Dutch bank ING's profits plunge 96%

THE HAGUE: Dutch bank and insurance group ING reported a 71 million euro (100 million dollar) second quarter net profit on Wednesday - down 96.3 per cent from 1.95 billion euros in the same period last year.

The result was worse than a 388 million euro profit predicted by analysts polled by Dow Jones Newswires, but better than the 793 million euro net loss registered in the first quarter of the year.

It was explained partly by divestments and special items to the tune of 159 million euros and real estate revaluations to the value of -584 million euros due to "market impacts", said an ING statement.

Underlying net profit came to 229 million euros in the second quarter, down 87.9 per cent from 1.88 billion euros in the same quarter last year, but up from a loss of 305 million euros in the first quarter of 2009.

"ING posted solid commercial performance in the quarter," said chief executive Jan Hommen.

"A more favourable interest rate environment and improved margins on savings and lending led to a 19.4 per cent increase in interest income at the banking operations."

In insurance, the recovery of equity markets helped boost fees on assets under management, said Hommen. But sales of investment products remained "subdued" as customers awaited a sustained market rally.

"Market impacts and the weaker economic environment continue to strain ING's results."

The bank said it had achieved 53 per cent of one billion euros in cost savings planned for this year - now expected to total 1.3 billion euros.

"Headcount has been reduced by 8,219" staff - ahead of the planned 7,000 for the year.

ING has added 852 million euros for loan loss provisions at its banking arm.

"While we begin to see signs of recovery in financial markets, economic conditions are expected to remain challenging for some time," Hommen said.

The company had decided not to pay an interim dividend for 2009.

ING shares fell 5.8 per cent on the Amsterdam stock exchange shortly after opening Wednesday to 8.61 euros.