ING posts 2Q underlying net profit of EUR 229 million
ING posts 2Q underlying net profit of EUR 229 million
12 August 2009
- 2Q09 underlying net profit of EUR 229 million shows improvement from underlying net loss of EUR -305 million in 1Q09
- Bank interest result up 19.4% versus 2Q08 and 4.7% versus 1Q09 on improvements in savings and lending margins
- Group operating expenses down 5.5% from the second quarter of 2008 and 2.4% from the first quarter of 2009
- Results dampened by market impacts including EUR -584 million of real estate revaluations
- EUR -763 million of pre-tax hedge results offset by positive equity-related DAC unlocking and unrealised gains through equity
- Net addition to loan loss provisions of EUR 852 million at ING Bank, equivalent to 118 bps of average credit-risk weighted assets
- Divestments and special items totalled EUR -159 million, bringing the quarterly net result to EUR 71 million or EUR 0.03 EPS
- De-leveraging, de-risking and cost-containment measures progressing on track or ahead of targets
- Cumulative reduction in Bank balance sheet of EUR 164 billion, or 15%, since 3Q08 exceeds target for 10% reduction
- 53% of targeted EUR 1 billion cost savings achieved in first half of 2009; cost savings expected to reach EUR 1.3 billion for full year
- Total FTE reduction of 8,219 realised by end of 2Q09, ahead of 7,000 planned reductions for full-year 2009
- Risk-reduction efforts help offset credit rating migration, limiting the increase in risk-weighted assets to 1.7%
- All key capital and leverage ratios robust during the quarter; shareholders’ equity increases by EUR 2.9 billion
- All key capital and leverage ratios remained strong during the quarter; Bank Tier 1 ratio of 9.4% and core Tier 1 ratio of 7.3%
- Shareholders’ equity increased by EUR 2.9 billion driven by tightening credit spreads and the uptick in equity markets
- Bank asset leverage ratio of 28.9x at the end of 2Q09, down from 30.1x at the end of 1Q09
- ING has decided not to pay an interim dividend on common shares over 2009
“ING posted solid commercial performance in the quarter, as a more favourable interest rate environment and improved margins on savings and lending led to a 19.4% increase in interest income at the banking operations. In Insurance, the recovery of equity markets in the second quarter helped boost fees on assets under management. However, sales of investment-linked products remained subdued as customers awaited a sustained market rally or opted for traditional life products,” said Jan Hommen, CEO of ING.
“Benefits of Back to Basics and improvements in equity and credit markets helped the Group return to profit with an underlying net result of EUR 229 million. However, market impacts and the weaker economic environment continue to strain ING’s results. The uptick in equity markets led to a reversal of some of the DAC unlocking seen in the first quarter, but was more than offset by negative results on hedges to preserve regulatory capital. As the real economy was impacted, credit quality worsened, leading to a rise in risk costs, while lower property prices in many markets triggered negative revaluations on real estate, which are immediately reflected in the P&L.”
“While we begin to see signs of recovery in financial markets, economic conditions are expected to remain challenging for some time. Against this backdrop our Back to Basics programme is our top priority and progress is ahead of plans. Our employees have managed these aggressive cost cuts with professionalism and a continued commitment to our customers. Of our target to reduce operating expenses by EUR 1 billion this year, EUR 525 million was already achieved in the first half and we now expect cost savings to reach EUR 1.3 billion driven by further reductions in infrastructure costs. Headcount has been reduced by 8,219 FTEs year-to-date, well ahead of the original plan to reduce 7,000 FTEs this year. Deleveraging of the balance sheet is also ahead of plan: the bank has achieved a total balance sheet reduction of EUR 164 billion, exceeding the EUR 110 billion target.”
“We have made strides to reduce risk, stabilise the capital base and simplify our organisation in the first half. The merger of ING’s Dutch retail banking operations is well on track and a programme to integrate ING’s Dutch insurance operations has been announced with positive earnings contribution in 2010. In line with our Back to Basics strategy, we have also agreed to sell several non-core or subscale businesses in our efforts to streamline the Group and sharpen our strategic focus. We are currently reviewing additional strategic options to facilitate our continued transformation and realise our ambition to repay the Dutch State. The process will also support ING’s efforts to meet the restructuring requirements set out by the European Commission for financial institutions that received state aid in the context of the financial crisis. In the meantime, we continue to focus on providing first-rate service to our customers and providing them with simpler and more transparent products.”
| Analyst Conference Call, 12 August 2009, 9:00 Amsterdam time (08:00 London time)Listen only via NL: +31 45 631 6900UK: +44 207 154 2666US: +1 480 248 5085Presentation available with audiocast at www.ing.com Press Conference, 12 August 2009, 11:30 Amsterdam time (10:30 London time). Presentation available with webcast at www.ing.com |
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Certain of the statements contained in this release are statements of future expectations and other forward looking statements. These expectations are based on management’s current views and assumptions and involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those in such statements due to, among other things, (i) general economic conditions, in particular economic conditions in ING’s core markets, (ii) changes in the availability of, and costs associated with, sources of liquidity such as interbank funding, as well as conditions in the credit markets generally, including changes in borrower and counterparty creditworthiness, (iii) the frequency and severity of insured loss events, (iv) mortality and morbidity levels and trends, (v) persistency levels, (vi) interest rate levels, (vii) currency exchange rates, (viii) general competitive factors, (ix) changes in laws and regulations, and (x) changes in the policies of governments and/or regulatory authorities. ING assumes no obligation to update any forward-looking information contained in this document.