Ladies and gentlemen, thank you for standing by. Welcome to the ING Third Quarter 2007 Results Conference Call on the 7th of November 2007. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. [Operator Instructions]. I would now like to hand the conference over to Mr. Thomas Werheim [ph]. Please go ahead sir.

Good morning, this is Thomas Werheim welcoming you to ING's third quarter 2007 conference call. Before handing this conference call over to Michel Tilmant, Chief Executive Officer of ING Group and John Hele, Chief Financial Officer, let me first say that any forward-looking statements in today's comments are subject to a number of variables including interest rates, foreign exchange rates, inflation rates, movements in securities markets including equity markets and the underlying economic conditions and changes. The realization of forward-looking statements could be materially altered by unexpected movements in any or all of these and other variables. Good morning, Michel and John. Michel, over to you

Yes, good morning to all of you and thank you for joining us this morning. Let me first say that the key issue this morning is that our results demonstrates a structural resilience in a very challenging environment as our risk management or risk policies and strong balance sheet has protected us against the market turmoil. Second, our commercial performance has remained robust as witnessed both in the insurance by our value of new business and sales growth or volume growth in retail balances in banking. We recognize that we have a more challenging environment and you can here and there that specific businesses and product areas were affected by the environment, and we'll come back on that. Nevertheless, we have continued investment to support growth and optimize our competitive position. We have made some organic growth initiative. We have made some acquisitions, but also we have made investment in restructuration. And finally, we continue our capital reallocation and it's important as we are selling some business that we feel are not in the core of our strategy or don't provide sufficient growth to reinvest in growth markets. And very quickly the summary on the financial highlights, and underlining this profit, we are up 19.2% to about €1.95 billion supported by investment gains. Underlying net profit includes a €455 million net gain on the sell of part of ING stake in ABN Amro. Profit declined 8.6% excluding ABN Amro gain. Let me analyze a few areas. First of all, reevaluations on real estate and private equity investment in Insurance Europe particularly in the Dutch market are less favorable this quarter than in recent quarter. This is not surprising, but has an immediate effect to the numbers. Second, we have lower strategic trading results in wholesale bank and slower deal flow…

Good morning everyone and I will just give you some insight into a few key areas of our numbers, if you look at the growth in net profit, there is a few things I would like to highlight. The first is our tax rate, which was 15% in the third quarter and you that number is circled on the page. We had given guidance that we think this year our tax rate for the year will be between 15% to 20%. And you can see it's 15% here in Q3 with the upcoming gains we expect in the fourth quarter from our equity stakes. We expect to be at the lower end of that range for the full year of 15% to 20%. You can see the gains and losses on divestments, that's both the Belgium, our life brokerage business and RegioBank 444. We also have special items after tax. We have taken some of these provisions that Michel has outlined. If you look at our share buyback program to early this week on Monday, we completed 43% of the program, that's... almost €2.2 billion. We also reached an agreement to buy back our preference shares from ABN and those have a voting of 5 times the preferred share and that will be done in two tranches for a total of €105 million. We give for you down here the details of what we have in the treasury and the free float of our ordinary share is now about €2.1 billion. I would like to highlight that at the end of September, we still had 9 million of the warrants outstanding. Those expire in January 2008, so expect those to be exercised and those are exercised 2 for 1. So you'd want to put those into your projections. On the…

Good morning. ING Direct continues to be a growth engine for the Group, setting out to fulfill our mission to become the world's most preferred consumer bank. As of today, we are active in 9 countries, representing together with Japan, which we hope to have on line shortly, 70% of the world economy. We focus on four simple products: savings, mortgages, investment products and payment accounts. And we envision creating this most preferred bank by continuing to create value for our customers by making banking simple. The new expanded product categories are developing very well. Mortgages are now 46% of our total retail balances and we see improved stickiness and better cross-sell potential for our payment account customers, which today total already 670,000. The profitability by product line, which I know is of interest to many, is at this point 83% is still contributed by savings; the remainder by mortgages and consumer lending. We are still investing substantially, as you are aware, in these other product lines. But as they gain scale and efficiencies, the profitability will become evident there as well. As John already mentioned, excluding the UK and these growth investments of €100 million in the third quarter, profit was up 7.8% in a very challenging environment. If we flip to page 37, you see the total retail client balances. Here also the increasing diversification improved €6 billion in production in the third quarter. If I reduce currency exchange effects, €4 billion of that eliminated. In total, we grew €7.2 billion in mortgages. We had a net outflow of €1.4 billion in savings, primarily due to the UK and we see on the right hand side the distribution, Germany will be our largest country with one-third of our business in the UK... sorry the USA, right behind that…

Okay. Now we turn to Koos. Koos Timmermans was in charge of our risk management.

