement of profit

or loss

-30

-0

-30

Changes in cash flow hedge reserve

-577

-96

-673

Realised and unrealised revaluations property in own use

-6

-3

-0

-3

Remeasurement of the net defined benefit asset/liability

Exchange rate differences and other

151

158

Share of other comprehensive income of associates and joint ventures and other income

-37

-2

Change in fair value of own credit risk of financial liabilities at fair value through profit

or loss

Total amount

recognised directly in other comprehensive income net of tax

-469

-431

-90

-521

Net result

3,161

3,219

Total comprehensive

income net of tax

-469

3,198

2,730

-31

2,698

Dividends

-468

-4

-472

Changes in treasury shares

-4

Employee stock option and share plans

Balance as at 30 June 2021

17,144

1,870

34,882

53,896

987

54,883

Changes in individual Reserve components are presented in Note 11 ‘Equity’.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Condensed consolidated statement

of changes in equity - continued

in EUR million

capital and

premium

Other

reserves

Retained

earnings

Share-

holders'

equity

(parent)

Non-

controlling

interests

Total

equity

Balance as at 31 December 2019

17,117

4,013

29,866

50,996

893

51,889

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

-5

-81

Realised gains/losses on debt instruments at fair value through other

comprehensive income reclassified to the statement of profit

or loss

-27

-1

-27

Changes in cash flow hedge reserve

501

144

644

Realised and unrealised revaluations property in own use

Remeasurement of the net defined benefit asset/liability

Exchange rate differences and other

-650

-41

-691

Share of other comprehensive income of associates and joint ventures and other income

-52

Change in fair value of own credit risk of financial liabilities at fair value through profit

or loss

Total amount

recognised directly in other comprehensive income net of tax

-404

-52

-456

-358

Net result

591

626

Total comprehensive

income net of tax

-404

539

135

134

268

Dividends

-3

Changes in treasury shares

Employee stock option and share plans

Changes in the composition of the group and other changes

-1

Balance as at 30 June 2020

17,128

3,616

30,406

51,149

1,022

52,171

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Condensed consolidated statement

of cash flows

1 January to 30 June

in EUR million

2021

2020

2021

2020

Cash flows from operating activities

Disposals and redemptions:

– Associates and joint ventures

Result before tax

4,484

1,065

- Financial assets at fair value through other comprehensive

income

11,802

8,523

Adjusted for:

– Depreciation and amortisation

418

402

- Securities at amortised cost

26,185

11,547

– Addition to loan loss provisions

131

1,998

– Property and equipment

– Other non-cash items in Result before tax

-624

1,285

– Other investments

Taxation

paid

-1,107

-1,149

Net cash flow from/(used in) investing activities

3,253

-9,627

Changes in:

–

Net change in Loans and advances to/from banks, not

available/payable on demand

7,944

51,912

–

Net change in Trading assets and Trading

liabilities

-5,159

3,208

Cash flows from financing activities

–

Loans and advances to customers

-13,380

-9,865

Proceeds from debt securities

42,208

48,565

–

Customer deposits

13,128

34,416

Repayments of debt securities

-32,233

-46,335

–

Other

-9,028

-5,849

Proceeds from issuance of subordinated loans

491

2,165

Net cash flow from/(used in) operating activities

-3,193

77,422

Repayments of subordinated loans

-1,455

-2,608

Repayments of principal portion of lease liabilities

-144

-132

Cash flows from investing activities

Purchase/sale of treasury shares

-4

Investments and advances:

- Associates and joint ventures

-31

-10

Dividends paid

-472

-3

- Financial assets at fair value through other comprehensive

income

-9,381

-13,095

Other financing

- Securities at amortised cost

-25,190

-16,306

Net cash flow from/(used in) financing activities

8,395

1,658

– Property and equipment

-84

-144

– Other investments

-94

-165

Net cash flow

8,455

69,453

Cash and cash equivalents at beginning of year

111,566

54,031

Effect of exchange rate

changes on cash and cash equivalents

-357

-192

Cash and cash equivalents at end of the reporting period

119,663

123,292

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Condensed consolidated statement

of cash flows - continued

Cash and cash equivalents

in EUR million

June

2021

June

2020

Treasury bills and other eligible bills

170

Deposits from banks/Loans and advances to banks

-1,706

4,151

Cash and balances with central banks

121,331

118,971

Cash and cash equivalents at end of the reporting period

119,663

123,292

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

in EUR million

June

2021

June

2020

Interest received

10,766

12,287

Interest paid

-4,674

-5,504

6,093

6,784

Dividend received

Dividend paid

-472

-3

Includes dividends received as recognized within Investment Income, from equity securities included in the Financial assets at fair value

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 six month period ended 30 June

2021 - Unaudited

Notes to the Condensed consolidated

interim financial statements

Basis of preparation and accounting policies

1.1 Reporting entity and authorisation of the Condensed consolidated interim financial

statements

ING Groep N.V.

is a company domiciled in

Amsterdam, the Netherlands

. Commercial Register of Amsterdam,

number 33231073. These Condensed consolidated interim financial

statements, as at and for the six month

period ended 30 June 2021, comprise ING Groep N.V. (the Parent

company) and its subsidiaries, together

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

countries.

The ING Group Condensed consolidated interim financial statements, as at and for the six month period ended

30 June 2021, were authorised for issue in accordance with a resolution of

the Executive Board on 5 August

2021.

1.2 Basis of preparation 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 prepare

the Condensed consolidated interim financial statements are consistent with International Financial Reporting

Standards as issued by the International Accounting Standards Board (IFRS-IASB) and are consistent with those

set out in the notes to the 2020 Consolidated financial statements as included in the

Annual Report on Form

20-F of ING Group except for the adoption of a number of amendments effective in 2021 as set out in

Note 1.4

‘Changes to accounting policies’.

The Condensed consolidated interim financial statements should be read in conjunction with

ING Group’s 2020

Consolidated financial statements as included in the Form 20-F.

The ING Group Condensed consolidated interim financial statements have been prepared on a going concern

basis.

The 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.

1.2.1 Presentation of Risk management disclosures

Certain disclosures of the nature and extent of risks related to financial instruments as disclosed in the 2020

ING Group Consolidated financial statements and included in the 2020 ING Group Annual

Report on Form 20-F

are updated and take into account Covid-19 developments in the first six months of 2021.

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 (*).

Chapters, paragraphs, graphs or tables within the risk management section that are indicated with this symbol

in the respective headings or table header are considered to be an integral part of the Condensed

consolidated

interim financial statements.

1.2.2 Reconciliation between IFRS-EU and IFRS-IASB

The 2020 ING Group Consolidated financial statements and the 2021 ING Group Condensed

consolidated

interim financial statements are prepared in accordance with IFRS-EU. IFRS-EU refers to International Financial

Reporting Standards (‘IFRS’) as adopted by the European Union (EU), including the decisions

ING Group made

with regard to the options available under IFRS as adopted by the EU. IFRS-EU differs from IFRS-IASB in respect

of certain paragraphs in IAS 39 ‘Financial Instruments: Recognition and Measurement’

regarding hedge

accounting for portfolio hedges of interest rate risk.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

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 version of IAS 39. Under

the EU IAS 39 carve-out,

hedge accounting may be applied, in respect of fair value macro hedges, to core deposits and hedge

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-IASB,

hedge accounting for fair value macro hedges cannot be applied to core deposits and ineffectiveness arises

whenever the revised estimate of the amount of cash flows in scheduled time buckets is either more or less

than the original designated amount of that bucket.

This information is prepared by reversing the hedge accounting impacts that are applied under the EU ‘carve-

out’ version of IAS 39. Financial information under IFRS-IASB accordingly

does not take account of the

possibility that had ING Group applied IFRS-IASB as its primary

accounting framework it might have applied

alternative hedge strategies where those alternative hedge strategies could have qualified for IFRS-IASB

compliant hedge accounting. These decisions could have resulted in different shareholders’ equity and net

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

statements on

Form 6-K.

In the first six months of 2021, interest yield increased resulting in a positive EU IAS39 carve out

adjustment

(EUR

956

million) while interest yield decreased in 2020 resulting in a negative EU IAS39 carve out adjustment

(EUR

-493

million). The impact of the adjustment is mainly

reflected in line item ‘Valuation results and net

trading income’ in the statement of profit or loss.

A reconciliation of net-result and shareholders’ equity

between IFRS-EU and IFRS-IASB is included below.

Reconciliation net result under IFRS-EU and IFRS-IASB

1 January to 30 June

in EUR million

2021

2020

In accordance with IFRS-EU (attributable to the shareholders of

the parent)

2,464

969

Adjustment of the EU IAS 39 carve-out

956

-493

Tax effect

of the adjustment

-260

115

Effect of adjustment after tax

697

-379

In accordance with IFRS-IASB (attributable to the shareholders of the parent)

3,161

591

Non-controlling interests

In accordance with IFRS-IASB Total

net result

3,219

626

1 includes the effect of changes in tax rate.

Reconciliation shareholders’ equity under IFRS-EU and IFRS-IASB

in EUR million

June

2021

December

2020

In accordance with IFRS-EU (attributable to the shareholders of

the parent)

56,222

54,637

Adjustment of the EU IAS 39 carve-out

-3,132

-4,081

Tax effect

of the adjustment

805

1,063

Effect of adjustment after tax

-2,327

-3,018

Shareholders’ equity

53,896

51,619

Non-controlling interests

987

1,022

In accordance with IFRS-IASB Total

Equity

54,883

52,640

1.3 Impact of Covid-19

After the outbreak of the Covid-19 pandemic in 2020,

various governments issued programs offering guarantee

schemes for borrowers impacted by Covid-19. As at 30 June 2021 ING Group had approximately EUR

2.0

billion

of loans outstanding under these programs (31 December 2020: EUR

1.5

billion).

In Wholesale Banking the main schemes are being

offered in the Netherlands (Corporate Finance Guarantee

Scheme (“GO-C”)), in France (state-guarantee scheme Bpifrance) and Germany (guaranteed by KfW).

