Dutch financial group ING reported a quarterly net profit that beat estimates on Wednesday as investments fell less than expected, and its underlying insurance and banking business remained solid.
Second-quarter net profit fell 25 percent, hurt by lower real estate, private equity valuations and investment returns, to €1.92 billion ($2.86 billion). That compared with €2.56 billion ($3.81 billion) a year earlier and an average forecast of €1.52 billion ($2.265 billion) in a Reuters poll of 12 analysts. The forecasts ranged between €1.18 billion ($1.758) and €1.69 ($2.52) billion.
ING booked a €44 million ($65.5 million) writedown after tax from its exposure to subprime, Alt-A and other struggling asset classes and a negative revaluation of €260 million ($387 million) through shareholders’ equity.
ING, like its European counterparts, has been hit by the credit crunch and subprime crisis, triggered a year ago when large numbers of less creditworthy U.S. borrowers began to default on mortgages.
“ING continues to weather the turmoil in credit markets well, as writedowns on pressurized assets remained limited in the second quarter,” Chief Executive Michel Tilmant said in a statement.
He added all capital and leverage ratios were well within targets and ING would have €3.9 billion ($5.81 billion) of spare cash after completing its €5 billion ($7.45 billion) share buyback and the payment of last year’s dividend.
ING said it took advantage of the brief market rally in April to reduce its equity exposure, and added equity gains were significantly below the exceptional levels realized last year.
“Financial services companies are facing unprecedented market volatility, limited liquidity, and intensified competition for deposits, which we see continuing into 2009,” Tilmant said.
ING’s results have proven to be more resilient through the credit crisis than many of its peers, such as Belgian-Dutch rival Fortis, which reported last week that its net profit halved, due in part to writedowns totaling €362 million ($540 million).
Shares in ING have also outperformed Europe’s other financial groups, losing 16 percent so far this year compared with a 28 percent drop in the DJ Stoxx European Banking index.
(Reporting by Reed Stevenson, editing by Will Waterman)
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