Good morning. Before going through the numbers, just a few words there. We realized the issues in the subprime market as well as with the securitizations. But just to understand the context of our numbers, our insurance company is more a selective buyer subprime mortgages rather than a manufacturer. Also, if you look at our bank, we are a selective buyer of CDOs or securitization products, but we are not a large manufacturer. And that means the portfolio which we have in our books is not something like a market average, and that is also why our numbers look relatively good. If we then go to the numbers here, first on the P&L side, yes, we have €7 million of impairment in our total €83 billion ABS portfolio. We have a small markdown in our leveraged finance pipeline and we have in trading books, we have some P&L items. We had that in both subprime and CDOs in the order of €25 million. And I'll zoom in on the fair values changes later during the presentation. Also important point is our liquidity part is doing well and we are going to unwind two conduits. And last point is I don't -- we don't think that our funding costs, our balance sheet repair job is anything serial in terms of funding future costs. If we go through the ABS portfolio, first thing is it's an €83 billion portfolio and there is 41% [indiscernible] agencies. So let's leave that part aside. We have a 32% Alt-A portfolio, we have our subprime portfolio 3.6% and then we have a small CDO/CLO portfolio. Looking at in the total, our fixed income portfolio overall including ABS and everything else, the fair value has not changed between 2Q and 3Q. So interest... credit spread widening was…

Thank you very much, Koos. Well let me conclude by saying a few things. First of all, we are looking for creating value for shareholders, and we are actively managing our business portfolio. We are not afraid to sell the company if we see that it doesn't fit or strategic long-term growth or because it's not growing fast enough. So we are not afraid with that as evidenced by selling our insurance brokerage business in Belgium. At the same time, we have a very focused strategy around customer needs, retail customer needs and we have made various acquisitions in the last few months which are focused on retail customer needs in banking, in wealth management and also, as we want to do, is to move this capital to our growth markets. So we actively manage our business portfolios. Second, we are concentrating also on organic growth. We have made new investment in banking, in pensions in Central and Eastern Europe, think about Romania. We have made new investment in bank distribution agreements in Asia, most recently in Malaysia. We have launched new VA products in Japan, the U.S. and Europe, think about Spain and Hungary. We are in the process of launching ING Direct in Japan. We have shown strong commercial traction in our insurance business worldwide with strong value of new business. And we have seen also volume growth in banking, not only in ING Direct but also in more traditional business. So organic growth is on. Third, we are permanently looking at how can we more efficiently allocate our capital and manage our capital base. Not only did we really provide capital to growth market, but as you have seen, we are continuing our share buyback program. We are nearly halfway and this shows that we have a…

Thank you, sir. Ladies and gentlemen, at this time we will begin the question and answer session. [[Operator Instructions]. Thank you. The first question comes from Mr. Nick Holmes. Please state your name and company name followed by your question.

Yes, hi, it's Nick Holmes at Lehman. I have three questions. First one is BVC from Insurance Europe seems to below a normal run rate of, I don't know what you say, but perhaps around €500 million. And the question is should we see the Q3 results as an ongoing reduction or a one-off depressed result? Perhaps you might want to answer that question before I move on to the others?

Yes, first of all, as you know, our insurance business, particularly in the Netherlands, we have a portfolio of investments to match our liability in the Netherlands, and this portfolio is well diversified in a number of categories including equities, real estate and private equity. And I think that if you look to the performance including the capital gains of ABN Amro, you can say that our equity portfolio has performed very well. So I think that we should not be ashamed of this capital gains of ABN Amro; it's a fantastic capital gains. We have decided proactively to keep those shares because we thought it was a good investment for us. It's just paying off this year. So this is very good. And to some extent, it was at the right time because it compensated the fact that the real estate portfolio, we are revaluating our portfolio every quarter and we have been experiencing exceptional improvement increase in the real estate portfolio over the last few quarters. And I think that what you see is a significant slowdown this quarter above the revaluation of our real estate portfolio. That means that the revaluation... the positive revaluation this quarter was much smaller than it used to be in the previous quarter. And I think looking into the future, I think we don't know exactly how the real estate market is going to perform in the next year. There are a number of uncertainties. I think on one end, we see very positive factors because we see that there is a great demand for real estate, particularly at some asset class are under pressure, investors are looking to invest more in real estate. So that's a very positive factor. On the other hand, what we see also that and that we…

Great, thank you for that Michel. Michel, another question to you. This is my second question, which is do you have any update for us on the earnings growth targets that I think you mentioned at the last symposium you were considering?

Yes, Nick, I don't think that the current circumstances are favorable of me making a definite choice on this, if I might say.

So nothing that you can share with us on that one.

Not at this point, no.

Okay, thank you. And then third and final question is for Dick, with ING Direct, why do you want to stay in the UK when it seems to be such a competitive market?

Well, Nick, of course, it's a big market. It is indeed a competitive market. But with our current pricing and already seeing the results as far as savings balances development based on repricing. We are adequately priced to make a margin that will allow us to make hurdle rates going forward. And of course we'll be diversifying into other product categories going forward as well so that will, let's say, decrease our dependency on just one product right now. We have more reduced, but they are still in a very early stage. So I think basically in UK we grew faster than anywhere else, too fast. Some client balances on these very high balance customers actually didn't belong to us. That has now been largely, let's say, restructured and I think we are on a sound footing to go forward. And we look at the market very positively, Nick, and actually are increasing the investment in marketing at this point to attract customers that are suitable to our market, to our direct strategy.

Okay, that's great. That's all of my questions. Thank you very much.

Thank you. The next question comes from Mr. Farooq Hanif. Please state your name and company mane followed by your question.

