ING has posted a net
profit for the three months to 31 March of €1.38bn ($2.03bn), an
increase of 12.2% from the same period last year.
On an underlying basis
before tax, gross profit at ING’s banking division increased by
32.2% to €1.69bn; profit before tax at the insurance unit almost
quadrupled to €461m.
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The strong set of
results beat analyst forecasts.
ING received a bail-out
of €10bn from the Dutch government at the height of the financial
crisis; it repaid €5bn in December 2009.
It remains on track to
repay all of the state aid received and penalties by
mid-2012.
ING Banking first
quarter highlights included:
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By GlobalData- a 2 basis point improvement in the net
interest margin from the year-ago quarter to 1.44%; - the underlying cost-income ratio reduced
by 2.4 percentage points from 57.4% to 55.0%; - ING’s Tier 1 ratio increased from 8.4% a
year ago to 10.0%; - A net profit of €229m at ING Direct, up
22.4% from the same period last year (Q110 €187m), and - Net profit increased by 11.0% to €252m at
the Netherland’s-based retail unit.
But the retail banking
unit at group level posted a 35% fall in net profit year-on-year to
€633m following a profits collapse at ING’s retail unit in Asia
from €339m in the first quarter of fiscal 2010 to €5m.
Jan Hommen, CEO of ING
Group, said in a statement:
“Both the bank and the
insurance company posted strong results in the first quarter,
illustrating clear progress on their respective performance
improvement programmes as they prepare for their futures as
stand-alone companies.
“The restructuring of the
Group is on track. We continue to work towards the full physical
separation of the banking and insurance activities, and we are
laying the groundwork this year for two IPOs of our US and European
and Asian insurance businesses so that we will be ready to proceed
with transactions when market conditions are
favourable.”
He added that ING continues
to explore strategic options for the sale of its ING Direct unit in
the US. ING’s US unit may fetch up to around $9bn according to
analysts.
That unit posted a profit
before tax in the first quarter of €126m, down 8.7% from the
year-ago quarter; funds entrusted inched down by 1.2% to
€57.3bn.
ING Direct enjoyed a strong
quarter in Germany/Austria: profits before tax increased by 79%
year-on-year to €136m; funds entrusted rose by 6.4% to
€87.0bn.
Hommen said that market
speculation relating to the possible sale of ING Direct’s unit in
Australia – Bloomberg reported on 2 May that ING was
considering disposing of the division – was wide of the
mark.
With good reason, Hommen
said that ING was satisfied with the performance of ING Direct in
Australia.
In the first quarter, ING
Direct Australia posted a pre-tax profit of €57m, up 42.5%
year-on-year; but funds entrusted reduced by 2.2% to
€17.4bn.
Accumulated profits
before tax from the ING Direct unit in Australia are now
approaching €1bn since it set up shop in 1999.
In March, ING Direct
Australia’s chief information officer, Andrew
Henderson, told RBI that the bank was looking to extend
its current product offering in the coming year.
UK
struggles continue
By contrast, there remains
no sign of a turnaround at ING Direct in the UK.
It posted a loss before tax
of €13m in the first quarter (Q110 -€9m) and continues to
hemorrhage deposits.
Funds entrusted at ING
Direct UK declined by 12.5% from the end of the previous quarter
(Q410 €15.0bn) to €13.8bn at the end of March.
ING Direct in the UK has now
lost an accumulated €288m since 2003 and has only ever made a
profit in 2006 and 2009.
Funds entrusted in the UK
have now collapsed towards 2003 levels (see table) and are down by
62% from a 2006 peak of €36.3bn.
Martin Rutland, ING Direct
UK spokesman told RBI:
“In the UK, we are at a
different stage of development compared with other ING
countries.
“Some of them offer a full
product suite offering a full range of banking services. We do not
currently do that in the UK.
“We are making a substantial
investment to increase the product range.
“Watch this
space.”
Rutland declined to disclose
when ING’s expanded UK product range would launch or which
type of products would be rolled out.
ING Direct does not
currently offer current account or investment products in the
UK.
