ING Groep NV, the Dutch bank and insurer, reported net profit of 71 million euros (US$100.3 million) for the second quarter yesterday, down 96 percent from 1.92 billion euros in the same period a year earlier, before the financial crisis struck.
In its earnings report, the company focused on the ways in which its recent performance is better than the 793 million euro loss it reported in the first quarter.
It cited better margins at its banking operations and the partial recovery of financial markets.
“ING posted solid commercial performance in the quarter, as a more favorable interest rate environment and improved margins on savings and lending led to a 19.4 percent increase in interest income at the banking operations,” chief executive Jan Hommen said in a statement.
“In insurance, the recovery of equity markets in the second quarter helped boost fees on assets under management,” he said.
However, ING increased its provision against bad loans by 852 million euros and suffered for being conservative — or wrong — in its positioning during the sharp rebound of recent months.
The company reported a pretax loss of 204 million euros at its banking operations on an “underlying” basis — a nonstandard measure that strips out the impact of divestments.
On the same basis, its insurance arm reported pretax profit of 278 million euros.
The company reported a litany of write-downs and devaluations.
In addition to the loan provisions, the company said it had written down real estate assets by 694 million euros and suffered 323 million euros in impairments on investments in subprime mortgage-related securities.
In January, the Dutch state assumed 80 percent of the risk for ING’s portfolio of 27.7 billion euros in such derivatives — meaning the losses borne by taxpayers in the Netherlands are four times as large as ING’s.
ING said its Tier 1 ratio — a key measure of solvency for banks — slipped to 9.4 percent from 9.7 percent in March.
Its balance sheet showed total equity was 33.4 billion euros, 10 billion euros of which is due to a direct investment lifeline it received from the Dutch government last year.
In January, the company announced plans to cut 7,000 jobs, representing 5 percent of its total work force, but said yesterday it had cut more than 8,000 already.
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