Good morning, this is Farooq Hanif from Morgan Stanley. I too have three questions, if I may. Firstly, you say in your subprime portfolio that it doesn't really reflect the market average. But I recall that you have a big exposure to the 2006 and 2007 vintages where others have seen much more material revaluation. I was wondering if you'd comment on that and also maybe give us some information on your Alt-A vintages. That's question one. Maybe, like Nick, if you answer that first and I can give the other two.

Okay. I know maybe something on the performance of our subprime portfolio. Indeed what we do have is we do have 2006 and 2007, but there we are more talking about the AAA. If we talk about lower rated, that is more in the 2005 and 2004 tranche. So you see that our portfolio moved more ahead like the 2007, 2006 that is predominantly almost only AAA and AA. If I then look at value in these portfolios, just a few remarks. I know that if I look at our portfolio first, we have good collateral in these portfolios. If I look also at nuances like our trades, they differ from an average ABS if that is where you're referring to also in terms of sequentiality. I mean we get repaid earlier than an average ABS. So both vintage as well as the sequentialty as well as specific technical factors that an ABS is used to quickly off load and hedge, those three factors make a difference in terms of movement of prices of subprime versus the generalization which you can see in the ABS. We are using basically external data metrics pricing from both Lehman as well IDC on this portfolio. If I move to the Alt-A portfolio, there you see relatively a lot of 2006 and 2007 and that has to do with our business model. Because remember that interest rates went down over 2005 and 2006, so you get prepayment in the portfolio; that means like you refinance. Our sweet spot in ING Direct is more the hybrid ARM, so they are relatively short term. But it does prepay, so you do refinancing. And again, there we are looking for the highest form of AAA, so that explains that we have a relatively big amount in the fresher vintages but high quality.

Okay, before I go into that two questions, I mean I am reliably informed that even AAA 2007 and 2006 vintages on subprime are sort of being marked down below 90%. So that's really the only reason I kind of ask the question. But maybe we can discuss this offline. But just the other two questions quickly. There seemed to be mixed message in your real estate. So in the Netherlands, you've not been able to take as high sort of fair value revaluations. You also say that real estate securities are under pressure yet your valuations of your real estate and other areas seem to be sort of holding up or going up. That seems to sort of be slightly contradictory. Do you agree?

Well, I think that you have to be a bit careful. If you look into our real estate business, there is a good part which is related to asset management where the fees basically are pretty stable and growing because our business portfolio is growing. Our real estate finance business has done very well and our business development has basically performed normally. So I think that from the real estate business itself, I think that the business itself has done pretty well. I think what... and also on that, we continue to see a lot of flows in the real estate market and basically investors, I would say, institutional investors looking for investments in real estate around the world. And therefore there is a market for that. So that's one thing, which is very important. Our business is still doing very well. On the other end, what we see is that if you look at the portfolio of assets under management, particularly the one which is in the insurance business, which is partly in the Netherlands area, what we have seen is that the revaluation of that portfolio this quarter has been very low compared to the last quarter because in the last quarter the revaluation had been very strong. That doesn't mean the market is a problem; that means just that the value of the properties you have has not rerated during the last quarter after having a fantastic boost in the last few quarters. So I mean that's all it says, and... but I would say unfortunately given the accounting treatment that we have to use for this that means a mark-to-mark revaluation of those building every quarter, you see an immediate impact because we have taken revaluation in the last few quarters and slower revaluation this quarter. So you see immediately the difference, and we are pretty transparent of the amount.

Okay. That's great. Just a last question. I noticed in certain areas in your banking business, you are obviously having to give up margins; you mentioned ING Direct. Even in general lending, you've been able to grow a lot, and I guess you'd probably have to give up some margin there. But overall, your RAROC has gone up, and I noticed that despite increase in risk weighted assets, your economic capital has gone down, and it seems that your economic capital as a percentage has sort of gone down even within line like general lending. I want to understand where that's coming from. Given the current circumstances, it just seems at odds with what's going on.

Okay. What I can tell you is a few things. First, indeed, our portfolio is growing. I think if you look at our economic capital numbers, we have been refining models there over the, year and I must say this has been confirmed also with what we will see with Basel II in the future where you will see a more significant uplift in our capital structure. So we are continuing refining the way how we are using our models. Also if you look at our portfolio and if you look at the statistics and if you look at the defaults and the parameters, you see no changes at this moment in terms of credit quality. So our models really don't show a deterioration there. Now I know that this is working on data in the past, but that still is reflected in the economic capital numbers which we see right now.

Will we see it continuing?

So from a technical side -- I'm sorry?

Sorry.

Yes, so the economic capital side is one part of the equation of the RAROC, and then of course if you look at the P&L side, yes, there is... partially there is the margin compression which is there. But the EC number, yes, [indiscernible] which we have is lower tax rates which work as a compensating effect as well. So two positive factors there.

I think I would like to add also is that since 2004 the wholesale bank basically concentrates at managing for value and not only managing for volume. And I think that means that when they look at the portfolio don't through the account of which the people in charge of the client, when they go out, that's what they have in mind. So they also structured the deals in such a way that to reduce the economic capital, number one. Number two, I think that we have improved also in the wholesale band the recording for instance of guarantees or of collaterals which has also improved the economic capital. So I think that it is the result of a global effort both on the risk management side, on the modeling side, on those people who are working on Basel II and on the commercial side and managing of the business which basically has shown constant improvements in 2004. So I think we are pretty proud of that.

