ING swings into the black, says entering exciting phase

 

THE HAGUE: Dutch banking and insurance group ING reported a sharp switch into quarterly profit yesterday as it restructured after a government bailout and said it was moving into an “exciting” phase.

For the third quarter, it reported net profit of ?499 million (?1 = RM5.02) from a loss of ?478 million in the same period of last year.

The bank, which received a e10 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 ?1 billion in the year to date, expected to reach ?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 ?778 million, ING said, compared with ?229 million in the previous quarter and a ?568 million loss in the third quarter of 2008.
Assets value dropped by ?882 million in the third quarter, due to the impact of impairments on mortgage-backed securities and negative revaluations on real estate investments.

“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.”

ING announced last month that it planned to sell off its insurance operations and raise ? 7.5 billion — ?5 billion of which would go to paying back its government emergency funding.
Hommen said ING had received strong interest in its insurance operations, but had not decided if it would sell them to a strategic buyer or the public.

Hommen said yesterday he would have to use his “hands and feet” to count all of the companies that have contacted him about the insurance operations.

Some potential buyers have already publicly expressed interest, including Britain’s Aviva, Spain’s Mapfre and Poland’s PZU, though Hommen has said he would like to see the operations remain together and that an IPO might be the best choice for that.

“We have plenty of time, we’re not in a hurry, we’re not a distressed seller ... we will do it in a quite orderly fashion,” he told reporters on a conference call.
Hommen later told analysts he was not in active discussions with any buyers and that the “normal path” would be to prepare an IPO for the unit, but that ING would then weigh an offering against all other exit options. — AFP, Reuters