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

In Retail Banking these facilities include in the Netherlands the SME Credit

Guarantee Scheme (“BMKB-C”) and

the small credit facility (“Klein Krediet Corona” or KKC) for self-employed individuals.

In 2020 ING Group started an initiative with European Investment Bank to lend nearly EUR

800

million on

favorable terms to Dutch small and medium-sized enterprises that are affected by the economic impact of

Covid-19 and loans under this program have been recognized on the balance sheet of ING as from 2021.

Similar facilities are also offered by ING Group in other countries, mainly in Belgium and

Poland. ING Belgium

provided in 2020 loans under the state guarantee scheme GS1 which establishes risk sharing

between banks

and the government. It applies to new loans to non-financial companies, SME

and self-employed persons under

certain conditions. ING Bank Poland signed an agreement with BGK

(Polish State Development Bank) to

support clients with individual guarantee schemes, provided by BGK as a collateral (equivalent to a state

guarantee).

Loans that have been originated under the above programs have been recognized on the consolidated

statement of financial position of ING Group. Depending on the scheme,

the guarantees received are either

integral or non-integral to the origination of these loans. Following this, the guarantees are either reflected in

the expected credit losses (ECL) associated with these loans or as separate reimbursement asset, respectively.

In either case, such guarantees have a similar impact on the statement of profit or loss and both reduce

the

amount presented as ‘addition to loan loss provisions’.

In 2020 governments in almost all countries where ING Retail bank is active adopted measures providing for

payment holidays to private individuals and small business loans. In the six month period

ended 30 June 2021

most of these payment holiday programs expired. As at 30 June 2021, approximately

159

thousand customers

were granted payment holidays in the context of the Covid-19 pandemic (down from

196

thousand as at 31

December 2020 due to reimbursements and prepayments). The total exposure of loans for which a payment

holiday is granted amounts to EUR

17.5

billion as at 30 June 2021 (EUR

19.4

billion as at 31 December 2020) of

which

% has expired.

The modification of contractual terms of loans subject to payment holiday arrangements does not

automatically result in derecognition of the financial assets. Where applicable,

the carrying amount of the

financial asset has been recalculated as the present value of the renegotiated or modified contractual cash

flows, discounted at the original effective interest rate and a gain or loss was recognized. This did not have a

material impact on the profit or loss statement of ING Group.

As a result of the economic effects of Covid-19 estimation uncertainty and level of management judgement

increased compared to before the Covid-19 pandemic in certain areas, such as the impairment assessment

loan loss provisions (including the need for management adjustments). Please

refer to paragraph 1.5

‘Significant judgements and critical accounting estimates and assumptions’.

1.4 Changes to accounting policies and presentation

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 2021.

1.4.1 Changes in IFRS effective in 2021

The following amended standards became effective in the current reporting period:

●

Amendments to IFRS 9 ‘Financial Instruments’, IAS 39 ‘Financial Instruments: Recognition and

Measurement’, IFRS 16 ‘Leases’,

IFRS 4 ‘Insurance Contracts’ and IFRS 7 ‘Financial Instruments:

Disclosures’: ‘IBOR Reform and its Effects on Financial Reporting – Phase 2’ (issued in August 2020);

●

Amendments to IFRS 16 ‘Leases’: ‘Covid-19-Related Rent Concessions’ (issued in May 2020).

The IBOR Reform – Phase 2 amendments relate mainly to accounting for changes in the basis for determining

the contractual cash flows of financial assets and liabilities due to the IBOR

reform and impact on hedge

accounting when an existing benchmark rate is reformed or replaced with an alternative risk free rate.

Specifically, Phase 2 amendments require that the effective interest rate

on debt financial instruments will be

adjusted, and hedge accounting will continue on transition to risk free rates, but only to the extent that the

modifications made to financial instruments are those necessary

to implement the IBOR Reform and that the

new basis for calculating cash flows is ‘economically equivalent’ to the previous basis. By applying these

mandatory amendments, ING Group avoids recognising modification gains and losses on

debt instruments that

would otherwise be required in the absence of Phase 2 amendments.

In addition, ING Group avoids hedge

accounting discontinuations when modifying both hedged items and hedging

instruments as a consequence of

the IBOR reform that would otherwise be required in the absence of Phase 2 amendments.

Refer to ‘Risk

Management’ section – ‘Market Risk’ for more details.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

The amendments to IFRS 16 ‘Leases’ provide lessees with an

exemption from assessing whether a Covid-19-

related rent concession is a lease modification. As ING Group did not receive rent concessions as a lessee,

these amendments had no impact on the accounting policies

of ING Group.

ING Group has not early adopted any standard, interpretation or amendment which has been issued, but is

not

yet effective.

For further information, reference is made to Note 1 ‘Basis of preparation and accounting policies’, paragraph

1.4.2 ‘Upcoming changes in IFRS after 2020’ in the 2020 ING Group Consolidated

financial statements.

1.5 Significant judgements and critical accounting estimates and assumptions

The preparation of the Condensed consolidated interim financial statements requires management to make

judgements in the process of applying its accounting policies

and to use estimates and assumptions. The

estimates and assumptions affect the reported amounts of the assets and liabilities and

the amounts of the

contingent assets and contingent liabilities at the balance sheet date, as well as reported income and expenses

for the period. The actual outcome may differ from these estimates. The process of setting assumptions is

subject to internal control procedures and approvals.

Consistent with Note 1.5 ‘Significant judgements and critical accounting estimates and assumptions’ of

the

2020 ING Group Consolidated financial statements, the following areas continue to require management to

make significant judgements and use critical accounting estimates and assumptions based on the

information

and financial data that may change in future periods:

●

Loan loss provisions (financial assets);

●

The determination of the fair values of financial assets and liabilities;

●

Impairment assessment of non-financial assets;

●

Impairment assessment of an investment in associate;

●

Provisions; and

●

Accounting for Targeted

Longer-Term

Refinancing Operations (TLTRO).

Of particular note to the six month period ended 30 June

2021 are the developments and judgements in the

areas of Loan loss provisions and TLTRO.

For Loan loss provisions this resulted in Covid-19 related management adjustment to the model-based

Expected Credit Losses. The Covid-19 management adjustment amounts to EUR

595

million in total as at 30

June 2021 and relates to Payment Holidays and other government support measures (EUR

260

million), the

time lag in defaults materialising (EUR

296

million) and Structured Acquisition Finance portfolio (EUR

million). This is a decrease of EUR

million in comparison to 31 December 2020.

Under the TLTRO III program, it is ING Group’s policy to recognise the conditional interest receivable only when

ING has a reasonable expectation that the lending growth targets will be met. ING Group interprets reasonable

expectations as highly probable, i.e. the probability of meeting the lending

targets is substantially greater than

the probability that it will not. As a result, if interest income is recognised during the

period based on the

expectation of meeting the targets, there should be only a limited possibility that the

interest may need to be

reversed in future periods. For details on the conditions of the TLTRO III programme and amount of interest

income recognised in the reporting period, refer to Note 7 ‘Deposits from banks’ and Note 12 ‘Net interest

income’ respectively.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Financial assets at fair value through profit or loss

in EUR million

June

2021

December

2020

Trading assets

50,652

51,356

Non-trading derivatives

2,112

3,583

Designated at fair value through profit or loss

5,421

4,126

Mandatorily measured at fair value through profit or loss

63,217

44,305

121,402

103,370

Trading assets include assets that are classified under IFRS as Trading, but are closely related to servicing the

needs of the clients of ING Group. ING offers institutional clients, corporate clients, and governments, products

that are traded on the financial markets. A significant part of the derivatives in the trading portfolio is related

to servicing corporate clients in their risk management to hedge for example currency or interest rate

exposures. In addition, ING provides its customers access to equity and debt markets for issuing their own

equity or debt securities (securities underwriting).

(Reverse) repurchase transactions

Financial assets at fair value through profit or loss include securities lending

and sales and repurchase

transactions which were not derecognised, because ING Group continues to be exposed to substantially all

risks and rewards of the transferred financial asset. For repurchase agreements the gross amount of trading

assets must be considered together with the gross amount of related trading liabilities, which are presented

separately on the statement of financial position since IFRS does not always allow netting of these positions in

the statement of financial position.

ING Group’s exposure to (reverse) repurchase transactions is included in the following lines in the statement of

financial position:

Exposure to (reverse) repurchase agreements

in EUR million

June

2021

December

2020

Reverse repurchase transactions

Loans and advances to banks

4,463

4,869

Loans and advances to customers

624

Trading assets, loans and receivables

9,939

10,947

Loans and receivables measured at mandatorily fair value through

profit or loss

60,124

41,735

74,526

58,175

Repurchase transactions

Deposits from banks

4,666

1,971

Trading liabilities, funds on deposit

6,658

5,787

Funds entrusted measured at designated at fair value through

profit or loss

51,457

41,177

62,781

48,935

Financial assets at fair value through other comprehensive income

Financial assets at fair value through other comprehensive income by type

in EUR million

June

2021

December

2020

Equity securities

2,434

1,862

Debt securities

29,693

32,977

Loans and advances

889

1,056

33,016

35,895

1 Debt securities include an amount of EUR

-12

million (31 December 2020: EUR

-12

million)

and the Loans and advances includes EUR

-1

million (31 December 2020: EUR

-2

million) of Loan loss provisions.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Exposure to equity securities

Equity securities designated as at fair value through other comprehensive

income

Carrying value

Dividend income

June

2021

December

2020

1 January to 30 June

in EUR million

2021

2020

Investment in Bank of Beijing

1,748

1,662

Other Investments

686

200

2,434

1,862

For strategic equity securities, ING decided to apply the option to irrevocably designate these investments at

fair value through other comprehensive income, instead of the IFRS 9 default measurement of fair value

through profit or loss.

As at 30 June 2021 ING holds approximately

% (31 December 2020:

of the shares of Bank of Beijing, a

bank listed on the stock exchange of Shanghai. As per regulatory requirements set by China Banking and

Insurance Regulatory Commission, ING, as a shareholder holding more than

% or more of the shares, is

required to supply additional capital when necessary.