Okay, that's very, very clear. Thank you very much.

Thank you. The next question comes from Mr. Zenon Voyiatzis. Please state your name and your company name followed by your question.

Hi, it's Zenon from Merrill Lynch. Hi everyone. Three quick questions, hopefully. The first one is on Romanian sales. The value of new business and also net flows have been very impressive there. You've got somewhere between €30 million and €40 million of VNB year-on-year. I just wonder how to look at it going forward. I mean you are talking about a sales window open in mid September. How much of that increase in VNB comes form Romanian pensions? And I mean if it's just two weeks in September; that's a fairly significant increase. How should we look at it going forward? Maybe I can come back to the other two questions in a minute.

Let me first say that when the pension market opens in a country like Romania, basically what happens is that a number of pensions funds are set up. And you basically... the government basically requests that most people who have a job basically enroll into a pension fund. Then you have a few pension funds going in the market, and the game is to enroll as many people as quickly as possible on your pension fund. And the fact that we have a brand there which is longstanding brand in Romania since years, both in insurance and banking, the fact that we were able to mobilize very, very quickly to our existing networks a number of agents, and basically each agent themselves mobilizing about 10 people around them just to go and basically go after clients to get those forms filled. Very quickly we have been able to build some very significant business by the number of clients we have acquired in a few weeks like 600,000 I mentioned to you. I think that we now have more than 30% market share as we talk now. I think that we expect... but what you have is because of that, it's a real one-shot deal. The question is to get as many clients as possible as quickly as possible on board. So what you have is you have an instant increase of the value of new business. Over time, we expect that this process will continue until the end of the year. Overall, we expect probably to have the number to be at least double and we intend to keep our market share and move. And this of course is a value of new business which represents earnings, which is going to filter through the P&L over the long period, which is the period at which those people think their contract. But if you look back to Poland, for instance where we started a business like this 10 years ago and if you look, we had exactly the same phenomenon; as a matter of fact, not as quick as this one. But you can see that it has long lasting effect on the P&L and the profit of the company. So I think that our people did a fantastic job there to capture the business, and I think we stand ready if other countries open their market, we stand ready to do the same thing.

Sorry. Can you please isolate how much of the €74 million relates to Romania?

About €30 million.

€30 million. Question number two.

€30 million to €40 million.

Sorry, €30 million to €40 million. Question number two, you've launched a new... we saw a benefit rider in the U.S. Just wanted to understand what features have you got in there either in terms of product features or hedging to protect yourselves from potential adverse selection if there is a U.S. economic slowdown scenario.

The new rider we call the product LifePay or LifePay Plus, it is a withdrawal benefit rider that stipulates that the benefit base will grow at a minimum of 7% and we delta hedge that by basically taking short positions in the equity market. And we charge depending on the type of product between 60 basis points and 75 basis points for the cost of that hedging.

Right. And the third question, just moving to ING Direct, you talked about the cost of the investment into mortgages, the €72 million. That presumably corresponds to your 140 basis points of upfront costs that you talk about writing new mortgages. Is that correct?

Well, if you do the calculation, €72 million versus €7.2 billion of production, it's 1%. But that's the accounting, let's say, reflection of those costs. If you look at them more on a cash flow basis, then you're talking about the 140 basis points that you're mentioning.

Right. So my question was really a follow up on that. If you were to I mean you also have now an €80 billion portfolio and you also talked about a 40 basis point run rate from that portfolio back in Q1 results. I just wondered what is the... on the income side, what is the run rate now and how quickly would you expect to get to that 40 basis points excluding the upfront costs?

The margin development on the mortgage is still basically the same as what I mentioned to you earlier on in the first quarter. So it varies by market, but 80 to 90 basis points gross margin. Our total operational cost to the balances today is for the acquisitions is something like 45 basis points. That number will come down, as the percentage growth decreases, will come down significantly so in the order of 20 to 25 basis points.

Right. But even if you are, say, 20 to 25 points, you should be getting a run rate, a quarterly run rate maybe about €30 million to €40 million for the mortgage portfolio. How much are you getting at the moment?

That's correct. We expect a profit on the mortgage this year in the order of €70 million to €80 million.

So that's annual, so I guess that's 20. Okay, perfect. Thanks.

And it's tending up very much because, as we communicated only in the last... the third quarter of last year did we actually go into the black on the mortgage line of business.

Great, thanks.

Thank you. The next question comes from Mr. Marc Thiele. Please state your name and company name followed by your question.

Good morning. Marc Thiele from UBS. I have two questions; one is on the investment side, subprime CDOs and Alt-A. Have you run stress test to sort of look at that portfolio? Have you run stress test, for example, based on a 20% decline in U.S. house price market and can you share some results with us? And then the second question is can you give us an update on the mark to market of the Alt-A? On one of the slides, I think it says €460 million declined in the third quarter. What will be the number at this moment?

