ING Groep NV, the bank and insurer, reported a 793 million euros (US$1.08 billion) net loss for the first quarter yesterday, blaming falling asset prices and charges for restructuring its business.
The figure compares with a net profit of 1.54 billion euros in the same period a year ago and with a 3.1 billion euro shortfall in the fourth quarter.
Losses came from all directions for the financial group, which said it suffered a grand total of 1.7 billion euros worth of “negative impacts stemming from the market turmoil.”
“Market conditions remained challenging in the first quarter as equity markets declined further, credit spreads remained elevated, real estate prices continued to fall and loan losses increased as the crisis spread from the financial markets to the real economy,” said chief executive Jan Hommen, who took the job after his predecessor resigned in January.
“Our first priorities are to reduce costs, risk and leverage to strengthen the Group,” he said in a statement.
ING’s insurance arm lost 979 million euros, mostly on bad investments.
Its banking arm had pretax profit of around 700 million euros, benefiting from the large numbers of investors keeping their money in cash while ING pays them little interest. However, provisions for bad loans rose.
The company took a 329 million euro hit for restructuring costs and among its investments it booked a 361 million euro impairment charge on direct real estate investments and an additional 290 million euro charge on troubled US mortgage-backed securities.
Separately, German insurance company Allianz SE said yesterday its first quarter net profit fell sharply, largely as a result of the sale of its Dresdner Bank unit.
The Munich-based company said net profit in the January-to-March period was 29 million euros compared with a net profit of 1.15 billion euros in the first quarter of last year.
Total revenues for the period were down 36 percent to 1.4 billion euros from 2.2 billion euros in the first quarter of last year.
The company did not provide a detailed outlook for the current quarter or full year, but said it saw the first signs of recovery in its life and health insurance business during the first quarter.
“Allianz continues to cope successfully with the impact of the ongoing financial markets crisis on our business,” Allianz chief financial officer Helmut Perlet said in the company’s report.
“We are strongly capitalized, our investment portfolio is of high quality and liquid, and our operating profitability proves resilient,” he said.
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