ING sees large profit increase
17 February 2011 Amsterdam
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ING Group's full-year underlying net profit rises fourfold to EUR 3,893 million from EUR 974 million in 2009
ING Group's full-year 2010 net result totals EUR 3,220 million, or EUR 0.85 per share, including divestments and special items. The fourth quarter showed underlying net profit of EUR 644 million compared to EUR 90 million in 4Q09 and EUR 1,032 million in 3Q10
ING will not pay a dividend over 2010 given the financial environment, regulatory requirements and priority to repay Dutch State
"ING made good progress in 2010 as we prepare to create strong stand-alone companies for banking and insurance," said Jan Hommen, CEO of ING Group. "Although the economic recovery remains fragile, and financial markets continue to be volatile, ING posted an underlying net profit of EUR 3,893 million in 2010, up from EUR 974 million a year earlier. The Bank made a strong recovery, boosting the return on IFRS equity to 13.1 per cent and generating EUR 5.9 billion of core Tier 1 capital. Insurance is also showing early progress on its performance improvement programme, despite challenging market circumstances. The operational separation of the Bank and Insurer was completed at year-end, with arms-length agreements in place between the two businesses for all commercial cooperation and shared infrastructure. The focus for 2011 will be on preparing the Insurance company for two IPOs and working towards the repurchase of the remaining outstanding core Tier 1 securities from the Dutch State."
"The Bank finished the year with another strong quarter, posting an underlying profit before tax of EUR 1,479 million, almost on par with the very strong third quarter, despite seasonally lower Financial Markets results and a small up-tick in loan loss provisions after three quarters of declines. The net interest margin increased further to 1.47 per cent, supported by healthy margins on both savings and lending, although loan growth remains subdued in some segments. Expenses increased compared with a year earlier, when costs were flattered by substantial accrual releases across most business lines. Compared with the third quarter, expenses were up 3.2 per cent and the cost/income ratio increased slightly to 57.2 per cent, driven by higher marketing and IT costs to support the growth of the business, as well as higher contributions to deposit guarantee schemes."
"Insurance continued to show progress towards its Ambition 2013 performance improvement objectives. Operating profit for Insurance was up 44.6 per cent to EUR 438 million, supported by a continued improvement in the investment spread to 93 basis points, as well as higher fees driven by new sales and growth in assets under management. The underlying result before tax was impacted by the write-down of EUR 975 million of deferred acquisition costs as part of the measures announced in the third quarter to improve transparency and address the reserve adequacy of the closed block variable annuity business in the US."
"The measures taken to address the US variable annuity block and the decision to bring the US reporting more into line with US peers should reduce earnings volatility from the US Closed Block VA going forward. The DAC balance for the closed block has been reduced substantially and reserve adequacy has been bolstered with a significant buffer above the 50 per cent confidence level. As we prepare for our base case of two IPOs for Insurance, our priorities for 2011 will be the legal and operational separation within the Insurance business, and delivery on the performance improvement plans so we will be ready to move forward with the IPOs when market conditions are favourable."
ING Group's full-year 2010 net result totals EUR 3,220 million, or EUR 0.85 per share, including divestments and special items. The fourth quarter showed underlying net profit of EUR 644 million compared to EUR 90 million in 4Q09 and EUR 1,032 million in 3Q10
ING will not pay a dividend over 2010 given the financial environment, regulatory requirements and priority to repay Dutch State
"ING made good progress in 2010 as we prepare to create strong stand-alone companies for banking and insurance," said Jan Hommen, CEO of ING Group. "Although the economic recovery remains fragile, and financial markets continue to be volatile, ING posted an underlying net profit of EUR 3,893 million in 2010, up from EUR 974 million a year earlier. The Bank made a strong recovery, boosting the return on IFRS equity to 13.1 per cent and generating EUR 5.9 billion of core Tier 1 capital. Insurance is also showing early progress on its performance improvement programme, despite challenging market circumstances. The operational separation of the Bank and Insurer was completed at year-end, with arms-length agreements in place between the two businesses for all commercial cooperation and shared infrastructure. The focus for 2011 will be on preparing the Insurance company for two IPOs and working towards the repurchase of the remaining outstanding core Tier 1 securities from the Dutch State."
"The Bank finished the year with another strong quarter, posting an underlying profit before tax of EUR 1,479 million, almost on par with the very strong third quarter, despite seasonally lower Financial Markets results and a small up-tick in loan loss provisions after three quarters of declines. The net interest margin increased further to 1.47 per cent, supported by healthy margins on both savings and lending, although loan growth remains subdued in some segments. Expenses increased compared with a year earlier, when costs were flattered by substantial accrual releases across most business lines. Compared with the third quarter, expenses were up 3.2 per cent and the cost/income ratio increased slightly to 57.2 per cent, driven by higher marketing and IT costs to support the growth of the business, as well as higher contributions to deposit guarantee schemes."
"Insurance continued to show progress towards its Ambition 2013 performance improvement objectives. Operating profit for Insurance was up 44.6 per cent to EUR 438 million, supported by a continued improvement in the investment spread to 93 basis points, as well as higher fees driven by new sales and growth in assets under management. The underlying result before tax was impacted by the write-down of EUR 975 million of deferred acquisition costs as part of the measures announced in the third quarter to improve transparency and address the reserve adequacy of the closed block variable annuity business in the US."
"The measures taken to address the US variable annuity block and the decision to bring the US reporting more into line with US peers should reduce earnings volatility from the US Closed Block VA going forward. The DAC balance for the closed block has been reduced substantially and reserve adequacy has been bolstered with a significant buffer above the 50 per cent confidence level. As we prepare for our base case of two IPOs for Insurance, our priorities for 2011 will be the legal and operational separation within the Insurance business, and delivery on the performance improvement plans so we will be ready to move forward with the IPOs when market conditions are favourable."
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