ING posts 28.7% increase in underlying net profit in 1st quarter
•Net profit up 3.3% to EUR 2,006 million: growth compensates for divestment gains in 2005
-Underlying net profit rises 28.7% to EUR 1,976 million1
-Earnings per share increase 4.1% to EUR 0.93 from EUR 0.89
-Life premium income up 14.4%, led by Asia, U.S. and Central Europe
-Banking income rises 12.0%, driven by strong growth in Retail Banking, ING Direct and ING Real Estate
•Emphasis on value creation and pricing discipline leads to higher returns
-Risk-adjusted return on capital after tax from banking rises to 24.0% from 19.8%
-Internal rate of return on new life insurance business increases to 14.0% from 12.6%
-Value of new life insurance business rises 31.9% to EUR 248 million
•Efficiency improves due to continued focus on execution
-Cost/income ratio of banking operations improves to 60.4% from 63.7%
-Outsourcing and streamlining of the Operations & IT organisation is on plan
-Restructuring at Nationale-Nederlanden remains on track
“The first quarter marked a strong start to the year, with an increase in underlying net profit of 28.7% to a record EUR 1,976 million. Net profit rose to EUR 2,006 million, an increase of 3.3%, as a strong underlying performance more than compensated for about EUR 400 million of divestment gains that boosted net profit in the first quarter last year,” said Michel Tilmant, Chairman of ING Group.
“ING’s three key growth engines — ING Direct, retirement services, and life insurance in developing markets — continued their strong performance and Retail Banking posted a record quarter, with underlying profit before tax up 43.7%.”
“Our emphasis on value creation has led to increased returns from both insurance and banking as business units sharpen their focus on product pricing and capital efficiency. The risk-adjusted return on capital for the banking operations increased to 24.0% and the internal rate of return on new life insurance sales increased to 14.0%. This performance was achieved as the Executive Board continues to allocate more capital to businesses with strong growth potential and the highest returns.”
“Expenses have remained under control as we continue to improve execution and increase efficiency, despite continuing investments to increase customer satisfaction and strengthen compliance. The efficiency programme at our Dutch life insurance business is on track and programmes announced last year to streamline and outsource parts of the Operations & IT organisation are progressing on plan.”
“The banking activities continue to benefit from low loan losses. While we see no sign yet of a deterioration in our credit portfolio, loan losses are expected to return gradually to more normalised levels over the coming years. Looking forward, ING remains confident in the growth prospects of its underlying businesses and in its ability to continue to create value for shareholders in the year ahead.”
1. Underlying profit excludes the impact of divestments and special items as specified in Appendix 2.
Analyst presentation: 11 May, 11:15 am CET, ING House, Amsterdam. Presentation & webcast www.ing.com
Analyst call: 11 May, 4 pm CET. Listen in:
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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) performance of financial markets, including developing markets, (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.
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