Solid performance in first half 2005 with returns improving in both
banking and insurance: Net profit per share increases 20.4% to 1.61 from 1.33 in first half 2004, Profit before tax excluding impact of divestments rises 9.3% to 4,011 million, Insurance profit excluding divestments rises 2.3% led by Americas and Europe, Banking profit excluding divestments climbs 16.0% driven by all business lines, Returns increase: RAROC after tax and divestments rises to 18.0%, IRR to 12.6%, ING to pay interim dividend of 0.54 per share in cash, up from 0.49.
"ING showed a solid performance in the first six months of 2005, despite challenges posed by low interest rates in most markets," said Michel Tilmant, Chairman of the Executive Board. "Income rose across the Group. The banking businesses benefited from lower risk costs as the credit environment remained benign, and ING Direct continued its fast growth, adding 1.8 million new customers. Life insurance sales increased, especially in emerging markets, while the non-life insurance units posted strong underwriting results. Both banking and insurance also benefited from lower taxes."
"We are seeing results from our emphasis on value creation, with returns improving in both banking and insurance, despite market pressures on margins. The risk- adjusted return on capital for the banking operations improved with all three business lines performing above ING's target. At the insurance operations, the value of new life business increased 33.2% as units improved margins and focused on the most attractive markets, such as retirement services and pensions."
"Net profit in the second quarter declined mainly due to gains on divestments last year and other non-recurring items. Excluding that impact, second-quarter profit rose 6.7%. In addition, we have taken measures to strengthen insurance reserves for an old book of business in Taiwan as a result of low interest rates, despite the fact that insurance reserves for the Group as a whole remain more than adequate, even using our conservative internal standards."
"We also continue to focus on improving execution to increase efficiency, address operational and compliance issues, and improve service. We announced some initiatives earlier this year to reduce expenses at some units. Cost control remains a priority for management, and we will continue to take steps to improve efficiency and preserve our competitive position in mature markets to deliver more value for our customers and shareholders."
"The company has declared an interim dividend of 0.54 to be paid in cash, equal to a rounded half of the full-year dividend for 2004. We remain confident about the remainder of the year, although interest-rate developments pose challenges for some businesses as we saw in the second quarter."
Net profit rose 25.0% to 3,492 million in the first half of 2005, up from 2,793 million in the same period last year, driven by solid growth at all three banking business lines as well as the insurance activities in the Americas and Europe. Net profit from banking increased 65.0% to 2,062 million, mainly as a result of low risk costs, lower taxes, and realised gains on divestments. Net profit from insurance decreased 7.3% to 1,430 million, despite lower taxes, due to divestments and other non-recurring items as well as a decision to strengthen reserves in Taiwan. However, the rest of Asia as well as the Americas and Europe showed strong growth. Net profit per share rose 20.4% to 1.61 from 1.33.
Total profit before tax increased 9.9% to 4,382 million. On balance, divestments had a positive impact of 56 million in the first half. Results in the first half of 2005 included 345 million in realised gains on divestments and 26 million in profit from divested units. That compares with 135 million in gains from divestments and 180 million in profit from divested units in the first half of 2004. Excluding the impact of divestments, profit before tax increased 9.3% to 4,011 million, lif