Dutch bank and insurance group ING yesterday reported a return to profit in the first quarter, but counseled vigilance amid what it said were volatile markets and a potentially fragile economic recovery.
Net profit increased to 1.33 billion euros (US$1.68 billion) in the first quarter of this year, 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 with a 236 million euro loss in the same period last year, the group added.
Hommen said ING’s priority for this year was to finalize the separation of its banking and insurance activities “to improve the performance of both organizations 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 yesterday 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 last year.
Separately, Aegon NV, the Dutch operator of Transamerica and other US insurance companies, yesterday reported a return to profit in the first quarter, as it wrote down the value of investment assets by the smallest amount in nearly two years.
Net profit was 371 million euros, from a loss of 173 million euros in the same period a year earlier.
“We saw improved underlying earnings and net income, as well as strong deposits,” chief executive Alex Wynaendts said in a statement.
Underlying earnings — a nonstandard measure that strips out the impact of impairments and divestments — were 488 million euros, up from a loss of 98 million euros in the same period a year ago. That was mostly due to a strong improvement in the US, where Aegon has the bulk of its business.
“A recovery in equity markets and higher account balances and investment income led to better results,” the company said in its earnings report.
In Germany, Allianz said yesterday that it owned 3.3 billion euros worth of Greek debt at the end of March, less than 1 percent of its total bond holdings.
The insurer also said it owned 14.3 billion euros worth of bonds issued by Greece, Ireland, Portugal and Spain, the eurozone countries most at risk of default.
“We do not expect any impact for the moment” from the Greek crisis, an Allianz statement said.
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