AMSTERDAM — Dutch financial services company ING Group NV Wednesday confirmed that it had plunged to its first ever quarterly net loss because of falling equity markets, widening credit spreads, declining property prices and the failure of several banks.
The Amsterdam-based company said its third-quarter loss was EUR478 million compared with a EUR2.31 billion profit in the same quarter last year that was helped by a gain of EUR455 million from shares it sold in ABN Amro.
Chief Executive Michel Tilmant said that "markets continue to be turbulent," adding that he "expects pressure on asset prices to continue to impact results in the fourth quarter, while weakening economic conditions will put pressure on results into 2009."
At 1150 GMT, ING shares were down 0.4% or EUR0.04 at EUR8.04. In the year-to-date the group has lost some 70% of its value, giving it a market capitalization of EUR17 billion.
ING told investors Oct. 17 that it expected a net loss of around EUR500 million, mainly as a result of impairments on equity and bond investments and value changes on real-estate.
ING made those comments in response to market speculation and a collapsing share price. Two days later the group agreed to a EUR10 billion capital injection from the Dutch state to strengthen its capital base.
ING Wednesday reported an underlying pretax loss from its banking operations of EUR216 million compared with a gain of EUR1.1 billion in the same period last year, hurt by asset impairments on equity and debt securities totaling EUR612 million.
A further negative impact of EUR376 million included EUR292 million related to a foreign exchange loss due to the strong appreciation of the dollar, ING said.
The underlying pretax result at the group's insurance unit plunged to a loss of EUR547 million from a EUR1.29 billion gain a year earlier, driven by impairments on equity and debt securities, as well as negative value changes on investments due to deterioration in financial markets.
After tax, the group booked an underlying net loss of EUR585 million, down sharply from a EUR1.95 billion profit in the same period last year.
"Results were negatively impacted by EUR1.5 billion of pretax impairments and losses on equities, pressurized assets and other debt securities. Of this amount, listed equity securities accounted for EUR628 million," ING said.
Chief Financial Officer John Hele, who will leave the company at the end of March, said that if stock markets remain at current low levels a further loss of some EUR300 million will be booked in the fourth quarter.
ING ranks within the top 20 global financial institutions by market capitalization and had EUR608 billion of assets under management at the end of the third quarter. The EUR10 billion capital injection by the Dutch state helped the group maintain its AA- credit rating with Standard & Poors and Fitch ratings agencies.