Restructuring ING posts solid Q1 results
ING Group, the Dutch financial services group, posted a solid set of results in the first quarter of 2014 as it prepares to fully divest its subsidiary NN Group via an IPO.
The company made a net profit of €988 million compared with €1.17 billion a year earlier but a net result, after gains and losses on divestments, of -€1.9 billion reflecting the spin-out of its US business Voya and the impact of the Dutch pension fund changes.
It noted in its results that in relation to NN Group it had secured pre-IPO investments of €1.2 billion and agreed a final capital structure for the unit. This means that the intended IPO will comprise only a secondary offering.
Ralph Hamers, chief executive officer of ING Group, said: “ING Group made a strong start to 2014, posting a first-quarter underlying net result of €988 million while demonstrating good commercial growth. At the same time, we reached significant milestones in our restructuring plan and sharpened the strategic priorities of our businesses to ensure they remain sustainable and competitive.
“ING Bank posted a solid first-quarter underlying pre-tax result of €1,176 million, reflecting an increase in the net interest margin and lower risk costs as economic conditions improved. Our consistent customer focus has enabled us to attract €8.3 billion of funds entrusted across our franchise and to extend €5.1 billion of net lending during the quarter. We are committed to supporting our customers’ financial needs and will continue to grow lending through the economic recovery.
“Continued capital generation at ING Bank enabled us to make a penultimate €1.225 billion payment to the Dutch State in March, bringing the total paid to the State since 2008 to €12.5 billion. The capital position of ING Bank remained strong, with a fully-loaded CET1 ratio of 10.1 percent at the end of the quarter. The first-quarter underlying return on IFRS-EU equity rose to 10.2 percent, within the range of our Ambition 2017 target.
“At NN Group, the first-quarter operating result for the ongoing business was €274 million, a significant improvement compared with both a year ago and the previous quarter, driven by solid results in the core Dutch businesses and lower expenses across the organisation. Commercial momentum was strong, with sales rising 20.6 percent year-on-year and 53 percent sequentially, at constant currencies. ING Group made significant progress in finalising its preparations for the intended IPO of NN Group, announcing last week transactions to secure important investments from three firms. Today, we announce measures to strengthen the company’s standalone capital structure with a further €850 million and confirm that the intended IPO will comprise only secondary shares.
“In April, ING U.S. started operating under the name Voya Financial, Inc. representing a new era for the company. We have reduced our stake in Voya to approximately 43 percent, fulfilling the requirement to divest more than 50 percent of this business by year-end. Although deconsolidating Voya brought us a step further in our strategic transformation, it also triggered a €2,005 million after-tax loss. This impact, together with a €-1,059 million charge for successfully completing the Dutch closed defi ned benefit pension plan agreement and a €202 million gain following the deconsolidation of ING Vysya Bank, led to the Group’s quarterly net loss.
“As we look forward to the rest of this year, we remain committed to achieving our strategic priorities and advancing further towards the completion of our restructuring. I am confident that the work we are doing will strengthen our company for the long-term and that we are well positioned to achieve our purpose of empowering people to stay a step ahead in life and in business.”