NaN

request for additional capital was received in the first

six months of 2021 (2020:

nil

Changes in fair value through other comprehensive income

The following table presents changes in financial assets at fair value through other comprehensive income.

Changes in fair value through other comprehensive income financial assets

FVOCI equity securities

FVOCI debt instruments

Total

in EUR million

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

Opening balance as at 1 January

1,862

2,306

34,033

32,163

35,895

34,468

Additions

504

8,877

16,936

9,381

16,949

Amortisation

-7

-9

-7

-9

Transfers

and reclassifications

-16

-107

-16

-107

Changes in unrealised revaluations

-283

-694

520

-685

237

Impairments

-1

-2

-1

-2

Reversals of impairments

-4

Disposals and redemptions

-1

-13

-11,800

-14,557

-11,802

-14,571

Exchange rate differences

-53

171

-1,017

247

-1,070

Changes in the composition of the group and

other changes

-0

Closing balance

2,434

1,862

30,582

34,033

33,016

35,895

1 Fair value through other comprehensive income debt instruments includes both debt securities and loans and advances.

2 Changes in unrealised revaluations of FVOCI debt instruments include changes on hedged items which are recognised in the statement

of profit or loss. Reference is made to Note 11 ‘Equity’ for details on the changes in revaluation reserve.

In the first six months of 2021, changes in unrealised revaluations of debt securities decreased by

EUR –

694

million as a result of increased interest rates (2020: EUR

520

million).

In 2020, changes in unrealised revaluations of equity securities decreased mainly

related to negative

revaluation of the stake in Bank of Bejing following a decline in share price (EUR

-339

million).

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Loans and advances to customers

Loans and advances to customers by type

in EUR million

June

2021

December

2020

Loans to, or guaranteed by,

public authorities

41,936

41,502

Loans secured by mortgages

356,786

352,130

Loans guaranteed by credit institutions

5,810

5,201

Personal lending

27,138

27,794

Corporate loans

181,453

173,121

613,123

599,749

Loan loss provisions

-5,347

-5,779

607,777

593,970

For details on credit quality and loan loss provisioning, refer to ‘Risk management – Loan loss

provisioning’

paragraph.

Investment in associates and joint ventures

Investments in associates and joint ventures

in EUR million

30 June 2021

Interest

held (%)

Fair value

of listed

invest-

ments

Balance

sheet

value

Total

assets

Total

liabilities

Total

income

Total

expenses

TMBThanachart Bank Public Company Limited

652

1,166

47,077

41,631

442

352

Other investments in associates and joint

ventures

295

1,461

Investments in associates and joint ventures

in EUR million

31 December 2020

Interest

held (%)

Fair value

of listed

invest-

ments

Balance

sheet

value

Total

assets

Total

liabilities

Total

income

Total

expenses

TMBThanachart Bank Public Company Limited

653

1,202

50,123

44,597

1,388

1,093

Other investments in associates and joint

ventures

273

1,475

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.

TMBThanachart Bank Public Company Limited

ING Group has a

% investment in TMBThanachart Bank Public Company Limited (hereafter: TTB), a bank

listed on the Stock Exchange of Thailand. TTB is providing products and services

to Wholesale, Small and

Medium Enterprise (SME), and Retail customers.

TTB is accounted for as an investment in associate based on the size of ING shareholding and representation on

the Board. IFRS requires to test its investment in TTB for impairment when there is an indication that

impairment might exist.

Impairment testing

In the first half of 2021, the fair value of ING’s investment in TTB shows a significant and prolonged decline

below purchase cost. This indicator triggered ING to perform an impairment test on the recoverability of the

investment of TTB. The impairment test performed at 30 June 2021 did

t result in an impairment.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Methodology

The recoverable amount is determined as the higher of the fair value less costs of disposal and Value in Use

(‘VIU’). Fair value less costs of disposal is based on observable

share price. The VIU calculation uses discounted

cash flow projections based on management’s best estimates. VIU is derived using a Dividend Discount Model

(DDM) where distributable equity, i.e. future earnings available to ordinary shareholders, is used as a proxy for

future cash flows. The valuation looks at expected cash flows into perpetuity resulting in two main components

to the VIU calculation:

i) the estimation of future earnings over a 5 year forecast period; and

ii) the terminal value being the extrapolation of earnings into perpetuity applying a

long term growth

rate. The earnings that are used for extrapolation represent the stable long term financial results and

position of TMB, i.e. a steady state. The terminal value comprises the majority of the

total VIU.

Key assumptions used in the VIU calculation as at 30 June 2021

The value in use is determined using a valuation model which is

subject to multiple management assumptions.

The key assumptions, i.e. those to which the overall result is most sensitive to, are the following:

●

Expected future earnings of TTB: based on forecasts derived from broker consensus over the short to

medium term and TTB observable targets for steady state earnings into perpetuity. A capital maintenance

charge is applied, which is management’s forecast of the earnings that need to be withheld in order for

TTB to meet target regulatory requirements over the forecast period;

●

Terminal growth rate:

2.15

% (2020:

1.6

%), consistent with current long term government bond yield in

Thailand as a proxy for a risk-free rate;

●

Discount rate (cost of equity):

9.36

% (2020:

8.49

%), based on the capital asset pricing model (CAPM)

calculated for TTB, using current market data.

At 30 June 2021 the model was tested for reasonably possible changes to key assumptions in the model. This

reflects the sensitivity of the VIU to each key assumption on its own and it is

possible that more than one

favourable and/or unfavourable change may occur at the same time. Holding the other key assumptions

constant, a reduction in all of the forecasted annual cash flows, including terminal value, of

15.4

% would

reduce the recoverable amount to the carrying amount. A

525

bps decrease in long term growth rate or a

143

bps increase in the discount rate would cause the VIU to equal the carrying amount.

Other investments in associates and joint ventures

Included in Other investments in associates and joint ventures are mainly financial services

and financial

technology funds or vehicles operating predominantly in Europe.

Other investments in associates and joint ventures represents a number of associates and joint ventures that

are individually not significant to ING Group.

Changes in Investments in associates and joint ventures

in EUR million

June

2021

December

2020

Opening balance as at 1 January

1,475

1,790

Additions

Revaluations

-3

Share of results

Dividends received

-31

-12

Disposals

-6

-12

Impairments

-3

-235

Exchange rate differences

-45

-144

Other

Closing balance

1,461

1,475

Share of results from associates and joint ventures of EUR

million (2020: EUR

million) as included in the

table above is mainly attributable to results of TTB of EUR

million (2020: EUR

million).

Assets and liabilities held for sale

Assets and liabilities held for sale includes disposal groups whose

carrying amount will be recovered principally

through a sale transaction rather than through continuing operations. This relates to businesses for which a

sale is agreed upon but for which the transaction has not yet closed or a

sale is highly probable at the balance

sheet date but for which no sale has yet been agreed.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

As at 30 June 2021 the assets and liabilities held

for sale relate to the Retail Banking Operations in Austria (the

Wholesale Banking activities in Austria will be continued

by ING). The Retail Banking Operations in Austria are

part of the business line Retail Germany (Challengers and Growth Markets). At 12 July 2021, ING announced

that it has reached an agreement to transfer ING’s Retail Banking operations in Austria to bank99, which is

expected to be completed in 2021. The agreement is subject to approval by relevant regulators. ING intends to

sell Customer lending portfolios (EUR

1,273

million), of which mortgages (EUR

877

million), other personal

lending (EUR

396

million) and non-financial assets (EUR

million), presented as Assets held for Sale and

Customer deposits (EUR

2,243

million) presented as Liabilities held for Sale.

On 18 February 2021 ING announced the intention to withdraw from the retail banking market in the Czech

Republic.

The decision to discontinue CZ Retail entails the closure of retail customer accounts /mutual funds

and the sale of assets comprising the related government bond portfolio. ING’s retail customers in the Czech

Republic have received a welcome offer from Raiffeisenbank Czech Republic. ING’s departure from the Czech

retail banking market is proceeding well with EUR

2.1

billion saving accounts already transferred to

Raiffeisenbank and the government bond portfolio with a carrying amount of EUR

0.5

billion being sold in the

second quarter of 2021. The remaining retail assets and liabilities are not presented as

held for sale assets/

liabilities.

Deposits from banks

Deposits from banks includes non-subordinated debt from banks, except for amounts in the form of debt

securities.

Deposits from banks by type

in EUR million

June

2021

December

2020

Non-interest bearing

784

792

Interest bearing

88,350

77,306

89,134

78,098

Deposits from banks includes ING’s participation in the Targeted Longer-Term

Refinancing Operations of EUR

65.5

billion (31 December 2020: EUR

59.5

billion). ING participated in a new series of Targeted Longer-Term

Refinancing Operations (TLTRO III) for EUR

6.0

billion in March 2021.

The TLTRO III funding is granted for a period of

three years

with an early repayment option after

one year

with

the earliest date of September 2021. The three new participation windows introduced

by the ECB press release

in December 2020, can be repaid quarterly from June 2022. Interest under TLTRO III will be settled on maturity

of each TLTRO III operation or on early repayment. The interest rate on TLTRO

III depends on the lending

volumes granted to corporates (excluding financial institutions) and households (excluding mortgages).

Under the conditions of the program, interest rates can be as favorable as

basis points below the average

interest rate on the Deposit Facility rate, but in any case not lower than

-1

%. Such a rate would apply to all

TLTRO III operations outstanding over the discrete periods between 24 June 2020 and 23 June 2021 (special

interest period 1), and between 24 June 2021 and 23 June 2022 (special

interest period 2), for banks that show

growth in lending volumes equal to or above 0% between 1 March 2020 and

31 March 2021 (observation

period 1) and 1 October 2020 and 31 December

2021 (observation period 2), respectively. In case lending

growth targets are not met, the interest rate during the special interest periods can in a worst case scenario be

basis points below the average Main Refinancing Operations rate over the same period. In the period

preceding and following the special interest periods the interest will be in a corridor between the Deposit

Facility and Main Refinancing Operations rates, depending on to what extent ING meets the lending growth

conditions of the TLTRO III program. Special interest period 2 was announced by the ECB in its press release in

December 2020 and confirmed in February 2021. For details on

the accounting policy of the TLTRO III

programme refer to Note 1 ‘Basis of preparation and accounting policies’ of the 2020 Annual Report and for

the amount of interest income recognised in the reporting period, refer to Note 12 ‘Net interest income’.

