ING Group NV, the bailed-out Dutch bank and insurer with retirement services headquarters in Windsor, says it returned to a net profit in the fourth quarter mostly due to strength at its banking arm, which enjoyed good margins and a significant drop in one-time charges, The Associated Press reports.
The company reported net profit Wednesday of euro433 million ($586 million), compared with a loss of euro712 million in the same period a year earlier. ING’s banking arm posted a net result of euro1.01 billion from a loss of euro700 million, as its interest margins were strong, provisions against bad loans fell, and it had had a one-time charge of euro930 million a year earlier.
ING’s insurance arm, which it plans to divest as part of conditions imposed by the European Union Commission after its 2008 bailout by the Dutch state, reported a net loss of euro576 million, due mostly to a euro975 million writedown on its U.S. variable annuity business.
Chief Executive Jan Hommen said the company won’t pay a dividend for 2010 as it focuses on paying back the euro5 billion it still owes the Dutch state and hiving off the insurance operations: its current plan is for two separate initial public offerings of insurance operations in the U.S. and another for operations in Europe and Asia.
The bulk of ING’s banking profit comes from interest margins, as it borrows money cheaper than it lends it. The company said interest margins increased to 1.47 percent from 1.41 percent a year ago, and retail deposits increased to euro517 billion from euro478 billion.
Other important impacts at banking were a fall in provisions for bad loans to euro415 million from euro689 million a year earlier and a euro240 million gain on investments, instead of a euro456 loss. Those are attributable to recoveries in the global economy and in financial markets.
Finally, a year ago the banking division had to pay a charge of euro930 million to the Dutch state as EU competition authorities ruled terms of one of ING’s state assistance packages had been too generous and amounted to improper state aid.
