Dutch financial group ING beat second-quarter profit forecasts at its main banking business and said it was looking at further possible cost savings as it continues to slim down in a drive to recover from the financial crisis.
Jan Hommen, CEO of ING Groep NV (ADR) (NYSE:ING), who is handing over the reins to Ralph Hamers on October 1st, said, “ING has made good progress so far this year as we work to improve our operational performance, execute our restructuring and prepare our banking and insurance companies for independent futures.”
ING Groep reiterated it was on track for its next big divestment
Bailed out by the Dutch state in 2008, ING has dismantled its once-fashionable banking and insurance model and announced thousands of job cuts and other cost savings.
The group reiterated it was on track for its next big divestment, its European insurance unit, in 2014. Outgoing chief executive Jan Hommen, 70, said he would give more details about the various options for the unit – initial public offering, spin-off, trade sale or some combination – on September 19.
ING has raised about 23 billion euros ($30.6 billion) in total from divesting insurance, investment management and other assets in order to repay state aid.
Core debt at ING Group declined
The company said today that the core debt at ING Groep NV (NYSE:ING) declined from 7.1 billion euros at the end of the first quarter to 4.4 billion euros, following the upstream of the secondary offering proceeds of 0.6 billion euros from the IPO of ING U.S. in May.
ING Groep NV (NYSE:ING)’s net profit dropped 39.1 percent to 788 million euros ($1.05 billion) from 1.29 billion euros in the previous year. Prior-year results have been restated. The latest results reflected negative hedge results driven by an increase in financial market volatility.
The firm recorded a loss of 98 million euros in Insurance and Investment Management Asia, primarily due to some guarantees and hedges in Japan that deteriorated.
On an underlying basis, group net profit was 942 million euros, while it totaled 1.11 billion euros last year.
Jefferies : Headline negative in the results were loan losses
According to Jefferies the driver of the beat at the bank was NII, which at €3,006m was 3% ahead of consensus. This was a potential positive surprise they were looking for and management’s guidance that NIM should stay at current levels (142bp) for the coming quarters will drive earnings upgrades. A headline negative in the results were loan losses at the group which were 4% higher than JEFe at €616m.
ING Groep NV (NYSE:ING) was upgraded by Zacks from Underperform to Neutral in a research report issued on Tuesday. The firm currently has a $10.70 price target on the stock. Zacks target price suggests a potential upside of 2.10% from the company’s current price.