Financial liabilities at fair value through profit or loss

in EUR million

June

2021

December

2020

Trading liabilities

26,845

32,709

Non-trading derivatives

1,925

1,629

Designated at fair value through profit or loss

58,370

48,444

87,141

82,781

Reference is made to Note 2 ‘Financial assets at fair value through profit or loss’ for information on repurchase

transactions.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Debt securities in issue

Debt securities in issue relate to debentures and other issued debt securities

with either fixed interest rates or

interest rates based on floating interest rate levels, such as certificates of deposit and accepted bills issued 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.

Changes in debt securities in issue

in EUR million

June

2021

December

2020

Opening balance as at 1 January

82,065

118,528

Additions

42,208

65,308

Redemptions / Disposals

-32,233

-99,212

Exchange rate differences

955

-3,403

Other movements

-1,156

844

Closing balance

91,840

82,065

In the first six months of 2021, Debt securities in issue increased

by EUR

9.8

billion because of liquidity and

funding needs as well as favourable market conditions. This is mainly explained by net increases of commercial

paper of EUR

9.4

billion and certificates of deposits of EUR

3.1

billion, where new issuances exceeded matured

trades. This increase is partly offset by matured covered bonds of EUR

1.0

billion, matured long term bonds of

EUR

0.6

billion and reduction in other debt securities of

EUR

1.1

billion.

Subordinated loans

Subordinated loans by group companies

in EUR million

June

2021

December

2020

ING Groep N.V.

13,795

13,150

ING Group companies

996

2,654

14,791

15,805

Subordinated loans issued by ING Groep N.V.

include bonds issued to raise Tier 1 and Tier 2 (CRD IV

eligible)

capital for ING Bank N.V.

Under IFRS these bonds are classified as liabilities and

for regulatory purposes, they

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.

Changes in subordinated loans

in EUR million

June

2021

December

2020

Opening balance as at 1 January

15,805

16,588

New issuances

491

2,165

Repayments

-1,455

-2,786

Exchange rate differences and other

-49

-163

Closing balance

14,791

15,805

ING Groep N.V.

issued in June 2021 EUR

500

million

0.875

% Fixed Rate Subordinated Tier 2 Green Notes.

ING Bank N.V.

redeemed in February 2021 EUR

1.5

billion

3.625

% Fixed Rate Subordinated Tier 2 notes on the

first call date.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Equity

Total equity

in EUR million

June

2021

December

2020

Share capital and share premium

Share capital

Share premium

17,105

17,089

17,144

17,128

Other reserves

Revaluation reserve: Equity securities at FVOCI

1,270

1,181

Revaluation reserve: Debt instruments at FVOCI

173

309

Revaluation reserve: Cash flow hedge

873

1,450

Revaluation reserve: Credit liability

-100

-117

Revaluation reserve: Property in own use

215

221

Net defined benefit asset/liability remeasurement reserve

-278

-307

Currency translation reserve

-3,485

-3,636

Share of associates and joint ventures and other reserves

3,209

3,246

Treasury shares

-8

-4

1,870

2,342

Retained earnings

34,882

32,149

Shareholders’ equity (parent)

53,896

51,619

Non-controlling interests

987

1,022

Total equity

54,883

52,640

Cash flow hedge

ING mainly hedges floating rate lending with interest rate swaps. Due to an increase in interest rate yield

curves in 2021 (decrease in 2020) the interest rate swaps had a negative revaluation of EUR

577

million (2020:

EUR

242

million positive) in the 6 month period ended

30 June 2021, which is recognised in the cash flow

hedge reserve.

Currency translation reserve

The increase of Currency translation reserve of EUR

151

million in the 6 month period ended 30 June 2021

related to several currencies including USD (EUR

208

million), TRY (EUR

-136

million) and GBP (EUR

million).

Retained earnings

ING paid in February 2021 a cash-only interim dividend of EUR

468

million (EUR

0.12

per share). This amount is

equal to

% of adjusted net profit for 2020, in line with the ECB recommendation of 15 December

2020,

which included a definition of adjusted net profit. No dividend

was paid in 2020 following an industry wide ECB

recommendation.

Refer to Note 21 ‘Capital Management’ for more information about ING’s dividend policy and the ECB

recommendations regarding dividend payments.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Net interest income

1 January to 30 June

in EUR million

2021

2020

2021

2020

Interest income on loans

6,999

8,333

Interest expense on deposits from banks

113

Interest income on financial assets at fair value through OCI

189

283

Interest expense on customer deposits

479

823

Interest income on debt securities at amortised cost

223

263

Interest expense on debt securities in issue

621

1,005

Interest income on non-trading derivatives (hedge accounting)

1,131

1,769

Interest expense on subordinated loans

271

323

Negative interest on liabilities

770

288

Negative interest on assets

276

117

Total interest

income using effective interest rate

method

9,313

10,935

Interest expense on non-trading derivatives (hedge accounting)

817

1,779

Total interest

expense using effective interest rate

method

2,534

4,160

Interest income on financial assets at fair value through profit

or loss

220

450

Interest income on non-trading derivatives (no hedge accounting)

1,140

556

Interest expense on financial liabilities at fair value through profit

or loss

158

348

Interest income other

Interest expense on non-trading derivatives (no hedge accounting)

934

540

Total other interest

income

1,368

1,026

Interest expense on lease liabilities

Total interest

income

10,680

11,962

Interest expense other

Total other interest

expense

1,125

925

Total interest

expense

3,659

5,085

Net interest income

7,021

6,877

Total

net interest income amounts to EUR

7,021

million (30 June 2020: EUR

6,877

million). Negative interest on

liabilities, amounting to EUR

770

million (30 June 2020: EUR

288

million) includes ECB funding rate benefit from

the first special reference period of the TLTRO III programme. As at 31 December 2020, ING did not have a

reasonable expectation of meeting the lending growth targets and did not accrue for the conditional benefit.

the first quarter of 2021, ING Group met the lending growth targets for the special reference period (1 March

2020 to 31 March 2021) and therefore the interest rate applicable under TLTRO III during the period of 24 June

2020 to 23 June 2021 changed from

-50

bps to

-100

bps. Given that the rate is negative, it represents income for

ING. The effect of the revised interest rate has been recognised in the statement of profit or loss (interest

income) of EUR

309

million within the six month period ended

30 June 2021, of which EUR

158

million related to

the year 2020. In addition, the unconditional interest of EUR

158

million was recognised within the 6 month

period ended 30 June 2021. For details on the accounting policy

and conditions of the TLTRO III programme, refer

to Note 1 ‘Basis of preparation and accounting policies’

and Note 7 ‘Deposits from banks’ respectively.

Excluding the TLTRO III benefit, net interest income decreased, mainly driven by lower margins on liabilities,

while average liability volumes increased as the Covid-19 pandemic reduced customer spending.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Net fee and commission income

Fee and commission income

1 January to 30 June

in EUR million

2021

2020

Funds transfer

727

686

Securities business

487

439

Insurance broking

117

101

Asset management fees

146

115

Brokerage and advisory fees

374

321

Other

588

644

2,439

2,307

Other fee and commission income mainly consists of commission

fees in respect of bank guarantees of EUR

million (first six months of 2020: EUR

million), in respect of underwriting syndication loans of

EUR

million

(first six months of 2020: EUR

million), in respect of structured finance fees of EUR

million (first six months

of 2020: EUR

million), and in respect of collective instruments distributed but not

managed by ING of EUR

million (first six months of 2020: EUR

112

million).

Fee and commission expenses

1 January to 30 June

in EUR million

2021

2020

Funds transfer

259

301

Securities business

Insurance broking

Asset management fees

Brokerage and advisory fees

185

157

Other

195

260

729

801

Reference is made to Note 17 ‘Segments’ which includes net fee and commission income, as reported to the

Executive Board and the Management Board Banking, disaggregated by line of business

and by geographical

segment.

Other income

1 January to 30 June

in EUR million

2021

2020

Share of result associates and joint ventures

Net result derecognition of financial assets measured

at amortised cost

-3

187

Other

166

184

269

In 2021, Other income other includes the recognition of

EUR

million relating to a better than expected

recovery of the insolvency of a financial institution in the Netherlands,

proceeds of the agreement with

Raiffeisenbank due to the withdraw from the retail banking market in the Czech Republic and the positive

recovery of defaulted receivables of EUR

million (2020: EUR

million). In 2020, Net result on derecognition

of financial assets measured at amortised cost included a result of

EUR

186

million following a one-off sale of

certain securities at amortised cost driven by exceptional market conditions due to Covid-19, which was

considered to be infrequent, but more than insignificant in value.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Other operating expenses

1 January to 30 June

in EUR million

2021

2020

Regulatory costs

759

663

Audit and non-audit services

IT related expenses

387

388

Advertising and public relations

149

166

External advisory fees

147

186

Office expenses

141

163

Travel and accommodation

expenses

Contributions and subscriptions

Postal charges

Depreciation of property and equipment

285

281

Amortisation of intangible assets

133

121

Impairments and reversals of impairments of tangible and intangible assets

333

Addition to / (unused amounts reversed of) provision for reorganisations

-2

Addition to / (unused amounts reversed of) other provisions

-14

Other

341

284

2,621

2,703

Regulatory costs

Regulatory costs represent contributions to the Deposit Guarantee Schemes (DGS), The Single Resolution Fund

(SRF), local bank taxes and local resolution funds. Included in Regulatory costs for 2021, are contributions to DGS

of EUR

260

million (first six months of 2020: EUR

203

million) mainly related to the Netherlands, Germany,

Belgium, Poland, and Spain and contributions to the SRF and

local resolution funds of EUR

308

million (first six

months of 2020: EUR

277

million). The increase in contributions of DGS and SRF relates to increased deposits.

In 2021 local bank taxes increased by EUR

million from EUR

183

million in the first six months of 2020 to EUR

191

million.

