By Lea Pachta
ING returns to profit in 2009: full-year underlying net result EUR 748 million vs. EUR -304 million in 2008.
Jan Hommen, CEO of ING Group said: “2009 was a tumultuous year for financial markets, and for ING.”
“Yet even in this challenging environment, we made great strides to improve our operating performance, cut expenses and return to profit on an underlying basis.”
“Although asset impairments and revaluations continued to have a substantial impact on ING’s results, market conditions improved gradually through the course of 2009, and the negative impact of market volatility was substantially lower in the fourth quarter than a year ago.
Loan loss provisions at the Bank increased from a year earlier, but were roughly in line with the first three quarters of the year. Excluding those impacts, the Bank showed a strong commercial performance, supported by improved interest margins, higher results from Financial Markets and cost reduction.
Insurance results were impacted by assumption changes in the variable annuity books in the US and Japan as fewer customers surrendered their policies, while investment margins remained under pressure following derisking measures taken earlier in the year. The net loss in the quarter reflects an accrual of additional future payments to the Dutch State for the Alt-A facility as part of the agreement with the European Commission which we announced in October.”
“We have made structural improvements in our operating performance, while reducing risks and leverage on our balance sheet. The first phase of our Back to Basics programme, which we launched at the beginning of last year, has been successfully completed with all targets exceeded. We reduced our operating expenses by EUR 1.5 billion on a comparable basis, surpassing the original cost reduction target by 50%.
The balance sheet of the Bank was reduced by 18% from September 2008, or by EUR 194 billion, exceeding the 10% target. In one year, Back to Basics has helped make ING a more efficient and less leveraged institution with a lower risk profile, and that’s an achievement our management can be proud of. In the fourth quarter we were also able to raise equity to repay half of the capital support received from the Dutch State and further strengthen our capital position, marking an important milestone on our road to recovery.”
“The Back to Basics programme culminated in the decision to separate our banking and insurance activities as part of the restructuring plan agreed with the European Commission. While we are now appealing the proportionality of this agreement in the context of a level playing field in Europe, we will move ahead with the separation, which we believe is the right strategy to position both businesses as we emerge from the financial crisis.”
“2010 will be a year of transition, and it will not be without challenges, as we work towards the operational separation of the banking and insurance businesses. We will approach this process with the utmost care and diligence to ensure an orderly and equitable separation. At the same time we will continue to work to improve the performance of both parts of the business for our shareholders and our customers, by rationalising our product offering, simplifying our processes and investing in further improvements in customer service. Through this process we will create strong and independent companies that can go forward to forge their own futures.”