ING swings to profit with restructuring
The Dutch banking and insurance group reported net profit of EUR 499 million in the third quarter.The Hague – Dutch banking and insurance group ING reported a sharp switch into quarterly profit on Wednesday as it restructured after a government bail-out and said it was moving into an "exciting" phase.
For the third quarter, it reported net profit of EUR 499 million from a loss of EUR 478 million in the same period of last year.
The bank, which received a EUR-10-billion capital injection from the government a year ago to help it through the global financial crisis, said: "ING achieved a strong commercial performance in the third quarter (of 2009)."
This illustrated "the strength of our banking and insurance franchises even in this challenging economic environment," chief executive officer Jan Hommen said.
The bank said that its third quarter performance was driven by higher interest margins, more income, and lower expenses thanks to "cost-containment initiatives".
Operating expenses had been reduced by just over EUR 1 billion in the year to date, expected to reach EUR 1.3 billion for the full year.
Staff had been reduced by 10,239 by the end of the third quarter, "surpassing the full-year expected reduction of 7,000," said the statement.
The underlying net result for the third quarter came was EUR 778 million, ING said, compared with EUR 229 million in the previous quarter and a EUR-568-million loss in the third quarter of 2008.
Assets value dropped by EUR 882 million in the third quarter, due to the impact of impairments on mortgage-backed securities and negative revaluations on real estate investments.
In October, ING announced it planned to sell off its insurance operations and raise EUR 7.5 billion – EUR 5 billion of which would go to paying back its government emergency funding.
The group also benefited, in January, from the government standing guarantee for up to 80 percent of a EUR-27.7-million United States credit portfolio, for which the European Commission requires ING to pay the state EUR 1.3 billion in fees in the fourth quarter.
"We have a lot of work ahead, but this is the beginning of an exciting new phase for ING," Hommen said.
"Our resolution with the European Commission on restructuring will put behind uncertainty and enable us to focus on the future. We are also raising equity to repay the first half of the capital received from the Dutch state a year ago, which is an important milestone on our road to recovery."
AFP / Expatica