ING's quarterly net profit falls

Dutch financial group ING reported a 6.7 percent fall in quarterly net profit with unexpected provisions in Taiwan and weak life insurance results in the Netherlands disappointing investors.
Europe's biggest insurer by market value said in a statement on Thursday that second-quarter net profit dipped to 1.55 billion euros ($1.92 billion), beating average analyst expectations.
Analysts pointed to a number of negative items, including an unexpected 80 million euro provision to strengthen ING's Taiwan insurance business, for bumping the group's shares around 3 percent lower.
"ING had good profit figures in the second quarter of 2005, but the underlining performance at insurance Asia/Pacific and wholesale banking was disappointing," Delta Lloyd Securities said in a research note. Delta Lloyd has a "buy" on ING.
ING focuses on life insurance, retail and wholesale banking in the Benelux, the United States, Asia and developing markets and acquired its Taiwan unit when it bought US insurer Aetna about four years ago.
Chief Financial Officer Cees Maas said the provisions were needed to shore up reserves to cover long-term commitments in Taiwan because of low interest rates there.
These provisions offset strong income growth in the Asia/Pacific region as a whole where new business in the first half climbed about 48 percent to 198 million euros, more than half the total for the group as a whole.
Net profit was expected to fall to 1.45 billion euros, according to an average forecast in a Reuters poll of 21 analysts, with estimates in a 1.2 billion to 1.8 billion euro range.
ING Chief Executive Michel Tilmant told a news conference that he remained confident about the rest of the year, although interest-rate developments would post some challenges. ING has operations in more than 50 countries, including the United States.
Low interest rates in most countries have resulted in a flattening yield curve, squeezing the margin between the rate at which ING lends and at which it borrows, limiting its potential to make money.
ING, which has added around 9 percent in market value this year to about $67 billion, said net profit at its insurance business fell 34.9 percent to 700 million euros. In addition to the added reserves in Taiwan, insurance results were hit by the revaluation of derivatives under IFRS and high costs in the Netherlands.
Pretax profit, before divestments, at ING's Asia/Pacific division plunged to 54 million euros from 152 million euros, while in the Netherlands the number fell 12 percent to 380 million euros.