ING posts 2Q underlying net profit of EUR 1,202 million
* 2Q underlying net profit rises to EUR 1,202 million from EUR 212 million in 2Q2009 and EUR 1,018 million in 1Q2010
* Net profit increases to EUR 1,090 million from EUR 71 million in the same quarter last year
* Divestments and special items total EUR -112 million for the second quarter
* Net profit per share increases to EUR 0.29 versus EUR 0.03 in 2Q2009
* Return on IFRS equity climbs to 11.7% for the first half of 2010
* First-half underlying net profit increases to EUR 2,220 million from EUR -23 million in 1H2009
* Bank 2Q underlying profit before tax EUR 1,613 million vs. EUR -186 million in 2Q2009 and EUR 1,278 million in 1Q2010
* Income continues to increase, supported by volume growth at healthy margins and lower negative market impacts
* Cost/income ratio improves to 52.6%, approaching ambition of 50% by 2013
* Addition to loan loss provisions declined further to EUR 465 million or 55 bps of average risk-weighted assets
* Volumes increase: funds entrusted up EUR 13.6 billion, mortgage production EUR 6.1 billion, midcorps and SME up EUR 2.4 billion
* Insurance 2Q underlying result before tax EUR -115 million vs. EUR 242 million in 2Q2009 and EUR 269 million in 1Q2010
* Operating result increases slightly from 1Q2010 but declines to EUR 419 million from EUR 482 million in 2Q2009
* Underlying result impacted by EUR -521 million DAC unlocking in US, mainly on closed block, as equity markets decline
* New sales increase 22.2% from year earlier, excluding FX and closed blocks, driven by Asia, US and Latin America
* Shareholders’ equity increases by EUR 3.4 billion to EUR 41.6 billion or EUR 11.02 per share
* Bank core Tier 1 ratio improves to 8.6%, well above the 7.5% target
* Insurance Groups Directive Solvency I ratio improves to 267%
* Group debt/equity ratio improves to 11.3% and FiCo ratio increases to 167%
* ING will not pay an interim dividend over the first half of 2010
“ING continued to build earnings momentum in the second quarter, particularly at the banking business, as commercial growth gained pace and market conditions further improved,” said Jan Hommen, CEO of ING Group. “The underlying net profit for the Group increased to EUR 1,202 million in the second quarter, up from EUR 212 million a year earlier when markets were more volatile. Underlying earnings also continued their upward trend compared with the strong first quarter, increasing 18% from EUR 1,018 million, despite concerns about economic recovery in the eurozone that dominated markets during the quarter.”
“Sovereign risk concerns, combined with fear of a ‘double dip’ scenario, had a significant impact on interbank markets in the euro area as well as on equity markets worldwide. The sharp decline in equity markets in the quarter severely impacted the results of our US insurance operations. However, the bank continued to benefit from its strong liquidity and funding profile, with lending growth funded entirely by customer deposits, and refinancing of long-term funding already completed for the year.”
“The Bank led the earnings improvement as commercial growth remained robust and negative market impacts continued to decline. Interest income was stable as margins on savings and lending remained healthy and volume growth picked up, offsetting a small decline from Financial Markets. Provisions for loan losses continued to trend lower as the US housing market stabilised and lower provisions were taken in Commercial Banking. However risk costs in the Benelux mid-corporate and SME segments remain elevated, reflecting a still weak economic environment. Efficiency at the bank improved further, reflecting the significant cuts made last year, and the cost/income ratio declined to 52.6%, approaching the target of 50% for 2013.”
“The measures taken over the past six quarters to strengthen our balance sheet have reduced vulnerability to market shocks. ING Bank comfortably passed the European Union’s stress test last month, and we are pleased that the increased disclosure from the industry appears to have helped stabilise markets and restore confidence in the sector. We also welcome the increased clarity around changes under Basel III, and the bank is well positioned for this new regulatory environment, with a healthy liquidity position and funding mix.”
“The decline in equity markets impacted underlying results from Insurance, particularly on the closed block in the US, however the operating profit from Insurance increased slightly from the first quarter. Compared with the second quarter last year, operating results were lower as investment margins remained under pressure in the low interest rate environment. Administrative expenses increased, due in part to investments to support growth initiatives and business improvement programmes. Insurance sales momentum continued, resulting in an increase of 22.2%, excluding currency effects and the closed blocks in Japan and the US.”
“Our commercial growth in the second quarter demonstrates the dedication of our employees and the resilience of both our banking and insurance franchises during a period of economic uncertainty as we strive to improve our service and put our customers at the centre of everything we do. Following the significant cost cuts achieved last year, we have shifted our focus to achieving operational excellence to secure a sustainable cost advantage in both the Bank and the Insurer.”
“We continue to work towards the operational separation of our Banking and Insurance operations, with the aim to have the businesses operating on an arm’s-length, stand-alone basis by the end of this year. Good progress was made in the second quarter. We currently have 1,100 projects underway worldwide, with separation costs estimated at EUR 110-150 million for 2010, of which EUR 30 million was taken in the first half. At the same time we are working to improve the performance of the Insurance business, while reviewing our options so we will be ready to act when markets are favourable.”
Analyst conference Call, 11 August 2010, 9:00 Amsterdam time (8:00 London time)
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Listen to the analyst call at www.ing.com
Press conference, 11 August 2010, 11:30 Amsterdam time (10:30 London time).
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Watch the press conference at www.ing.com
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ING Group’s Annual Accounts are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (‘IFRS-EU’).
In preparing the financial information in this document, the same accounting principles are applied as in the 2009 ING Group Annual Accounts. All figures in this document are unaudited. Small differences are possible in the tables due to rounding.
Certain of the statements contained herein are not historical facts, including, without limitation, certain statements made of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation: (1) changes in general economic conditions, in particular economic conditions in ING’s core markets, (2) changes in performance of financial markets, including developing markets, (3) the implementation of ING’s restructuring plan to separate banking and insurance operations, (4) 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, (5) the frequency and severity of insured loss events, (6) changes affecting mortality and morbidity levels and trends, (7) changes affecting persistency levels, (8) changes affecting interest rate levels, (9) changes affecting currency exchange rates, (10) changes in general competitive factors, (11) changes in laws and regulations, (12) changes in the policies of governments and/or regulatory authorities, (13) conclusions with regard to purchase accounting assumptions and methodologies, (14) changes in ownership that could affect the future availability to us of net operating loss, net capital and built-in loss carry forwards, and (15) ING’s ability to achieve projected operational synergies. ING assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason.
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