First, on the stress testing side, yes, we do perform stress tests. I alluded to that for instance with ING Direct. If we take the Alt-A portfolio, we look at the credit enhancement and we compare that to the portfolio and we compare that to the pipeline losses which are there in the portfolio. And if it reaches a certain level, so if it goes more... the relationship is not one in ten, but is more one in five, then we start to scratch our head and think by ourselves like do we still want to keep this or is there anything else what we will do. So that's first example of stress testing. If I look at other types of stress tests, if I take the CDO portfolio in the bank, we both perform tests in terms of when [ph] to default of the underlying portfolio without wanting to get too technical and also we look at stressing the correlations between the different tranches which we are short and long. So there are tests done over these ones as well. You could say with stress testing we are getting served by the market as well, because that is one bigger stress as a whole, and it's holding up relatively well. So, yes, stress tests on the subprime, on the Alt-A portfolio as well as on the portfolio of CDOs are performed at a business unit level. The other element, if we go back to the Alt-A revaluation, what you said indeed is we have the €460 million. That is the negative revaluation which is there at this moment, the total. So that moved from a certain amount in the previous quarter to €460 million right now. If you ask like what does that do to October? We've seen no material changes in that portfolio. So we had the first few days in October we are positive and then we have a slight negative with credit spread widening, but that's still an offset in rates.

Yes, Marc, this is John. I think you said it went down by €400 million, but really, that's the balance of the pre-tax revaluation reserve. It was minus 233 in July, the end of July, it's now minus €460 million. And it's pre-tax, and that's on a portfolio of €26.9 billion. We checked these balance recently of course with all the excitement going on in the marketplaces and it materially has not changed to the end of October.

Excellent. Do you have any sort of indication what would happen with the 20% decline in U.S. house prices?

No, I would really have to recalculate and run that through my model with an LGD, and that is what I don't have ahead over here.

As you can see, our loan to values are very good in these portfolios of the Alt-A and also the FICO scores, I mean the ability of people to pay, it's not just the house price, because house prices may go down, but can the people keeping paying? I think there are really two factors here that you have to think about a risk profile and we're good in both of these versus missing on our being --

I mean let's remember also that the first line of defense when you make a loan and the first principle of a loan is that you assume to be repaid and that you look at the quality of the borrower. And I think that we have always put a lot of emphasis at ING to make sure that if we buy a portfolio of this kind of instruments, the quality of the borrower is pretty high. And I think if we look to the FICO scores of our portfolio, it's extremely high, 722, it's close to the market prime average of 734. So I think from that standpoint, we are... and then the second issue is what is the second line of defense is the value of the portfolio and what is the loan to value. And if we look to the loan to value, we have also been very conservative with an average of less than 70%.

And maybe I can add something there, Marc. If I take the Alt-A portfolio, we have at the moment an average loan to value of 70%. Suppose that this becomes 50%, then if you move back to page 46 of the presentation, you see our estimated pipeline mortgage pool 3.4, then it means the losses in this case will not became estimated 1.2, but that would become 1.7 because that is basically the part which is uncovered, so. And then we have a 1.7% losses versus the credit enhancement of 11.2. That covers basically the Alt-A portfolio. On the subprime, I just want to reiterate the front-end part that we get repaid relatively early in the process given our higher ratings of it, so. But we can have a look at the specifics of that portfolio and run a simulation of the LGD there, but the big portfolio of Alt-A is what you have basically off the shelf here.

But I think that the good news here, I mean the fundamental good news here if you look to our asset base is that the part of subprime and the part of CDO/CLOs is extremely limited on our balance sheet. I think that's the first overwhelming conclusion that you should take, all right, and I think not only in relative term but in absolute terms and that within those portfolio I think that they are behaving properly. I think that, lets to some extent, realize the performance here.

That's excellent. Thank you very much.

Thank you. The next question comes from Mr. Christopher Hitchings. Please state your name and company name followed by your question. Chris Hitchings - Keefe, Bruyette & Woods: Hi, it's Chris Hitchings from KBW. Just a couple of issues. Firstly, a comment on, really, please ING Direct UK is no longer targeting large balances. Can you tell your marketing department to actually stop bombarding me with emails? First question, Asia, Japan, clearly, your SPVA product has done very well. I noted that Hartford [ph] happen to have a similar product had done less well in the third quarter and they complained about aggressive competition. And can you give us some update on that? You clearly haven't suffered from it. Perhaps you are the aggressive competition. Can you tell us something about that? Secondly, fund flows in the U.S. I believe, and I maybe wrong, that under the new disclosure you didn't get the product by product fund flows that you used to get in the U.S. stat supplement. But looking at your wealth management, there is a slight uptick in the third quarter from negative in Q1, Q2 net funds. Is that down to the variable in the U.S. including that because, clearly, one of the issues was on actual retirement services product. What are the net fund flows in that in the third quarter? Has there been any improvement on previous few quarters of rather week trends? Thank you.

Sure, Chris. In terms of Asia and Japan, well, yes, I'm sure we are the aggressive competitor, of course. We are head to head with Hartford generally in Japan. They are very good competitors. We had 18% of the market share in the third quarter, but you also have to realize that in the third quarter we had extensive advertising and marketing with our Formula One campaign. In Japan, we had our car in the train station and really had strong TV coverage and everything else. I think all these things help out in maintaining in addition to a good product. We have solid distribution. We added Nomura distribution again in late August and that started to kick in. So I think the team there has been executing well and continues to execute well in that marketplace.

