ING to cut 2,350 jobs as Q3 profits drop
AMSTERDAM (AP) — ING Groep NV, the Dutch bank and insurance company, revealed plans Wednesday to cut 2,350 jobs after a sharp drop in third-quarter profits.
ING, one of Europe's larger financial conglomerates by assets, said its net profit fell to €609 million ($783 million) from €1.69 billion a year ago. It attributed the decline primarily to "de-risking" — that is, selling assets at a book loss to eliminate the potential for bigger losses later.
The job cuts, many of which will fall at its commercial banking division, represent more than 2 percent of ING's workforce.
CEO Jan Hommen said he was "confident that these efforts, combined with further streamlining, will strengthen our company for the long-term benefit of all stakeholders."
A more detailed look at the results shows that underlying profits — a nonstandard measure intended to indicate operating performance — at the banking division rose 16 percent to €1.02 billion, as ING attracted retail depositors and its margins improved from the second quarter.
However, the underlying profits included a one-time gain of €323 million from the sale of ING's 9 percent stake in Capital One. And notably, the bank sharply increased provisions for bad loans.
Net banking profit was €670 million, including €258 million in losses on European "debt securities," which usually means bonds.
At insurance, ING blamed a 39 percent fall in operating profit to €238 million on lower interest rates, losses on hedges, and "de-risking."
The arm booked a net loss of €61 million, which ING attributed to a writedown in the value of its U.S. variable annuities business, a writedown in the value of its Korean life insurance business, more "de-risking," and restructuring costs.
The company's shares rose 0.9 percent to €6.938 in early trading in Amsterdam.
Analyst Lemer Salah of SNS Securites said the results "showed a steady performance in a tough market."
ING is still negotiating with European regulators over compensation measures for its 2008 bailout by the Dutch state. It is supposed to split its banking and insurance arms into separate companies by the end of next year.