ING Group NV reported fourth-quarter profits on Wednesday of $586.5 million, $0.14 per share, compared with $1.4 billion in the third quarter, and a loss of $964.4 million in the same quarter last year. For the full year, net profits rose to $5.3 billion from $1.3 billion in 2009.
Income fell short of expectations from analysts surveyed by Bloomberg, who estimated income of $727.4 million for the bank.
“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, said in a statement.
"The Bank finished the year with another strong quarter, posting an underlying profit before tax of [$2.0 billion], 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," Hommen added.
The company will not pay a dividend over 2010 in light of "the financial environment, regulatory requirements and priority to repay Dutch State."
Pre-tax profits for the fourth quarter totaled $2.0 billion and the net interest margin increased 6 bps to 1.47% on healthy savings and lending margins. After falling for three quarters, risk costs increased 51 bps to $562.6 million.
The cost/income ratio for the fourth quarter improved to 57.2% from 74.5% in 2009. For the full year, the cost/income ratio improved to 56% from 68.7%.
The insurance segment posted an operating result of $593 million, up 44.6% on continued improvement in the investment spread which rose 93 bps. Higher fees from new sales and growth in assets under management also contributed to the segment's success, according to Hommen. Pre-tax income fell $934 million on a deferred-acquisition cost write-down of $1.3 billion in U.S. closed-block variable annuity.
“The measures taken to address the U.S. variable annuity block and the decision to bring the U.S. reporting more into line with U.S. peers should reduce earnings volatility from the U.S. Closed Block VA going forward."
Hommen noted that the insurance segment showed "early progress" on its performance improvement program, in spite of "challenging market circumstances."
"Theoperational 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," Hommen said. "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.”
Read about ING's third-quarter earnings.
Read AdvisorOne's 2010 Q4 earnings calendar for the financial sector for release dates and links to earnings stories.
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