Dutch bank and insurance group ING reported Wednesday a return to profit in the first quarter but counselled vigilance amid what it said were volatile markets and a potentially fragile economic recovery.
Net profit increased to 1.33 billion euros (1.68 billion dollars) in the first quarter of 2010, up from a loss of 793 million euros recorded in the same period a year ago, the company said in a statement. This result, due to higher insurance sales and savings volumes, was better than a profit of 930 million euros predicted by analysts polled by Dow Jones Newswires.
“The results to date are clearly encouraging,” ING chief executive officer Jan Hommen said in a statement. “We will work hard to build on these successes in the coming quarters, but we must remain vigilant as markets are still volatile and the economic recovery could prove fragile, as we have seen in recent weeks with severe market volatility amid concerns about sovereign risk.”
ING reported an exposure of 3.2 billion euros to Greek government bonds, 2.8 billion euros to Spanish bonds and 1.6 billion euros to Portuguese ones. Its underlying net profit improved to 1,02 billion euros in the first quarter, compared to a 236-million-euro loss in the same period last year, the group added.
Hommen said ING’s priority for 2010 was to finalise the separation of its banking and insurance activities “to improve the performance of both organisations to create strong independent companies going forward.” Announcing the split last October, ING said it would eventually lead to the sale of its insurance branch.
ING said Wednesday its banking division had posted first quarter underlying profit before tax of 1.3 billion euros, up from 769 million last year. Its insurance activities posted a first quarter underlying profit before tax of 269 million euros — up from a 954-million-euro loss in the first quarter of 2009.
“The performance of both businesses improved, while market-related impacts diminished in the first quarter as markets generally improved,” said Hommen. “Insurance sales regained momentum from the fourth quarter, and savings volumes increased although loan growth remained muted.”
Loan loss provisions were decreased by loan restructuring and the stabilisation of the US housing market. “However risk costs on the Benelux mid-corporate segment remained elevated given the weak economic environment.” ING also announced having reduced the number of employees by five percent year-on-year to a total of 105,140 world-wide.
The Hague, May 12, 2010 (AFP)