Bloomberg News
AMSTERDAM - ING Group NV, the largest Dutch financial services company, said second-quarter profit rose a greater-than-expected 21% as acquisitions boosted insurance earnings.
Profit excluding one-time gains rose to $1.16 billion, or 59 cents a share, from $960 million, or 49 cents a share, in the year-earlier period. The company repeated that it expects full-year earnings per share to rise at least 17% but added that "the economic outlook for the longer term remains uncertain."
Under chief executive Ewald Kist, ING spent $13.8 billion last year to become one of the top-10 U.S. life insurers, buying ReliaStar Financial Corp. and two units of Aetna Inc.
But analysts are concerned that because of the slowing U.S. economy the purchases will not add as much to earnings as ING projected.
"They showed strong numbers" on the banking side, said David Smith, a fund manager at Abbey National Asset Managers in Glasgow who helps manage $1.45 billion and holds ING shares. "People were looking to that area for weakness." Profit from banking rose 13%, to $448.3 million, and insurance earnings rose 28%, to $715.3 million.
Analysts had expected banking earnings to decline, and the group's overall profit to rise 7.3%. The shares rose as much 0.4%, to $33, recouping earlier declines of as much as 1.8%.
ING said that it still expects the Aetna and ReliaStar acquisitions to add to earnings this year, though not as much as the company previously anticipated.
Like rivals ABN Amro Holding NV and Deutsche Bank AG, ING saw commission income at its banking division decline, by 3.7%, as stock markets fell. That was more than offset by an increase of 4.8% in net interest income, ING said.
ING's decision last year to rein in its investment bank, and its sale in April of ING Barings' U.S. unit to rival ABN Amro, helped boost profit at the banking division, which accounts for almost 40% of earnings.
Though ING said it expects the full impact of the cost-cutting measures to be reflected in the second half this year, it said "disappointing market circumstances" continue and it expects full-year results to be lower than last year. "Management is actively adjusting the cost base to the lower income levels," ING said. ING's assets under management rose 4.9% in the three months that ended June 30, reaching $493.2 million, up from $470 million at the end of March.
ING's net income was $1.45 billion in the second quarter, including a one-time gain of $297 million from selling part of its stake in the Belgian-Dutch financial services company Fortis in June. That is down from $4.08 billion in the same period last year, when ING had $3.1 billion in one-time gains from selling stakes in rivals to pay for its purchases of Aetna and ReliaStar.
