Wednesday, Dutch financial services company ING Groep NV (ING) reported a net loss for the third quarter, hurt by impairments amid ongoing crisis in the financial sector worldwide. The company also said that markets continue to be turbulent as it approaches the end of 2008 and it will impact its fourth-quarter and 2009 results.
The company's net loss for the quarter was EUR 478 million, or EUR 0.22 per share, compared with a net profit of EUR 2.31 billion, or EUR 1.08 per share, a year ago.
The results included pre-tax impairments on equities, pressurized assets and other debt securities of EUR 1.51 billion. Negative revaluations through P&L on real estate and private equity were EUR 333 million, while negative impact of other market-related items through P&L reached EUR 265 million.
On an underlying basis, the company's third-quarter loss reached EUR 585 million, in comparison with a profit of EUR 1.95 billion in the prior-year quarter.
For the second quarter, ING's net earnings were EUR 1.92 billion, or EUR 0.94 per share, and underlying earnings were EUR 1.95 billion.
Gross premium income was EUR 10.38 billion, down 6.5% from EUR 11.11 billion last year. Interest result banking operations rose 15.6% year-over-year to EUR 2.61 billion. Commission income was up 3% to EUR 1.26 billion, whereas total investment and other income fell 65.8% to EUR 1.21 billion.
Business wise, Life Insurance business posted underlying income of EUR 11.78 billion, down 11.2% from EUR 13.26 billion in the previous year. Non-life Insurance's total underlying income declined 19.4% from last year to EUR 1.13 billion.
Total underlying income from the Banking business reached EUR 2.63 billion, a 24.8% fall from EUR 3.49 billion in the prior-year quarter. While Wholesale Banking's underlying income dropped 5.3%, Retail Banking's underlying income edged down 1.9%. In addition, ING Direct recorded a 14.6% decrease in underlying income for the quarter.
Commenting on the quarterly results, Michel Tilmant, Chief Executive Officer of ING said, "The third quarter was extremely challenging for financial institutions. Financial markets deteriorated rapidly toward the end of the quarter, with steep declines in equity markets, widening credit spreads, declining property prices and the failure of several banks."
According to the company, EUR 10 billion capital injection from the Dutch government helped it to reinforce its capital base. The company also expects that the sale of its Taiwan life business will significantly reduce its exposure to long-term interest rates, reducing risks within the company.
For the nine-month period, ING posted a net profit of EUR 2.98 billion, or EUR 1.46 per share, lower than EUR 6.76 billion, or EUR 3.14 per share, in the previous year.
Among others in the sector, Aegon NV (AEG) on November 6 reported a net loss for the third quarter. Before tax, underlying earnings for the period declined primarily affected by lower equity markets and mortality experience. Another peer, Axa Group (AXA) said on the same day that nine-month revenue dropped 0.9%.
Going forward, the company expects the market-turbulence to continue. Pressure on asset prices will continue to impact fourth-quarter results, while weakening economic conditions will put pressure on results into 2009.
ING closed Tuesday's trading at $10.18, down $0.52, on a volume of 1.59 million shares.
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