ING posts 2010 underlying net profit of EUR 3,893 million
ING posts 2010 underlying net profit of EUR 3,893 million
16 February 2011
- ING Group full-year underlying net profit rises fourfold to EUR 3,893 million from EUR 974 million in 2009
- ING Group full-year 2010 net result EUR 3,220 million, or EUR 0.85 per share, including divestments and special items
- Group 4Q10 underlying net profit of EUR 644 million vs. EUR 90 million in 4Q09 and EUR 1,032 million in 3Q10
- 4Q10 net result EUR 433 million, or EUR 0.11 per share, vs. net loss of EUR 712 million in 4Q09
- ING will not pay a dividend over 2010 given the financial environment, regulatory requirements and priority to repay Dutch State
- Bank continues strong performance with 4Q10 underlying profit before tax of EUR 1,479 million vs. EUR 163 million in 4Q09
- Net interest margin increases to 1.47%, up 6 basis points, supported by healthy margins on savings and lending
- Risk costs increase in 4Q10 after three quarters of decline to EUR 415 million, or 51 basis points of average risk-weighted assets
- Cost/income ratio improves to 57.2% vs. 74.5% in 4Q09; full-year 2010 cost/income ratio of 56.0% vs. 68.7% in 2009
- Core Tier 1 ratio rises to 9.6% from 9.0% at the end of 3Q10; EUR 5.9 billion core Tier 1 capital generated in 2010
- Insurance 4Q10 operating result of EUR 438 million shows improvement vs. EUR 303 million in 4Q09
- Investment spread rises to 93 bps vs. 83 bps in 4Q09 driven by the Netherlands and the US
- Underlying result before tax EUR -690 million mainly due to EUR 975 million DAC write-down in US Closed Block Variable Annuity (VA)
- Previously announced measures implemented to more closely align Insurance US reporting with US peers
- DAC write-down of EUR 975 million in US Closed Block VA booked in 4Q10
- EUR -0.7 billion equity impact from move towards fair-value accounting for reserves as of 1 Jan 2011 came in lower than expected
- US Closed Block VA reserve adequacy reinforced as of 1 January 2011 with a significant buffer above the 50% confidence level
“ING made good progress in 2010 as we prepare to create strong stand-alone companies for banking and insurance,” said Jan Hommen, CEO of ING Group. “Although the economic recovery remains fragile, and financial markets continue to be volatile, ING posted an underlying net profit of EUR 3,893 million in 2010, up from EUR 974 million a year earlier. The Bank made a strong recovery, boosting the return on IFRS equity to 13.1% and generating EUR 5.9 billion of core Tier 1 capital. Insurance is also showing early progress on its performance improvement programme, despite challenging market circumstances. The operational separation of the Bank and Insurer was completed at year-end, with arms-length agreements in place between the two businesses for all commercial cooperation and shared infrastructure. The focus for 2011 will be on preparing the Insurance company for two IPOs and working towards the repurchase of the remaining outstanding core Tier 1 securities from the Dutch State.”
“The Bank finished the year with another strong quarter, posting an underlying profit before tax of EUR 1,479 million, almost on par with the very strong third quarter, despite seasonally lower Financial Markets results and a small up-tick in loan loss provisions after three quarters of declines. The net interest margin increased further to 1.47%, supported by healthy margins on both savings and lending, although loan growth remains subdued in some segments. Expenses increased compared with a year earlier, when costs were flattered by substantial accrual releases across most business lines. Compared with the third quarter, expenses were up 3.2% and the cost/income ratio increased slightly to 57.2%, driven by higher marketing and IT costs to support the growth of the business, as well as higher contributions to deposit guarantee schemes.”
“Insurance continued to show progress towards its Ambition 2013 performance improvement objectives. Operating profit for Insurance was up 44.6% to EUR 438 million, supported by a continued improvement in the investment spread to 93 basis points, as well as higher fees driven by new sales and growth in assets under management. The underlying result before tax was impacted by the write-down of EUR 975 million of deferred acquisition costs as part of the measures announced in the third quarter to improve transparency and address the reserve adequacy of the closed block variable annuity business in the US.”
“The measures taken to address the US variable annuity block and the decision to bring the US reporting more into line with US peers should reduce earnings volatility from the US Closed Block VA going forward. The DAC balance for the closed block has been reduced substantially and reserve adequacy has been bolstered with a significant buffer above the 50% confidence level. As we prepare for our base case of two IPOs for Insurance, our priorities for 2011 will be the legal and operational separation within the Insurance business, and delivery on the performance improvement plans so we will be ready to move forward with the IPOs when market conditions are favourable.”
Investor conference call, 16 February 2011, 9:00 Amsterdam time (8:00 London time)
Listen ONLY:
NL: +31 20 794 8500
UK: +44 207 190 1537
US: +1 480 629 9724
Listen to the analyst call at www.ing.com
Media webcast, 16 February 2011, 11:00 Amsterdam time (10:00 London time).
NL: +31 20 794 8500
UK: +44 207 190 1537Watch the press conference at www.ing.com
| Media relations +31 20 541 5433 | Investor relations +31 20 541 5460 |
DISCLAIMER
ING Group’s Annual Accounts are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (‘IFRS-EU’).
In preparing the financial information in this document, the same accounting principles are applied as in the 2009 ING Group Annual Accounts. The Financial statements for 2010 are in progress and may be subject to adjustments from subsequent events. All figures in this document are unaudited. Small differences are possible in the tables due to rounding.
Certain of the statements contained herein are not historical facts, including, without limitation, certain statements made of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation: (1) changes in general economic conditions, in particular economic conditions in ING’s core markets, (2) changes in performance of financial markets, including developing markets, (3) the implementation of ING’s restructuring plan to separate banking and insurance operations, (4) changes in the availability of, and costs associated with, sources of liquidity such as interbank funding, as well as conditions in the credit markets generally, including changes in borrower and counterparty creditworthiness, (5) the frequency and severity of insured loss events, (6) changes affecting mortality and morbidity levels and trends, (7) changes affecting persistency levels, (8) changes affecting interest rate levels, (9) changes affecting currency exchange rates, (10) changes in general competitive factors, (11) changes in laws and regulations, (12) changes in the policies of governments and/or regulatory authorities, (13) conclusions with regard to purchase accounting assumptions and methodologies, (14) changes in ownership that could affect the future availability to us of net operating loss, net capital and built-in loss carry forwards, (15) ING’s ability to achieve projected operational synergies, and (16) the move towards fair value accounting for Guaranteed Minimum Withdrawal Benefits for the US Closed Block VA business line. ING assumes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason.