"ING Group made a strong start to the year. All six business lines contributed to the sharp increase in first-quarter net profit, which was supported by a lower tax rate due to tax-exempt gains on divestments and private equity," said Michel Tilmant, Chairman of the Executive Board.
"We saw healthy progress at the Group's three growth engines. ING Direct added one million new customers and attracted more than EUR 15 billion in funds entrusted in the first quarter alone. The life insurance businesses in developing markets posted a 36% increase in the value of new business, and Asia/Pacific accounted for more than half of the Group's total. Assets in the pensions and retirement savings business also continued to grow."
"All three banking business lines performed above ING's target for risk-adjusted return on capital, and the life insurance businesses posted a 20% increase in the value of new business by focusing on the most profitable products and market segments."
"Our operating expenses declined from the level in the fourth quarter. However expenses remain a key point of attention for management, and we will continue to look for ways to reduce costs and improve efficiency to preserve our competitive position, particularly in mature markets. At Nationale-Nederlanden we plan to reduce the annual cost base by 235 million by 2007 to bring efficiency into line with the industry benchmark. That will lead to a reduction of the workforce by 1,000 positions by the end of 2007 as well as a reduction in third-party staff as backlogs diminish."
"In the first quarter we continued to benefit from favourable market conditions. Risk costs in banking were historically low, partly due to releases of provisions in Wholesale Banking, supported by improvements in risk management as well as favourable market conditions. Our life insurance businesses were helped by investment gains, while the non-life insurance business continued to benefit from exceptionally low claims, particularly in Canada. Looking forward to the full year, we are confident about the year ahead, although market circumstances have started to deteriorate and have become more challenging recently."
First-quarter profit
Net profit increased 71.8% to 1,941 million in the first quarter of 2005, up from 1,130 million in the same period last year, driven by strong growth across all business lines. Net profit from insurance rose 56.3% to 730 million, driven by strong profit growth from the life insurance businesses in Asia, the U.S. and the Netherlands, as well as continued strong underwriting results from non-life insurance in Canada. Net profit from banking rose 82.7% to 1,211 million, driven by the continued growth of ING Direct and lower risk costs particularly in Wholesale Banking, as well as realised gains on divestments in the first quarter of 2005. Net profit per share rose 64.8% to 0.89 from 0.54 in the first quarter of 2004.
Total profit before tax increased 48.3% to 2,575 million. Realised gains on divestments added 376 million to profit before tax in the first quarter of 2005 compared with a loss of 84 million from divestments in the first quarter of 2004. The divested units contributed a total of 125 million to profit before tax in the first quarter of 2004 and 14 million in the first quarter this year. Excluding those impacts, profit before tax increased 28.9% to 2,185 million.
Insurance profit before tax excluding divestments rose 44.5% to 993 million, with all three regions reporting strong increases. Insurance Europe posted an increase of 43.5% to 505 million, lifted by higher investment gains in the Netherlands as well as continued growth in Central Europe. Insurance Americas posted a 32.5% increase to 444 million, driven by continued strong underwriting results at the Canadian non-life insurance business as well as higher investment and fee income at the U.S. life business. Insurance Asia/Pacific posted a 52.7% increase, driven by strong growth from life insurance in Australia and South Korea.
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