COST FACTOR:  ING CE Jan Hommen announced another round of cost savings at the group’s results in Amsterdam on Wednesday. Picture: REUTERS
COST FACTOR: ING CE Jan Hommen announced another round of cost savings at the group’s results in Amsterdam on Wednesday. Picture: REUTERS

AMSTERDAM — ING Groep, the biggest Dutch financial-services company, will shed 1,400 jobs in the Netherlands and 1,000 in Belgium after saying fourth-quarter profit missed estimates due to restructuring costs.

ING CEO Jan Hommen will eliminate the 2,400 jobs in addition to 2,350 positions in commercial banking and insurance announced in November. Last year, he won more time from European Union regulators to divest insurance operations and repay a 2008 government bail-out. He is seeking to cut costs by €1bn a year by 2015.

Net income was €1.43bn compared with €1.19bn a year earlier, the Amsterdam-based company said on Wednesday, which missed the €1.63bn median estimate of 12 analysts. The results included €643m in special items after tax, mostly related to restructuring of units.

"Times are obviously difficult," said Corne Aben, who helps manage about €1bn of assets including ING shares at Amsterdam-based Optimix Vermogensbeheer. "The cost-cutting announcements are incrementally positive, especially as they seem related to a structural shift in business. Hommen is clearly executing the announced strategy step by step."

ING had "less benefits from de-risking than we had anticipated," ABN Amro Bank analyst Jan Willem Weidema said by e-mail. "Capital ratios in the bank somewhat disappointed."

ING shares fell as much as 2.9% and were down 2% to €6.80 at noon in Amsterdam, giving it a market value of €26bn.

ING is the fifth-worst-performing stock in the 33-member Stoxx 600 insurance index this year.

Its core tier 1 capital ratio, a measure of financial strength, dropped to 11.9% at the end of December last year from 12.1% in the third quarter, as it repaid the Netherlands government €1.13bn in aid and premiums.

Underlying pretax profit at ING’s banking operations slid 72% to €184m, hurt by a loss of €126m on the sale of southern European bonds. That reduced risk weighted assets by €1bn. The firm set aside €588m for doubtful loans, compared with €445m a year ago.

ING’s fourth-quarter earnings also included €175m in a Dutch bank tax, introduced in October to force lenders to share in the costs of ensuring financial stability after the nation bailed out companies including ING, SNS Reaal and ABN Amro Group in 2008 and 2009. ING will also have to pay about a third of a €1bn one-time industry levy next year imposed after the Netherlands took control of SNS Reaal on February 1.

The shares have declined 1.8% this year compared with a 9% gain for banks in the Stoxx Europe 600 index and a 1.2% increase for Europe’s benchmark gauge for insurance companies.

The insurance division had an underlying pretax profit of €272m in the fourth quarter, compared with a loss of €1.51bn a year earlier. Investment margin rose to €447m from €413m.

ING received a €10bn bail-out by the Dutch state in 2008, triggered as subprime mortgage assets held at its US unit plunged. It has returned €7.8bn of the borrowing, with €2.4bn in interest and premiums. The firm was ordered to sell its global insurance and asset management operations before the end of this year as a condition of the bail-out. The European Commission said on November 19 last year that it extended the deadline because of market conditions. Under the new time line, ING has until the end of 2018 to complete the disposal of its European insurance arm.

In the fourth quarter, ING completed the sale of its Malaysian insurance unit to AIA Group for €1.3bn. The disposal of its Canadian online bank in November resulted in a €1.1bn gain after tax, while the sale of ING Direct UK led to a loss of €244m.

Bloomberg