ING 2Q Profit Lower Than Expected; Upgrades Cost Savings

ING Groep NV (ING) Wednesday reported a lower-than-expected net profit in the second quarter after three consecutive loss-making quarters, but said it sees the first signs of recovery.

"While we begin to see signs of recovery in financial markets, economic conditions are expected to remain challenging for some time", ING's CEO Jan Hommen said, adding ING now expects full year cost savings to reach EUR1.3 billion, up from the original EUR1 billion target.

A loss in banking activities was more than offset by a profit in the insurance unit.

ING said it booked a net profit of EUR71 million in the second quarter from the first quarter net loss of EUR793 million, and down from the EUR1.92 billion net profit in the second quarter of 2008. This was an unpleasant surprise, as analysts had expected a net profit of EUR388 million.

ING received a EUR10 billion Dutch state capital injection in October and received EUR27.7 billion state guarantee on its Alt-A mortgage portfolio in January 2009.

Its shares closed Tuesday at EUR9.11. In the year to date, they've gained 24%.

ING was the first of the listed Dutch financial services companies to report. Insurer Aegon NV (AEG) will follow Thursday.

- By Bart Koster; Dow Jones Newswires; [phone]; [e-mail]