Impairments and reversals of impairments on tangible and intangible assets

Impairments on tangible and intangible assets in the first six months of 2021 mainly

relate to impairments on

capitalised software.

Impairments on tangible and intangible assets in the first six months of 2020 included

EUR

310

million goodwill

impairment in the cash generating units Retail Belgium and Wholesale Banking.

Earnings per ordinary share

Weighted average

number of ordinary

shares outstanding

Amount

during the period

Per ordinary share

(in EUR million)

(in millions)

(in EUR)

1 January to 30 June

2021

2020

2021

2020

2021

2020

Basic earnings

3,161

591

3,901.9

3,897.9

0.81

0.15

Basic earnings from continuing operations

3,161

591

0.81

0.15

Effect of dilutive instruments:

Stock option and share plans

1.6

0.5

1.6

0.5

Diluted earnings

3,161

591

3,903.5

3,898.5

0.81

0.15

Diluted earnings from continuing operations

3,161

591

0.81

0.15

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Additional notes to the Condensed consolidated interim financial

statements

Segments

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

The Executive Board of ING Group and the Management Board Banking set the performance

targets, approve

and monitor the budgets prepared by the business lines. Business

lines formulate strategic, commercial, and

financial plans in conformity with the strategy and performance targets set by the Executive Board of ING Group

and the Management Board Banking.

The following table specifies the segments by line of business and

main sources of income of each of the

segments:

Specification of the main sources of income of each of the segments by line of business

Segments by line of business

Main source of income

Retail Netherlands

(Market Leaders)

Income from retail and private banking activities in the Netherlands, including the

SME and mid-corporate segments, and the Real Estate

Finance portfolio related to

Dutch domestic mid-corporates. The main products offered

are current and savings

accounts, business lending, mortgages and other consumer lending in the

Netherlands.

Retail Belgium

(Market Leaders)

Income from retail and private banking activities in Belgium (including

Luxembourg), including the SME and mid-corporate segments. The main products

offered are similar to those in the Netherlands.

Retail Germany

(Challengers and Growth Markets)

Income from retail and private banking activities in Germany (including Austria). The

main products offered are current and savings accounts,

mortgages and other

customer lending.

Retail Other

(Challengers and Growth Markets)

Income from retail banking activities in the rest of the world, including the SME and

mid-corporate segments in specific countries. The main products offered

are similar

to those in the Netherlands.

Wholesale Banking

Income from wholesale banking activities. The main products are: lending, debt

capital markets, working capital solutions, export finance, daily banking solutions,

treasury and risk solutions, and corporate finance.

Specification of geographical split of the segments

Geographical segments

Main countries

The Netherlands

Belgium

Including Luxembourg

Germany

Including Austria

Other Challengers

Australia, Czech Republic, France, Italy,

Spain, Portugal, Other

Growth Markets

Poland, Romania, Turkey,

Philippines and Asian stakes

Wholesale Banking Rest of World

UK, Americas, Asia and other countries in Central and Eastern Europe

Other

Corporate Line and the run-off portfolio of Real Estate

ING Group monitors and evaluates the performance of ING Group at a consolidated level and by segment using

results based on figures according to IFRS as adopted by the European Union (IFRS-EU). The Executive Board and

the Management Board Banking consider this measure to be relevant to an understanding of the Group’s

financial performance, because it allows investors to understand the primary method used by management to

evaluate the Group’s operating performance and make decisions about allocating resources.

In addition, ING Group believes that the presentation of results in accordance with IFRS-EU helps investors

compare its segment performance on a meaningful basis by highlighting

result before tax attributable to ongoing

operations and the profitability of the segment businesses. IFRS-EU result is derived by including

the impact of

the IFRS-EU ‘IAS 39 carve out’ adjustment.

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 Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

The segment reporting in the Form 6-K

has been prepared in accordance with International Financial Reporting

Standards as issued by the EU (IFRS-EU) and reconciled to International Financial Reporting Standards as issued

by the International Accounting Standards Board (IFRS-IASB) for consistency with the other financial information

contained in this report. The difference between the accounting standards is reflected in the Wholesale Banking

segment, and in the geographical split of the segments in the Netherlands,

Belgium, Germany and Other

Challengers.

Reference is made to Note 1 ‘Basis of preparation and accounting policies’

for a reconciliation between IFRS-EU

and IFRS-IASB. Corporate expenses are allocated to business lines based on time spent by head office personnel,

the relative number of staff, or on the basis of income, expenses and/or assets of the segment.

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 the recognition of

value-added tax (VAT)

refunds in the Netherlands (recorded

under expenses). 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 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 six month period ended 30 June

2021 - Unaudited

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

2021

2020

in EUR million

6 month period

1 January to 30 June

Income

Expenses

Taxation

Non-

controlling

interests

Net result

Income

Expenses

Taxation

Non-

controlling

interests

Net result

Net result IFRS-IASB attributable to equity holder of the parent

10,175

5,691

1,265

3,161

8,688

7,623

438

591

Remove impact of:

Adjustment of the EU 'IAS 39 carve out'

-956

-260

-697

493

115

379

Result IFRS-EU

9,219

5,691

1,005

2,464

9,182

7,623

553

969

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 re-instated as this is the measure at

which management monitors the business.

3. IFRS-EU figures are derived from figures according to 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 six month period ended 30 June

2021 - Unaudited

ING Group Total

2021

2020

in EUR million

6 month period

1 January to 30 June

ING

Bank N.V.

Other

Total ING

Group

ING

Bank N.V.

Other

Total ING

Group

Income

– Net interest income

6,852

6,853

6,931

– Net fee and commission income

1,710

-0

1,710

1,507

-1

1,506

– Total investment

and other income

653

656

760

-16

745

Total income

9,215

9,219

9,198

-16

9,182

Expenditure

– Operating expenses

5,553

5,560

5,625

5,626

– Addition to loan loss provisions

131

-0

131

1,997

1,998

Total expenses

5,685

5,691

7,623

Result before taxation

3,530

-2

3,528

1,575

-17

1,558

Taxation

1,005

519

553

Non-controlling interests

Net result IFRS-EU

2,467

-2

2,464

1,021

-51

969

Adjustment of the EU 'IAS 39 carve out'

697

-379

Net result IFRS-IASB attributable to equity holder of the parent

3,163

-2

3,161

642

-51

591

ING Group Interim financial report

on form 6-K for the six month period ended

30 June 2021 - Unaudited

Segments by line of business

2021

2020

in EUR million

6 month period

Retail

Netherlands

Retail Belgium

Retail

Germany

Retail

Other

Wholesale

Banking

Corporate

Line

Total

Retail

Netherlands

Retail Belgium

Retail

Germany

Retail

Other

Wholesale

Banking

Corporate

Line

Total

1 January to 30 June

Income

–

Net interest income

1,651

894

734

1,354

2,044

174

6,853

1,763

937

801

1,392

1,864

173

6,931

–

Net fee and commission income

368

248

257

253

580

1,710

332

207

215

193

561

-2

1,506

–

Total investment

and other income

119

122

267

656

175

134

354

-48

745

Total income

2,138

1,241

1,036

1,729

2,891

184

9,219

2,269

1,215

1,075

1,720

2,780

123

9,182

Expenditure

–

Operating expenses

1,181

912

604

1,174

1,452

237

5,560

1,088

969

567

1,120

1,728

154

5,626

–

Additions to loan loss provision

-65

194

102

-119

-0

131

139

282

304

1,256

1,998

Total exp

enses

1,116

1,107

623

1,276

1,333

237

5,691

1,227

1,251

581

1,424

2,984

156

7,623

Result before taxation

1,022

134

413

454

1,558

-53

3,528

1,043

-36

494

295

-204

-34

1,558

Taxation

267

135

117

355

1,005

262

188

-14

553

Non-controlling interests

-0

-1

-0

Net result IFRS-EU

754

275

291

1,192

-142

2,464

781

-44

304

183

-235

-19

969

Adjustment of the EU 'IAS 39 carve out'

697

-379

Net result IFRS-IASB

754

275

291

1,889

-142

3,161

781

-44

304

183

-614

-19

591

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Geographical split of the segments

2021

2020

in EUR million

6 month period

1 January to 30 June

Netherlands

Belgium

Germany

Other

Challengers

Growth

Markets

Wholesale

Banking Rest

of World

Other

Total

Netherlands

Belgium

Germany

Other

Challengers

Growth

Markets

Wholesale

Banking Rest

of World

Other

Total

Income

–

Net interest income

2,023

1,072

1,010

974

749

850

175

6,853

2,097

1,090

1,059

893

799

823

169

6,931

– Net fee and commission

income

518

356

263

161

163

246

1,710

494

302

228

136

131

217

-3

1,506

–

Total investment

and

other income

148

127

154

101

656

197

203

197

-44

745

Total income

2,688

1,554

1,350

1,179

1,066

1,197

184

9,219

2,788

1,491

1,367

1,043

1,133

1,237

123

9,182

Expenditure

–

Operating expenses

1,577

1,065

691

724

636

629

237

5,560

1,736

1,126

652

669

644

155

5,626

–

Additions to loan loss

provision

-51

139

-101

-0

131

320

338

241

212

205

678

1,998

Total expenses

1,526

1,205

734

779

681

529

237

5,691

2,056

1,465

893

882

849

1,322

158

7,623

Result before taxation

1,162

349

616

400

384

669

-53

3,528

732

474

162

284

-85

-35

1,558

Retail Banking

1,022

134

413

160

294

2,023

1,043

-36

494

222

1,796

Wholesale Banking

140

215

203

240

669

1,558

-310

-20

-85

-2

-204

Corporate Line

-53

-34

Result before taxation

1,162

349

616

400

384

669

-53

3,528

732

474

162

284

-85

-35

1,558

Taxati

298

186

121

137

1,005

252

170

-10

553

Non-controlling interests

-0

-1

-0

Net result IFRS-EU

864

257

428

279

245

531

-140

2,464

481

302

106

178

-74

-25

969

Adjustment of the EU 'IAS

39 carve out'

477

185

-1

697

-338

-97

-379

Net result IFRS-IASB

1,341

292

613

279

245

531

-140

3,161

143

205

159

178

-74

-25

591

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

18 Fair value of assets and liabilities

Valuation Methods

The estimated fair values represent the price that would be received to sell an asset or paid to transfer a liability

in an orderly transaction between market participants at the measurement date. It is a market-based

measurement, which is based on assumptions that market participants would use and takes into account the

characteristics of the asset or liability that market participants would take into account when pricing the asset or

liability.

