'The continued weak economic climate and the further sharp fall of stock market indices in the third quarter have affected our nine months´ results, but we are pleased with a 0.7% increase in operational net profit', said Ewald Kist, Chairman of the Executive Board.
'Our broad product range - matching our clients´ increased demand for low-risk products - enabled us to grow total income by 8.3%. Strong growth was reported by Postbank and ING Direct as well as by our pension business and developing markets insurance activities. In view of the uncertain future course of the economy and especially of the equity markets, however, we must step up our efforts to use capital more efficiently, to make additional cost cuts and to further rationalise the organisation. We will, for instance, continue to restructure our international wholesale banking operations to improve its profitability in the current strongly changed business environment.
Starting in 2003, taking of capital gains on equity investments will depend on market developments. This decision puts an end to the automatism of a 15% year-on-year increase in realised capital gains on equities. We nevertheless intend to complete our capital gains programme for 2002 as planned. In order to further strengthen solvency and support organic growth, we will propose to our shareholders to introduce optional cash/stock dividend as from the final dividend 2002.'
Profit expectation 2002
Provided that economic conditions and financial markets will not deteriorate further until year-end, the Executive Board expects to match last year´s operational net profit per share of EUR 2.20.
ING´s strong financial position has been impacted by the depressed stock markets, the continued weak economic climate and the uncertainty with respect to a future recovery. Risk costs have risen substantially and low equity prices affect growth in income. The latter also limits the possibilities to realise capital gains on equity investments.
Total income rose by a healthy 8.3% to EUR 58.1 billion. The organic increase (excluding acquisitions and exchange rate fluctuations) was 6.4%. Insurance income advanced 9.1% to EUR 49.5 billion. Premium income from life insurance grew by 6.4% to EUR 33.4 billion. Non-life premiums increased by 38.5% to EUR 6.3 billion, primarily reflecting the acquisition of ING Comercial AmÃ©rica in Mexico. Banking income was up 4.0% to EUR 8.6 billion as the interest result increase exceeded the decline in commission and other income.
Due to restructuring, integration and tight cost control, the increase in total operating expenses was limited to 2.5%. The organic increase was 0.6%. Compared to a year ago, the total number of staff decreased by 5,500 to 111,700 full-time equivalents. The organic decrease in operating expenses of the insurance activities was 5.3%. The difference between the relative premium growth and the relative expense growth was +22.8%-points (excluding GICs and the impact of the joint venture with ANZ in Australia), well above the target of at least +2%-points. There was an organic increase in banking operating expenses of 4.3%, largely due to a EUR 128 million restructuring provision with respect to the international wholesale banking operation. Excluding this provision and the fast-growing ING Direct, organic banking expenses showed a slight increase of 0.4%. The efficiency ratio of the banking activities (excluding ING Direct and the restructuring provision for international wholesale banking) improved to 69.9% from 70.5% in the first nine months of 2001 and 71.7% for the full year 2001.
Operational net profit increased by 0.7% to EUR 3,328 million from EUR 3,304 million a year ago. The effective tax rate decreased from 22.8% to 20.4%, largely as a result of a change in tax legislation in Australia, the release of a tax provision, the sale of shares in Cedel and the ANZ transaction. The operational result before taxation declined by 2.1% to EUR 4,48