ING's profit declines 15,2% on market downturn while commercial growth momentum remains robust
ING's profit declines 15,2% on market downturn while commercial growth momentum remains robust
14 May 2008
- First-quarter earnings affected by the downturn in financial markets
- Underlying net profit declines 15.2% to EUR 1,589 million; net earnings per share EUR 0.74
- Underlying profit before tax from Insurance declines 31.2% while Banking increases slightly by 1.5%
- Lower real estate and private equity valuations, lower equity gains account for EUR 436 million net decline vs 1Q07
- Decline of most currencies against the euro has negative impact of EUR 55 million
- Limited direct impact from credit and liquidity crisis in the first quarter
- P&L impact from subprime, Alt-A and other pressurised asset classes limited to EUR 55 million after tax
- Market values impacted by lack of liquidity, with EUR -2.3 billion revaluation after tax through shareholders’ equity
- Capital position remains strong, with key ratios within target and a spare leverage capacity of EUR 6.2 billion
- Strong commercial growth continued despite competitive and turbulent markets
- Net inflow of client balances reaches EUR 34 billion with total client balances of EUR 1,456 billion
- Interest result for banking up 17.2%, driven by volume growth and an improvement in the interest margin
- New life sales up 23.1% excluding currency impacts and value of new business reached EUR 320 million
“The downturn in financial markets in the first quarter led to a decline in earnings, despite strong commercial growth momentum across the Group,” said Michel Tilmant, CEO of ING. “Market declines reduced investment income at the insurance businesses, particularly compared with the first quarter last year when investment returns were above long-term assumptions. That led to a 15.2% decline in underlying net profit for the quarter. Lower real estate and private equity valuations and lower realised gains on equities had a negative impact of EUR 436 million after tax compared with the first quarter last year. The decline in most currencies against the euro reduced earnings by EUR 55 million.”
“While the credit and liquidity crisis deepened in the first quarter, extending the disruption of global financial markets, ING’s impairments on pressurised asset classes remained limited to EUR 55 million after tax. Market prices for these assets were inevitably impacted, with fluctuations in valuation reflected in shareholders’ equity. ING’s capital position remained strong, with key ratios within target and a spare leverage capacity of EUR 6.2 billion at the end of March.”
“Commercial growth momentum was maintained across the group despite competitive and turbulent markets. The group generated a net inflow of EUR 34 billion in client balances in the quarter, with total client balances of EUR 1,456 billion at the end of March. Customer deposits at the banking businesses increased by EUR 14 billion excluding currency effects despite intense competition for savings as many banks face tight liquidity and higher wholesale funding costs. Higher volumes and an improvement in the interest margin drove the interest result on the banking side up 17.2%. Sales of life insurance and investment products remained robust despite the stock market volatility. New life sales were up 23.1% excluding currencies and the value of new business reached EUR 320 million.”
“As we saw in the first quarter, earnings and shareholders’ equity are affected by movements in fixed-income securities, equity and real estate markets. Although we have perceived some improvement in equity markets and credit spreads since the close of the first quarter, investment returns and asset values will likely remain under pressure with the correlated impact on earnings. However, with ING’s broad client access and product range, strong capital base and solid liquidity position we remain confident that ING is well positioned to help our customers manage their financial future while generating long-term profitable growth for our shareholders.”
Audiocast Analyst Conference, 14 May 2008, 9:00 Amsterdam time (8:00 London time)
Listen ONLY:
+31 20 796 5332 (NL)
+44 20 8515 2303 (UK)
+ 1 480 248 5085 (USA)
Presentation available with audiocast at www.ing.com
Audiocast Press Conference, 14 May 2008, 10:30 Amsterdam time (9:30 London time).
Listen ONLY:
+31 20 796 5332 (NL)
+44 20 8515 2307 (UK) Presentation available with audiocast at www.ing.com
US Analyst Conference Call, 14 May 2008, 10:00 New York time (16:00 Amsterdam time)
Listen ONLY:
+31 20 796 5332 (NL)
+44 20 8515 2303 (UK)
+ 1 480 248 5085 (USA)Presentation available with audiocast 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.