Retail banking helps ING triple profit

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ING, the Dutch banking and insurance group, reported a surge in net profit on Wednesday thanks to a tripling of operating profit in retail banking and lower loan loss provisions.

ING Q2 results
SalesNet profitEarnings per shareDividend
€15.3bn€1.09bn€0.29
↑153%↑1,535%↑966%

The group, which had to be bailed out by the Dutch government during the financial crisis, is gradually splitting its insurance and banking operations to comply with demands set by regulators in Brussels to offset the state aid that it received.

ING said it still expected the insurance business to be operating “on an arm’s length, stand-alone basis” by the end of the year.

Echoing recoveries by other banks that were hit hard in the financial crisis, ING’s second-quarter earnings boost came in ahead of analyst expectations. That recovery has mostly been recorded among lenders with strong retail operations rather than in investment banking, where trading profits have fallen across the board.

ING, which reported a jump in group net profit for the quarter to €1.09bn ($1.03bn) from €71m a year earlier, said its strong retail banking performance was driven by higher interest margins on savings, a growth in client balances and lower bad loan provisions and costs. The underlying profit for retail banking tripled to €944m, ING said.

The insurance operations, by contrast, reported an underlying loss of €115m compared with a profit of €242m a year ago. This was mainly due to the sharp decline in equity markets in the second quarter, which hit ING’s US variable annuity business, but the operating result also declined.

The group has said it will prepare for an initial public offering of the insurance division but is also open to an outright sale of the business.

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