AMSTERDAM ING Group NV said Tuesday that first-quarter profits rose 11%, to $986 million, beating analysts expectations, as U.S. insurance businesses purchased last year more offset a drop in banking income.
Analysts had projected a 3.6% rise for ING, the largest Dutch financial services company. Per-share income came in at $1.02.
ING has been shifting assets from investment banking, where earnings are more volatile, to insurance. It paid a total of $13.8 billion last year for ReliaStar Financial Corp. and two units of Aetna Inc. Last month it sold its U.S. investment banking firm to the rival ABN Amro Holding NV for $275 million.
This week ING launched a branding campaign in the United States to raise its profile there. (See story, page 8.)
Net income from INGs insurance business jumped 30%, to $592.5 million, as ReliaStar and the Aetna units added $54.8 million, or 6 cents a share, to earnings after funding expenses. Sixty percent of INGs net income came from insurance, compared with 5% in the first quarter last year.
Overall the growth for 2001 will be driven by insurance, said Cees Maas, INGs chief financial officer. But the banking side did OK too, considering the first quarter of 2000 was very strong.
Net income from INGs banking operations dropped 9.5%, to $391.5 million, as the slump in the stock markets crimped commissions and trading income. Securities-trading commissions fell 21%, to $689 million, while trading income fell 5.2%, to $387.5 million.
I think theyve made some good inroads into what they see as a more profitable and more predictable future, said Lodewijk van der Kroft, a fund manager at Theodoor Gilissen in Amsterdam, which owns more than one million ING shares.
A dependence on commissions and securities trading has caused profits to decline at some of INGs rivals. Credit Suisse Group reported this week that first-quarter profits dropped 25%, and this month ABN Amro said profits fell 12% as fee income dwindled.
Thanks to our broad mix of products, we are able to continue our growth under adverse market conditions, said Ewald Kist, INGs chief executive officer, in a statement to the Amsterdam Stock Exchange.
The company said it still expects per-share earnings this year to rise 12% from last year, excluding the effect of acquisitions.