And Chris, this is Tom. On the fund flows, we actually did upgrade our disclosers since so many of you have been asking for more details. So we now disclose fund flows by within retirement services, we split it between corporate 401(k), education and our IRA rollovers versus our healthcare, government and other. And I think we have been saying for, and you know this for a long time that the focus in retirement services, the corporate 401(k), education and rollover markets. And then in addition, the other important part of the wealth management is variable annuities because in many cases, as people retire they roll money out of a 401(k), it goes into a variable annuity. So the way I look at it is if you have a chance today to study pages 18 and 9 of the U.S. supplement, our focus... our goal has really been to grow assets under management. I mean that's the key driver of the wealth management business because it's a fee business. And if you look historically, we've been targeting asset under management growth of 15%. But let me break that out because I think you all tend to focus more on net cash flow, market appreciation. I sort of understand that. But of the 15%, one-third of that we would expect to come from that cash flow and two-thirds from market appreciation. So the 15 is 5% positive net cash flow and 10% from market appreciation. That's the long-term equity market growth in the U.S. And if you actually look at on page 18 the seven quarters that we show, the average net cash flow combing the corporate 401(k), education and IRA with variable annuity is the average of those seven quarters is a billion, that cash flow for those businesses, and that's around 5%.Aand then in addition to that, clearly, we have had market appreciation. So if you look at where assets under management were for, again, the 401(k), education and variable annuity business, at the end of the third quarter of 2006, it was 73... about 73.5 million... these are all in dollars in the supplement... 73.5 million of assets under management in those core segments. And at the end of the third quarter, it was 87.1%, and that's about 18.5%. So we are actually on our target. And if you look at the balance of how we got to that 18% growth, about a third is positive net cash flow and two-thirds is market depreciation. And over the long run, while you will have variances from quarter-to-quarter, that's what we would expect and ultimately that's what drives this business and I think gives it a good... makes it a good growth engine for the U.S. Chris Hitchings - Keefe, Bruyette & Woods: Okay. Thank you.

Thank you. The next question comes from Mr. Mark Cathcart. Please state your name and company name followed by your question.

Yes, hello. It's Mark Cathcart from Deutsche Bank. I want to make an observation and ask a question. The observation is if I get into a Formula One racing car with ING logo on it, I want to know two things. One is how fast it can go and also the direction in which it's actually going to travel? And I think the market is confused on both in relation to ING. For instance, in relation to how fast you can grow, we don't seem to get any earnings targets because I guess we have got all of these moving parts on gains. Also, we don't seem to know what would happen to ABS if you get a 20% decline in the housing market. We have got an uncertain outlook for risk costs. And also with ING Direct specifically, it seems to grow where you don't want it to grow and then not grow where you want it to grow. So I guess against the backdrop of Asian and U.S. growth which goes up and down, what do you think you can do as a company to really get rid of this confusion on the earnings trajectory? Because I thought the point of ING as a conglomerate was to have so many parts, you would have smooth earnings growth. And the second part to this is where is ING moving forward? Because I'm not really clear what the game is now if you want to be more a bank or more a sort of diversified player. I keep getting unclear messages on what ING actually wants to be. I guess it comes down to the conglomerate discount. And obviously it's frustrating for investors to see a relatively low rating attached to the stock. So what do you think you can do to really clear up the confusion and all of the noise that we seem to hear on this stock?

Okay. Well thank you very much Mark for those very proactive questions as usual. I mean you have... let me first respond to the overall direction of the car. I don't know if you have been to my presentation or you have listened to my presentation that I did in London recently. But I think that I was there extremely clear about the direction. And what I have said is that when we look to our customer needs and when you look to the customer needs about what they need through their life cycle, which is current account, savings accounts, payment accounts and then move to mortgage, which is the second step generally that customers do and then to buy mutual funds, then to go into private banking, then to buy annuities, then a pension contract. We believe that's... when we look at our customer worldwide, this is the area in which we want to grow, okay, and that is very clear. So we are readjusting our portfolio to grow in those areas. On top of that, we have said very clearly, we see that there are more and more of those customers sitting in emerging markets and in developing markets which are getting richer and go through this cycle also. And that's why we have... we are rebalancing our portfolio to make sure that we capture also most of those customers in emerging markets. And we have also said that we believe that as investment products and as insurance product are getting more and more close to investment products, that basically the banking distribution is more and more important, and you see us buying retail banking distribution like in Turkey and you see us making a bank distribution contract. So I think the direction is extremely clear. So, and…

I think you said in the past that you see insurance companies as tanks that get stuck on landmines and banks as jeeps that are quite nimble. So I guess --

I won't comment on that.

Yes. But I just wondered if you still felt that was the case, and so therefore you are happy buying banks and banking distribution and moving more towards being a bank than an insurance company.

Well I am saying that we are happy to buy banking distribution for the retail market. And by the way also, Mark, I think that when you buy a distribution and when you want to collect savings, you need to know what you are going to do with those savings, and that's why asset management and asset gathering is important. And it's important for us and remains very important for us in the future, so that's very clear.

Right. So what about the speed with all of this diversified asset base you have?