Fair values of financial assets and liabilities are based on quoted prices in active market where available. When

such quoted prices are not available, the fair value is determined by using valuation techniques. 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).

A comprehensive description of ING’s valuation methods and framework is reported in Note 38 ‘Fair value of

assets and liabilities’ of the 2020 Annual Report on Form

20-F of ING Group. This chapter of the Interim financial

report should be read in conjunction with the 2020 Annual

Report on Form 20-F of ING Group.

Valuation Adjustments

Valuation adjustments are an integral part of the fair value. They are included as part of the fair value to provide

better estimation of market exit value on measurement date. ING considers various valuation adjustments to

arrive at the fair value including Bid-Offer adjustments, Model Risk adjustments, Credit Valuation Adjustments

(CVA), Debt valuation Adjustments (DVA),

including DVA on derivatives

and own issued liabilities and Collateral

Valuation Adjustment (CollVA) and Funding Valuation Adjustment (FVA).

The following table presents the models reserves for financial assets and liabilities:

Valuation adjustment on financial assets and liabilities

in EUR million

June

2021

December

2020

Bid/Offer

-111

-121

Model Risk

-17

-25

CVA

-180

-238

DVA

-92

-124

CollVA

-14

-16

FVA

-91

-111

Total Valuation

Adjustments

-505

-634

All financial assets and liabilities are recognised initially at fair value. The fair value of a

financial instrument on

initial recognition is generally its transaction price.

If there is a difference between the transaction price and the

fair value of financial instruments whose fair value is based on a valuation technique using unobservable

inputs,

the entire day one difference is deferred. ING defers the Day One profit or loss relating to financial instruments

reported with significant unobservable valuation parameters, including positions classified as Level 3 and

trades

related to CVA with material unobservable input but not necessarily classified as Level 3. The deferred Day One

profit or loss is recognised in the statement of profit or loss over the life of the transaction until the transaction

matures or until the observability changes. The impact on the statement of profit and loss

in the first six months

of 2021 is deemed to be immaterial.

Financial instruments at fair value

The fair values of the financial instruments

were determined as follows:

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Methods applied in determining fair values of financial assets and liabilities (carried at fair value)

Level 1

Level 2

Level 3

Total

in EUR million

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

Financial Assets

Financial assets at fair value

through profit or loss

- Equity securities

13,976

7,897

144

138

14,123

8,037

- Debt securities

3,755

3,378

6,556

4,867

1,250

1,269

11,561

9,514

- Derivatives

22,761

30,623

129

197

22,898

30,821

- Loans and receivables

70,971

53,733

1,849

1,265

72,820

54,998

17,740

11,276

100,290

89,225

3,372

2,870

121,402

103,370

Financial assets at fair value

through other comprehensive

income

- Equity securities

2,266

1,687

168

176

2,434

1,862

- Debt securities

28,522

31,592

1,171

1,385

29,693

32,977

- Loans and receivables

889

1,056

889

1,056

30,788

33,279

1,171

1,385

1,057

1,231

33,016

35,895

Financial liabilities

Financial liabilities at fair value

through profit or loss

–

Debt securities

862

1,124

5,047

5,231

168

180

6,077

6,534

–

Deposits

59,319

48,111

59,323

48,114

–

Trading securities

735

699

804

768

–

Derivatives

20,715

27,094

160

217

20,937

27,365

1,658

1,879

85,151

80,505

331

398

87,141

82,781

The following methods and assumptions were used by ING Group to estimate the fair value of the financial

instruments:

Equity securities

Instrument description:

Equity securities include stocks

and shares, corporate investments and private equity

investments.

Valuation:

If available, the fair values of publicly traded equity securities and private equity securities are based

on quoted market prices. In absence of active markets, fair values are estimated by analysing the investee’s

financial position, result, risk profile, prospect, price, earnings

comparisons and revenue multiples. Additionally,

reference is made to valuations of peer entities where quoted prices in active markets are available. For equity

securities best market practice will be applied using the most relevant valuation method.

All non-listed equity

investments, including investments in private equity funds, are subject to a standard review framework which

ensures that valuations reflect the fair values.

Fair value hierarchy:

The majority of equity securities are publicly traded and quoted

prices are readily and

regularly available.

Hence, these securities are classified as Level 1.

Equity securities which are not traded in

active markets mainly include corporate investments, fund investments and other equity securities and are

classified as Level 3.

Debt securities

Instrument description:

Debt securities include government bonds, financial institutions

bonds and Asset-backed

securities (ABS).

Valuation:

Where available, fair values for debt securities are generally based on quoted market prices.

Quoted

market prices are obtained from an exchange market, dealer,

broker,

industry group, pricing service, or

regulatory service. The quoted prices from non-exchange sources are reviewed on their tradability of market

prices. If quoted prices in an active market are not available, fair value is based on an analysis of available market

inputs, which includes consensus prices obtained from one

or more pricing services. Furthermore, fair values are

determined by valuation techniques

discounting expected future cash flows using a market interest rate curves,

referenced credit spreads, maturity of the investment, and estimated prepayment rates where applicable.

Fair value hierarchy:

Government bonds and financial institutions bonds are generally traded in active markets,

where quoted prices are readily and regularly available and are hence, classified as

Level 1. The remaining

positions are classified as Level 2 or Level 3.

Asset backed securities for which no active market is available and a

wide discrepancy in quoted prices exists, are classified as Level 3.

Derivatives

Instrument description:

Derivatives contracts can either be exchange-traded or over the counter (OTC).

Derivatives include interest rate derivatives, FX derivatives, Credit derivatives, Equity derivatives and commodity

derivatives.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Valuation:

The fair value of exchange-traded derivatives is determined using quoted market prices in an active

market and are classified as Level 1 of the fair value hierarchy. For

instruments that are not actively traded, fair

values are estimated based on valuation techniques. OTC derivatives and derivatives trading in an inactive

market are valued using valuation techniques. The valuation techniques and inputs depend on

the type of

derivatives

and the nature of the underlying instruments. The principal

techniques used to value these

instruments are based on (amongst others) discounted cash flows option pricing models

and Monte Carlo

simulations. These valuation models calculate the present value of expected future cash flows, based on

‘no-

arbitrage’ principles. The models are commonly used in the financial

industry and inputs to the validation models

are determined from observable market data where possible. Certain inputs may not be observable in the

market, but can be determined from observable prices via valuation model calibration procedures. These inputs

include prices available from exchanges, dealers, brokers or providers of pricing, yield curves, credit spreads,

default rates, recovery rates, dividend rates, volatility of underlying interest rates,

equity prices, and foreign

currency exchange

rates and reference is made to quoted prices, recently executed trades, independent market

quotes and consensus data, where available.

For uncollateralised OTC derivatives, ING applies Credit Valuation Adjustment to correctly reflect the

counterparty credit risk in the valuation. See section DVA/BVA in section b) Valuation Adjustments for more

details regarding the calculation.

Fair value hierarchy:

The majority of the derivatives are classified as Level 2. Derivatives for which the input

cannot be implied from observable market data are classified as Level 3.

Loans and receivables

Instrument description:

Loans and receivables are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market. Loans and receivables carried at fair value includes trading

loans, being securities lending and similar

agreement comparable to collateralised lending, syndicated loans,

loans expected to be sold and receivables with regards to reverse repurchase transactions.

Valuation:

The fair value of loans and receivables are generally based on quoted market prices. The fair value of

other loans is estimated by discounting expected future cash flows using a discount rate that reflects credit risk,

liquidity, and other current market conditions. The fair value of mortgage loans is estimated by taking into

account prepayment behaviour.

Fair value hierarchy:

Loans and receivables are predominantly classified as Level 2. Loans

and receivables 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 are classified as Level 3 and are expected to be sold as Level 3.

Financial liabilities at fair value through profit and loss

Instrument description:

Financial liabilities at fair value through profit and loss include debt securities,

debt

instruments, primarily comprised of structured notes, which are held at fair value under the

fair value option.

Besides that, it includes derivative contracts and repurchase agreements.

Valuation:

The fair values of securities in the trading portfolio and other liabilities

at fair value through profit or

loss are based on quoted market prices, where available. For those securities not actively traded, fair values are

estimated based on internal discounted cash flow valuation techniques using interest rates and credit spreads

that apply to similar instruments.

Fair value hierarchy:

The majority of the derivatives are classified as Level 2. Derivatives for which the input

cannot be derived from observable market data are classified as Level 3.

Transfers

between Level 1 and 2

NaN

significant transfers between Level 1 and 2 and no significant changes in the valuation techniques were

recorded in the reporting period 2021.

Level 3: Valuation techniques and inputs used

Financial assets and liabilities in Level 3 include both

assets and liabilities for which the fair value was determined

using (i) valuation techniques that incorporate unobservable inputs as well as

(ii) quoted prices which have been

adjusted to reflect that the market was not actively trading at or around the balance sheet date. Unobservable

inputs are inputs which are based on ING’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 circumstances.

Unobservable inputs may include volatility, correlation, spreads to discount rates, default rates and recovery

rates, prepayment rates, and certain credit spreads. Valuation techniques that incorporate unobservable inputs

are sensitive to the inputs used.

Of the total amount of financial assets classified as Level 3 as at 30 June

2021 of EUR

4.4

billion (31 December

2020: EUR

4.1

billion), an amount of EUR

1.5

billion (

34.6

%) (31 December 2020: EUR

2.1

billion, being

52.3

%) is

based on unadjusted quoted prices in inactive markets. As ING does not generally adjust quoted

prices using its

own inputs, there is no significant sensitivity to ING’s own unobservable inputs.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Furthermore, Level 3 financial assets includes approximately EUR

1.6

billion (31 December 2020: EUR

0.9

billion)

which relates to financial assets that are part of structures that are designed to be fully neutral in terms of

market risk. Such structures include various financial assets and liabilities for which the overall sensitivity

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 structures may be

sensitive to unobservable inputs, the overall sensitivity is by design not significant.

