ING Records Sharp Rise in Profit

AMSTERDAM-- ING Groep NV on Thursday recorded a sharp rise in first-quarter earnings as the Dutch bank benefited from a pickup in lending activity in Europe and lower provisions for bad loans.

Amsterdam-based ING reported an underlying pretax profit, a measure of operating performance that strips out divestments and other special items, of EUR1.66 billion, a rise of 41% on the year.

Analysts polled by The Wall Street Journal predicted an underlying profit of EUR1.45 billion.

"This strong performance was achieved despite the challenging operating environment, characterized by unprecedented low interest rates and the uneven economic recovery," Chief Executive Ralph Hamers said.

ING, the Netherlands' largest bank by assets, attributed the rise in profits to "robust growth" of its loan book. Its core lending franchises grew by EUR6.9 billion in the quarter, an annualized increase of 5.3%, driven by growth in the Netherlands and Germany.

Mr. Hamers said lending is picking up "across the board" and that businesses are becoming more willing to invest, although he cautioned that the economic recovery in Europe is still in the early stage. "Growth is there, but we are at the start of the cycle," he said.

Provisions for bad loans were EUR432 million in the first quarter, an 8% drop on the year but an 8% increase from the previous quarter.

ING in November repaid the final chunk of state aid it received during the financial crisis and has nearly completed the divestment of its insurance business. The overhaul has transformed it into a smaller Europe-focused bank that concentrates on gathering deposits and lending to consumers and businesses.

ING recorded a first-quarter net profit of EUR1.77 billion, compared with a net loss of EUR1.92 billion last year. Results were boosted by a gain on the sale of ING's remaining stake in U.S. insurer Voya Financial Inc. The bank also further reduced its stake in Dutch insurer NN Group NV in the first quarter, causing a EUR1.8 billion book loss without affecting the bottom line.

ING was ordered by the European Union to sell its insurance arm as a condition for getting approval for the government support.

Write to Maarten van Tartwijk at [e-mail]

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