Well, I think that the speed... I mean you have two ways to look at it. The first, if you look to a commercial activity and a commercial development, I think the speed is pretty fantastic. Again, look at the evolution of the value of new business and our investments, look at the number of clients we acquire both in insurance and banking, look at the retail balance that we increase. I think that the commercial development of our business and the speed there is pretty fast. So I think that's pretty encouraging, and I think that we intend to continue to be fast because we invest a lot in fast moving market. No, I think that we are a financial institution, and there are factors that we cannot necessarily control and that we have to accept to basically deal as much as we can with the elements. And I think what you have seen first of all is when you look at those elements, I think that you have seen the success this quarter of a risk management. I think that it's... for us, I think this is evidencing that the prudent approach we took in the last few years is paying off. And I did that... most of you have a lot of questions about it and want to know more and more and more and more. I understand it. But the fact of the matter is that the amount of total assets which we have on our balance sheet and which are now questioned by the market is relatively small. As a matter of fact, in the grand scheme of things, you think... you could say that it's extremely small because it could have been much bigger if we had been more adventures, which we did not proactively did. So I think we have done our job there. But there are of course things that we cannot 100% manage. For instance, the yield curve, I mean this is something we have to react to and we cannot manage the yield curve itself. We can manage the consequence, but we cannot... we are not forming the yield curve. And I think that like any other financial institution, we are relatively independent of the cycles in private equity, in real estate and in equity market. And by the way, we had some negatives numbers or at least less positive numbers in real estate and private equity. But you seem to forget the fantastic capital gains we make in equities. So I mean it's easy to forget €500 million, but I don't, because I think it's completely part of our business.

I guess --

I think that if you always look at the bad side as volatile and the good side non-existent, then of course we have a problem. I think that --

It's really just trying to work out what your earnings base is and how fast you can grow the earnings base.

Yes, but the earnings base depends very much of also of all those factors. And I think that we tried to give you as much transparency as you have required. I think we had never given you more transparent than today to be able to make your own judgment about the underlying earning without those investment income and make a judgment on the investment income. And I have said also at the conference recently when I was asked are you ready to make earnings projections. And I said that philosophically, and I think we had a conversation about that a few years ago. I think philosophically, I am not very much in favor of doing this and as a matter of fact at the time when I decide to do that, I was one of the first not to publish cash flow projections. People applauded that, and by the way today... when I ask the question in a room of 200 people, 100 people said you should do it and 100 people say you should never do it. So I am still not decided about the benefits of giving very strong earning guidance from myself. Now I have to say also that going forward, we are going to see growth because of... because we basically are transforming our platform like you see in Postbank/IBN and Belgium. So we are improving our existing platform, number one. We are going to see growth because we are investing in organic growth and you have seen multi evidence of that and we are going to see growth because we have the capacity to acquire. I have to say that the current situation probably put us in a good situation to look at opportunities. We have good earnings and cash flow, we have good capital base and we feel that there might be opportunities. And if there are opportunities in the direction we want, well, I think we will look at it seriously.

If I could just ask one final question --

And by the way --

What's your RAROC ex-ING Direct if you strip out the German business?

Sorry.

What's your RAROC at ING Direct if you strip out the German business?

We strip out the German business.

So if you strip out what works extremely well, you want to call the numbers and keep the UK, right? Okay, we'll take a look at that.

Yes. Thanks.

Just a SEC, we are looking at that.

Okay. Thank you very much. That's really good. Thank you.

We are looking at that Mark.

Mark, this is John. We have got an after-tax RAROC around... DBA's [ph] 20 but all the other units are in that ballpark.

16, 15.8, total.

U.S. has been down a bit because historically they have been tighter spreads, but that's opened up in the last month or so as the Fed's change. So they should be back up to around the 20. But that's really around the target that group has had. Some have been as high as 30 like Australia and it varies depending on how the yield curves move around. Spain is 19. So I think it's a very solid business and a very efficient business in terms of return on the economic capital. This is driven a lot because the asset portfolio and how ING Direct uses the asset side as a very smart risk manager. And that drives... that keeps the economic capital lower.

And Mark just in response to your comment made about growth, I don't know if it's more on ING as a whole or ING Direct, sometimes being in places we don't want and not a place we want. I would say ING Direct, we are in a very fortune position that we are in nine countries and that we have multiple products right now. So we adjust the pressure in growth depending on market circumstances. So right now in Europe, our focus on growth is less so on savings and much more on the other product lines and developing those other product lines. In the U.S. on the other hand, if you look at the savings growth, this last quarter was a very good quarter of $5 billion. Because of the currency exchange effect, is not wiped out largely, but a very conscious decision with the market moving in our direction there that we are going to speed up growth in that area. And mortgages, this year we will end up with something in the order of €27 billion, €28 billion net growth that's even more a force in gross production. So a very solid number spread out across the various business units because mortgages is a market where we... that has a stable flow where we can really make a difference right now.

Okay, thanks a lot Bernard. That's excellent. Thank you.

Thanks Mark.

Thanks.

Thank you. The next question comes from Mr. William Elderkin. Please state your name and company name followed by your question.

Good morning everyone. It's William Elderkin from Citi. First question, if I back on the subprime and other pressurized asset causes, part A, can you confirm that you are using the same accounting standards, reporting standards of other global financial institutions? And secondly, related to that, given we have seen enormous write-downs from some of the U.S investment banks, again, possibly repeating ground you've already covered, but in layman's terms, why is ING different from those people? Second question on the Dutch life business. Perhaps it would be helpful if you could just give us an idea of what the normalized IFRS earnings rate is that back operation and assuming say that the investment markets perform consistently with your embedded value assumptions. And thirdly, can you just walk us through exactly how you got to the €37 million loss I think in ING Direct UK?