The remaining EUR

1.3

billion (31 December 2020: EUR

1.1

billion) of the fair value classified in Level 3 financial

assets is established using valuation techniques that incorporates certain inputs that are unobservable.

Of the total amount of financial liabilities classified as Level

3 as at 30 June 2021 of EUR

0.3

billion (31 December

2020: EUR

0.4

billion), an amount of EUR

0.2

billion (

52.4

%) (31 December 2020: EUR

0.1

billion, being

34.6

%) is

based on unadjusted quoted prices in inactive markets. As ING does not generally adjust quoted prices

using its

own inputs, there is no significant sensitivity to ING’s own unobservable inputs.

Furthermore, Level 3 financial liabilities includes approximately EUR

0.1

billion (31 December 2020: EUR

0.1

billion) which relates to financial liabilities that are part of structures that are designed to be fully

neutral in

terms of market risk. As explained above, the fair value of each of the components of these structures may be

sensitive to unobservable inputs, but the overall sensitivity is by design not

significant.

The remaining EUR

0.1

billion (31 December 2020: EUR

0.2

billion) of the fair value classified in Level 3 financial

liabilities is established using valuation techniques that incorporates certain inputs that are unobservable.

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 analysis of unobservable inputs (Level

3).

��

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Valuation techniques and range of unobservable

inputs (Level 3)

Assets

Liabilities

Valuation techniques

Significant unobservable inputs

Lower range

Upper range

in EUR million

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

At fair value through profit or loss

Debt securities

1,250

1,269

Price based

Price (%)

104

107

Equity securities

144

137

Price based

Price (EUR)

5475

Loans and advances

1,363

1,090

Price based

Price (%)

101

Present value techniques

Credit spread (bps)

250

(Reverse) repo's

486

176

Present value techniques

Interest rate (%)

Structured notes

168

180

Price based

Price (%)

118

109

Option pricing model

Equity volatility (%)

Equity/Equity correlation

n.a.

0.6

n.a.

0.9

Equity/FX correlation

-0.3

-0.7

-0.3

0.3

Dividend yield (%)

Derivatives

–

Rates

Option pricing model

Interest rate volatility (bps)

Present value techniques

Reset spread (%)

–

Option pricing model

FX volatility (bps)

n.a.

–

Credit

168

154

Present value techniques

Credit spread (bps)

599

1,403

Price based

Price (%)

100

107

–

Equity

Option pricing model

Equity volatility (%)

Equity/Equity correlation

0.5

0.8

0.9

Equity/FX correlation

-0.5

-0.6

0.1

Dividend yield (%)

Price based

Price (%)

–

Other

Option pricing model

Commodity volatility (%)

Com/FX correlation

n.a.

-0.5

n.a.

-0.3

At fair value through other comprehensive income

–

Loans and advances

889

1,056

Present value techniques

Prepayment rate (%)

Price based

Price (%)

100

–

Equity

168

176

Present value techniques

Credit spread (bps)

Interest rate (%)

Price based

Price

n.a.

Other

Total

4,429

4,101

331

398

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Price

For securities, where market prices are not available, fair value is measured by comparing the value of these

securities with observable pricing data of similar instruments.

Prices of

% are distressed to the point that no

recovery is expected, while prices significantly in excess of

100

% or par are expected to pay a yield above current

market rates.

Credit spreads

Credit spread is the premium above a benchmark interest rate, typically LIBOR or relevant treasury instrument,

required by the market participant to accept a lower credit quality. Higher credit spreads indicate lower credit

quality and a lower value of an asset.

Volatility

Volatility is a measure for variation of the price of a financial instrument or other valuation input over time.

Volatility is one of the key inputs in option pricing models. Typically, the higher the volatility,

the higher the value

of the option. Volatility varies by the underlying reference (equity, commodity,

foreign currency and interest

rates), by strike, and maturity of the option. The minimum level of volatility is

% and there is no theoretical

maximum.

Correlation

Correlation is a measure of dependence between two underlying

references which is relevant for valuing

derivatives and other instruments having more than one underlying reference. High positive correlation (close to

1) indicates strong positive (statistical) relationship, where underliers move, everything else equal, into the same

direction. The opposite holds for a high negative correlation.

Reset spread

Reset spreads are key inputs to mortgage linked prepayment swaps valuation. Reset spread is the future spread

at which mortgages will re-price at interest rate reset dates.

Inflation rate

Inflation rate is a key input to inflation linked instruments. Inflation linked instruments protect against price

inflation and are denominated and indexed to investment units. Interest payments would be based on the

inflation index and nominal rate in order to receive/pay the real rate of return. A rise in nominal coupon

payments is a result of an increase in inflation expectations, real rates, or both. As markets for these inflation

linked derivatives are illiquid, the valuation parameters become unobservable.

Dividend yield

Dividend yield is an important input for equity option pricing

models showing how much dividends a company is

expected to pay out each year relative to its share price. Dividend yields are generally expressed as an annualised

percentage of share price.

Jump rate

Jump rates simulate abrupt changes in valuation models. The rate is an added component to the discount rate in

the model to include default risks.

Prepayment rate

Prepayment rate is a key input to mortgage and loan valuation. Prepayment rate is the estimated rate

at which

mortgage borrowers will repay their mortgages early, e.g.

% per year. Prepayment

rate and reset spread are key

inputs to mortgage linked prepayment swaps valuation

ING Group Interim financial report

on form 6-K for the six month period ended

30 June 2021 - Unaudited

Level 3: Changes during the period

Changes in Level 3 Financial assets

Trading assets

Non-trading

derivatives

Financial assets

mandatorily at FVPL

Financial assets

designated at FVPL

Financial assets

at FVOCI

Total

in EUR million

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

Opening balance

882

174

1,191

1,381

796

1,244

1,231

1,961

4,101

4,768

Realised gain/loss

recognised in the statement of profit or loss during the period

-61

-1

-104

-0

-198

-8

-19

-383

Revaluation recognised in other comprehensive income during the period

-8

-46

-8

-46

Purchase of assets

453

834

1,180

489

212

1,393

1,887

Sale of assets

-32

-73

-3

-8

-265

-973

-25

-270

-147

-419

-472

-1,743

Maturity/settlement

-8

-39

-1

-21

-83

-12

-57

-53

-175

-94

-354

Reclassifications

-16

330

-13

-105

-29

224

Transfers

into Level 3

517

-3

-1

523

Transfers

out of Level 3

-496

-90

-528

-138

-496

-755

Exchange rate differences

-24

-4

-27

Changes in the composition of the group and other changes

Closing balance

379

882

1,743

1,191

1,248

796

1,057

1,231

4,429

4,101

Net gains/losses were recorded as ‘Valuation results and net trading income’ in the statement

of profit or loss. The total amounts

includes EUR

million (31 December 2020: EUR

312

million) of unrealised gains and losses recognised in the statement of profit or loss.

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’.

Financial assets transfers into and transfers out of fair value hierarchy levels are

made on a quarterly basis at the

end of the reporting period.

In the first six months of 2021, financial assets transfers out of Level 3 is mainly related to debt securities due to

the valuation no longer being significantly impacted by unobservable inputs

and the short term nature of the

instruments.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Changes in Level 3 Financial liabilities

Trading liabilities

Non-trading derivatives

Financial liabilities

designated as at fair

value through profit or

loss

Total

in EUR million

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

Opening balance

180

195

110

180

184

398

490

Realised gain/loss

recognised in the

statement of profit or

loss

during the period

-2

-22

-4

Additions

662

736

Redemptions

-2

-116

-3

-45

-159

-90

-164

-250

Maturity/settlement

-39

-11

-0

-52

-0

-83

-40

-146

Transfers

into Level 3

170

228

267

242

445

Transfers

out of Level 3

-96

-111

-3

-23

-165

-738

-264

-873

Closing balance

130

180

168

180

331

398

Net gains/losses were recorded as ‘Valuation results and net trading income’ in the statement

of profit or loss. The total amount includes

EUR

million (2020: EUR

-4

million) of unrealised gains and losses recognised in the statement of profit or loss.

Financial liabilities transfers into and transfers out of fair value hierarchy

levels are made on a quarterly basis at

the end of the reporting period.

In the first six months of 2021, financial liabilities transfers into and out of level 3 mainly consisted of structured

notes, measured as designated at fair value through profit or loss. The structured notes were transferred out of

Level 3 due to the valuation being significantly respectively no longer significantly impacted by unobservable

inputs

, while the reverse holds for structured notes that were transferred into Level 3.

Recognition of unrealised gains and losses in Level 3

Amounts recognised in the statement of profit or loss relating to unrealised gains and losses during the year that

relates to Level 3 assets and liabilities are included in the line item ‘Valuation results and net trading income’ in

the statement of profit or loss.

In 2020 and the first half of 2021, unrealised gains and losses that relate to ‘Financial assets

at fair value through

other comprehensive income’ are included in the Revaluation reserve – Equity securities at fair value through

other comprehensive income or Debt

Instruments at fair value through other comprehensive income.

Level 3: Sensitivity analysis of unobservable inputs

Where the fair value of a financial instrument is determined using inputs which

are unobservable and which 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

% level of valuation certainty. The

actual levels chosen for the unobservable inputs in preparing the financial

statements are consistent with the

valuation methodology used for fair valued financial instruments.

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 Level 3

inputs the actual valuation adjustments may also reflect the benefits of portfolio offsets.

This disclosure does not attempt to indicate or predict future fair value movement. The numbers in isolation give

limited information as in most cases these Level 3 assets and liabilities should be

seen in combination with other

instruments (for example as a hedge) that are classified as Level 2.

