ING first quarter earnings rise on asset sales
ING's first quarter earnings rise on asset sales; bank operations improve marginally
AMSTERDAM (AP) -- Dutch financial company ING Groep NV reported Wednesday that its first-quarter earnings rose as it sold businesses and improved profit margins at its banking arm. Its insurance arm reported a loss.
Net profit was 1.80 billion euros ($2.36 billion), compared with 728 million euros in the same period a year ago. This quarter's figure includes 940 million euros in net gains on divestments, mostly from the sale of its life insurance business in Asia.
"Risk costs remained elevated amid the weak economic climate in Europe, but improved compared with the fourth quarter," said Chief Executive Jan Hommen in a statement.
ING said it is hastening preparations for the separation of its banking and insurance arms, mandated by European regulators after the company received a 10 billion euro bailout from the Dutch state in 2008. It expects to spin off the insurance arm in 2014.
The company has been selling off assets and paying no dividends in order to repair its balance sheet and pay off the money it owes the state, which was given at a punishing 15 percent interest rate. ING said Wednesday it will repay 1.13 billion euros to the state by November 2013 out of the 3.38 billion remaining on its tab.
"ING showed strong performance across its banking activities and in particular commercial banking," said SNS Securities analyst Lemer Salah in a note on the earnings, which he said were better than expected.
Shares rose 3.8 percent to 6.84 euros.
ING did not give a single number for its insurance operations, but reported its U.S. and European results separately. Both suffered from declining investment returns because bond yields have dropped, and as old bond investments pay off, the company is forced to reinvest in new ones at lower yields.
The loss at its U.S. insurance arm, which had an initial public offering of shares last week in which ING sold a 25 percent stake, was 192 million euros. That's slightly better than its 199 million euro loss in the first quarter of 2012. The loss in both years was due to hedging losses on its stock market portfolio.
ING's European insurance arm reported an 85 million euro profit, from a 43 million euro loss in the same period a year ago. The 2012 loss was mostly because of a one-time writedown at its Dutch arm, and ING said that this quarter's underlying results actually worsened due to the lower bond yields and the weak Dutch economy.