Why don't I talk to the accounting standards. Of course, we are in IFRS and some of the U.S. banks are fully under U.S. GAAP. But the standards for how you value these instruments, particularly instruments in terms of fair value sense is essentially the same. There are three categories, level 1, level 2 and level 3. We have very few in level 3, which is a model-base approach. Level 1 is a pure totally market value level 2 is in between. But there is no fundamental accounting difference in how the fair values are created. There is a difference, though. Some banks record a lot of these CDOs/CLOs at fair values to the P&L, and so they have great write up in the past as these fair values were going up and they have now seen to their P&L fair values going down. Many of ours are held available for sale, so you see it. The fair values are in the equity, they are in our balance sheet, but it's an amortized cost through the P&L. But if you look to our balance sheet, you're on an apples-to-apples basis really across all IFRS and U.S. GAAP reporters. Koos?

Yes, maybe I can add a few things on this with the valuations. Apart from the explanation which I gave that, yes, we do deviate from the ABS. There is another thing and that is first, if I look at the amount of level 1, level 2, level 3 type of valuation, our level 3 valuations, it is something in the order of less than €4 billion in total. So that means of the total amount of over €600 billion of investments, it shows that we have a relatively decomplicated asset profile. So there is the first thing to say. That does mean we do have our level 2 type of valuations where we do observe market prices, and those market prices are prices of securities based on metrics which has both weighted average life which is taking into consideration collaterals, and that is the ones which we are using to value our subprime and Alt-A portfolio. But it's a relatively uncomplicated portfolio. Does it mean that we don't see every now and then something more significant? Yes, if I give you the example in our trading portfolio in New York, that is where we had a portfolio with some CDOs which had underlying subprime. It was very small. But there we took a write-down in total of something like half if you look at it overall from June to now. So where we did see some more exotic asset classes we had a similar in-line type of write-down. But then again we don't have a lot of these.

Okay. Coming to your question as what are the normalized earnings of life insurance in Netherlands and what is basically in your embedded value assumption, well, I can tell you that the results of the third quarter are basically in line with the embedded value assumptions. So what you see today is basically what has been normalized. Now if you look back, and you can see that in the appendix that you receive, but if you... and you have to realize also that this is not basically the base, but you have realize that every year on the second quarter we have about €250 million minimum of additional dividend because it's the dividend season. So you could see that this quarter is basically on line with embedded value expect that normally the second quarter is about €250 million minimum higher than that. Okay, that's globally speaking. I would like also to remind you that in the last few quarters if you read the press release and go back those press releases and if you go back to my statement, in all those quarters I have repeatedly said that we had exceptional returns of private equity and real estate gains. So this has been clearly said by us in the last few quarters. We'll take one more question because I have to go to the press conference right now.

Thank you. The final question comes from Mr. Ton Gietman. Please state your name and company name followed by your question.

Good morning. Ton Gietman, Petercam, Amsterdam. I am lucky one to have last question. I will stick to one question then. I always learned that strategic has something to do with long term and trading is what you do for tomorrows profit or the day after. So what exactly does it mean strategic trading and could give us some feel for what numbers we are talking about change in profits here?

The strategic trading is basically it's market trading. This is a sophisticated word to say trading; it is prop trading, if you want to say.

Okay. But could you give us some idea of changes in profits in this area?

Well, I think that what I said first of all is that the month of August was pretty bad. And if you see the difference in performance, it's essentially to the trading losses that we had in August, which were not exceptionally large, but high enough to be seen. So I have to say that this situation should not be considered as recurrent; let's put it that very clear. So I have the numbers here. Basically, if you look to the quarter... to the few quarters, they were basically about €75 million loss in strategic trading in the third quarter of '07 essentially due to August. Hello, are you there?

Yes. Somebody else is ringing?

Hello. Are you there?

If you are asking me, I'm still there.

Okay. No, because we had kind of a technical problem here. And if you look to what we call strategic trading or trading and if you look to over the first quarter, the first quarter income was about €66 million, the second quarter €22 million and the third minus €74 million. But I think you should not take this as a recurrent situation because we are performing well right now, and I think that this certainly should not be considered as recurrent.

Okay, thank you.

Yes. Okay, before I close, I would like just to... seems to me that we have a technical problem again. Okay, are you there? Okay, let me conclude this call by saying that the first message is that our risk policy, our risk management and our risk profile has performed very well in this time of turmoil. And I think that we should look at that in the grand scheme of things, this is important for us. The second thing is commercial performance has been robust both in banking and insurance. Third, we recognize that there was a challenging business environment which had affected some businesses but on a very limited basis and not necessarily on a recurrent basis. We are continuing to allocate our capital and to make the right investments to support growth and optimize our competitive position. And looking forward, I think that the fundamentals of our business, the fundamentals of what we try to achieve are positive and strong and will support growth in the future. And on this, I would like to thank you very much for joining us and we might have other chance to meet. Thank you very much. Bye bye.

Ladies and gentlemen, this concludes the ING third quarter 2007 results conference call. Thank you for participating. You may now disconnect.