The valuation uncertainty in the table below is broken down by related risk class rather than by product. The

possible impact of a change of unobservable inputs in

the fair value o of financial instruments where

unobservable inputs are significant to the valuation is as follows:

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Sensitivity analysis of Level 3 instruments

Positive fair value

movements from

using reasonable

possible alternatives

Negative fair value

movements from

using reasonable

possible alternatives

in EUR million

June

2021

December

2020

June

2021

December

2020

Equity (equity derivatives, structured notes)

-21

-14

Interest rates (Rates derivatives,

FX derivatives)

-1

Credit (Debt securities, Loans, structured notes, credit derivatives)

-27

-49

–42

i) Financial instruments not measured at fair value

The following table presents the estimated fair values of the financial instruments not measured at fair value in

the statement of financial position. The aggregation of the fair values presented below does not represent, and

should not be construed as representing, the underlying value of ING

Group.

Methods applied in determining fair values of financial assets and liabilities (carried at amortised cost)

Carrying Amount

Carrying amount

approximates fair value

Level 1

Level 2

Level 3

Total fair

value

in EUR million

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

June

2021

December

2020

Financial Assets

Loans and advances to banks

26,198

25,364

2,548

2,165

7,714

7,763

15,990

15,611

26,252

25,539

Loans and advances to customers

607,777

593,970

19,007

17,486

17,828

14,595

583,268

576,659

620,103

608,740

Securities at amortised cost

49,467

50,587

47,444

49,109

2,433

2,550

586

622

50,462

52,281

683,442

669,921

21,555

19,651

47,444

49,109

27,975

24,908

599,844

592,892

696,817

686,560

Financial liabilities

Deposits from banks

89,134

78,098

6,306

3,918

77,571

68,473

5,870

6,014

89,748

78,405

Customer deposits

620,564

609,517

590,870

580,262

17,081

14,007

12,730

15,704

620,682

609,972

Debt securities in issue

91,840

82,065

-0

51,051

51,906

22,879

24,005

18,283

6,449

92,213

82,360

Subordinated loans

14,791

15,805

-0

14,263

15,013

1,167

1,161

15,429

16,174

816,329

785,484

597,176

584,180

65,314

66,919

118,698

107,645

36,883

28,167

818,072

786,911

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Legal proceedings

ING Group and its consolidated subsidiaries are involved in governmental, regulatory, arbitration and legal

proceedings and investigations in the Netherlands and in a number of foreign jurisdictions,

including the U.S.,

involving claims by and against them which arise in the ordinary course of their businesses,

including in

connection with their activities as lenders, broker-dealers, underwriters, issuers of securities and investors and

their position as employers and taxpayers. In certain of such proceedings, very large or indeterminate amounts

are sought, including punitive and other damages. This note should

be read in conjunction with Note 45 of the

2020 consolidated financial statements of ING Group, which included further details on

legal proceedings.

While it is not feasible to predict or determine the ultimate outcome of all pending or

threatened governmental,

regulatory, arbitration and legal proceedings and investigations, ING is of the opinion that some of the

proceedings and investigations set out below may have or have in the recent past had a significant effect on the

financial position, profitability or reputation of ING and/or ING and its consolidated subsidiaries.

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 various

requirements for client on-boarding and the prevention of money laundering and corrupt practices. Following

the entry into the settlement agreement, ING 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 against ING in connection with the subject matter of

the settlement, have

filed or may file requests for disciplinary proceedings against ING employees based on the

Dutch “Banker’s oath”.

Certain parties filed requests with the Court of 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. In

December 2020, the Court of Appeal issued

its final ruling. In this ruling the prosecutors' decision to enter into

the settlement agreement with ING was upheld, making the settlement final. However, in a separate ruling, the

Court ordered the prosecution of ING’s former CEO.

Findings regarding AML processes:

As previously disclosed, after its September 2018 settlement with Dutch

authorities concerning anti-money laundering matters, and in the context of significantly increased attention on

the prevention of financial economic crime, ING has experienced heightened scrutiny by authorities

in various

countries. The interactions with such regulatory and judicial authorities have included,

and can be expected to

continue to include, onsite visits, information requests, investigations and other enquiries. Such interactions, as

well as ING’s internal assessments in connection with its global enhancement programme, have in some cases

resulted in satisfactory outcomes, and also have resulted in, and may continue to result in, findings, or other

conclusions which may require appropriate remedial actions by ING, or may have other 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 continues to take steps to enhance its management of compliance risks and embed stronger awareness

across the whole organisation. These steps are part of the global KYC programme and set of initiatives, which

includes enhancing KYC files and working on various structural improvements in compliance policies,

tooling,

monitoring, governance, knowledge and behaviour.

SIBOR – SOR litigation:

In July 2016, investors in derivatives tied to the Singapore Interbank Offer Rate (“SIBOR”)

filed a U.S. class action complaint in the New York District Court alleging that several banks, including ING,

conspired to rig the prices of derivatives tied to SIBOR and the Singapore Swap Offer Rate (“SOR”). The lawsuit

refers to investigations by the Monetary Authority of Singapore (“MAS”) and other regulators, including the U.S.

Commodity Futures Trading Commission (“CFTC”), in relation to rigging prices of SIBOR-

and SOR based

derivatives. In October 2018, the New York District Court issued a decision dismissing all claims against ING

Group and ING Capital Markets LLC, but leaving ING Bank, together with several other banks, in the case, and

directing plaintiffs to file an amended complaint consistent with the Court's rulings. In

October 2018, plaintiffs

filed such amended complaint, which asserts claims

against a number of defendants but none against ING Bank

(or any other ING entity), effectively dismissing ING Bank from the case. In December

2018, plaintiffs sought

permission from the Court to file a further amended complaint

that names ING Bank as a defendant. In July 2019,

the New York District Court granted the defendants’ motion to dismiss and denied leave to further amend the

complaint, effectively dismissing all remaining claims against ING Bank. In March 2021, the Second Circuit court

vacated the District Court’s ruling. The case was remanded to the District Court to reconsider the amended

complaint that would add ING Bank N.V.

back to the case. In May 2021, the Second Circuit court denied the

defendants’ petition for rehearing with the Second Circuit court.

ING Group Interim financial report

on form 6-K for the six month period ended 30 June

2021 - Unaudited

Interest rate derivatives claims:

ING is involved in several legal proceedings in the Netherlands with respect to

interest rate derivatives that were sold to clients in connection with floating interest rate loans in order to hedge

the interest rate risk of the loans. These proceedings are based on several legal grounds, depending on the facts

and circumstances of each specific case, inter alia alleged breach of duty of care, insufficient information

provided to the clients on the product and its risks and other elements related to the interest rate derivatives

that were sold to clients. In some cases, the court has ruled in favour of the claimants and

awarded damages,

annulled the interest rate derivative or ordered repayment of certain amounts to the claimants. The total

amounts that need to be repaid or compensated in some cases still need to be determined.

ING may decide to

appeal against adverse rulings. Although the outcome of the pending litigation and similar

cases that may be

brought in the future is uncertain, it is possible that the courts may ultimately rule in

favour of the claimants in

some or all of such cases. Where appropriate a provision has been taken. The aggregate financial impact of

the

current and future litigation could become material.

Mortgage expenses claims:

ING Spain has received claims and is involved in procedures with customers

regarding reimbursement of expenses associated with the formalisation of mortgages. In most court proceedings

in first instance the expense clause of the relevant mortgage contract has been declared null and ING Spain has

been ordered to reimburse all or part of the applicable expenses. Since 2018,

the Spanish Supreme Court and the

European Court of Justice have issued rulings setting out which party should

bear notary, registration, agency,

and stamp duty costs. In January 2021, the Spanish Supreme Court

ruled that valuation costs of mortgages,

signed prior to 16 June 2019, the date the new mortgage law entered into force, should be borne by the bank.

Media attention for the statute of limitations applicable to the right to claim reimbursement of costs resulted in

an increased number of claims at the beginning of

2021. In June 2021, the Supreme Court has published

a press

release informing of its decision to ask ECJ for a preliminary ruling regarding the criteria that should be applied

determine the date from which the action for claiming the reimbursement of mortgage expenses is considered to

be expired. ING Spain has also been included, together with other

Spanish banks, in three class actions filed by

customer associations. In one of the class actions an agreement

was reached with the association. In another

class action ING filed an appeal asking the Spanish

Court of Appeal to determine that the ruling of the

court of

first instance is only applicable to the consumers that were part of the case. A provision has been established in

the past and has been adjusted where appropriate.

Claims regarding mortgage loans in Swiss franc in Poland:

ING Poland is a defendant in several lawsuits with

retail customers who took out mortgage loans indexed to the Swiss franc. Such customers have alleged that the

mortgage loan contract contains abusive clauses. One element that the court is expected to consider in

determining whether such contracts contain abusive clauses is whether the rules to determine

the exchange rate

used for the conversion of the loan from Polish zloty to Swiss franc are unambiguous and verifiable. In December

2020, the Polish Financial Supervision Authority

(PFSA) proposed that lenders offer borrowers voluntary out-of-

court settlements on foreign-currency mortgage disputes, with mortgages indexed to Swiss franc serving as a

reference point. In February 2021, ING Poland announced its support for this initiative. ING has recorded a

portfolio provision with respect to the claims and the PFSA proposal. The Polish Supreme Court is expected to

provide further clarity on this topic in a ruling scheduled

for September 2021.

Related parties

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

party in making financial or operating decisions. Related parties of ING

Group include, among others, its

subsidiaries, associates, joint ventures, key management personnel, and various defined benefit and contribution

plans. Transactions between related parties include rendering or receiving of services, leases, transfers under

finance arrangements and provisions of guarantees or collateral.

Related party transactions in the six month period ended 30 June

2021 were similar in nature to those disclosed

in the 2020 consolidated financial statements of ING Group. No related party transactions that have taken place

in the six month period ended 30 June 2021 have materially affected the financial position

or the performance of

ING during this period.

Capital management

ING Group’s Common Equity Tier 1 capital (CET1) ratio increased to

15.7

% as at 30 June 2021 (31 December

2020:

15.5

%), mainly due to capital generation.

ING’s CET1 ambition level is around

12.5

%. This ambition level is comfortably above the current Maximum

Distributable Amount (MDA) level of

10.51

%, implying a management buffer of ~

200

basis points.