Bancherul - BANCI / ENGLISH / ING's 2Q underlying net profit rises 19.7% to EUR 1,528 million

ING Group's 2Q11 net result was EUR 1,507 million, or EUR 0.40 per share, including divestments, discontinued operations and special items. The underlying return on IFRS-EU equity for the first six months of 2011 rose to 14.8%.

Bank reported an underlying result before tax of EUR 1,304 million, including EUR 187 million impairment of Greek government bonds. The net interest margin was healthy at 1.42% and client balances increased for the eighth straight quarter. Risk costs fell 20.4% versus 2Q10. Operating expenses declined for the second consecutive quarter, but increased year-on-year. The underlying cost/income ratio was 59.2%, or 54.6% excluding market impacts.

Insurance operating result rose 82.5% to EUR 690 million, fuelled by increases in the investment and technical margins. The investment spread rose to 99 basis points, primarily on reinvestments and higher dividend income. The administrative expenses/operating income ratio improved to 38.0%. The underlying result before tax was strong at EUR 673 million, despite EUR 123 million of impairments on Greek government bonds.

ING maintained strong capital ratios during the quarter following the 13 May 2011 payment of EUR 3 billion to the Dutch State. The Bank's core Tier 1 ratio remained robust at 9.4%, or 10.7% on a pro-forma basis including the impact of announced divestments. The Insurance IGD solvency ratio strengthened to 252%.

Given the uncertain financial environment, increasing regulatory requirements and ING's priority to repurchase the remaining outstanding core Tier 1 securities, no interim dividend will be paid in 2011.

"ING reached important milestones in the second quarter as we work towards the separation of the Group and the establishment of strong stand-alone banking and insurance companies," said Jan Hommen, CEO of ING Group. "In May we paid EUR 3 billion (including EUR 1 billion premium) to the Dutch State, while maintaining strong capital buffers to withstand potential shocks given the uncertain economic environment. We reached an agreement to sell ING Direct USA, meeting one of the principal restructuring requirements imposed by the European Commission. And last week we announced an agreement to sell our Latin American life and pension businesses for EUR 2.7 billion, marking the first major step in the divestment of the Insurance and Investment Management activities."

"The US and European & Asian insurance businesses are making good progress on performance improvement initiatives as they prepare for separate IPOs. The operating profit for Insurance increased compared with a year ago, as measures to improve returns continue to gain momentum. The Bank posted another strong quarter, as margins held up well and we continued to grow volumes in savings and lending despite the challenging operating conditions in the second quarter. As the economic environment and financial markets remain uncertain, we will reinforce our vigilance on costs by focusing on structural improvements in our processes and organisation, while continuing to invest responsibly in the growth of our franchises for the long-term benefit of our customers."