'The world-wide economic slowdown and the decline in equity markets had a negative impact on ING´s 2001 results. However, our broad mix of businesses proved essential to conclude this difficult year with a 6.1% growth in operational net profit,' said Ewald Kist, chairman of the Executive Board.
'In 2002 performance improvement will have absolute priority. The integration of the US insurance companies will be furthered and largely completed by year-end. We are also continuing our efforts to adjust the wholesale banking organisation to the new realities of the market. Throughout the company, even more emphasis will be placed on efficiency-enhancing projects to lower the cost base and increase our competitive strength.'
>b>Profit expectation 2002
The Executive Board is positive, but cautious about the economic outlook for the year ahead. Given the uncertainty about improvement of the economies in which ING is active, the Executive Board considers it prudent not to make a profit forecast for 2002 yet.
Total revenues, including ReliaStar, Aetna Financial Services and Aetna International, reached EUR 74.2 billion (+49.6%). Total insurance revenues increased by 64.7% to EUR 63.1 billion as life premiums were up 78.1%, non-life premiums advanced 44.2% and investment income rose by 28.6%. In the current difficult economic climate, banking income contracted slightly by 1.7% to EUR 11.1 billion as the decrease in commission of 23.8% outweighed the increases in interest income of 4.9% and other income of 20.6%.
The organic growth of Group operating expenses was limited to approximately 1%, reflecting tight cost control throughout the company. Operating expenses in insurance increased by 4.6% organically. In banking, operating expenses decreased by 1.1% due to the sale of the investment banking activities in the US, tight cost control and lower bonuses. The efficiency ratio (excluding ING Direct) improved from 72.1% in 2000 to 71.7% in 2001. Including acquisitions, divestments and exchange rate fluctuations, total Group operating expenses increased by 21.4%.
Operational net profit increased by 6.1% to EUR 4,252 million in 2001 from EUR 4,008 million in 2000. Operational net profit from insurance was 19.7% higher at EUR 2,810 million compared to EUR 2,348 million a year earlier. ReliaStar, Aetna Financial Services and Aetna International were accretive in the first year after their acquisition (EUR 0.07 per share after funding costs) to the net result. The operational net profit from banking declined by 13.1% from EUR 1,660 million in 2000 to EUR 1,442 million. In view of the deteriorated economic situation the loan loss provisions increased by EUR 750 million, equalling 32 basis points of credit risk weighted assets, compared to the very low level of EUR 400 million (19 basis points) in the year before.
Return on equity
The operational net return on equity increased from 12.2% for the full year 2000 to 18.4% in 2001. The improvement reflects a higher operational net profit and a substantially lower capital base, mainly caused by the write-off of goodwill and the revaluation of the equity investment portfolio.
(source: ING Groep)