ING Posts Q1 Gains in all Sectors Gains; Will Sell Australian Business to QBE

May 13, 2004

Holland’s ING Group made a strong start for 2004, announcing a 32 percent rise in operating net profits to 1.191 billion euros ($1.41 billion) or 57 euro cents ($0.67) per share. Overall net profits increased to 1.202 billion euros ($1.427 billion).

ING also announced plans to sell its Australian insurance operations to QBE for A$740 million (U.S.$ 517 million). QBE will acquire the remaining 50 percent of its joint with ING, QBE-Mercantile insurance, as well as ING’s other Australian insurance interests.

The biggest gain came in ING’s banking activities, where net profits increased 65.1 percent to 657 million euros ($780 million), while net profits from insurance increased by 6 percent to 534 million euros ($634.2 million). The group’s debt/equity ratio improved to 13.3 percent from 14.4 percent at year-end 2003.

“ING made a strong start to the year, driven mainly by an excellent performance at our banking businesses. Insurance performance also improved,” stated Michel Tilmant, chairman of the Executive Board. “The operating net profit from banking reached an all-time high in the first quarter, thanks to strong revenue growth at almost all business units, especially from ING Direct and the financial markets activities. Risk costs also showed a marked decline, falling well below long-term average levels in the first quarter.”

He noted that while “operating net profit from insurance gained,” it was affected by higher taxes. “Life premium income showed a solid increase, especially in the U.S. and the growth markets of Asia,” Tilmant observed. “Profit from ING’s insurance business in the U.S. improved as a result of a sharp decline in credit losses and continued focus on profitable sales growth from core products. Profit from non-life insurance was strong, thanks to a favorable claims environment.

Tilmant declined to give a forecast on ING’s full-year profit, but he indicated that “we see signs of improvement in the major economies where ING is active, although Europe is lagging behind. Risk costs and credit losses are going down, and were exceptionally low in the first quarter. However, the performance of the major stock markets is still uncertain for this year. The low interest-rate environment continues to affect some of our businesses. A sharp increase would also create its own challenges.

“In the year ahead, we will strive for excellence in service to all our customers, and invest further in growth markets to secure ING’s future. We will actively manage our capital, committing funds to those markets and businesses that provide superior returns for shareholders. ING will continue to focus on improving its operational performance through strict cost control and risk management,” he concluded.

The complete earnings report may be obtained on the company’s Website at: www.ing.com.

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